EXHIBIT 10.69
CONFIDENTIAL TREATMENT REQUESTED
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AGREEMENT
Relating to Intellectual Property Rights
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MADE BETWEEN:
1. Pro-Fit Holdings Limited
2. Tag-It Pacific Inc.
Xxxxxxx Xxxxx, 00 Xxxxxxxxx Xxxx, Xxxxx, XX0 0XX
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*** Terms represented by this symbol are considered confidential. These
confidential terms have been omitted pursuant to a Confidential Treatment
Request filed with the Securities and Exchange Commission (`SEC") and have been
filed separately with the SEC.
CONFIDENTIAL TREATMENT REQUESTED
THIS AGREEMENT is made the day of 2002
BETWEEN:
(1) "Pro-Fit" : PRO-FIT HOLDINGS LIMITED (a company registered in
England under number 3889914) of Albion Xxxxx, Xxxxxx
Xxxx, Xxxxxxxxxx, Xxxxxxxx, XX00 0XX
(2) "TPI" : TAG-IT PACIFIC INC (a company registered in Delaware,
USA under number ) of 00000 Xxxxxxx Xxx., Xxxxx
000, Xxxxxxxx Xxxxx, XX 00000, XXX
IT IS AGREED as follows:
1. BACKGROUND
1.1 Pro-Fit has certain knowledge and expertise and owns certain
intellectual property rights and know-how relating to the
manufacture of the Products.
1.2 TPI conducts business in the clothing and garment business and
wishes to manufacture and distribute the Products using
Pro-Fit's know-how and intellectual property rights.
1.3 TPI desires to utilise equipment and raw materials
manufactured or supplied by Pro-Fit.
2. INTERPRETATION
In this Agreement where the context so permits:
2.1 the following words and expressions shall have the meanings
ascribed to them:
"Business Day" any day other than Saturdays,
Sundays or public holidays in
England
"Commencement Date" the date of this Agreement
"Equipment" the equipment supplied and
installed by Pro-Fit to enable
TPI to manufacture with the
Processes including the
Pro-Fit Machine
"Garments" finished apparel, bottoms and
tops, including but not
limited to trousers, shorts,
skirts and tops
"Improvements" any improvement, modification
or adaptation to the Know-how
or the Patent which (whether
or not patentable) might
reasonably be of commercial
interest in the design,
manufacture or supply of the
Equipment and the Processes
relating to the manufacture of
the Products
*** Terms represented by this symbol are considered confidential. These
confidential terms have been omitted pursuant to a Confidential Treatment
Request filed with the Securities and Exchange Commission (`SEC") and have been
filed separately with the SEC.
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CONFIDENTIAL TREATMENT REQUESTED
"Interlinings" the fusible interlining
components as are necessary to
manufacture the finished
Products including interlining
and made-up waistband linings
(including stretch jacquard
tape where specified)
"Know-how" such technical information,
know-how, processes,
procedures and techniques of
Pro-Fit as is required to
operate the Equipment, the
Processes and manufacture the
Products
"Licensed Patent Rights" the rights under the Patents
that are licensed to TPI
hereunder
"Net Revenues" all revenues actually received
by TPI from its sales of the
Products during the Term, less
(a) all VAT, sales, use,
excise and other taxes or
government levies of any kind,
and (b) any trade discounts,
rebates, returns and
allowances and similar items
actually incurred by TPI with
respect to such Products
"Patent" the patent, short particulars
of which are set out in
Schedule 1, and any and all
continuations, divisionals
therefrom and patents based on
improvements or modifications
to the invention described in
the patent described in
Schedule 1
"Part 1 Territory" the territory specified in
Schedule 2 Part 1
"Part 2 Territory" the territory specified in
Schedule 2 Part 2
"Process A" the processes and methods of
using the Equipment to
manufacture Product A,
including the Pro-Fit Machine
"Process B" the processes and methods of
using the Equipment and
further processes to
manufacture Product B,
including the Pro-Fit Machine
"Process C" the processes and methods of
manufacturing Product C
"Process D" the processes and methods of
manufacturing Interlinings
*** Terms represented by this symbol are considered confidential. These
confidential terms have been omitted pursuant to a Confidential Treatment
Request filed with the Securities and Exchange Commission (`SEC") and have been
filed separately with the SEC.
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CONFIDENTIAL TREATMENT REQUESTED
"Processes" all of Process A, Process B,
Process C and Process D
"Product A" stretch waistbands for
Garments manufactured
according to Pro-Fit's current
specifications and samples
provided to TPI and any
improvements thereon
"Product B" stretch waistband linings for
Garments manufactured
according to Pro-Fit's current
specifications and samples
provided to TPI and any
improvements thereon
"Product C" stretch tape for Garments
manufactured according to
Pro-Fit's current
specifications and samples
provided to TPI and any
improvements thereon
"Product D" Interlinings for Garments
manufactured according to
Pro-Fit's current
specifications and samples
provided to TPI and any
improvements thereon
"Products" all of Product A, Product B,
Product C and Product D
"Pro-Fit Machine" Machine ref. AT320
"Quarter" the period of three months
beginning on the Commencement
Date, each successive period
of three months during the
Term, and any shorter period
to the date of termination of
this Agreement
"Records" records and books of account
containing all data necessary
for the determination of
royalties payable under this
Agreement
"USA Market" (a) retail and wholesale
Garment sales (including
outlet, catalogue and mail
order sales) in the United
States and/or sales made
directly or indirectly to end
users/consumers in the United
States save and except Non US
Brand Garments (such as Hugo
Boss); and/or (b) worldwide US
Brand Garment sales;
"Term" the period from the
Commencement Date until
termination pursuant to the
terms hereof
*** Terms represented by this symbol are considered confidential. These
confidential terms have been omitted pursuant to a Confidential Treatment
Request filed with the Securities and Exchange Commission (`SEC") and have been
filed separately with the SEC.
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CONFIDENTIAL TREATMENT REQUESTED
"Territory" refers collectively to the
Part 1 Territory and the Part
2 Territory
"U.S. Brand Garments" a Garment bearing a brand name
which originated in the USA or
is now owned by an entity
which is a USA domiciled
entity or is directly or
indirectly controlled by a USA
based or owned entity.
"Non U.S. Brand Garments" a Garment bearing a brand name
which did not originate in the
USA and which is owned by an
entity which is not a USA
domiciled entity and is not
directly or indirectly
controlled by a USA based or
owned entity.
"Year" each period of 365 (or in the
case of a leap year 366) days
commencing on the Commencement
Date and each anniversary
thereof
2.2 references to one gender only shall include all genders, the
singular shall include the plural and vice versa
2.3 references to clauses and schedules are references to clauses
and schedules of this Agreement
2.4 references to "or" shall include "and/or"
2.5 references to "Prices To Be Agreed" shall mean the prices set
forth in Schedules 3 and 4, which prices shall remain fixed
until modified by mutual agreement every six months commencing
September 30, 2002 to reflect actual cost decreases or
increases experienced with respect to the relevant products in
the following categories only:
2.5.1 the actual cost of the item, except interlinings, to
Pro-Fit as demonstrated by bona fide purchase and
payment documentation;
2.5.2 administrative costs specifically related to direct
procurement services by Pro-Fit; as demonstrated by
bone fide documentary back-up;
2.5.3 in the case of Interlinings only, the processing
costs to Pro-Fit provided, however, that if the
parties are unable to agree upon the amount of
adjustment to any price upon a semi-annual review the
price shall remain fixed until the price is resolved
through an arbitration proceeding to be held under
the rules of the American Arbitration Association in
Los Angeles, California. Any price adjustment shall
apply retroactively to the applicable six month
review date.
3. GRANT OF RIGHTS
3.1 Pro-Fit grants to TPI with effect from the Commencement Date:
*** Terms represented by this symbol are considered confidential. These
confidential terms have been omitted pursuant to a Confidential Treatment
Request filed with the Securities and Exchange Commission (`SEC") and have been
filed separately with the SEC.
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CONFIDENTIAL TREATMENT REQUESTED
3.1.1 the exclusive (even as to Pro-Fit), sublicensable,
transferable, and irrevocable right and license under
the Patent and the Know-how to manufacture Product A
and Product B in the Part 1 Territory; save and
except as specified in clause 3.8 and 3.9
3.1.2 The non-exclusive sub-licensable transferable and
irrevocable right and license under the Patent and
the Know-how to manufacture Product A and Product B
in the Part 2 Territory for use in Garments which are
to be supplied to for the USA Market
3.1.3 the non-exclusive sublicensable, transferable, and
irrevocable right and license under the Patent and
the Know-how to manufacture Product C and Product D
in the Territory for use in Garments which are to be
supplied to for the USA Market;
3.1.4 the exclusive (even as to Pro-Fit), sublicensable,
transferable, and irrevocable right and license under
the Patent and the Know-how to market, distribute,
sell, offer for sale and license Product A and
Product B for use in Garments manufactured in the
Part 1 Territory which are being supplied for the USA
Market or for US Brand Garments PROVIDED that this
right is save and except as specified in clause 3.4,
3.8 and 3.9
3.1.5 In addition to and not in limitation of Section 3.1.4
the exclusive sub-licensable transferable and
irrevocable right and license under the Patent and
the Know-how to market, distribute, sell, offer for
sale, and license Product A and Product B for use in
Garments manufactured in the Part 2 Territory which
are being supplied for the USA Market
3.1.6 the non-exclusive, sub-licensable, transferable, and
irrevocable right and license under the Patent and
the Know-how to market, distribute, sell, offer for
sale and license Product C and Product D for use in
Garments manufactured in the Territory which are
being supplied for the USA Market; and
3.1.7 the exclusive, sublicensable, transferable, and
irrevocable license to market, distribute and sell
Product A and Product B outside the Territory at
Pro-Fit's sole discretion for use in US Brand
Garments to be sold world-wide and the non-exclusive,
sublicensable, transferable, and irrevocable license
to market, distribute and sell, Product C and Product
D outside the Territory at Pro-Fit's sole discretion
for use in US Brand Garments to be sold world wide
*** Terms represented by this symbol are considered confidential. These
confidential terms have been omitted pursuant to a Confidential Treatment
Request filed with the Securities and Exchange Commission (`SEC") and have been
filed separately with the SEC.
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CONFIDENTIAL TREATMENT REQUESTED
3.2 TPI has no right to use the Process or to manufacture the
Products or to use the Know-how or the Patent otherwise than
as expressly licensed to TPI in this Agreement
3.3 Pro-Fit shall not during the Term grant a right or license to
manufacture using Process A or Process B to any third party in
the Part 1 Territory save and except as specified in clause
3.8 and clause 3.9
3.4 Save and except the rights and licenses which at the date
hereof have already been granted by Pro-Fit to third parties
in the countries as set forth on Schedule 6 hereto and which
rights and licenses subsist throughout the Term or any part
thereof, Pro-Fit shall not during the Term grant a right or
license to sell Product A or Product B directly or indirectly
in Garments which are being supplied for the USA Market. In
the event that any of the third parties referred to in this
clause shall during the Term request Pro-Fit to supply any
further Pro-Fit processing machines, then Pro-Fit shall as a
condition of supplying such Pro-Fit machines require such
third party to enter into a covenant not to sell Product A or
Product B directly or indirectly for use in Garments which are
being supplied to the USA Market provided that the imposition
of such condition is not unlawful at the relevant time
3.5 Pro-Fit shall not during the Term (other than in connection
with sales to TPI) retain any right to directly or indirectly
manufacture Product A or Product B for use in Garments to be
sold in the Part 1 Territory or distribute or sell any of
Product A or Product B for use in Garments to be sold in the
Part 1 Territory save and except as specified in clause 3.8
and clause 3.9
3.6 Pro-Fit shall not during the Term compete with or assist any
third party in competing with TPI in the manufacture,
distribution and/or sales of Product A or Product B within the
Territory for use in Garments which are being supplied to for
the USA Market save and accept as specified in clause 3.8
3.7 TPI shall have the right, but not the obligation, to use the
Pro-Fit Brand and/or any other brands to label the Products.
This Agreement includes a royalty free license to all
trademark rights of Pro-Fit necessary to permit such use of
the Pro-Fit brands.
3.8 In the event that Pro-Fit requests of TPI to be able with
TPI's approval to supply Product A and/or Product B directly
or indirectly to a clothing manufacturer for use in Garments
which are to be supplied to the USA Market and where TPI does
not wish to sell Product A and/or Product B directly or
indirectly to such clothing manufacturer and has not
transferred or sub-licensed the right to do so or has not
granted a right that this would affect then with TPI's
agreement Pro-Fit shall have the right to manufacture Product
A and/or Product B and to sell Product A and/or Product B to
*** Terms represented by this symbol are considered confidential. These
confidential terms have been omitted pursuant to a Confidential Treatment
Request filed with the Securities and Exchange Commission (`SEC") and have been
filed separately with the SEC.
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CONFIDENTIAL TREATMENT REQUESTED
such clothing manufacturers, such agreement provided that such
agreement will be given only in TPI's sole discretion
3.9 In the event that Pro-Fit requests TPI to sell Product A
and/or Product B to a clothing manufacturer located within the
Part 1 Territory for use in garments which are not being
supplied to the USA Market and TPI does not wish to supply,
with TPI's agreement Pro-Fit shall have the right to
manufacture, market, distribute, sell, offer for sale &
license Product A and Product B to such clothing manufacturers
for use in garments which are not to be supplied to the USA
Market, provided that such agreement will be given only in
TPI's sole discretion.
4. SECURING PAYMENTS FOR EQUIPMENT ORDERS
4.1 TPI shall pay to Pro-Fit, as provided in Clause 4.2:
4.1.1 the price of the Equipment to be ordered in
connection with the signing of this Agreement.
4.1.2 the price of Interlining Stock
4.1.3 training costs pursuant to Clause 6.6
4.2 TPI will provide to Pro-Fit on the Commencement Date an
irrevocable 60 day letter of credit in customary form against
which the Equipment and Interlinings will be ordered and
shipped and training provided and thereafter Pro-Fit will
endeavour to achieve payment terms for all subsequent
shipments to TPI on 60 day open terms. PROVIDED however that
the foregoing is conditional upon Pro-fit obtaining coverage
on TPI from Pro-Fit's factoring company and/or that similar
terms are available from the applicable suppliers of equipment
and/or raw materials
4.3 TPI shall make an advance payment of 200,000 USD in respect of
royalties payable hereunder. The payment will be made in the
first Year by quarterly instalments of 50,000 USD payable on
the first day of each Quarter as specified in Schedule 5
5. INSPECTION FACILITY
Pro-Fit shall when so requested by TPI demonstrate Process A and
Process B at its factory in Bradford, England to TPI's potential
clients
6. EQUIPMENT
6.1 Pro-Fit shall sell and TPI shall purchase the Equipment at the
price as specified in Schedule 3 at a price to be agreed. TPI
shall have the right to resell such Equipment to any
sublicensee of TPI. Notwithstanding anything set forth in this
Clause 6, if TPI can demonstrate to Pro-Fit that it can obtain
the Equipment (except the Pro-Fit Machine) from an alternative
manufacturer at a lower price than the price offered by
Pro-Fit (but of the same or sufficient standard and quality)
then TPI shall give Pro-Fit
*** Terms represented by this symbol are considered confidential. These
confidential terms have been omitted pursuant to a Confidential Treatment
Request filed with the Securities and Exchange Commission (`SEC") and have been
filed separately with the SEC.
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CONFIDENTIAL TREATMENT REQUESTED
the opportunity to match such price. If Pro-Fit does not match
such price, then TPI shall have no obligation to purchase
Equipment from Pro-Fit.
6.2 Pro-Fit shall offer to sell and if requested by TPI, sell to
TPI, any improvements or modifications to the Equipment that
Pro-Fit may design or manufacture at Prices To Be Agreed
6.3 In the event that TPI seeks additional Equipment, Pro-Fit
shall sell such additional Equipment to TPI at Prices To Be
Agreed
6.4 Payment of the price for the Equipment ordered on the date
hereof and any additional Equipment shall be as specified in
Clause 4.2
6.5 Pro-Fit shall promptly install the Equipment and ensure that
the Equipment is in full and proper working order in
compliance with all provided specifications. Pro-Fit shall
also provide TPI with training as specified in Schedule 3
6.6 As soon as practicable (which shall be assessed at the
discretion of Pro-Fit acting reasonably) after the Equipment
has been delivered and commissioned and TPI's staff have been
trained in the use of Process A, then Pro-Fit will advise on
the methodology for and implementation of Process B, including
(but not limited to) requirements for and procurement of plant
and machinery, and training (at the rates specified in
Schedule 3)
6.7 The same procedure set forth in Clause 6.6 shall apply for the
implementation of Process C and Process D
6.8 The target dates for implementation, which Pro-Fit shall use
its best efforts to achieve, are as follows:
***
***
***
6.9 Pro-Fit shall perform all activities that TPI may reasonably
request to convey and document the Know-how to TPI
6.10 Pro-Fit shall provide TPI with spare parts to repair the
Pro-Fit processing machines forming part of the Equipment free
of charge for one year following the completion of their
installation or pay to have such activities performed.
Notwithstanding any provision of this Agreement to the
contrary, Pro-Fit will introduce TPI to all Pro-Fit's sources
for the Equipment (except the Pro-Fit Machine) and assist TPI
to arrange for direct purchases of such Equipment. Pro-Fit
will transfer to TPI the benefits of all third party
warranties on all Equipment (except the Pro-Fit Machine) sold
to TPI and on such transfer Pro-Fit shall have no future
liability under this Clause.
*** Terms represented by this symbol are considered confidential. These
confidential terms have been omitted pursuant to a Confidential Treatment
Request filed with the Securities and Exchange Commission (`SEC") and have been
filed separately with the SEC.
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CONFIDENTIAL TREATMENT REQUESTED
6.11 The Equipment shall be in good working order, free of defects,
merchantable and fit for their intended purpose, conform with
all of the laws, rules and regulations covering their
operation, and be free and clear of all liens and encumbrances
so that valid title passes to TPI and with full title
guarantee
6.12 If Pro-Fit is unable or unwilling, other than for a material
breach of this Agreement by TPI, to sell and deliver the
Pro-Fit Machine to TPI (on commercially reasonable terms and
delivery schedules as referred to in Schedule 3), Pro-Fit
grants TPI (without limiting TPI's rights to pursue other
remedies) a license to manufacture or have such Equipment
manufactured
7. PAYMENT PROVISIONS
If any sum payable under this Agreement is not paid when due, then such
sum shall bear interest from the due date until payment is made in
full, both before and after judgement, at ***% per annum above Barclays
Bank plc base rate from time to time
8. TERM AND TERMINATION
8.1 This Agreement shall come into effect on the Commencement Date
and unless terminated earlier under the provisions of this
Agreement shall remain in full force and effect until the date
upon which the Know-how ceases to be secret and substantial in
the whole of the Territory or if it is later, the date upon
which the Patent expires
8.2 Either party may terminate this Agreement with immediate
effect by giving to the other notice if the other:
8.2.1 commits any material breach of this Agreement and
fails to remedy the same within either: (1) 60 days
if it is the first occurrence of a breach by such
party, or (2) 30 days if it is other than the first
occurrence of a breach by such party, of service of
notice by the non-defaulting party specifying the
breach and requiring it to be remedied; or
8.2.2 becomes bankrupt or insolvent or enters into any
arrangement with its creditors or takes or suffers
any similar actions in consequence of debt
8.3 All licenses granted by Pro-Fit under this Agreement may be
rendered non-exclusive by written notice from Pro-Fit
delivered at any time after the fifth Year of the term of this
Agreement if *** and TPI has failed to demonstrate
commercially reasonable efforts to reach this royalty level in
the succeeding year. Such written notice shall be served not
later than 60 days after the issue of the auditor's
certificate referred to in Clause 16.5
8.4 The rights to terminate this Agreement given by this clause
and any other clause in this Agreement shall not prejudice any
other right or remedy of either party
*** Terms represented by this symbol are considered confidential. These
confidential terms have been omitted pursuant to a Confidential Treatment
Request filed with the Securities and Exchange Commission (`SEC") and have been
filed separately with the SEC.
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CONFIDENTIAL TREATMENT REQUESTED
9. CONSEQUENCES OF TERMINATION.
Upon the termination of this Agreement:
9.1 by TPI pursuant to a material breach of contract by Pro-Fit,
Pro-Fit shall fulfill all outstanding orders for Interlinings
and will repurchase all Equipment and any unused interlinings
at book value following expiration of the licenses as set
forth in Clause 9.2
9.2 Except in the case of expiration of the Term of this
Agreement, TPI shall retain a nonexclusive, sublicensable,
transferable, and irrevocable license to manufacture,
distribute, sell, offer to sell and license the Products in
the Territory for one year following the date of termination
in order to complete ongoing sales programs (the "Wind Down
Period")
9.3 Pro-Fit shall, at the instruction of TPI, return, delete,
overwrite or destroy all TPI Confidential Information
disclosed hereunder, and provide written confirmation
certified by an officer of Pro-Fit to such effect
9.4 The provisions of the following clauses shall survive
termination of this Agreement for whatever reason: Clauses 9,
10, 11, 12 (but only during the Wind Down Period), 14 (but
only during the Wind Down Period), 15.1, 15.6 , 16 (but only
during the Wind-Down Period) and 18-27.
10. LIABILITY
TPI shall indemnify and hold harmless Pro-Fit from and against all
claims by any person whatsoever for injury to person or property and in
respect of all costs, expenses and liabilities, injuries, losses,
damages, proceedings or legal costs (on a full indemnity basis) and
judgements which Pro-Fit incurs or suffers and which arise in
connection with or out of the use of TPI's negligent use of the
Equipment, excluding death, property damage or personal injury arising
out of the negligence of Pro-Fit
11. PATENTS AND KNOW-HOW
11.1 Pro-Fit represents and warrants that to its best knowledge,
the manufacture and/or distribution and sale of the Products
under the Patent and Know-how does not infringe the rights of
any third party in the Territory or any other intellectual
property rights
11.2 Pro-Fit shall at its own cost pay all renewal fees and do all
such acts and things as may be reasonably necessary to
maintain the Patent and the confidentiality of its Know-how
licensed hereunder
11.3 Pro-Fit represents and warrants that [(i)] it owns the Patent
and Know-how and has the right to grant the rights hereunder
and [(ii) the Patent is valid and enforceable
*** Terms represented by this symbol are considered confidential. These
confidential terms have been omitted pursuant to a Confidential Treatment
Request filed with the Securities and Exchange Commission (`SEC") and have been
filed separately with the SEC.
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CONFIDENTIAL TREATMENT REQUESTED
12. IMPROVEMENTS
12.1 Each party shall disclose to the other in confidence and in
such detail as the other may reasonably require all
Improvements that it may develop or acquire except in so far
as it is prohibited from doing so by law or by obligation to
any other person. Pro-Fit shall not hereinafter enter into any
obligation with any other person prohibiting disclosure to TPI
of the Improvements
12.2 Improvements which Pro-Fit is due to disclose to TPI hereunder
shall form part of the Know-how
12.3 Pro-Fit shall have a non-exclusive, irrevocable, royalty free
license (without limit of time and with the right to assign
and to grant sub-licenses thereunder) to use all Improvements
that TPI discloses to Pro-Fit hereunder outside of the
Territory
13. INFRINGEMENT BY A THIRD PARTY
13.1 TPI shall inform Pro-Fit promptly in writing of any alleged
infringement of the Licensed Patent Rights by a third party
and of any available evidence thereof.
13.2 Pro-Fit shall have the right, but shall not be obligated, to
prosecute at its own expense all infringements of the Licensed
Patent Rights and, in furtherance of such right, TPI hereby
agrees that Pro-Fit may include TPI as a party plaintiff in
any such suit, without expense to TPI. The total cost of any
such infringement action commenced or defended solely by
Pro-Fit shall be borne by Pro-Fit, and Pro-Fit shall keep any
recovery or damages for past infringement derived therefrom.
13.3 If within three (3) months after having been notified of an
alleged infringement, Pro-Fit shall have been unsuccessful in
persuading the alleged infringer to desist and shall not have
brought and shall not be diligently prosecuting an
infringement action, or if Pro-Fit shall notify TPI at any
time prior thereto of its intention not to bring suit against
any alleged infringer in the Territory, then, and in those
events only, TPI shall have the right, but shall not be
obligated, to prosecute at its own expense any infringement of
the Licensed Patent Rights in the Territory, and TPI may, for
such purposes, use the name of Pro-Fit as party plaintiff. No
settlement, consent judgment or other voluntary final
disposition of the suit may be entered into without the
consent of Pro-Fit, which consent shall not unreasonably be
withheld.
13.4 In the event that TPI shall undertake litigation for the
enforcement of the Licensed Patent Rights in the Territory, or
the defense of the Licensed Patent Rights under the prior
Clause 13.3, TPI may withhold up to ***% of the payments
otherwise thereafter due Pro-Fit hereunder (but not payments
due in Year 1) and apply the same toward
*** Terms represented by this symbol are considered confidential. These
confidential terms have been omitted pursuant to a Confidential Treatment
Request filed with the Securities and Exchange Commission (`SEC") and have been
filed separately with the SEC.
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CONFIDENTIAL TREATMENT REQUESTED
reimbursement of TPI's expenses, including reasonable
attorneys' fees, in connection therewith. Any recovery of
damages by TPI for each such suit shall be applied first in
satisfaction of any unreimbursed expenses and legal fees of
TPI relating to such suit, and next toward reimbursement of
Pro-Fit for any payments under Article 4 past due or withheld
and applied pursuant to this Clause 13.4. The balance
remaining from any such recovery shall be divided ***% to TPI
and ***% to Pro-Fit, respectively
13.5 In the event that a declaratory judgment action alleging
invalidity or non infringement of any of the Licensed Patent
Rights shall be brought against Pro-Fit or TPI, Pro-Fit, at
its option, shall have the right, within thirty (30) days
after commencement of such action, to take over the sole
defense of the action at its own expense. If Pro-Fit shall not
exercise this right, TPI may take over the sole defense at
TPI's sole expense, subject to the prior Clause 13.4.
13.6 In any infringement suit as either party may institute to
enforce the Licensed Patent Rights pursuant to this Agreement,
the other party hereto shall, at the request and expense of
the party initiating such suit, cooperate in all respects and,
to the extent possible, have its employees testify when
requested and make available relevant records, papers,
information, samples, specimens, and the like.
14. ALLEGED INFRINGEMENT BY TPI
In the event that a court issues a temporary restraining order or a
preliminary or permanent injunction based on claims that TPI infringes
the rights of a third party due to TPI's exercise of any of its rights
hereunder, Pro-Fit shall either: (1) contest the validity of such
claim, including, without limitation, filing an opposition to any
infringement action brought pursuant to such claim (2) obtain a license
from such third party, at Pro-Fit's sole expense, to allow TPI to
continue exercising its rights hereunder, or (3) modify its Processes
so that they are no longer infringing while insuring substantially
equivalent benefits from the standpoint of performance, functionality,
cost, marketability and manufacturability. In the event that a third
party shall obtain a final judgement in such party's favor with respect
to such infringement claim, Pro-Fit shall take the actions described in
clauses (2) and (3) of the preceding sentence
15. INTERLININGS
15.1 TPI recognises and agrees that:
15.1.1 the Equipment has been manufactured and installed for
use in conjunction with Interlinings produced and
manufactured by suppliers approved by Pro-Fit as
producing Interlinings of an appropriate standard and
quality level, sufficient for mass-market production;
*** Terms represented by this symbol are considered confidential. These
confidential terms have been omitted pursuant to a Confidential Treatment
Request filed with the Securities and Exchange Commission (`SEC") and have been
filed separately with the SEC.
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CONFIDENTIAL TREATMENT REQUESTED
15.1.2 the Interlinings so produced and manufactured are of
a level of quality sufficient for mass production
using the Processes, and are necessary for the proper
exploitation of the Processes and the operation of
the Equipment; and
15.1.3 the use of Interlinings of a standard presently
provided by Pro-Fit is a reasonable requirement of
Pro-Fit and necessary to protect the value of its
trademarks and the goodwill therein
15.1.4 Pro-Fit represents and warrants that the Interlinings
will be of a quality level sufficient for mass
production using the Processes
15.2 Having regard to the issues set out in the foregoing clause
TPI agrees that, subject hereto, it will purchase all its
requirement for Interlinings to be used in the production of
the Products from Pro-Fit and Pro-Fit agrees to promptly
supply TPI with its ordered Interlinings in the normal course
of business.
15.3 The Interlinings will be purchased from Pro-Fit by TPI at
Prices To Be Agreed upon from time to time
15.4 If TPI can demonstrate to Pro-Fit that it can source the
Interlining from an alternative supplier at a lower price than
the Pro-Fit price but of the same or sufficient standard and
quality (as to which Pro-Fit shall advise, acting reasonably
properly and promptly) then TPI shall give Pro-Fit the
opportunity to match such price (landed duty paid) and
delivery. If Pro-Fit does not match such price (landed duty
paid) and delivery then this clause shall cease to have effect
15.5 If for any reason, Pro-Fit is unwilling or unable to fulfill
any order for Interlinings from TPI, TPI shall have the right
to immediately and thereafter source Interlining from an
alternative supplier
15.6 Pro-Fit represents and warrants that the Interlinings supplied
by Pro-Fit shall be in good working order, comply with the
samples and specifications thereof provided to TPI, free of
defects, merchantable and fit for their intended purpose,
conform with all of the laws, rules and regulations covering
their manufacture, distribution, use and sale, and be free and
clear of all liens and encumbrances so that valid title passes
to TPI; provided, however, that Pro-Fit shall not be
responsible for compliance with regulatory standards for
territories other than the USA and UK unless Pro-Fit has been
notified of the applicable regulatory standards prior to its
receipt of the applicable order.
15.7 Where Pro-Fit has specified a standard or quality of
Interlining, it warrants that such standard and quality shall
be sufficient for the intended purpose.
*** Terms represented by this symbol are considered confidential. These
confidential terms have been omitted pursuant to a Confidential Treatment
Request filed with the Securities and Exchange Commission (`SEC") and have been
filed separately with the SEC.
14
CONFIDENTIAL TREATMENT REQUESTED
16. ROYALTIES
16.1 In consideration of the rights granted under this Agreement
TPI shall, subject to the following provisions, pay to Pro-Fit
a royalty at the rate specified in Part I of Schedule 5
16.2 Royalties payable under this clause shall be paid within 45
days after the end of the second Quarter (of each Year) for
the royalties accrued during the first two Quarters (of each
Year) and 90 days after the end of the Fourth Quarter (of each
Year) for the royalties accrued during the last two Quarters
(of each Year), at which times TPI shall deliver to Pro-Fit a
statement showing how the payments were calculated
16.3 TPI shall keep true and accurate Records in sufficient detail
to enable the amount of all royalties to be determined
16.4 TPI shall at the reasonable request of Pro-Fit from time to
time allow Pro-Fit or its agent (or procure that Pro-Fit or
its agent is allowed) to inspect the Records, at Pro-Fit's
expense (subject to reimbursement below) and to the extent
that they relate to the calculation of the royalties, to take
copies of them
16.5 TPI shall at Pro-Fit's expense obtain and submit to Pro-Fit
within 90 Business Days after the end of each Year a
certificate by TPI's auditors or an independent royalty
statement auditor that the statements submitted in that Year
are true and accurate
16.6 If following an inspection or auditor's certificate pursuant
to this clause it transpires that the amount of royalties paid
in respect of the Year fell short of the amount which was
properly payable in that Year then TPI shall within 7 Business
Days of the date of the inspection or certificate as the case
may be, as Pro-Fit's sole remedy for such shortfall, pay the
shortfall to Pro-Fit. In the event that the shortfall is an
amount which exceeds ***% of the amount of royalties paid in
respect of such Year, then TPI shall reimburse Pro-Fit for the
reasonable costs and expenses up to *** of the inspection,
including costs of Pro-Fit as well as auditors costs. In the
event of a dispute regarding any alleged shortfall or if an
obligation to render a payment is disputed, TPI shall have the
right to deposit the disputed amount in escrow and submit such
dispute to arbitration in Los Angeles, California. TPI shall
not be in breach or default of this Agreement provided that
the disputed amount is deposited in escrow and the arbitration
proceedings are in process. In the event the inspection
reveals an overpayment by TPI, TPI shall receive a credit
against the next payment due hereunder in the amount of such
overpayment.
*** Terms represented by this symbol are considered confidential. These
confidential terms have been omitted pursuant to a Confidential Treatment
Request filed with the Securities and Exchange Commission (`SEC") and have been
filed separately with the SEC.
15
CONFIDENTIAL TREATMENT REQUESTED
16.7 TPI guarantees that the minimum royalties payable during each
Year shall be as specified in Part 2 of Schedule 5
irrespective of the amount of Product actually sold or
supplied
16.8 In the event that the aggregate royalty payments due in a Year
are in excess of the guaranteed amount then TPI shall pay to
Pro-Fit such shortfall within 90 days of the end of such Year.
16.9 Within 30 Business Days of each Quarter end TPI shall deliver
a quarterly report to Pro-Fit describing its progress and
developments with its manufacturing and distribution
activities in the immediately preceding Quarter and
projections for the forthcoming Quarter. However, it shall not
be a breach of this Agreement (unless such report is more than
30 days late)
17. EQUITY
17.1 Within 5 business days of the execution and delivery of this
Agreement TPI shall deliver and issue to Pro-Fit, one hundred
fifty thousand (150,000) shares of TPI's common stock, par
value $0.001 per share (the "Shares").
17.2 Subject to the restrictions set forth in Clauses 17.4, 17.5
and 17.8 below, Pro-Fit shall not directly or indirectly sell,
assign, pledge, dispose, convey, gift, hypothecate, encumber
or otherwise transfer (each a "Transfer") any Shares except in
accordance with the following schedule:
17.2.1 ***;
17.2.2 ***; and
17.2.3 ***.
17.3 In the event of any stock dividend, stock split,
recapitalization or other change affecting TPI's outstanding
common stock as a class effected without receipt of
consideration, then any new, substituted or additional
securities or other property (including money paid other than
as a regular cash dividend) which is by reason of any such
transaction distributed with respect to the Shares shall be
subject to the Transfer restrictions set forth in Clause 17.2
above, but only to the extent the Shares are at the time
covered by such right.
17.4 Pro-Fit understands and acknowledges, and represents and
warrants to TPI, that (a) Pro-Fit understands that it must
bear the economic risk of its investment in the Shares; (b)
the Shares have not been registered under the Securities Act
of 1933, as amended (the "Securities Act") or any state
securities laws and are being offered and sold in reliance
upon exemptions provided in the Securities Act and state
securities laws for transactions not involving any public
offering and, therefore, cannot be
*** Terms represented by this symbol are considered confidential. These
confidential terms have been omitted pursuant to a Confidential Treatment
Request filed with the Securities and Exchange Commission (`SEC") and have been
filed separately with the SEC.
16
CONFIDENTIAL TREATMENT REQUESTED
resold or transferred unless they are subsequently registered
under the Securities Act and applicable state laws or unless
an exemption from such registration is available; (c) Pro-Fit
is purchasing the Shares for investment purposes only for
Pro-Fit's own account and not with any view toward a
distribution thereof; (d) Pro-Fit does not presently have any
contract, undertaking, agreement or arrangement with any
person to sell, transfer or pledge the Shares to such person
or anyone else, and such party does not have any present plans
to enter into any such contract, undertaking, agreement or
arrangement; (e) Pro-Fit is an "accredited investor" as that
term is defined in Rule 501(a) of the General Rules and
regulations under the Securities Act; (f) the purchase and
sale of the Shares and all offers with respect thereto will
take place and have taken place in Los Angeles County,
California; and (g) the certificate(s) representing the Shares
shall bear legends in substantially the following form:
"The securities represented by this certificate have not been
registered under the securities act of 1933, as amended (the
"act") or the securities laws of any state and may not be sold
or otherwise disposed of except pursuant to an effective
registration statement under such act and applicable state
securities laws or pursuant to an applicable exemption from
the registration requirements of such act and such laws. The
company may require a satisfactory opinion of counsel for the
holder that such transfer is exempt from the requirements of
the act."
"The shares represented by this certificate may not be sold,
assigned, transferred, encumbered or in any manner disposed
of, except in compliance with the terms of that certain
license agreement (the "agreement") by and between the issuer
of the shares represented by this certificate (the "issuer")
and the holder of such shares, dated as of _________ __, 2002,
pursuant to which certain restrictions apply to the
transferability of the shares represented by this certificate.
The secretary of the issuer will upon written request furnish
a copy of such agreement to the holder hereof without charge."
17.5 Pro-Fit agrees that it will not Transfer any of the Shares
without complying with each of the restrictions set forth
herein and pursuant to applicable law and agrees that in
connection with any such Transfer it will, if requested by
TPI, deliver at its expense to TPI an opinion of counsel, in
form and substance reasonably satisfactory to TPI and counsel
for TPI, that such Transfer is not in violation of the
securities laws of the United States of America or any state
thereof having jurisdiction with respect to such Transfer.
Each certificate or instrument evidencing the Shares
Transferred as above
*** Terms represented by this symbol are considered confidential. These
confidential terms have been omitted pursuant to a Confidential Treatment
Request filed with the Securities and Exchange Commission (`SEC") and have been
filed separately with the SEC.
17
CONFIDENTIAL TREATMENT REQUESTED
shall bear the appropriate restrictive legends set forth
above, except that such certificate shall not be required to
bear the first such restrictive legend set forth above, if in
the opinion of counsel for TPI such legend is not required
(under Rule 144(k) or otherwise) in order to establish
compliance with any provisions of the Securities Act.
Notwithstanding anything set forth herein to the contrary,
Pro-Fit shall not Transfer any of the Shares except in
accordance with Clauses 17.2 and 17.8.
17.6 Pro-Fit represents and warrants to TPI that (1) it has
received all information necessary and appropriate for
deciding whether to acquire the Shares, (2) it has had the
opportunity to ask questions and obtain answers from TPI
regarding the terms and conditions of the issuance of the
Shares and the business prospects and financial condition of
TPI, and (3) it is not relying on the accuracy of any
projections with respect to TPI or TPI's business or
operations in its decision to acquire the Shares.
17.7 TPI represents and warrants to Pro-Fit that the Shares have
been duly authorised by all necessary corporate action on the
party of TPI and, when payment is made for the Shares in
accordance with this Agreement, the Shares shall be validly
issued, fully paid, and nonassessable and will be free of
restrictions on transfers other than restrictions contained in
this Agreement and under applicable state and federal
securities laws.
17.8 Notwithstanding Clause 17.2 hereof, Pro-Fit shall not be
permitted to Transfer any of the Shares unless Pro-Fit has
complied with this Clause 17.8. If Pro-Fit intends to Transfer
any of its Shares, Pro-Fit shall give written notice (the
"Seller's Notice") to TPI at least fifteen (15) calendar days
prior to the closing of such Transfer, stating that Pro-Fit
intends to make such a Transfer, identifying the name and
address of the prospective purchaser or transferee (or if
Transfer is an unsolicited broker transaction, it shall so
state) (the "Proposed Transferee"), specifying the number of
Shares proposed to be purchased or acquired pursuant to the
offer (the "First Refusal Shares") and specifying the per
share purchase price and the terms and conditions of such
Transfer. A Seller's Notice shall constitute an irrevocable
election by Pro-Fit to sell the Shares identified therein to
TPI.
17.9 TPI shall have the irrevocable and exclusive option (but not
the obligation) to purchase any or all of the First Refusal
Shares at a price per share equal to the lesser of (i) the
average closing price of the Shares during the five (5)
trading days immediately preceding the date the Seller's
Notice is delivered by Pro-Fit or (ii) the terms set forth in
the Seller's Notice (the "Sale Price"). TPI may exercise such
option by delivering within fifteen (15) calendar days of
receipt of the Seller's Notice a
*** Terms represented by this symbol are considered confidential. These
confidential terms have been omitted pursuant to a Confidential Treatment
Request filed with the Securities and Exchange Commission (`SEC") and have been
filed separately with the SEC.
18
CONFIDENTIAL TREATMENT REQUESTED
written notice (the "Company Notice") to the Proposed Seller
stating its election to exercise its option under this Clause
17.9 and the number of First Refusal Shares it is willing to
purchase at the Sale Price, and such notice shall constitute
and irrevocable commitment to purchase such Shares. In the
event that TPI delivers a Company Notice, the closing of the
Transfer of the First Refusal Shares from Pro-Fit to TPI shall
take place at the offices of TPI within 5 business days of the
delivery of such Company Notice, or at such other time and
place as may be mutually agreed upon by Pro-Fit and TPI.
17.10 If any shares are not elected to be purchased by TPI pursuant
to Clause 17.9, then, subject to Clauses 17.2, 17.4 and 17.5
hereof, Pro-Fit shall be free, for a period of ninety (90)
days from the date of the Seller's Notice, to sell the Shares
to the Proposed Transferee, at a price per share equal to or
greater than the Sale Price and upon terms no more favorable
to the Proposed Transferee (or unsolicited broker transaction
as specified in the Seller's Notice) than those specified in
the Seller's Notice. Any Transfer of the remaining First
Refusal Shares by the Pro-Fit after the end of such ninety
(90) day period or any change in the terms of the sale as set
forth in the Seller's Notice which are more favorable to the
Proposed Transferee shall require a new notice of intent to
Transfer to be delivered to TPI and shall give rise anew to
the rights provided in the preceding Clauses 17.8 and 17.9.
18. ASSIGNMENT AND SUB-CONTRACTING
18.1 Pro-Fit will be entitled at any time to assign the benefit or
delegate the burden of this Agreement without the prior
consent of TPI in the event that Pro-Fit is liable for the
performance of its assignee
18.2 Pro-Fit shall be entitled to carry out its obligations under
this Agreement through any agents or sub-contractors appointed
by it in its reasonable discretion for that purpose provided
that such third party is capable of providing an equivalent
level of service and Pro-Fit is liable for the performance of
such third party
18.3 TPI shall have the right to sublicense its rights under this
Agreement to any third party, (provided that in the case of a
proposed sublicense to a manufacturer of Interlinings, the
sub-license shall be subject to the prior written consent of
Pro-Fit which shall not be unreasonably withheld) and to
assign this Agreement to any third party that acquires
substantially all of TPI's assets or to any of TPI's
subsidiaries
19. CONFIDENTIALITY
19.1 CONFIDENTIAL INFORMATION. During the Term, either party may
come into possession of the other party's Confidential
Information. For the purposes of this Agreement,
*** Terms represented by this symbol are considered confidential. These
confidential terms have been omitted pursuant to a Confidential Treatment
Request filed with the Securities and Exchange Commission (`SEC") and have been
filed separately with the SEC.
19
CONFIDENTIAL TREATMENT REQUESTED
"Confidential Information" means any information that a party
designates as confidential or which the receiving party knows
or has reason to know is confidential. Without limiting the
foregoing, Confidential Information includes financial,
business and technical plans and strategies, inventions, new
products, services or technology. Confidential Information
does not include information which is: (a) already known by
the receiving party at time of disclosure; (b) or becomes,
through no act or fault of the receiving party, publicly
known; (c) received by the receiving party from a third party
without a restriction on disclosure or use; or (d)
independently developed by the receiving party without
reference to the disclosing party's Confidential Information.
The receiving party may disclose Confidential Information to
the extent required to be disclosed by a court or governmental
agency pursuant to a statute, regulation or valid order
including, but not limited to, the rules of the American Stock
Exchange or any subsequent stock exchange on which the
securities of a party are listed; provided that the receiving
party first notifies the disclosing party and gives it the
opportunity to seek a protective order or to contest such
required disclosure
19.2 RESTRICTIONS. Each party shall hold the disclosing party's
Confidential Information in confidence and shall not use such
information except as permitted under this Agreement. Each
party shall use the same precautions to prevent disclosure to
third parties of such information as it uses with its own
confidential information, but in no case less than reasonable
efforts
19.3 ADDITIONAL OBLIGATIONS. Each party agrees (i) not to alter or
remove any identification of any copyright, trademark or other
proprietary rights notice which indicates the ownership of any
part of the Confidential Information, and (ii) to notify the
other party of the circumstances surrounding any possession,
use or knowledge of the Confidential Information by any person
or entity other than those authorized by this Agreement
20. RIGHT OF SET-OFF.
TPI shall have the right to set-off and withhold any amounts payable
hereunder to Pro-Fit against any amounts owed to TPI hereunder.
21. REPRESENTATIONS
Each party acknowledges that in entering into this Agreement it does
not do so in reliance on any representations, warranty or otherwise
provisions except as expressly provided herein, and any conditions,
warranties or other terms implied by statute or common law are excluded
from this Agreement to the fullest extent permitted by law
*** Terms represented by this symbol are considered confidential. These
confidential terms have been omitted pursuant to a Confidential Treatment
Request filed with the Securities and Exchange Commission (`SEC") and have been
filed separately with the SEC.
20
CONFIDENTIAL TREATMENT REQUESTED
22. SEVERABILITY
If any of the provisions is judged to be illegal or unenforceable, the
continuation in full force and effect of the remaining provisions will
not be prejudiced
23. WAIVER
No exercise or failure to exercise or delay in exercising any right,
power or remedy by either party will constitute a waiver by that party
of any right, power or remedy
24. THE CONTRACTS (RIGHTS OF THIRD PARTIES) XXX 0000
The Contracts (Rights of Third Parties) Xxx 0000 shall not apply to
(and no person other than the parties hereto or their lawful successors
in title shall be entitled to enforce) any of the provisions hereof
25. NOTICES
25.1 Any demand, notice or other communication given or made under
or in connection with this Agreement shall be in writing and
shall be given to Pro-Fit or to TPI as the case may be either
personally, by post (registered or airmail as appropriate), by
facsimile to the address stated at the beginning of this
Agreement, or to such other address, facsimile or name as
either party may from time to time designate by written notice
to the other
25.2 Notices and communications so designated shall be deemed to
have been duly given or made:
24.2.1 if delivered by hand upon delivery at the address of
the relevant party;
24.2.2 if sent by airmail 10 Business Days after being
posted; or
24.2.3 if sent by facsimile one Business Day after the date
of transmission (provided a confirmatory letter is
sent on the day of transmission by airmail)
26. GOVERNING LAW AND JURISDICTION
26.1 This Agreement is governed by and shall be construed in
accordance with English law
26.2 The Courts of England shall have non-exclusive jurisdiction to
settle any dispute which may arise out of this Agreement and
the parties agree to submit to such jurisdiction; provided,
however that the parties shall be entitled to seek emergency
and equitable relief in any court of applicable jurisdiction,
including courts located within the Territory and the venue of
arbitration required hereby shall be as specified in the
applicable arbitration provisions.
26.3 Notwithstanding the foregoing, matters relating to the Shares,
including, without limitation, Clause 17, shall be governed by
and shall be construed in accordance with the laws of
California, USA
*** Terms represented by this symbol are considered confidential. These
confidential terms have been omitted pursuant to a Confidential Treatment
Request filed with the Securities and Exchange Commission (`SEC") and have been
filed separately with the SEC.
21
CONFIDENTIAL TREATMENT REQUESTED
27. INJUNCTIVE RELIEF.
Pro-Fit acknowledges that the remedies at law are not adequate to
protect TPI's interests, and that TPI shall be entitled to seek
injunctive relief for any breach of this Agreement by Pro-Fit.
28. FURTHER ASSURANCES.
Each of the parties to this Agreement shall execute any documents and
perform any further acts as may be reasonably required or desirable to
carry out the provisions of this Agreement and the transactions
contemplated hereby.
29. COUNTERPARTS.
This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original. A facsimile copy of this Agreement,
including signatures, shall be deemed an original
30. ENTIRE AGREEMENT.
This Agreement, including the exhibits attached hereto, constitutes the
entire Agreement and understanding between the parties, and integrates
all prior discussions between the parties related to its subject
matter. No modification of any of the terms herein shall be valid
unless in writing and signed by an authorized representative of each
party
31. INDEPENDENT CONTRACTORS
Each party acknowledges and agrees that it is dealing with the other
party as independent contractors. Nothing contained in this Agreement
shall be interpreted as constituting either party the employee or agent
of the other party or as conferring upon either party the power of
authority to bind the other party in any transaction with third
parties.
32. CONSTRUCTION
The parties intend that each representation, warranty, and covenant
contained herein will have independent significance. If any Party has
breached any representation, warranty, or covenant contained herein in
any respect, the fact that there exists another representation,
warranty or covenant relating to the same subject matter (regardless of
the relative levels of specificity) which the party has not breached
will not detract from or mitigate the fact that the party is in breach
of the first representation, warranty, or covenant.
SIGNED on behalf of ) /s/ Xxxxxx Xxxxxx
PRO-FIT HOLDINGS LIMITED ) Xxxxxx Xxxxxx
Joint Managing Director
2nd April, 2002
SIGNED on behalf of ) /s/ Xxxxx Xxxxxxx
TAG-IT PACIFIC INC, ) Xxxxx Xxxxxxx
*** Terms represented by this symbol are considered confidential. These
confidential terms have been omitted pursuant to a Confidential Treatment
Request filed with the Securities and Exchange Commission (`SEC") and have been
filed separately with the SEC.
22
CONFIDENTIAL TREATMENT REQUESTED
SCHEDULE 1
THE PATENT
US Patent No. 5,987,721
*** Terms represented by this symbol are considered confidential. These
confidential terms have been omitted pursuant to a Confidential Treatment
Request filed with the Securities and Exchange Commission (`SEC") and have been
filed separately with the SEC.
23
CONFIDENTIAL TREATMENT REQUESTED
SCHEDULE 2
THE TERRITORIES
PART I
------
USA
Mexico
Dominican Republic*
Honduras
Guatemala
* Provided that TPI acknowledges that Grupo M has been granted certain
non-exclusive rights to manufacture and sell Products A in the Dominican
Republic only and to sell garments containing Product A and Product B anywhere
in the world and that the exclusive rights hereby granted are subject to those
rights granted to Grupo M. Pro-Fit hereby confirms that Pro-Fit is not obligated
to supply any additional machines, raw materials, service or equipment to Groupo
M.
PART 2
------
Any other part of the world except Europe and Scandinavia where TPI desires to
establish a factory to manufacture Product A and/or Product B which are to be
sold for use in Garments which are to be supplied for the USA Market or for US
Brand garments. For purposes of clarification, in the preceding sentence,
"Europe" excludes Turkey and the territories and nations which comprised the
former Soviet Union.
PART 3 ***
-----------
***:
a) ***
OR
b) ***
OR
*** Terms represented by this symbol are considered confidential. These
confidential terms have been omitted pursuant to a Confidential Treatment
Request filed with the Securities and Exchange Commission (`SEC") and have been
filed separately with the SEC.
24
CONFIDENTIAL TREATMENT REQUESTED
c) ***
AND
d) ***
*** Terms represented by this symbol are considered confidential. These
confidential terms have been omitted pursuant to a Confidential Treatment
Request filed with the Securities and Exchange Commission (`SEC") and have been
filed separately with the SEC.
25
CONFIDENTIAL TREATMENT REQUESTED
SCHEDULE 3
1. PRO-FIT MACHINES:
As regards sales and delivery of Pro-Fit machines to TPI, commercially
reasonable terms shall be:
Price: (pound)*** ex works (not including packing, insurance and freight)
Delivery: machinery will be available normally for despatch within 12 working
weeks following receipt of deposit.
Terms: ***% Deposit with order - balance on despatch (either by cash or
irrevocable 60 day letter of credit capable of being discounted)
TPI shall give notice to Pro-fit of any significant changes in machinery volumes
required.
2. THE EQUIPMENT:
This will be more specifically scheduled according to agreement between the
parties in due course, it is anticipated that the approximate values will be in
the order of: (pound)*** and may include the following items (the prices of each
item shown are approximate in (pound) sterling):
1. Band joining - 2 thread o/lock with spreader and foot ***
2. PROFIT Machine ***
3. Pro-fuse Guides ***
4. PROFIT Fabric/Interlining/Tape rack with additional mod bars
for waistband lining production similar to Xxxx ***
5. Reliant M90 Fusing Press ***
6. Fusing Press Guides mounting plate ***
7. Fusing Press Guides x 2 - AT313 LH and RH ***
8. Rewind Unit - flexible tube sizing ***
9. Sew round machine - with three position tensioning for Pro-Solve/
Pro-Vapo attachment ***
10. Base plate for fitting waistband lining folders onto front of
PROFIT machine - twin bar arrangement
*** Terms represented by this symbol are considered confidential. These
confidential terms have been omitted pursuant to a Confidential Treatment
Request filed with the Securities and Exchange Commission (`SEC") and have been
filed separately with the SEC.
26
CONFIDENTIAL TREATMENT REQUESTED
11. Waistband Lining plain folders x 4 ***
12. Double single and double double lockstitch binders ***
13. Two part chino folder - waistband and waistband lining ***
14. Standard one piece folders - double double & double single in ***
various finished widths - check this
15. Hounsfield ES100 Stretch tester - with additional tools to clip
or hang garment ***
16. Narrow Heat Sealing machine with independently heated knives ***
17. Shaped waistband sewing system - with twin rear upper & lower
puller system ***
18. Various needle gauges - check sizes required
3. TRAINING
This will be provided for approx. 5 working days at a cost of (pound)*** in
Mexico. This includes flight costs and consultancy from up to 5 people but not
accommodation or travel expenses within Mexico.
*** Terms represented by this symbol are considered confidential. These
confidential terms have been omitted pursuant to a Confidential Treatment
Request filed with the Securities and Exchange Commission (`SEC") and have been
filed separately with the SEC.
27
CONFIDENTIAL TREATMENT REQUESTED
SCHEDULE 4
INTERLINING PRICES
Product Group: PROFLEX ELASTIC
Product Reference: PO37/3U/HP/W
Description: Fusible Coated Elastic with HP coating in ultra fine
gauge for all chino/denim grades
Width: 37mm (1 1/2inches)
Price per metre: (pound)*** per metre
Method of supply: Boxed
Product Group: OAKWORTH
Product Reference: FT300 Natural 150cm
Description: Fusible Polyester for use in waistband lining
Width: 150 cm wide
Price per metre: (pound)*** per metre (at 150 cm wide)
Method of supply: Full width rolls (normally 300 mts/roll)
(Usage for 1 1/2 inch band - 41 reels - therefore cost per metre at 1 1/2 inches
is (pound)***)
Product Group: YORK TAPE
Product Reference: CE008 Clear
Description: Clear tape used in denim samples (2 pieces required).
Width: 6mm
Price per metre: (pound)*** per metre (at 6mm)
Method of supply: Flanged spools
Product Group: XXXXXX ELASTIC
Product Reference: PO12/6F/HP/W
Description: 12mm fusible elastic for use in shaped lycra bands.
Width: 12mm
Price per metre: (pound)*** per metre (at 12mm)
Method of supply: Flanged spools/boxed
*** Terms represented by this symbol are considered confidential. These
confidential terms have been omitted pursuant to a Confidential Treatment
Request filed with the Securities and Exchange Commission (`SEC") and have been
filed separately with the SEC.
28
CONFIDENTIAL TREATMENT REQUESTED
Product Group: BINGLEY BINDING
Product Reference: BT800/28mm Red
Description: Stretch Binding Tape
Width: 28mm
Price per metre: (pound)*** per metre (at 28mm)
Method of supply: Flanged spools
*** Terms represented by this symbol are considered confidential. These
confidential terms have been omitted pursuant to a Confidential Treatment
Request filed with the Securities and Exchange Commission (`SEC") and have been
filed separately with the SEC.
29
CONFIDENTIAL TREATMENT REQUESTED
SCHEDULE 5
ROYALTIES
PART I
------
AGGREGATE NET REVENUES OVER ROYALTY RATES
THE TERM OF THE license
0 - $*** in Net Revenues ***% for the Net Revenues within this range
$*** to $*** in Net Revenues ***% for the Net Revenues within this range
$*** + in Net Revenues ***% for the Net Revenues within this range
PART 2
------
YEAR MINIMUM AGGREGATE ROYALTY PAYMENT
Years 1 and 2 US $200,000 in Year 1 payable in $50,000
instalments on the first day of each
Quarter commencing with $50,000 on the
Commencement Date; and US $50,000 in Year
2, with US $25,000 payable on the last day
of the second Quarter of Year 2 and US
$25,000 on the last day of the fourth
Quarter of Year 2 Notwithstanding the
foregoing, Pro-Fit acknowledges that US
5,500 has been paid by TPI prior to the
date hereof
Year 3 US $350,000 payable half on the last day of
the second and fourth Quarters
Year 4 US $450,000 payable half on the last day of
the second and fourth Quarters
*** Terms represented by this symbol are considered confidential. These
confidential terms have been omitted pursuant to a Confidential Treatment
Request filed with the Securities and Exchange Commission (`SEC") and have been
filed separately with the SEC.
30
CONFIDENTIAL TREATMENT REQUESTED
SCHEDULE 6
OTHER PROFIT EXCLUSIVE LICENSES
UNITED KINGDOM:
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10 Clothing Manufacturers for Product A
1 Waistband Lining Manufacturer for Product B
FRANCE
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1 Waistband Lining Manufacturer for Product B
GERMANY
-------
2 Clothing Manufacturers for Product A
1 Waistband Lining Manufacturer for Product B
PORTUGAL
--------
1 Waistband Lining Manufacturer for Product B
SPAIN
-----
1 Clothing Manufacturer for Product A
DENMARK
-------
1 Clothing Manufacturer for Product A
SWEDEN
------
1 Waistband Lining Manufacturer for Product B
SRI LANKA
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1 Clothing Manufacturer for Product A and B
CANADA
------
1 Fusing Service Supplier for Product A
DOMINICAN REPUBLIC
------------------
1 Clothing Manufacturer for Product A
*** Terms represented by this symbol are considered confidential. These
confidential terms have been omitted pursuant to a Confidential Treatment
Request filed with the Securities and Exchange Commission (`SEC") and have been
filed separately with the SEC.
31
CONFIDENTIAL TREATMENT REQUESTED
SOUTH AFRICA
------------
1 Waistband Lining Manufacturer for Product A & B
*** Terms represented by this symbol are considered confidential. These
confidential terms have been omitted pursuant to a Confidential Treatment
Request filed with the Securities and Exchange Commission (`SEC") and have been
filed separately with the SEC.
32
