Exhibit 10.1
Portions of this document including exhibits hereto indicated by an ++
have been omitted and filed separately with the
Securities and Exchange Commission pursuant to a
request for confidential treatment of such information.
LICENSE AGREEMENT
This license agreement (this "Agreement") is made as of the 12th day of May
2003 among IP Holdings LLC, a Delaware limited liability company with offices at
000 Xxxxx Xxxx, Xxxxxxxxxx DE ("Licensor"), Candie's, Inc., a Delaware
corporation with offices at 000 Xxxxxxxx Xxxxxx, Xxxxxxxx, XX 00000
("Candie's"), and Xxxxxx Xxxxxx, Ltd, a Delaware corporation with offices at
00-00 Xxxxxxx Xxxxxx, Xxxx Xxxxxx Xxxx, XX 00000 ("Licensee") (each a "Party"
and, collectively, the "Parties").
WITNESSETH:
WHEREAS, Licensor is the exclusive owner of, and has as a result of its
substantial use and promotion become identified with, the trade name, trademark
and service xxxx "CANDIE'S", particularly for footwear and accessories and
products and services related thereto, and as a result of such substantial use
and promotion has developed a reputation for products and accessories that
represent a certain lifestyle, quality and distinctiveness; and
WHEREAS, Licensee desires to acquire the right and license from Licensor to
use the trade name, trademark and service xxxx, whether or not registered,
consisting of CANDIE'S (the "Licensed Xxxx"), in connection with the design,
manufacture, sale, marketing, distribution, advertising and promotion of all
categories of women's and children's footwear (the "Articles"), upon such terms
and subject to such conditions as set forth herein.
NOW, THEREFORE, in consideration of the mutual representations, warranties
and covenants hereinafter set forth, the Parties hereby agree as follows:
1. GRANT AND USE OF LICENSE
1.1 General. Licensor hereby grants to Licensee during the Term (as defined in
Section 2) and subject to the terms and conditions of this Agreement, the
exclusive right and license to use the Licensed Xxxx in connection with the
design, manufacture, sale, marketing, distribution, advertising and
promotion of Articles throughout the Territory (as defined in Section 1.3).
1.2 Reservation of Rights. Licensor reserves all rights to the
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Licensed Xxxx except such as are specifically granted herein to Licensee.
1.3 Territory. (a) The territory shall be the world (the "Territory"), subject
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to the terms, conditions and limitations set forth in this Agreement.
(b) Licensor represents that attached hereto as Exhibit A is a status
report which sets forth in all material respects the registrations and
applications of the Licensed Xxxx throughout the world in
International Class 25 (footwear).
(c) Licensor agrees that upon the approval of any Business Development
Plan (as defined herein) of Licensee (which approval shall not be
unreasonably withheld or delayed) that involves a country or region in
which Licensor is not the owner or has not applied for registrations
of the Licensed Xxxx in Class 25, Licensor will act promptly to
investigate the availability of the Licensed Xxxx in that region or
country, and will use commercially reasonable efforts to procure the
registration of the Licensed Xxxx therein. A "Business Development
Plan" is defined as a document in which Licensee, at its sole cost,
sets forth with reasonable specificity and in good faith, the manner
in which Licensee plans the sale, marketing, distribution, advertising
and promotion of Articles in the proposed region or country, a
proposed level of Net Sales (as defined in Section 5.2) for the
proposed region or country for each year in which Licensee plans to
distribute Articles therein, and the date that Licensee proposes to
commence such sales. Notwithstanding anything in this Agreement to the
contrary, nothing in the Business Development Plan or Licensor's
acceptance thereof shall release Licensee from any or all of its
obligations under this Agreement or require that Licensee proceed with
the Business Development Plan.
1.4 Best Efforts of Licensee. Licensee shall use its best efforts to exploit
the rights herein granted throughout the Territory and to sell: (i) the
maximum quantity of Articles consistent with the high standards and
prestige associated with the Licensed Xxxx; and (ii) an amount at least
equal to the Minimum Net Sales (as defined in Section 5.1) and as set forth
in Exhibit B hereof. For the purposes of this Agreement, Licensee's "best
efforts" shall be construed in the context of the corresponding efforts of
the highest quality of footwear manufacturers. Notwithstanding anything
hereunder to the contrary, (x) Licensee shall not be required to use its
best efforts to exploit the rights herein granted in any country or region
unless and until Licensee shall have commenced marketing operations therein
and (y) Licensor acknowledges and agrees that (I) Licensee is engaged in
the footwear business, either directly or as licensee of other trademarks,
and (II) Licensee may continue to expand its operations either through an
expansion of its current brands or via other brands that it creates and/or
licenses ("Licensee Other Activities").
1.5 Purchases by Licensor, Candie's or Business Partners. (a) Licensor,
Candie's and their business partners, licensees and affiliates
(collectively "Candie's Store Operators") will have the right at any time
to sell, market, distribute, advertise and promote Articles within Candie's
retail locations, outlets or stores.
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(b) Licensee will sell Articles to Candie's Store Operators, and Candie's
Store Operators will purchase all of their requirements for Articles
from Licensee, at prices equal to ++ percent (++%) lower than
wholesale prices. Sales of Articles to Candie's Store Operators will
not be included in the calculation of Minimum Net Sales and will not
be subject to payment of Royalties (as hereinafter defined).
Notwithstanding the foregoing, Candie's Store Operators may purchase
up to ten percent (10%) of their requirements for Articles from
entities other than Licensee. Except for sales at existing outlet
stores only, Candie's Store Operators shall not sell Articles at an
initial price less than the initial price charged by Macy's with
respect thereto.
(c) In the event that Candie's determines not to continue the operation of
the Candie's concept or outlet retail locations (either directly or
through the Xxxxxxxxx Group), Candie's will so notify Licensee to such
effect and grant Licensee the right, prior to conducting any
discussions or negotiations with other entities, to make an offer
pursuant to which Licensee would open and operate such locations. It
is understood that regardless of which party or entity is involved in
a possible future roll out of retail stores, it will work with
Licensee in good faith to establish appropriate pricing and other
policies so that the wholesale and retail businesses are
complementary.
1.6 No Publicity. Neither Party shall issue any press release or public
statement related to the existence or subject matter of this Agreement
without the prior written consent of the other as to all aspects of such
release or statement, except as may be required by law or pursuant to a
court order, in which event the Party making the press release or public
statement shall give the other Party a reasonable opportunity to comment
thereon prior to the release.
1.7 $++ Payment. In addition to all amounts to be paid hereunder, as
consideration for entering into this Agreement Licensee will pay $++ to
Candie's upon the execution of this Agreement. This payment is not an
advance on Royalties (as defined herein).
2. TERM.
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2.1 Initial Term. The initial term of this Agreement shall be the period
commencing as of the date hereof and continuing through December 31, 2009
(the "Initial Term"), unless sooner terminated in accordance with Section
10.
2.2 Year and Quarter. (a) Each "Year" of the Initial Term shall be defined as:
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the First Year 5/12/03 - 12/31/04
the Second Year 1/1/05 -- 12/31/05
the Third Year 1/1/06 -- 12/31/06
the Fourth Year 1/1/07 -- 12/31/07
the Fifth Year 1/1/08 -- 12/31/08
the Sixth Year 1/1/09 -- 12/31/09
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(b) With the exception of the First Year (as defined in Section 2.2), each
12 month period commencing January 1 and ending December 31 thereafter
for which the license is in effect will be a "Year". Commencing with
the shipment of Articles, each quarter of each Year throughout the
Term (as defined in Section 2.3), ending March 31, June 30, September
30 and December 31, will be a "Quarter".
2.3 Renewal Term. (a) Licensee shall have the option to renew this Agreement
for four additional terms of three (3) years (each, a "Renewal Term",
referred to together with the Initial Term, as applicable, as the "Term"),
if, (i) as of June 1 of the last Year in the applicable Term, Licensee
shall have delivered to Licensor written notice of its intention to renew,
and reasonable forecasts of the business projected to be achieved through
the end of that Year (ii) as of the last day of the applicable Term,
Licensee shall have achieved sales of Articles in an amount that equals or
exceeds Minimum Net Sales for the applicable Term (as defined in Exhibit B)
subject to such reduction in Minimum Net Sales as provided for in Section
5.1(b); and (iii) Licensee has been at all times throughout the Initial
Term in material compliance with the terms of this Agreement or, if not,
Licensee shall have cured any breach within thirty (30) days of receipt of
written notice thereof from Licensor.
(b) In the event of any Renewal Term, Licensor and Licensee will agree in
good faith on appropriate and reasonable Minimum Net Sales for such
Renewal Term taking into account various factors, including without
limitation, the level of business achieved during the final two Years
of the prior Term.
3. MANUFACTURE OF ARTICLES; QUALITY CONTROL.
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3.1 Production of Articles. During each Year for which this Agreement is in
effect, Licensee shall, at its own expense, manufacture or have
manufactured, sell, market, distribute and promote Articles, along with any
Packaging Materials (as defined in Section 3.4) used in connection
therewith, of a good quality that are at least comparable to similar items
offered at comparable prices for each respective brand and of such style,
appearance and distinctiveness so as to protect and enhance, and in no
manner reflect adversely upon, the prestige of Licensor and the Licensed
Xxxx and the goodwill pertaining thereto.
3.2 Dedicated Designer and Sales Staff. (a) Within 120 days of the execution of
this Agreement, and continuing throughout the Term, Licensee will have
hired and shall maintain for Articles a sales manager, the Sales Employee
(as defined below) or a comparable replacement, and a designer (together
the "Candie's Personnel") dedicated exclusively to the design, manufacture,
sale, marketing, distribution and promotion of Articles and such other
employees as may be necessary to carry out its obligations under this
Agreement. Licensee shall use reasonable efforts throughout the Term to
ensure that Licensor and Candie's remain satisfied with the performance of
the Candie's Personnel, including replacing one or more of the Candie's
Personnel if there is a reasonable basis for doing so.
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(b) Licensee acknowledges and agrees that it and all employees involved in
the design and sale of Articles must understand the distinction
between Articles and other products designed or sold by Licensee and
shall be able to produce and sell Articles distinct from other lines
of products in a manner that is consistent with the reputation of the
Licensed Xxxx and with the distribution channels in which such
Articles are sold.
(c) Within 15 days of the date hereof, Licensee will extend an offer of
employment to Xxxxx Xxxxxx (the "Sales Employee"), on terms comparable
to those pursuant to which he is currently employed by Candie's.
3.3 Contractors and Suppliers. (a) All parts and components of the Articles
shall be manufactured, sold, distributed, marketed, promoted, labeled,
packaged and, if applicable, imported into any country or region by
Licensee in all material respects in accordance with all applicable foreign
and United States laws, rules and regulations and the practices and
policies of Licensor relating thereto that have been provided to Licensee,
including those with respect to fair remuneration for work, health and
safety conditions in the work environment and social protection of workers.
Licensee agrees that upon Licensor's request it will provide notice to
Licensor of the location and ownership of any factory or facility that
manufactures or fabricates Articles or components of Articles, and Licensee
shall cease producing Articles at factories or facilities as to which
Licensor shall reasonably object, or take all necessary steps to cure any
issues regarding quality, within thirty 30 days following Licensee's
receipt of such notice. Notwithstanding the foregoing, Licensor
acknowledges and agrees that any factory or facility that currently
manufactures or fabricates goods for Licensee is an acceptable
manufacturer.
(b) Licensee further agrees that it will make aware all permitted
contractors, subcontractors and suppliers used in the manufacture,
sale, distribution, marketing, advertising and promotion of Articles
that: (i) they are expected to adhere to all of the same high
standards with regard to Articles and the Licensed Xxxx to which
Licensee is held; (ii) Licensor is the true and lawful owner of, and
in some cases applicant for the registration, or registrant, of the
Licensed Xxxx; and (iii) Licensee's authority to use the Licensed Xxxx
derives solely from this Agreement. Licensee shall be fully
responsible for any breach of this Agreement by its permitted
contractors, subcontractors, suppliers, affiliates and similar parties
hereunder. Licensee shall use all reasonable efforts to protect the
Licensed Xxxx from any misappropriation, misuse or unauthorized use by
any of its directors, officers, employees, agents, contractors,
subcontractors, suppliers or associates, and shall indemnify Licensor
for any damages incurred arising from the actions or omissions of any
of the directors, officers or employees of such entities in such
regard.
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3.4 Display of Licensed Xxxx. With respect to all Articles, Licensee shall use
and display the Licensed Xxxx only in such form and manner as is consistent
with the high standards and prestige associated with the Licensed Xxxx and
the high quality of the Articles, and Licensee shall cause such legends,
markings and notices as may be required by law or as Licensor requests to
appear on all items used or intended to be used by Licensee in connection
with the Articles or in connection with any materials in which the Articles
are packaged, including, but not limited to tags, labels, boxes and bags
("Packaging Materials"). No Articles bearing the Licensed Xxxx shall be
sold by Licensee under or in conjunction with any other trade name or
trademark, except that Articles may be shipped to customers with other
products in a bulk package. Licensee may include on Packaging Materials and
on its business stationery and documentation an indication of the
relationship between the Parties, but only in a form previously approved by
Licensor.
3.5 Approvals by Licensor. During each selling season of each Year during the
Term, Licensee shall submit to Licensor for its review in a timely manner
for each selling season prior to the production or fabrication of Articles
or Packaging Materials, as applicable, samples of all Articles and
Packaging Materials and any and all items or components used or intended to
be used by Licensee in connection with their design, manufacture, sale,
distribution, marketing or advertising of Articles and Packaging Materials.
If Licensor shall disapprove of any Articles or Packaging Materials, or any
items used therein or components thereof (which disapproval shall not be
made unreasonably), Licensee shall make such corrections or inclusions
reasonably identified by Licensor. Articles and Packaging Materials shall
be deemed to be approved by Licensor in the event Licensor does not provide
notice of its disapproval within ten (10) Business Days following its
actual receipt thereof from Licensee. For the purposes of this Agreement,
"Business Day" means the days on which banks in the City of New York are
required to be open for business.
3.6 Complementary Product. During each selling season of each Year during the
Term, and any Renewal Term, if applicable, Licensee shall provide at cost
to Licensor at Licensor's request, the number of samples of Articles as
Licensor shall reasonably request.
3.7 Designs, Sketches and Ideas. (a) Licensee shall be the owner of all
sketches, ideas, artwork, concepts and designs created by Licensee for use
in connection with Articles (together, the "Designs"), including without
limitation any and all patent, trade secret, trademark, copyright, and
other intellectual property and proprietary right, title, and interest
therein. The copyright in each Design shall belong to Licensee. Licensor
agrees to execute, at Licensee's request, any written documents reasonably
prepared by Licensee, and to provide such other cooperation and assistance
that Licensee reasonably deems appropriate or necessary, to effectuate this
result. Once Designs have been used for the production of Articles bearing
the Licensed Xxxx, Licensee shall not use such Designs in connection with
any other products without the prior written consent of Licensor.
Notwithstanding the foregoing, Licensor acknowledges and agrees that, in
connection with Licensee Other Activities, Licensee may create designs for
other footwear that may in some respects resemble the Designs used for the
production of the Articles bearing the Licensed Xxxx so long as Licensor
uses its reasonable efforts to produce Articles that are distinctive from
other products produced by Licensee.
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(b) At any time and from time to time, Licensor may prepare and deliver to
Licensee sketches and ideas that it desires Licensee to use in
producing Articles or Packaging Materials. Licensee agrees that it
shall in good faith use its reasonable efforts to produce sample
Articles or sample Packaging Materials, as applicable, in compliance
with such sketches and ideas. All sketches and other materials
provided by Licensor to Licensee are owned by Licensor and shall be
used by Licensee solely in connection with the manufacture, sale,
marketing, distribution, advertising and promotion of Articles or
Packaging Materials, as applicable, in accordance with Licensor's
instructions. Following its review or use of such materials, Licensee
shall re-deliver them to Licensor, at Licensee's expense, and Licensee
shall not use or permit the use of such materials thereafter except in
connection with producing Articles. If Licensee does not use any such
sketches or other materials, Licensor may use and permit others to use
them in any manner it desires provided that such use by Licensor does
not conflict with rights granted to Licensee under this Agreement.
3.8 Inspection. Upon reasonable notice, Licensee shall permit inspection by
Licensor or its duly authorized representatives during regular business
hours, of Licensee's premises or any other facilities in which samples,
Articles, components of Articles or Packaging Materials are being
manufactured or warehoused at any time (whether or not Licensee is then
engaged in the production of Articles).
4. DISTRIBUTION OF ARTICLES.
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4.1 On Time Shipment of Orders. Licensee shall use reasonable efforts to ship
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all orders for Articles by the date promised.
4.2 Distinct Distribution Channels. (a) Articles shall be targeted to the
upscale department store channel, including Federated, May Company, other
department and specialty stores of that level, type and quality and any
other store to which Candie's currently sells Articles, including, without
limitation, XX Xxxxxx'x. If there is any question as to whether a proposed
customer meets the standard set forth herein, Licensee shall obtain
Licensor's approval (which approval shall not be unreasonably withheld or
delayed) prior to selling any products to such customer. ++ Notwithstanding
the foregoing, in the event that Licensee advises Licensor in writing that
there has been a material change in Licensee Other Activities prior to the
end of the First Year, Licensor will use best efforts to remove any
contractual impediments that may exist and, if successful, will permit
Licensee to commence selling Articles to the mid-tier as soon as possible
thereafter. In no event may Licensee sell any Articles in the mass merchant
channel described in Section 4.2 (d).
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(b) Off Price Articles (as defined in Section 4.3 hereof) of all Articles
may be sold to T.J. Maxx, Marshalls, Ross Department stores, and
department and specialty stores of a similar level, type and quality.
If there is any question as to whether a proposed customer meets the
standard set forth herein, Licensee shall obtain Licensor's approval
(which approval shall not be unreasonably withheld or delayed) prior
to selling any products to such customer.
(c) At no time shall Licensee distribute Articles or Off Price Articles to
any retail stores that may be described as "discount mass merchants"
or "wholesale clubs".
(d) Licensor may consent to sales of Articles outside the specified
channels set forth herein, from time to time and at any time, without
limiting or waiving the provisions of this Section 4.2.
(e) Notwithstanding the foregoing, Licensee shall have the right to sell
the Articles directly to the public (i) in Xxxxxx Xxxxxx retail
stores, (ii) through catalogs and (iii) on Licensee's internet site
(collectively, "Other Permitted Channels"). Sales of Articles in Other
Permitted Channels will be included in the computation of Minimum Net
Sales based on wholesale pricing.
4.3 Off Price Articles. In the event that Licensee shall produce Off Price
Articles, Licensor will permit such Articles to be distributed strictly in
accordance with this Agreement, so long as: (1) no distribution of Off
Price Articles is made earlier than thirty (30) days after the conclusion
of the "first run" retail selling season, and (ii) the total amount of such
Off Price Articles sold in any Year does not exceed 25% of Net Sales in any
given Year. Sales of Off Price Articles will be subject to payment of
Royalties in accordance with Section 5.2(b) hereof and will be included in
the calculation of Minimum Net Sales except in the event that such sales
exceed 25% of total Net Sales, in which case such sales over 25% shall be
deducted from Minimum Net Sales. For the purposes of this Agreement, "Off
Price Articles" shall be defined as Articles offered by Licensee on a
landed basis at prices thirty percent (30%) or more below wholesale.
4.4 Webstore. Candie's will transfer to and Licensee will take over all rights
and obligations relating to the operation of the Candie's webstore located
at xxx.xxxxxxx.xxx (the "Webstore"), including all fulfillment therefor and
maintenance thereof. Candie's will apply for and make available to Licensee
full use of any URL or domain names that are necessary to operate the web
site and store. Candie's acknowledges and agrees that Licensee may
discontinue the offering of any non footwear products in the Webstore, but
in the event that Licensee determines to stop selling all products through
the Webstore for a period of 30 days or more, all rights to the Webstore
shall revert to Licensor and Licensee shall cease having any rights
relating thereto. The Parties shall work together in good faith to effect a
smooth and expeditious transition.
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4.5 Existing Inventory and Backlog. (a) It is understood that Candie's will
retain all rights to and for, and all obligations and liabilities in
connection with, footwear orders in connection with Spring 2003, including
shipping, invoicing, collecting payment, markdowns, chargebacks and
returns.
(b) Candie's hereby transfers to Licensee its current backlog of unfilled
orders for Fall 2003 as set forth on Exhibit C attached hereto (the
"Backlog").
(c) Candie's and Licensee will work together in good faith and use their
collective best efforts to minimize any markdowns on the Spring 2003
collection. Notwithstanding the foregoing, in the event that, in
connection with Fall 2003 orders, there are markdowns associated with
the Spring 2003 orders, Candie's will be responsible for the amount of
such markdowns to the extent that they are comparable to historical
markdowns that Candie's has experienced in prior years for that season
and will indemnify Licensee therefor.
(d) Candie's will work in good faith with Licensee to effect a smooth
transition of the footwear business, including facilitating
discussions and the transfer of information to factories, agents,
retailers and other business partners who are involved in the footwear
business. It is the goal of the Parties that there be no material
detrimental impact on the footwear business resulting solely from the
transition of the business by Candie's to Licensee.
4.6 In-Store Displays and Showrooms. In addition to Licensee's obligations
---------------------------------
under Section 3.5, Licensee shall perform the following obligations:
(a) Licensee shall maintain at least one showroom in New York City, all or
part of which will be dedicated exclusively to featuring Articles.
Licensee shall bear all costs associated with the use, maintenance and
update of all in-store fixtures and display furniture for Articles
used in any showroom space dedicated to Articles.
(b) All aspects of displays (whether in-store or in a showroom) shall be
subject to consultation between the Parties. Prior to showing any
Articles in any display or showroom, Licensee shall obtain Licensor's
approval (which shall not be unreasonably withheld or delayed) of the
proposed display of the Licensed Xxxx and Articles.
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(c) Licensor shall be entitled to inspect Licensee's in-store displays or
showrooms periodically at Licensor's expense. Licensee shall make any
such reasonable changes, adjustments or improvements provided that the
cost of any such changes, adjustments and improvements do not exceed
$50,000.
4.7 Trade Shows. Licensee will attend all significant industry trade shows for
footwear and will assume all costs associated with attending and displaying
Articles at such shows. It is agreed that: (i) for the purposes of a smooth
transition, the FFANY show in June 2003 will take place at Candie's
showroom, which will be made available to Licensee at no cost; (ii)
thereafter, Candie's will give to Licensee its CANDIE'S trade show booth
and thereafter Licensee will be responsible for and pay all costs
associated with the booth, including but not limited to storage, shipping
and maintenance (prior to the that time Candie's will be responsible for
all storage charges); and (iii) upon Candie's presentation to Licensee of
the invoice therefore, Licensee will reimburse Candie's for the cost of the
space at the August 2003 WSA show.
4.8 Third Party Distributors. (a) Licensee may, provided it obtains the prior
written consent of Licensor, sublicense the right to distribute products
outside the United States to one or more approved distributors (each an
"Approved Distributor"). In furtherance of the foregoing, Licensee shall
submit to Licensor for its approval (which shall not be unreasonably
withheld or delayed) (i) copies of any proposed distribution agreement not
less than 10 days prior to the submission thereof to any proposed
distributor, and (ii) prior to the execution of any distribution agreement,
copies of such agreement in the form that Licensee and a proposed
distributor may propose to execute.
(b) Without limiting the generality of the foregoing, each approved
distribution agreement shall include the following provisions, among
others, to ensure that: (i) Licensor through Licensee retains control
over the quality of any Products that may be manufactured thereunder,
(ii) upon the termination of this Agreement for any reason, Licensor
has the right to require the Approved Distributor to assign such
agreement to Licensor with respect to Articles only, (iii) the term of
each such agreement is deemed to be terminated automatically upon the
termination of this Agreement if for any reason Licensor does not
exercise its option to require Licensee to assign such agreement to
Licensor as provided herein, (iv) each Approved Distributor is
required to furnish separately to Licensee and Licensor reports and
statements of the type described in Section 9 hereof, and (v) Licensor
and any representative of Licensor have the right to inspect any
manufacturing facilities of each Approved Distributor to monitor
compliance with the provisions of this Section.
(c) Licensee hereby agrees that in the event that Licensee learns that an
Approved Distributor has breached the material terms thereof, Licensee
shall immediately notify Licensor of such breach and all relevant
facts relating thereto. If Licensor is so notified by Licensee, or if
Licensor independently becomes aware of any such breach, Licensor
shall have the right, in its reasonable discretion, to instruct
Licensee to take any action to remedy such breach which Licensor
reasonably deems appropriate under the terms of the agreement and
applicable law. Licensee's failure to comply with Licensor's
reasonable instructions as provided above shall entitle Licensor to
cause Licensee to terminate the distribution agreement with the
Approved Distributor.
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4.9 No Tie-ins. Licensee shall not offer or sell Articles in connection with
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any tie-in or promotional campaign relating to products other than Articles
without the prior written consent of Licensor.
5. NET SALES.
5.1 Minimum Net Sales. (a) In furtherance of its duties and obligations
hereunder, Licensee shall use its best efforts to promote diligently the
manufacture, sale, marketing, distribution and promotion of Articles in
accordance with the terms of this Agreement, and without limiting the
generality of the foregoing, achieve Minimum Net Sales each Year during the
Term in the amounts set forth in Exhibit B hereto ("Minimum Net Sales").
(b) Notwithstanding the foregoing, in the event that Licensee achieves
Minimum Net Sales in an amount equal to at least ++% of the amounts
set forth in Exhibit B in any one Year during the Initial Term and ++%
of the amounts set forth in Exhibit B during any other Year of the
Initial Term, Licensee will not be in default of this Agreement and
Licensee's right to exercise any renewal option will not be affected,
so long as Licensee pays Minimum Royalties in the full amount as set
forth in Exhibit B. This provision relating to the relief of the
obligation to achieve Minimum Net Sales will not be available in any
other Term.
5.2 Definition of "Net Sales". For purposes of this Agreement, the term "Net
Sales" shall mean the gross invoiced amount, whether represented by United
States dollars or other consideration, of Articles shipped by Licensee or
any of its Affiliates (as defined in Section 14.7) to customers at
wholesale prices (invoiced list prices) less actual (i) markdowns, (ii)
allowances, (iii) returns, (iv) trade discounts, (v) new store discounts,
(vi) coop advertising allowances, and (vii) operating chargebacks ((i)
through (vii) together not to exceed twenty percent (20%) of aggregate Net
Sales for any Year). No deductions shall be made for other discounts,
special promotions, advertising, warehouse, distribution, or any other cost
incurred by Licensee. In computing Net Sales, Articles shall be considered
finally "sold" when shipped or otherwise transferred.
6. ROYALTIES.
6.1 Upfront Payment. Upon the execution of this Agreement, Licensee will pay to
Licensor an advance on Royalties in the amount equal to $200,000, which
amount will be credited against the payment of the first Royalties due
under this Agreement.
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6.2 Minimum Royalties. Commencing on October 1, 2003, subject to Section 6.1,
Licensee shall pay to Licensor on a quarterly basis in equal installments
in the manner provided for in Sections 6.5 and 14.5 hereof, the minimum
royalties as set forth in Exhibit B hereto (the " Minimum Royalties").
6.3 Percentage Royalties. (a) Commencing with the first shipment of Articles,
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Licensee will pay to Licensor on a quarterly basis in the manner provided
for in Section 6.5 below, a royalty equal to ++% of Net Sales
("Percentage Royalties").
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6.4 Calculation of Royalties. All payments of Minimum Royalties for each
---------------------------
Quarter will be credited against Percentage Royalties due for that Quarter.
If at the end of any Quarter, the amount of Percentage Royalties due
exceeds the Minimum Royalties paid, Licensee shall pay to Licensor in the
manner provided for in Sections 6.5 and 14.5 the difference between the
Minimum Royalties paid and the Percentage Royalties owed for that Quarter.
Percentage Royalties payable for each Quarter shall be computed on the
basis of Articles shipped by Licensee during such Quarter.
6.5 Payment of Royalties. Minimum Royalties shall be accounted for on the basis
--------------------
of each Quarter, and shall be paid in United States Dollars on the first
day of each
[++ represents confidential treatment request]
Quarter. Percentage Royalties shall be accounted for on the basis of each
Quarter, and shall be paid in United States Dollars within thirty (30) days
following the close of each Quarter (or portion thereof in the event of
prior termination of this Agreement for any reason). All payments shall be
in accordance with this Section and Section 14.5 of this Agreement.
Notwithstanding the foregoing, once the sum of the Minimum Royalties and
Percentage Royalties paid for a particular Year equals or exceeds the total
Minimum Royalties payable for such Year, no further Minimum Royalties shall
be payable for such Year.
6.6 Currency Exchange. Licensee shall calculate Net Sales and Percentage
Royalties for any Quarter in the first instance in the currency of the
country in which the relevant sales were made by Licensee (unless payment
was made in United States Dollars), and then shall convert such amount into
United States dollars, using as the rate of exchange the average rate that
has been in effect for the Quarter, as reported by the Bloomberg service or
such other reporting service as may be agreed to by the Parties. Licensee
shall state clearly in any statement that involves the conversion of
currency the Net Sales stated in the local currency and in United States
dollars and state clearly the exchange rate used.
7. ADVERTISING AND MARKETING.
-------------------------
12
7.1 Advertising and Promotional Materials. (a) Licensee acknowledges that
Licensor's policy is to create and maintain a uniform concept and image for
Articles consistent with the image and prestige of the Licensed Xxxx.
Licensee acknowledges and agrees that Licensor shall have complete control
and approval over all aspects of any advertisement of Articles (Licensor
acknowledges that certain retailers may advertise Articles through
cooperative advertising in a manner beyond Licensee's reasonable control).
Notwithstanding the foregoing, Licensor agrees to consult with Licensee,
and consider in good faith all suggestions made by Licensee, in connection
with the advertisement of Articles and not to effect any fundamental change
in the image of of the brand as it relates to Articles without Licensee's
consent, which will not be unreasonably withheld. In addition, Licensor
agrees to use its best efforts to include Articles in all advertisements
that are funded through the Advertising Royalties.
(b) Licensor shall develop and place national or institutional advertising
for Articles through its advertising department. Licensee shall
cooperate with, and assist Licensor, as necessary (provided that it is
not required to expend more than nominal amounts), in developing and
placing all such national and/or institutional advertising for
Articles.
7.2 Advertising Royalties. (a) In addition to amounts payable under Section 6,
---------------------
Licensee shall pay minimum advertising royalties to Licensor for national
and institutional advertising of Articles equal to ++ percent (++%) of Net
Sales or Minimum Net Sales,
13
whichever is greater, for each Year (the "Advertising Royalties", referred
to collectively with Percentage Royalties as "Royalties"). Advertising
Royalties shall be paid to Licensor on the first day of each Quarter along
with the Minimum Royalties in accordance with Section 6.5. If, at the end
of any Quarter, Licensee's payments are less than the amounts required to
be paid, the difference shall be paid to Licensor thirty (30) days after
the end of the Quarter along with the payment of Percentage Royalties. It
is understood that Licensee remains obligated to pay Advertising Royalties
regardless of whether or not payment of such amounts would result in
payments exceeding the Minimum Royalties; provided, however, that no
Advertising Royalties shall be payable on Net Sales to the extent that (A)
the Net Sales are "first cost sales" (sales that are factory to customer
direct) and (B) such "first cost sales" do not exceed ten percent (10%) of
"landed sales". Notwithstanding anything to the contrary contained in this
Agreement, Licensee shall be entitled to a deduction against Advertising
Royalties for co-op advertising actually authorized and spent by Licensee,
which amount of such deduction shall not exceed 0.4% of Net Sales or 20% of
Advertising Royalties, whichever is greater. In no event shall the amount
of such deduction exceed $400,000 in any Year.
(b) All Advertising Royalties shall be spent by Licensor on advertising
that relates directly to Articles.
(c) At Candie's request, Licensee will make a charitable contribution of
$50,000 per Year for each of the initial three (3) Years of the
Initial Term to The Candie's Foundation for use in promoting its
charitable cause ("The Candie's Foundation Contribution"). The
Candie's Foundation Contribution shall be paid to The Candie's
Foundation c/o Candie's in equal installments on the first day of each
Quarter along with the Advertising Royalties in accordance with
Section 6.5. It is understood that Licensee remains obligated to pay
The Candie's Foundation Contribution regardless of whether or not
payment of such amounts would result in payments exceeding Minimum
Royalties or Advertising Royalties.
8. OWNERSHIP OF LICENSED XXXX.
--------------------------
8.1 Unauthorized Uses. Licensee shall not use or register, or authorize or
attempt to use or register, the Licensed Xxxx or any source identifier
confusingly similar thereto, including without limitation trademarks, trade
names, corporate names, or domain names, in whole or in part. Licensee
shall not join any name or names with the Licensed Xxxx so as to form a new
or composite xxxx. Licensee shall not use any name or names in connection
with the Licensed Xxxx in any advertising, publicity, labeling, packaging
or printed matter otherwise than in connection with Articles in accordance
with the terms and conditions of this Agreement. Notwithstanding anything
hereinabove to the contrary, Licensee may use the name "Candie's" as a name
of Licensee's division and/or subsidiary which manufacturers and/or sells
the Articles provided that all documents reflecting such name (other than,
in the case of a subsidiary, its Certificate of Incorporation) also
indicates "a division [or subsidiary] of Xxxxxx Xxxxxx, Ltd."
8.2 Licensor to Remain Owner. Licensee acknowledges that Licensor is the owner
of all right, title and interest in and to the Licensed Xxxx in the
Territory in any and all forms or embodiment thereof, and in some cases
applicant for the registration, or registrant, of the Licensed Xxxx, and is
also the owner of the goodwill attached or which shall become attached
thereto in connection with the business and goods in relation to which the
same has been, is or shall be used (including any goodwill arising in
connection with the manufacture, distribution and sale of Articles). As
such, all goodwill developed in the Licensed Xxxx resulting from this
Agreement inures solely to Licensor's benefit. Licensee shall not, at any
time, do or suffer to be done any act or thing which may in any way damage
or disparage, blur or tarnish, or otherwise dilute the fame of, the
Licensed Xxxx or its reputation, or adversely affect any rights of Licensor
in and to the Licensed Xxxx or in and to any registrations or applications
thereof, or which, directly or indirectly, may reduce the value of the
Licensed Xxxx, or detract from its reputation and goodwill.
8.3 Confirmation of Ownership. Licensor shall take reasonable steps to protect
the Licensed Xxxx in the Territory. At Licensor's request, Licensee shall
execute any documents reasonably required by Licensor in order to confirm
Licensor's rights in and to the Licensed Xxxx in the Territory and the
respective rights of Licensor and Licensee pursuant to this Agreement.
Licensee shall cooperate with Licensor in connection with the recordal of
this Agreement, in connection with any filing and prosecution by Licensor
of applications in Licensor's name to register the Licensed Xxxx for
Articles in the Territory, and any derivations thereof, and the maintenance
and renewal of such registrations as may issue.
8.4 Prohibition Against Challenge. Licensee shall never challenge Licensor's
ownership of or the validity of the Licensed Xxxx, or of any application
for registration thereof by Licensor, or of any trademark registration
therefor, or any rights of Licensor therein or which derive from marks that
are confusingly similar to the Licensed Xxxx.
14
8.5 Notification to Licensor. In the event any Party learns of any infringement
or imitation of the Licensed Xxxx, it shall give prompt written notice to
the other Parties thereof. Licensor thereupon shall take such action as it
deems advisable for the protection of its rights in and to the relevant
Licensed Xxxx and Licensee, if requested to do so by Licensor, shall
cooperate with Licensor in all respects including, without limitation, by
being a plaintiff or co-plaintiff in any related legal action and by
causing its officers and employees to provide necessary documents and to
give testimony (provided that Licensee's reasonable costs and expenses are
paid or reimbursed by Licensor). In no event, however, shall Licensor be
required to take any action if it deems it inadvisable to do so, and
Licensee shall have no right to take any action with respect to the
Licensed Xxxx without Licensor's prior written approval (not to be
unreasonably withheld or delayed). Licensor shall have sole control over
any action taken to protect the Licensed Xxxx, except as it may otherwise
permit. Licensor shall be responsible for costs and expenses incurred in
connection with any legal action instituted to protect the Licensed Xxxx,
except to the extent that any such costs or expenses are incurred as a
result of Licensee's breach of this Agreement.
9. REPORTS; RECORDS; AUDITS.
------------------------
9.1 Quarterly Statements and Reports. Licensee shall deliver to Licensor, in a
format acceptable to Licensor, within thirty (30) days after the end of
each Quarter (or portion thereof, in the event of prior termination of the
Term for any reason), a report, certified to be complete and accurate by
Licensee's Chief Financial Officer, broken down by each region or country
in the Territory, in detail reasonably satisfactory to Licensor,
reflecting: (i) the gross invoice price paid for Articles sold in the
Quarter, by customer, (ii) the aggregate amount of returns, markdowns or
other deductions taken or made during such Quarter, (iii) the amount of Off
Price Articles sold and first cost sales made during the Quarter; (iv) the
amount of co-op advertising; and (v) Net Sales and the computation of
Royalties payable for such Quarter, together with such other information as
Licensor may reasonably request from time to time. In the event of sales
outside the United States, reports must identify the country where products
are sold and to the extent applicable, Licensee must provide copies of all
tax certificates or the equivalents thereof supplied to or received by the
applicable foreign government.
9.2 Annual Statements and Reports. Licensee shall deliver to Licensor by April
1 of each Year (or portion thereof, in the event of prior termination of
the Term for any reason) in detail reasonably satisfactory to Licensor,
statements and a report certified to be complete and accurate by Licensee's
Chief Financial Officer reflecting for such Year the information provided
pursuant to Section 9.1, and such other and additional relevant financial
information as may be regularly available to management (including, if so
available, open undelivered orders). If such statement discloses that the
amount of Royalties paid to Licensor during the period to which such
statement relates is less than the amount required to be paid to Licensor
pursuant to this Agreement, then, within ten (10) Business Days after the
delivery of such statement, Licensee shall pay to Licensor the amount of
such deficiency. Licensee will not be permitted to make retroactive
adjustments to statements at any time exceeding 12 months following the
date of the statement.
15
9.3 Books and Records; Audits. (a) Licensee shall prepare and maintain, in such
manner as will allow accountants to perform an audit, complete and accurate
books of account and records (specifically including, without limitation,
the originals or copies of documents and supporting entries in the books of
account) covering all transactions arising out of or relating to this
Agreement. Licensor and its duly authorized representatives shall have the
right at any time and from time to time (but not more often than one time
in each Year), with reasonable notice during regular business hours, for
the duration of this Agreement and for three (3) years thereafter, to
inspect and/or audit said books of account and records and examine all
other documents and material in the possession or under the control of
Licensee with respect to the subject matter and the terms of this Agreement
for the entire Term, including, without limitation, detailed sales,
inventory, manufacturing, purchasing, invoicing, shipping and transfer
documents, customer lists, purchase and sales orders, cost information,
pricing policies and the underlying financial statements kept in connection
therewith. All such books of account, records and documents shall be kept
available by Licensee for at least four (4) years following the termination
or expiration of this Agreement, or such longer period as may be required
by applicable tax laws.
(b) If, as a result of any inspection of any statement or audit of
Licensee's books and records or otherwise, it is determined (following
any third party review as provided below) at any time that Licensee's
payments to Licensor hereunder were less than the amount that should
have been paid with respect to any such period by an amount equal to
five percent (5%) or more of the appropriate amount due with respect
to the period in question, Licensee shall reimburse Licensor for all
reasonable costs and expenses of Licensor and its representatives
incurred in connection with any inspection and/or audit pursuant to
which the deficiency was discovered and shall make within ten (10)
Business Days following Licensor's demand therefor, all payments
required to be made to eliminate any deficiency.
(c) If, as a result of any inspection of any statement or audit of
Licensor's books and records or otherwise, it is determined (following
any third party review as provided below) at any time that the amount
actually expended by Licensor in connection with the advertisement of
Articles as provided for herein is five percent (5%) or more less than
the amount required to have been expended thereon by Licensor,
Licensor shall reimburse Licensee for all reasonable costs and
expenses of Licensee and its representatives incurred in connection
with any inspection and/or audit pursuant to which the deficiency was
discovered and shall, within ten (10) Business Days following
Licensee's demand therefor, pay to Licensee the amount of the
shortfall.
16
(d) Licensor shall prepare and maintain, in such manner as will allow
accountants to perform an audit, complete and accurate books of
account and records (specifically including, without limitation, the
originals or copies of documents and supporting entries in the books
of account) covering all advertising transactions relating to Articles
for which it has utilized Advertising Royalties arising out of or
relating to this Agreement. Licensee and its duly authorized
representatives shall have the right at any time and from time to time
(but not more often than one time every two Years), with reasonable
notice during regular business hours, for the duration of this
Agreement and for three (3) years thereafter, to inspect and/or audit
said books of account and records and examine all other documents and
material in the possession or under the control of Licensor with
respect to the subject matter and the terms of this Agreement for the
entire Term. All such books of account, records and documents shall be
kept available by Licensor for at least four (4) years following the
termination or expiration of this Agreement, or such longer period as
may be required by applicable tax laws.
(e) In the event a Party disputes the results of an audit, the matter
shall be submitted to a independent accounting firm mutually agreeable
to the Parties for resolution. The decision of the independent
accounting firm shall be binding upon the Parties hereto. The Parties
shall share the fees and expenses of the independent accounting firm
equally.
9.4 Forecasting Information. Licensee will provide to Licensor, on a quarterly
basis forecasts of sales for each Quarter of the applicable Year, and, on
an annual basis for the next Year, in such form and detail sufficient to
allow Licensor to reasonably project for budgeting purposes Royalties
expected to be paid by Licensee.
10. TERMINATION.
-----------
10.1 Nonpayment of Financial Obligations. Licensor may terminate this Agreement
upon thirty (30) days' written notice if Licensee defaults in any of its
payment obligations set forth in this Agreement and fails to cure the
default within such thirty (30) day period.
10.2 Failure to Achieve Minimum Net Sales. In the event that Licensee shall have
failed to achieve Minimum Net Sales for each Year as set forth in Exhibit B
hereto and modified by Section 5.1 (b) hereof, such failure shall
constitute a material default hereunder and Licensor may cancel and
terminate this Agreement in whole within ten (10) days of the date that
Licensor learns of such failure.
17
10.3 Breach of Agreement. In addition to the rights of Licensor set forth in
Sections 10.1 and 10.2, either Party may terminate this Agreement if the
other Party commits any other material breach of the terms of this
Agreement. The Party claiming breach must provide thirty (30) days written
notice to the alleged breaching Party setting forth the nature of the
breach and the required curative actions. If the alleged breaching Party
fails to cure the breach by the end of the thirty (30) day period, the
Agreement may be terminated immediately with no further notice. In
addition, Licensee shall have the right to terminate this Agreement in the
event a court of competent jurisdiction enjoins Licensee from using the
Licensed Xxxx in association with Articles in the United States. Such right
to terminate this Agreement shall not preclude either Party from exercising
any and all rights or remedies available to it at law or in equity.
10.4 Bankruptcy, Insolvency. In the event Licensee files a petition in
bankruptcy, or is adjudicated a bankrupt or insolvent, or makes an
assignment for the benefit of creditors, or files a petition or otherwise
seeks relief under or pursuant to any bankruptcy, insolvency or
reorganization statute or proceeding, or if it discontinues its business
for a period of sixty (60) days or more, or if a custodian, receiver or
trustee is appointed for it or a substantial portion of its business or
assets for any reason, this Agreement shall terminate immediately. In the
event that Licensee defaults on any obligation that is secured by a
security interest in any Articles and such default results in foreclosure
of the security interest thereon, such event to be deemed a material breach
hereunder, either Party shall have the right to terminate this Agreement
immediately.
10.5 Assignment for Creditors. (a) Neither Licensee as debtor (the "Debtor"),
nor any assignee for the benefit of creditors, custodian, receiver, trustee
in bankruptcy, sheriff or any other officer of the court or official
charged with taking over custody of Licensee's assets or business, shall
have the right to continue this Agreement or to exploit or in any way use
the Licensed Xxxx.
(b) Notwithstanding the provisions of this Section 10, in the event that,
pursuant to the United States Bankruptcy Code or any amendment or
successor thereto (hereinafter referred to as the "Bankruptcy Code"),
a trustee in bankruptcy of Licensee (hereinafter referred to as the
"Trustee") is permitted to assume this Agreement and does so and,
thereafter, desires to assign this Agreement to a third party, which
assignment satisfies the requirements of the Bankruptcy Code, the
Trustee or the Debtor, as the case may be, shall notify Licensor of
same in writing (hereinafter referred to as the "Notice"). The giving
of the Notice shall be deemed to constitute the grant of an option to
Licensor to have this Agreement assigned to it or to its designee for
such consideration, or its equivalent in money, and upon such terms,
as are specified in the Notice. The aforesaid option may be exercised
only by written notice given by Licensor to the Trustee or the Debtor,
as the case may be, within fifteen (15) days after Licensor's receipt
of the Notice from such party or such shorter period of time as may be
deemed appropriate by the court in the bankruptcy proceeding. If
Licensor fails to give its notice to such party within the exercise
period, such party may complete the assignment referred to in its
Notice but only to the entity named in the Notice and upon the terms
specified therein. Nothing contained herein shall be deemed to
preclude or impair any rights that Licensor may have as a creditor in
any bankruptcy proceeding.
18
10.7 Reservation of Remedies Rights. Licensor has and hereby reserves all the
rights and remedies that it has or that are granted to by operation of law,
to collect monies due, earned or payable by Licensee pursuant to this
Agreement, to be compensated for damages for breach of this Agreement and
to enjoin the unlawful or unauthorized use of the Licensed Xxxx, without
the necessity of proving actual damages, which injunctive relief may be
sought prior to or in lieu of termination.
11. RIGHTS UPON TERMINATION.
-----------------------
11.1 Sell-Off; Termination of Production. (a) Upon the expiration or termination
of this Agreement, Licensee shall cease all manufacture, distribution,
sale, advertising, promotion and sourcing of Articles. Notwithstanding the
foregoing, current work-in-process for which raw materials have been
received and which are the subject of existing confirmed orders, may be
completed and sold off in accordance with this Agreement, except in cases
of termination resulting from Licensee's breach of the provisions of
Section 3, in which case no defective Articles may be sold.
(b) All labels, tags, and other such items and Packaging Materials bearing
the Licensed Xxxx that are not required to complete the aforesaid
current work in process shall be, at Licensor's option in its sole
discretion, sent or shipped to Licensor immediately (at no cost to
Licensor) or destroyed, with Licensee providing proof of such
destruction to Licensor in the form of a sworn statement or
certificate.
11.2 Inventory. Within thirty (30) days following the expiration or termination
of this Agreement, Licensee shall deliver to Licensor a complete and
accurate schedule of Licensee's inventory of finished Articles, related
work-in-process then on hand and confirmed orders (collectively,
"Inventory"). Such schedule shall be prepared as of the close of business
on the date of such expiration or termination and shall reflect Licensee's
actual documented manufacturing cost of each such item, such cost not to
include any allocation of general and administrative costs, design and
development costs and similar items. Licensor thereupon shall have the
option (the "Option"), exercisable by notice in writing delivered to
Licensee within ten (10) days after Licensor's receipt of the complete
Inventory schedule, to purchase any or all of the Inventory (other than
Inventory needed to fill existing orders) at a price equal to Licensee's
landed cost plus a ten percent (10%) handling charge. In the event the
Option is exercised by Licensor, Licensee shall deliver to Licensor or its
designee the Inventory in Licensee's possession subject to the Option
within twenty (20) days following Licensor's notice of exercise of the
Option, or with respect to that part of the Inventory that is not in
Licensee's possession, within twenty (20) days of Licensee's receipt
thereof. Licensor shall pay Licensee for such Inventory as it elected to
purchase concurrently with its receipt thereof.
19
11.3 Sell-Off. To the extent that Licensor does not exercise the Option for the
Inventory, Licensee shall be entitled, for a period of four (4) months
following the expiration or termination of this Agreement, to sell and
dispose of such of the Inventory as Licensor did not elect to purchase
pursuant to the Option, except that, if Licensor has terminated the
Agreement by reason of Licensee's material breach thereof, no defective
Articles may be sold by Licensee. Such sales shall be made subject to all
of the provisions of this Agreement, including without limitation an
accounting therefor and the payment of Percentage Royalties thereon but
excluding Advertising Royalties thereon. Such accounting and payment shall
be due within thirty (30) days following the earlier of the close of the
four-month period during which the Inventory was sold, or the sale by
Licensee of all of said Inventory.
11.4 Termination of Rights. Except as specifically provided in Sections 11.1 and
11.3 hereof, upon the expiration or termination of this Agreement all of
the rights of Licensee under this Agreement shall terminate forthwith and
shall revert immediately to Licensor, and Licensee no longer shall have the
right to use the Licensed Xxxx, or any variation or simulation thereof, and
shall then discontinue all use of the Licensed Xxxx, and promptly shall
transfer to Licensor, at no cost to Licensor, all registrations, filings
and rights with regard to the Licensed Xxxx which it may have possessed at
any time. In addition, Licensee thereupon shall deliver to Licensor, at no
cost to Licensor, all items such as sketches, advertisements, brochures,
forms, and other materials in its possession relating to or bearing on the
Licensed Xxxx (other than those items to which Licensee shall have title).
From and after expiration or termination of this Agreement, Licensee shall
not use or permit others to use any such items or other materials, or any
variations thereof, in connection with Articles or any other merchandise.
12. REPRESENTATIONS, WARRANTIES AND COVENANTS.
-----------------------------------------
12.1 As to Licensor. Each of Licensor and Candie's hereby represents, warrants
--------------
and covenants that:
(a) Licensor is the owner of the Licensed Xxxx in the United States and
has applied for or obtained registrations of the Licensed Xxxx as set
forth on Exhibit A;
(b) It has the full right, power and authority to enter into this
Agreement and to perform all of its obligations and all necessary
limited liability company and corporate actions have been taken by it
to render this Agreement a legal, valid and binding obligation of
Licensor and Candie's enforceable in accordance with its terms;
20
(c) Candie's is a corporation duly incorporated, validly existing and in
good standing under the laws of the State of Delaware;
(d) Licensor is a limited liability company duly organized, validly
existing and in good standing under the laws of the State of Delaware.
(e) Licensor has not entered into, and shall not enter into during the
Term, any other agreement, contract, understanding or commitment
(collectively, "Contract"), and is not subject to any order, decree or
ruling, which would prohibit Licensor from performing its obligations
under this Agreement, and is not a party to any Contract that would
otherwise be violated by Licensor's entering into this Agreement,
including any agreement, contract, understanding or commitment,
pursuant to which Licensor grants with respect to the Articles a
license for a trademark to a third party which is confusingly similar
to the Licensed Xxxx;.
(f) Licensor is not aware of any claim or assertion that the Licensed Xxxx
with respect to Articles infringes upon or interferes with any
trademark right of any third party in the United States;
(g) Licensor has not granted any option, right, privilege or license to
any third party which conflicts with the rights and privileges granted
to Licensee hereby;
(h) All required consents of third parties to the execution, delivery and
performance of this Agreement by Licensor and Candie's, including,
without limitation, the consent of the Trustee and the holder of the
Notes, have been obtained;
(i) Effective with the execution of this Agreement, Candie's has no
license or other right in or to the Licensed Xxxx with respect to the
Articles;
(j) Licensor is the sole owner of the Licensed Xxxx, free and clear of any
and all liens, claims, security interests and other encumbrances
except for the security interest of Wilmington Trust Company, as
trustee (the "Trustee"), and factor therein;
(k) Licensor and Candie's shall comply in all material respects with all
applicable laws, rules and regulations;
12.2 As to Licensee. Licensee hereby represents, warrants and covenants that:
--------------
(a) It has the full right, power and authority to enter into this
Agreement and to perform all of its obligations and all necessary
corporate actions have been taken by it to render this Agreement a
legal, valid and binding obligation of Licensee enforceable in
accordance with its terms;
21
(b) It is a corporation duly incorporated, validly existing and in good
standing under the laws of the State of Delaware; and
(c) All necessary corporate resolutions have been effected by it to render
this Agreement a valid, legal and binding obligation of Licensee
enforceable in accordance with its terms, which obligation does not
cause the violation of any agreement to which Licensee is a party.
(d) Licensee has not entered into, and shall not enter into during the
Term, any other Contract, and is not subject to any order, decree or
ruling, which would prohibit Licensor from performing its obligations
under this Agreement, and is not a party to any Contract that would
otherwise be violated by Licensee's entering into this Agreement;
(e) Licensee shall comply in all material respects with all applicable
laws, rules and regulations
12.3 Disclaimers of Warranties. EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES
EXPRESSLY STATED HEREIN, NEITHER LICENSEE NOR LICENSOR NOR CANDIE'S MAKES
ANY OTHER REPRESENTATIONS OR WARRANTIES OF ANY KIND, WHETHER EXPRESS,
IMPLIED OR STATUTORY (INCLUDING, WITHOUT LIMITATION, ANY IMPLIED WARRANTIES
ARISING FROM TRADE USAGE, COURSE OF DEALING, OR COURSE OF PERFORMANCE, OR
THE IMPLIED WARRANTIES OF TITLE, NON-INFRINGEMENT, MERCHANTABILITY OR
FITNESS FOR A PARTICULAR USE OR PURPOSE), AND LICENSEE, LICENSOR AND
CANDIE'S HEREBY EXPRESSLY DISCLAIM ALL SUCH REPRESENTATIONS AND WARRANTIES.
00.0.Xx Consequential Damages. LICENSOR AND CANDIES, AND THEIR RESPECTIVE
AFFILIATES, SHALL NOT BE LIABLE TO LICENSEE OR TO ANY OTHER INDIVIDUAL OR
ENTITY FOR ANY INDIRECT, SPECIAL, PUNITIVE, EXEMPLARY, CONSEQUENTIAL, OR
INCIDENTAL LOSS OR DAMAGE OF ANY KIND OR NATURE, RELATING TO OR ARISING OUT
OF THIS AGREEMENT OR THE USE OF THE LICENSED TRADEMARKS, INCLUDING BUT NOT
LIMITED TO ANY LOSS OF REVENUES, ANTICIPATED PROFITS OR SAVINGS, OR LOSS BY
REASON OF SHUTDOWN IN OPERATION OR FOR INCREASED EXPENSES OF OPERATION,
EVEN IF LICENSOR, CANDIES, OR ANY OF THEIR AFFILIATES HAVE BEEN ADVISED OF
THE POSSIBILITY OF SUCH LOSSES OR DAMAGES. THIS SUBSECTION SHALL NOT
RELIEVE LICENSOR, CANDIE'S, OR THEIR AFFILIATES FROM LIABILITY FOR DAMAGES
THAT RESULT FROM (i) THEIR GROSS NEGLIGENCE OR WILLFUL MISCONDUCT; OR (ii)
WRONGFUL TERMINATION OF THIS AGREEMENT, OR (iii) A BREACH OF ANY OF THE
PROVISIONS OF SECTION 12.1.
22
12.5.Independent Limitations. Each of the above disclaimers or limitations is
------------------------
intended to be independent of each other. This is intended, for example,
where a remedy is found to have failed of its essential purpose.
13. HOLD HARMLESS.
-------------
13.1 Licensee's Indemnification; Insurance. (a) Licensee shall indemnify and
hold harmless Licensor and each of its directors, officers, employees,
contractors, agents and affiliates ("Licensor Affiliates") from any and all
claims, suits, judgments, losses, damages and expenses, including
reasonable attorneys' fees (collectively, "Losses"), of any kind whatsoever
that arise in any way from: (i) Licensee's material breach of this
Agreement; and (ii) the manufacture, sale, distribution, production,
promotion, or transportation of Articles, except to the extent that such
Losses are caused by Licensor's negligence, willful misconduct or breach of
this Agreement. Licensee shall have the right to defend any action or claim
with respect to which Licensor or Licensor Affiliates shall be entitled to
indemnification hereunder.
(b) Throughout the Term Licensee shall maintain products liability
insurance, or insurance providing protection against claims of the
nature commonly provided against by such insurance, in either case,
providing coverage against claims on the basis currently in effect, in
an amount not less than three million dollars ($3,000,000), with an
aggregate limit of not less than ($5,000,000). Such policy shall be
written to include Licensor as an additional insured and shall provide
for thirty (30) days prior written notice of termination, non-renewal
or material reduction in coverage to Licensor. Licensee shall deliver
to Licensor a certificate evidencing such continuing insurance
coverage of Licensor within thirty (30) days following the execution
hereof. Insurance will not be deemed to limit the amount or scope of
the indemnification provisions of this Agreement.
13.2 Licensor's Indemnification. Licensor shall defend, indemnify and hold
Licensee and each of its directors, officers, employees, contractors,
agents and affiliates, harmless from and against any Losses of any kind
whatsoever that arise in any way from (i) any actual or alleged patent,
trademark, trade dress or copyright infringement resulting from the use of
the Licensed Xxxx by Licensee as permitted or authorized under this
Agreement; (ii) Licensor's material breach of this Agreement, including,
without limitation, a breach of the representations, warranties and
covenants set forth in Section 12.1 hereof; (iii) the advertising and
promotion of Articles; and (iv) the operation of the Webstore prior to the
date hereof, and to the extent that such Losses are not caused by
Licensee's negligence, willful misconduct or breach of this Agreement.
Licensor shall have the right to defend any action or claim with respect to
which Licensee or Licensee Affiliates shall be entitled to indemnification
hereunder.
23
13.3 Notice of Claim. A Party seeking indemnification under this Agreement shall
promptly notify the indemnifying party of the subject matter, parties and
other material information relating to such claim.
14. MISCELLANEOUS.
-------------
14.1 Governing Law; Forum. This Agreement shall be interpreted and construed in
accordance with the laws of the State of New York, without regard to its
internal conflict of laws principles. In connection with any litigation
relating hereto, the Parties shall subject themselves exclusively to the
jurisdiction of the federal and state courts sitting within the City of New
York.
14.2 Binding Effect. The rights and obligations set forth in this Agreement
---------------
shall be binding upon and shall inure to the benefit of the legal
successors and permitted assigns of the Parties.
14.3 No Partnership. Nothing in this Agreement shall be construed to create a
---------------
partnership or joint venture among the Parties. Nothing herein shall be
construed to appoint Licensee as an agent for Licensor in
other arrangements outside of this Agreement.
14.4 Licensor's Sole Discretion. Unless specifically stated otherwise herein, it
is understood and agreed that where this Agreement provides that Licensor
shall approve of any matter, such approval or disapproval shall be based
solely on Licensor's subjective standards and determined in accordance with
Licensor's good faith discretion.
14.5 Manner of Payment. All amounts payable to Licensor by Licensee pursuant to
this Agreement shall be paid by wire transfer in United States Dollars by
Licensee to Licensor in accordance with the reasonable instructions of
Licensor. Checks should be made payable as follows: "IP Holdings LLC" or to
such payee as Licensor shall designate at any time by written notice to
Licensee.
14.6 Interest. If Licensee fails to make any payment due hereunder and such
failure continues unremedied for a period of thirty (30) days following
receipt of written notice of default, the unpaid balance shall be subject
to interest charges per month equal to 1%. If Licensor or Licensee
undertakes legal action to collect any amount due under this Agreement or
obtain any other relief hereunder and is successful, the other Party shall
pay the successful Party's reasonable collection costs, including
attorneys' fees.
24
14.7 Assignment. Licensee shall not assign any of its rights under this
Agreement, including the right to distribute Articles or to appoint any
manager or agent in connection therewith, to any other Person without the
prior written consent of Licensor (not to be unreasonably withheld or
delayed, it being acknowledged and agreed that it shall be unreasonable for
Licensor to seek to obtain any additional monies or other consideration
beyond that provided herein as a condition to the delivery of its consent)
and in compliance with the terms specifically set forth in this Agreement.
For the purposes of this Agreement, an assignment shall be deemed to have
occurred if (i) Licensee sells, or otherwise disposes of, substantially all
of its business or assets to another Person; (ii) Licensee merges or
consolidates with or into another Person or consummates any other form of
corporate reorganization; or (iii) if capital stock of Licensee is issued
or if issued and outstanding capital stock of Licensee is sold or otherwise
transferred, with the effect that one or more Persons who are not currently
stockholders of Licensee hold beneficial ownership of more than fifty
percent (50%) of the issued and outstanding capital stock of Licensee.
Notwithstanding anything hereinabove to the contrary, (a) Licensee may
assign its rights under this Agreement to a wholly-owned subsidiary
thereof; and (b) Licensor agrees that Licensee may subcontract the
manufacture of Articles, or any portion thereof, provided that Licensee
obtains from any and all subcontractors an agreement to the effect that no
use of the Licensed Xxxx will be made for any purpose other than supplying
Articles solely to Licensee.
14.8 Confidentiality. (a) Subject to the ownership provisions of subsection 3.7,
the Parties acknowledge and agree that all information relating to the
business and operations of the Parties and Licensee's manufacturers learned
during or prior to the term of this Agreement, the information set forth in
this Agreement and the negotiations relating thereto (collectively,
"Confidential Information"), are the valuable and confidential property of
the Party who provides such information or provides access thereto. The
Parties acknowledge the need to preserve the confidentiality and secrecy of
such information, and agree that no Party shall use or disclose same,
except as expressly permitted in this Agreement, and each Party shall take
all necessary steps to ensure that its directors, officers, employees,
agents, contractors, subcontractors and suppliers shall preserve in all
respects such confidentiality and secrecy. Accordingly, each Party
receiving the other Party's Confidential Information (the "Receiving
Party") shall permanently hold, and cause its personnel to hold, such
Confidential Information in strict confidence, except that the Receiving
Party may: (i) disclose the Confidential Information that is required to be
disclosed by governmental agencies, regulatory authorities, or pursuant to
court order, but only to the extent such disclosure is required by law and
only if the Receiving Party provides prompt prior written notice to the
Party disclosing the Confidential Information to the Receiving Party (the
"Disclosing Party") of the disclosure, and (ii) use and duplicate the
Confidential Information only to the extent necessary to perform its
obligations and exercise its rights under this Agreement. Except as
specifically permitted by this Agreement, the Receiving Party shall not
duplicate or use, or permit the duplication or use of, the Confidential
Information of the Disclosing Party or disclose or permit the disclosure of
such Confidential Information to any person or entity.
25
(b) The term "Confidential Information" means any and all technical and
non-technical information of or related to a Party, including, without
limitation, patent, trade secret, and proprietary information,
drawings, inventions, know-how, products, designs, financial
information, procurement requirements, suppliers, customers,
prospective customers, cost information, pricing policies, and
business and marketing plans and information, in whatever form
disclosed or made available. The Confidential Information of a Party
represents trade secrets and proprietary property of the Party and has
great commercial value to the Party.
(c) Confidential Information does not include items that were: (i)
possessed by the Receiving Party prior to receipt or availability
pursuant to this Agreement, other than through prior disclosure or
availability by the Disclosing Party, as evidenced by the Receiving
Party's contemporaneous written records maintained in the ordinary
course of business, (ii) independently developed by the Receiving
Party without the benefit of disclosure or availability by the
Disclosing Party, as evidenced by the Receiving Party's
contemporaneous written records maintained in the ordinary course of
business, (iii) published or available to the general public other
than through a breach of this Agreement or breach by a third party of
its confidentiality obligations to the Disclosing Party, or (iv)
obtained by the Receiving Party from a third party with a valid right
to disclose or make available such Confidential Information, provided
that such third party is not under a confidentiality obligation to the
Disclosing Party.
(d) The specific terms and conditions of this Agreement, including, but
not limited to, those related to compensation, shall be confidential
and shall not be disclosed or made available by either Party to any
other person or entity except to the extent required by law or legal
requirement.
(e) The Receiving Party shall deliver to the Disclosing Party or, at the
Disclosing Party's option, destroy any and all Confidential
Information, and shall deliver to the Disclosing Party or, at the
Disclosing Party's option, destroy any and all copies of the
Confidential Information in the possession or control of the Receiving
Party, upon the expiration or termination of this Agreement or at the
Disclosing Party's request.
(f) The provisions of this Section 14.8 supersede and replace the
provisions of that certain Confidentiality Agreement, dated April 22,
2003, between Candie's and Licensee.
14.9 Force Majeure. Neither Party shall be responsible for failure or delay in
performing any of its obligations under this Agreement due to force majeure
causes beyond its control including, but not limited to, armed conflicts,
strikes, acts of God, embargoes, boycotts, restrictions on export, shipping
or delivery, strikes, accidents, governmental orders, fires, delays, or
failure of transportation and floods. If deliveries of Articles are delayed
because of any such cause, they shall be made as soon as practicable.
Notwithstanding any other provision of this Agreement, Licensor may
terminate this Agreement if an event of force majeure continues for more
than one hundred twenty (120) days.
26
14.10Severability. If any portion of this Agreement is held to be invalid or
unenforceable, the remaining provisions shall not be affected and shall
remain in full force and effect. In the event that any portion or clause of
this Agreement is rendered invalid, that portion or clause shall be
stricken herefrom, and the remainder of the Agreement shall remain in full
force and effect.
14.11Modification or Waiver. This Agreement may be modified or a requirement
thereof waived only by a writing signed by all Parties. The waiver of any
requirement set forth in this Agreement shall not constitute a permanent
waiver of that requirement or a waiver of any other provision hereof.
14.12Notices. (a) All notices, requests, waivers, consents and other
communications (collectively, "Notices") hereunder shall be in writing and
shall be personally delivered, mailed by overnight mail, overnight courier,
certified U.S. Mail, postage prepaid, return receipt requested or faxed
(with confirmation of receipt) to the addresses first named above. All
Notices sent to Licensee shall be directed to the attention of its
President and copies of all such Notices shall be sent to Certilman Balin
Xxxxx & Xxxxx, LLP, 00 Xxxxxxx Xxxxxx, Xxxx Xxxxxx, Xxx Xxxx 00000, Attn:
Xxxxx X. Xxxxxxx, Esq. All notices sent to Licensor shall be sent to the
attention of Candie's, Inc., CEO, and IP Holdings, LLC
(b) All Notices shall be deemed received when given if delivered in person
or sent by fax or e-mail, receipt within forty eight (48) hours if
sent by courier, and within five (5) business days if sent by
registered or certified mail.
14.13Other Merchandise. Nothing herein contained shall be construed to limit
Licensor in any way from entering into agreements with third parties for
use of the Licensed Xxxx on or in connection with items other than
Articles. Licensor agrees to include in any such agreements standard
provisions protecting the integrity of the Licensed Xxxx.
14.14Execution in Counterparts. This Agreement may be executed in counterparts
by the Parties with each such counterpart then being considered one and the
same and both of which shall constitute one and the same agreement.
14.15Headings. The headings and captions used in this Agreement are for
convenience only and shall not be deemed to limit, amplify or modify the
terms of this Agreement nor affect the meaning thereof.
14.16Entire Agreement. This Agreement embodies the entire agreement of the
Parties with respect to the subject matter hereof and there are no further
agreements or understandings among the Parties with respect to such subject
matter.
27
14.17Certain Definitions. For the purposes of this Agreement, (a) "Affiliate,"
whether capitalized or not, means, with respect to a specified person, any
person which directly or indirectly controls (either individually or in
common with another person), is controlled by, or is under common control
with the specified person, for as long as such relationship remains in
effect; and (b) "Person," whether capitalized or not, means any individual,
sole proprietorship, joint venture, partnership, corporation, company,
firm, bank, association, cooperative, trust, estate, government,
governmental agency, regulatory authority, or other entity of any nature.
14.18Assumed Liabilities. Except as expressly provided for in this Agreement,
in no event shall any Party assume or agree to pay or perform, or incur any
liability or obligation under this Agreement, or otherwise, in respect of
any liability of obligation of the other.
28
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered as of
the date first above written.
CANDIES, INC. XXXXXX XXXXXX, LTD.
By: /s/ Xxxx Xxxx By: /s/ Xxxxxxxx Xxxxxx
--------------- ---------------------
Name: Xxxx Xxxx Name: Xxxxxxxx Xxxxxx
Title: Chief Executive Office Title: Chief Executive Officer
IP HOLDINGS, LLC
By: /s/ Xxxx X. Xxxxxxx
---------------------
Name: Xxxx X. Xxxxxxx
Title: Secretary
29
EXHIBIT A
Trademark Status Report
Client: IP HOLDINGS LLC
c/o Candie's Inc.
000 Xxxxxxxx Xxxxxx, 0xx Xxxxx
Xxxxxxxx, Xxx Xxxx 00000
ID Country Xxxx Classes App. # App. Dt. Reg. # Reg. Dt. Allow Dt. ITU
000 Xxxxxxxxx CANDIE'S (STYLIZED) 3 2.166.369 7/30/1998 1.760.011 11/1/1999 No
000 Xxxxxxxxx CANDIE'S (STYLIZED) 25 2133774 2/26/1998 1.863.393 3/13/2002 No
0000 Xxxxxxxxx CANDIE'S (STYLIZED) 9 2.243.721 9/29/1999 1.832.147 6/4/2001 No
4971 Aruba CANDIE'S (STYLIZED) 3 990416.13 4/16/1999 20341 2/8/2000 No
0000 Xxxxxxxxx CANDIE'S (STYLIZED) 9, 18 806603 9/9/1999 806603 9/9/1999 No
4581 Bahamas CANDIE'S (STYLIZED) 3 21588 4/21/1999 21588 11/22/2001 No
369 Bahrain CANDIE'S (STYLIZED) 3 597/99 4/18/1999 25468 4/18/1999 No
368 Benelux CANDIE'S (STYLIZED) 25 627430 11/23/1978 355784 11/23/1978 No
4580 Bermuda CANDIE'S (STYLIZED) 3 30640 4/23/1999 30,640 7/10/2000 No
370 Bolivia CANDIE'S (STYLIZED) 25 06139 5/11/1998 No
371 Brazil CANDIE'S (STYLIZED) 3 820.836.141 8/12/1998 820.836.141 4/3/2001 No
000 Xxxxxx CANDIE'S (STYLIZED) 25 820030929 8/22/1997 No
0000 Xxxxxx CANDIE'S (STYLIZED) 9 821.699.547 10/7/1999 No
4600 British Virgin
Islands CANDIE'S (STYLIZED) 3 3362 5/10/1999 3362 5/10/1999 No
373 Brunei Darussalam CANDIE'S (STYLIZED) 25 28885 1/22/1998 No
000 Xxxxxx CANDIE'S (STYLIZED) 3 885605 7/24/1998 518,832 10/28/1999 Yes
000 Xxxxxx CANDIE'S (BLOCK) 3, 8, 9, 11, 555917 1/21/1986 364,035 1/5/1990 Xx
00, 00, 00,
00, 00
0000 Xxxxxx CANDIE'S (STYLIZED) 18,25 1,028,541 9/9/1999 No
000 Xxxxx CANDIE'S (STYLIZED) 3 428849 10/2/1998 536.398 3/15/1999 No
0000 Xxxxx CANDIE'S (BLOCK) 25 244.639 6/28/1993 413.992 10/5/1993 Xx
000 Xxxxx (Xxxxxx'x
Xxxxxxxx of) CANDIE'S (STYLIZED) 25 9800109583 9/25/1998 1746943 4/14/2002 Xx
0000 Xxxxx (Xxxxxx'x
Xxxxxxxx of) CANDIE'S (STYLIZED) 18 9900114550 9/24/1999 1532896 3/7/2001 No
000 Xxxxxxxx CANDIE'S (BLOCK) 25 97001972 1/17/1997 230515 7/26/2000 Xx
000 Xxxxx Xxxxxxxx CANDIE'S (STYLIZED) 18 00118665 1/20/1997 224,795 1/20/1997 Xx
0000 Xxxxx Xxxxxxxx CANDIE'S (STYLIZED) 3, 9, 14 147605 10/6/1999 230869 2/21/2001 No
0000 Xxxxxxxxx Xxxxxxxx CANDIE'S (STYLIZED) 3 P12.08(44337) 10/21/1999 0108902 12/15/1999 No
380 European Union CANDIE'S (STYLIZED) 3, 14, 18,25 673533 11/12/1997 673533 11/12/1997 No
5097 European Union CANDIE'S (STYLIZED) 9 1312396 9/17/1999 1312396 9/17/1999 No
383 Hong Kong CANDIE'S (STYLIZED) 25 659/98 1/20/1998 2381/2001 1/20/1998 No
5065 Hong Kong CANDIE'S (STYLIZED) 3 12458/99 9/10/1999 12970/2000 9/10/1999 No
5066 Hong Kong CANDIE'S (STYLIZED) 9 12459/99 9/10/1999 6252/2000 9/10/1999 No
5845 Hong Kong CANDIE'S (STYLIZED) 25 1428/81 8/19/1980 1428/81 8/19/1980 No
5844 Hong Kong CANDIE'S (BLOCK) 25 1427/81 8/19/1980 1427/81 8/19/1980 No
426 Hungary CANDIE'S (BLOCK) 25 3/17/1981 122912 10/23/1981 No
5061 Hungary CANDIE'S (STYLIZED) 3 M99 04248 9/10/1999 162 940 12/12/2000 No
385 Indonesia CANDIE'S (STYLIZED) 25 X00 00000 6/26/1997 414386 4/6/1998 No
5060 Indonesia CANDIE'S (STYLIZED) 18 D99 16131 9/13/1999 463177 9/13/1999 No
000 Xxxxxx CANDIE'S (STYLIZED) 25 118178 2/27/1998 118178 2/27/1998 No
000 Xxxxxx CANDIE'S (STYLIZED) 3 120941 7/14/1998 120941 7/14/1998 No
000 Xxxxxx CANDIE'S (BLOCK) 25 52851 9/10/1981 52851 12/30/1984 No
0000 Xxxxxx CANDIE'S (STYLIZED) 18 130733 9/13/1999 130733 9/13/1999 No
000 Xxxxx CANDIE'S (BLOCK) 25 MI98C002013 3/3/1998 830250 1/10/2001 No
000 Xxxxx CANDIE'S (BLOCK) 25 MI2002C00544 5/28/2002 412,504 3/10/1986 No
4
000 Xxxxx CANDIE'S (STYLIZED) 3 H10-066189 8/15/1998 4564334 4/26/2002 No
000 Xxxxx CANDIE'S (BLOCK) 25 61-20983 3/5/1986 2664130 5/31/1994 No
000 Xxxxx CANDIE'S WITH KATAKANA 25 62-39206 4/10/1987 2250909 7/30/1990 No
0000 Xxxxx CANDIE'S (STYLIZED) 9, 18, 25 11-83482 9/14/1999 4544696 2/22/2002 No
000 Xxxxxx CANDIE'S (STYLIZED) 3 42916 4/18/1999 39260 4/18/1999 No
000 Xxxxxx CANDIE'S (BLOCK) 25 43166 5/19/1999 39780 5/19/1999 No
391 Lebanon CANDIE'S (STYLIZED) 3 96-01-0151619 11/9/1998 No
393 Macao CANDIE'S (STYLIZED) 25 003046 1/21/1998 N/003046 7/3/1998 No
000 Xxxxxxxx CANDIE'S (STYLIZED) 25 96-12835 10/22/1996 No
0000 Xxxxxxxx CANDIE'S (STYLIZED) 3 99/08990 9/14/1999 99008990 9/14/1999 No
0000 Xxxxxxxx CANDIE'S (STYLIZED) 9 99/08989 9/14/1999 99008989 9/14/1999 No
000 Xxxxxx CANDIE'S (STYLIZED) 25 322842 2/17/1998 690270 2/17/1998 No
000 Xxxxxx CANDIE'S (STYLIZED) 3 343669 8/14/1998 591155 10/27/1998 No
000 Xxxxxx CANDIE'S (STYLIZED) 25 362602 2/3/1999 690294 2/31/999 No
0000 Xxxxxx CANDIE'S (STYLIZED) 9 374233 5/6/1999 690299 5/6/1999 No
0000 Xxxxxx CANDIE'S (STYLIZED) 18 375654 5/18/1999 No
0000 Xxxxxxxxxxx Antilles CANDIE'S (STYLIZED) 3 4/19/1999 2745 8/13/2001 No
5056 New Zealand CANDIE'S (STYLIZED) 9 316007 9/9/1999 316007 9/9/1999 No
5057 New Zealand CANDIE'S (STYLIZED) 14 316008 9/9/1999 316008 9/9/1999 No
5058 New Zealand CANDIE'S (STYLIZED) 25 316010 9/9/1999 316010 9/9/1999 No
5059 New Zealand CANDIE'S (STYLIZED) 18 316009 9/9/1999 316009 9/911999 No
5291 New Zealand CANDIE'S (BLOCK) 25 133157 6/27/1980 133157 6/27/1980 No
000 Xxxxxx CANDIE'S (STYLIZED) 25 9800772 1/27/1998 204519 9/7/2000 No
0000 Xxxx CANDIE'S (STYLIZED) 3 21266 11/16/1999 No
397 Panama CANDIE'S (STYLIZED) 3 098581 1/28/1999 98,581 1/28/1999 Xx
000 Xxxx CANDIE'S (STYLIZED) 25 057202 2/19/1998 73664 6/20/2001 No
000 Xxxxxxxxxxx CANDIE'S (STYLIZED) 3 4-1998-05814 8/4/1998 No
000 Xxxxxxxxxxx CANDIE'S (STYLIZED) 25 43019 10/30/1980 No
000 Xxxxxxxxxxx CANDIE'S (BLOCK) 25 43932 2/6/1981 No
0000 Xxxxxxxxxxx CANDIE'S (STYLIZED) 9 4-2000-05452 7/3/2000 No
0000 Xxxxxx CANDIE'S (STYLIZED) 3 Z-207090 9/10/1999 No
0000 Xxxxx CANDIE'S (STYLIZED) 3 21494 10/10/1999 No
452 Russian Federation CANDIE'S 25 122194 5/17/1990 93556 1/28/1991 Xx
000 Xxxxx Xxxxxx CANDIE'S (STYLIZED) 25 44202 6/6/1998 504/28 11/3/1999 No
403 Saudi Arabia CANDIE'S (STYLIZED) 3 47366 12/27/1998 546/12 12/27/1998 No
0000 Xxxxx Xxxxxx CANDIE'S (STYLIZED) 18 61109 11/22/1999 594/36 11/1/2001 No
404 Singapore CANDIE'S (STYLIZED) 25 6353/97 5/30/1997 T97/06353H 5/30/1997 No
405 Singapore CANDIE'S (STYLIZED) 3 S/7923/98 8/6/1998 No
5090 Singapore CANDIE'S (STYLIZED) 9 T99/10191G 9/15/1999 T99/10191G 9/15/1999 No
000 Xxxxxx Xxxxxxxx CANDIE'S (STYLIZED) 18,25 POZ 0339-1997 1/30/1997 186734 8/13/1999 No
000 Xxxxx Xxxxxx CANDIE'S (STYLIZED) 25 10/3/1980 80/6494 10/3/1980 No
389 South Korea CANDIE'S (STYLIZED) 25 84-14399 9/21/1984 125267 4/22/1986 No
0000 Xxxxx Xxxxx XXXXXX`S (STYLIZED) 18 40-1999-35583 9/21/1999 487195 2/7/2001 No
000 Xxxxx CANDIE'S (STYLIZED) 25 2.057.367/7 11/12/1996 2.057.367 11/12/1996 Xx
000 Xxxxxx CANDIE'S (STYLIZED) 25 97-06186 7/1/1997 341 330 10/20/2000 No
000 Xxxxxxxxxxx CANDIE'S (STYLIZED) 25 00297/1998 1/16/1998 452.201 1/16/1998 No
377 Taiwan CANDIE'S (STYLIZED) 25 145325 12/15/1980 No
378 Taiwan CANDIE'S (STYLIZED) 25 146223 1/1/1981 No
422 Taiwan CANDIE'S (BLOCK) 25 145324 12/16/1980 No
423 Taiwan CANDIE'S (BLOCK) 25 146222 1/1/1981 No
409 Thailand CANDIE'S (STYLIZED) 25 345313 10/2/1997 No
0000 Xxxxxx CANDIE'S (STYLIZED) 3, 9, 25 99/17216 10/20/1999 99/017216 10/20/1999 No
000 Xxxxxx Xxxx Xxxxxxxx CANDIE'S (STYLIZED) 3 30602 3/31/1999 23551 2/5/2000 No
0000 Xxxxxx Xxxx Xxxxxxxx CANDIE'S (STYLIZED) 25 33464 10/25/1999 24545 10/25/1999 No
000 Xxxxxx Xxxxxxx CANDIE'S (BLOCK) 25 2103900 6/28/1996 2103900 6/28/1996 No
0000 Xxxxxx Xxxxxxx CANDIE'S (STYLIZED) 18 2226952 3/23/2000 2226952 3/23/2000 No
5998 United Kingdom CRAYONS 25 1112830 4/18/1979 1112830 4/18/1979 No
000 Xxxxxx Xxxxxx CANDIE'S (STYLIZED) 25 73213391 4/27/1979 1206758 8/31/1982 No
000 Xxxxxx Xxxxxx CANDIE'S (STYLIZED) 3 73335241 11/2/1981 1255032 10/25/1983 No
000 Xxxxxx Xxxxxx CANDIE'S (STYLIZED) 9 73335244 11/2/1981 1217393 11/23/1982 No
000 Xxxxxx Xxxxxx CANDIE'S (STYLIZED) 25 73335242 11/2/1981 1240430 5/31/1983 No
436 United Stales CANDIE'S (BLOCK) 25 73155005 1/11/1978 1157373 6/9/1981 No
000 Xxxxxx Xxxxxx CANDIE'S (STYLIZED) 18,25 73206403 3/7/1979 1154885 5/19/1981 No
000 Xxxxxx Xxxxxx CANDIE'S (BLOCK) 16 73312796 6/1/1981 1197875 6/15/1982 No
000 Xxxxxx Xxxxxx CANDIE'S (BLOCK) 7, 9, 11, 20 73554188 8/19/1985 1429009 2/17/1987 No
000 Xxxxxx Xxxxxx CANDIE'S (BLOCK) 25 73306783 4/21/1981 1199658 6/29/1982 No
000 Xxxxxx Xxxxxx CANDIE'S (BLOCK) 18 73541329 6/4/1985 1378107 1/14/1986 No
000 Xxxxxx Xxxxxx CANDIE'S (BLOCK) 25 73423155 4/25/1983 1291227 8/21/1994 No
6308 United.States CANDIE'S DREAMS 25 76270565 6/13/2001 8/13/2002 Yes
0000 Xxxxxx Xxxxxx CANDIE'S (STYLIZED) 9, 21 76289740 7/24/2001 Yes
0000 Xxxxxx Xxxxxx CANDIE'S STREET & DESIGN 25 76301264 8/16/2001 2652693 11/19/2002 2/5/2002 Yes
000 Xxxxxxx CANDIE'S (STYLIZED) 2, 3, 6, 7, 167453 7/9/1979 236750 4/17/1980 No
8, 16, 17,
18, 20, 21,
22, 23, 24,
25, 26
417 Venezuela CANDIE'S (STYLIZED) 3 98-014717 8/6/1998 No
441 Venezuela CANDIE'S (BLOCK) 25 12103-97 6/11/1997 No
0000 Xxxxxxx. CANDIE'S (STYLIZED) 3, 18, 25 N993613 11/23/1999 36292 11/23/1999 No
------------------------------------------------------------------------------------------------------------------------------------
EXHIBIT B
Minimum Net Sales and Royalties
Year Minimum Net Sales* Minimum Royalties**
1 -- --
2 ++ ++
3 ++ ++
4 ++ ++
5 ++ ++
6 ++ ++
*/ Is subject to the Minimum Net Sales relief provisions set forth in Section
5.1(b).
**
Includes Percentage and Advertising Royalties (subject to the provisions of
Section 7) but not The Candie's Foundation contribution.
EXHIBIT C
Backlog
Candie's Inc.
Candie's Total-All Years-Open Orders Excl (Past Cancel)
Gross Landed Sales By Customer
(Candie's Women & Kids, Bong Women & Kids)
Total Customers Revenue Cost Gross Profit GP% Units
--------------- ------- ---- ------------ --- -----
++ ++ ++ ++ ++
Third Party Customers ++ ++ ++ ++ ++
++ ++ ++ ++ ++ ++
Candie's Inc.
Candie's Kids-All Years-Open Orders Excl (Past Cancel)
Gross Landed Sales By Customer
(Candie's Women & Kids, Bong Women & Kids)
Total Customers Revenue Cost Gross Profit GP% Units
--------------- ------- ---- ------------ --- -----
++ ++ ++ ++ ++
Third Party Customers ++ ++ ++ ++ ++
++ ++ ++ ++ ++ ++
Candie's First Cost
Sales By Division
Candie's Women-All Agents
All Years
Open All Fall Sell Gross Billable
Candies Women Pairs Price Factory Cost Sales $ Cost $ Profit Royalty $ Commission Agent Commission FC Revenue Net Earned
------------- ----- ----- ------------ ------- ------ ------ --------- ---------- ---------------- ---------- ----------
++ ++ ++ ++ ++ ++ ++ ++ ++ ++ ++ ++
Total Customers ++ ++ ++ ++ ++ ++ ++ ++ ++ ++ ++
Candie's First Cost
Sales By Division
Kids Candie's -All Agents
All Years
Open All Fall Sell Gross Billable
Kids Women Pairs Price Factory Cost Sales $ Cost $ Profit Royalty $ Commission Agent Commission FC Revenue Net Earned
---------- ----- ----- ------------ ------- ------ ------ --------- ---------- ---------------- ---------- ----------
++ ++ ++ ++ ++ ++ ++ ++ ++ ++ ++ ++
Total Customers ++ ++ ++ ++ ++ ++ ++ ++ ++ ++ ++
