EXHIBIT 10.57
SETTLEMENT AGREEMENT
BY AND BETWEEN
XXXXXX XXXXX TRADEMARK TRUST,
XXXXXX XXXXX, INC.
AND
XXXXXX XXXXX
AND
XXXXX XXXXXXX,
THE WARNACO GROUP, INC.,
WARNACO INC.,
DESIGNER HOLDINGS, LTD.,
CKJ HOLDINGS, INC.,
JEANSWEAR HOLDINGS INC.,
XXXXXX XXXXX JEANSWEAR COMPANY
AND
OUTLET HOLDINGS, INC.
JANUARY 22, 2001
REDACTED PORTIONS OF THIS EXHIBIT ARE MARKED BY AN ***.
SETTLEMENT AGREEMENT
This Settlement Agreement (the "Agreement") is entered into this 22nd
day of January, 2001 by and between, on the one hand, the Xxxxxx Xxxxx Trademark
Trust, Xxxxxx Xxxxx, Inc. ("CKI") and Xxxxxx Xxxxx (together referred to herein
as "Xxxxxx Xxxxx") and, on the other hand, Xxxxx Xxxxxxx, The Warnaco Group,
Inc., Warnaco Inc., Designer Holdings, Ltd., CKJ Holdings, Inc., Jeanswear
Holdings Inc., Xxxxxx Xxxxx Jeanswear Company and Outlet Holdings, Inc.
(together referred to herein as "Warnaco").
WHEREAS a lawsuit captioned Xxxxxx Xxxxx Trademark Trust, et al. v.
Xxxxx Xxxxxxx, The Warnaco Group, et al. (Case No. 00-4052(JSR)) is pending in
the United States District Court for the Southern District of New York, and a
lawsuit captioned Xxxxxx Xxxxx, Inc. v. CKJ Holdings, Inc., et al. (Index No.
01600231) is pending in the Supreme Court of the State of New York (Index No.
01600231); and
WHEREAS Xxxxxx Xxxxx and Warnaco desire to resolve, fully and finally,
all claims and counterclaims asserted in those lawsuits between them; and
WHEREAS Xxxxxx Xxxxx and Warnaco recognize it is in their mutual
interest to work together cooperatively to enhance the value of the Xxxxxx Xxxxx
brand;
IT IS HEREBY AGREED by and between Xxxxxx Xxxxx and Warnaco as follows:
1. Xxxxxx Xxxxx and Warnaco agree to work together for their mutual
benefit under their existing license and other agreements, except to the extent
that those agreements are modified by the terms of this Settlement Agreement.
2. a. Beginning in calendar year 2002, Warnaco will limit its annual
gross sales of Xxxxxx Xxxxx jeanswear to mass merchandisers (defined as, for
example, KMart, Wal-Mart and Target) and/or warehouse clubs so that the
percentage of such sales does not exceed ***% of Warnaco's total gross
sales of Xxxxxx Xxxxx jeanswear in 2002 (and the percentage of sales other than
excess and close-outs to such channels does not exceed ***% of total
gross sales) and ***% in 2003 and thereafter (and the percentage of sales
other than excess and close-outs to such channels does not exceed ***% of
total gross sales). ***.This provision is without prejudice to the positions
of the parties as to the meaning of the license terms.
b. If at any time after January 1, 2003 Warnaco determines that the
limitations contained in subparagraph a. of this paragraph have become
economically unfeasible, the parties agree that they will negotiate in good
faith to revise those limitations, and if agreement on an appropriate revision
cannot be reached within 30 days, the parties will refer the issue of
distribution to a panel of arbitrators appointed pursuant to the terms of
paragraph 13 of this Agreement, who shall decide whether, and
to what extent, such sales are consistent with the licenses and agreements
between the parties.
3. Within 60 days of the date of this Agreement, Warnaco will appoint an
additional full-time President of the Jeanswear Company.
4. Within 60 days of the date of this Agreement, CKI will appoint a
full-time Design Director with overall responsibility for the design of
jeanswear only.
5. The term 'Collection' in paragraph 3.5 of the Jeanswear License shall be
construed to refer to all items manufactured or sold by Warnaco under said
license. CKJ must either have designed, proposed or approved in writing each
Article or any material change in an Article (including the fabric used to
manufacture each Article) manufactured or sold under said license. A change in
fabric, trim, fit, construction or wash is a material change. CKI will give
prompt good faith consideration and respond in no more than 72 hours to any
proposal from the licensee for the inclusion of a new Article in any Collection.
Both CKI and Warnaco will keep a record of each approval of any such Article.
This paragraph shall not apply to shipments already ordered, in production, or
sold.
6. 'Net Sales' as defined in the Jeanswear License, as amended and restated
in the amendment letter dated November 4, 1996, is amended to specifically and
expressly exclude Articles sold to customers by Stores as defined in the Store
License Agreement opened subsequent to the date of this Agreement and as to
which CKI is paid the royalty provided for in the Store License Agreement.
7. All claims and counterclaims in the aforesaid lawsuits pending in the
United States District Court for the Southern District of New York and the
Supreme Court of the State of New York shall be dismissed with prejudice, with
each party to bear its own costs. The parties will not bring claims of a similar
nature against any other person or entity -- including Xxxxx Xxxxxxxx, Xxxxx
Xxxxxxxx or Xxxxxxxx Xxxxx Xxxxxxxxxx -- based on any conduct up to the date of
this Agreement.
8. Paragraph 13.1(d)(ii) of the Jeanswear License is hereby suspended
through January 5, 2002.
9. All parties referred to herein as Xxxxxx Xxxxx, on the one hand, and all
parties referred to herein as Warnaco, on the other hand, hereby release and
forever discharge each other, and all of the subsidiaries, officers, directors,
employees and agents of the other, from any and all claims, causes of action,
and liabilities of any kind, whether known or unknown, that they may now have or
may have had against each other arising up to the date of this Agreement other
than claims related to men's underwear or women's intimate apparel -- including,
but not limited to all claims, counterclaims and allegations that were asserted
or could have been asserted in either of the aforesaid lawsuits or otherwise,
except for claims for royalties under the license agreements between the
parties. Nothing in this provision shall foreclose CKI from seeking to
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invoke the Administration Committee under section 3.5 of the Administration
Agreement to address any issues pertaining to underwear.
10. All disputes arising under this Agreement, and all disputes arising
under the terms of any of the licenses between the parties, shall be resolved
through binding arbitration pursuant to the rules of the International Chamber
of Commerce before a panel of three arbitrators, one of whom shall be appointed
by Xxxxxx Xxxxx, one of whom shall be appointed by Warnaco, and the third of
whom shall be appointed by the other two.
11. Except as required to comply with any court order or provision of
law or regulation, including applicable stock exchange regulations, the terms of
this Agreement shall be confidential and shall not be disclosed to anyone other
than the parties and their agents, who shall also be bound to maintain the
confidentiality of the Agreement. The parties will issue a joint press release
announcing that they have reached an agreement to resolve their differences and
to work together for their mutual benefit and the enhancement of the brand.
12. Xxxxxx Xxxxx and Xxxxx Xxxxxxxx, on the one hand, and Xxxxx
Xxxxxxx, on the other hand, agree to speak respectfully about each other and
their personnel and products, to direct their attorneys and press
representatives to speak respectfully about each of them and their personnel and
products, and to refrain from uttering any public comments of a derogatory
nature about each other and their personnel and products.
13. This Agreement shall be binding on all successors and assigns of
each of the parties hereto.
14. This Agreement contains the entire understanding and agreement
among the parties to resolve the aforesaid lawsuits and supersedes all prior
oral understandings and discussions relating thereto. This Agreement may not be
modified except in a written agreement signed by the parties hereto.
15. This Agreement shall be governed by the laws of the State of New
York and may be executed in counterparts.
Xxxxxx Xxxxx Trademark Trust The Warnaco Group, Inc.
By /s/ Xxxxxxxx Xxxxxxxx By /s/ Xxxxxx X. Xxxxxxxx
--------------------------------- --------------------------------
Xxxxxx Xxxxx, Inc. Warnaco Inc.
By /s/ Xxxxxxxx Xxxxxxxx By /s/ Xxxxxx X. Xxxxxxxx
--------------------------------- --------------------------------
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Designer Holdings, Ltd.
/s/ Xxxxxxxx Xxxxxxxx By /s/ Xxxxxx X. Xxxxxxxx
--------------------------------- --------------------------------
Xxxxxx Xxxxx
XXX Holdings, Inc.
By /s/ Xxxxxx X. Xxxxxxxx
--------------------------------
Jeanswear Holdings Inc.
By /s/ Xxxxxx X. Xxxxxxxx
--------------------------------
Xxxxxx Xxxxx Jeanswear Company
By /s/ Xxxxxx X. Xxxxxxxx
--------------------------------
Outlet Holdings, Inc.
By /s/ Xxxxxx X. Xxxxxxxx
--------------------------------
/s/ Xxxxxx X. Xxxxxxxx
--------------------------------
Xxxxx Xxxxxxx
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