EXHIBIT 10.05
TRADEMARK LICENSE AGREEMENT
THIS IS A TRADEMARK LICENSE AGREEMENT dated as of May 10, 1999 between
LEVI XXXXXXX & CO., a Delaware corporation located at 0000 Xxxxxxx Xxxxxx, Xxx
Xxxxxxxxx, Xxxxxxxxxx 00000 ("LS&CO."), and AVID SPORTSWEAR, INC., a California
Corporation, located at 00000 X. Xxxxxxxx Xxxxxx, Xxxxxxx, XX 00000
("Licensee").
B A C K G R O U N D
LS&CO. owns the trademarks (as defined in Section 1, the "Trademarks")
associated with the Dockers brand. LS&CO. has developed the Trademarks and brand
to have an outstanding reputation and goodwill. Licensee is in the business of
designing, manufacturing, marketing and selling golfwear products. Licensee
desires to obtain, and LS&CO. is willing to grant, a license, under which
Licensee may and shall se the Trademarks as described in this Agreement.
LS&CO. AND LICENSEE AGREE AS FOLLOWS:
1. GRANT OF LICENSE
LS&CO. grants to Licensee, and Licensee accepts, an exclusive,
nonassignable right to use the Trademarks as described in this Agreement, solely
in connection with the manufacture, advertising, distribution and sale of
Products to Approved Retailers for resale by those Approved Retailers within the
Territory. "Trademarks" means: (i) all of the trademarks identifying on EXHIBIT
A; (ii) any combination, form or derivative of those trademarks which LS&CO.
may, from time to time at its sole discretion, specifically authorize for use by
Licensee in a writing identifying the xxxx and referring to this Section 1; and
(iii) any other trademark LS&CO. may, from time to time at its sole discretion,
specifically authorize for use by Licensee in a writing identifying the xxxx and
referring to this Section 1, it being understood that LS&CO. may from time to
time remove or substitute individual trademarks from EXHIBIT A at its sole
discretion because of changes in marketing strategy, branding evolution or
otherwise. LS&CO. and Licensee acknowledge and agree that the Dockers(R) Golf
logo is being redesigned by LS&CO. at the time of execution of this Agreement.
LS&CO. will exercise best efforts to deliver camera ready art for the redesigned
logo to Licensee no later than June 5, 1999. "Products" means those items
identified on EXHIBIT B, all bearing or incorporating one or more of the
Trademarks. "Territory" means the United States of America and its territories
and possessions, and Bermuda. "Approved Retailers" means retailers approved
under Section 8 to purchase Products from Licensee.
2. TERM
2.1 INITIAL TERM. The initial term of this Agreement shall begin as of
the date of this Agreement and shall end as of the close of business on December
31, 2003 (the "Initial Term"), unless earlier terminated as provided in Section
13. It shall consist of four (4) Annual Periods. "Annual Period" shall mean, for
the Initial Term and any renewal term, the twelve month period beginning January
1 of a given year and ending December 31 of that year, except that the "First
Annual Period" shall mean the period beginning on the date of this Agreement and
ending December 31, 2000.
2.2 FIRST RENEWAL TERM. This Agreement shall be renewed, upon written
request of Licensee delivered to LS&CO. not earlier than April 1, 2003 and not
later than June 30, 2003, for one additional three (3) year term, commencing on
January 1, 2004 and ending on December 31, 2006 (the "First Renewal Term"), if:
(i) Net Sales of Products for the Annual Period beginning January 1, 2002 are no
less than Seventeen Million Dollars ($17,000,000) and (ii) Licensee is in
compliance with all material terms and conditions contained in this Agreement
and there is no outstanding Event of Default existing on the date Licensee
delivers its notice of renewal or at any time during the balance of the Initial
Term. Licensee shall include with its renewal notice data demonstrating that the
renewal condition set out in clause (i) is satisfied, a written certification by
the president, a vice president or the chief financial officer to the effect
that the condition set out in clause (ii) is met and Licensee's projections for
sales of Products during the contemplated First Renewal Term. Within 30 days
after receipt of Licensee's renewal notice, and again on the last day of the
Initial Term, LS&CO. shall notify Licensee whether or not the conditions to
renewal set out in this Section 2.2 are satisfied or waived. Licensee's failure
to timely deliver its notice of renewal shall be treated as a final decision by
Licensee that it has elected not to renew.
2.3 ADDITIONAL RENEWAL TERMS. If (i) this Agreement enters a First
Renewal Term as provided under Section 2.2, (ii) Net Sales of Products during
the First Renewal Term have exceeded Licensee's projections for sales of
Products during each respective Annual Period of that term, and (iii) Licensee
is in compliance with all material terms and conditions contained in this
Agreement and there is no outstanding Event of Default existing on the date
Licensee delivers its notice of renewal or at any time during the balance of the
First Renewal Term, LS&CO. agrees to negotiate in good faith, no later than June
30, 2006, for two additional three (3) year terms, commencing on January 1, 2007
and ending on December 31, 2009 (the "Second Renewal Term"), and commencing on
January 1, 2010 and ending on December 31, 2012 (the "Third Renewal Term"),
respectively.
3. ROYALTIES
3.1 GUARANTEED MINIMUM ROYALTY. Licensee shall pay to LS&CO. a
non-recoupable guaranteed minimum royalty (the "Guaranteed Minimum Royalty") in
respect of each Annual Period. The Guaranteed Minimum Royalty for the Initial
Term shall be:
ANNUAL PERIOD GUARANTEED MINIMUM ROYALTY
1st $250,000
2nd $540,000
3rd $765,000
4th $990,000
Licensee shall pay Guaranteed Minimum Royalty payments due under the First
Annual Period as follows: ten percent (10%), or twenty five thousand dollars
($25,000) on March 31, 2000; twenty percent (20%), or fifty thousand dollars
($50,000) on June 30, 2000; thirty percent (30%), or seventy five thousand
dollars ($75,000) on September 30, 2000; and forty percent (40%), or one hundred
thousand dollars ($100,000) on December 31, 2000. For all other Annual Periods,
Licensee shall pay to LS&CO. the Guaranteed Minimum Royalty in equal
installments on January 1, April 1, July 1 and October 1, respectively, of each
Annual Period. Should there be a renewal of this Agreement as contemplated by
Section 2.2, the Guaranteed Minimum Royalty in respect of each Annual Period
during the First Renewal Term shall be an amount equal to seventy five percent
(75%) of the projected earned royalty derived from the sales plan provided for
each Annual Period of the First Renewal Term, as reflected in the projections
supplied by Licensee to LS&CO. as contemplated by Section 2.2.
3.2 EARNED ROYALTY. During each Annual Period of the Initial Term and
the Renewal Terms, if any, Licensee shall pay to LS&CO. eased royalties in an
amount equal to the sum of: (i) six percent (6%) of aggregate Net Sales of first
quality Products and (ii) four percent (4%) of aggregate Net Sales of second
quality and closeout or end of season Products. To that end, Licensee shall pay
to LS&CO., no later than 30 days after the end of each quarterly period, an
amount equal to the excess of earned royalties in a quarter over the Guaranteed
Minimum Royalty for that quarter. In addition, if Licensee's second quality and
closeout or end of season sales are greater than ten percent (10%) of total
Licensee-manufactured Product sales during any Annual Period (in terms of
units), Licensee shall pay LS&CO., at the time it delivers the annual statement
for that Annual Period as described in Section 9.1, an amount equal to the
difference between (i) 6% of aggregate Net Sales of second quality and closeout
or end of season products for the entire Annual Period and (ii) 4% of aggregate
Net Sales of second quality and closeout or end of season Products for the
entire Annual Period. "Net Sales" shall mean the gross sales of all Products
sold, less trade discounts actually taken and credits for merchandise returns
actually applied to subsequent payments required to be made to Licensee, with
merchandise returns being credited in the quarterly period in which the returns
are actually made. A Product shall be considered "sold" on the earlier of the
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date when the Product is billed or invoiced, shipped, consigned or paid for. The
terms of payment or credit concerns relating to Approved Retailers or otherwise
shall not affect Licensee's royalty payment obligations; provided, however, that
Licensee may retroactively adjust royalty payments for its actual amount of Bad
Debt, not to exceed three percent (3%) of adjusted Net Sales in any quarter.
"Bad Debt" shall mean accounts receivable which are uncollectible by Licensee,
using reasonable collection efforts, one hundred eighty (180) days after due.
Licensee shall provide LS&CO. with written substantiation of actual Bad Debt
with its Royalty Statement for any quarter in which Licensee claims a Bad Debt
allowance.
3.3. PAYMENT MECHANICS. Licensee shall make royalty and all other
required payments to LS&CO. in U.S. Dollars by wire transfer to:
Bank of America NT&SA
ABA Number 0000-0000-0
Beneficiary: Levi Xxxxxxx & Co.
Beneficiary Account Number: 12336-18321
Ref: Licensing Fees for LS&CO.
Licensee shall provide LS&CO. with written documentation of the wire transfer
within five days of each such transfer. If a payment is not received when due
for any reason, interest shall accrue on the unpaid principal amount of such
installment from and after the date on which it became due, at a rate equal to
1% over the base rate (expressed as an annual rate) announced from time to time
by Bank of America (or its successor) at its San Francisco office as then in
effect. If on any examination of Licensee's books and records as provided by
Section 9, LS&CO. discovers any royalty underpayment by Licensee, then Licensee
will make, within 30 days after LS&CO.'s demand, all payments required to be
made to correct and eliminate the underpayment. In addition, if that examination
reveals an underpayment of more than three percent (3%) for any quarterly
period, then Licensee shall reimburse LS&CO. for LS&CO.'s expenses in performing
the examination.
3.4 ROYALTY STATEMENT. Licensee shall prepare and give to LS&CO. a
royalty statement for each quarterly period within 30 days after the end of that
period. The royalty statement shall report Net Sales by account, Net Sales by
style, net returns by account and net returns by style, and a calculation of
royalties, for that quarter, and substantiation of any Bad Debt allowance
retroactively claimed. Licensee shall include with each royalty statement a
written certification of statement accuracy by the chief financial officer of
Licensee or Licensee's accounting firm.
4. MARKETING AND SALES
4.1 SALES PLAN. On or before September 1 of each Annual Period,
Licensee shall deliver to LS&CO. a draft sales plan describing Licensee's
proposed line plan, retailers for the upcoming Annual Period, marketing
activities, delivery dates and projected sales by month. No later than 15 days
following Licensee's delivery of the proposed sales plan, LS&CO. and Licensee
shall meet to discuss and complete a final sales plan (the "Sales Plan"), it
being understood that the line plan, list of retailers and specific marketing
materials and plans are subject to LS&CO.'s approval as provided elsewhere in
this Agreement and that actual sales performance may vary from that contemplated
by the Sales Plan in view of market conditions, customer relations and other
factors.
4.2 CONSUMER ADVERTISING. During each Annual Period, Licensee shall
spend an amount no less than three percent (3%) of the projected aggregate Net
Sales for that Annual Period (the "Marketing Spend") on consumer and trade
advertising as described herein. If actual aggregate Net Sales exceed projected
Net Sales for any Annual Period, then Licensee shall spend an additional amount
not less than three percent (3%) of the excess, with that amount to be spent and
for use during, the next Annual Period, in addition to the Marketing Spend
otherwise due for that Annual Period. Marketing Spends shall be separate from
and shall not be subject to credit for expenditures by Licensee for cooperative
advertising, trade advertising, fixture programs, trade shows, sponsorships,
events, sampling or any other promotional or sales material. Licensee shall
primarily use these funds for consumer marketing of the Products through
vehicles and at the times and in the manner as agreed upon between Licensee and
LS&CO.
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4.3 PRODUCT LAUNCH ADVERTISING. Between June 1, 1999 and December 31,
1999, Licensee shall conduct, and spend not less than two hundred-forty thousand
dollars ($240,000) for, Product launch advertising, subject to LS&CO.'s
approval. (Approval procedures for this and all other matters under this
Agreement involving LS&CO. approval are described in Section 19). Launch
activities shall not include PGA Show expenses.
4.4 SHOWROOM. No later than January 1, 2000, Licensee at its sole
expense shall establish, and then maintain during the term of this Agreement,
two (2) showrooms in Los Angeles, California and New York or New Jersey,
respectively, dedicated exclusively to Products (the "Showrooms"). Licensee
shall submit plans for the Showrooms to LS&CO. Design and decor of the Showroom
shall be subject to LS&CO.'s approval.
4.5 BUSINESS MATERIALS. Licensee shall not use any business materials,
including, without limitation, invoices, stationery, advertising, promotional
materials, sundries, labels, packaging, fixtures, posters or graphics, bearing
any of the Trademarks, unless such materials comply with LS&CO.'s trademark use
standards as contemplated by Section 11.7 and unless Licensee shall have first
obtained LS&CO.'s approval of the use. Any approval granted by LS&CO. shall be
effective until revoked by LS&CO.; to the extent LS&CO.'s approval relates only
to a seasonal collection of Products, however, Licensee shall not use such
packaging or business materials without LS&CO.'s separate specific approval
after completion of the season to which the collection relates.
4.6 RETAIL AND VISUAL PRESENTATIONS
(a) Licensee, at its sole expense, shall develop all visuals
used at retail, including packaging, fixtures, point of sale materials and
visual merchandising materials. Licensee shall provide LS&CO. with a timetable
for the development of the materials. LS&CO. may provide reasonable guidelines
for the development of such materials, and use of all such materials shall be
subject to LS&CO.'s prior approval. Licensee at its expense may use the vendors
and creative agencies used by LS&CO. for similar projects. If Licensee decides
not to use such vendors, it shall nonetheless be required to comply with
guidelines provided by LS&CO. If LS&CO. reasonably determines that any materials
produced by a vendor selected by Licensee do not meet LS&CO.'s quality
standards, Licensee shall upon LS&CO.'s request select and use an alternate
vendor approved by LS&CO.
(b) Licensee shall use reasonable efforts to secure premium
retail locations, custom fixturing and strong image positioning for the Products
on the retail floor. Licensee shall work with retailers to update the location,
fixturing and positioning on a regular basis. Licensee shall not provide, both
during the term of this Agreement and after its expiration or termination,
packaging, fixtures, point of sale, visual merchandising or related materials to
any person other than to an Approved Retailer or, following expiration or
termination of this Agreement, to LS&CO.; provided, however, that this does not
prohibit use of fixtures from which all Trademarks and branding have been
removed, and which are no longer used in connection with the Products.
4.7 TRADE ADVERTISING; PUBLICITY
(a) Licensee shall be responsible for the development, at
Licensee's sole expense, of all advertising in trade or industry publications.
Licensee shall submit all such advertising to LS&CO. for its approval prior to
its submission to the publication. Licensee shall use LS&CO. branded apparel or
accessories in all Product advertising whenever a head to the shot or visual
requiring other product categories is required. If LS&CO. or one of its
licensees does not have a product category required for the advertisement, then
LS&CO. and Licensee shall choose an alternate brand for that product category,
it being understood that Licensee shall: (i) be responsible for obtaining
appropriate legal advice concerning such use; (ii) cause all trademark or other
identifying marks or features visible on the item to be removed from or obscured
in the final image prior to publication, except for any identifying marks which
Licensee has the right to display, for which Licensee provides LS&CO. written
evidence of such right, and for which Licensee agrees to indemnify LS&CO. as
provided in Section 15.2 hereof; and (iii) be responsible in all respects to the
maker of the alternative product. If removing or obscuring the xxxx is
impossible because of the nature of the product or is unsatisfactory from an
aesthetic or legal perspective, then Licensee and LS&CO. shall select another
product.
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(b) Licensee shall maintain editorial contacts within its
industry and shall use reasonable efforts to gain editorial coverage for
Products in relevant industry publications. Licensee shall not, however, make
any press or other public communications regarding LS&CO., Dockers(R) brand or
Product plans and strategies, sales or earnings of the Products or the status of
the relationship between LS&CO. and Licensee, without in each case first
obtaining LS&CO.'s approval, it being understood that LS&CO. anticipates that it
will coordinate ail major programs to publicize or promote the Products.
4.8 MARKETING COORDINATION. The senior executives of Licensee
responsible for marketing the Products shall attend marketing coordination
meetings as requested by LS&CO. These meetings shall include discussion of
marketing, publicity, promotion, advertising, visual programs, and use of
Trademarks, and development of annual and seasonal marketing plans.
Representatives from other licensees of the Trademarks and creative vendors of
LS&CO. may be present at LS&CO.'s discretion. LS&CO. shall schedule marketing
coordination meetings upon reasonable advance notice and at times consistent
with market calendars.
4.9 RESEARCH. LS&CO. may, at its discretion and sole expense, perform
research of consumer reaction to advertising or product initiatives involving
Products. LS&CO. shall inform Licensee in advance of such research and provide
reasonable access to its results; Licensee shall participate, at LS&CO.'s
reasonable expense, if asked by LS&CO.
5. PRODUCT DESIGNS
Licensee shall not produce or sell any Product unless LS&CO. approves
of the design and the collection under this Section 5. Licensee shall produce
two (2) collections per Annual Period, for the Spring/Summer and Summer/Fall
seasons, and not less than a total of fifty two (52) Styles, of which forty (40)
shall be tops and twelve (12) be bottoms, for each collection. For purposes of
this Section 5, a "Style" shall mean an SKU identifying a Product's Style, Model
and Color. Licensee shall submit to LS&CO., for LS&CO.'s approval in accordance
with the design schedule attached as EXHIBIT C, all proposed designs and
collections, through vehicles and formats acceptable to LS&CO. If LS&CO.
approves but specifies modifications in the designs or collections, then
Licensee shall incorporate those modifications in the anal design and
composition of the collection. In addition, LS&CO. may submit proposed designs
to Licensee. Licensee shall in good faith consider these designs, and Licensee
and LS&CO. shall mutually decide whether to pursue and use the proposed design.
LS&CO. shall have the sole right to determine which Trademarks (and which
combinations, forms or derivatives of such trademarks) shall be used in
connection with each particular Product.
6. PRODUCTS; QUALITY CONTROL
6.1 SUBMISSION OF SAMPLES. Licensee shall not market or sell any
Products without first obtaining LS&CO.'s approval of the Products through the
process described in this Section 6. Licensee shall submit to LS&CO., at
Licensee's sole expense, one Sample of each different Style of a Product prior
to any commercial production of that Product; provided, however, that Samples
for the Spring 2000 season only may be provided as early as possible, but in no
event later than August 15, 1999. LS&CO. shall pay for any additional Samples it
requests at a price equal to Licensee's first factory landed cost for the item.
If LS&CO. rejects a Sample, whether on the basis of Trademark use, styles,
designs, dimensions, details, colors, materials, workmanship, quality or
otherwise, it shall give Licensee a brief explanation of the reasons for
disapproval, and it may make suggestions for modifying the particular item.
Licensee shall promptly correct such Sample and resubmit such Sample for
LS&CO.'s approval through the same process. "Sample" means prototypes or actual
samples of Products from which commercial production will be made; a Sample
shall reflect product attributes including, without limitation, the type and
quality of materials, colors and workmanship. LS&CO. shall have no obligation to
approve, review or consider any item the submission of which did not comply with
the required submission procedure. Licensee shall either destroy Samples or
dispose of them through-methods (for example, deposit in a sample archive or an
employee sample sale) not involving placement into the marketplace.
6.2 COMPLIANCE WITH SAMPLE. Licensee shall present for sale, through
the showing of each seasonal collection to the trade, Products identical in all
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respects to approved Samples. Licensee shall ensure that all Products
manufactured and sold by Licensee adhere in all respects (including, without
limitation, use of Trademarks, materials, colors, workmanship, dimensions,
styling, detail and quality) to Samples approved by LS&CO. If any Product is, in
the sole discretion of LS&CO., not being manufactured or sold in adherence to
the Trademark uses, styles, designs, dimensions, details, colors, materials,
workmanship and qualify embodied in the Samples or otherwise approved by LS&CO.,
LS&CO. shall notify Licensee in writing and Licensee shall immediately stop
selling the Product, and either (i) change the Product to so conform as
confirmed by LS&CO. or (ii) dispose of remaining inventory by selling the
Products as seconds to those Approved Retailers approved under Section 8.3 or by
destroying the Products.
6.3 WITHDRAWAL OF APPROVAL. LS&CO. shall have the right, in its sole
discretion, to withdraw its approval of that Product, whether or not the Product
is noncomplying as contemplated by Section 6.2. Upon receipt of written notice
from LS&CO. of its decision to withdraw approval, Licensee shall immediately
stop selling the Product as a first quality in-season Product and instead sell
the Product as a closeout item only to those Approved Retailers approved under
Section 8.3. Licensee may, however, complete work in process and utilize
materials on hand provided that it submits proof of that work in process to
LS&CO. and sells those Products as closeouts to those Approved Retailers
approved under Section 8.3.
6.4 PRODUCTION LINE. Licensee shall provide to LS&CO., at Licensee's
expense, one full production line of the initial season's collection of
Products, including each different Style of a Product. Licensee shall in even
subsequent season provide to LS&CO. one production line of any new or seasonal
Style for that season. Licensee shall provide to LS&CO. additional production
lines or portions of lines of Products at LS&CO.'s request upon payment by
LS&CO. of an amount equal to Licensee's first factory landed cost for the
Products.
6.5 SECONDS. In the case of second quality Products, Licensee, if
possible given the nature of the Product, shall remove the Trademarks from the
Product, prominently xxxx all such Products with the legend "second,"
"irregular," or a red-line, or cut through the label. Licensee shall not sell
any Products incorporating any labels or other identification bearing any of the
Trademarks as seconds, damaged or defective merchandise without first obtaining
LS&CO.'s approval.
6.6 OTHER PRODUCT ATTRIBUTES. Licensee shall ensure that all Products
shall be suitable for their intended purposes; that no injurious, unlawfully
flammable, poisonous, deleterious or toxic substances or materials will be used
in or on the Products; that the Products in normal or foreseeable use will not
harm the user; and that the Products will be manufactured, advertised, labeled,
sold and distributed in compliance with all applicable laws and regulations and
in accordance with LS&CO. standards relating to flammability, detachable
hardware and other matters. Licensee shall not sell or immediately stop selling
any Product that does not meet or is later found not to meet these requirements.
7. PERSONNEL AND COOPERATION
7.1 DESIGNATION OF MANAGERIAL PERSONNEL. Licensee shall at all times
employ a senior manager, reasonably satisfactory to LS&CO., who shall be
responsible for oversight of the production, merchandising, distribution and
promotion of the Products. Xxxxx Xxxxxxxx shall be the initial manager.
7.2 DESIGNATION DESIGN PERSONNEL. Licensee shall at all times employ a
designer, reasonably satisfactory to LS&CO., who shall be responsible for
oversight of Product design, direction and development.
Xxxxx Xxxxxxxx shall be the initial designer.
7.3 CONSULTATION. Licensee and LS&CO. shall make their respective
personnel, and shall use reasonable efforts to make the personnel of any of
their contractors, suppliers and other resources, available for consultation
with the other party during normal business hours. When requested by LS&CO.,
Licensee shall make available senior executives of Licensee to discuss matters
arising under this Agreement.
7.4 COMPUTER NETWORK. Upon LS&CO.'s reasonable request, Licensee will
enable itself to use and will use, with LS&CO. and other LS&CO. licensees, an
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extranet or other electronic linkage system specified by LS&CO. Licensee will at
its expense (not to exceed $5,000 in any Annual Period) acquire and maintain
appropriate enabling hardware, software and enhancements.
7.5 LS&CO. MANAGEMENT PERSONNEL. Upon Licensee's reasonable request,
LS&CO. will attempt to make key management personnel and Tour Pro available to
participate in Licensee retailer visits, trade shows, or similar events.
Licensee will pay out of pocket expenses incurred by LS&CO., including, without
limitation, travel and lodging expenses, for those individuals requested by
Licensee.
8. DISTRIBUTION
8.1 OVERVIEW. The retail distribution of products bearing the
Trademarks is of critical importance to LS&CO. It affects the ability of LS&CO.
to, among other things, reach the target consumers of the Dockers(R) brand
maintain the reputation and integrity of the Trademarks, enhance the image of
the Dockers brand and facilitate, consistency in product presentation and
assortment. Those concerns, and LS&CO.'s commercial need to maintain flexibility
in its distribution strategies and policies, underlie the provisions of this
Section 8. Accordingly, Licensee shall market, sell and distribute Products in
the Territory in accordance with its provisions. Retailers approved under
Sections 8.2 and 8.3 of this Agreement and identified on EXHIBITS D AND E, as
the case may be, are occasionally referred to as "Approved Retailers."
8.2 FIRST QUALITY. Licensee may market, sell and distribute first
quality, in season Products only to: (i) the public and/or private golf courses,
resorts, and offcourse golf specialty retailers listed on EXHIBIT D as in effect
at the time and (ii) LS&CO. and its affiliates. Licensee shall not market, sell
or distribute first quality in season Products to any retailer listed on EXHIBIT
E without LS&CO.'s prior written approval. Licensee acknowledges that LS&CO. may
at its sole discretion, during discussion of the Sales Plan or otherwise,
determine that certain Products may be sold by Licensee only to selected
retailers listed on EXHIBIT D.
8.3 SECOND QUALITY. Licensee may market, sell and distribute second
quality and closeout or end of season Products only to: (i) the retailers listed
on EXHIBIT E as in effect at the time, (ii) LS&CO. and its affiliates, and (iii)
no more than ten (10) Approved Retailers for each Season, a list of which shall
be provided to LS&CO. and approved as provided herein prior to sales of second
quality or closeout Products to those Approved Retailers.
8.4 ADDITIONAL APPROVED RETAILERS; OFF COURSE GOLF SPECIALTY APPROVAL.
Licensee may add public and/or private golf courses and resorts to EXHIBIT D in
its sole discretion; Licensee shall provide LS&CO. updated accounts lists no
later than January 15 and July 15 of each Annual Period to reflect the current
distribution. Licensee may ask LS&CO. at any time to add additional off-course
golf specialty retailers to EXHIBIT D. Licensee shall give LS&CO. a completed
Account Approval Form, in the form attached as EXHIBIT F for each proposed
additional off-course golf specialty retailer and all additional information,
including without limitation, interior and exterior photographs and data about
the retailer's customer base, as LS&CO. may request. LS&CO. may approve or
disapprove the request in its sole discretion. If LS&CO. approves an additional
retailer, then LS&CO. shall prepare and distribute a new and governing EXHIBIT D
which shall be effective going forward.
8.5 WITHDRAWAL OF APPROVAL. LS&CO. may in its sole discretion withdraw
approval of any Approved Retailer by giving written notice to Licensee. After
Licensee's receipt of such notice, Licensee may ship Products to the retailer
for a period of 30 days. If Licensee has executed supply contracts with a
disapproved retailer which require Licensee to ship beyond 30 days, Licensee
shall provide LS&CO. with a copy of any such contract for LS&CO.'s consent to
ship beyond the 30 day period, and Licensee may fulfill any non-cancelable
portion of that supply contract or, at LS&CO.'s option, LS&CO. may pay Licensee
any cancellation penalty amounts due under the supply contract and Licensee
shall not fulfill the contract. Licensee recognizes that LS&CO. may from time to
time change its distribution profile and account policies, or take actions in
implementing and enforcing its account policies, and that such actions may
result in withdrawals of approvals. If LS&CO. withdraws approval of a retailer,
then LS&CO. shall prepare and distribute a new EXHIBIT D or EXHIBIT E, as the
case may be, which shall be effective going forward.
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8.6 ACCOMMODATION SALES; ROYALTY RATES. Licensee may make accommodation
sales or giveaways of Products to its employees. No royalty shall be due on the
first one percent (1 %) of Net Sales which are actual employee accommodation
sales or giveaways reported in the Royalty Statement; Licensee shall pay LS&CO.
a royalty of four percent (4%) on employee sales or giveaways in excess of 1% of
Net Sales. Licensee may make promotional sales to golf pros and golf club staff;
Licensee shall pay LS&CO. a royalty of four percent (4%) on such sales, which
shall be reported in the Royalty Statement.
8.7 PROHIBITED SALES. Licensee shall not market, sell or distribute any
Products through or to any person or entity except as expressly provided in this
Section 8. For example, Licensee shall not sell Products (i) to any wholesaler,
jobber or exporter or (ii) directly to consumers except through a Licensee-owned
brick-and-mortar retail store approved under Section 8.2 or 8.3. Licensee shall
not, without LS&CO.'s prior approval, sell any Products to any third party
(including an Approved Retailer) which, directly or indirectly, sells or,
Licensee knows or has reason to know, proposes to sell, such Products outside
the Territory, or sell or proposes to sell Products through the Internet or any
other vehicle other than an approved brick-and-mortar retail store. Licensee
shall use reasonable efforts to prevent any such resale outside the Territory or
through an unauthorized vehicle and shall, immediately upon receiving notice
from LS&CO. or otherwise learning that an Approved Retailer is selling Products
outside the Territory or through an unauthorized vehicle, cease all sales and
deliveries to that Approved Retailer. Nothing contained in this section shall be
construed to prohibit Licensee from conducting wholesale sales solely to
Approved Retailers in the Territory under this Section 8 through the Internet.
Licensee shall not permit or conduct Internet sales directly to consumers, or to
anyone other than Approved Retailers, without LS&CO.'s advance written approval.
8.8 SALES TO LS&CO. Licensee shall make available for purchase, and
shall sell at its customary price and on its customary credit and payment terms,
all lines and Styles of Products, to LS&CO. or any affiliate of LS&CO., for
purposes of sales to employees of LS&CO. and its affiliates. LS&CO. shall not
permit or conduct Internet sales directly to consumers, or to anyone other than
its employees, without Licensee's advance written approval.
9. INSPECTION; STATEMENTS AND RECORDS
9.1 INSPECTION RIGHTS. LS&CO. and its representatives may, during
normal business hours and upon reasonable advance notice, inspect all facilities
used by Licensee and its contractors, sublicensees and suppliers in connection
with Licensee's performance of its obligations under this Agreement including
compliance with Section 10. These facilities shall include, without limitation,
those used for preparation of Samples and for manufacture, sale, storage or
distribution of Products in the process of manufacture and when offered for
sale.
9.2 ACCOUNTING AND AUDIT RIGHTS. Licensee shall at all times keep an
accurate account of all operations and transactions within the scope of this
Agreement. Within 30 days after the end of each quarter, Licensee shall give to
LS&CO.: a statement presenting (i) a listing of each retailer to which Licensee
sold Products in such period and the sales to each such retailer in such period
expressed in both units of each Product sold and aggregate Net Sales for each
Product sold and (ii) aggregate gross sales, aggregate trade discounts,
aggregate merchandise returns and aggregate Net Sales of all sales of Products
by product category. These statements shall be in sufficient detail to be
audited from the books of the Licensee and shall be certified by the chief
financial officer of Licensee. No later than 45 days after the end of Licensee's
fiscal year, Licenses shall give to LS&CO.: (i) a statement, certified by the
chief financial officer of License a, showing aggregate gross sales, aggregate
trade discounts, aggregate merchandise returns and aggregate Net Sales of
Products made by Licensee and (ii) copies of Licensee's audited balance sheet,
income statement, statement of cash flows and statement of stockholders' equity,
and the notes to those statement as of the year end and for the twelve-month
period then ended. During the term of this Agreement and for a period of three
(3) years after its termination or expiration, LS&CO. or its agents, at LS&CO.'s
sole expense, may inspect and audit all the books of account of Licensee
relating to performance by Licensee of its obligations under this Agreement,
including, without limitation, those relating to computation of Net Sales.
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9.3 RECORDS. Licensee shall provide to LS&CO., in the farm requested by
LS&CO., such information an as LS&CO. may reasonably request with respect to the
manufacture, distribution and sale of Products and Licensee's compliance with
the provisions of this Agreement. Licensee shall retain all books and records
relating to its performance of this Agreement during the term of this Agreement
and for a period of five years after its termination on or expiration.
10. ETHICS CODE AND GLOBAL SOURCING AND OPERATING GUIDELINES
10.1. LS&CO. REPUTATION. LS&CO. has and is determined to maintain a
world-wide reputation for ethical business conduct. To that end, LS&CO. adopted
a Code offices and Global Sourcing and Operating Guidelines ("GSOG") setting
forth standards of conduct. It requires from, among others, its licensees,
including Licensee. Licensee acknowledges that its conduct, and the conduct of
any subcontractor, must reflect positively on LS&CO.'s reputation and
accordingly agrees to the provisions of this Section 10.
10.2 CODE OF ETHICS. Licensee represents and warrants that Licensee and
its key officers and managers have read and understand LS&CO.'s Code of Ethics,
a copy of which is attached to this Agreement as EXHIBIT G, and agrees that
Licensee shall, and shall cause its subcontractors to, abide by the provisions
thereof (as amended from time to time by LS&CO.) in conducting all aspect of its
operations under this Agreement.
10.3 GLOBAL SOURCING AND OPERATING GUIDELINES. Licensee represents and
warrants that its key officers and managers have read and understand the GSOG
attached to this Agreement as EXHIBIT H, and agrees that Licensee shall, and
shall cause its permitted sub-contractors to, comply with the requirements of
the GSOG at all times.
10.4 EFFECT ON COMPLIANCE WITH LAWS. Licensee shall be fully
responsible for compliance with all local laws and regulations applicable to
Licensee's operations. If the requirements of the Code of Ethics or of the GSOG
are stricter than the requirements of applicable law, the requirements of the
Code of Ethics and the GSOG shall control.
10.5 EFFECT OF BREACH. This Section 10 is of the essence of this
Agreement. Any failure by Licensee or any of its subcontractors to comply with
the Code of Ethics or any failure by Licensee or any of its subcontractors to
comply with the GSOG shall be grounds for declaration of an Event of Default by
LS&CO. under Section 20.
11. INTELLECTUAL PROPERTY MATTERS
11.1 PERMITTED USE. The license granted under this Agreement applies
only to the use of the Trademarks by Licensee in connection with the
manufacture, advertising, distribution and sale of Products to retailers
approved under Section 8. Licensee is not authorized to use any other trademark
of LS&CO. or any of its affiliates or to use of any Trademarks in connection
with the manufacture and sale of any other products, the sale of Products to any
person or entity other than a retailer approved under Section 8 or for any
purpose other than as expressly provided in this Agreement.
11.2 RESERVATION OF RIGHTS; OTHER LICENSEES. LS&CO. owns the Trademarks
and any related registrations or applications. Except as specifically, expressly
and exclusively granted to Licensee under this Agreement, LS&CO. reserves all
right, title and interest in and to the Trademarks for its own use or for the
use of any other licensee, whether within or outside the Territory, in
connection with any and all products and services. By way of example and not of
limitation, Licensee understands and agrees that: (i) LS&CO. may manufacture, or
authorize third. parties to manufacture, in the Territory, Products for ultimate
sale outside the Territory; and (ii) LS&CO. may grant licenses to others in the
Territory in connection with items of the type described in EXHIBIT B except for
Products bearing the Trademarks manufactured and sold to Approved Retailers
pursuant to the terms of this Agreement. Licensee acknowledges that LS&CO. has
granted licenses to 525 Made in America, Pacific Trail, Xxxxxx Xxxx, NORTHEM
Cap, Royce Hosiery and Xxxxxxxx'x to design, manufacture and sell in the
Territory products bearing the Trademarks and/or similar trademarks, including
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sweaters, outerwear, hats, socks and belts, respectively, and that this does not
limit or otherwise affect either LS&CO.'s or its licensees' rights under their
agreements.
11.3 NO SUBLICENSE. Licensee shall not grant to any third party any
right, permission, license or sublicense with respect to any of the rights
granted under this Agreement. Licensee may enter into a sublicense agreement or
purchase order arrangement with a third party with whom Licensee contracts for
the manufacture of Products, provided that that sublicense or purchase order
limits use of the Trademarks to only those uses as may be necessary for the
manufacture of Products for Licensee under this Agreement. Use of contractors
shall in no way limit or otherwise affect Licensee's obligations under this
Agreement; Licensee shall be responsible for all contractors and shall take all
steps necessary to ensure that contractors maintain the level of quality
required under this Agreement and otherwise comply with this Agreement. Licensee
shall ensure that all sundry items and other materials bearing the Trademarks
used by Licensee or any contractor are used only for purposes of manufacture of
Products, that Licensee and any contractors take appropriate steps to prevent
the loss, duplication or improper use of these sundries and materials and that
Licensee or any contractor not use these sundries and materials in making
products for Licensee other than the Products or for the account of any party
other than Licensee.
11.4 OTHER USES; NO DERIVATIVES. Licensee shall not use, or permit any
other person or entity in its control to use, the words "Levi Xxxxxxx & Co.,"
"Dockers(R)" or "Dockers(R) Golf," any of the Trademarks or any combination,
form or derivative of a Trademark, as part of a corporate or division name or
trade name, or in a way that creates the impression that Licensee and LS&CO. are
related parties. Licensee shall not use any Trademarks in such a way so as to
give the impression that the names "Levi Xxxxxxx & Co.," "Dockers(R)," or
"Dockers(R) Golf," or such Trademarks, or any combination, form or derivative of
a Trademark, is the property of Licensee. Neither the Products nor any labeling
or packaging shall bear any of Licensee's marks or other identifiers except for
the Trademarks or except as required by law, except as may be specifically
directed by LS&CO. with respect to disclosure of Trademark ownership and
existence of the licensing relationship (for example, "this product is
manufactured under license from Levi Xxxxxxx & Co."). Licensee shall not use the
reputation and goodwill of the Trademarks or LS&CO. in connection with or
otherwise to influence the sales or distribution of any other brand it
manufactures or sells.
11.5 NO USE FOR PUBLICITY. Unless expressly requested by LS&CO.,
Licensee shall not manufacture, sell or distribute Products for use for
publicity purposes (other than publicity of Products), in combination sales (by
way of example and not limitation, a gift with purchase), as premiums or
giveaways, or to be disposed of through similar methods of merchandising. LS&CO.
reserves the right to authorize the manufacture and sale of Products as part of
a combination sale, premium or giveaway with products (other than Products)
bearing the LS&CO. name or LS&CO. trademarks. These Products, however, shall
not: (i) be substantially similar to Products distributed by the Licensee or
(ii) unreasonably interfere with Licensee's distribution of Products. If LS&CO.
desires to authorize the manufacture of Products for these purposes, LS&CO.
shall provide Licensee notice and a first right of negotiation for the
manufacturing work. If LS&CO. and Licensee fail to reach a mutually acceptable
agreement within ten days after such notice is given, LS&CO. may negotiate and
enter into an agreement with a third party for the manufacture of those
Products.
11.6 RIGHTS TO TRADEMARKS. Licensee acknowledges and agrees that its
use of the Trademarks shall at all times be in its capacity as a licensee of
LS&CO., for the account and benefit of LS&CO. Uses of the Trademarks shall not
vest in Licensee any title to the Trademarks or right or presumptive right to
continue use except as provided in this Agreement. For purposes of trademark
registrations, sales by Licensee or LS&CO. shall be considered to have been made
by LS&CO. Licensee shall not, during the term of this Agreement or after its
expiration or termination: (i) attack or question LS&CO.'s title or rights in
and to the Trademarks in any jurisdiction, or attack or question the validity of
this license or of the Trademarks, or (ii) contest the fact that Licensee's
rights under this Agreement (x) are solely those of a licensee entitled to
produce and sell products under contract and (y) terminate upon-termination or
expiration of this Agreement. Licensee acknowledges that only LS&CO. may file
and prosecute a trademark application or applications to register any of the
Trademarks, and that registration decisions may be made by LS&CO. in its sole
discretion.
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11.7 STANDARDS. Licensee shall maintain the high standards of the
Trademarks in all marketing, packaging and promotion of the Products. LS&CO. may
issue uniform rules and regulations relating to the manner of use of the
Trademarks. Licensee shall comply with these rules and regulations. Licensee
shall take all appropriate actions, and all actions reasonably requested by
LS&CO., to prevent improper use of the Trademarks, in advertising, POS
presentations or otherwise by Approved Retailers and any others who come into
possession of the Products, and by subcontractors, vendors and any other
entities or persons engaged by Licensee in connection with this Agreement.
11.8 COUNTERFEITING. Licensee shall, at LS&CO.'s expense and reasonable
request, cooperate in such anti-counterfeiting measures as undertaken by LS&CO.
from time to time and use reasonable efforts to secure and protect from
counterfeiting labels, sundries and other materials used in connection with
manufacturing, packaging and marketing of the Products.
11.9 DESIGN OWNERSHIP AND ASSIGNMENT. LS&CO. shall own, and Licensee
assigns to LS&CO., all copyright, patent, trade secret, know-how right, and all
other right, title and interest in and to, all designs for Products, and all
artwork, sketches, color cards, color stories, logos, labels, samples and other
materials depicting designs or Products, whether created or furnished by
Licensee or by LS&CO., including any modifications or improvements created by
Licensee or LS&CO. All patent and copyright registrations in respect of designs
and artwork, sketches, logos, labels, samples and other materials depicting the
designs, whether created or furnished by Licensee or LS&CO., shall only be
applied for by LS&CO., at LS&CO.'s discretion and expense, with the applications
designating LS&CO. as the patent or copyright owner, as the case may be. LS&CO.
may use these designs and other materials in any manner it desires, so long as
the use does not conflict with rights granted to Licensee under this Agreement,
including, without limitation, for products in jurisdictions outside the
Territory and on products other than Products in any jurisdiction. Licensee
shall cause to be placed on all Products and packaging, when necessary,
appropriate notices (reviewed and approved in advance by LS&CO.) designating
LS&CO. as the trademark, copyright or design patent owner, as the case may be.
11.10 DESIGN LICENSE. LS&CO. grants to Licensee the exclusive right'
license and privilege to use the designs furnished or approved by LS&CO. under
this Agreement and all related copyrights and design patents, if any, solely in
connection with Products sold to Approved Retailers in the Territory. LS&CO.
shall execute and deliver to Licensee all documents and instruments necessary to
document that license. Licensee shall have no right to use the licensed designs
under any other trademark or label or for any other product without first
obtaining the prior approval of LS&CO., including, without limitation, any
unique, signature design element or technical feature for the Products.
11.11 INFRINGEMENT. Licensee shall promptly notify LS&CO. in writing of
any use it learns of which may be infringements or imitations by others of the
Trademarks on articles similar to Products, and of any uses which may be
infringements or imitations by others of the related designs, design patents and
copyrights. LS&CO. shall have the sole right to determine whether or not any
action shall be taken on account of infringements or imitations. Licensee shall
not institute any suit or take any action unless LS&CO. in its sole discretion
authorizes Licensee to do so. Licensee shall not attempt to register any
infringing or confusingly similar trademark or corporate name, and shall use
reasonable efforts to ensure that no third party infringes or registers
confusingly similar trademarks or the LS&CO. corporate name. Licensee shall take
all appropriate actions, and all actions reasonably requested by LS&CO., to
prevent or avoid any misuse of the Trademarks or licensed designs by any of its
customers, contractors, sublicensees, suppliers or other resources.
11.12 COOPERATION. Licensee shall, at LS&CO.'s expense (provided that
LS&CO. shall not be responsible for the cost of the time and effort expended by
Licensee's officers and employees in connection with furnishing such
assistance), assist and cooperate with LS&CO. in securing and preserving
LS&CO.'s rights in and to the Trademarks and in and to the designs, design
patents or copyrights described in Section 11.9. LS&CO. may commence or
prosecute any claims or suits in its own name and may join Licensee as a party
in these proceedings.
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12. DILIGENCE; OTHER RELATIONSHIPS; FIRST RIGHTS OF REFUSAL
12.1 DILIGENCE. Licensee shall use its best efforts to exploit
throughout the Territory the license granted and to maintain the established
prestige and goodwill of the Trademarks and the reputation, standards and image
of LS&CO. Licensee shall maintain adequate design, sourcing, marketing, sales
and customer service resources, inventories and distribution facilities for
Products to ensure exploitation of the license and timely and complete
performance of its obligations under this Agreement.
12.2 OTHER LICENSES. Licensee is a party to, or presently plans to
become a party to, certain licenses, sublicenses or similar arrangements giving
Licensee the right to manufacture or sell products of the type described in
EXHIBIT B. Those arrangements are described on EXHIBIT I. During the term of
this Agreement, Licensee shall not, except as approved by LS&CO. in its sole
discretion, become a party to any additional license, sublicense or similar
agreement giving Licensee the right to manufacture, and shall not manufacture,
any product of the type described in EXHIBIT B bearing trademarks of or
otherwise on behalf of Sport Xxxxx, Cutter & Buck, Ashworth, Xxxx Xxxxxx, Chaps
by Xxxxx Lauren, Antigua, or Guess?. In addition, if Licensee intends to enter
into any license or sublicense agreement giving Licensee the right to
manufacture and sell any product of the type described in EXHIBIT B for any
other entity or person and the product, in the reasonable judgment of Licensee,
would compete in the marketplace with the Products, Licensee shall, if not
prevented by under a confidentiality agreement with the prospective licenser,
notify LS&CO. in writing of its intention as soon as practicable, but in no
event less than 30 days prior to Licensee executing or entering into that
license or sublicense agreement. Licensee shall upon LS&CO.'s request discuss
the proposed arrangement with LS&CO.
12.3 FIRST RIGHTS OF REFUSAL. Licensee agrees that in connection with
the development of Products bearing the Trademarks as contemplated under this
Agreement, it will offer the first right of refusal to (a) Royce Hosiery for the
design and manufacture of socks, and (b) Xxxxxxxx'x for the design and
manufacture of belts and small leather goods. LS&CO. shall have no obligations
or liabilities to Licensee, Royce Hosiery or Xxxxxxxx'x with respect to these
offers or any resulting negotiations.
13. DEFAULT; TERMINATION
13.1 EVENT OF DEFAULT. Each of the following shall constitute an event
of default ("Event of Default"):
(a) Licensee fails to make any payment of royalties (including
Guaranteed Minimum Royalties) or other amounts to LS&CO. when due;
(b) Licensee files a petition in bankruptcy, is adjudicated a
bankrupt or files a petition or otherwise seeks relief under any bankruptcy,
insolvency or reorganization statute or proceeding, or a petition in bankruptcy
is filed against it and is not dismissed within 60 days, or it becomes insolvent
or makes an assignment for the benefit of its creditors or a custodian, receiver
or trustee is appointed for it or a substantial portion of its business or
assets or admits in writing its inability to pay its debts as they become due;
(c) Licensee, after achieving distribution and sale of Products
throughout the Territory, fails for a period of at least two consecutive months
to continue the bona fide distribution and sale of Products;
(d) Licensee sells Products to any entity or person other than an
Approved Retailer or other than as provided in Section 8.8;
(e) Licensee's second quality and closeout or end of season sales
are greater than 25% of total licensee manufactured Product sales (measured in
units) during any Annual Period;
(f) Except for the First Annual Period, Licensee fails in any
Annual Period to achieve enough sales to generate earned royalties under Section
3.2 equal to or exceeding the Guaranteed Minimum Royalty specified in Section
3.1 for that Annual Period;
(g) Licensee uses the Trademarks in a manner not authorized under
this Agreement or uses any other trademarks of LS&CO. on Products or otherwise;
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(h) Licensee sells any Products the designs and Samples for which
were not approved by LS&CO. as provided by Sections 5 and 6 or the approval for
which was withdrawn as provided in Sections 6.2 or 6.3;
(i) Licensee commits any breach of its obligations in respect of
Confidential Information as specified in Section 17;
(j) Licensee sells Products not meeting product quality standards
as contemplated by Section 6;
(k) Licensee or any of its subcontractors commits any breach of
its obligations under Section 10;
(l) Licensee assigns or attempts to assign this Agreement
(including any deemed assignment resulting from a Change of Control as
contemplated by Section 18) in breach of its obligations under Section 18;
(m) Any material representation or warranty made by Licensee in
this Agreement is false in any material respect; or
(n) Licensee commits a material breach of any of its other
obligations under this Agreement.
13.2 EFFECTIVENESS AND CURE. If any Event of Default specified in
Sections (a), (b), (c), (d), (e), (f), (g), (h) or (i) occurs, then LS&CO. may
immediately terminate this Agreement, with that termination effective upon
delivery of notice to Licensee. If any other Event of Default occurs, or if
LS&CO. decides not to terminate immediately the Agreement in respect of an Event
of Default specified in Sections 13(a) - (i), then Licensee, upon written notice
from LS&CO. to Licensee describing the circumstances giving rise to that Event
of Default, shall promptly and at its expense cure the Event of Default as
though it never occurred. If Licensee fails to cure such Event of Default within
that 30 day period, then LS&CO. may terminate this Agreement upon delivery to
Licensee of a written notice to that effect, with that termination effective
upon delivery of notice to Licensee. It is understood and agreed that Licensee
shall not have a right to cure if there occurs a second Event of Default under
the same subsection of Section 13.1 within two years of a prior Event of Default
that did not, because of cure or otherwise, result in termination of this
Agreement.
14. CONSEQUENCES OF TERMINATION
14.1 OPTION TO PURCHASE. Licensee shall give LS&CO., no later than ten
days following the termination of this Agreement (including by reason of
expiration), a listing of all Products on hand or in process. LS&CO. may conduct
a physical review of all finished and unfinished Products and roll goods,
labels, raw materials, sundries, embellishments, packaging, transparencies,
films and echtachromes that are used in connection with the manufacture and
packaging of the Products, artwork and negatives or transparencies previously
used or to be used in connection with the designs for the upcoming season and
prototypes and samples of the Products (collectively, the "Termination
Inventory"). LS&CO. or its designee shall have the option (but not the
obligation) in its sole discretion to purchase from Licensee either or both of:
(i) all or a portion of the excess finished Products and Samples which have not
been sold or will not be sold by Licensee within 180 days of expiration or
termination of the Agreement, and (ii) all or a portion of the other Termination
Inventory. If LS&CO. wishes to make a purchase, LS&CO. shall notify Licensee of
its or its designee's intention to exercise the option within 30 days of
delivery after receipt of the Termination Inventory listing. LS&CO. shall pay
Licensee for any finished Products and Samples at a price equal to actual
manufacturing cost for those Products and Samples. LS&CO. shall pay an amount
equal to Licensee's book value for any remaining items other than labeling and
packaging materials bearing the Trademarks, which Licensee will turn over to
LS&CO. without payment by LS&CO. Licensee shall at its expense deliver the
purchased items to LS&CO. within 15 days after receipt of LS&CO.'s exercise
notice, with LS&CO. to pay the purchase price to Licensee within ten days after
delivery of the purchased items. LS&CO. shall be entitled to deduct from the
purchase price any amounts owed it by Licensee.
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14.2 DISPOSAL OF TERMINATION INVENTORY. If LS&CO. chooses not to
purchase all of the Products included in the Termination Inventory, then
Licensee, for a period of 90 days after Licensees physical receipt of Products
in the Territory, but in no event to exceed 180 days from the termination or
expiration of this Agreement, may dispose of Products which are on hand or in
the process of being manufactured at the time of termination, to persons
approved to purchase Products under Section 8 and otherwise in accordance with
this Agreement. If, however, LS&CO. notifies Licensee that LS&CO. or a new
licensee is selling Products during that 90 day period, or if the termination is
by reason of an Event of Default described in Section 13.1(h) or (j), then
Licensee shall dispose of Products only to those Approved Retailers approved
under Section 8.3. Licensee shall pay earned royalties on such sales as provided
in Section 3. Licensee shall have no right to so dispose of Products unless it
has complied with the provisions of this Section 14.
14.3 TERMINATION OF LICENSES. Upon termination of this Agreement, all
rights granted to Licensee under this Agreement, including, without limitation,
all license rights under Section 11.10 with respect to designs, artworks,
sketches and other materials, together with rights to use the Trademarks, shall
automatically and without consideration or further action terminate and revert
to LS&CO. Licensee shall, except as required in connection with disposal of
Products included in the Termination Inventory as provided in Section 14.2: (i)
stop and refrain from all use of the Trademarks or any marks specified by LS&CO.
in its sole discretion as being similar to the Trademarks; (ii) stop and refrain
from further use of any of Product designs; and (iii) stop and refrain from
manufacturing, selling or distributing any products (whether or not they bear
the Trademarks) which are similar to, or derived from, the Products or designs,
it being understood that nothing in this Section 14.3 shall prevent Licensee
from selling styles of golf apparel; and (iv) dispose of all sundries, labels,
packaging and other materials bearing the Trademarks in a manner approved by
LS&CO.
14.4 PAYMENT OF GUARANTEED MINIMUM ROYALTY. Licensee shall, no later
than 30 days after the effective date of the termination, pay LS&CO. any
remaining installments of the entire Guaranteed Minimum Royalty for the balance
of the quarter in which LS&CO. gave notice of the termination, and for the next
calendar quarter.
14.5 CERTAIN EVENTS. No assignee for the benefit of creditors,
custodian, receiver, trustee in bankruptcy, sheriff or any other officer of the
court or official charged with responsibility for taking custody of Licensee's
assets or business may continue this Agreement or exploit or use any of the
Trademarks following the termination of this Agreement. Notwithstanding the
provisions of Sections 13 and 18, if, under the bankruptcy code or successor
similar law, a trustee in bankruptcy, of Licensee, or Licensee, as debtor, is
permitted to assume this Agreement and does so and, thereafter, desires to
assign this Agreement to a third party in accordance with the bankruptcy code,
the trustee or Licensee, as the case may be (in either case, the "Debtor"),
shall notify Licensor. The notice shall set out the name and address of the
proposed assignee, the proposed consideration for the assignment and all other
relevant data about the proposed assignment. The giving of this notice shall
constitute the grant to LS&CO. of an option to have this Agreement assigned to
LS&CO. or to LS&CO.'s designee for the consideration, or its equivalent in money
and upon the terms specified in the notice . The option may be exercised only by
notice given by LS&CO. to the Debtor no later than 30 days after LS&CO.'s
receipt of the notice from the Debtor unless a shorter period is deemed
appropriate by the court in the bankruptcy proceeding. If LS&CO. does not
exercise its option in a timely manner then the Debtor may complete the
assignment, but only if the assignment is to the entity named in the notice and
for the consideration and upon the terms specified in the notice. Nothing in
this Section 14.5 is intended to impair any rights which LS&CO. may have as a
creditor in the bankruptcy proceeding.
14.6 TRANSITION COOPERATION; OTHER LICENSES. Licensee shall cooperate
with LS&CO. during the transition period following a termination of this
Agreement, including, for example, signing any documents reasonably requested by
LS&CO. to accomplish or confirm the outcome outcomes (for example, reversions or
assignment of license or other intellectual property, rights) contemplated by
Section 14. The right of licensee to sell items of Termination inventory is
non-exclusive and shall not limit LS&CO.'s rights to sell such items of
Termination Inventory or to enter into other licenses or transactions.
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14.7 REMEDIES; OTHER LICENSES; NO OTHER OBLIGATIONS
(a) Notwithstanding any other provision of this Agreement
(including, without limitation, Section 13), LS&CO. shall have all the rights
and remedies which it may have, at law or in equally, with respect to the
termination of this Agreement, the collection of royalties or other; or amounts
payable by Licensee under this Agreement, the enforcement of all rights relating
to the establishment, maintenance or protection of the Trademarks and the
designers created or used under this Agreement or in respect of damages or
equitable relief in connection with breach of this Agreement by Licensee, it
being understood that termination under Section 13 shall not be considered an
exclusive remedy or in any way limit LS&CO. from enforcing other rights or
remedies, and that all decisions under, Section 13 by LS&CO. may be made by
LS&CO. in its sole discretion.
(b) Licensee shall under no circumstance be entitled, directly
or indirectly, to any form of compensation or indemnity from LS&CO. as a
consequence of the termination or expiration of this Agreement for any reason,
including, without limitation, the circumstances contemplated by Section 13.
Licensee waives any claims it may have against LS&CO. arising from any alleged
goodwill created by Licensee for the benefit of Licensee or LS&CO. or from the
alleged creation or increase of a market for Products or other items bearing the
Trademarks.
(c) Notwithstanding anything to the contrary in this
Agreement, LS&CO. shall have the; right, exercisable at any time, to negotiate
and enter into agreements with third parties under which it may grant a license
to use the Trademarks in connection, with the manufacture, distribution and sale
of Products in the Territory, or to enter into whatever other transactions it
desires for the use of the Trademarks on Products without any obligation of any
kind to Licensee, if under such agreement the products will be sold after the
date of expiration or termination of the Agreement. Nothing in this Agreement
shall be construed to prevent any such third party licensee from showing these
products and accepting orders prior to the termination or expiration of this
Agreement.
(d) It is understood and agreed that: (i) neither Licensee nor
LS&CO. shall be, as a result of entry into or performance under this Agreement
obligated to renew or extend this Agreement (other than as provided by Section
2.2) or business relationship in any respect, or to negotiate any such renewal
or extension, or, on the part of LS&CO., to offer a "first right of negotiation"
or "right of refusal" for a renewed or new license; (ii) subject to Section
12.2, Licensee shall be free to engage in negotiations and to enter into
agreements with other licensers or otherwise committing Product-devoted
resources, to commence upon expiration of this Agreement; and (iii) neither
Licensee nor LS&CO. shall have any right to compensatory, consequential, lost
profits, punitive or other damages of any other nature, or to obtain an
injunction, specific performance or other equitable remedy, whether to prevent
LS&CO. or Licensee, as the case may be, from entering into another agreement or
otherwise, should LS&CO. or Licensee, as the case may be, (a) decline to
negotiate or enter into a renewal or extension of this agreement (other than as
provided by Section 2.2) or (b) enter into a new agreement with a third party.
15. INDEMNITY
15.1 LS&CO. INDEMNITY. Except for matters as to which Licensee is
required to indemnify LS&CO. under Section 15.2, LS&CO. shall indemnify and hold
harmless Licensee and its affiliates, directors, officers, employees and agents
against any and all liability, claims, causes of action, suits, damages and
expenses (including reasonable attorneys' fees and expenses in disputes or
proceedings involving third parties or between LS&CO. and Licensee) which
Licensee is or becomes liable for, or may incur solely by reason of its use
within the Territory, in accordance with the terms and conditions of this
Agreement, of the Trademarks or the designs furnished to Licensee by LS&CO., to
the extent that such liability arises through infringement of another's
trademark rights or in connection with LS&CO.'s performance of this Agreement
(collectively, an "LS&CO. Indemnified Claim"). If any LS&CO. Indemnified Claim
shall be brought or asserted against Licensee in respect of-which indemnity may
be sought from LS&CO. under this Section 15.1, Licensee shall notify LS&CO. in
writing not later than the earlier of ten days before a response is due or 30
days after Licensee receives notice of the LS&CO. Indemnified Claim, and LS&CO.
shall assume and direct the defense thereof. A failure or delay by Licensee in
giving this notice shall not reduce or otherwise affect LS&CO.'s indemnification
obligations except to the extent that the failure or delay shall have materially
15
prejudiced LS&CO.'s ability to defend or settle the Indemnified Claim. Licensee
may, at its own expense, be represented by its own counsel in such action or
proceeding.
15.2 LICENSEE INDEMNITY. Except for matters as to which LS&CO. is
required to indemnify Licensee under Section 15.1, Licensee shall defend,
indemnify and save and hold LS&CO. and its affiliates, directors, officers,
employees and agents harmless of and from any and all liability, claims, causes
of action, suits, damages and expenses (including reasonable attorneys fees and
expenses in disputes or proceedings involving third parties or between LS&CO.
and Licensee), which it is, or becomes liable for, or may incur, or be compelled
to pay by reason of any acts, whether of omission or commission, that may be
committed or suffered by Licensee or any of its servants, agents or employees in
connection with Licensee's performance of this Agreement, including without
limitation, Licensee's use of Licensee's own designs, advertising and
promotional material used by Licensee, manufacture, sale and consumer use of
Products or otherwise in connection with Licensee's business, whether that claim
based on laws relating to product liability, consumer protection, environmental
protection, tort, contract, trademark, patent, copyright, trade secret, tax,
employment, advertising, customs or any other law or basis (collectively, a
"Licensee Indemnified Claim"). If any Licensee Indemnified Claim shall be
brought or asserted against LS&CO. in respect of which indemnity may be sought
from Licensee under this Section 15.2, LS&CO. shall notify Licensee in writing
not later than the earlier of ten days before a response is due or 30 days after
LS&CO. receives notice of the Licensee Indemnified Claim. A failure or delay by
LS&CO. in giving this notice shall not reduce or otherwise affect Licensee's
indemnification obligations, except to the extent that the failure or delay
shall have materially prejudiced Licensee's ability to defend or settle the
claim. LS&CO. may, at its own expense, be represented by its own counsel in such
action or proceeding.
16. INSURANCE
16.1 REQUIRED COVERAGE. Licensee shall maintain, at its sole expense,
the following insurance coverage, with a financially sound insurance company
having an A.M. Best Rating of A or better, throughout the term of this Agreement
and, with respect to the coverage described in (ii) below, for a period of two
(2) years after its expiration or termination: (i) worker's compensation,
occupational disease, employer's liability (with limits of not less than $1
million for bodily injury by accident for each accident, $1 million for bodily
injury by disease for each employee and a $1 million policy limit for bodily
injury by disease), disability benefit and other similar insurance required
under the laws of the state that apply to the activities to be performed by
Licensee under this Agreement; (ii} commercial general liability insurance
including products liability, blanket contractual liability, personal injury and
advertising liability coverage with a combined single limit of $1 million per
occurrence for bodily injury, including death and property damage; (iii)
comprehensive automotive liability insurance for both owned and non-owned
vehicles used by Licensee either on or away from premises with a combined single
limit of $1 million per occurrence for bodily injury, including death and
property damage; and (iv) umbrella excess liability insurance, with a combined
single limit of $2 million per occurrence for bodily injury, including death and
property damage.
16.2 LS&CO. AS ADDITIONAL INSURED. Licensee shall ensure that LS&CO.,
and its directors, officers, employees, agents and assigns, shall be named as
additional insureds with respect to the insurance described in clause (ii)
through (iv) of Section 16.1. Licensee shall, within ten days after execution of
this Agreement, deliver to LS&CO. a certificate of such insurance from the
insurance carriers, describing the scope of coverage and the limits of
liability, naming the additional insureds required by this Section 16 and
providing that the policy may not be canceled or amended without at least 30
days prior written notice to LS&CO.
17. CONFIDENTIAL INFORMATION
17.1 CONFIDENTIAL INFORMATION. Except as otherwise provided in this
Agreement, all information disclosed by one of the parties (the "Discloser") to
the other party (the "Recipient") is considered confidential and: (i) shall
remain the exclusive property of the Discloser; (ii) shall be used by the
Recipient only in connection with its performance under this Agreement; and
(iii) shall be maintained in confidence by Recipient as described in this
Section 17. "Confidential Information" means any formula, pattern, program,
method, marketing programs, profitability, corporate strategy, technique,
process, design, sketch, color card, color story, artwork, material, business
16
plan, customer or personnel list, or financial statement. Confidential
Information shall include, without limitation, information disclosed in
connection with this Agreement, but shall not include information that: (i) is
now or subsequently becomes generally available to the public through no
wrongful act or omission of Recipient; (ii) Recipient can demonstrate to have
had rightfully in its possession prior to disclosure to Recipient by Discloser;
(iii) is independently developed by Recipient without use, directly or
indirectly, of any Confidential Information; or (iv) Recipient rightfully
obtains from a third party who has the right to transfer or disclose it.
17.2 LIMITS ON USE AND DISCLOSURE. Except as contemplated by this
Agreement or as specifically authorized by Discloser in writing, and except as
required by law, Recipient shall not reproduce, use, distribute, disclose or
otherwise disseminate Confidential Information. Upon expiration or termination
of this Agreement or upon request by Discloser, Recipient shall promptly deliver
to Discloser all Confidential Information (including copies) then in its
custody, control or possession, and shall deliver within five days after such
termination or request a written statement to Discloser certifying compliance
with this Section 17.2.
17.3 ACCESS. Licensee and LS&CO. shall use reasonable efforts to ensure
that access to Confidential Information is limited to those employees or other
authorized representatives of Recipient who need to know such Confidential
Information in connection with their work related to this Agreement. Recipient
shall use reasonable efforts to inform such employees or authorized
representatives of the confidential nature of Confidential Information.
17.4 CONFIDENTIALITY OF AGREEMENT. Except as may be required under
applicable securities law and stock exchange regulations, Licensee shall not
issue any press release or other public announcements relating to this Agreement
in any respect or to the business relationship between LS&CO. and Licensee
without first obtaining the approval of LS&CO.
18. ASSIGNMENT; CHANGE OF CONTROL OF LICENSEE
18.1 LICENSOR ASSIGNMENT. Nothing in this Agreement limits LS&CO.'s
ability to sell or otherwise transfer the Trademarks to a third party or to
engage in any merger, consolidation, sale of assets, reorganization, sale of
stock or other transaction. LS&CO. may assign its rights and delegate its duties
under this Agreement as it sees fit, including, without limitation, in
connection with such a transaction.
18.2 LICENSEE ASSIGNMENT. The rights granted to Licensee are personal
in nature. Licensee may not assign this Agreement or any rights granted under
this Agreement, or delegate any of its obligations under this Agreement, without
first obtaining the approval of LS&CO. Any such assignment without the prior
approval of LS&CO. shall be null and void and of no force or effect. Any "Change
of Control" (as defined in this Section 18.2) of Licensee shall be considered an
assignment of this Agreement by Licensee. "Change of Control" means: (i) any
consolidation or merger of Licensee in which Licensee or its parent is not the
continuing or surviving corporation or after which the shareholders of Licensee
or the date hereof cease to hold at least 50% or more of the combined voting
power of Licensee, (ii) any sale of all or substantially all the assets of
Licensee to any person, entity or group (within the meaning of Section 13(d)(3)
or 14(d)(2) of the Securities Exchange Act of 1934) (the "Exchange Act") other
than a then existing shareholder or group of shareholders of Licensee or its
parent owning 75% or more of the combined voting power of Licensee's or its
parent's then outstanding securities or (iii) any person, as that term is used
in Sections 13(d) and 14(d)(2) of the Exchange Act, who becomes or is discovered
to be a beneficial owner (as defined in Rule 13d-3 under the Exchange Act as in
effect on the date of this Agreement) directly or indirectly of securities of
Licensee representing 50% or more of the combined voting power of Licensee's
then outstanding securities on a fully converted, fully diluted basis (unless
that person is already such a beneficial owner on the date of this Agreement).
Licensee shall notify LS&CO. of any Change in Control within three days after
its occurrence. If the prior approval of LS&CO. is not obtained with respect to
any Change of Control of Licensee, LS&CO. shall be entitled, in its sole
discretion, to terminate this Agreement at any time during the 90 day period
after the date upon which LS&CO. receives from Licensee notice of the Change in
Control or otherwise learns of the Change in Control.
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19. APPROVALS
This Agreement contains a number of provisions in which Licensee must
obtain LS&CO.'s approval of a particular item or matter. All requests for these
approvals must be made in writing by Licensee. Unless otherwise expressly stated
in the relevant provision, approval procedures shall be as described in this
Section 19. All approvals or disapprovals may be made by LS&CO. in its sole
discretion and must be communicated by LS&CO. in writing. If LS&CO. fails to
affirmatively approve or disapprove of an item or matter within ten (10) days
after submittal to LS&CO., then Licensee shall contact LS&CO. and confirm LS&CO.
receipt. Any request for which affirmative approval or disapproval is not given
by LS&CO. within three (3) days after confirmed receipt shall be considered
approved. LS&CO. shall have no obligation to review items or matters the
submission of which did not comply with this submission procedure. It is
understood and agreed that LS&CO.'s approval decisions under Sections 4, 5, 6
and 8 of this Agreement may be based solely upon LS&CO.'s subjective standards
as to aesthetics and image based upon its requirements for and the reputation
and prestige of products bearing the Trademarks, retail distribution of products
bearing the Trademarks and its commercial judgment generally. It is understood
that Product quality, style of packaging, shipping, customer service, promotion,
selling tools, creation and introduction of new products and service and
presentation at retail all may bear upon "image" as contemplated by this Section
19.
20. DISPUTE RESOLUTION
20.1 DEFINITIONAL DISPUTES. Licensee recognizes that LS&CO. has
granted, and may in the future grant, licenses to other parties to use the
Trademarks or one or more of LS&CO.'s other trademarks in connection with the
manufacture, promotion and sale of apparel, accessories or other items. If
Licensee or the licensee under any other such license notifies LS&CO. of what it
believes is an existing or potential conflict in the definition of merchandise
covered by, or the rights of the licensee under, their respective license
agreements, LS&CO. shall consider and resolve the issue by giving each of the
affected parties a written notice of its decision. LS&CO.'s decision shall be
final and binding upon Licensee. In addition, Licensee acknowledges that due to
the nature of the marketplace, the definition of Products may change over time
or may not be amenable to precise delineation, whether or not there exists a
potentially conflicting second license. Licensee agrees that if there is a
dispute with LS&CO. regarding the definition of Products, LS&CO. shall have
authority to resolve the dispute in its sole discretion; that decision shall be
final and binding upon Licensee.
20.2 MEDIATION. If there is any controversy, dispute or claim arising
out of or relating to interpretation or breach of this Agreement (except
controversies, disputes or claims relating to or affecting in any way the
ownership of or the validity of the Trademarks or any related registration or
application for registration, or fraud by either party), then Licensee and
LS&CO. promptly shall try to settle it. If the dispute cannot be resolved,
Licensee and LS&CO. promptly shall initiate and participate in mediation of the
dispute, with a mediator to be selected jointly by Licensee and LS&CO., or, if
they cannot agree upon a mediator, by the Regional Vice President of the San
Francisco-based division of the American Arbitration Association "AAA-SF") or
his or her designee. If the dispute is not resolved within five days after
completion of mediation, then Licensee and LS&CO. promptly shall submit it to
binding arbitration as provided in Section 20.3.
20.3 AGREEMENT TO ARBITRATE. The arbitration shall be conducted in San
Francisco or other location mutually chosen by Licensee and LS&CO. in accordance
with the then existing Rules of Commercial Arbitration of the American
Arbitration Association ("AAA"). There shall be a single arbitrator, who shall
be selected in accordance with the procedures of the AAA. He or she shall be a
retired or former judge of any federal court appointed under Article III of the
United States Constitution who presided in a court located in the state in which
the arbitration is conducted, or a retired or former judge of a trial court of
general jurisdiction or a higher court of the state in which the arbitration is
conducted. Judgment upon any award rendered by the arbitrator may be entered by
any State or Federal court having jurisdiction. Any controversy concerning
whether a dispute is an arbitrable dispute shall be determined by the
arbitrator. Licensee and LS&CO. intend that this agreement to arbitrate be
valid, specifically enforceable and irrevocable. The designation of a site or a
governing law for this Agreement or the arbitration shall not be deemed an
election to preclude application of the Federal Arbitration Act, if it would be
applicable. The decision of the arbitrator shall be binding and shall not be
subject to judicial review.
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20.4 INJUNCTIVE RELIEF; OTHER ACTIONS. Notwithstanding the other
provisions of this Section 20, both Licensee and LS&CO. may request a court of
competent jurisdiction to grant provisional injunctive relief solely for the
purpose of maintaining the status quo until an arbitrator can render an award on
the matter in question and the award can be confirmed by a court having
jurisdiction. It is understood and agreed that LS&CO. may seek injunctive relief
in matters involving use of the Trademarks or other trademarks of LS&CO. or
disclosure of confidential information. It is further understood and agreed that
nothing in Sections 20.1, 20.2, 20.3 or 20.4 shall in any way limit LS&CO.'s
rights under Sections 13 and t4 to terminate the Agreement upon the occurrence
of an Event of Default.
20.5 EXPENSES. The arbitrator shall award to the prevailing party in
any arbitration, and the court shall include in its judgment, if any, for the
prevailing party in any claim arising under this Agreement, the prevailing
party's costs and expenses (including, without limitation, expert witness
expenses and reasonable attorneys' fees and expenses for mediation) of
investigating, preparing and presenting such claim or cause of action. LS&CO.
and Licensee shall each bear their own expenses incurred in a mediation that
does not result in arbitration.
21. BROKERS
Each of LS&CO. and Licensee represents and warrants to the other that
it has not employed or dealt with any broker or finder in connection with this
Agreement or the transactions contemplated by this Agreement. Each of LS&CO. and
Licensee agrees to indemnify the other and hold it harmless from any and all
liabilities (including, without limitation, reasonable attorneys' fees and
disbursements paid or incurred in connection with those liabilities) for any
brokerage commissions or finders' fees in connection with this Agreement or the
transactions contemplated by this Agreement insofar as those liabilities shall
be based on any arrangements or agreements made by or purported or alleged to be
made by, it or on its behalf.
22. TAXES
Both parties shall pay, at the time and in the manner provided for in
any applicable legislation, all of their respectively owed income or other taxes
of whatever nature, to-tether with any related liabilities including interest
and penalties imposed by the United States or by a state or municipal government
or by any taxation authority thereof, payable on or in respect of its
manufacture, sale or distribution of Products or otherwise in connection with
exercise of its rights and performance of its obligations under this Agreement.
Unless otherwise specifically provided in this Agreement, both parties shall
promptly pay all of their respectively owed taxes (whether income, documentary,
sales, stamp, registration, issue, capital, property, excise or otherwise),
levies, imposts, duties, fees, charges, deductions, withholding, restrictions or
conditions or any penalties, interest or additions thereto or any nature
whatsoever imposed, levied, collected, assessed or withheld by and perform all
obligations imposed by the United States or by a state or municipal government
or any taxation authority thereof in connection with the manufacture, sale or
distribution of Products or otherwise in connection with exercise of its rights
and performance of its obligations under this Agreement.
23. REPRESENTATIONS AND WARRANTIES
23.1 BY LS&CO. LS&CO. represents and warrants to Licensee that: (i)
LS&CO. holds various U.S. registrations for, and/or common law rights in and to,
the Trademarks; (ii) LS&CO. has full legal right, power and authority to grant
the license described in Section 1, to enter into this Agreement, to perform all
of its obligations under this Agreement and to consummate all of the
transactions contemplated by this Agreement; (iii) this Agreement has been duly
executed and delivered by LS&CO. and constitutes the legal, valid and binding
obligation of LS&CO., enforceable against it in accordance with its terms; and
(iv) LS&CO. is not a party to, subject to or bound by any agreement, contract,
license, indenture, law, regulation or commitment of any kind or any judgment,
order, writ, prohibition, injunction or decree of any court or other
governmental body that would prevent, or that would be breached or violated by,
the execution and delivery of this Agreement or the consummation of the
transactions contemplated by this Agreement.
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23.2 BY LICENSEE. Licensee represents and warrants to LS&CO. that: (i)
Licensee has full legal right, power and authority to enter into this Agreement,
to perform all of its obligations under the Agreement and to consummate all of
the transactions contemplated by this Agreement; (ii) this Agreement has been
duly executed and delivered by Licensee and constitutes the legal, valid and
binding obligation of Licensee, enforceable against it in accordance with its
terms; (iii) Licensee is not a party to, subject to or bound by any agreement,
contract, license, indenture, law, regulation or commitment of any kind or any
judgment, order, writ, prohibition, injunction or decree of any court or other
governmental body that would prevent, or that would be breached or violated by,
the execution and delivery of this Agreement or the consummation of the
transactions contemplated by this Agreement; (iv) except as described in EXHIBIT
I, Licensee is not a party to any license, sublicense or similar agreement or
arrangement giving Licensee the right to manufacture or sell any product of the
type described in EXHIBIT B; and (v) neither the accurate and continuous
operation of the facilities, equipment, hardware and software systems
(collectively, the "Infrastructure") that Licensee will use in its activities
under this Agreement nor Licensee's design, manufacture, marketing and sale of
Products will be impaired or otherwise adversely affected because of "Year 2000"
problems affecting the Infrastructure or any contractors or other vendors upon
which Licensee will materially rely upon in its performance.
23.3 NO OTHER REPRESENTATIONS AND WARRANTIES. Licensee and LS&CO.
recognize that there are many uncertainties in the business of Licensee
contemplated by this Agreement. Licensee and LS&CO. agree and acknowledge that
other than those representations expressly made in this Agreement, no
representations, warranties, commitments or guarantees of any kind have been
made to either party by the other, or by anyone acting on its behalf, including,
without limitation, representations concerning the value of the Products or the
prospects for the level of their sales or profits. Licensee and LS&CO. each have
made its own independent business evaluation in deciding to license Licensee to
manufacture and distribute the Products on the terms described in this
Agreement.
24. GENERAL PROVISIONS
24.1 NOTICE. All notices, approvals requests, consents and other
communications under this Agreement shall be in writing and shall be considered
properly given or sent: (i) on the date when the notice, request, consent or
communication is personally delivered and acknowledged; or (ii) on the date when
sent by confirmed facsimile if a business day or on the first business day
following if not; or (iii) five days after transmission by certified or
registered mail; or (iv) the first business day after transmission by overnight
courier delivery, as follows:
if to LS&CO.:
Director of Licensing
Levi Xxxxxxx & Co.
0000 Xxxxxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
with copy to:
General Counsel/Trademark Licensing
Levi Xxxxxxx & Co.
0000 Xxxxxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
If to Licensee:
Xxxxx Xxxxxxxx
Avid Sportswear, Inc.
00000 X. Xxxxxxxx Xxxxxx
Xxxxxxx, XX 00000
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With a copy to:
Xxxxxxx X. Xxxxxx
Xxxx Xxxxx Xxxxxx & Xxxxxxx, P.C.
Xxx Xxxxxxxx Xxxxxx
Xxxxx 0000, Xxx 00000
Xxxxxxxxxxxx, XX 46282
These addresses may be changed by delivery of a notice to that effect to the
other party.
24.2 RELATIONSHIP OF THE PARTIES. Licensee and LS&CO. are and will
remain independent commercial contracting parties; the arrangements contemplated
by this Agreement will not create a partnership, joint venture, employment,
fiduciary or similar relationship for any purpose. This Agreement is not
intended to and does not create any direct relationship between LS&CO. and any
employee, contractor, subcontractor or other person in a relationship with
Licensee. Neither Licensee nor LS&CO. shall have the power to obligate or bind
the other to a third party or commitment in any manner whatsoever, except as
expressly provided in Section 15 of this Agreement. LS&CO. shall not be
responsible, to Licensee or to any person, in any way for wages, benefits,
compensation, taxes or any other liability in respect of persons employed or
retained by Licensee in connection with performance of its obligations under
this Agreement or otherwise. LS&CO. shall not be responsible, to Licensee, to
Licensee's landlord or to any other person, in any way for lease obligations,
environmental compliance, personal injuries or otherwise in respect of Showroom,
sales office, manufacturing facility, distribution facility or other space used
by Licensee in connection with performance of its obligations under this
Agreement or otherwise.
24.3 COMPLIANCE WITH LAWS. Licensee shall comply with all laws, rules,
regulations and requirements of any governmental body which may be applicable to
the manufacture, distribution, sale or promotion of Products or otherwise to the
performance of its obligations under this Agreement.
24.4 ENTIRE AGREEMENT; MODIFICATIONS. This Agreement and its exhibits
contain the entire agreement between LS&CO. and Licensee, represent the final,
complete and exclusive statement of LS&CO. and Licensee and supersede any and
all prior or contemporaneous agreements, communications, arrangements or
understandings between LS&CO. and Licensee, including, without limitation,
letter of intent. This Agreement may not be explained or supplemented by any
course of dealings between LS&CO. and Licensee or by usage or trade and shall
not be considered modified by provisions contained in other documents prepared
by LS&CO. and Licensee including, without limitation, royalty statements, Sales
Plans, retailer approvals and the like. This Agreement may be modified only as
stated in and by a writing signed by both LS&CO. and Licensee which refers
specifically to this Agreement and states that it is amending this Agreement.
24.5 REMEDIES. All rights and remedies provided for in this Agreement
shall be cumulative and in addition to any other rights or remedies LS&CO. and
Licensee may have at law or in equity. LS&CO. and Licensee may employ any of the
remedies available to it with respect to any of its rights without prejudice to
the use by it in the future of any other remedy. Except as expressly provided in
Section 15 of this Agreement, no person, other than LS&CO. and Licensee, shall
have any rights under this Agreement, it being understood that the respective
affiliates, directors, officers, employees and agents of each of them are direct
and intended beneficiaries of indemnification promises as provided in Section
15. Licensee's obligation to pay royalties shall be absolute notwithstanding any
claim Licensee may assert against LS&CO. Licensee may not set off, compensate or
make any deduction from any royalty payment for any reason whatsoever.
24.6 SUBMISSION TO JURISDICTION. LS&CO. AND LICENSEE CONSENT TO THE
JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATE WITHIN THE STATE OF
CALIFORNIA, AND IRREVOCABLY AGREE THAT ALL ACTIONS OR PROCEEDINGS RELATING TO
THIS AGREEMENT OR ANY RELATED MATTER, OTHER THAN ANY ACTION OR PROCEEDING
REQUIRED BY SECTION 20 TO BE SUBMITTED TO MEDIATION AND ARBITRATION, SHALL BE
LITIGATED IN THOSE COURTS. LS&CO. AND LICENSEE EACH WAIVE ANY OBJECTION WHICH IT
MAY HAVE BASED ON IMPROPER VENUE OR FORUM NON CONVENIENS TO THE CONDUCT OF ANY
21
SUCH ACTION OR PROCEEDING IN ANY SUCH COURT AND WAIVES PERSONAL SERVICE OF ANY
AND ALL PROCESS UPON IT, AND CONSENTS TO SERVICE OF PROCESS MADE IN THE MANNER
DESCRIBED IN SECTION 24.1. Nothing contained in this Section 24.6 shall affect
the right of either LS&CO. or Licensee to serve legal process on the other in
any other manner permitted by law. Nothing contained in this Section 24.6 shall
affect the rights and obligations of LS&CO. and Licensee under Section 13 or in
respect of mediation and arbitration of disputes under Section 20.
24.7 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
inure to the benefit of the successors and permitted assigns of LS&CO. and
Licensee.
24.8 GOVERNING LAW. This Agreement is to be governed by and construed
in accordance with the laws of the State of California.
24.9 SEVERABILITY. If any provision of this Agreement is held by a
court of competent jurisdiction to be invalid, void or unenforceable, the
remainder of this Agreement shall remain in full force and effect and shall in
no way be affected, impaired or invalidated.
24.10 SURVIVAL. The following provisions of this Agreement shall
survive and remain effective after expiration or termination of this Agreement:
9,11.1, 11.2, 11.4, 11.5, 11.11, 11.12, 14, 15, 16, 17, 20, 21, 22 and 24.
24.11 HEADINGS. The section headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
24.12 FORCE MAJEURE. Neither LS&CO. nor Licensee shall be liable for
any failure of or delay in the performance of its obligations under this
Agreement for the period that the failure or delay is due to acts of God, public
enemy, war, strikes or labor disputes, or any other cause beyond the party's
reasonable control, it being understood that lack of financial resources or Year
2000 problems shall not be deemed a cause beyond a party's control. Each of
LS&CO. and Licensee shall notify the other promptly of the occurrence of any
such cause and carry out the affected performance as promptly as practicable
after the cause of the problem is alleviated. It is understood, however, that
the occurrence of a force majeure event shall not in any case work an extension
of the term of this Agreement.
24.13 DAYS AND QUARTERS. Unless expressed stated in a particular
provisions, references in this Agreement to "days" means calendar, not business,
days, and references to "quarters" means calendar quarters.
24.13 COUNTERPARTS. This Agreement may be signed in one or more
counterparts.
IN WITNESS WHEREOF, LS&CO. and Licensee signed this Agreement on the
date appearing in the first paragraph of this Agreement.
LEVI XXXXXXX & CO
BY: /s/ Xxxx Xxxxxxxxxx
------------------------------------
Xxxx Xxxxxxxxxx
AVID SPORTSWEAR, INC
By: /s/ Xxxxx Xxxxxxxx
------------------------------------
Xxxxx Xxxxxxxx
President
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