SETTLEMENT AGREEMENT AND RELEASE
Blondie Rockwell, Inc. ("Blondie") and Innovo Azteca
Apparel, Inc. ("IAA") have reached the following agreement, as of
May 25, 2004 (the "Agreement" or "Settlement Agreement").
Capitalized terms not defined herein shall have the meanings
assigned to them in the License Agreement (defined below).
WHEREAS, Blondie and IAA entered into a Trademark License
Agreement, dated as of February 13, 2003, as amended by that
certain First Amendment to Trademark License Agreement, dated as
of February 13, 2003 (the "First Amendment") and that certain
Second Amendment to Trademark License Agreement, dated as of
February 18, 2004 (the "Second Amendment") (collectively, the
"License Agreement") pursuant to which, among other things,
Blondie granted IAA an exclusive license to manufacture and sell
women's apparel and certain accessories featuring the "FETISH"
trademarks, including but not limited to the Trademarks (the
"Brand") in the United States in exchange for the payment of
royalties as provided in the License Agreement;
WHEREAS, IAA has granted a sublicense for the manufacture,
sale and/or distribution of accessories to Innovo, Inc.;
WHEREAS, IAA has caused to be filed in the name of Blondie a
trademark application in Japan, a copy of which is annexed as
Exhibit C (the "Japan IP");
WHEREAS, the parties mutually desire to terminate the
License Agreement on the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the following covenants
and agreements and for other good and valuable consideration, the
receipt of which is hereby acknowledged, the parties have agreed
as follows:
1. IAA shall pay Blondie the following monetary amounts in
accordance with the following payment schedule:
(a) A total of $337,171.79 upon execution of this
Settlement Agreement,$87,171.79 of which represents
Royalties due on Net Sales of IAA through
April 24, 2004 (the "Owed Royalties");
(b) $250,000.00 on or before June 15, 2004; and
(c) $250,000.00 on or before July 15, 2004.
Said payments shall be made by wire transfer of immediately
available funds on or before the aforesaid due dates to the ▇▇▇▇
account of ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLP, as attorneys for
Blondie, in accordance with the following wire instructions:
JPMORGANCHASE BANK - Private Banking
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ - ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
ABA #xxxxxxxxx
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇ ACCOUNT - ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLP
#xxx-xx-xxxxx-xx
Attention: ▇▇▇▇ ▇. ▇▇▇▇, Esq.
(d) IAA's parent company, Innovo Group, Inc., a
Delaware corporation having an address at ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ("Guarantor") shall guarantee
certain of IAA's obligations under this Settlement Agreement,
and, in connection therewith, shall execute and deliver to
Blondie a Guaranty Agreement, the form of which is annexed hereto
as Exhibit E, simultaneous to the execution of this Settlement
Agreement.
2. Subject to Section 8.2 hereof, the License Agreement
shall be deemed terminated as of the execution of this Settlement
Agreement. It is understood and agreed that this Settlement
Agreement supercedes the License Agreement once this Settlement
Agreement is executed by the parties hereto and that the only
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continuing rights and obligations between the parties are those
set forth or referenced in this Settlement Agreement, subject to
8.2 hereof.
3. Notwithstanding the foregoing, IAA has the right to
market, distribute and sell the summer line for 2004 (the "Summer
Line") solely within the Territory and solely to the customers
identified in Exhibit A attached hereto. The entire Summer Line
consists of the SKUs provided by IAA and identified in Exhibit B
attached hereto.
4. IAA shall also have the right to sell off any remaining
inventory on hand not inclusive of the Summer Line ("Other
Inventory") between the date hereof and December 31, 2004 (the
"Sell Off Period"). IAA shall provide Blondie with a list of all
SKUs comprising such Other Inventory presently on hand which
shall be attached hereto as Exhibit D. IAA shall have the right
to sell off the Other Inventory during the Sell Off Period to the
customers identified in Exhibit A-1 hereto. Additionally, IAA
shall have the right to sell off the Other Inventory during the
Sell Off Period to the following off-price retailers subject to
the following restrictions and limitations: (a) Value City,
provided that net sales to Value City shall not exceed one
million dollars during the Sell Off Period, absent further
written approval by Blondie; and (b) ▇▇▇▇▇▇'▇, provided that net
sales to ▇▇▇▇▇▇'▇ shall not exceed one million two hundred fifty
thousand dollars during the Sell Off Period, absent further
written approval by Blondie. As used in this Section 4, net
sales shall mean the gross invoice price charged by IAA to its
customers, less returns, without any other deductions. In the
event IAA desires to (i) sell off Other Inventory to a customer
not listed on Exhibit A-1 or listed in 4(a) and (b) above or (ii)
sell Other Inventory to Value City and/or ▇▇▇▇▇▇▇ in excess of
the above limits, IAA shall first obtain Blondie's written
consent in order to do so, which consent shall not be
unreasonably withheld by Blondie. Blondie shall respond within
one business day after receipt of any request for approval under
this paragraph. If Blondie does not respond within one business
day, Blondie shall be deemed to have consented to such additional
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customers or additional sales. Following the Sell Off Period,
IAA shall no longer have the right to sell the Other Inventory
unless all references to the Brand are removed from such
merchandise, including but not limited to all tags, labels and/or
ornamentation bearing reference to the Brand in any form.
Following the Sell-Off period, IAA shall deliver to Blondie,
dispose of or destroy the remainder of all packaging materials
and all other materials bearing reference to the Brand in any
form (other than IAA's inventory reports, invoices, and the
like).
5.1 IAA shall also have the right to sell off any items
remaining unsold or returned comprising the Summer Line on hand
or returned on and after August 1, 2004 (the "Excess Summer
Inventory") provided all such sales take place prior to December
31, 2004 (the "Summer Line Sell Off Period"). IAA shall have the
right to sell off the Excess Summer Inventory during the Summer
Line Sell Off Period solely in the Territory and solely to the
customers identified in Exhibit A and Exhibit A-1 hereto.
Additionally, IAA shall have the right to sell off the Excess
Summer Inventory during the Summer Line Sell Off Period to the
following off-price retailers subject to the following
restrictions and limitations: (a) Value City, provided that net
sales to Value City shall not exceed one million dollars during
the Summer Line Sell Off Period inclusive of the Other Inventory,
absent further written approval by Blondie; and (b) ▇▇▇▇▇▇'▇
provided that net sales to ▇▇▇▇▇▇'▇ shall not exceed one million
two hundred fifty thousand dollars during the Summer Line Sell
Off Period inclusive of the Other Inventory, absent further
written approval by Blondie. As used in this Section 5, net
sales shall mean the gross invoice price charged by IAA to its
customers, less returns, without any other deductions. In the
event IAA desires to (i) sell off Excess Summer Inventory to a
customer not listed on Exhibit A, Exhibit A-1 or listed in 5.1(a)
and (b) above or (ii) sell Excess Summer Inventory to Value City
and/or ▇▇▇▇▇▇▇ in excess of the above limits, IAA shall first
obtain Blondie's written consent in order to do so, which consent
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shall not be unreasonably withheld by Blondie. Blondie shall
respond within one business day after receipt of any request for
approval under this paragraph. If Blondie does not respond
within one business day, Blondie shall be deemed to have
consented to such additional sales. Following the Summer Line
Sell Off Period, IAA shall no longer have the right to sell the
Excess Summer Inventory unless all references to the Brand are
removed from such merchandise, including but not limited to all
tags, labels and/or ornamentation bearing reference to the Brand
in any form. Following the Summer Line Sell-Off Period IAA shall
deliver to Blondie, dispose of or destroy the remainder of all
packaging materials and all other materials bearing reference to
the Brand in any form (other than IAA's inventory reports,
invoices, and the like).
5.2 IAA and Innovo, Inc. shall also have the right to
finish production of, market, distribute and sell the accessories
identified in Exhibit F hereto (the "Accessory Inventory")
between the date hereof and March 31, 2005 (the "Accessory Sell-
Off Period") solely in the Territory and solely to the customers
identified in Exhibits A and A-1 hereto, it being understood that
no sales of Accessory Inventory to Value City, ▇▇▇▇▇▇'▇ or any
other `jobbers' are permitted hereunder. IAA shall pay or cause
to be paid to Blondie a Royalty of eight percent (8%) of all Net
Sales (as defined in the License Agreement) of Accessory
Inventory, which shall be payable to Blondie on a monthly basis,
together with a royalty report (setting forth all applicable
information as required by the License Agreement) beginning on
July 1, 2004 and continuing until all Net Sales of Accessory
Inventory have been accounted for. In the event IAA or Innovo
Inc. desires to sell Accessory Inventory to any other customer
(but not Value City, ▇▇▇▇▇▇'▇ or any other jobber), IAA or Innovo
Inc. shall first obtain Blondie's written consent in order to do
so, which consent shall not be unreasonably withheld by Blondie.
Blondie shall respond within one business day after receipt of
any request for approval under this paragraph. If Blondie does
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not respond within one business day, Blondie shall be deemed to
have consented to such additional customers (but not Value City,
▇▇▇▇▇▇'▇ or any other jobber). Following the Accessory Sell Off
Period, IAA and Innovo Inc. shall no longer have the right to
sell the Accessory Inventory unless all references to the Brand
are removed from such merchandise, including but not limited to
all tags, labels and/or ornamentation bearing reference to the
Brand in any form. Following the Accessory Sell-Off Period, IAA
shall deliver to Blondie, dispose of or destroy the remainder of
all packaging materials and all other materials bearing reference
to the Brand in any form (other than IAA's inventory reports,
invoices, and the like).
6. All such rights granted to IAA hereunder with respect
to the sale of merchandise utilizing the Brand are non-exclusive,
and, subject to Section 24 herein nothing herein or in any other
agreement between Blondie and IAA existing on the date hereof
shall preclude Blondie or any parent, subsidiary, affiliate or
related entity or person from immediately entering into an
agreement, partnership, license, joint venture or other business
arrangement providing for the immediate licensing, sale,
manufacture, distribution and/ or use of any and all categories
of consumer goods or services bearing the FETISH trademarks or
any other uses of the Brand.
7. (i) Ownership of all intellectual property rights,
whether recognized currently or in the future, including, without
limitation, copyright, patent and trademark rights, in the
Licensed Products and in all artwork, packaging, copy, literary
text, advertising material and promotion material of any sort
utilizing the Property, including all such material developed by
IAA (the "Work"), shall vest in Blondie, and title thereof shall
be in the name of Blondie. All such items and all Licensed
Products sold hereunder shall bear the copyright and trademark
notices as are reasonable and customary and any other legal
notices, which Blondie has prescribed. Any and all additions to,
and new renderings, modifications or embellishments of the
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artwork (the "Rights" and together with the Work, the "Work
Product") shall, notwithstanding their invention, creation and
use by IAA and/or its representatives, affiliates and/or sub-
licensees, if applicable, be and remain the property of Blondie,
and Blondie may use, and license others to use the same, without
any obligation to IAA. IAA represents and warrants that it has
sufficient authority and rights to grant all right, title and
interest in and to the Work Product to Blondie. IAA represents
and warrants that neither IAA nor its representatives, affiliates
and/or sub-licensees, if applicable has permitted any of its
employees or independent contractors to obtain or reserve, by
written or oral agreement or otherwise, any rights as "authors"
or "inventors" of any such artwork or designs (as such terms are
used in present or future United States copyright and/or patent
statutes or judicial decisions). IAA shall furnish to Blondie at
Blondie's request, full information concerning the invention and
creation of such artwork and designs, together with the originals
of assignments of all rights therein obtained from all such third
parties. IAA hereby assigns all of its rights in and to the
Work Product to Blondie.
(ii) At Blondie's request and expense, IAA shall execute any
documents, including registered users agreements, reasonably
required by Blondie to confirm its ownership of all rights in and
to the Property in the Territory. IAA shall cooperate with
Blondie at Blondie's expense, in connection with the filing and
prosecution by Blondie of applications in Blondie's name
relating to the use of the Property for Licensed Products in the
Territory.
(iii) IAA shall not use any other tradenames, trademarks or
other designations including, without limitation, IAA's own
corporate name or tradename in connection with the Property in
any consumer advertising and publicity, labeling, packaging or
printed matter utilized by IAA in connection with the Licensed
Products. IAA may, however, use its own corporate name or
tradename in connection with the Property in transactions between
and among the parties hereto, and with Manufacturers, merchants,
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wholesale customers and others relating to: the manufacture of
Licensed Products and the wholesale sale of the Licensed
Products. IAA shall not use the Property in combination with any
other names or marks to form a new ▇▇▇▇ and shall not use the
Property as a tradename or in any other manner other than in
connection with this Agreement. IAA will at all times make
reference on the Licensed Products and on all packaging and
promotional materials used in connection therewith that the
Property is under license from Blondie.
(iv) IAA shall prominently display on all Licensed Products,
all Packaging materials, and in all advertising and promotional
materials using the Trademarks, such trademark and/or copyright
notices as are reasonable and customary.
(v) All of the Property and all files, including but not
limited to all applications or registrations with respect to
Property and the Japan IP, shall within 10 business days of the
execution of this Settlement Agreement by all parties be
delivered by IAA to counsel to Blondie.
(vi) IAA represents and warrants that all the Licensed
Products have, and covenants that all Licensed Products shall be
manufactured, sold, marketed and advertised in compliance with
all applicable laws, rules and regulations (collectively,
"Laws"). Manufacture of Licensed Products may only be undertaken
directly by IAA. No sublicensing is permitted under any
circumstances without the prior written approval of Blondie.
Notwithstanding the immediately preceding sentence, IAA shall
have the right to sublicense the accessory category of Licensed
Products to Innovo, Inc., its Affiliate subsidiary, provided
that: (1) Innovo, Inc. shall be subject to all of the terms and
conditions of this Agreement and execute all documents reasonably
required by Blondie in connection therewith, (2) IAA covenants on
behalf of Innovo, Inc. that all manufacture of Licensed Products
shall be in accordance with all applicable Laws, and (3) no
amounts due and payable to Blondie by IAA shall be reduced in any
way due to such sublicense. IAA shall pretest all proposed and
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approved Licensed Products and shall cause truthful labeling
regarding the care, maintenance, and use to be affixed to the
Licensed Products as required by the Laws. IAA shall immediately
inform Blondie in writing of any complaint by any consumer,
governmental or other regulatory or self regulatory body relevant
to the Licensed Products, and the status and resolution thereof.
IAA shall act expeditiously to resolve any such complaint.
Without limiting the provisions of this Section 7(vi), IAA
covenants on behalf of itself and on behalf of all of IAA's
Manufacturers, as follows:
(A) IAA and Manufacturers shall not use child
labor in the manufacturing, packaging or distribution
of Licensed Products or Packaging or advertising or
promotional materials hereunder. The term "child"
refers to a person younger than the age for completing
compulsory education, but in no case shall any person
younger than fourteen (14) years of age be employed in
the manufacturing, packaging or distribution of
Licensed Products or Packaging or advertising or
promotional materials hereunder.
(B) IAA and Manufacturers shall provide employees
with a safe and healthy workplace in compliance with
all applicable Laws. IAA and Manufacturers agree to
provide Blondie with all information Blondie may
reasonably request about manufacturing, packaging and
distribution facilities for the Licensed Products.
(C) IAA and Manufacturers shall only employ
persons whose presence is voluntary. IAA and
Manufacturers shall not use prison labor, or use
corporal punishment or other forms of mental or
physical coercion as a form of discipline of employees.
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(D) IAA and Manufacturers shall comply with all
applicable wage and hour Laws, including minimum wage,
overtime, and maximum hours. IAA and Manufacturers
agree to utilize fair employment practices as defined
by applicable Laws.
(E) IAA and Manufacturers shall comply with all
applicable environmental and other Laws.
(ix) During the period ending ▇▇▇▇▇ ▇▇, ▇▇▇▇, ▇▇▇ agrees
that Blondie may make on-site inspections of manufacturing,
packaging and distribution facilities, upon 24 hours prior
written notice to IAA, in order to monitor compliance with
applicable Laws. IAA shall obtain an agreement with each third
party Manufacturer and supplier to comply with the provisions
of Section 7(viii).
(x) IAA represents and warrants that:
(A) All Licensed Products manufactured, sold and
distributed hereunder will be merchantable and fit for the
purpose for which they are intended.
(B) The Licensed Products will conform at all times to all
applicable federal, state and local laws, rules,
regulations, ordinances and other enactments provided in the
Territory or otherwise applicable, and all applicable
industry standards, including but not limited to, those
relating to product safety.
(C) All Licensed Products, including all Packaging and all
other ancillary materials, will conform in all respects to
the samples approved by Licensor and that Licensee will not
distribute or sell any Licensed Products which are of a
quality or standard inferior to or different from the
approved quality. Notwithstanding the foregoing, the
parties hereto hereby acknowledge and agree that all of the
Licensed Products specifically identified by SKU's and
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listed in Exhibits B, D and F hereof have been and hereby
are approved for sale.
8.1 Subject to IAA's full and complete compliance with all
of its payment obligations set forth in Section 1 hereunder, upon
execution of this Settlement Agreement Blondie and its
representatives, agents, consultants, shareholders, officers,
directors, employees, heirs, devisees, legatees, affiliates,
successors and assigns ("Blondie Releasors") hereby fully and
forever release and discharge IAA and all of its representatives,
agents, shareholders, officers, directors, employees, heirs,
devisees, legatees, parents, affiliates, successors and assigns
("IAA Releasees") from any and all claims, demands, losses,
costs, damages, rights and causes of action, debts, liabilities
and obligations whatsoever, at law or in equity, which Blondie
ever had, now has or hereafter can, shall or may have for, upon,
or by reason of any matter, cause or thing, whether or not
previously asserted or assertable, known or unknown, other than
claims to enforce this Settlement Agreement.
8.2 In the event of a default in the payment obligations
set forth in Section 1 hereof, which is not cured in accordance
with Section 11 hereof, Blondie may either (a) invoke its
acceleration rights provided by Section 12 hereof and ▇▇▇ to
enforce such rights, whether under this Agreement, the Guaranty
or otherwise, or (b) declare the releases provided by this
Agreement to be rescinded, thereby restoring all rights, remedies
and claims of the parties as existed prior to entering this
Agreement, whether under the License Agreement or otherwise,
provided that any payments theretofore made under this Agreement
shall count towards any amounts ultimately found to be due and
owing to Blondie.
9. Subject to Blondie's complete and prompt performance of
all material obligations hereunder, upon execution of this
Settlement Agreement, IAA and its representatives, agents,
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consultants, shareholder, officers, directors, employees, heirs,
devisees, legatees, affiliates, successors and assigns ("IAA
Releasors") hereby fully and forever release and discharge
Blondie and all of its representatives, agents, shareholders,
consultants, officers, directors, employees, heirs, devisees,
legatees, parents, affiliates, successors and assigns ("Blondie
Releasees") from any and all claims, demands, losses, costs,
damages, rights and causes of action, debts, liabilities and
obligations whatsoever, at law or in equity, which IAA ever had,
now has or hereafter can, shall or may have for, upon, or by
reason of any matter, cause or thing, whether or not previously
asserted or assertable, known or unknown, other than claims to
enforce this Settlement Agreement.
10. Through March 31, 2006, Blondie, and its employees,
agents and representatives, shall have the right, at its own
expense, on reasonable notice to Innovo (but in no event need
such notice be more than ten (10) business days) and during
regular business hours, to examine, photocopy, and make extracts
from such books of account and other records, documents and
materials (including, but not limited to, invoices, purchase
orders, sales records, and reorders) to the extent needed to
confirm Innovo's compliance with Section 4(a) of the License
Agreement and this Settlement Agreement, which shall be
maintained and kept by License during the period specified
herein.
11. In the event of a claimed breach of any of the
provisions, representation, warranties or covenants contained in
this Agreement, the party claiming breach shall notify the
alleged breaching party (or parties) in writing (in accordance
with the notice provisions hereof) of the claimed breach and the
alleged breaching party (or parties) shall have five business
days to cure said breach, if curable.
12. In the event of a default in the payment obligations
set forth in paragraph 1, which is not cured in accordance with
paragraph 11 above, the unpaid balance shall be accelerated and
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shall become due and payable immediately together with interest
on the unpaid balance at the rate of 10% per annum (simple). In
the event that an action is required to be brought to enforce the
Agreement or for any breach, the prevailing party in any such
action shall be entitled to recover reasonable attorneys fees and
costs.
13. Each party shall defend, indemnify, save and hold
harmless the other, its shareholders, affiliates, and their
officers, directors, agents and employees from any and all third-
party claims, demands, liabilities, costs or expenses, including
reasonable attorneys' fees, resulting from the breach of each
party's duty, covenant, representations, or warranty contained in
this Agreement.
14. All notices, waivers and other communications hereunder
shall be in writing and shall be give by hand delivery to the
other party, by reputable overnight courier, or by certified
mail, return receipt requested. All notices, waivers, or other
communications shall be deemed delivered when actually received
if delivered by hand, one day after mailing if sent by overnight
courier and three days after mailing if sent by certified mail
and shall be addressed as follows:
If to Blondie:
Blondie Rockwell, Inc.
c/o Erving Wonder/Sanctuary
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Ms. ▇▇▇ ▇▇▇▇▇▇▇
Mr. ▇▇▇▇ ▇▇▇▇▇▇
With a copy to:
▇▇▇▇ ▇. ▇▇▇▇, Esq.
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
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If to IAA:
Innovo Azteca Apparel, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇ ▇▇▇▇▇▇
With a copy to:
▇▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
Akin Gump ▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to Innovo Group Inc.
Innovo Group Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇ ▇▇▇▇▇▇
With a copy to:
▇▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
Akin Gump ▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
15. This Agreement may be signed in counterparts and when
executed by all parties and the Guarantor shall constitute one
integrated agreement. A party's signature delivered by facsimile
transmission shall be deemed an original and is binding on such
party.
16. Each of the signatories hereto represents and warrants
to be duly authorized to fully and completely resolve the
disputes described in this Agreement, make the release contained
in this Agreement, and to bind the party on whose behalf the
signatory has agreed to act to the terms and conditions contained
in this Agreement.
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17. IAA further warrants and represents to Blondie as
follows: (a) the Owed Royalties accurately represents the total
amount of Royalties due and owing to Licensor based on actual
"Net Sales" as of April 24, 2004 ; (b) Exhibit B accurately
represents the SKUs constituting entire Summer Line; (c) Exhibit
D accurately represents the SKUs constituting the entire Other
Inventory; (d) IAA has not initiated nor permitted any third
party to initiate any trademark applications or other filings,
whether in the name of Blondie, IAA or otherwise, with respect to
the Brand, other than the Japan IP; (e) IAA has not granted any
sublicense agreements other than that referenced in the second
Whereas clause hereof, and (f) Exhibit F accurately represents
the SKUs constituting the entire Accessory Inventory.
18. The parties hereto represent and warrant that they have
not assigned, transferred, conveyed or released and discharged,
voluntarily or involuntarily, or by operation of law, to any
other entity an interest in the disputes which are the subject of
this Agreement.
19. This Agreement represents the entire agreement
concerning the matters herein, supersedes any and all prior
agreements concerning same, may not be amended except in a
writing referring specifically to this Agreement, and shall be
binding on the parties' successors and assigns. IAA shall not
assign this Agreement in any manner without the prior written
consent of Blondie.
20. The parties each acknowledge that they have not
executed this Agreement in reliance on any representation,
inducement, promise, agreement or warranty which is not contained
or referenced in this Agreement and that they have received
independent legal advice from their respective attorneys with
respect to their rights as well as the consequences of signing
this Agreement.
21. This Agreement shall be construed and interpreted
in accordance with the laws of the State of New York without
regard to any conflicts of law. The Courts in the County and
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State of New York shall have exclusive jurisdiction over any
action relating to the disputes or with respect to any claims
that might arise under or relating to this Agreement.
22. (a) The Blondie Releasors agree not to disparage,
criticize or make any negative comments about the IAA Releasees
that a Blondie Releasor knows or should reasonably have known
would be published in media outlets; provided, however, that this
undertaking shall not be applicable to any statement made in any
legal proceeding or government investigation, or to any
statements made which are consistent with the Press Release
(defined below). The IAA Releasors agree not to disparage,
criticize, or make any negative comments about the Blondie
Releasees that an IAA Releasor knows or should reasonably have
known would be published in media outlets; provided, however,
that this undertaking shall not be applicable to any statement
made in any legal proceeding or government investigation, or to
any statements made which are consistent with the Press Release
(defined below).
(b) The parties hereto agree to release a jointly
approved press release (the "Press Release") related to the
transactions contemplated hereunder, which shall be attached
hereto as Exhibit G.
23. (a) Except as provided in Section 23(b), IAA shall
indemnify and hold Blondie , and its subsidiaries and affiliates,
and their officers, directors, shareholders, employees,
representatives and agents, harmless against any and all
settlements, claims, demands, causes of action, judgments,
damages, losses, costs and expenses (including but not limited to
attorney's fees and litigation costs) of any kind whatsoever
actually or allegedly suffered by any person, persons, product,
customer or property arising in any way out of or incidental to,
any Licensed Products manufactured, sold or distributed by IAA or
suffered or incurred by Blondie in connection with any allegedly
unauthorized use of any trademark, patent, process, idea, method,
or device in connection with the Licensed Products except as
authorized by this Agreement or the License Agreement, and also
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from any claims, suits losses and damages arising out of alleged
defects in any Licensed Products manufactured, sold or
distributed by IAA or resulting from any failure of IAA, or any
person, firm, or entity acting under or through IAA, to comply
with the provisions of this Agreement or the License Agreement or
to comply with any applicable Laws including, without limitation
of the foregoing, accidental death, or injury to, persons or
damage to property, and claims of infringement of intellectual
property rights, including copyrights, trademark, trade dress
and/or patent claims. IAA shall maintain, through March 31,
2005, at its own expense, product liability insurance from a
recognized insurance company qualified to do business in the
State of New York, providing adequate protection with a limit of
liability (in addition to costs of defense) of not less than
Three Million ($3,000,000.00) Dollars per occurrence, insuring,
without limitation, against any claims, suits, losses or damages
arising out of any alleged defects in the Licensed Products,
including actions for negligence and strict liability in tort.
Said product liability insurance shall be issued by a company
reasonably satisfactory to Blondie, and a certificate evidencing
the paid policy naming the Licensor as an insured party will be
submitted to Blondie by IAA upon written request of Blondie.
Said policy will provide that the insurer may not terminate it or
materially modify it without thirty (30) day's prior written
notice to Blondie. Payment for any indemnification due
hereunder will be made on demand. Excluded from this indemnity
shall be all obligations for indemnity arising out of claims that
IAA's use of the Brand, strictly in accordance with the terms of
this Agreement and/or the License Agreement, constitutes an
infringement or like violation of intellectual property rights of
others.
(b) Blondie shall indemnify, defend and hold IAA and
its subsidiaries and affiliates, and their officers, directors,
shareholders, employees, representatives and agents, harmless
against any and all claims, settlements, judgments, damages,
losses, costs and expenses (including but not limited to
<17>
reasonable attorney fees and litigation costs) incurred by IAA
solely as a result of any claim by any person, firm or entity
that IAA's use of the Brand strictly in accordance with this
Agreement and/or the License Agreement infringes upon any rights
granted to such person, firm or entity by Blondie, to the extent
such claim arises in a jurisdiction that is covered by Blondie's
representations and warranties as specifically set forth in
Section 9(c)(ii) of the License Agreement, and solely in
connection with advertising and promotional materials that are
developed or purchased by Blondie. IAA shall not, however, be
entitled to any recovery for lost profits. Additionally, if by
reason of any claims referred to in this subsection IAA is
precluded from selling any stock of Licensed Products or
utilizing any materials in its possession or which come into its
possession by reason of any required recall, Blondie shall be
obligated to purchase such licensed Products and materials from
Licensee at their out-of-pocket cost to IAA, excluding overheard,
but Blondie shall have no other responsibility or liability with
respect to such Licensed Product or materials.
(c) Any party claiming a right to indemnification
under this Section 23 ("Indemnitee") shall give prompt written
notice to the other party ("indemnitor") of any claims or legal
proceeding which may give rise to such right to indemnification
(a "Claim"). Without limiting the foregoing, IAA agrees to give
Blondie written notice of any product liability Claim made
against IAA with respect to any Licensed Product within fifteen
(15) days of IAA's receipt of the Claim. Without limiting the
foregoing, IAA agrees to give Blondie written notice of any
product liability Claim made or suit filed with respect to any
Licensed Product, any investigations or directives regarding the
Licensed products issued by the Consumer Product Safely
Commission ("CPSC") or other federal, state or local consumer
safety agency, and any notices sent by IAA to, or received by
Blondie from, the CPSC or other consumer safety agency regarding
the Licensed Products within ten (10) days of IAA's receipt or
promulgation of the Claim, suit, investigation, directive, or
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notice. Without limiting the foregoing, IAA agrees not to
communicate with the press regarding any product liability Claim,
and not to confirm or deny any information relating to such Claim
without Blondie's prior written consent. The indemnitor shall
have the right to defend any Claim or action at its sole cost and
expense with counsel of the indemnitor's choice reasonably
satisfactory to the indemnitee. The indemnitee will at all times
cooperate in all reasonable respects with the indemnitor and
counsel in the conduct of the defense of any Claim or action
giving rise to indemnification hereunder. Notwithstanding
anything to the contrary herein, IAA will in no event have the
right, in any Claim or action or proceeding hereunder, to settle
any claims or issues relating to any Trademarks or the rights to
ownership or utilization thereof.
(d) For purposes of this Agreement the term "Licensed
Products" shall include all Licensed Products as defined by the
License Agreement, as well as the Summer Line, Other Inventory,
Accessory Inventory and Excess Summer Inventory.
24. IAA and Blondie agree to continue negotiating in good
faith a potential new license covering the Brand but limited to
accessories (the "Accessory License"), provided, however, that
nothing herein shall prevent Blondie from granting the Accessory
License or any other license or right with respect to the Brand
to any other party at any time; further provided, that Blondie
shall not grant the Accessory License to any party other than IAA
prior to thirty (30) days following execution hereof.
Notwithstanding the foregoing, Blondie shall not be in breach of
this Section 24 in the event that Blondie or an affiliate thereof
enters into a joint venture for the sale of products utilizing
the Brand, so long as the joint venture does not grant a third
party the right to sell accessories utilizing the Brand.
[remainder of page intentionally left blank, signature page to
follow]
<19>
IN WITNESS WHEREOF, the parties hereto have executed this
agreement as of the date first above written.
INNOVO AZTECA APPAREL, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
-------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
Title: CEO
BLONDIE ROCKWELL, INC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇
----------------
Name: ▇▇▇▇ ▇▇▇▇▇▇
Title: Authorized Signatory
INNOVO GROUP, INC., as to
Section 1(d)only
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
-------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
Title: CEO
<20>
EXHIBIT A
CUSTOMER LIST
<21>
EXHIBIT A-1
CUSTOMER LIST
<22>
EXHIBIT B
SKU'S RESENTING THE ENTIRE SUMMER LINE
<23>
EXHIBIT C
TRADEMARK APPLICATIONS
<24>
EXHIBIT D
SKU'S REPRESENTING THE OTHER INVENTORY
<25>
EXHIBIT E
GUARANTY AGREEMENT
<26>
EXHIBIT F
SKU'S REPRESENTING THE ENTIRE ACCESSORY INVENTORY
<27>
Exhibit G
Joint Press Release
<28>
