TRADEMARK LICENSE AGREEMENT
Exhibit 10.9
THIS AGREEMENT (hereinafter “Agreement”) is effective as of November 27, 2002
(hereinafter “Effective Date”) by and between:
Xxxxx Xxxxxxxxxxx Inc., a corporation organized and existing under the laws of the State of
California, located at 0000 Xxxxxx Xxxxxx, Xxxxxxxx Xxxx, Xxxxxxxxxx 91755(hereinafter
"LICENSOR”), and The Fashion House, Inc., a corporation organized and existing under
the laws of the State of Delaware, located at 000 Xxxxx Xxxxxxxxx Xxxxxxxxx, Xxxxx 000, Xxxxxxx
Xxxxx, Xxxxxxxxxx 00000 (hereinafter “LICENSEE”).
WHEREAS, LICENSOR is the owner of the trademark “Xxxxxxx Xxxxx”, and certain simulations and
variations thereof as set forth on Schedule I annexed hereto and incorporated herein by reference
(hereinafter referred to collectively as the “Marks”);
WHEREAS, LICENSEE desires to obtain a license from LICENSOR to use the Marks on the
Licensed Products (as hereinafter defined) in the Territory (as hereinafter defined);
WHEREAS, LICENSEE acknowledges that the Marks and associated goodwill are of great
significance and value to LICENSOR and that strict adherence to the quality control standards
provided in this Agreement is essential to the maintenance of the significance and value of the
Marks and associated goodwill; and
WHEREAS, LICENSEE pledges its active cooperation in and support of LICENSOR’S marketing
programs, the spirit and intent of which are to maintain and enhance the value and significance
of the Marks throughout the world.
NOW, THEREFORE, in consideration of their mutual covenants, undertakings and promises
contained herein, and other good and valuable consideration, the receipt and adequacy of which the
parties hereby acknowledge, the parties agree as follows:
1. DEFINITIONS
In this Agreement, the following terms shall have the meanings set forth below:
1.1 “Competitor” shall mean those trademarks, trade names or other identifying words or
symbols of any third party clothing designer which are used on products which are similar to the
Licensed Products in category, image, quality and price points, and which are sold through
distribution channels of the same like and kind as the Licensed Products.
1.2 “Inventory” shall be any and all remaining (i.e. on hand or in stock) Licensed Products
and tangible items bearing the Marks, including but not limited to, raw material, work in process,
labels, tags, etc.
1.3 “Licensed Product(s)” shall be women’s shoes and boots, including fashion sports shoes but
expressly not including athletic shoes.
1.4 “Net Sales” shall mean the gross dollar amount of all sales by LICENSEE of the Licensed
Products (hereinafter “Gross Sales” ) less the following items insofar as they are separately
stated but included in the amounts invoiced to customers: usual trade discounts actually taken,
returns and allowances. No costs incurred in the manufacture, sale, distribution, advertisement,
or promotion of the Licensed Products shall be deducted from Gross Sales or from any Royalty
(defined below) payable to LICENSOR, except as otherwise expressly set forth herein. Local, State
or Federal taxes of any nature whatsoever including, without limitation, tariffs, sales tax, use
taxes, value added and inventory taxes, shall not be included in Gross Sales, or deducted from
Gross Sales for purposes of computing Net Sales. Net Sales shall include the
sale of Secondary Goods (as defined below), but shall not include the sale of samples to
LICENSEE’S Licensed Product sales force.
Except as otherwise expressly set forth herein, any sales or transfers of Licensed Products
made by LICENSEE to any person or entity that does not deal at arm’s length with LICENSEE shall
be computed, for the purpose of determining Net Sales, at an amount equal to the price at which
LICENSEE would have invoiced or charged purchasers who deal at arm’s length with LICENSEE and all
Royalties shall be paid to LICENSOR thereon.
1.5 “Notice Address” shall be the addresses set forth for the parties at the beginning of this
Agreement, or such other addresses as a party may hereafter designate to the other party in writing
from time to time. At no time shall LICENSEE have a notice address outside of the United States.
1.6 “Territory” shall be Worldwide. Licensee will have 24 months from the effective date of
this License Agreement to exploit the Japanese market or Licensor shall have the right to assign
another Licensee for Japan.
1.7 “Use” (or “Used,” “Uses” or “Using”) shall mean (1) the placement of the Marks on the
Licensed Products; and (2) the use of the Marks in the broadest sense of publication, that is any
visual and aural form which to the average person would indicate that the Licensed Products are
associated with the Marks, including, but not limited to, print media, labels, tags, point of sale
and showroom displays, signage, packaging, stationery, business cards and forms, and electronic
media now known or hereafter devised, and the form and content of the subject matter associated
with all the aforementioned; and (3) all other uses of the Marks approved by
LICENSOR in writing prior to the use.
1.8 “Material Term” shall include any numbered provision within the paragraphs headed
“Minimums and Payment,” “Reporting, Accounting and Auditing,” and “Quality Standards,” a breach of
any of which shall be deemed “material.”
1.9 “Advertising” shall include expenditures made in connection with the public promotion,
through standard media, of the Licensed Product for sale and
distribution, and shall not include coop advertising and sales promotions. “Advertising” shall not include any
expense incurred in connection with the preparation and/or construction or dismantling of a
booth at any trade show, or entertainment expenses.
1.10 “Close-Out Sales” shall mean Sales of Licensed Merchandise for less than 50% of its
regular wholesale price made to the following approved retailers: Xxxxxxxx’x, X.X.Maxx,
Xxxxxxx’x, Xxxx Stores, Syms, Daffy’s, Century 21, Filene’s Basement, and Luggage Factory
Outlet, as well as to such other discount retailers as LICENSOR shall hereafter approve in its
sole discretion in writing.
1.11 “Season” shall mean any of four seasons. Such seasons are: February (Fall),
June(Resort), August (Spring), December (Prefall).
2. TERM
2.1 TERM: Subject to the provisions of Article 1 I (Termination) herein, this Agreement
shall continue in force for Five (5)years from the Effective Date . LICENSEE shall have the
option to extend the term of this Agreement for an additional period of Two (2) years provided:
(i) LICENSEE is in full compliance with all the terms and conditions of this Agreement
immediately prior to the exercise of the option to renew, and (ii) LICENSEE gives LICENSOR
notice of its desire to renew at least six (6) months prior to the end of the Initial Term,
Unless otherwise agreed to by written amendment, the Option Term, if any, shall be upon the same
terms and conditions as provided for in this Agreement, excepting there shall be no further
extension of the Initial Term without mutual agreement of the parties. Should LICENSOR at any
time exercise its right under this Agreement to terminate the rights of LICENSEE, all options to
extend the term shall likewise be terminated.
2.2 LICENSED TERM, YEAR, AND QUARTER DEFINED: The Initial Term, Option Term, if any, and the
Winding-Up Period (defined below), if any, shall collectively be referred to as the “Licensed
Term” or “Term.” The quarters of the Term shall be every three (3) month period.
3. GRANT OF LICENSE
3.1 LICENSE: Subject to the provisions of this Agreement,
LICENSOR grants to LICENSEE, and LICENSEE accepts, an exclusive, nontransferable license to
Use the Marks in the Territory only as specifically provided for in this Agreement including,
but not limited to, the right to produce, sell and distribute the Licensed Products (hereinafter
“License”).
3.2 BEST EFFORTS: During the Licensed Term, LICENSEE shall use its best efforts to exploit the
License granted herein throughout the Territory, including, but not limited to, offering for sale
Licensed Products so that they may be sold to the consumer on a timely basis; coordinating the
characteristics and marketing of its Licensed Products with the products of LICENSOR’S other
licensees; cooperating with LICENSOR and its licensees’ marketing and sales programs; and offering
a collection of the Licensed Products for sale in the Territory at all times for each and every
season
3.3 ADDITIONAL RIGHTS TO LICENSE:
(A) LICENSEE acknowledges that LICENSOR has previously licensed the use or Use of the Marks
in connection with products other than the Licensed Products to third parties and that LICENSOR
shall grant additional licenses in the future for territories or products that are not presently
licensed and that are not within the scope of this License.
(B) For the purpose of this Section 3.3(B), when the term “LICENSEES” or “Licensees” is used,
it is intended that said terms mean the whole or part of the whole group of all of LICENSOR’S
licensees, which includes LICENSEE. LICENSEE hereby acknowledges that, due to the nature of the
industry, precise definition of the scope of goods covered as Licensed Product is sometimes not
possible. LICENSEE therefore agrees to accept at all times the sole judgment of LICENSOR with
respect to whether a particular style, design or product is a Licensed Product within the scope of
the License. LICENSEE agrees that it will not market, either directly or indirectly, any style,
design or product which LICENSOR, in its sole discretion, determines is not a Licensed Product
within the scope of the License. LICENSEE further agrees that in the event of a dispute between any
of the Licensees arising out of or based upon a claim that a product being manufactured or sold as
a Licensed Product by one “Licensee” infringes upon the license granted by LICENSOR to another
“Licensee,” regardless of the legal grounds upon which the cause of action or claim is based,
LICENSOR shall reasonably and consistent with the terms and spirit of this License investigate the
claim and LICENSEE shall cooperate in all respects with said investigation. LICENSOR shall then
submit to any affected Licensee a written determination, which may include a procedure for
mitigating any losses that might occur. Said determination and procedure shall be conclusive as to
all parties including LICENSEE, and all shall be bound thereby without legal recourse.
OPTION: In the event Licensor decides to License Men’s footwear Licensor shall advise Licensee in
writing of pending negotiations with a third party. Licensee shall come up with an acceptable
proposal. If an agreement cannot be reached within 30 days, Licensor
shall have the right to enter into License for men’s shoes with a 3rd party.
4. MINIMUMS AND PAYMENT
4.1 MINIMUM SALES VOLUMES: If LICENSEE’S Net Sales in the Territory do not reach the
following dollar volume levels for each Year of the Licensed Term (hereinafter “Minimum Sales
Volumes”), then LICENSOR shall have the right, but not the obligation, to terminate this
Agreement:
The Minimum Sales Volume shall be the greater of those figures established below or 75% of the
average of the actual sales for the preceding two years.
Year One: (2003) |
$ | 500,000 | ||||||
Year Two: (2004) |
$ | 625,000 | ||||||
Year Three: (2005) |
$ | 780,000 | ||||||
Year Four: (2006) |
$ | 975,000 | ||||||
Year Five: (2007) |
$ | 1,218,750 | ||||||
Option Terms |
||||||||
Year Six: (2008) |
$ | 1,525,000 | ||||||
Year Seven: (2009) |
$ | 1,906,250 |
Notwithstanding the preceding, LICENSEE may avoid termination of this Agreement for failure
to meet the Minimum Sales Volumes in a given Year by paying the GMTR due for that Year as
defined below in Sections 4.2 and 4.3.
4.2 TRADEMARK ROYALTY:
(A) As a royalty, LICENSEE shall pay to LICENSOR a sum equal to seven percent (7%) of Net
Sales of the Licensed Products, except, as set forth in Paragraph 4.4 hereinbelow, the
Trademark Royalty on Close-out goods shall be three percent (3%) (hereinafter “Trademark
Royalty”) on a quarterly basis no later than the twentieth (20th) day of the month immediately
following the quarter in which said Net Sales are made.
(B) GUARANTEED MINIMUM TRADEMARK ROYALTY: Whether or not LICENSEE achieves the required
Minimum Sales Volumes, LICENSEE shall pay to LICENSOR (as set forth in 4.2(C) below) the greater
of either the Trademark Royalty or the Guaranteed Minimum Trademark Royalty (hereinafter “GMTR”)
as follows:
The Minimum Trademark Royalty shall be the greater of those figures established below or 75% of the
average of the actual royalty for the preceding two years.
Year One: (2003) |
$ | 35,000 | ||||||
Year Two: (2004) |
$ | 43,750 | ||||||
Year Three: (2005) |
$ | 54,600 | ||||||
Year Four: (2006) |
$ | 68,250 | ||||||
Year Five: (2007) |
$ | 85,300 | ||||||
Option Terms |
||||||||
Year Six: (2008) |
$ | 106,750 | ||||||
Year Seven: (2009) |
$ | 133,400 |
(C) Subject to the provisions of paragraph 4.5 below, the GMTR shall be paid in two equal
payments for each year (on January 1st and June 1st), with the exception of Year One where one
payment of $17,500 shall be made on February 2, 2003, and a second payment of $17,500 shall be
paid on June 1, 2003.
(D) All royalty payments (whether Trademark Royalty. Advertising Payment, or GMTR, herein
collectively referred to as “Royalty” or “Royalties”) shall be sent to Licensor via overnight
courier together with the Quarterly Report, defined hereinbelow, and shall be paid automatically
by LICENSEE without billing therefore by LICENSOR.
(E) LICENSOR shall have the right to purchase such styles and quantities of Licensed Product
for its wholly owned retail stores as it desires. LICENSOR’S cost for all such purchases shall be
discounted Twenty Percent (20%) from LICENSEE’S regular wholesale prices. No royalty shall be due
to LICENSOR on such sales. Such sales do not count toward minimum sales volume. Notwithstanding
anything to the contrary contained herein, LICENSOR shall have no obligation to purchase or sell
any Licensed Product.
4.3 ADVERTISING EXPENDITURE: LICENSEE must spend, at a minimum, three percent (3%) of Net
Sales on advertising and/or public relations related to the Licensed Products (“Advertising
Funds”). LICENSEE shall arrange for at least one print advertisement for the Licensed Products in a
prestigious magazine with national distribution such as Glamour, Cosmopolitan, Elle, WWD, or
Mademoiselle annually during the Term. For the first year of the Term, LICENSEE shall spend at
least Fifteen Thousand ($15,000) Dollars as Advertising Funds. All Advertising Funds shall be in
addition to all other payments due LICENSOR hereunder. LICENSOR shall have the right to approve all
copy, layout and artwork of all advertisements placed by LICENSEE for the Licensed Products.
LICENSEE shall forward copies to LICENSOR sufficiently in advance of
the date of use for
LICENSOR to review. In no event will any advertising or promotional piece for the Licensed Products
be disseminated or utilized by LICENSEE without LICENSOR’ S advance written approval. Any earned
advertising percentage not spent during the year shall be paid directly to Licensor.
4.4 CLOSE-OUT SALES (Royalty): The reduced Trademark Royalty on Close-Outs shall be three
percent (3%). Licensee is only entitled to these reduced royalty rates on a maximum of twenty
percent (20%) of Gross Sales per Year of the Licensed Term. On sales of Close-Outs in excess of
this twenty percent (20%) limit, LICENSEE, shall pay the standard Trademark Royalty percentages
as set forth in Section 4.2 above.
Each quarter LICENSEE shall provide LICENSOR with an accounting of the sales of Close-Outs
on the Quarterly Report for said quarter. If any such accounting reveals that LICENSEE has paid
the reduced royalty on more than twenty percent (20%) of Gross Sales from the beginning of that
Year through the end of the relevant quarter, LICENSEE shall immediately pay to LICENSOR the
amount of the calculated underpayment of Royalty. Should any such payment result (as of the end
of any Year) in an overpayment of Royalty by LICENSEE, LICENSOR shall credit the overpayment to
LICENSEE against the next Royalty payment due.
4.5 ADVANCE TRADEMARK ROYALTY: In addition to all other payments required
hereunder, LICENSEE, shall pay to LICENSOR, an advance Trademark Royalty (hereinafter
“Advance Trademark Royalty”). This Advance Trademark Royalty shall be credited
against the GMTR due for the year of the Initial Tenn. The balance of the GMTR shall
be paid in accordance with the provisions of paragraph 4.2(c) above.
5. REPORTING, ACCOUNTING AND AUDITING
5.1 QUARTERLY REPORTS: No later than the twentieth (20th) day of the month
immediately following each quarter of the Licensed Term, LICENSEE shall submit to
LICENSOR a written report on a form provided by LICENSOR (see Exhibit A) from
time to time which shall include a written statement of LICENSEE’S inventory and Net
Sales during such quarterly period showing the number and type of Net Sales of each
Licensed Product, a calculation of the Royalty due based thereon, and all other
information requested by LICENSOR in this Agreement or Exhibit A (hereinafter
“Quarterly Report”). Each Quarterly Report shall be accompanied by the remittance to
LICENSOR of the Royalties shown to be due on the report, shall be sent via overnight
courier, and shall be certified as correct by the Chief Executive Officer or Chief
Financial Officer of LICENSEE or such other officers or employees of LICENSEE as shall
be designated by LICENSOR. In the event of an inquiry by LICENSOR regarding any such
report, LICENSEE shall comply promptly with LICENSOR’S reasonable request for
information in the manner requested. Within twenty (20) days after any expiration or
termination of this Agreement, LICENSEE shall provide LICENSOR a Quarterly Report for
the last whole or partial quarterly period during the Term, and LICENSEE shall continue
to submit such reports and all Royalty payment obligations to LICENSOR within twenty
(20) days following each thirty (30) day period during the Winding Up Period, if any.
5.2 LATE PAYMENTS: It is specifically understood by LICENSEE that, with respect to
royalty payments and accounting statements, time is of the essence and any payment due
pursuant to this Agreement (including, but not limited to all Royalties, trade show
bills, and other bills for expenses or services agreed upon by LICENSEE, etc.), that is
late shall bear interest from seven (7) days after the date that notice of payment
default is received from LICENSOR, unless the same is cured within the seven (7) day
period, until remittance thereof to LICENSOR at the prime rate of interest established
by EAB — European American Bank of New York, New York, from time to time during said
period, plus two percent (2%) per annum or the highest rate allowed by law, which is
greater. The operation of this clause is without prejudice to any other right or remedy
LICENSOR may have pursuant to the terms of this Agreement or the law. LICENSEE shall not
set off any amounts against any payment of its Royalties or bills due LICENSOR
unless agreed in writing by LICENSOR prior thereto.
5.3 PAYMENT DEFAULT: The acceptance of late payments hereunder, or the acceptance of
payment without a Quarterly Report or with an incomplete or incorrect Quarterly Report,
or any restrictive endorsement (1) shall not constitute a waiver of timely payments, (2)
shall not cure any default which might exist, and (3) shall be without prejudice to any
of the rights or remedies LICENSOR may have hereunder.
In the event that a default is declared and the rights of LICENSEE under this
Agreement are terminated, all payments required hereunder, including, but not limited
to, Trademark Royalty and Advertising Payments on past sales, and all GMIR for the
Licensed Term, unpaid bills, etc., shall be immediately due and payable to LICENSOR, in
full, plus any interest due thereon at the rate prescribed in 5.2 above.
5.4 PROPER BOOKS AND RECORDS: LICENSEE shall maintain separate and appropriate
books of account or computer records relating to the Licensed Products, in accordance
with generally accepted accounting principles (including, without limitation, a sales
journal, sales return journal, cash receipt book, general ledger, and to the extent
reasonably available, purchase orders, cutting tickets, and Inventory records) and
shall make accurate entries concerning all transactions relevant to this Agreement. The
Licensed Products shall be assigned unique style numbers which shall be identical to
the style numbers utilized to identify each respective Licensed Product in all
Licensee’s books and records and computer records, and on all sales invoices and
related documents. LICENSEE’S books and records shall at all times during the Licensed
Term and for three years (3) thereafter (or in the event of a dispute between the
parties hereto, until three (3) years after said dispute is resolved, whichever is
later) be kept at LICENSEE’S Notice Address. LICENSEE shall not change the address at
which the books and records are
kept without prior written notice to LICENSOR.
5.5 ANNUAL FINANCIAL STATEMENTS: No later than one hundred and twenty (120) days
after each December 31st during the Term, LICENSEE shall furnish LICENSOR with its
audited annual financial statements (if they are prepared in its ordinary course of
business) prepared in accordance with generally accepted accounting principles
consistently applied. In the event an audited statement is not prepared by LICENSEE,
LICENSEE shall furnish LICENSOR within ninety (90) days after LICENSEE’S fiscal year end
with its unaudited financial statements, reviewed by an independent certified public
accountant and certified to be correct by the Chief Executive Officer and Chief Financial
Officer of LICENSEE or by such other officers or employees of LICENSEE as LICENSOR shall
designate.
5.6 RIGHT TO AUDIT: Upon not less than ten (10) day’s notice to LICENSEE, LICENSOR,
at its expense, shall have the right during the Licensed Term and for three (3) years
thereafter at any time during regular business hours, not more frequently than one time
annually,. to have a qualified accountant selected by LICENSOR audit the records of
LICENSEE to the extent necessary to verify LICENSEE’S statements and payments of
Royalties, including the right to examine, photocopy and make extracts from such records.
Such records shall be made available to LICENSOR’S accountant at LICENSEE’S Notice
Address stated above. LICENSEE shall cooperate with and assist LICENSOR’S accountant for
the purpose of facilitating such audit. The provisions of this paragraph shall survive
the termination or expiration of this Agreement.
If, as a result of such audit, LICENSOR’S accountant determines that the amount of
Royalties due was greater than the amount reported by LICENSEE in any Quarterly Report
furnished pursuant to Section 5. 1, LICENSOR shall promptly furnish to LICENSEE a copy of
the report of its accountant setting forth the amount of the deficiency showing, in
reasonable detail, the basis upon which such deficiency was determined. LICENSEE shall
promptly remit to LICENSOR a sum equal to such deficiency, together with interest thereon
at the rate prescribed in Section 5.2 from the date such Royalty was due until the date of such remittance. In addition,
if the audit reveals underpayment by more than three percent (3%) of the
Royalties in any quarterly period, LICENSEE shall pay to LICENSOR the cost of such
audit.
If, as a result of such audit, LICENSOR’S accountant determines that the amount
of Royalties paid was greater than the amount actually due, such overpayment will be
promptly refunded to LICENSEE.
5.7 PAYMENT CURRENCY: All calculations and payments required under this Agreement
shall be in United States Dollars.
6. QUALITY STANDARDS
6.1 QUALITY STANDARDS: LICENSEE acknowledges that the continued maintenance of
the great significance and value of the Marks and their associated goodwill, the
continued maintenance of LICENSOR’S quality standards, and the merchandising and
coordination of the products associated with the Marks are all essential elements of
the License granted herein. LICENSEE agrees that the nature and quality of all Uses of
the Marks by LICENSEE shall conform to standards set by, and be under the control of,
LICENSOR. All Uses, and any later permitted use as set forth in Section 1.7 above,
shall require the prior written consent of LICENSOR. (See Approval Procedure Section
6.2 below).
The Marks shall be used only in the form set forth in Schedule 1. Upon written
notice, LICENSOR may change, at its sole discretion, such approved form of the Marks.
LICENSEE shall comply with said change as soon as all remaining Inventory and any
Inventory contracted for prior to such notice are Used in connection with the
Licensed Products, but in no event shall they be Used beyond six (6) months from the
date of notice. This Agreement shall automatically apply to such later developed
trademarks which, at the sole option of LICENSOR, are specifically instructed for a
Use by LICENSEE. The term “Xxxx” as used in this Agreement is intended to include all
such later developed trademarks which LICENSEE has been instructed to Use under the
terms of this Section. The “Showing” shoes shall be provided free of charge to
Licensor four (4) times per year as follows: February(Fall) and August (Spring) not
exceeding(80) pairs for each collection; June (Resort) and December
(Prefall) not exceeding (30) pairs for each collection. Shoe sizes shall be
between 7 1/2 to 11 to fit models.
6.2 APPROVAL PROCEDURE: Before offering for sale any product LICENSEE intends
to offer as a Licensed Product, and before committing to a Use of the Marks,
LICENSEE shall obtain LICENSOR’S prior written approval of such product and/or Use.
The Licensed Product and Marks Use approval process is critical to the License
granted herein, and must be strictly adhered to at all times by LICENSEE. Once
LICENSOR has approved any Licensed Product or Use, the approval shall remain in
effect unless LICENSOR notifies LICENSEE to the contrary in writing. LICENSOR shall
notify LICENSEE of its approval or disapproval within five (5) business days after
its receipt of a product.
6.3 MAINTENANCE OF AND CONTINUED QUALITY CONTROL:
(A) LICENSEE agrees to cooperate with LICENSOR in facilitating LICENSOR’S control of
the nature and quality of the Licensed Products, to permit reasonable, periodic
inspection of LICENSEE’S operations, at reasonable times and with reasonable notice, and
to supply LICENSOR with specimens of all Uses of the Marks as set forth in this
Agreement, and upon request of LICENSOR. LICENSEE shall provide LICENSOR, when and if
requested for the purpose of quality control or for investigating an issue involving the
Marks, with the name, address, telephone number and name of principals of any plants,
factories or other manufacturing facilities of any third party (hereinafter “Third Party
Facility”), and any symbol or number a Third Party Facility may use or be required to use
to identify itself as a source of goods. In the event the Licensed Products or components
thereof are manufactured or displayed other than by LICENSEE, LICENSEE shall at all times
obtain compliance with this Article 6.
(B) In Order for LICENSOR to determine and assure itself that LICENSEE is
maintaining the quality control standards set forth by LICENSOR by manufacturing the
Licensed Products in accordance with the samples approved by LICENSOR as per the approval
procedure set forth in 6.2 above, within ten (10) business days after the commencement of
each Licensed Product’s first production run, LICENSEE shall deliver to LICENSOR not less
than one (1) pair of each first production run of Licensed Product without charge.
LICENSEE shall also deliver to LICENSOR, promptly upon LICENSOR’S request from time to
time, but not more than four (4) times per year, a reasonable amount of specific Licensed
Products without charge for quality control checking. If at any time, LICENSOR reasonably
determines, in its sole discretion, that a Licensed Product is of lesser quality than the
sample approved pursuant to Section 6.2 above, LICENSOR shall give LICENSEE written
notice thereof, setting forth specifically the elements of variation in quality and
reasons for disapproval. LICENSEE shall immediately cease production and distribution of
that Licensed Product until its quality is improved to the sole reasonable satisfaction
of LICENSOR; however, in no case shall LICENSEE have longer than thirty (30) days to cure
said defect. Repeated failures by LICENSEE, after notice, to correct a recurring Licensed
Product defect, shall constitute cause for immediate termination of this Agreement by
LICENSOR with no right to cure by LICENSEE.
(C) In the event that the standard, style, appearance or quality of any Licensed
Product ceases to be acceptable to Licensor, Licensor shall have the right, exercisable in
its reasonable discretion, to withdraw its approval of
such Licensed Products. Within thirty (30) days of receipt of written notice from
Licensor of its determination to withdraw such approval, Licensee shall either correct the
deficiencies in the Licensed Products to the satisfaction of Licensor or immediately cease
the use of the Xxxx(s) in connection with the manufacture, distribution, sale, marketing,
advertising, merchandising, publicity and promotion of such Licensed Products except that
work in process may be completed and finished inventory may be sold to customers. Upon
request, Licensee shall provide Licensor with a list of all work in progress and all
completed inventories related to such Licensed Products. Licensor’s election to withdraw
approval from any or all Licensed Products shall not relieve Licensee from its obligation
to pay royalties on any Sales of such Licensed Products theretofore or thereafter made, as
permitted herein.
6.4 SECONDARY GOODS: LICENSEE shall not market any of the Licensed Products as
seconds or irregulars (“Secondary Goods”): (a) unless such Secondary Goods do not
constitute, during any four (4) consecutive Quarterly Periods, in excess of five percent
(5%) of the total volume of Licensee’s production of the Licensed Products during such
Quarterly Periods; or (b) unless the Xxxx(s) are obliterated or rendered illegible to the
reasonable satisfaction and approval of LICENSOR, which approval must be in writing; or
(c) unless LICENSOR otherwise specifically authorizes LICENSEE to sell such Secondary
Goods with the Xxxx(s) thereon, strictly in compliance with LICENSOR’S instructions.
Notwithstanding LICENSEE’S sale of such products, such sales shall be deemed Net Sales
and entitle LICENSOR to the payment of the Percentage Royalty related thereto.
6.5 COMPLIANCE WITH LAWS: Any and all Uses and manufacture of the Licensed Products
shall be in compliance with all necessary governmental approvals and all applicable laws,
rules and regulations, including, but not limited to, Title 29, section 212 of the United
States Code and the Xxxxxxxx-Xxxx Warranty Act as to express and implied warranties.
LICENSEE shall pretest all proposed and approved Licensed Products and shall cause
truthful labeling regarding care, maintenance, and use to be affixed to the Licensed
Products, along with any other disclosures required by law or reasonably required by
LICENSOR (including, but not limited to, copyright and trademark ownership notices which
shall be included with any Use of the Marks at all times, the legend “Manufactured by
[name of LICENSEE] under license from Xxxxxxx Xxxxx” on all Licensed Products [hangtags,
labels or packaging as appropriate] to disclose the relationship established by this
Agreement, and any legally required Xxxxxxxx-Xxxx warranty notices clearly identifying
LICENSEE as responsible for the warranty). LICENSEE shall immediately inform LICENSOR in
writing of any material complaint by any consumer or governmental body relevant to the
Licensed Products, and the status and resolution thereof. LICENSEE shall move
expeditiously to resolve any such complaint.
6.6 PRODUCTION/IMPORTATION:
(A) Licensed Products may only be manufactured by LICENSEE at a facility it does not
own or lease if and only if it notifies LICENSOR that such third-party manufacturer shall
be retained, and further submits to LICENSOR such information, specifications and samples
as LICENSOR requests. LICENSOR reserves the right to reject, in the exercise of its
reasonable discretion, any such third-party manufacturer, and may impose reasonable
inspection and supervision fees on approved manufacturers to cover LICENSOR’S costs
incurred in making such determination. Such inspection and supervision fees shall be paid
by LICENSEE.
(B) LICENSOR may demand that LICENSEE impose reasonable restrictions on such
third-party manufacturers manufacture of products relating to the Xxxx(s)s and/or designs
provided by the LICENSOR, including, but not limited to, having such manufacturers and
their key production managers execute confidentiality and anti-pirating agreements in
connection with same.
(C) Any Licensed Product caused to be manufactured by LICENSEE outside the United
States shall be imported into the United States under the name of LICENSEE and only
LICENSEE. Any and all Licensed Products imported under a name other than that of LICENSEE
shall be deemed counterfeit by LICENSOR and LICENSEE, and may be so represented to U.S.
Customs Service and prosecuted accordingly.
In order to prevent the importation of counterfeit merchandise, LICENSEE shall use a customs
broker for all Licensed Merchandise imported under this Agreement. LICENSEE shall promptly notify
LICENSOR of the identity of each such customs broker as LICENSEE shall use from time to time during
the Term for Licensed Merchandise imported hereunder. LICENSOR shall not be liable for any acts of
or transactions with said broker.
LICENSEE agrees that it will not engage in “unlawful transshipment” of merchandise,
as that term is defined by the U.S. Customs Service, or utilize manufacturers that
engage in such “unlawful transshipment.” LICENSEE further agrees that all merchandise
manufactured outside the United States will have labels permanently affixed thereto that
reflect the actual “country of origin” as that term is defined by the U.S. Custom
Service.
6.7 ALL APPROVALS SEASONAL: LICENSOR’S approval of any materials for use in
connection with the manufacture, distribution, sale, marketing, advertising,
merchandising, publicity and promotion of any particular Season’s Licensed Products
shall constitute approval for such use in
connection with such Season unless LICENSOR notifies LICENSEE to the contrary in
writing.
6.8 LICENSEE acknowledges and agrees that although LICENSOR may conduct reviews of
various items for LICENSEE, including, without limitation, Licensed Products, prototypes
or samples and may make various recommendations to LICENSEE, regardless of whether such
reviews or recommendations are required or voluntary under the terms of this Agreement,
LICENSOR shall have no responsibility or liability for the operation of LICENSEE’S
business or its manufacturing, distribution, sales or facilities used in connection
therewith. Nor shall LICENSOR’S approval of any Prototype, Final Prototype, Packaging or
artwork be construed to mean the LICENSOR has determined that the sample or artwork
conforms to the laws or regulations of any jurisdiction, or that it is not in conflict
with any other licensed articles and Licensor shall not bear any liability for such
approval.
7. THE MARKS
7.1 OWNERSHIP RIGHTS DEFINED: LICENSEE acknowledges the ownership of the Marks by
LICENSOR, agrees that it will do nothing inconsistent with such ownership, and that all
Use (and any other use thereof) of the Marks by LICENSEE and all good will developed
therefore shall inure to the benefit of and be on behalf of LICENSOR. LICENSEE agrees
that nothing in this Agreement shall give LICENSEE any right, title, or interest in the
Marks other than the right to Use the Marks in accordance with this Agreement and
LICENSEE agrees that it will not attack the title of LICENSOR to the Marks, the validity
of the Marks, any rights of LICENSOR that may have arisen from this Agreement, or the
validity of this Agreement.
LICENSOR has the right to use any Licensed Product designed and used by LICENSEE
and/or LICENSOR as part of LICENSEE’S obligation under this Agreement in any manner
LICENSOR may deem beneficial to the exploitation of the Marks anywhere in the world,
including, but not limited to, the production, sale and distribution of the Licensed
Products through a third party contractor or a new licensee, should this License expire
or terminate for any reason (with no right to a Winding-Up Period) prior to the
fulfillment of any outstanding orders or as otherwise necessary to protect the
reputation and goodwill of the Marks. LICENSEE shall be entitled to reimbursement for
actual out-of-pocket expenses associated with the duplication of art work, designs,
patterns, etc. developed by LICENSEE (which shall be duplicated and forwarded to
LICENSOR promptly after requested by LICENSOR) for use as set forth in this paragraph.
7.2 COPYRIGHT NOTICES: LICENSOR shall be deemed the author, with the right but not the
obligation in its sole discretion, to register a claim to any copyright within an art work or a
writing that is developed by LICENSEE as part of the obligations of LICENSEE toward the Licensed
Products. LICENSEE agrees that all such copyrighted artwork and writings are a work for hire, and
shall be protected as the sole and exclusive property of LICENSOR. In the event any such artwork
and writings are deemed to not be works for hire, LICENSEE hereby assigns all copyright rights in
and to the artwork and writings to LICENSOR. LICENSEE agrees to execute such documents as may be
requested by LICENSOR to give effect to this provision. LICENSEE shall place a legally sufficient
copyright notice which protects the rights of LICENSOR on each and every design, style, garment,
creation or writing which is capable of protection pursuant to the copyright laws of the United
States of America. Any public distribution of goods bearing copyrightable works of LICENSOR by
LICENSEE without a copyright notice as required above, if not authorized, is a violation of this
Agreement.
7.3 CONFIRMATION OF OWNERSHIP: Whenever requested by LICENSOR, whether during the Licensed
Term or thereafter, LICENSEE shall execute such documents or applications as LICENSOR may deem
necessary to confirm LICENSOR’S ownership of all their rights, to maintain the validity of the
Marks and the copyright(s) referred to above in Section 7.2, and to obtain, or maintain any
registration thereof.
7.4 LABELS/PACKAGING: All Licensed Products shall contain a label, hangtag and/or packaging
(hereinafter c collectively “labeling” or “label(s)”) as designated by LICENSOR from time to time.
LICENSEE understands the importance of maintaining the security and integrity of all trademarked
labeling used on the Licensed Products, and LICENSEE agrees to use its best efforts to maintain,
and to require any subcontractors to maintain, a strict, accurate and current inventory of all
labels throughout the manufacturing process of the Licensed Products so as to preclude any
diversion of the labels, and, if any such diversion occurs, LICENSEE agrees to notify LICENSOR in
writing immediately upon discovery thereof.
7.5 TRADEMARK REGISTRATION: In the event the Territory includes countries in which one or
more of the Marks has not yet been registered, LICENSOR has the right, but not the obligation, to
obtain trademark registration of any of the Marks in such countries. LICENSOR makes no
representation or warranty that the Marks will be registered or are registerable in the Territory,
and the failure to obtain or maintain registrations thereof shall not be deemed a breach hereof by
LICENSOR.
8. MARKETING AND DISTRIBUTION
8.1 PARTICIPATION PLEDGED: LICENSEE acknowledges that the marketing programs that may be
developed by or for LICENSOR are for the benefit of all licensees of the Marks, and LICENSEE’S
cooperation and support thereof are an integral part of such program and this Agreement. Therefore,
LICENSEE pledges its direct and active support of all licensee meetings and any marketing program
LICENSOR may
develop, including, without limitation, participation in sales presentations and fashion
shows, presentations and distributions to the various media, special events and special promotions
by the timely giving of Licensed Products, direct assistance, sales and other relevant information.
8.2 MARKETING, WHOLESALE & SHIPMENT POLICY: LICENSEE acknowledges that the
availability and selection of product, styles, fabrication, quality, colors and sizes of
the Licensed Products (as the case may be depending on the category of Licensed Product)
are an integral part of the high reputation and value which the trade and consumers have
come to associate with the Marks. To further protect that reputation and value, LICENSEE
agrees that its policy of sale, distribution, and exploitation shall be of the high
standard established by LICENSOR from time to time in its sole discretion reasonably
applied (see the Licensee Guidelines), and any variance from such standards shall be only
upon the prior written approval of LICENSOR or when necessary to comply with any
applicable law, rule or regulation with prior written notice thereof to LICENSOR. LICENSEE
hereby acknowledges that the timely shipment of all Licensed Products approved for
shipment to a customer is a critical element of this License, and LICENSEE agrees that it
will use high diligence to timely ship all such orders.
LICENSEE shall not sell the Licensed Products to any person or entity LICENSEE
knows, should have known, or had reason to believe would sell them outside the Territory.
8.3 DISTRIBUTION: LICENSEE’S distribution shall be solely to retail outlets to which
LICENSOR and other of LICENSOR’S licensees sell products bearing the Xxxx(s) and to such
specialty shops, department stores and other retail outlets dealing in products similar in
quality to the Licensed Products and where operations are consistent with the standards of
quality, taste and prestige associated with the Xxxx(s). The Licensed Merchandise shall be
sold by LICENSEE only at wholesale and at wholesale prices. LICENSEE shall not (i) subject
to Section 4.4, sell or distribute any Licensed Merchandise to discounters, wholesalers,
jobbers, diverters, or any other entity which does not sell at retail exclusively, or (ii)
sell the Licensed Merchandise directly to the public in retail stores, catalogs or
otherwise unless LICENSEE submits a proposal to LICENSOR outlining its plans for the
development of such a business and LICENSOR approves, in the exercise of its sole
discretion, such proposal. Within thirty (30) days after the execution of this Agreement,
LICENSEE shall provide LICENSOR with a list of its customers for the Licensed Merchandise.
LICENSEE shall submit all changes in its customer list with the regular statement of
royalties or more frequently if needed. LICENSOR shall have the right to disapprove all or
any portion of such list. LICENSEE shall not sell Licensed Merchandise to any customer
without first obtaining currently effective approval from LICENSOR.
8.4 SAMPLES FOR SALES FORCE: Prior to the showing of a new line, and subsequent to
Use approvals (see Section 6.2), LICENSEE shall furnish to its Licensed Product sales
force sufficient samples of the Licensed Products for their use in selling said product
and for the display of said Licensed Products at trade shows and showrooms. At the same
time and at no cost, LICENSEE shall give LICENSOR three complete lines of the Licensed
Products for display at its showroom along with all other products bearing the Marks and
as otherwise determined by LICENSOR, and shall provide a reasonable quantity of Licensed Product for the use of any public
relations or advertising firm or individual hired to promote said Licensed Products and/or the
Marks through editorials, advertising and the like, also at no cost to LICENSOR.
8.5 MERCHANDISER/DESIGNER: LICENSEE shall provide, at its own expense, a full time or part
time (as is necessary) employee or independent contractor qualified to act as a designer,
merchandiser and/or production/sample coordinator (or the equivalent as the case may be depending
on the Licensed Product category) with respect to the Licensed Products. This employee shall
devote the necessary amount of his/her working time on the development and coordination of the
line in conjunction with the merchandising staff of LICENSOR.
8.6 APPEARANCE OF ONE PRODUCT LINE: LICENSEE acknowledges that to the extent reasonably
possible and prudent LICENSOR and its merchandiser/designers/production coordinators will attempt
to make the product lines of all licensees of the Marks coherent and consistent and appear to be
the product of one company. LICENSEE agrees to reasonably cooperate with LICENSOR in this
endeavor.
9. INFRINGEMENT
LICENSEE shall notify LICENSOR promptly of any actual or threatened infringements, imitations,
or unauthorized use of the Marks by third parties of which LICENSEE becomes aware. LICENSOR shall
have the sole right, at its expense, to bring any action on account of any such infringements,
imitations or unauthorized use, and LICENSEE shall cooperate with LICENSOR, at LICENSOR’S expense,
as LICENSOR may reasonably request, in connection with any such action brought by LICENSOR.
LICENSOR shall retain any and all damages, settlement and/or compensation paid in connection with
any such action brought by LICENSOR. In no event shall LICENSOR be responsible to LICENSEE for any
damages that may result from said infringement(s), subject to Section 10. 1 hereof
(Indemnification). Notwithstanding anything to the contrary contained herein, in the event LICENSOR
fails or refuses to commence an action on account of any infringements, imitations or unauthorized
use of the Marks, LICENSEE shall have the right to do so after advance written notice of its intent
to LICENSOR. In such event, LICENSEE shall pay all costs and expenses incurred by it in connection
with such action, and shall retain any and all damages, settlement and/or compensation paid in
connection with any such action brought by LICENSEE.
Notwithstanding the preceding, in no event will LICENSEE enter into any settlement without the
express prior written approval of LICENSOR, which approval it may grant or withhold in its sole
discretion. No costs or expenses incurred by LICENSEE in any such action shall be deducted from or
offset against the Royalties otherwise do LICENSOR. In the event LICENSEE requests that LICENSOR
cooperate in any such action, LICENSOR will do so at the sole cost and expense, including counsel
of LICENSOR’S own choosing, of LICENSEE. In no event shall LICENSOR be responsible to LICENSEE for
any damages that may result from said infringement(s),
10. INSURANCE AND INDEMNIFICATION
10.1 INDEMNIFICATION:
(A) LICENSEE hereby indemnifies and holds LICENSOR, its successors and assigns, and any
entity owning or controlling LICENSOR and its owners, officers, directors, employees, agents and
representatives (hereinafter individually or collectively referred to as “Licensor Corporate”)
harmless from and against any and all liabilities, claims, causes of action, suits, damages,
including without limitation, suits for personal injury or death of third parties, and expenses,
including reasonable attorneys’ fees and expenses, for which LICENSOR or Licensor Corporate may
become liable or may incur or be compelled to pay as a result of (i) LICENSEE’S performance of (or
its failure to perform) its obligations or responsibilities hereunder, or (ii) LICENSEE’S breach
of any of its covenants, representations and warranties under this Agreement, or (iii) any claim
based upon allegations of negligence or strict liability which are attributable to any act of
LICENSEE, or (iv) claims of infringement of any intellectual property right that would not be
included under Section 10. 1 (B) below. In the event there is a claim against LICENSOR for which
indemnification from LICENSEE is sought hereunder, LICENSEE shall have the right to defend, settle
or contest said claim, at LICENSEE’S sole discretion, so long as the exercise of such discretion
does not adversely affect LICENSOR in a substantial manner and does not affect the Marks in any
way. This paragraph shall survive expiration or termination of the Licensed Term.
(B) LICENSOR hereby indemnifies and holds LICENSEE, its successors and assigns, and any
entity owning or controlling LICENSEE and its officers, directors, employees, agents and
representatives (hereinafter individually or collectively referred to as “Licensee Corporate”)
harmless from and against liabilities, claims, causes of action, suits, damages, including
without limitation, suits for bodily injury or death of third parties, and expenses, including
reasonable attorneys’ fees and expenses, for which LICENSEE or Licensee Corporate may become
liable or may incur or be compelled to pay as a result of an infringement of any third party’s
registered trademark in the Territory resulting from LICENSEE’S Use of the Marks in compliance
with all the terms and conditions of this Agreement (including, but not limited to, the Approval
Process set forth in 6.2). In the event there is a claim against LICENSEE for which
indemnification from LICENSOR is sought hereunder, LICENSOR shall have the sole
right to elect to defend, settle or contest said claim, at LICENSOR’S sole discretion,
except as otherwise provided herein. This paragraph shall survive expiration or termination of
the Licensed Term.
10.2 EFFECT OF APPROVAL: The approval by LICENSOR of any Licensed Product, Use or
distribution channel shall not be construed as a consent by LICENSOR to any infringement or
violation of the law or rights of third parties occasioned by the approved License Product, Use
or distribution channel, nor as an indemnification by LICENSOR or assumption of any
responsibility for any such claim beyond the indemnification set forth in Section 10. 1 (B)
above.
10.3 INSURANCE: LICENSEE shall promptly procure and maintain in full force and effect at all
times during the Licensed Term, with a responsible insurance carrier or carriers reasonably
acceptable to LICENSOR, at least Two Million Dollars ($2,000,000) coverage through a commercial
general liability policy, including products liability, and a Two Million Dollar ($2,000,000)
umbrella general liability policy that specifically includes any and all risks related to the sale
or Use of the Licensed Products, and that identifies the LICENSOR, owners, their officers,
directors, employees, subcontractors, agents and managers.
LICENSEE shall automatically furnish or cause to be furnished to LICENSOR within thirty
(30) days of the Effective Date (and on the anniversary date thereof for every Year thereafter)
evidence, in form and substance reasonably satisfactory to LICENSOR, of the maintenance and
renewal of the insurance required herein, including, but not limited to, copies of policies
with applicable riders and endorsements, Certificates of Insurance, and Continuing Certificates
of Insurance.
11. TERMINATION
TERMINATION: Subject to the continuing obligations arising from a breach hereof and those
terms and obligations that survive cessation of this Agreement by the clear import of their
language (including, but not limited to, Articles 4 [Payment], 5 [Accounting], 7 [Marks] and 10
[Insurance & Indemnification)), this Agreement and all rights relevant thereto shall cease upon
the earlier of termination, for whatever reason, or expiration, except that the exercise of any
right of termination under this Article II shall not affect any rights which have accrued prior to
termination and shall be without prejudice to any other legal or equitable remedies to which
LICENSOR may be entitled by reason of such rights.
(A) WITHOUT CURE: LICENSOR shall have the right to terminate this Agreement effective
immediately (without right to cure by LICENSEE) (1) upon LICENSEE’S receipt of written notice from
LICENSOR in the event of any affirmative act of insolvency by LICENSEE; or (2) upon the
appointment of any receiver or trustee to take possession of the properties of LICENSEE; or (3)
upon the winding-up, sale, consolidation, merger, or any sequestration by governmental authority
of LICENSEE; or (4) upon the breach by LICENSEE of any Material Term herein, except as expressly
set
forth in paragraph II (B) hereof, or (5) upon the decision of a court of first impression
having competent jurisdiction to permanently enjoin LICENSEE’S unlawful use of the Marks or use of
the Marks in a manner specifically denied in this Agreement, or adjudges such use to be violative
of the trademark or other rights of any third party; or (6) upon performance by LICENSEE of any
act specifically set forth in this Agreement as a non-curable breach.
If this License is terminated as set forth above with no right to cure by LICENSEE, then
LICENSEE shall have no right to a Winding-Up Period (as defined here and below) and shall
promptly transfer all remaining Inventory to LICENSOR at LICENSEE’S direct and actual cost of
goods to LICENSOR.
(B) WITH CURE: LICENSOR shall have the right to terminate this Agreement, after notice to
LICENSEE and expiration of a ten (10) day cure period for payment and or reporting defaults and
expiration of a thirty (30) day cure period for all other defaults (but excluding any non-curable
default as set forth in Section II (A) above which shall not be subject to this Section I 1 (13))
if said defaults are capable of being cured, (1) upon the breach of any of the terms or conditions
of this Agreement by LICENSEE, or (2) if LICENSEE takes any act or fails to act, and such action or
omission is, in the reasonable opinion of LICENSOR, materially harmful to the Marks or the business
of LICENSOR, or LICENSOR’S other licensees, or the brand. If a breach is not capable of being
cured, then termination shall become effective as of the date of notice.
12. EFFECTS OF AND PROCEDURE ON TERMINATION
12.1 DISCONTINUE USE OF THE MARKS: Upon the expiration or termination of this Agreement and
any Winding-Up Period (as defined below), LICENSEE agrees (1) immediately to discontinue all Use
of the Marks and copyrights of LICENSOR and any term, trademark or trade dress confusingly similar
thereto; and (2) at no cost to LICENSOR, to transfer promptly to LICENSOR or destroy all printed
materials bearing any of the Marks or copyrights of LICENSOR, and all tapes, heat stamps, dyes and
the like used by LICENSEE (and any third party subcontractor) for reproduction of the Marks or
copyrights of LICENSOR. In the event LICENSEE destroys such items, it shall provide a sworn
statement to that effect detailing what was destroyed, the manner of destruction, and the date of
destruction which is signed by an officer of LICENSEE. LICENSEE further agrees as set forth in
Article 7 hereof that in the event of expiration or termination of this Agreement, that all rights
in and to the Marks, the copyrights of LICENSOR and the good will connected therewith shall remain
the property of LICENSOR. LICENSEE acknowledges that any Use or use of the Marks or copyrights of
LICENSOR by LICENSEE after the date that termination or expiration is effective, which shall be
effective upon the date set forth in any notice of Termination or upon the expiration of any
Winding Up Period, whichever is later, shall constitute an infringement of the Marks and/or
copyrights of LICENSOR.
12.2 WINDING-UP PERIOD: Upon the expiration or termination of this
Agreement and subject to LICENSOR’S right to purchase the Inventory as set forth in Section
12.3 below, LICENSEE shall have a reasonable time (as determined by LICENSOR upon receipt and
review of the Inventory Statement and verification of the Inventory size), not to exceed nine (9)
months from the Commencement Date (defined below) of the Winding-Up Period, on a non-exclusive
basis, in which to dispose of its Inventory, if any, according to all the terms and conditions of
this Agreement (hereinafter “Winding-Up Period”). LICENSEE shall have no right to dispose of or
otherwise deal in any Licensed Products or use tangible items bearing the Marks if it refuses to
allow LICENSOR to exercise its rights under this Section 12.2 or if it fails to allow
LICENSOR to resolve any objections to the Inventory Statement to the satisfaction of LICENSOR.
(A) WINDING-UP PROCEDURE: No later than sixty (60) days prior to expiration of this Agreement
or within fifteen (15) days after termination, as the case may be, LICENSEE shall deliver to
LICENSOR a complete and detailed statement setting forth the number and description of the then
remaining Inventory, advertising (only if said advertising has previously been purchased and set
for publication), copies of orders LICENSEE intends to fill, and the like (hereinafter “Inventory
Statement” ). LICENSEE shall permit LICENSOR to be present at the time (with at least ten (10)
day’s notice of the time and date of the compilation of data in preparation for the Inventory
Statement) and at all reasonable times thereafter during the Winding-Up Period to have sufficient
access to verify the accuracy of the Inventory Statement. If LICENSOR does not make a written
objection to any part of the Inventory Statement within fourteen (14) days of receipt thereof, said
statement shall be deemed accurate. The Winding-Up Period shall commence upon the earlier of the
expiration of said fourteen (14) day period or the date of written notice to proceed with
winding-up from LICENSOR (hereinafter “Commencement Date”).
(B) EXPIRATION OF THE WINDING-UP PERIOD: Within twenty (20) business days following (i)
expiration of the Winding-Up Period, or (ii) the actual liquidation of all remaining Licensed
Products, or (iii) upon expiration of the fifteen (15) day or sixty (60) day deadline (depending on
whether termination or expiration has occurred) for submission of the Inventory Statement by
LICENSEE if none is received by LICENSOR within said time period, or (iv) the termination or
expiration of this Agreement without right to a Winding-Up period, or (v) the exercise of
LICENSOR’S right to purchase the Inventory as set forth in Section 12.3 below (unless LICENSOR does
not purchase all remaining Inventory in which case LICENSEE shall have a right to a Winding-Up
Period to sell-off the Inventory not so purchased), whichever is earlier, LICENSEE shall remit the
last requisite Royalty payments and reports on the sale thereof (as required in Section 5.
1)[Payment], and shall, at the same time, remove and send to LICENSOR, at no cost to
LICENSOR, any and all then remaining Inventory, and shall cease to Use the Marks or otherwise act
in any way which may lead another to believe the LICENSEE still has the right to Use the Marks.
12.3 LICENSOR’S RIGHT TO PURCHASE INVENTORY: Upon expiration or termination of this
Agreement for any reason, LICENSOR shall have the
right and option superior to any right of LICENSEE to a Winding-Up Period to be exercised in
writing and mailed or delivered to LICENSEE no later than fourteen (14) days after receipt of the
Inventory Statement, to purchase any or all remaining Inventory at LICENSEE’S actual and direct
cost of the goods. No general overhead or indirect costs shall be included in computing
LICENSEE’S actual cost of the goods.
13. RELATIONSHIP OF THE PARTIES
The relationship of LICENSEE to LICENSOR is that of an independent contractor and neither
LICENSEE nor its agents or employees shall be considered employees or agents of LICENSOR. This
Agreement does not constitute and shall not be construed as consisting of a partnership or
joint venture or grant of a franchise between LICENSOR and LICENSEE. LICENSEE shall not have
the right, nor shall it represent that it has the right, to bind LICENSOR to any obligations to
third parties.
14. ASSIGNMENT
14.1 ASSIGNMENT: This Agreement may be assigned by LICENSOR but shall not be assignable or
transferable by LICENSEE without the prior written consent of LICENSOR reasonably applied, and
any attempted assignment, sublicense or pledge thereof by LICENSEE without such prior written
consent shall be void and shall constitute a non-curable breach of the obligations of LICENSEE
hereunder and shall be subject to termination by the LICENSOR at LICENSOR‘S sole
discretion.
14.2 DEFINITION OF ASSIGNMENT: Assignment for purposes of this Agreement shall be the sale,
transfer or assignment of fifty percent (50%) or more of the shares of LICENSEE, including by way
of transfer, or assignment of any amount of authorized but unissued shares, a merger or
consolidation; (or, if a partnership, then any change in at least fifty percent (50%) or more of
the partners’ interest) in which LICENSEE is not the surviving entity; or, a sale of a substantial
part of LICENSEE’S assets.
15. NOTICES
15.1 NOTICES: Any notice, demand, waiver, consent, approval or disapproval (collectively
referred to as “notice”) required or permitted herein shall be in writing and shall be given
personally, by messenger, by air courier, or by prepaid registered or certified mail, with
return receipt requested, addressed to the parties at their respective Notice Address.
15.2 A notice shall be deemed received on the date of receipt.
16. ARBITRATION AND APPLICABLE LAW
16.1 ARBITRATION & APPLICABLE LAW: Any controversy or claim arising under or in relation to
this Agreement, or the breach thereof, or the relations between LICENSEE and LICENSOR or LICENSEE
and OWNER (excluding disputes falling within paragraph 3.4(B), supra , or 16.2 below) shall be
settled by arbitration by a panel of three arbitrators (unless the amount in dispute is less than
Twenty-Five Thousand Dollars ($25,000) in which case there shall be only one arbitrator) in the
City of Los Angeles, California, administered by the American Arbitration Association under the
then applicable General Arbitration Rules of the Council of the Textiles and Apparel Industries (or
if said Rules no longer exist, then the equivalent applicable arbitration rules generally accepted
by the apparel industry), and judgment on the award rendered by the arbitrator(s) may be entered in
any court having jurisdiction thereof, provided however, that the arbitrator(s) shall be bound by
the laws of the State of California and, regarding any questions related thereto, the trademark
statutes of the United States of America, and shall have no power to extend this Agreement beyond
its termination date, nor to award punitive, consequential, multiple, incidental or any other
damages in excess of the economic damages actually sustained by the claimant. If, and only if, the
arbitrator(s) shall detennine that either party’s position in arbitration was not maintained in
good faith, then the arbitrators shall have the power to order reinstatement or other continuation
of the parties’ relationship after termination, and to award the other party a reasonable
attorney’s fee.
The choice of law governing any and all questions and issues in any way related to this
Agreement, except as set forth in the above paragraph) shall be the laws of the State of New
York and the trademark statutes of the United States of America.
16.2 EQUITABLE RELIEF: LICENSEE recognizes that the Marks possess a special, unique and
extraordinary character which makes difficult the assessment of monetary damages which LICENSOR
might sustain by an unauthorized use. LICENSEE agrees that irreparable injury would be caused by
LICENSEE by such unauthorized use, and that injunctive relief, including specific performance as
applicable, would be appropriate in the event of breach of this Agreement. The loser of said
action shall pay any and all reasonable costs, expenses, attorney’s fees and disbursements
incurred by the other party with respect thereto.
This Section 16.2 shall be an exception to the mandatory arbitration provision set forth
in Section 16.1 above.
17. CONFIDENTIALITY OF INFORMATION
17.1 CONFIDENTIAL INFORMATION: LICENSEE and LICENSOR shall regard and preserve as
confidential all Confidential Information (defined below) related to the business of the other
party, except that information which is public knowledge, which may be obtained by it from any
source as a result of this Agreement, or otherwise. The parties agree that they shall not and
they shall cause their employees, representatives, agents and licensees not to divulge, furnish
or make accessible to anyone such Confidential Information, except as may be necessary from
time to time in performance of their duties hereunder on a limited “need to know” basis. This
provision shall survive the termination of this Agreement.
LICENSEE shall confine and limit the use of all Confidential Information obtained from
LICENSOR, its designees, its licensees or its agents exclusively to the development and sale of the
Licensed Products, and shall not use or adopt such Confidential Information obtained from LICENSOR,
including, but not limited to customer lists, pricing methods, marketing programs, in connection
with any product which is not a Licensed Product. Upon expiration or termination of the Agreement
for any reason, LICENSEE shall forthwith deliver to LICENSOR any such Confidential Information and
thereafter cease using the same.
LICENSOR shall confine and limit the use of all Confidential Information obtained from
LICENSEE, its designees, or agents exclusively to the development, marketing and sale of the Marks.
17.2 DEFINITION: “Confidential Information” shall be written information marked confidential
and oral information designated confidential and confirmed as such in writing delivered not later
than ten (10) days after such disclosure, and shall include this Agreement, customer/account
lists, and marketing plans of LICENSOR or LICENSEE whether or not marked as confidential or
confirmed as such in writing.
18. MISCELLANEOUS
18.1 LIMITATION ON USE OF OTHER TRADEMARKS: LICENSEE does hereby acknowledge that any attempt
by it, or by any other corporation, partnership, or business organization in which any officers,
directors, stockholders, partners of LICENSEE are owners thereof, to manufacture, sell or
distribute the Licensed Products under any trademark, trade name, or other identifying word or
symbol of any Competitor other than the Marks, excluding those used by LICENSEE as of the date of
this Agreement as set forth on Schedule 2 attached hereto, constitutes a violation of its
obligation to use its best efforts to exploit the License granted herein and is a breach of this
Agreement. LICENSEE does hereby assume the liability for its officers, directors, and shareholders
(or partners) for such conduct and agrees that any such conduct shall constitute a breach of this
Agreement. For purposes of clarification, LICENSEE may license, manufacture and sell products which
are similar to the Licensed Products in category, image, quality and price points, and which are
sold through distribution channels of the same like and kind as the Licensed Products under the
xxxx of any third party, so long as it does not use the same designs or styles as are used for the
Licensed Products hereunder in connection with any third party xxxx.
18.2 HEADINGS: The headings contained in this Agreement are for convenience and reference
purposes only. They do not form a part hereof and shall not affect the meaning or interpretation of
this Agreement.
18.3 LICENSOR’S RIGHT TO APPOINT REPRESENTATIVES: LICENSOR shall have the right at any time to
appoint in writing an authorized representative or representatives who shall be empowered to act on
behalf of the LICENSOR with regard to any matter pertaining to this Agreement. It is understood
that such appointment shall be strictly limited to the provisions of the written appointment, that
the representative shall have no authority beyond the scope of such appointment, and that LICENSEE
shall act only in accordance with such written appointment.
18.4 WAIVER OF RIGHTS: The failure of a party to insist upon strict adherence to any
provision of this Agreement on any occasion shall not be considered or deemed to be a waiver nor
considered or deemed to deprive that party of the right thereafter to insist upon strict adherence
to that provision or any other provision of this Agreement. Any waiver must be in writing.
18.5 COMPLETE AGREEMENT & NO ORAL MODIFICATION: This Agreement is a complete statement of all
agreements among the parties with respect to the subject matter hereof. Any amendment,
modification, alteration, change or waiver must be in writing. LICENSEE acknowledges that LICENSOR
has made no warranties or representations except those expressly stated herein, if any.
18.6 SEVERABILITY: If any provisions of this Agreement is for any reason declared to be
invalid or unenforceable, the validity of the remaining provisions shall not be affected
thereby.
18.7 INCORPORATION BY REFERENCE: The recitals, Schedules and Exhibits are hereby incorporated
in this Agreement. Paragraph headings are used solely for convenience and should not be given any
weight in the interpretation of this Agreement.
18.8 WARRANTIES OF CORPORA IE FITNESS: The parties each warrant the following: (1) that the
delivery of this Agreement has been duly authorized by all requisite corporate action of its
company; (2) that the execution and delivery of this Agreement does not violate its Articles of
Incorporation or By-laws, or any contract or commitment to which it is a party or by which it is
bound; and (3) that it is not a party to any suit, action, administrative proceeding, or
investigation which, if successful, would have a material, adverse effect on its properties,
financial conditions or business.
18.9 CONSTRUCTION: This Agreement’s terms and conditions were freely negotiated. LICENSOR
drafted the Agreement for the convenience of the parties only. As such, the language shall be
interpreted without regard to any rule, law or presumption requiring the language to be construed,
interpreted or applied against LICENSOR.
18.10 RESERVATION OF RIGHTS: LICENSOR reserves all rights not specifically granted
to LICENSEE hereunder.
18.11 USE OF COUNSEL: The parties hereto represent that they have each consulted with counsel
of their own choosing in connection with the negotiation and execution of this agreement or have
knowingly chosen not to do so.
IN WITNESS WHEREOF, the parties have first caused this Agreement to be
executed as of the Effective Date.
| XXXXX XXXXXXXXXXX | ||||
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Name: |
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Title: |
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| THE FASHION HOUSE, INC. | ||||
By: |
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Name: |
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Title: |
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