EXHIBIT 10.18
EMPLOYMENT AGREEMENT
--------------------
THIS EMPLOYMENT AGREEMENT (this "Agreement") , dated as of the 1st day of
April, 2001, is made by and between GFSI, INC., a Delaware corporation (the
"Company") , and XXXXXX X. XXXX, an individual (the "Executive").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, Executive is actively involved in the business of the Company as
an employee, stockholder and officer; and
WHEREAS, the Company desires to memorialize its agreement with the
Executive concerning the Executive's service to the Company;
NOW, THEREFORE, in consideration of the premises, the covenants and the
agreements contained herein, the parties hereto agree as follows:
1. Employment. The Company hereby agrees to employ the Executive as Vice
President of the Company, and the Executive hereby agrees to serve as Vice
President of the Company, for a term commencing as of the date of this Agreement
and ending on February 27, 2007. The Executive shall undertake and perform such
services as are mutually agreed upon by the Executive and the Company's Board of
Directors, which services may include, without limitation, fostering the
Company's relationships with its suppliers, customers and employees.
2. Salary. During the term of this Agreement, the Company will pay
Executive an annual salary (the "Salary"), payable in substantially equal
monthly or more frequent installments. The Salary shall be initially set at
$60,000.00 per annum, and is subject to annual increases at the discretion of
the Company's Board of Directors, based upon its review of the performance of
the Executive.
3. Benefits. During the term of this Agreement, the Executive will receive
the same benefits as are provided to the Executive prior to the date hereof;
provided, however, the Executive shall not receive any (i) accrued vacation
benefits, (ii) stock options or (iii) bonuses, unless approved by the Board of
Directors.
4. Expenses. The Company shall reimburse the Executive for such ordinary,
necessary and reasonable business expenses as are advanced by him in the
performance of his services hereunder; but such expenses shall be substantiated
by the Executive in writing to the reasonable satisfaction of the Company.
Notwithstanding the preceding sentence, the Company shall not reimburse the
Executive for any commuting expenses to or from the Company or any of its
facilities.
5. Equity Redemption. In consideration for this Agreement and the Salary
and other benefits provided herein, the Executive shall sell to GFSI Holdings,
Inc., a Delaware corporation and the sole stockholder of the Company
("Holdings"), on or around April 1, 2001, all shares of the common stock and
preferred stock of Holdings owned or held by the Executive or any immediate
family member, trust or other affiliate of the Executive, at a purchase price
equal to the sum of the cost of such stock and any accrued dividends due and
owing on the preferred stock, which sum the parties agree is equal to $_____ in
the aggregate.
6. Termination.
(a) The Company may terminate this Agreement, all of the Company's
obligations under this Agreement, and Executive's employment hereunder for
"cause," upon the delivery of written notice to Executive, following the
occurrence of any one of the following events on the part of Executive:
1. Conviction of any felony;
2. Executive's violation of any non-competition agreement with the Company
or with any affiliate of the Company; provided, however, the Company cannot
terminate Executive's employment for "cause" unless the Company has given
written notice to the Executive of such violation and allowed the Executive a
reasonable period in which to cure such violation; or
3. Frequent drunkenness on the job.
(b) In the event that this Agreement is terminated by the Company for
"cause" or voluntarily terminated by Executive, the Company shall pay any
amounts earned by Executive under Section 2 hereof up to the date of
termination. Additionally, if the Executive voluntarily terminates this
Agreement, the Noncompetition Agreement between the Company and the Executive,
dated as of the date hereof, shall automatically terminate and cease to be
effective.
(c) If the Company terminates this Agreement for "cause," but the
Executive contests such termination, the Company shall continue to make all
payments required by Section 2 of this Agreement after the date of such
termination until and unless a final judgment is rendered in favor of the
Company and against the Executive. For purposes of this section, a final
judgment means a judgment from which there is no possibility of further appeal.
7. Inventions, Etc. The Executive agrees that all inventions conceived of
or developed by the Executive during the term of his employment with the
Company, whether alone or jointly with others and whether during working hours
or otherwise, which relate to the business or interests of the Company, or any
business or other company in which the Company or Holdings currently has an
ownership interest, shall be the Company's exclusive property. The Executive
shall (i) promptly disclose in writing to the Company each invention, conceived
or developed by the Executive during the term of his employment with the
Company, (ii) assign all rights to such inventions to the Company and (iii)
assist the Company in every way to obtain and protect any patents, trademarks or
copyrights on such inventions.
8. Release. (a) In consideration of the promises contained herein, the
Executive hereby irrevocably and unconditionally releases, acquits and forever
discharges for himself and his heirs, executors, administrators, successors and
assigns, the Company, The Jordan Company LLC and each of their respective
stockholders, partners, members, predecessors, successors, assigns, agents,
directors, officers, employees, representatives, attorneys and all persons
acting by, through, under or in concert with any of them (collectively, the
"Company Releasees"), or any of them, from any and all charges, complaints,
claims, liabilities, obligations, promises, agreements, controversies, damages,
actions, causes of action, suits, rights, demands, costs, losses, debts and
expenses (including attorneys' fees and costs actually incurred) of any nature
whatsoever, known or unknown, suspected or unsuspected, including, but not
limited to, claims relating to the Executive's employment, claims in equity or
law for wrongful discharge, personal injury, defamation, mental anguish, injury
to health and reputation, and claims under federal, state or local laws
prohibiting discrimination on account of national origin, race, sex, handicap,
religion or similar classifications (each, a "Claim"), which the Executive now
has, or ever claimed to have, or could claim against each or any of the Company
Releasees or any Claims which were or could have been asserted by the Executive
arising out of or related to his work for the Company under any local, state, or
federal law dealing with employment discrimination, including Title VII of the
Civil Rights Act of 1964, the Age Discrimination in Employment Act and the
Americans with Disabilities Act. The provisions of any laws providing in
substance that releases shall not extend to Claims which are unknown or
unsuspected at the time, to the person executing such waiver or release, are
hereby expressly waived. The Executive hereby agrees to forego any right to file
any charges or complaints with any governmental agencies or a lawsuit against
the Company Releasees under any of the laws referenced in this paragraph or with
respect to any matters covered by the release in this paragraph. Notwithstanding
the foregoing, the release by the Executive in this Section 8 shall not limit
the right of the Executive to seek to enforce the provisions of this Agreement.
(b) In consideration of the promises contained herein, the Company
hereby irrevocably and unconditionally releases, acquits and forever discharges
for itself, The Jordan Company LLC and each of their respective stockholders,
partners, members, predecessors, successors, assigns, agents, directors,
officers, employees, representatives, attorneys and all persons acting by,
through, under or in concert with any of them (collectively, the "Company
Parties"), the Executive and his heirs, executors, administrators, successors
and assigns, or any of them (collectively, the "Executive Releasees"), from any
and all Claims, which the Company or the Company Parties now have, or ever
claimed to have, or could claim against each or any of the Executive Releasees
or any Claims which were or could have been asserted by any of the Company or
the Company Parties arising out of or related to the Executive's work for the
Company or the Company Parties or under any local, state, or federal law dealing
with employment discrimination, including Title VII of the Civil Rights Act of
1964, the Age Discrimination in Employment Act and the Americans with
Disabilities Act. The provisions of any laws providing in substance that
releases shall not extend to Claims which are unknown or unsuspected at the
time, to the person executing such waiver or release, are hereby expressly
waived. The Company Parties hereby agree to forego any right to file any charges
or complaints with any governmental agencies or a lawsuit against the Executive
Releasees under any of the laws referenced in this paragraph or with respect to
any matters covered by the release in this paragraph. Notwithstanding the
foregoing, the release by the Company Parties in this Section 8 shall not limit
the right of the Company Parties to seek to enforce the provisions of this
Agreement.
9. Non-Disparagement. The Executive shall not, directly or indirectly,
disparage or make negative, derogatory or defamatory statements about the
Company, its business activities, or any of its directors, officers, employees,
affiliates, agents, or representatives, or any of them, to any person or
business entity. Neither the Company nor its directors, officers, employees,
affiliates, agents and representatives shall, directly or indirectly, disparage
or make negative, derogatory or defamatory statements about the Executive.
Except pursuant to a subpoena validly issued or enforced by a court, arbitrator,
agency, or other governmental body of competent jurisdiction, or in response to
a valid investigative demand by a governmental body, neither the Executive nor
the Company (including any of its directors, officers, employees, affiliates,
agents and representatives) will testify, consult, cooperate or otherwise
communicate with any other person concerning any legal proceeding, judicial or
administrative, against or adverse to the Executive, the Company or an affiliate
of the Company, actual or contemplated. The Executive and the Company shall give
prompt notice (i.e., no later than five (5) business days following receipt) to
each other of any such subpoena or investigative demand before taking any action
in response thereto.
10. Notices. Any notice, request, consent or communication (collectively a
"Notice") under this Agreement shall be effective only if it is in writing and
(i) personally delivered, (ii) sent by certified or registered mail, return
receipt requested, postage prepaid, (iii) sent by a nationally recognized
overnight delivery service for next day delivery, with delivery confirmed, or
(iv) telecopied, with receipt confirmed, addressed as follows:
a. If to Executive:
Xxxxxx X. Xxxx
00000 Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxxx 00000
b. If to the Company to:
GFSI, Inc.
0000 Xxxxxxxx Xxxxxxx
Xxxxxx, Xxxxxx 00000
Attention: Xxxxxx X. Xxxxx
Telecopier: 000-000-0000
with copies to:
The Jordan Company LLC
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: A. Xxxxxxx Xxxxxx, Xx.
Telecopier: 000-000-0000
Xxxxxx X. Xxxxxxx Xxxxx, Xxxxx & Xxxxx 0000 Xxxxxxxx,
Xxxxx 0000 Xxx Xxxx, Xxx Xxxx 00000 Telecopier:
000-000-0000
or such other persons or addresses as shall be furnished in writing by either
party to the other party. A Notice shall be deemed to have been given as of the
date when (i) personally delivered, (ii) three (3) days after the date when
deposited with the United States mail properly addressed, (iii) when receipt of
a Notice sent by an overnight delivery service is confirmed by such overnight
delivery service, or (iv) when receipt of the telecopy is confirmed, as the case
may be, unless the sending party has actual knowledge that a Notice was not
received by the intended recipient.
11. Assignment. This Agreement and all of the provisions hereof shall be
binding upon and inure to the benefit of the parties hereto and their respective
heirs, successors and permitted assigns, but neither this Agreement nor any of
the rights, interests or obligations hereunder shall be assigned by Executive.
12. Attorneys' Fees. If any legal action or other proceeding is commenced
to enforce or interpret any provision of, or otherwise relating to, this
Agreement, the losing party shall pay the prevailing party's reasonable expenses
incurred in the investigation of any claim leading to the proceeding,
preparation for and participation in the proceeding, any appeal or other post
judgment motion, and any action to enforce or collect the judgment, including
contempt, garnishment, levy, discovery and bankruptcy. "Expenses" shall include,
without limitation, court or other proceeding costs and experts' and reasonable
attorneys' fees and their expenses. The phrase "prevailing party" shall mean the
party who is determined in the proceeding to have prevailed and who prevails by
dismissal, default or otherwise from which there is no possibility of further
appeal..
13. Governing Law. This Agreement shall be governed by the law of the
State of Missouri as to all matters, including, but not limited to, matters of
validity, construction, effect and performance, except that no doctrine of
choice of law shall be used to apply any law other than of Missouri.
14. Severability. The Company and Executive believe the covenants
contained in this Agreement are reasonable and fair in all respects, and are
necessary to protect the interests of the Company and Executive. However, in
case any one or more of the provisions or parts of a provision contained in this
Agreement shall, for any reason, be held to be invalid, illegal or unenforceable
in any respect in any jurisdiction, such invalidity, illegality or
unenforceability shall not affect any other provision or part of a provision of
this Agreement or any other jurisdiction, but this Agreement shall be reformed
and construed in any such jurisdiction as if such invalid, illegal or
unenforceable provision or part of a provision had never been contained herein
and such provision or part shall be reformed so that it would be valid, legal
and enforceable to the maximum extent permitted in such jurisdiction.
15. Neutral Interpretation. This Agreement constitutes the product of the
negotiation of the parties hereto and the enforcement hereof shall be
interpreted in a neutral manner, and not more strongly for or against either
party based upon the source of the draftsmanship hereof.
16. Miscellaneous. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. The section headings
contained in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement. This Agreement
embodies the entire agreement and understanding of the parties hereto in respect
of the subject matter contained herein and may not be modified orally, but only
by a writing subscribed by the party charged therewith. There are no
restrictions, promises, representations, warranties, covenants or undertakings,
other than those expressly set forth or referred to herein. This Agreement
supersedes all prior agreements and understandings (whether oral or written)
between the parties with respect to such subject matter.
IN WITNESS WHEREOF, the parties hereto have made and entered into this
Agreement the date first hereinabove set forth.
COMPANY:
GFSI, INC.
By /s/ Xxxxxx X. Xxxxx
-------------------------------------------
Name: Xxxxxx X. Xxxxx
Title: Chief Executive Officer
EXECUTIVE:
/s/ Xxxxxx X. Xxxx
-------------------------------------------
Xxxxxx X. Xxxx
EXHIBIT 10.19
NONCOMPETITION AGREEMENT
------------------------
THIS NONCOMPETITION AGREEMENT (this "Agreement"), dated this
1st day of April, 2001, is made by and between GFSI HOLDINGS, INC., a Delaware
corporation ("Holdings"), and XXXXXX X. XXXX, an individual (the "Executive").
W I T N E S S E T H:
-------------------
WHEREAS, the Executive has been actively involved in the
business of GFSI, Inc., a Delaware corporation (the "Company") and a
wholly-owned subsidiary of Holdings, as an employee, substantial stockholder and
officer of the Company; and
WHEREAS, the involvement by the Executive in a business in
competition with the Company would be harmful to the business of Holdings and
the Company; and
WHEREAS, in consideration of the continued employment of
Executive by the Company according to the terms set forth in the Employment
Agreement, dated the date hereof, between the Company and the Executive (the
"Employment Agreement"), the Executive has agreed not to compete with Holdings
and to refrain from making disclosures to the extent set forth below;
NOW, THEREFORE, in consideration of the premises and the
covenants and agreements contained herein, the parties hereto agree as follows:
1. Restrictive Covenants. In consideration of the amounts payable to the
Executive pursuant to the Employment Agreement, including any benefits provided
thereunder, and the redemption of the Executive's equity interest in Holdings,
the Executive agrees that during the period from the date hereof through
February 27, 2007 (the "Term"), the Executive shall not:
a. directly or indirectly, either individually or as a principal, partner,
agent, employee, employer, consultant, stockholder, joint venturer, or investor,
or as a director or officer of any corporation or association, or in any other
manner or capacity whatsoever, engage in, assist or have any active interest in
a business located anywhere in the United States that (i) manufactures,
distributes or markets custom imprinted and embroidered activewear or that
otherwise competes with or is similar in concept, design or format to the
business conducted by Holdings or the Company on the date hereof, or (ii) sells
to, supplies, provides goods or services to, purchases from, or does business in
any manner with Holdings or the Company. Notwithstanding the above, this
paragraph shall not be construed to prohibit the Executive from owning shares of
Holdings or from owning less than ten percent (10%) of the securities of a
corporation which is publicly traded on a securities exchange or
over-the-counter; or
b. directly or indirectly, either individually, or as a principal, partner,
agent, employee, employer, consultant, stockholder, joint venturer, or investor,
or as a director or officer of any corporation or association, or in any other
manner or capacity whatsoever, (i) divert or attempt to divert from Holdings or
the Company any business with any customer or account with which the Executive
had any contact or association, which was under the supervision of the
Executive, or the identity of which was learned by the Executive as a result of
the Executive's employment with Holdings or the Company, or (ii) induce any
salesperson, distributor, supplier, vendor, manufacturer, representative, agent,
jobber or other person transacting business with Holdings or the Company to
terminate their relationship or association with Holdings or the Company, or to
represent, distribute or sell services or products in competition with services
or products of Holdings or the Company existing on the date hereof, or (iii)
induce or cause any employee of Holdings or the Company to leave the employ of
Holdings or the Company; provided, however, that if the Company determines that
the Executive has violated any of the abovementioned provisions, the Company
shall give prompt notice to the Executive of such violation and allow a
reasonable period for the Executive to cure such violation.
2. Non-Disclosure. The Executive shall not at any time or in any manner,
directly or indirectly, use or disclose to any party other than Holdings any
trade secrets or other Confidential Information (as defined below) learned or
obtained by him while a stockholder, officer or director of Holdings or the
Company. As used herein, the term "Confidential Information" means information
disclosed to or known by the Executive as a consequence of his position with
Holdings or the Company and not generally known in the industry in which
Holdings or the Company is engaged and that in any way relates to the Company's
or Holdings' products, processes, services, inventions (whether patentable or
not), formulas, techniques or know-how, including, but not limited to,
information relating to distribution systems and methods, research, development,
manufacturing, purchasing, accounting, engineering, marketing, merchandising and
selling.
3. Specific Performance. The Executive acknowledges and agrees that Holdings'
rights hereunder are special and unique and that any violation of this Agreement
by the Executive would not be adequately compensated by money damages, and the
Executive hereby grants Holdings the right to specifically enforce (including
injunctive relief where appropriate) the terms of this Agreement, so long as the
Employment Agreement has not been terminated by the Executive.
4. Notices. Any notice, request, consent or communication (collectively a
"Notice") under this Agreement shall be effective only if it is in writing and
(i) personally delivered, (ii) sent by certified or registered mail, return
receipt requested, postage prepaid, (iii) sent by a nationally recognized
overnight delivery service, with delivery confirmed, or (iv) telecopied, with
receipt confirmed, addressed as follows:
a. If to the Executive:
Xxxxxx X. Xxxx
00000 Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxxx 00000
b. If to the Company to:
GFSI, Inc.
0000 Xxxxxxxx Xxxxxxx
Xxxxxx, Xxxxxx 00000
Attention: Xxxxxx X. Xxxxx
Telecopier: 000-000-0000
with copies to:
The Jordan Company LLC
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: A. Xxxxxxx Xxxxxx, Xx.
Telecopier: 000-000-0000
Xxxxxx X. Xxxxxxx Xxxxx, Xxxxx & Xxxxx 0000 Xxxxxxxx,
Xxxxx 0000 Xxx Xxxx, Xxx Xxxx 00000 Telecopier:
000-000-0000
or such other persons or addresses as shall be furnished in writing by any party
to the other party. A Notice shall be deemed to have been given as of the date
when (i) personally delivered, (ii) five (5) days after the date when deposited
with the United States mail properly addressed, (iii) when receipt of a Notice
sent by an overnight delivery service is confirmed by such overnight delivery
service, or (iv) when receipt of the telecopy is confirmed, as the case may be,
unless the sending party has actual knowledge that a Notice was not received by
the intended recipient.
5. Assignment. This Agreement and all of the provisions hereof shall be binding
upon and inure to the benefit of the parties hereto and their respective heirs,
successors and permitted assigns, but neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned by the Executive.
6. Governing Law. This Agreement shall be governed by the law of the State of
Missouri as to all matters, including, but not limited to, matters of validity,
construction, effect and performance, except that no doctrine of choice of law
shall be used to apply any law other than of Missouri.
7. Severability. Holdings and the Executive believe the covenants against
competition contained in this Agreement are reasonable and fair in all respects,
and are necessary to protect the interests of Holdings. However, in case any one
or more of the provisions or parts of a provision contained in this Agreement
shall, for any reason, be held to be invalid, illegal or unenforceable in any
respect in any jurisdiction, such invalidity, illegality or unenforceability
shall not affect any other provision or part of a provision of this Agreement or
any other jurisdiction, but this Agreement shall be reformed and construed in
any such jurisdiction as if such invalid or illegal or unenforceable provision
or part of a provision had never been contained herein and such provision or
part shall be reformed so that it would be valid, legal and enforceable to the
maximum extent permitted in such jurisdiction.
8. Neutral Interpretation. This Agreement constitutes the product of the
negotiation of the parties hereto and the enforcement hereof shall be
interpreted in a neutral manner, and not more strongly for or against any party
based upon the source of the draftsmanship hereof.
9. Attorneys' Fees. If any legal action or other proceeding is commenced to
enforce or interpret any provision of, or otherwise relating to, this Agreement,
the losing party shall pay the prevailing party's reasonable expenses incurred
in the investigation of any claim leading to the proceeding, preparation for and
participation in the proceeding, any appeal or other post judgment motion, and
any action to enforce or collect the judgment, including contempt, garnishment,
levy, discovery and bankruptcy. "Expenses" shall include, without limitation,
court or other proceeding costs and experts' and reasonable attorneys' fees and
their expenses. The phrase "prevailing party" shall mean the party who is
determined in the proceeding to have prevailed and who prevails by dismissal,
default or otherwise from which there is no possibility of further appeal.
10. Miscellaneous. This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument. The section headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. This Agreement embodies the entire
agreement and understanding of the parties hereto in respect of the subject
matter contained herein and may not be modified orally, but only by a writing
subscribed by the party charged therewith. There are no restrictions, promises,
representations, warranties, covenants or undertakings, other than those
expressly set forth or referred to herein. This Agreement supersedes all prior
agreements and understandings (whether oral or written) between the parties with
respect to such subject matter.
IN WITNESS WHEREOF, the parties hereto have made and entered into this
Agreement the date first hereinabove set forth.
HOLDINGS:
GFSI, INC.
By /s/ Xxxxxx X. Xxxxx
-------------------------------------------
Name: Xxxxxx X. Xxxxx
Title: Chief Executive Officer
EXECUTIVE:
/s/ Xxxxxx X. Xxxx
--------------------------------------------
Xxxxxx X. Xxxx
EXHIBIT 10.20
LICENSE AGREEMENT
THIS LICENSE AGREEMENT (this "Agreement"), effective as of the 25th day
of June, 2001 (the "Effective Date"), is made and entered into by and between
XXXX XXX CORPORATION, a Maryland corporation ("Licensor"), and CC PRODUCTS,
INC., a Delaware corporation ("CCP"), CCP ACQUISITION, INC., formerly known as
CHAMPION PRODUCTS, INC., a New York corporation ("Acquisition" and, together
with CCP, "Licensee"), and GFSI, INC., d/b/a Gear For Sports, a Delaware
corporation ("GFSI") which owns, directly or indirectly, all of the issued and
outstanding capital stock of CCP and Acquisition.
WITNESSETH:
WHEREAS, Licensor is the owner of the Licensed Marks (as hereinafter
defined) in the United States; and
WHEREAS, subject to the terms and conditions set forth herein, Licensee
desires to obtain a license to manufacture, sell and distribute certain products
bearing the Licensed Marks, and Licensor desires to grant such a license;
NOW, THEREFORE, in consideration of the mutual covenants and promises
contained herein, the parties hereto, intending to be legally bound, agree as
follows:
1. DEFINITIONS
As used herein, the terms set forth below shall be defined as follows:
1.1. "Agreement Year" shall mean each twelve (12) month period commencing on
July 1 of one year and ending June 30 of the following year.
1.2. "Blank Products" shall mean
a) fleece tops and bottoms, jersey tops and bottoms, mesh
fabric tops and bottoms, woven tops and bottoms, polo
shirts, windwear, sweaters, outerwear, and headwear for
men, women, boys, girls, toddlers and infants and
b) such other products as Licensee requests, from time to
time, to be included within the definition of Blank
Products, to which request Licensor agrees in its sole
discretion,
in each case bearing the brand name CHAMPION or a related
trademark.
1.3. "Collegiate Products" shall mean Blank Products attributed with college
decoration.
1.4. "Licensed Channels" shall mean a) with respect to Specialty Products,
resort retail shops, casinos, hotel spas, athletic clubs, cruise lines,
and resort event concessionaires, (b) with respect to Military
Products, military bases and other such outlets and (c) with respect to
Collegiate Products, any of the channels described in (a) and (b) as
well as college bookstores, campus stores, department stores (except
Mass Retailers), specialty stores, sporting goods stores, direct mail,
collegiate event concessionaires, and internet distributors. "Mass
Retailers" shall mean Wal-Mart, K-Mart, Target, Xxxx, Value City,
Dollar General and Dollar Stores.
1.5. "Licensed Marks" shall mean the Marks illustrated on Schedule A, and
any related trademarks that Licensor may elect to include from time to
time.
1.6. "Licensed Products" shall mean Blank Products that are acquired from
Licensor or are manufactured and sold or distributed by Licensee and
that bear the Licensed Marks as authorized herein by Licensor, and
shall consist of Collegiate Products, Specialty Products and Military
Products.
1.7. "Manufacturing Territory" shall mean all countries in which the
Licensed Marks are registered and owned by Licensor excluding Europe,
the Middle East, and Africa. Licensor may, from time to time at its
sole discretion, exclude additional countries from the Manufacturing
Territory.
1.8. "Military Products" shall mean Blank Products attributed with military
decoration.
1.9. "Specialty Products" shall mean Blank Products, other than Collegiate
Products and Military Products, attributed with any custom decoration
other than custom decoration pertaining to a professional sports team,
league or franchise, or the CHAMPION name and/or logo.
1.10. "Territory" shall mean the United States and all of its territories
and possessions. and all United States military facilities anywhere in
the world.
2. GRANT OF LICENSE
2.1. Licensor hereby grants to Licensee an exclusive, non-transferable, and
non-assignable license to use the Licensed Marks in the Territory
solely in connection with the sale and distribution of Collegiate
Products. Licensor further grants a non-exclusive, non-transferable,
and non-assignable license to use the Licensed Marks in the Territory
solely in connection with the sale and distribution of Military
Products and Specialty Products.
2.2. Licensor further grants to Licensee a non-exclusive, non-transferable
license to manufacture or have manufactured on its behalf Blank
Products bearing the Licensed Marks solely in the Manufacturing
Territory. In the event that Licensee uses a third party to manufacture
the Licensed Products, Licensee shall nevertheless remain primarily
obligated under all the provisions of this Agreement.
2.3. Licensor covenants to Licensee that, in the event Licensor grants to
any third party after the date of this Agreement a license or
sublicense to use the Licensed Marks anywhere in the world, or sells
any of the Licensed Marks, and such license, sublicense or sale is
reasonably likely to have a material adverse effect on Licensee's
business of selling Licensed Products in the Territory, then Licensor
shall obtain on behalf of Licensee the right to manufacture (but not to
sell or distribute) Licensed Products in the territory covered by such
third-party license, sublicense or sale; provided that (a) Licensor
shall have no such obligation with respect to any Licensed Marks in
Japan, (b) Licensor shall have no such obligation with respect to any
Licensed Marks in any jurisdiction if the laws of such jurisdiction
prohibit one person or entity from being the owner of a Licensed Xxxx
or holder of a license to sell or distribute Licensed Product in such
jurisdiction and another person or entity from having the right to
manufacture Licensed Product in such jurisdiction, and (c) Licensor
shall have no obligation to obtain such right to manufacture for
Licensee unless Licensee agrees in writing, in form and substance
satisfactory to any such other licensee, sublicensee or purchaser not
to sell or distribute any merchandise (or portions thereof) bearing the
Licensed Xxxx in such jurisdiction, including, without limitation, the
sale or other distribution of any irregular or defective merchandise or
any remnants of such merchandise.
2.4. Licensor hereby reserves any and all rights, opportunities, and
approvals not expressly granted to the Licensee hereunder.
3. OWNERSHIP OF THE LICENSED MARKS
3.1. Licensee hereby acknowledges that Licensor is the owner of all right,
title and interest in and to the Licensed Marks, and agrees that it
will not, during the term of this Agreement or thereafter, challenge
Licensor's rights in and to such marks. Licensee further agrees that it
will not attack the validity of this Agreement.
3.2. Licensee recognizes the great value of the goodwill associated with the
Licensed Marks and acknowledges that the Licensed Marks and all rights
therein, and goodwill pertaining thereto, belong exclusively to
Licensor. Licensee further acknowledges that all use of the Licensed
Marks by Licensee shall inure to the benefit of Licensor.
4. CONDITIONS TO USE OF THE LICENSED MARKS
4.1. Licensee acknowledges and agrees that the Licensed Products shall
be distributed only through the Licensed Channels.
4.2. Licensee shall not sell or distribute the Licensed Products outside the
Territory or to any purchaser within the Territory if Licensee knows or
has reason to know that such purchaser may sell or distribute such
Licensed Products to any person, organization, or address outside the
Territory. Notwithstanding the foregoing, Licensee shall be permitted
to sell and distribute Licensed Products on board any cruise ship and
shall be permitted to ship Licensed Product to such cruise ships in
ports located where Licensor has the right to sell such Licensed
product pursuant to the terms of this Agreement.
4.3. Licensee shall not adopt or use any trade name or legal name (including
a corporate name) that incorporates the word "champion" or that is
confusingly similar to the Licensed Marks. Notwithstanding the
foregoing, Licensor hereby grants to Licensee a non-exclusive license
to use "Champion Custom Products" as a trade name under which Licensee
may conduct the business of manufacturing, selling or distributing
Licensed Products. When displaying "Champion Custom Products" as a
trade name, Licensee may use the stylized "Champion" or "C" logo
trademark. No other use of the trade name "Champion Custom Products" is
authorized by Licensor.
4.4. Licensee shall not manufacture the Licensed Products outside the
Manufacturing Territory nor shall Licensee engage any third-party
manufacturer to manufacture the Licensed Products outside the
Manufacturing Territory.
4.5. Licensee agrees to use the Licensed Marks only in the form approved by
Licensor. All use of the Licensed Marks on the Blank Products and on
labels, packaging, in advertising and otherwise must faithfully
reproduce the form approved by Licensor in accordance with Sections 5
and 8 hereto. Any approval of the form of use of the Licensed Marks,
once given, shall continue until such time as Licensor rescinds such
approval in accordance with the terms of Section 5 or 8. In the event
Licensee receives written notice that any use of the Licensed Marks is
no longer approved, all use of the Licensed Marks to which such notice
applies shall immediately cease, except that for up to three (3) months
after receipt of such notice Licensee shall have the right to sell and
distribute Licensed Products in inventory at the time of such notice
that bear the Licensed Marks in such forms that are no longer approved
by Licensor. The sell-off period described in this Section is subject
to the termination and sell-off provisions set forth in Section 10 of
this Agreement.
4.6. Licensee shall comply with all notice and marking requirements of any
law or regulation applicable or necessary for the protection of the
Licensed Marks, including those which Licensor, in its reasonable
discretion, may deem appropriate. Licensee shall not, at any time, do
or knowingly permit any third party within its control or with whom
Licensee has a contractual relationship to do any act that will, in any
way, impair the rights of Licensor in and to the Licensed Marks or
which will affect the validity thereof.
4.7. Licensee hereby acknowledges that Licensor is a party to other
licensing arrangements with other parties for the manufacture and
distribution of merchandise other than the Licensed Products under one
or more of the Licensed Marks. Consequently,
(a) Licensee shall, to the fullest extent possible, avoid any
conflicts between or among the definitions of any apparel,
accessories or other articles licensed under agreements with
other parties, including the Licensed Products hereunder. In
the event of a conflict between or among the definitions of
apparel or accessories licensed under other agreements and the
Licensed Products hereunder, Licensor reserves the right to
resolve any such conflict, taking into account the natural
channels of distribution of the articles and other apparel,
and the protection of any of the Licensed Marks. Licensor's
decision in resolving such conflicts shall be final and
binding.
(b) Licensee shall not, directly or indirectly, engage in any
conduct that infringes on the legal rights of parties licensed
under arrangements with Licensor for products manufactured or
sold under one or more of the Licensed Marks, whether in the
Territory or other jurisdictions.
4.8. Licensee agrees that its use of the Licensed Marks shall be in a
commercially acceptable and responsible manner, and that no use of the
Licensed Marks shall reflect adversely upon the good name of Licensor.
4.9. Licensee acknowledges that Licensor continues to manufacture and
distribute Blank Products. Licensor shall not sell or knowingly permit
any direct customer to sell, within the Licensed Channels, Blank
Products embellished with custom college decoration. Notwithstanding
the foregoing, Licensee acknowledges that Licensor's ability to
restrict the resale of Blank Products is limited, and that the sale or
distribution of Blank Products that are later embellished with custom
college decoration is not a violation of the exclusivity provision of
this Agreement. As such, Licensor will not terminate any agreement it
has with customers to whom Licensor sells Blank Products for resale and
distribution.
4.10. Nothing contained in this Agreement shall prohibit any Restricted Party
(as that term is defined in the hereinafter defined Noncompetition
Agreement) from engaging in the activities described in Section 1(ii)
of that certain Noncompetition Agreement, of even date herewith (the
"Noncompetition Agreement"), between Licensor and GFSI.
5. APPROVALS AND QUALITY CONTROL
5.1. Licensor shall have the right to exercise quality control over
Licensee's use of the Licensed Marks on and in connection with
the Licensed Products so as to maintain the validity of the
Licensed Marks and to protect the goodwill associated
therewith.
5.2. For Licensee's convenience, Licensor shall provide to Licensee
product specifications, including color standards, for
Collegiate Products included in Licensor's college line of
products at the effective date of this Agreement. For each
style of Licensed Product proposed to be sold by Licensee and
manufactured according to specifications other than those
provided by Licensor, Licensee shall provide to Licensor
specifications in sufficient detail to enable Licensor to
evaluate the proposed Licensed Product. Licensee will not
describe, sell, or distribute any Licensed Products unless and
until Licensor has provided or approved specifications and
designs (hereinafter collectively referred to as
"specifications") for each style of Licensed Product;
provided, however, that such approval shall not be withheld if
such specifications are reasonably comparable to the
specifications with which Licensor's suppliers generally are
required to comply.
5.3. Prior to the initial distribution of any Licensed Product,
Licensee will submit to Licensor representative production
samples of each type of Licensed Product to evaluate whether
the production samples conform to the previously provided or
approved specifications. In addition, at any time during the
term of this Agreement, at Licensor's request upon 5 days'
prior notice, Licensee will submit to Licensor representative
production samples of each type of Licensed Product to
evaluate whether the production samples conform to the
previously provided or approved specifications. Licensor will
have thirty (30) days from receipt of such production samples
to notify Licensee in writing that such production samples do
not conform to the previously provided or approved
specifications. If no written notification is provided by
Licensor within those thirty (30) days, Licensor will be
deemed to have approved such production samples. If Licensor
notifies Licensee in writing within those thirty (30) days
that, in its reasonable good faith discretion, the production
samples do not conform to the previously provided or approved
specifications, Licensee, with the cooperation and assistance
of Licensor, will take such steps and make such changes as are
necessary to bring the relevant Licensed Product into
conformance to the previously provided or approved
specifications, and will provide Licensor with production
samples for follow-up evaluation. If, after follow-up
evaluation, Licensor determines, in its reasonable good faith
discretion, that the relevant Licensed Product does not yet
conform to the previously provided or approved specifications,
Licensor will have ten (10) days from receipt of such
production samples to notify Licensee in writing of such
continuing non-conformance. If no written notification is
provided by Licensor within those ten (10) days, Licensor will
be deemed to have approved such follow-up production samples.
If Licensor notifies Licensee in writing within those ten (10)
days of Licensor's reasonable good faith discretion that such
non-conformance persists, Licensee will not, without
Licensor's written consent, distribute such non-conforming
Licensed Product and may not distribute until such time as
Licensor gives Licensee written approval to distribute
conforming products.
5.4. All specifications and production samples submitted by
Licensee shall be sent to the following address:
Xxxx Xxx Corporation.
0000 Xxxx Xxxxx Xxxx Xxxx
Xxxxxxx-Xxxxx, Xxxxx Xxxxxxxx 00000
Attention: Xxxxx Xxxxxx
or to such other address Licensor may designate in writing to
Licensee.
5.5. If during the term of this Agreement, Licensor desires to
change the previously provided or approved specifications, the
parties will work together to implement such change(s) in a
timely fashion.
5.6. Licensee shall use commercially reasonable efforts to ensure
that the Licensed Products, and all labels, packaging, or
promotional materials therefor, comply in all material
respects with all applicable ordinances, laws, and statutes
governing the manufacture, packaging, promotion, and sale of
such products.
5.7. Licensee shall use commercially reasonable efforts to produce
first- quality Blank Products for sale of Licensed Products.
Licensee may sell closeouts and irregulars only in the
Territory in the Licensed Channels and to TJ Maxx, Xxxx Xxxxx,
Xxxxxxx Xxxxxxxx, the Xxxx Xxx Champion Outlet Stores, and
Gear For Sports Outlet Stores. Closeouts and irregular goods
may not be sold in Mass Retailers as defined in this License
Agreement. Additional outlets will be considered for approval
as requested.
5.8. Licensee shall use commercially reasonable efforts to ensure
that purchasers thereof are satisfied with the quality,
material, workmanship, and design of the Licensed Products
sold by it under the provisions of this Agreement. Licensee
will handle all consumer and customer complaints pertaining to
the Licensed Products in a commercially reasonable fashion.
Licensee will keep a record of all such complaints for each
Agreement Year and provide this record to Licensor within
sixty (60) days following the conclusion of each Agreement
Year. As used herein, "consumers" shall mean only natural
persons who purchase one or more of the Licensed Products for
personal use or for personal use by family members or as a
purchase for gifts and "customers" shall mean store locations
to which Licensee sells or distributes Licensed Products.
5.9. Licensee acknowledges that the reputation and success of
Licensor and the Licensed Marks are dependent on excellence in
levels of customer service. Therefore, Licensee agrees to use
commercially reasonable efforts to continuously provide
customer service on its business in connection with the
Licensed Products at a high level of quality.
5.10. Licensee shall use commercially reasonable efforts to ensure
that the consumer is satisfied with the quality, material,
workmanship, and design of the Licensed Products.
6. TERM
The Effective Date of this Agreement is July 1, 2001. The term
of this Agreement shall commence on the Effective Date and,
unless earlier terminated as hereinafter provided, shall
continue until and including June 30, 2016 (the "Term").
7. ROYALTY
7.1. Unless otherwise provided herein, Licensee shall pay to
Licensor the royalty set forth on Schedule B for each
Agreement Year of this Agreement, which royalty shall be
calculated on the Net Sales for the relevant period. "Net
Sales" shall mean the wholesale price of each Licensed Product
sold or otherwise invoiced or transferred by Licensee upon
disposal of the Licensed Products in the Territory less any
and all taxes, freight and handling charges, credits, refunds,
or returns given by Licensee to its customers or applicable
royalty payments paid by Licensee to the licensors of custom
decoration used in connection with the manufacture and sale of
Licensed Products. Also set forth on Schedule B are Licensee's
anticipated sales targets for each Agreement Year during the
term of this Agreement.
7.2. Royalties shall be payable in quarterly intervals expiring on
each 30 September, 31 December, 31 March, and 30 June during
the Term. For the purposes of this Agreement, a royalty year
ends on 30 June in each year of the Term. Unless otherwise
agreed in writing by the parties, Licensee shall within one
(1) calendar month after the end of each quarterly royalty
period, submit to Licensor a report in writing showing the
quantities of the Licensed Products sold, or otherwise
invoiced, or transferred by Licensee in the Territory during
the preceding quarterly royalty period and the Net Sales in
respect thereof and with such statement shall pay to Licensor
the amount owing upon such Net Sales, calculated in accordance
with Schedule B. If so requested by Licensor, Licensee shall
produce to Licensor evidence of any of the deductions claimed
against the wholesale price of Licensed Products invoiced. The
first such report shall include the period between the
Effective Date and the end of the subsequent quarterly royalty
period. The last report shall include the period from the end
of the previous quarter to the date of termination of this
Agreement. All royalty payments shall be made in U.S. Dollars.
7.3. In the event the aggregate royalties actually paid during an
Agreement Year are more than the amount actually due for such
fiscal year, the difference shall be credited against the next
payment due from Licensee Licensor.
7.4. Should the payment of any royalty or other moneys due and
payable by Licensee to Licensor not be received by Licensor
within five (5) days after the due date for payment thereof,
as set forth in Section 7.2, after the appropriate remittance
instructions have been provided by Licensor and received by
Licensee, Licensee shall, in addition to such payment, pay to
Licensor interest on such outstanding payment amount at a rate
equal one and one half percent (1 1/2%) per month or any
lesser maximum interest rate permitted by law until payment in
full of all such moneys as may be outstanding as aforesaid has
been received by Licensor.
7.5. All royalty payments, interest, and any other payments shall
be sent to such address or account as Licensor may from time
to time specify during the term of this Agreement.
8. MARKETING, ADVERTISING, PROMOTION, AND PACKAGING
8.1. Licensor shall have the right to approve packaging, labels and
consumer and trade advertising materials ("Promotional
Materials") prior to its use in connection with the Licensed
Products. Consumer and trade advertising materials shall
include without limitation all sales and marketing materials,
advertising, point of sale signage, and any other display or
promotional materials exposed to the consumer or retail
customer incorporating the Licensed Marks or referencing the
relationship between Licensor and Licensee. Licensor shall
have the right to approve matters related to how the Licensed
Products are positioned and sold to the consumer. Licensee
agrees to submit samples of all such Promotional Materials to
Licensor for review and approval prior to its intended release
to the public. Licensor shall have fifteen (15) days from
receipt of such samples to provide Licensee with written
approval or reasonable good faith disapproval thereof. If no
written approval or disapproval is provided by Licensor within
those fifteen (15) days, Licensor will be deemed to have
approved such Promotional Materials. If such Promotional
Materials are disapproved by Licensor, Licensee may resubmit
such Promotional Materials for follow-up evaluation after
necessary changes have been made by Licensee. Licensee shall
not release such Promotional Materials to the public other
than in accordance with this Section 8.1.
8.2. When Licensee uses the Licensed Marks on Promotional
Materials, Licensee shall include a conspicuous statement on
all such packaging and labels as follows: "CHAMPION and "C"
Logo are trademarks owned by Xxxx Xxx Corporation." Unless
approved pursuant to Section 8.1, packaging and labels for the
Licensed Products shall not bear any of Licensee's trademarks.
8.3. Licensee and Licensor shall work together to facilitate
cross-selling and cross-promotional activity. To that end,
from time to time and when Licensor deems reasonable, Licensor
will permit Licensee to participate in Licensed Products line
development reviews, sales meetings, and marketing meetings.
Likewise, from time to time and when Licensee deems
reasonable, Licensee will permit Licensor to participate in
Licensed Products line development reviews, sales meetings,
and marketing meetings. Licensee and Licensor may, when
appropriate, share design, sourcing arrangements and marketing
and promotional information prepared in relation to the
Licensed Marks, PROVIDED HOWEVER, that neither Licensor nor
Licensee shall be under any obligation to prepare any such
information specifically for the other party or in relation to
the Territory.
8.4. Licensor shall provide its account listings active on the
Effective Date of this Agreement for Collegiate Products,
historical sales by each such account, the names of sales
representatives for each such account and Blank Product
classifications purchased by each such customer during each
fiscal year (July 1st through June 30th) beginning in 1999 and
continuing to 2001.
8.5. Licensor shall permit Licensee, at Licensee's cost, to place a
link on the Champion website administered by Licensor for use
in connection with the promotion, sale and distribution of
Licensed Products. Licensor reserves the right to disapprove
any such website operated by Licensee in connection with the
Licensed Products and Licensor, in its sole discretion, shall
determine the placement and appearance of the website link on
Licensor's web page.
8.6. All packaging, labels, and consumer and trade
advertising materials submitted hereunder shall be sent to the
following address:
Xxxx Xxx Corporation
0000 Xxxx Xxxxx Xxxx Xxxx
Xxxxxxx-Xxxxx, Xxxxx Xxxxxxxx 00000
Attention: Xxxxx Xxxxxx
or to such other address as Licensor may designate in writing
to Licensee.
8.7. Any and all trademarks, copyrights or other intellectual
property rights (excluding any and all decoration licensed to
Licensee by third-parties and used in connection with the
manufacture and sale of Licensed Products), including without
limitation sub-brand names, which are now or may in the future
be used on labels, packaging, or Promotional Materials for the
Licensed Products, shall be the exclusive property of
Licensor. To the extent any rights in and to any such
trademarks, copyrights or other intellectual property rights
are deemed to accrue to Licensee, Licensee hereby assigns to
Licensor any and all such rights, at such time as they may be
deemed to accrue.
9. BOOKS AND RECORDS
9.1. Licensee shall keep and maintain at its regular place of
business, or at such off-site documents storage facility as
Licensee shall use from time to time for the retention of its
business records generally, complete and accurate records and
accounts in accordance with Generally Accepted Accounting
Principles showing the business transacted in connection with
the Licensed Products manufactured and sold pursuant to this
Agreement, including without limitation, records and accounts
relating to sales, or other disposition or transfer of
Licensed Products and shipments and orders for Licensed
Products for at least two (2) years following the creation of
the record or account.
9.2. Licensor, or its duly authorized agents or representatives,
shall have access to and the right to examine/audit all
records and accounts that Licensee is required to maintain
pursuant to this Section 9 at Licensee's premises, or at such
off-site documents storage facility as Licensee shall use from
time to time for the retention of its business records
generally; provided, however, that Licensor shall not have the
right to conduct an audit more often than once per year.
Notwithstanding the foregoing, if an audit preformed during
the Term of the Agreement reveals a material discrepancy, (i)
Licensor shall have the right to audit more than once per
year, and (ii) at any time and from time to time during the 12
month period thereafter, if so requested by Licensor, Licensee
shall provide to Licensor a certificate by its auditors
certifying the amount of the Net Sales of all Licensed
Products sold, or otherwise invoiced or transferred in the
Territory by Licensee and the amount of royalty payable
hereunder. Audits, if any, may be preformed during the first
six (6) months after each Agreement Year, except additional
audits, if any, required after discovering a material
discrepancy may be performed at any time during an Agreement
Year. Any such examination will be at Licensor's expense and
will be conducted during Licensee's normal business hours upon
reasonable prior written notice, which shall be no less than
five (5) business days. If such audit discloses that Licensee
underpaid royalties for any given year, Licensee shall
forthwith and upon written demand pay Licensor the amount
owed, together with interest thereon, at the lower of (a) one
and one-half percent (1 1/2%) per month or (b) the maximum
interest rate permitted by law, calculated from the due date
of such royalties. Further, should an audit disclose that
Licensee underpaid royalties by a margin exceeding three
percent (3%) in any given year, Licensee shall pay for all
reasonable costs relating to the audit.
9.3. Licensor shall keep confidential all information obtained in
the course of its examination of records under this Section 9
in accordance with Section 18 hereof.
10. TERMINATION
10.1. Licensor shall have the right to terminate this Agreement if:
(a) Licensee does not cure any failure to make timely payment of
any royalty due under the terms of this Agreement within
thirty (30) days after receiving written notice from Licensor;
(b) Licensee commits or permits the occurrence of a material or
substantial breach of any of its obligations under this
Agreement and fails to cure said breach or default within
thirty (30) days after receiving written notice from Licensor;
(c) Licensee violates any applicable laws of any government
pertaining or relating specifically to the manufacture,
marketing, and/or sale of the Licensed Products, which
violations Licensor reasonably and in good faith believes are
significantly damaging to the goodwill associated with the
Licensed Marks, and fails to cure such violation(s) within
thirty (30) days after receiving a reasonably detailed written
notice thereof from Licensor;
(d) Licensee's customer service or lack thereof, the quality of
any of the Licensed Products or lack thereof, or any act on
the part of Licensee results in a volume of trade or consumer
complaints which Licensor, in its good faith judgment,
reasonably believes are having a materially adverse effect on
Licensor's reputation and/or account relationships or consumer
relationships and/or good will, and Licensee fails to improve
such customer service or cure such acts to the satisfaction of
Licensor within a commercially reasonable time after receiving
a detailed written notice thereof from Licensor;
(e) Licensee becomes insolvent, or if a receiver is appointed for
its property and business, or if it liquidates its business in
any manner whatsoever;
(f) Licensee fails to achieve the Anticipated Sales Target
established for any Agreement Year during the first four (4)
years of the Term;
(g) Licensee makes any transfer or assignment in violation of
Section 15 hereof; or
(h) Licensee, commencing in Agreement Year five (5), fails during
any two (2) consecutive Agreement Years to achieve the
Anticipated Sales Target established for said Agreement Years.
10.2. Licensee shall have the right to terminate this Agreement, if:
(a) Licensor should fail to perform any of its material
obligations hereunder and such breach is not cured within
thirty (30) days after written notice from Licensee, or;
(b) During any two (2) consecutive Agreement Years commencing in
Agreement Year five (5), Licensor, in connection with its
Business, fails to achieve aggregate annual net sales of Blank
Products as defined in this Section 1.2(a), socks and
underwear greater than one hundred million Dollars
($100,000,000) within the Territory. For the purpose of this
Agreement, "Business" shall mean the business of marketing,
distributing, and selling Blank Products. For the purpose of
this Section 10 of the Agreement, "Blank Product" shall have
the meaning set forth in Section 1.2(a) and shall not include
any other products; or
(c) Licensor sells Blank Products to Mass Retailers during the
Term. In the event that Licensee elects to terminate this
Agreement in accordance with this provision at any time prior
to the second anniversary of the Effective Date, then Licensor
shall pay to Licensee the amount set forth below which
corresponds to the date upon which the Champion License
Agreement so terminates:
------------------------------------------------------------ -------------------------------
Effective Date up to and including six months $2,250,000
following the Effective Date
------------------------------------------------------------ -------------------------------
Six months following the Effective Date up to and $1,500,000
including 12 months following the Effective Date
------------------------------------------------------------ -------------------------------
12 months following the Effective Date up to 18 $1,000,000
months following the Effective Date
------------------------------------------------------------ -------------------------------
18 months following the Effective Date up to and $500,000
including 24 months following the Effective Date
------------------------------------------------------------ -------------------------------
10.3. Upon expiration or termination of this Agreement, Licensee
shall have no further right to, and shall not, manufacture,
advertise, distribute, sell or otherwise dispose of or accept
orders or reorders for any Licensed Products except as
hereinafter provided.
(a) Unless otherwise approved by Licensor in writing, upon
termination of this Agreement pursuant to Subsections
10.1(d), (f), (h) or 10.2 and after expiration of this
Agreement, Licensee may, in a manner otherwise consistent
with this Agreement, dispose of the Licensed Products from
inventory on hand to meet existing orders on a non-exclusive
basis, for a period of ninety (90) days thereafter, provided
that all payments then due are first made to Licensor and
statements and payments with respect to that ninety (90) day
period are thereafter made in accordance with Section 7. A
final statement and payment in accordance with the then
applicable royalty rate shall be made within thirty (30)
days after the end of the sell-off period provided for in
this paragraph.
(b) Upon expiration of the ninety (90) day sell-off period
provided for above or in the event Licensor terminates this
Agreement pursuant to Subsections 10.1(a), (b), (c), (e), or
(g), the right of Licensee to use the Licensed Marks or any
other designation, name, label, Promotional Materials, or
copyright belonging to Licensor shall immediately cease. All
labels, advertising Promotional Materials, forms, stationery
and printed or other matter in Licensee's possession, or
owned by Licensee, bearing the Licensed Marks, designations,
names, labels and the like shall immediately be destroyed,
except as may be necessary in connection with Licensee's
rights under the last sentence of this paragraph, and
Licensee shall immediately thereafter deliver to Licensor an
affidavit signed by an officer of Licensee confirming such
destruction. Upon the expiration of the ninety (90) day
period described above, the Licensed Marks and all such
designations, labels, or names which may have been attached
to or made a part of any products or goods in process, shall
be removed before the merchandise is sold, except where they
may have been attached to finished Licensed Products which
are sold to Licensor as provided in Section 10.4.
10.4. Upon termination of the right by Licensee to use the
Licensed Marks as provided in Subsection 10.3(b), Licensor
shall have the option, but not the obligation, to purchase
from Licensee some or all of the stock of Licensed Products,
and all advertising and promotional materials relating
thereto, which are in Licensee's possession or under
Licensee's control on the date of expiration or termination.
Licensee shall provide Licensor, within fifteen (15) days of
such termination or expiration, with a written inventory of
its unsold stock of Licensed Products, which inventory shall
indicate the quantities (by size) of each style or type of
Licensed Product, and of its Promotional Materials relating
thereto, and shall further indicate what proportion thereof
are in first-quality, salable or usable condition. Stock
which is purchased by Licensor and is in first-quality,
salable or usable condition shall be purchased at a price
equal to the cost for such stock, as reflected on the books
and records of Licensee, and stock which is not in
first-quality, salable or usable condition shall, if
purchased, be purchased at a price to be agreed upon in good
faith by Licensee and Licensor. Licensee will cooperate with
Licensor in arranging for the delivery of stock purchased by
Licensor. Such delivery shall be f.o.b. the location of such
stock and the costs thereof shall be borne solely by
Licensor.
10.5. Following expiration or termination of this Agreement for
any reason whatsoever, Licensee agrees not to resume use of
the Licensed Marks, or adopt any imitation thereof, or use
any confusingly similar trade name, trademark, service xxxx,
symbol or emblem which resembles or simulates the Licensed
Marks or any feature thereof.
11. REPRESENTATIONS AND WARRANTIES AND COVENANTS
11.1. Licensor represents and warrants that:
(a) Licensor has full corporate power and authority to
enter into this Agreement and perform its obligations
hereunder, and Licensor's entering into this Agreement
and performance of its obligations hereunder have been
duly authorized, and no other proceedings on the part
of Licensor are necessary to authorize such execution,
delivery and performance and shall not violate any
agreement or other instrument to which Licensor is a
party or by which it may be bound;
(b) Licensor owns the Licensed Marks listed on Schedule A,
free and clear of any lien, license, or other
restriction that prohibits or restricts Licensor's
ability to grant the rights set forth in this
Agreement. Except as otherwise made known to Licensee
or GFSI, to the best of Licensor's knowledge, in the
past two years, the Licensed Marks, used as
contemplated by this Agreement, were not subject to any
outstanding injunction, judgment, order, decree,
ruling, or charge and no action, suit, proceeding,
hearing, investigation, charge, complaint, claim, or
demand is pending or, to the best of the Licensor's
knowledge, is threatened which challenges the legality,
validity, enforceability, use, or ownership of any
Licensed Xxxx used as contemplated by this Agreement.
(c) To the knowledge of Licensor, no third party has
successfully interfered with, infringed upon,
misappropriated, or otherwise come into conflict with
any rights of the Licensor in and to the Licensed Marks
used as contemplated by the Agreement.
11.2. Licensee represents and warrants that:
(a) Licensee has full corporate power and authority to
enter into this Agreement and perform its obligations
hereunder, and Licensee's entering into this Agreement
and performance of its obligations hereunder have been
duly authorized, and no other proceedings on the part
of Licensee are necessary to authorize such execution,
delivery and performance and shall not violate any
agreement or other instrument to which Licensee is a
party or by which it may be bound;
(b) To the best of Licensee's knowledge, no use by Licensee
or its third-party manufacturers of designs, devices,
inventions, or patents in connection with the Licensed
Products will infringe or otherwise interfere with the
trademark, patent, copyright, or other proprietary
rights of any third party;
(c) All Licensed Products sold by Licensee pursuant to this
Agreement: (i) shall meet or exceed the quality,
materials, and specifications of samples provided or
approved by Licensor, (ii) shall be in compliance with,
conform to, and satisfy all applicable federal, state,
municipal, and other governmental body laws, rules,
regulations, and ordinances, (iii) will be safe in all
material respects for the general public and will
contain no material defect or toxic or hazardous
substance, (iv) are not and will not be injurious to
person or property when used or foreseeably misused,
and (v) will be tested for flammability pursuant to
Commercial Standard 191-53 prior to the sale thereof,
and have been determined to be Class 1 products that
possess only normal flammability characteristics;
(d) Licensee shall provide Licensor copies of all
flammability testing of all items of Licensed Products
and a copy of a Continuing Guaranty under the Flammable
Fabrics Act within thirty (30) days of each such
flammability test; and
(e) Licensee shall perform its own due diligence review of
any labeling instructions, specifications, standards or
other information provided to Licensee by Licensor and
Licensee is not relieved of any responsibility
whatsoever because of any such labeling instructions,
specifications, or other information provided by
Licensor.
11.3. Licensor covenants that, at no time during the Term will
Licensor sell any Collegiate Products that consist of
close-outs, irregulars, slow moving and/or discontinued styles
in or to any college bookstore.
12. JOINT AND SEVERAL LIABILITY
12.1. The obligations of Licensee contained in this agreement shall
be the joint and several obligations of Licensee and GFSI.
13. TRADEMARK ENFORCEMENT
13.1. Licensee agrees to promptly notify Licensor of any
unauthorized use of the Licensed Marks by third parties, as
soon as it comes to Licensee's attention. Licensor shall have
the sole right and discretion to bring infringement actions
involving the Licensed Marks, and any award received by
Licensor in any such actions shall belong solely to Licensor.
13.2 Licensor and Licensee shall indemnify each other as provided
in Exhibit A.
14. INSURANCE
14.1. Licensee shall obtain and maintain, at its own cost and
expense, Commercial General Liability insurance and Umbrella
liability insurance written on an occurrence basis with the
following coverage and limits:
Coverage Limits
General Aggregate Limit $2,000,000.00
Products/Completed
Operations Aggregate Limit $2,000,000.00
Personal and Advertising
Injury - Per Injury $1,000,000.00
14.2. Licensor shall be named as an additional insured on the
Commercial General Liability policy. Licensee shall provide
Licensor with a certificate of insurance evidencing all of the
required coverage. The certificate shall also provide evidence
that the policy has been amended to afford at least thirty
(30) days advance written notice to Licensor of cancellation,
nonrenewal or material change of any of the required coverage.
15. ASSIGNMENT OR SUBLICENSE BY LICENSEE
15.1 This Agreement and all of Licensee's rights and duties
hereunder are personal to Licensee and shall not, without the
prior written consent of Licensor, be transferred, assigned,
sublicensed or otherwise encumbered by Licensee (including as
a result of a change of control) or by operation of law;
provided, however, that Acquisition may transfer or assign its
rights and duties under this Agreement to GFSI or a wholly
owned subsidiary of GFSI who shall thereupon be deemed the
Licensee hereunder; and further provided that Licensee may
transfer or assign this License pursuant to a transaction
(regardless of form), (a) in which all or substantially all of
the assets of Licensee, GFSI, their Subsidiaries and any other
affiliate of Licensee engaged in the Business are sold, or (b)
in which a change of control of Licensee occurs, so long as,
in either such case, such transferee or assignee (i) is not a
Competitor of Licensor, (ii) will not impair or adversely
affect the reputation and good will associated with the
Licensed Marks, and (iii) will be able to operate the Business
in a manner no less favorable, considering its financial,
management and other relevant capabilities and resources, as
Licensee, in each case, as determined by Licensor in good
faith. Notwithstanding the foregoing, the parties agree (A)
that no transfer, assignment, encumbrance or sublicense of
this License or any of Licensee's rights and duties hereunder
shall relieve Acquisition, CCP or GFSI of its obligations
hereunder which shall be joint and several with any transferee
or assignee and (B) that if, following the transfer of all of
the activewear business owned or operated by Xxxx Xxx
Corporation and its affiliates, the "Licensor" hereunder shall
be an entity other than Xxxx Xxx Corporation or an affiliate
thereof, the restriction imposed by sub-section (i) of this
Section 15.1 shall be of no further force or effect. The term
"Subsidiary" means any entity of which GFSI or Licensee
directly or indirectly owns shares of capital stock,
membership interests or other interests having in the
aggregate more than 50% of the total combined voting power of
such entity or the power to direct management or policy. The
term "Business" shall mean the business acquired by GFSI
pursuant to that certain Stock Purchase Agreement, dated April
20, 2001, to which GFSI and Xxxx Xxx Corporation, among
others, are parties. The term "Competitor" means, at any time,
any entity that competes, directly or indirectly, with any
apparel business that is then owned or operated by Licensor or
any of its affiliates.
16. APPROVED FACILITIES
16.1. Licensor is committed to having its products produced in
manufacturing facilities that operate under responsible, safe
and humane conditions. To that end, Licensee agrees that
Licensee shall be entitled to manufacture the Licensed
Products in only those manufacturing facilities (third-party
or owned) for which Licensee has obtained Licensor's prior
written approval (and which approval has not been subsequently
revoked by Licensor). Licensee shall submit to Licensor a
request for approval to utilize a manufacturing facility
(third-party or owned) in the form attached hereto as Schedule
C which approval may be withheld, conditioned or revoked in
Licensor's sole discretion. Licensor shall grant written
approval in a form consistent with Schedule D. In no event
shall such approval be unreasonably withheld or delayed. In
the event that Licensee uses a third party to manufacture the
Licensed Products, Licensee shall nevertheless remain
primarily obligated under all of the provisions of this
Agreement. Licensee shall inform Licensor in writing if an
approved facility is sold and must receive Licensor's written
approval of the new entity before production may resume. The
word "sold" as used in the preceding sentence includes a
change of controlling interest. In the event Licensee
manufactures Licensed Products in a facility that has not been
approved or in a facility in which approval has been revoked,
Licensee shall remove all Licensed Marks, including tags and
other means of identifying Licensor or the Licensed Marks,
from the Licensed Products manufactured at such facilities and
take such other measures as Licensor in its sole discretion
deem necessary to protect the Licensed Marks and Licensor.
17. XXXX XXX STANDARDS
17.1. Licensee has received a copy of Xxxx Xxx Corporation's Global
Business Standards and Supplier Selection Guidelines in the
form attached hereto as Schedule E (the "Guidelines"), and
shall provide the Guidelines to any and all vendors or
manufacturers appointed under this Agreement. Licensor shall
provide Licensee with a sufficient number of copies of the
Guidelines at no cost to Licensee in the local language(s) of
the management and employees producing the product. Licensee
shall cause the Guidelines to be posted at all times in all
facilities where Licensed Products are manufactured. Licensee
hereby represents, warrants and covenants that (i) it has
reviewed and understands the Guidelines and has or will verify
that any third party which manufactures Licensed Products has
reviewed and understands the Guidelines and (ii) it, and, to
Licensee's knowledge, any third party which manufactures
Licensed Products for Licensee is presently in compliance and
will remain in compliance with all terms and provisions of the
Guidelines for the Term of this Agreement. Licensee agrees to
advise Licensor promptly in writing of any violations of the
provisions of this Agreement by any such facility and of the
corrective actions taken by Licensee and the results thereof.
18. AUDITS
18.1. Licensee shall immediately, at its own expense, have each
facility (third-party and owned) it uses to produce Licensed
Products independently audited by a firm approved by Licensor,
for compliance with these or such similar Guidelines
(including, without limitation, applicable Worldwide
Responsible Apparel Production "WRAP" guidelines) as Xxxx Xxx
Corporation may require from time to time. Audits to ensure
continuing compliance to the Guidelines shall be conducted at
least annually. Licensee shall provide Licensor with a copy of
the audit report. If, in Licensor's discretion, the audit
indicates the need for improvement or change, such changes
must be made within ninety (90) days of notice of such need
for improvement or change. Notwithstanding the foregoing,
improvements or changes must be made within thirty (30) days
if such improvement or change relates to matters involving
child labor, involuntary labor, physical or psychological
abuse, degradation of the environment, or otherwise impacts
the health and safety of employees at the facility or the
safety of the products manufactured in the facility. If the
improvement or change is not made during the time set forth in
this Agreement, the approval of such facility may be
terminated and Licensor shall have the right to require
Licensee to immediately cease production of the Licensed
Products at such facilities.
19. LICENSOR INSPECTION RIGHTS
19.1. Licensor retains the right, with or without prior notice, at
Licensor's expense, to conduct or procure its own or
independent third-party inspection and audit of Licensee and
any third-party manufacturer which manufactures Licensed
Products for compliance with the Guidelines or such similar
guidelines as Licensor may establish from time to time;
provided, however, that the scope of any such inspection shall
be restricted to those aspects of the Licensee's or such third
party's business that relates to the Licensed Products.
19.2. Licensor encourages Licensee and all of Licensee's
manufacturers and subcontractors to voluntarily participate in
the Worldwide Responsible Apparel Production (WRAP) factory
certification program. If Licensee and all facilities
producing Licensor's products become WRAP certified (and
remain certified periodically), Licensee shall provide proof
of such certification to Licensor as required, and shall be
exempt from the provisions of Section 18 above. Effective July
1, 2003 every, Licensee will be required to produce product
for Licensor in WRAP-certified factories.
20. CONFIDENTIALITY
20.1. The terms of this Agreement and all merchandising know-how,
specifications, plans, patterns, outlines, designs, creations,
and other data and information of any kind obtained by
Licensee from Licensor or developed by Licensee or any third
party for use in connection with this Agreement shall be kept
confidential and shall not be disclosed or used for the
benefit of Licensee or any third party except in accordance
with the terms of this Agreement. Such confidential
information shall be revealed to employees of Licensee only to
the extent reasonably necessary to enable Licensee to exercise
the full rights granted hereunder, and Licensee agrees to bind
its officers and key employees, including but not limited to
those employees to whom such confidential information is
revealed.
21. NOTICES
All notices required hereunder shall be in writing and
dispatched by overnight courier addressed as follows:
If to Licensor: Xxxx Xxx Corporation
0000 Xxxx Xxxxx Xxxx Xxxx
Xxxxxxx-Xxxxx, Xxxxx Xxxxxxxx 00000
Attention: Xxxxx Xxxxxx
With copy to: Xxxx Xxx Corporation
Law Department
0000 Xxxx Xxxxx Xxxx Xxxx
Xxxxxxx-Xxxxx, Xxxxx Xxxxxxxx 00000
Attention: Chief Counsel - Intellectual
Property
If to Licensee: CC Products, Inc.
c/o GFSI, Inc.
0000 Xxxxxxxx Xxxxxxx
Xxxxxx, Xxxxxx 00000
Attention: Xxxxx Xxxxxxxx
All such notices shall be effective upon receipt.
22. RELATIONSHIP OF THE PARTIES
22.1 This Agreement does not constitute either party the agent of
the other, or create a partnership, employment, agency, joint
venture or similar relationship between the parties, and
neither party shall have the power to obligate or bind the
other party in any manner whatsoever. The parties agree not to
contend to the contrary or to attempt to enforce any contrary
intention in any court. In addition, neither party shall
represent to third parties that it is an agent or partner of
or joint venturer with the other.
23. FORCE MAJEURE
23.1 In the event an act of government, war conditions, fire,
flood, or other act of God prevents either party from
performing in accordance with the provisions of this
Agreement, such non-performance shall be excused and shall not
be considered a breach or default for so long as the said
conditions prevail. However, at any time after a six (6) month
period of such non-performance, either party may terminate
this Agreement on thirty (30) days' written notice thereof.
24. MISCELLANEOUS
24.1 In the event that either party shall, at any time, waive any
of its rights under this Agreement, or the performance by the
other party of any of its obligations hereunder, such waiver
shall not be construed as a continuing waiver of the same
rights or obligations or a waiver of any other rights or
obligations.
24.2 Licensee agrees that all press releases and other public
announcements related in any way to this Agreement, or to
Licensee's or Licensor's operations hereunder, shall be
subject to approval by Licensor, which approval shall not be
unreasonably withheld, and that each request for a statement,
release or other inquiry shall be sent in writing to the
advertising/publicity director of Licensor for response.
24.3 This Agreement constitutes the entire agreement between the
parties as to the subject matter hereof and no modifications,
amendments or revisions hereto shall be of any force or effect
unless the same are in writing and executed by the parties
hereto. All schedules attached hereto shall be part of this
Agreement.
24.4 Any provisions of this Agreement which are, or shall be
determined to be, invalid shall be ineffective, but such
invalidity shall not affect the remaining provisions hereof.
The titles to the sections herein are for convenience only and
shall have no substantive effect.
24.5 This Agreement is binding upon the parties hereto, any parent,
subsidiary and affiliated companies of the parties and any of
their successors and assigns.
24.6 Licensee shall be responsible for compliance with the
requirements of all local laws in the countries where it
manufactures, markets, distributes or sells the Licensed
Products, except for any obligations with respect to the
effectiveness, the maintenance of the Licensed Trademarks or
similar obligations where required under applicable trademark
law. It is understood that Licensor is responsible for the
costs and fees for, or incidental to, obtaining trademark
registrations.
24.7 This Agreement shall be construed in accordance with and
governed by the laws of the State of Illinois, applicable to
contracts made and to be wholly performed therein without
regard to its conflicts of law rules, and the federal laws of
the United States of America.
24.8 For the convenience of the parties, any number of counterparts
of this Agreement may be executed. Each such counterpart shall
be deemed to be an original instrument and all of them
together shall constitute one and the same instrument.
24.9 Notwithstanding any other provisions hereof, the terms and
conditions of this Agreement shall survive any expiration or
termination hereof to the extent necessary to carry out the
intent of the parties.
IN WITNESS WHEREOF, Licensor has caused this instrument to be executed
in its name by a proper officer and Licensee has caused this instrument to be
executed by a proper officer as of the date written below.
XXXX XXX CORPORATION CC PRODUCTS, INC.
Name: /S/ Xxxxxxx Xxxxxxxx Name: /s/ Xxxxx Xxxxxxx
-------------------- ------------------
Title: Vice President Title: President
-------------------- ------------------
Date: June 25, 2001 Date: June 25, 2001
-------------------- ------------------
CCP ACQUISITION, INC.
Name: /s/ Xxxxxxxxx XxXxxxx
----------------------
Title: Vice President
----------------------
Date: June 25, 2001
----------------------
GFSI, INC.
Name: /s/ Xxxxx Xxxxxxx
----------------------
Title: President, COO
----------------------
Date: June 25, 2001
----------------------
SCHEDULE A
LICENSED MARKS(1)
CHAMPION & C Logo in Class 25 - US
Trademark Status Registration
--------- ------ ------------
C LOGO Registered 1827538
C LOGO Registered 1463681
C LOGO Registered 2049566
C LOGO Registered 1566064
C LOGO Renewal Pending 1127251
CHAMPION Registered 2319994
CHAMPION LOGO Registered 1860938
CHAMPION LOGO Registered 1323337
CHAMPION LOGO Registered 1819014
CHAMPION LOGO Registered 1828930
CHAMPION LOGO Registered 1756925
CHAMPION LOGO Registered 1915092
CHAMPION LOGO Registered 2004276
CHAMPION LOGO Registered 1775283
CHAMPION Registered 274178
(1) The Licensed Marks are registered for good in addition to Licensed
Products. Licensee shall only use Licensed Marks on Licensed Products as
defined in this Agreement.
SCHEDULE B
Royalty Payment Guide for Champion License Agreement
License Agreement Year Royalty Rate Anticipated
Year % of Net Sales Sales
Target*
---------------------------------------------------------------------------------------------------------------------
1 July 1, 01-June 30, 02 0 $20,000,000
---------------------------------------------------------------------------------------------------------------------
2 July 1, 02-June 30, 03 0 $25,000,000
---------------------------------------------------------------------------------------------------------------------
3 July 1, 03-June 30, 04 3 $33,000,000
---------------------------------------------------------------------------------------------------------------------
4 July 1, 04-June 30, 05 4 $35,000,000
---------------------------------------------------------------------------------------------------------------------
5 July 1, 05-June 30, 06 5 $40,000,000
---------------------------------------------------------------------------------------------------------------------
6 July 1, 06-June 30, 07 6 $46,000,000
---------------------------------------------------------------------------------------------------------------------
7 July 1, 07-June 30, 08 6 $46,000,000
---------------------------------------------------------------------------------------------------------------------
8 July 1, 08-June 30, 09 6 $46,000,000
---------------------------------------------------------------------------------------------------------------------
9 July 1, 09-June 30, 10 6 $46,000,000
---------------------------------------------------------------------------------------------------------------------
10 July 1, 10-June 30, 11 6 $46,000,000
---------------------------------------------------------------------------------------------------------------------
11 July 1, 11-June 30, 12 6 $46,000,000
---------------------------------------------------------------------------------------------------------------------
12 July 1, 12-June 30, 13 6 $46,000,000
---------------------------------------------------------------------------------------------------------------------
13 July 1, 13-June 30, 14 6 $46,000,000
---------------------------------------------------------------------------------------------------------------------
14 July 1, 14-June 30, 15 6 $46,000,000
---------------------------------------------------------------------------------------------------------------------
15 July 1, 15-June 30, 16 6 $46,000,000
---------------------------------------------------------------------------------------------------------------------
* These sales targets are subject to the termination provisions described in
this Agreement.
Licensee has established Anticipated Sales Targets for each Agreement Year
during the term of this Agreement as defined herein. Licensee agrees to pay
royalties to Licensor in accordance with the following provisions.
a) Agreement Years One (1) and (2): No royalties are payable.
b) Agreement Years Three (3) and (4): In Agreement Years three (3) and four
(4), Licensee agrees to pay $1,000,000 (the "Guaranteed Minimum Royalty")
to Licensor. If, however, the actual royalty (i.e. Net Sales times royalty
rate) is greater than the Guaranteed Minimum Royalty, Licensee shall pay
the actual royalty to Licensor.
c) Agreement Years Five (5) through Fifteen (15): Commencing in Agreement Year
five (5), Licensee shall pay the actual royalty (i.e. Net Sales times
royalty rate).
Schedule C
REQUEST FOR APPROVAL OF MANUFACTURING FACILITIES
Licensee: CC Products, Inc. and CCP ACQUISITION, Inc.
Name of Manufacturer:
Name of Manufacturing Facility:
Location of Manufacturing Facility(ies):
Name of Third-Party Audit Firm:
Date Compliance Audit Completed:
Results of Audit:
Licensed Products:
CC PRODUCTS, INC.
By: ____________________
Name: ____________________
Title: ____________________
Date: ____________________
CCP ACQUISITION, INC.
By: ____________________
Name: ____________________
Title: ____________________
Date: ____________________
Schedule D
APPROVAL OF MANUFACTURING FACILITIES
Licensee: CC Products, Inc. and CCP ACQUISITION, Inc.
Name of Manufacturer:
Name of Manufacturing Facility:
Location of Manufacturing Facility(ies):
Licensed Products:
Subject to the terms and provisions set forth in the License Agreement
dated July 1, 2001, between Xxxx Xxx Corporation ("Licensor"), CC Products, Inc.
and CCP ACQUISITION, Inc. ("Licensee"), Licensor hereby consents to the
manufacture of the Licensed Products by the manufacturer at the manufacturing
facility mentioned above upon the following, if any, conditions:
Xxxx Xxx Corporation
By:
Name:
Title:
Date:
Licensee warrants and covenants that the above-named facility
currently, and during the time the facility manufactures Licensed Products,
adheres to Xxxx Xxx Supplier Selection Guidelines.
CC PRODUCTS, INC.
By:
Name:
Title:
Date:
CCP ACQUISITION, INC.
By:
Name:
Title:
Date:
Schedule E
Xxxx Xxx Corporation's Global Business Standards and Supplier Selection
Guidelines
Exhibit A
Indemnification
1. Licensor's Indemnification. Subject to the further provisions of this
Exhibit A, Licensor shall indemnify, defend and hold harmless Licensor and its
affiliates and their respective directors, officers, employees, affiliates,
advisors, representatives, agents, successors and assigns (collectively,
"Licensee Indemnified Parties"), against and in respect of any losses, damages
or expenses (including interest, penalties, court costs, settlement costs, costs
of investigation and reasonable attorneys' fees) (collectively, "Losses") that
any of such parties shall incur or suffer, to the extent arising or resulting
from, or relating to, directly or indirectly in any way whatsoever, (a) subject
to the provisions of Section 8.6 of the Stock Purchase Agreement, dated April
20, 2001, among Licensor, Licensee and GFSI (the "Purchase Agreement"), any
inaccuracy or breach of any representation or warranty made by Licensor in this
Agreement, (b) the failure of Licensor to comply with any of its covenants or
other obligations set forth in this Agreement, (c) trademark infringement
arising out of approved use of the Licensed Marks by Licensee in the Territory
in accordance with the terms of this Agreement, or (d) any claim relating to the
foregoing.
2. Licensee's Indemnification. Subject to the further provisions of this
Exhibit A, Licensee shall indemnify, defend and hold harmless Licensor and its
affiliates and their respective directors, officers, employees, affiliates,
advisors, representatives, agents, successors and assigns (collectively,
"Licensor Indemnified Parties") against and in respect of any and all Losses
that any such parties shall incur or suffer, to the extent arising or resulting
from, or relating to, directly or indirectly in any way whatsoever any of the
following: (a) any inaccuracy or breach of any representation or warranty made
by Licensee in this Agreement, (b) the failure of Licensee or GFSI to comply
with any of their covenants or other obligations set forth in this Agreement,
(c) the manufacture, packaging, sale, marketing or distribution of the Licensed
Products by Licensee and its third-party manufacturers and the officers,
directors, employees, and agents of each of the foregoing, or which may be
occasioned by Licensee's breach of the warranties, representations, or covenants
contained in this Agreement, and (d) any claim relating to the foregoing;
provided, however, that no indemnification shall be provided with respect to the
portion of such Losses that any of such Licensor Indemnified Parties shall incur
or suffer to the extent arising or resulting from (1) a determination that
Licensee's use of the Licensed Marks in accordance with the terms of this
Agreement infringes prior trademark rights of a third party, and (2) any
manufacturing, packaging or other error or defect in connection with any
Licensed Product that is supplied to Licensee by Licensor.
3. Indemnification Procedures for Third Party Claims.
-------------------------------------------------
(a) In the event that a third party files a lawsuit, enforcement
action or other proceeding against a party entitled to indemnification
under this Exhibit A (an "Indemnified Party") or the Indemnified Party
receives notice of, or becomes aware of a condition or event which
otherwise entitles such party to the benefit of any indemnity hereunder in
connection with Losses incurred as a result of a claim by a Third Party (a
"Third Party Claim"), the Indemnified Party shall give written notice
thereof (the "Claim Notice") promptly to each party obligated to provide
indemnification pursuant to this Exhibit A (an "Indemnifying Party"). All
Third Party Claims for indemnification by the Indemnified Party shall be
bona fide. The Claim Notice shall describe in reasonable detail the nature
of the Third Party Claim, including an estimate, if practicable, of the
amount of Losses that have been or may be suffered or incurred by the
Indemnified Party attributable to such Third Party Claim and the basis of
the Indemnified Party's request for indemnification under this Agreement.
Notwithstanding the foregoing, failure by an Indemnified Party to provide
notice on a timely basis of a Third Party Claim shall not relieve the
Indemnifying Party of its obligations hereunder, unless, and then solely to
the extent that, the Indemnifying Party is prejudiced thereby.
(b) The Indemnifying Party shall have the right, upon written notice
to the Indemnified Party (the "Defense Notice") within fifteen days of its
receipt from the Indemnified Party of the Claim Notice, to conduct at its
expense the defense against such Third Party Claim in its own name, or, if
necessary, in the name of the Indemnified Party; provided, however, that
Licensor shall have the priority and right to conduct the defense of any
Third Party Claim which relates to (A) the Licensed Marks or any other
intellectual property rights owned or used by Licensor or any of its
affiliates, (B) the safety, quality, design or manufacture of any Licensed
Products, or (C) any matter which adversely reflects on the name,
reputation or goodwill of Licensor, any of its affiliates or any of their
respective intellectual property rights, including any matter which would
give Licensor the right to terminate its approval of any facility pursuant
to Section 18 of this Agreement, and if any Licensor Indemnified Party is
the Indemnified Party with respect to such Third Party Claim, Licensee
shall be responsible for the cost of such defense. Regardless of which
party conducts the defense of a Third Party Claim, the other party shall
have the right to approve the defense counsel for such Third Party Claim,
which approval shall not be unreasonably withheld or delayed, and in the
event the Indemnifying Party and the Indemnified Party cannot agree upon
such counsel within ten days after counsel is proposed, then the party
conducting the defense shall propose an alternate defense counsel, which
shall be subject again to the other party's approval, which approval shall
not be unreasonably withheld or delayed. Notwithstanding the foregoing, if
the counsel retained by the party conducting the defense is prohibited by
the applicable rules of legal ethics from representing both the
Indemnifying Party and the Indemnified Party, then the party not conducting
the defense may employ separate counsel to represent or defend it in any
such claim, action, suit or proceeding and the Indemnifying Party shall pay
the fees and disbursements of such separate counsel. If the Indemnified
Party is conducting the defense of a Third Party Claim at the expense of
the Indemnifying Party, the Indemnifying Party shall reimburse the
Indemnified Party for the costs and expenses of such defense which
constitute Losses for which the Indemnified Party is entitled to
indemnification pursuant to this Exhibit A on a monthly basis promptly
after the Indemnifying Party's receipt of an invoice therefor from the
Indemnified Party.
(c) In the event that the Indemnifying Party shall fail to give the
Defense Notice within the time and as prescribed by clause (b) of this
Section 3, or if the Indemnified Party has the right to defend such Third
Party Claim pursuant to clause (b) of this Section 3 and has elected to do
so, then, in either such event, the Indemnified Party shall have the right
to conduct such defense in good faith with counsel reasonably acceptable to
the Indemnifying Party, but the Indemnified Party (or any insurance carrier
defending such Third Party Claim on the Indemnified Party's behalf) shall
be prohibited from compromising or settling the Third Party Claim without
the prior written consent of the Indemnifying Party, which consent shall
not be unreasonably withheld or delayed. Failure at any time of the party
conducting the defense to diligently defend a Third Party Claim as required
herein shall entitle the other party to assume the defense and settlement
of such Third Party Claim.
(d) Regardless of which party conducts the defense of a Third Party
Claim, the other party will cooperate with and make available to the party
conducting the defense such assistance, personnel, witnesses and materials
as such party may reasonably request, all at the expense of the
Indemnifying Party. Regardless of which party defends such Third Party
Claim, the other party shall have the right at its expense to participate
in the defense assisted by counsel of its own choosing. Each Indemnified
Party shall reasonably consult and cooperate with each Indemnifying Party
with a view towards mitigating Losses, in connection with Third Party
Claims for which a party seeks indemnification under this Exhibit A.
(e) Without the prior written consent of the Indemnified Party (which
shall not be unreasonably withheld or delayed), the Indemnifying Party (or
any insurance carrier defending such Third Party Claim on the Indemnifying
Party's behalf) will not enter into any settlement of any Third Party Claim
if, pursuant to or as a result of such settlement, such settlement could
lead to liability or create any financial or other obligation on the part
of the Indemnified Party (including any obligation which would have a
material and adverse impact on the ability of such Indemnified Party to
conduct its business in the ordinary course ) for which the Indemnified
Party is not entitled to indemnification hereunder. If the Indemnifying
Party receives a firm offer to settle a Third Party Claim which contains an
agreement on the part of a the Third Party to otherwise unconditionally
release the Indemnified Party from any further Third Party Claims, which
offer the Indemnifying Party is otherwise permitted to settle under this
Section 3, and the Indemnifying Party desires to accept such offer, the
Indemnifying Party will give prior written notice to the Indemnified Party
to that effect. If the Indemnified Party objects to such firm offer within
ten days after its receipt of such notice, the Indemnified Party may
continue to contest or defend such Third Party Claim and, in such event,
the maximum liability of the Indemnifying Party as to such Third Party
Claim will not exceed the amount of such settlement offer, plus costs and
expenses paid or incurred by the Indemnified Party up to the point such
notice had been delivered.
(f) If Licensee assigns all or any portion of its rights under this
Agreement as permitted by Section 15.1, then for purposes of this Exhibit A
and the actions and decisions to be made by Licensee and any assignee, GFSI
shall be deemed to be the representative of such assignee and Licensor and
the Licensor Indemnified Parties shall be entitled to rely exclusively on
the acts and omissions of GFSI with respect to actions to be taken by, or
inferences from omissions of, either GFSI or such assignee.
4. Nature of Other Liabilities, Claims. In the event any Indemnified Party
should have a claim against any Indemnifying Party hereunder which does not
involve a Third Party Claim, the Indemnified Party shall transmit to the
Indemnifying Party a written notice (the "Indemnity Notice") describing in
reasonable detail the nature of the claim and the basis of the Indemnified
Party's request for indemnification under this Agreement. If the Indemnifying
Party does not notify the Indemnified Party within 45 days from its receipt of
the Indemnity Notice that the Indemnifying Party disputes such claim (a "Dispute
Notice"), the claim specified by the Indemnified Party in the Indemnity Notice
shall, subject to the further provisions of this Exhibit A, be deemed a
liability of the Indemnifying Party under this Exhibit A. Any award received by
Licensor in an action for infringement shall belong solely to Licensor.
5. Exclusive Remedy. Except for injunctive and other equitable relief and
remedies and except as otherwise expressly provided elsewhere in this Agreement,
the rights and obligations of the parties under this Exhibit A are the exclusive
rights and obligations of the parties with respect to any breach of any
representation, warranty, covenant or agreement in this Agreement and shall be
in lieu of any other rights or remedies to which the party entitled to
indemnification hereunder would otherwise be entitled as a result of such
breach, it being agreed that the provisions of this Exhibit A supersede the
provisions of Article VIII of the Purchase Agreement pertaining to any such
breach of this Agreement except as expressly provided herein.
EXHIBIT 10.21
SUPPLY AGREEMENT
This Supply Agreement ("Agreement"), dated June 25, 2001 (the "Effective
Date"), is by and among Xxxx Xxx Corporation, a Maryland corporation
("Supplier"), GFSI, Inc., d/b/a Gear For Sports, a Delaware corporation
("GFSI"), CC Products, Inc., a Delaware corporation ("CCP"), and CCP
Acquisition, Inc., formerly known as Champion Products, Inc., a New York
corporation ("Acquisition").
RECITALS:
A. CCP is a wholly-owned subsidiary of GFSI. On the Effective Date, CCP
acquired from Supplier all of the issued and outstanding capital stock of
Acquisition, pursuant to the terms of that certain Stock Purchase Agreement,
dated as of April 20, 2001 (the "Purchase Agreement"), among Xxxx Xxx,
Acquisition and GFSI. Any capitalized terms used, but not defined herein shall
have the meanings ascribed to such terms in the Purchase Agreement.
B. As of the Effective Date, Acquisition is engaged in the business
("Business") of marketing, distributing and selling fleece tops and bottoms,
jersey tops and bottoms, mesh fabric tops and bottoms, woven tops and bottoms,
polo shirts, windwear, sweaters, outerwear, and headwear for men, women, boys,
girls, toddlers and infants, in each case bearing the brand name Champion or a
related trademark ("Champion Product") pursuant to the terms of the Champion
License.
C. To assist with the successful transfer of the Business to CCP,
Supplier is willing to supply to Acquisition certain Acquisition Blank Product
on the terms and conditions contained herein. The term "Acquisition Blank
Product" means Champion Product which (1) is not attributed with any custom
decoration, and (2) is of a color, type and style set forth on Exhibit A.
A G R E E M E N T
NOW, THEREFORE, in consideration of the foregoing and of the mutual
representations, warranties and covenants hereinafter set forth, the parties
hereto agree as follows:
1. Term. This Agreement shall become effective on the Effective Date, and,
subject to Sections 10 and 11, shall continue in effect for a term of eighteen
(18) months (the "Term").
2. Supply of Acquisition Blank Product. During the Term, Supplier shall
sell to Acquisition, and Acquisition shall purchase from Seller, such amount of
Acquisition Blank Product as Acquisition elects in its sole discretion to
purchase from time to time, subject to and in accordance with the terms of this
Agreement (such Acquisition Blank Product being purchased by Acquisition being
called "Acquisition Product"). All Acquisition Product shall be shipped to such
of Acquisition's distribution centers in the United States (the "Distribution
Centers"), for delivery on the dates (the "Delivery Dates"), as set forth in the
purchase orders for Acquisition Product delivered to Supplier by Acquisition
from time to time during the Term (collectively, the "Purchase Orders").
Acquisition agrees that each Purchase Order shall be consistent with the Orders
(as defined below) and shall be delivered to Supplier no later than two weeks
prior to the earliest Delivery Date contained in such Purchase Order. The
parties acknowledge that the Acquisition Product subject to this Agreement does
not include any products produced by Supplier and sold to Acquisition pursuant
to (a) the Purchase Agreement, (b) the Fall 2001 Agreement, or (c) any other
agreement or arrangement entered into between Supplier and Acquisition for the
production by Supplier and sale to Acquisition of any products.
3. Specifications; Quality Standards. All Acquisition Product will be
produced in accordance with Supplier's currently existing specifications for
Acquisition Blank Product, as such specifications may be amended by Supplier
from time to time; provided, however, that any such amendment shall apply
generally to all products manufactured by Supplier and in no event shall any
such amendment apply solely to Acquisition Blank Product sold to Acquisition
hereunder. All Acquisition Product will be packed in accordance with the terms
set forth on Exhibit B. All Acquisition Product will be inspected by Supplier as
per Supplier's current AQL standards of 5% average as described in the attached
Exhibit C. Acquisition's exclusive remedy for any Acquisition Product which does
not meet Supplier's specifications for Acquisition Blank Product or is otherwise
not in compliance with the Purchase Order therefor shall be as set forth in
Exhibit C.
4. Production Scheduling. On or before each shaded date set forth in
Exhibit D (each, a "Forecast Date") during the Term, Acquisition and Supplier
shall jointly develop a rolling production and delivery schedule of
Acquisition's Acquisition Product requirements (each, a "Forecast") based upon
Acquisition's sales projections for Champion Products.
(a) Each Forecast will contain a five (5) month and twelve (12) month
projection of volumes and delivery months to the Distribution Centers for
Acquisition Product, in each case commencing on the first day of each
Supplier Fiscal Month after the Supplier Fiscal Month in which the
applicable Forecast Date occurs. For purposes of this Agreement, a
"Supplier Fiscal Month" means any of the periods set forth on Exhibit D.
The five (5) month projections will be broken down in biweekly increments
and the twelve (12) month projections will be shown in monthly increments
(based upon the appropriate Supplier Fiscal Month) only. The five (5) month
projections will represent binding purchase commitments ("Orders") by
Acquisition for the volumes and delivery months identified therein. The
remaining seven (7) months or the twelve (12) month projections will
represent good faith estimates of anticipated volume requirements and
delivery months but shall be non-binding and used for planning purposes
only.
(b) Each Forecast and Order shall be subject to the following
requirements and conditions:
(i) Acquisition's requirements for any calendar month shall be no
less than (A) 300 dozens of any Lot, and (B) 80 dozens of any specific
size in a Lot. The term "Lot" means one style of Acquisition Product
in one color.
(ii) Supplier shall have no obligation to supply more than
400,000 dozens of Acquisition Product during the Term and the parties
agree that the amount of Acquisition Product which Acquisition shall
have the right to Order and which Supplier shall have the obligation
to fulfill at any time, and from time to time, during the Term shall
take into consideration constraints on Supplier's production, store
and shipping capacities and Supplier's obligations to other customers;
provided, however, that, so long as Acquisition has not materially
breached its obligations hereunder, Acquisition shall not be treated
any less favorably in terms of allocation of production, storage and
shipping capacities than the best of Supplier's customers who purchase
Champion Product from Supplier, but only with respect to Orders which
are contained in a timely delivered Forecast; provided, further, that
Supplier shall have no obligation to expand its existing capacity to
manufacture, store or ship product to satisfy its obligations pursuant
to this Agreement.
(c) The Forecast containing the projections for the five (5) month and
twelve (12) month periods commencing on the Effective Date is attached
hereto as Schedule I.
5. Prices; Payments.
----------------
(a) Acquisition shall pay to Supplier for Acquisition Products
Supplier's Standard Cost. For purposes of this Agreement, "Supplier's
Standard Cost" means, for each item of Acquisition Product which is shipped
to Acquisition during the Term, the standard cost to Supplier for such
product (including the cost of shipping such product to a Shipping
Facility) developed by Supplier for the fiscal year of Supplier during
which such shipment occurs. Supplier's Standard Cost shall be calculated in
each fiscal year in a manner consistent with the methodology which was used
by Supplier in calculating the standard cost for Acquisition Blank Product
(including the cost of shipping such product to a Shipping Facility) for
Acquisition's Fall 2001 merchandise (meaning merchandise intended for sale
by the Company's customers to consumers for the Fall 2001 season) as set
forth in the attached Exhibit E; it being agreed that the --------- pricing
listed in Exhibit E, which is for Supplier's 2001 fiscal year, shall not
apply to any --------- Acquisition Product other than for purposes of
determining the pricing methodology for Supplier's Standard Cost, and that
Supplier has disclosed to Acquisition that Supplier's Standard Cost for its
2002 fiscal year will be higher than that set forth in Exhibit E. Anything
to the contrary herein --------- notwithstanding, in no event shall
Supplier's Standard Cost for the 2002 fiscal year be more than five percent
(5%) higher, in the aggregate, than Supplier's standard cost for
Acquisition Blank Product for Acquisition's Fall 2001 merchandise.
(b) Notwithstanding the foregoing, Acquisition shall be entitled to a
discount of 24% from Supplier's Standard Cost for all of the Acquisition
Product commencing with the first item of Acquisition Product sold to
Acquisition until the sum of the Supplier's Standard Cost for each such
item of Acquisition Product, when added to the Fall 2001 Inventory Value
(as defined below), equals $5,000,000. For purposes of this Section 5(b),
"Fall 2001 Inventory Value" means the sum of the 2002 Standard Costs (as
that term is defined in the Fall 2001 Agreement), at the time of shipment
thereof, of all of the Remaining Fall 2001 Product (as that term is defined
in the Fall 2001 Agreement) and the amounts payable to Supplier pursuant to
Section 2.7 of the Fall 2001 Agreement.
(c) Acquisition or its representatives shall have the right, at
Acquisition's sole cost and expense, to examine Supplier's calculations of
Supplier's Standard Cost, together with Supplier's work papers supporting
such calculations, at such times as Acquisition may reasonably request (but
no more often than once every six months), provided that any such
examination shall be conducted in a manner which does not unduly disrupt or
interfere with Supplier's business.
(d) Supplier shall invoice Acquisition for all Acquisition Product,
F.O.B. Supplier's facility in El Paso, Texas, Laurel Hill, North Carolina,
or Perry, New York (each, a "Shipping Facility"), as designated by
Supplier. Invoices shall be issued upon shipment and are due and payable
within five (5) days after receipt of the applicable Acquisition Product at
the Distribution Center(s) designated in the applicable Purchase Order,
after which Acquisition shall pay interest on overdue amounts at a rate
equal to the lesser of 1.5% per month or the maximum rate permitted by
applicable law.
6. Shipping; Risk of Loss. Supplier shall ship all Acquisition Product to a
Distribution Center as directed by Acquisition in the applicable Purchase Order.
Risk of loss or damage to Acquisition Product shall remain with Supplier until
the same Acquisition Product is delivered to the appropriate carrier at a
Shipping Facility.
7. Force Majeure. Supplier shall be excused from performance under this
Agreement while and to the extent that such performance is prevented by an Act
of God, strike or other labor dispute, war or war condition, riot, civil
disorder, government regulation, embargo, fire, flood, accident or any other
casualty beyond the reasonable control of Supplier; provided, however, that
under no circumstances shall Supplier's obligations hereunder be excused
pursuant to this Section 7 in the event Supplier is able to supply products
generally, without similar interruption or constraint, to its other customers.
In the event that Supplier shall be unable to perform any of its obligations as
undertaken, it shall promptly advise Acquisition of its inability to perform.
8. Independent Contractor Relationship. The relationship which Supplier holds in
relation to Acquisition is that of an independent contractor. This Agreement is
not intended to create and shall not be construed as creating between Supplier
and Acquisition the relationship of principal and agent, joint venturers,
partners or any other similar relationship, the existence of which is hereby
expressly denied, nor shall Acquisition be considered in any sense an affiliate
or subsidiary of Supplier. Neither party shall have any authority to create or
assume in the other party's name or on its behalf any obligation, expressed or
implied, or to act or purport to act as the other party's agent or legally
empowered representative for any purpose whatsoever. Neither party shall be
liable to any third party in any way for any engagement, obligation, commitment,
contract, representation, transaction or act or omission to act of the other,
except as expressly provided herein.
9. Not a Requirements Contract. Acquisition acknowledges and agrees that this is
not a requirements contract, and nothing contained herein shall be deemed as
granting to Acquisition, and Acquisition is not hereby acquiring, any exclusive
rights with respect to the production of Acquisition Product.
10. Termination by Acquisition. Acquisition reserves and Supplier hereby agrees
that Acquisition shall have the right to immediately terminate this Agreement if
Supplier fails to perform or comply with any term or condition hereof and has
failed to cure such nonperformance or noncompliance within thirty (30) days
after receipt of written notice of such failure from Acquisition.
11. Termination by Supplier. Supplier reserves and Acquisition hereby agrees
that Supplier shall have the right to immediately terminate this Agreement under
the following circumstances:
(a) If Acquisition fails to make any payment due to Supplier hereunder
within five (5) days after such payment is due, unless the amount which
has not been paid is subject to a bona fide dispute between the
parties;
(b) If Acquisition fails to perform or comply with any term or condition
hereof and has failed to cure such nonperformance or noncompliance
within thirty (30) days after receipt of written notice of such failure
from Supplier; or
(c) At the time that Supplier has delivered 400,000 dozens of Acquisition
Product to Acquisition.
12. Limitations on Liability of Supplier. EXCEPT AS EXPRESSLY SET FORTH IN
SECTION 3, THE ACQUISITION PRODUCTS ARE BEING SOLD "AS IS" AND EXCEPT AS
EXPRESSLY SET FORTH IN SECTION 3, SUPPLIER MAKES NO REPRESENTATION OR WARRANTY,
WHATSOEVER, EXPRESS OR IMPLIED, RELATING TO THE ACQUISITION PRODUCTS. WITHOUT
LIMITING THE FOREGOING, SUPPLIER MAKES NO REPRESENTATION AS TO THE
MERCHANTABILITY, OR FITNESS FOR A PARTICULAR PURPOSE, OF ANY OF THE ACQUISITION
PRODUCTS OR OTHER REPRESENTATIONS OR WARRANTIES ARISING BY STATUTE OR OTHERWISE
IN LAW, FROM A COURSE OF DEALING OR USAGE OF TRADE. ALL SUCH OTHER
REPRESENTATIONS AND WARRANTIES ARE HEREBY EXPRESSLY DISCLAIMED BY SUPPLIER. IN
NO EVENT SHALL SUPPLIER BE LIABLE FOR ANY INCIDENTAL OR CONSEQUENTIAL LOSSES OR
DAMAGES, WHETHER FORESEEABLE OR NOT, WHETHER OCCASIONED BY ANY FAILURE TO
PERFORM OR THE BREACH OF ANY REPRESENTATION, WARRANTY, COVENANT OR OTHER
OBLIGATION UNDER THIS AGREEMENT FOR ANY CAUSE WHATSOEVER. NOTWITHSTANDING
ANYTHING CONTAINED IN THIS AGREEMENT TO THE CONTRARY, NO PARTY SHALL BE LIABLE
TO THE OTHER FOR ANY ACTS OR OMISSIONS WHICH ARE NOT THE RESULT OF SUCH PARTY'S
GROSS NEGLIGENCE, RECKLESSNESS OR WILLFUL MISCONDUCT; PROVIDED THAT THIS
PROVISION SHALL NOT APPLY TO INTENTIONAL ACTS OR OMISSIONS OR FAILURE TO MAKE
PAYMENTS WHEN DUE.
13. Survival. The provisions of Sections 3, 5, 6, 8 and 12 through 24 shall
survive any termination of this Agreement or expiration of the Term.
14. Notices. All notices and other communications required or permitted to be
made under this Agreement shall be in writing and shall be deemed duly given for
all purposes (a) on the date of delivery, if delivered personally or by
confirmed telecopier transmission, (b) on the next business day after delivery
by a recognized overnight carrier, or (c) on the third business day after
mailing, if sent by United States registered mail, return receipt requested,
postage-prepaid, and addressed as follows (or at such other address as any party
shall provide to the other parties by notice given pursuant to this Section 14):
If to Supplier:
--------------
Xxxx Xxx Corporation
Three First Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Senior Vice President,
Secretary and General Counsel
Fax No.: 000-000-0000
If to GFSI, CCP or Acquisition:
CC Products, Inc.
c/o GFSI, Inc.
0000 Xxxxxxxx Xxxxxxx
Xxxxxx, Xxxxxx, 00000
Attention: Xxxxx Xxxxxxxx
Fax No.: 000-000-0000
15. Amendments; Waivers. Any provision of this Agreement may be amended or
waived if, and only if, such amendment or waiver is in writing and is duly
executed, in the case of an amendment, by Acquisition and Supplier, or, in the
case of a waiver, by the party against whom the waiver is to be enforced. No
failure or delay by any party in exercising any right, power or privilege under
this Agreement shall operate as a waiver thereof nor shall any single or partial
waiver or exercise thereof preclude the enforcement of any other right, power or
privilege.
16. Joint and Several Liability. The obligations of Acquisition contained in
this Agreement shall be the joint and several obligations of Acquisition, CCP
and GFSI.
17. Successors and Assigns. This Agreement shall be binding upon and inure to
the benefit of the parties and their respective successors and permitted
assigns. No party may assign or delegate or otherwise transfer any of its rights
or obligations hereunder without the prior written consent of the other party,
except that (a) Acquisition may (i) assign its rights under this Agreement to
GFSI or a wholly owned subsidiary of GFSI, and (ii) assign its rights under this
Agreement to any Person (other than a competitor of Supplier as determined by
Supplier in good faith) who acquires (whether by acquisition of stock or assets,
merger, consolidation, recapitalization or otherwise) the Business and
substantially all of the other assets and liabilities of GFSI and its
subsidiaries, it being agreed, however, that in each case no such assignment
shall relieve Acquisition, CCP or GFSI of its obligations hereunder and, upon
any such assignment, without any further action by any of the parties, all
obligations of Acquisition, CCP and GFSI hereunder shall be the joint and
several obligations of Acquisition, CCP, GFSI and such assignee, and (b)
Supplier may assign its rights under this Agreement to any Subsidiary, it being
agreed, however, that no such assignment shall relieve Supplier of its
obligations hereunder and, upon any such assignment, without any further action
by any of the parties, all obligations of Supplier hereunder shall be the joint
and several obligations of Supplier and such assignee. The term "Subsidiary"
means any entity of which Supplier directly or indirectly owns shares of capital
stock, membership interests or other interests having in the aggregate more than
50% of the total combined voting power of such entity or the power to direct
management or policy.
18. Construction; Interpretation; Certain Terms. The headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. Article, Section, Attachment and
party references are to this Agreement unless otherwise stated. The words
"hereof," "herein," "hereunder" and words of similar import shall refer to this
Agreement as a whole and not to any particular Section or provision of this
Agreement, and reference to a particular Section of this Agreement shall include
all subsections thereof. No party, nor its counsel, shall be deemed to have
drafted this Agreement for purposes of construing the provisions of this
Agreement, and all provisions of this Agreement shall be construed in accordance
with their fair meaning, and not strictly for or against any party. The term
"including" as used in this Agreement shall mean including, without limitation,
and shall not be deemed to indicate an exhaustive enumeration of the items at
issue.
19. Severability. Any term or provision of this Agreement that is or becomes
invalid or unenforceable shall be ineffective to the extent of such invalidity
or unenforceability without rendering invalid or unenforceable the remaining
terms or provisions of this Agreement.
20. Counterparts. This Agreement may be executed in any number of counterparts,
each of which shall constitute an original and all of which together shall
constitute one and the same instrument.
21. Entire Agreement. This Agreement, together with the Exhibits and Schedule
hereto, constitutes the entire agreement among the parties pertaining to the
subject matter hereof and supersedes all prior and contemporaneous, oral and
written, agreements and understandings pertaining thereto.
22. Governing Law; Consent to Jurisdiction; Venue. This Agreement shall be
governed by and construed in accordance with the laws of the State of Illinois,
without giving effect to conflict of law principles. Each party hereto hereby
agrees that any proceeding relating to this Agreement and the transactions
contemplated hereby shall be brought solely in the state or federal court
located in Chicago, Illinois. Each party hereto hereby consents to personal
jurisdiction in any such action brought in any such state or federal court,
consents to service of process by registered mail made upon such party, waives
any objection to venue in any such state or federal court and any claim that any
such state or federal court is an inconvenient forum.
23. Third-Party Beneficiaries. Nothing herein expressed or implied is intended
to or shall be construed to confer upon or give any person or entity, other than
the parties hereto and their respective successors and permitted assigns, any
rights or remedies under or by reason of this Agreement.
24. Incorporation of Certain Remedies. The provisions of Article VIII of the
Purchase Agreement are hereby incorporated into this Agreement by this reference
as though fully set forth herein.
25. WAIVERS OF TRIAL BY JURY. SUPPLIER AND ACQUISITION HEREBY IRREVOCABLY WAIVE
ANY AND ALL RIGHTS TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR
RELATING TO THIS AGREEMENT, AND CONSENT TO THE GRANTING OF SUCH LEGAL OR
EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY THE COURT.
The parties hereto have caused this Supply Agreement to be duly
executed as of the day and year first above written.
XXXX XXX CORPORATION
By: /s/ Xxxxxxx Xxxxxxxx
--------------------------------------
Name: Xxxxxxx Xxxxxxxx
----------------------------------
Title: Vice President
---------------------------------
GFSI, INC., d/b/a Gear For Sports
By: /s/ Xxxxx Xxxxxxx
------------------------------------
Name: Xxxxx Xxxxxxx
----------------------------------
Title: President, COO
---------------------------------
CC PRODUCTS, INC.
By: /s/ Xxxxx Xxxxxxx
------------------------------------
Name: Xxxxx Xxxxxxx
----------------------------------
Title: President, COO
---------------------------------
CCP ACQUISITION, INC. f/k/a CHAMPION
PRODUCTS, INC.
By: /s/ Xxxxxxxxx XxXxxxx
--------------------------------------
Name: Xxxxxxxxx XxXxxxx
------------------------------------
Title: Vice President
------------------------------------
EXHIBIT 10.22
FALL 2001 MERCHANDISE AGREEMENT
This Fall 2001 Merchandise Agreement ("Agreement"), dated June 25, 2001
(the "Effective Date"), by and among Xxxx Xxx Corporation, a Maryland
corporation ("Supplier"), GFSI, Inc., d/b/a Gear For Sports, a Delaware
corporation ("GFSI"), CC Products, Inc., a Delaware corporation ("CCP"), and CCP
Acquisition, Inc., a New York corporation formerly known as Champion Products,
Inc. ("Acquisition").
RECITALS:
A. CCP is a wholly-owned subsidiary of GFSI. On the Effective Date, CCP
acquired from Supplier all of the issued and outstanding capital stock of
Acquisition pursuant to that certain Stock Purchase Agreement, dated April 20,
2001 (the "Purchase Agreement"), among Supplier, Acquisition and GFSI. Any
capitalized terms used in this Agreement which are not defined herein shall have
the respective meanings assigned to them in the Purchase Agreement.
B. To assist with the successful transfer of the Business to CCP, Supplier
is willing to supply to Acquisition certain Fall 2001 Product (as that term is
defined below) and Services (as that term is defined below), in each case on the
terms and conditions contained herein.
A G R E E M E N T
NOW, THEREFORE, in consideration of the mutual representations, warranties
and covenants hereinafter set forth, the parties hereto agree as follows:
ARTICLE I.
SUPPLY ARRANGEMENTS
1.1. Supply of Fall 2001 Product. During the Term, Supplier shall sell to
Acquisition, and Acquisition shall purchase from Seller, the Branded Products
and Blank Products set forth in Schedule 1 and any Inventory which is excluded
from Closing Inventory due to the proviso of the definition of Closing Inventory
(such Branded Product and Blank Product being purchased by Acquisition being
called "Fall 2001 Product") at the times set forth in Schedule 1. The parties
acknowledge that the Fall 2001 Product includes the Fall 2001 Inventory.
1.2. Specifications; Quality Standards. All Fall 2001 Product will be
produced in accordance with Acquisition's specifications for Branded Product and
Blank Product as in existence on the Effective Date. Except as provided in the
last sentence of Section 1.3, all Fall 2001 Product will be packed in accordance
with the terms set forth on Schedule 2. All Fall 2001 Product will be inspected
by Supplier as per Supplier's current AQL standards of 5% average as described
in the attached Schedule 3. Acquisition's exclusive remedy for any Fall 2001
Product which does not meet the specifications described above for Branded
Product or Blank Product or is otherwise not in compliance with Schedule 1 shall
be as set forth in Schedule 3. EXCEPT AS EXPRESSLY SET FORTH IN THIS SECTION
1.2, THE FALL 2001 PRODUCT IS BEING SOLD "AS IS" AND EXCEPT AS EXPRESSLY SET
FORTH IN THIS SECTION 1.2, SUPPLIER MAKES NO REPRESENTATION OR WARRANTY,
WHATSOEVER, EXPRESS OR IMPLIED, RELATING TO THE FALL 2001 PRODUCT. WITHOUT
LIMITING THE FOREGOING, SUPPLIER MAKES NO REPRESENTATION AS TO THE
MERCHANTABILITY, OR FITNESS FOR A PARTICULAR PURPOSE, OF ANY OF THE FALL 2001
PRODUCT OR OTHER REPRESENTATIONS OR WARRANTIES ARISING BY STATUTE OR OTHERWISE
IN LAW, FROM A COURSE OF DEALING OR USAGE OF TRADE. ALL SUCH OTHER
REPRESENTATIONS AND WARRANTIES ARE HEREBY EXPRESSLY DISCLAIMED BY SUPPLIER.
1.3. Prices; Payments. Acquisition shall pay to Supplier for Fall 2001
Product sold to Acquisition pursuant to this Agreement, (i) 90.625% of 2001
Standard Cost for the Preliminary Fall 2001 Product, and (ii) 76.000% of 2002
Standard Cost for the remainder of the Fall 2001 Product (the "Remaining Fall
2001 Product"). For purposes of this Agreement, the following definitions shall
apply:
(a) "Preliminary Fall 2001 Product" means all of the Fall 2001
Product commencing with the first item of Fall 2001 Product sold to
Acquisition under this Agreement until the sum of the 2001 Standard
Cost for each such item of Fall 2001 Product, when added to the
Purchased Inventory Value (as defined below), equals $8,000,000.
(b) "2001 Standard Cost" means, for each item of Preliminary Fall
2001 Product, the value set forth for such item on Schedule 1.
(c) "Purchased Inventory Value" means the remainder obtained by
subtracting $158,000 from the Purchase Price and then multiplying such
remainder by 1.1035.
(d) "2002 Standard Cost" means for each item of Remaining Fall
2001 Product, the standard cost to Supplier for such product developed
by Supplier for its 2002 fiscal year. 2002 Standard Cost shall be
calculated consistent with the same methodology which was used by
Supplier in calculating the 2001 Standard Cost as set forth in the
attached Schedule 1. Anything to the contrary herein notwithstanding,
in no event shall 2001 Standard Cost be more than five percent (5%)
higher, in the aggregate, than 2001 Standard Cost.
Fall 2001 Product shipped to Acquisition, or at the direction of Acquisition, to
customers of Acquisition, pursuant to this Agreement shall be shipped F.O.B. El
Paso, Texas, Laurel Hill, North Carolina, or Perry, New York (each being called
a "Shipping Facility"), as designated by Supplier, it being agreed that all
costs of freight and shipping shall be at Acquisition's sole cost and expense
and that risk of loss shall pass to Acquisition once Fall 2001 Product is
removed from a Shipping Facility. Acquisition shall advise Supplier of
Acquisition's arrangement for the shipment of Fall 2001 Product under this
Agreement and if Fall 2001 Product is not picked up in a timely manner, Supplier
may ship Fall 2001 Product on a freight collect or other basis, as Supplier
determines. If Supplier incurs any shipping costs which are the responsibility
of Acquisition under this Section 1.3, Acquisition shall promptly upon demand
therefor reimburse Supplier for such costs. Supplier shall issue invoices to
Acquisition for all Fall 2001 Product upon shipment and such invoices shall be
due and payable sixty calendar days after such shipment, after which Acquisition
shall pay interest on overdue amounts at a rate equal to the lesser or 1.5% per
month or the maximum rate permitted by applicable law. If Acquisition requests
that any of the Fall 2001 Product be packed in a manner other than as provided
in Schedule 2, Acquisition shall, promptly upon Supplier's demand, reimburse
Supplier for the amount by which the direct and indirect costs actually incurred
by Supplier in packing such Fall 2001 Product in such manner exceeds the amount
of direct and indirect costs which Supplier would have incurred had such Fall
2001 Product been packed in the manner provided in Schedule 2.
1.4. Not a Requirements Contract. Acquisition acknowledges and agrees that
this is not a requirements contract, and nothing contained herein shall be
deemed as granting to Acquisition, and Acquisition is not hereby acquiring, any
exclusive rights with respect to the production of Branded Product or Blank
Product.
ARTICLE II.
THE SERVICES
2.1. Retention of Supplier. Acquisition hereby retains Supplier, and
Supplier hereby accepts such retention, to provide to Acquisition during the
Term, solely as an agent of Acquisition, the Services. At the Closing, Supplier
shall retain possession of such of the Design Assets and Sales and Product Data
as Supplier and Acquisition reasonably determine that Supplier will require to
perform the Services (all of such Design Assets and Sales and Product Data
retained by Supplier pursuant to this Section 2.1, the "Retained Assets").
2.2. The Services. At the Closing, Supplier shall retain possession of the
portions of the Closing Inventory as mutually agreed by Supplier and Acquisition
(collectively, the "Retained Product" and, together with the Fall 2001 Product,
the "Services Product"). The Services Product shall include both Blank Product
and Branded Product. Supplier shall, at its sole cost and expense, perform the
following services (collectively, the "Services") with respect to the Services
Product, in each case as provided in Schedule 4:
(a) Cause Blank Product which is part of the Services Products to
be attributed with decorations (such Blank Product after being
attributed, the "Attributed Product");
(b) Store all Services Product;
(c) Cause all of the Retained Product to be clearly marked and
identified as being the property of Acquisition; and
(d) Ship to Acquisition at its distribution centers in the United
States, or, as directed by Acquisition, to customers of Acquisition,
(i) the Attributed Product and (ii) the Branded Product which is part
of the Fall 2001 Product.
Supplier shall perform the Services in compliance with Acquisition's
specifications as in existence on the Effective Date (the "Acquisition
Specifications").
2.3. Insurance. Supplier shall, at its cost, procure and maintain
throughout the Term hereof:
(a) Worker's Compensation Insurance providing statutory benefits
and Employer's Liability Insurance with limits of not less than One
Million US Dollars ($1,000,000.00);
(b) Commercial General Liability Insurance including Contractual
Liability, Fire Legal Liability and Product Liability Coverages (with
an endorsement naming Acquisition and its affiliates as additional
insureds) with Bodily Injury and Property Damage Limits of not less
than Ten Million US Dollars ($10,000,000.00) per occurrence;
(c) "All Risk" Property Insurance including flood, earthquake,
and inland transit (with an endorsement naming Acquisition and its
affiliates as loss payee), covering any property of Acquisition that
is under Supplier's care, custody and control including all of the
Retained Product and Retained Assets. Such policy shall be valued at
the replacement cost for such Acquisition property.
Supplier shall submit policies and/or certificates of insurance evidencing the
above coverages (which shall include an agreement by the insurer not to cancel
or materially alter its coverage except upon thirty (30) days prior written
notice to Acquisition) to Acquisition before entering into performance of this
Agreement. The coverages provided by Supplier hereunder shall be primary and
non-contributing with any similar insurance which may be maintained or provided
by Acquisition, and any certificate furnished by Supplier shall be endorsed to
so state.
2.4. Confidential and Proprietary Information. The Acquisition IP is
proprietary information of Acquisition, and shall not be used by Supplier except
in connection with the performance of the Services hereunder. The term
"Acquisition IP" means the Design Assets and Acquisition's rights and interests
under the Design License Agreements.
2.5. Trademarks and Trade Names. Supplier agrees that, as between Supplier
and Acquisition, all of the Acquisition IP to be used by Supplier in the
performance of the Services is the sole and exclusive property of Acquisition.
Nothing in this Agreement shall give or is intended to give Supplier any right,
title or interest in or to any of the Acquisition IP or the good will associated
with any of the Acquisition IP, except the right to use the same in accordance
with the terms and conditions of this Agreement. Supplier shall not contest the
validity or ownership of any of the Acquisition IP or assist others in
contesting the validity or ownership of any of the Acquisition IP.
2.6. Ownership of Retained Product. Acquisition shall be the sole and
exclusive owner of all of the Retained Product and Supplier shall have no right,
title or interest of any kind in any Retained Product, other than the rights
expressly provided in this Agreement.
2.7. Compensation of Supplier. Acquisition shall pay to Supplier, as
compensation for the Services, the amounts set forth on Schedule 4 upon
Acquisition's receipt of Supplier's invoice therefor, after which Acquisition
shall be obligated to pay to Supplier interest on overdue amounts at a rate
equal to the lesser or 1.5% per month or the maximum rate permitted by
applicable law. In addition,
(a) For each shipment of any portion of the Fall 2001 Product
which Acquisition directs Supplier to ship directly to a customer of
Acquisition, Acquisition shall, promptly upon Supplier's demand, pay
to Supplier a distribution fee for handling and picking such items of
Fall 2001 Product equal to $2.45 for each dozen (or partial dozen) of
such items so shipped.
(b) If Supplier is required to develop any acetates to enable it
to perform the Services, Acquisition shall, promptly upon Supplier's
demand, pay to Supplier an acetate development fee equal to $2.55 for
each acetate so developed.
2.8. Key-in Services. During the period from the Effective Date through
August 3, 2001, Supplier shall provide, at a location or locations determined by
Supplier in its sole discretion, key-in services in connection with all orders
placed during such time period by customers of Acquisition which it directs to
Supplier. On the Effective Date, Acquisition shall pay to Supplier $17,604.71,
by wire transfer of immediately available funds, as compensation for Supplier
providing such services.
2.9. Graphic Arts Personnel. During the period from the Effective Date
through August 3, 2001, Supplier shall provide to Acquisition, at a location or
locations determined by Supplier in its sole discretion, the services of two
Production Artists, one Art Clerk, one Art Matrix Clerk and one Manager for the
portions of their work times as set forth on the attached Schedule 5 to service
orders placed during such time period by customers of Acquisition. On the
Effective Date, Acquisition shall pay to Supplier $18,374.00, by wire transfer
of immediately available funds, as compensation for Supplier providing such the
services of such graphic arts personnel. If, during the time period ending on
August 3, 2001, the services of additional graphic arts personnel are required
to service such customers of Acquisition, Supplier shall use commercially
reasonable efforts to obtain for Acquisition the use of such additional
personnel from sources other than Supplier and its Affiliates, and Acquisition
shall, promptly upon Supplier's demand, reimburse Supplier for all of the direct
and indirect costs incurred by Supplier in obtaining the use of such additional
personnel for Acquisition.
ARTICLE III.
TERM AND TERMINATION
3.1. Term. This Agreement shall become effective on the Effective Date,
and, subject to Sections 3.2 and 3.3, shall continue in effect for a term (the
"Term") ending on the first to occur of (a) the date that Acquisition has
purchased from Supplier all of the Fall 2001 Product, or (b) the date that
Acquisition has purchased from Supplier Remaining Fall 2001 Product, the value
of such Remaining Fall 2001 Product at 2002 Standard Costs, when added to the
sum of the 2001 Standard Costs of the Preliminary Fall 2001 Product and the
Purchased Inventory Value, equals $13,000,000.
3.2. Termination by Acquisition. Acquisition reserves and Supplier hereby
agrees that Acquisition shall have the right to immediately terminate this
Agreement if Supplier fails to perform or comply with any term or condition
hereof or under the Purchase Agreement or the Champion License and has failed to
cure such nonperformance or noncompliance within thirty (30) days after receipt
of written notice of such failure from Acquisition.
3.3. Termination by Supplier. Supplier reserves and Acquisition hereby
agrees that Supplier shall have the right to immediately terminate this
Agreement under the following circumstances:
(a) If Acquisition fails to make any payment due to Supplier
hereunder or under the Purchase Agreement or the Champion License
within five (5) days after such payment is due, unless the amount
which has not been paid is subject to a bona fide dispute between the
parties; or
(b) If Acquisition fails to perform or comply with any term or
condition hereof or under the Purchase Agreement or the Champion
License and has failed to cure such nonperformance or noncompliance
within thirty (30) days after receipt of written notice of such
failure from Supplier.
3.4. Effect of Termination. Upon any termination of this Agreement
(a) Acquisition shall, within five days after the date of such
termination, pay to Supplier all amounts which it would have paid to
Supplier hereunder assuming that (i) Supplier had performed all of the
Services, and (ii) all invoices are due and payable on the earlier of
(A) sixty calendar days after issuance, or (B) five days after the
date of such termination; and
(b) Supplier shall, no later than the later of (i) 30 calendar
days after the date of such termination, or (ii) 25 calendar days
after Acquisition pays to Supplier all amounts owed to Supplier
pursuant to Section 3.4(a), at the sole cost and expense of
Acquisition, ship all of the Services Product and Retained Assets then
in the possession or custody of Supplier to Acquisition or to such
other location as Acquisition directs Supplier in a written direction
delivered to Supplier no later than five days after the date of such
termination.
3.5. Survival. The provisions of Sections 1.3, 2.3 through 2.7 and 3.4 and
Article IV shall survive any termination of this Agreement or expiration of the
Term.
ARTICLE IV.
MISCELLANEOUS
4.1. Independent Contractor Relationship. The relationship which
Acquisition holds as to Supplier is that of an independent contractor. This
Agreement is not intended to create and shall not be construed as creating
between Acquisition and Supplier the relationship of principal and agent, joint
venturers, partners or any other similar relationship, the existence of which is
hereby expressly denied, nor shall Supplier be considered in any sense an
Affiliate or subsidiary of Acquisition. Neither party shall have any authority
to create or assume in the other party's name or on its behalf any obligation,
expressed or implied, or to act or purport to act as the other party's agent or
legally empowered representative for any purpose whatsoever. Neither party shall
be liable to any third party in any way for any engagement, obligation,
commitment, contract, representation, transaction or act or omission to act of
the other, except as expressly provided herein.
4.2. Force Majeure. Supplier shall be excused from performance under this
Agreement while and to the extent that such performance is prevented by an Act
of God, strike or other labor dispute, war or war condition, riot, civil
disorder, government regulation, embargo, fire, flood, accident or any other
casualty beyond the reasonable control of Supplier; provided, however, that
under no circumstances shall Supplier's obligations hereunder be excused
pursuant to this Section 4.2 in the event Supplier is able to supply products
generally, without similar interruption or constraint, to its other customers.
In the event that Supplier shall be unable to perform any of its obligations as
undertaken, it shall promptly advise Acquisition of its inability to perform.
4.3. Notices. All notices and other communications required or permitted to
be made under this Agreement shall be in writing and shall be deemed duly given
for all purposes (a) on the date of delivery, if delivered personally or by
confirmed telecopier transmission, (b) on the next business day after delivery
by a recognized overnight carrier, or (c) on the third business day after
mailing, if sent by United States registered mail, return receipt requested,
postage-prepaid, and addressed as follows (or at such other address as any party
shall provide to the other parties by notice given pursuant to this Section
10.1):
If to Supplier:
--------------
Xxxx Xxx Corporation
Three First Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Senior Vice President,
Secretary and General Counsel
Fax No.: 000-000-0000
If to Acquisition, CCP or GFSI:
GFSI, Inc.
0000 Xxxxxxxx Xxxxxxx
Xxxxxx, Xxxxxx 00000
Attention: Xxxxx Xxxxxxxx, Chief Financial Officer
Fax No.: 000-000-0000
with a copy to:
Xxxxx, Xxxxx & Xxxxx
000 Xxxxxxx Xxxxxx
Xxxx Xxxx, Xxxxxxxxxx 00000-0000
Attention: Xxxxxx X. Xxxxxxx
Fax No.: 000-000-0000
4.4. Amendments; Waivers. Any provision of this Agreement may be amended or
waived if, and only if, such amendment or waiver is in writing and is duly
executed, in the case of an amendment, by Supplier and Acquisition, or, in the
case of a waiver, by the party against whom the waiver is to be enforced. No
failure or delay by any party in exercising any right, power or privilege under
this Agreement shall operate as a waiver thereof nor shall any single or partial
waiver or exercise thereof preclude the enforcement of any other right, power or
privilege.
4.5. Joint and Several Liability. The obligations of Acquisition contained
in this Agreement shall be the joint and several obligations of Acquisition, CCP
and GFSI.
4.6. Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of the parties and their respective successors and permitted
assigns. No party may assign or delegate or otherwise transfer any of its rights
or obligations hereunder without the prior written consent of the other party,
except that (a) Acquisition may (i) assign its rights under this Agreement to
GFSI or a wholly owned subsidiary of GFSI, and (ii) assign its rights under this
Agreement to any Person (other than a competitor of Supplier as determined by
Supplier in good faith) who acquires (whether by acquisition of stock or assets,
merger, consolidation, recapitalization or otherwise) the Business and
substantially all of the other assets and liabilities of GFSI and its
subsidiaries, it being agreed, however, that in each case no such assignment
shall relieve Acquisition, CCP or GFSI of its obligations hereunder and, upon
any such assignment, without any further action by any of the parties, all
obligations of Acquisition, CCP and GFSI hereunder shall be the joint and
several obligations of Acquisition, CCP, GFSI and such assignee, and (b)
Supplier may assign its rights under this Agreement to any Subsidiary, it being
agreed, however, that no such assignment shall relieve Supplier of its
obligations hereunder and, upon any such assignment, without any further action
by any of the parties, all obligations of Supplier hereunder shall be the joint
and several obligations of Supplier and such assignee. The term "Subsidiary"
means any entity of which Supplier directly or indirectly owns shares of capital
stock, membership interests or other interests having in the aggregate more than
50% of the total combined voting power of such entity or the power to direct
management or policy.
4.7. Construction; Interpretation; Certain Terms. The headings contained in
this Agreement are for reference purposes only and shall not affect in any way
the meaning or interpretation of this Agreement. Article, Section, Attachment
and party references are to this Agreement unless otherwise stated. The words
"hereof," "herein," "hereunder" and words of similar import shall refer to this
Agreement as a whole and not to any particular Section or provision of this
Agreement, and reference to a particular Section of this Agreement shall include
all subsections thereof. No party, nor its counsel, shall be deemed to have
drafted this Agreement for purposes of construing the provisions of this
Agreement, and all provisions of this Agreement shall be construed in accordance
with their fair meaning, and not strictly for or against any party. The term
"including" as used in this Agreement shall mean including, without limitation,
and shall not be deemed to indicate an exhaustive enumeration of the items at
issue.
4.8. Severability. Any term or provision of this Agreement that is or
becomes invalid or unenforceable shall be ineffective to the extent of such
invalidity or unenforceability without rendering invalid or unenforceable the
remaining terms or provisions of this Agreement.
4.9. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall constitute an original and all of which
together shall constitute one and the same instrument.
4.10. Entire Agreement. This Agreement, together with the Schedule hereto,
constitutes the entire agreement among the parties pertaining to the subject
matter hereof and supersedes all prior and contemporaneous, oral and written,
agreements and understandings pertaining thereto.
4.11. Governing Law; Consent to Jurisdiction; Venue. This Agreement shall
be governed by and construed in accordance with the laws of the State of
Illinois, without giving effect to conflict of law principles. Each party hereto
hereby agrees that any proceeding relating to this Agreement and the
transactions contemplated hereby shall be brought solely in the state or federal
court located in Chicago, Illinois. Each party hereto hereby consents to
personal jurisdiction in any such action brought in any such state or federal
court, consents to service of process by registered mail made upon such party,
waives any objection to venue in any such state or federal court and any claim
that any such state or federal court is an inconvenient forum.
4.12. Third-Party Beneficiaries. Nothing herein expressed or implied is
intended to or shall be construed to confer upon or give any person or entity,
other than the parties hereto and their respective successors and permitted
assigns, any rights or remedies under or by reason of this Agreement.
4.13. LIMITATIONS ON LIABILITY. IN NO EVENT SHALL SUPPLIER BE LIABLE FOR
ANY INCIDENTAL OR CONSEQUENTIAL LOSSES OR DAMAGES, WHETHER FORESEEABLE OR NOT,
WHETHER OCCASIONED BY ANY FAILURE TO PERFORM OR THE BREACH OF ANY
REPRESENTATION, WARRANTY, COVENANT OR OTHER OBLIGATION UNDER THIS AGREEMENT FOR
ANY CAUSE WHATSOEVER. NOTWITHSTANDING ANYTHING CONTAINED IN THIS AGREEMENT TO
THE CONTRARY, NO PARTY SHALL BE LIABLE TO THE OTHER FOR ANY ACTS OR OMISSIONS
WHICH ARE NOT THE RESULT OF SUCH PARTY'S GROSS NEGLIGENCE, RECKLESSNESS OR
WILLFUL MISCONDUCT; PROVIDED THAT THIS PROVISION SHALL NOT APPLY TO INTENTIONAL
ACTS OR OMISSIONS OR FAILURE TO MAKE PAYMENTS WHEN DUE.
4.14. Incorporation of Certain Remedies. The provisions of Article VIII of
the Purchase Agreement are hereby incorporated into this Agreement by this
reference as though fully set forth herein.
4.15. WAIVERS OF TRIAL BY JURY. SUPPLIER AND ACQUISITION HEREBY IRREVOCABLY
WAIVE ANY AND ALL RIGHTS TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF
OR RELATING TO THIS AGREEMENT, AND CONSENT TO THE GRANTING OF SUCH LEGAL OR
EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY THE COURT.
(SIGNATURES ON NEXT PAGE)
The parties hereto have caused this Fall 2001 Merchandise Agreement to be
duly executed as of the day and year first above written.
XXXX XXX CORPORATION
By: /s/ Xxxxxxx Xxxxxxxx
--------------------------------------
Name: Xxxxxxx Xxxxxxxx
----------------------------------
Title: Vice President
---------------------------------
GFSI, INC., d/b/a Gear For Sports
By: /s/ Xxxxx Xxxxxxx
------------------------------------
Name: Xxxxx Xxxxxxx
----------------------------------
Title: President, COO
---------------------------------
CC PRODUCTS, INC.
By: /s/ Xxxxx Xxxxxxx
------------------------------------
Name: Xxxxx Xxxxxxx
----------------------------------
Title: President, COO
---------------------------------
CCP ACQUISITION, INC. f/k/a CHAMPION
PRODUCTS, INC.
By: /s/ Xxxxxxxxx XxXxxxx
--------------------------------------
Name: Xxxxxxxxx XxXxxxx
------------------------------------
Title: Vice President
------------------------------------
EXHIBIT 2.4
FIRST AMENDMENT TO
STOCK PURCHASE AGREEMENT
------------------------
THIS FIRST AMENDMENT TO STOCK PURCHASE AGREEMENT (this "First Amendment")
is entered into on this 25th day of June, 2001, by and among Xxxx Xxx
Corporation, a Maryland corporation ("Seller"), Champion Products, Inc., a New
York corporation (the "Company"), and GFSI, Inc., d/b/a GEAR For Sports, a
Delaware corporation ("Buyer").
RECITALS
A. Seller, the Company and Buyer are parties to that certain Stock Purchase
Agreement, dated as of April 20, 2001 (the "Original Agreement"), pursuant to
which Buyer is, among other things, acquiring from Seller 100% of the issued and
outstanding shares of common stock of the Company, $1.00 par value per share.
All capitalized terms used in this First Amendment which are not defined herein
shall have the respective meanings assigned to them in the Original Agreement.
B. Seller, the Company and Buyer desire to amend the Original Agreement as
provided in this First Amendment.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual promises and other
consideration contained in this Agreement, the delivery and sufficiency of which
is acknowledged, the parties agree as follows:
1. PURCHASE PRICE. Section 2.3 of the Original Agreement is amended, to
read in its entirety, as follows:
2.3 Purchase Price. The aggregate purchase price to be paid by Buyer
for the Shares shall be the sum of $7,408,000.00 less the Inventory
Adjustment Amount, if any (said sum being called the "Purchase
Price"). The Purchase Price shall be paid to Seller as follows: (i)
$2,250,000.00 in cash (U.S. dollars) at Closing by wire transfer of
same day funds as set forth in Schedule 2.3, (ii) $2,000,000.00 in
cash (U.S. dollars) on or before August 1, 2001 by wire transfer of
same day funds as set forth in Schedule 2.3, (iii) $1,625,000.00 in
cash (U.S. dollars) on or before September 1, 2001 by wire transfer of
same day funds as set forth in Schedule 2.3, and (iv) the balance of
the Purchase Price in cash (U.S. dollars) on or before October 1, 2001
by wire transfer of same day funds as set forth in Schedule 2.3.
2. CLOSING INVENTORY REDUCTION. Section 2.9(b) of the Original Agreement is
amended, to read in its entirety, as follows:
(b) As used herein, the term "Closing Inventory Reduction" means
90.625% of the amount, if any, by which the Closing Inventory Value
exceeds the aggregate value (as determined in accordance with Schedule
2.7(a)) of the Shipped Inventory. Shipped Inventory shall be valued as
provided in Schedule 2.7(a), and any Irregular Inventory which
constitutes Excessive Irregular Inventory and which is part of the
Shipped Inventory shall be valued as agreed upon by Seller and Buyer.
If the parties are unable to reach agreement within thirty days of
such Inventory being received by Buyer (or, in the case of such
Inventory which is shipped by Seller directly to a customer of Buyer,
by such customer), then such Excessive Irregular Inventory shall be
valued at zero and the Company shall ship such Excessive Irregular
Inventory at such times and to such destinations as directed by Seller
from time to time at Seller's cost, it being agreed that the Company
shall store such Excessive Irregular Inventory, on Seller's behalf, at
no charge for up to 180 days until Seller provides such direction;
provided that Buyer and Seller shall review with one another on a
monthly basis the quantity and any related issues pertaining to
storage of such Excessive Irregular Inventory. Inventory shall
conclusively be deemed "Shipped Inventory" to the extent such
Inventory is reflected on the bills of lading or other shipping
documents prepared by Seller and accompanying such shipment, and shall
be valued as provided therein, unless, within five business days of
receipt by Buyer (or, in the case of such Inventory which is shipped
by Seller directly to a customer of Buyer, within twenty business days
of receipt by such customer), Seller receives written notice
containing a detailed explanation of Buyer's objection to the Shipped
Inventory. Buyer shall be entitled to object to such list or valuation
only to the extent (a) mathematical errors exist in the list or
valuation, or (b) Excessive Irregular Inventory is included in such
shipment, or (c) merchandise is shipped to Buyer (or, in the case of
such Inventory which is shipped by Seller directly to a customer of
Buyer, to such customer), but is not reflected on the Closing
Inventory Statement. If Buyer objects to Shipped Inventory in
accordance with the provisions of this Section, the parties, in good
faith, shall promptly attempt to resolve such dispute and, where
applicable, make any necessary adjustments to the aggregate value of
the Shipped Inventory.
3. SHIPPING AND SHIPPING COSTS. Section 2.10 of the Original Agreement is
amended, to read in its entirety, as follows:
2.10 Shipping and Shipping Costs. Inventory shipped to Buyer (or, at
the direction of Buyer to any customer of Buyer) pursuant to this
Agreement, whether before or after Closing, shall be shipped F.O.B.
Seller's designated Shipping Facility, it being agreed that all costs
of freight and shipping shall be at Buyer's sole cost and expense and
that risk of loss shall pass to Buyer once Inventory is removed from a
Shipping Facility. Similarly, Buyer shall be responsible for the cost
of freight and shipment (but not packaging for shipment) of all Design
Assets referred to in Section 4.10(c)(iii). Buyer shall advise Seller
of Buyer's arrangement for the shipment of Inventory under this
Agreement and if Inventory is not picked up in a timely manner, Seller
may ship Inventory on a freight collect or other basis, as Seller
determines. If Seller incurs any shipping costs which are the
responsibility of Buyer under this Section 2.10, Buyer shall promptly
upon demand therefor reimburse Seller for such costs.
4. NONSTANDARD PACKING COSTS. Article II of the Original Agreement is
amended by the addition of a new Section 2.11, to read in its entirety, as
follows:
2.11 Nonstandard Packing Costs. If Buyer requests that any of the
Inventory be packed in a manner other than as provided in Schedule
10.8, Buyer shall, promptly upon Seller's demand, reimburse Seller for
the amount by which the direct and indirect costs actually incurred by
Seller in packing such Inventory in such manner exceeds the amount of
direct and indirect costs which Seller would have incurred had such
Inventory been packed in the manner provided in Schedule 10.8.
5. DISTRIBUTION COSTS. Article II of the Original Agreement is amended by
the addition of a new Section 2.12, to read in its entirety, as follows:
2.12 Distribution Costs. For each shipment of any portion of the
Closing Inventory which Buyer directs Seller to ship directly to a
customer of Buyer, Buyer shall, promptly upon Seller's demand, pay to
Seller a distribution fee for handling and picking such items of
Closing Inventory equal to $2.45 for each dozen (or partial dozen) of
such items so shipped.
6. ACETATE DEVELOPMENT COSTS. Article II of the Original Agreement is
amended by the addition of a new Section 2.13, to read in its entirety, as
follows:
2.13 Acetate Development Costs. If Seller is required to develop any
acetates to enable it to complete the production or processing of any
of the Closing Inventory, Buyer shall, promptly upon Seller's demand,
pay to Seller an acetate development fee equal to $2.55 for each
acetate so developed.
7. EMPLOYEE STAY BONUSES. Section 6.2 of the Original Agreement is amended
by the addition of a new Section 6.2(e), to read in its entirety, as follows:
(e) After Closing, Buyer shall provide incentives to retain at least
five of the Business Employees through December 31, 2001. On December
31, 2001, Buyer shall pay the following amounts to each of the
following Business Employees, but only to the extent that such
Business Employee is employed by Buyer, the Company or any of their
respective Affiliates, on December 31, 2001 or has prior to such time
been terminated by the Company other than for "proper cause" as that
term is defined in Section 3.1 of the Xxxx Xxx Corporation Severance
Pay Plan attached to the Original Agreement as Schedule 4.16(d):
Name Amount
---- ------
Xxxxxx Xxxxxx $50,000
Xxxx Xxxxxx $ 5,000
Xxxxxx Xxxx $10,000
Xxxxx Xxxxxx $17,000
Xxxxx Xxxxxx $10,000
8. NO OTHER AMENDMENTS. Except as expressly amended by this First
Amendment, all of the terms and provisions of the Original Agreement shall
remain in full force and effect.
(SIGNATURES ON NEXT PAGE)
The parties hereto have caused this First Amendment to Stock Purchase
Agreement to be duly executed as of the day and year first above written.
XXXX XXX CORPORATION
By: /s/ Xxxxxxx Xxxxxxxx
--------------------------------------
Name: Xxxxxxx Xxxxxxxx
----------------------------------
Title: Vice President
---------------------------------
CHAMPION PRODUCTS, INC.
By: /s/ Xxxxxxxxx XxXxxxx
--------------------------------------
Name: Xxxxxxxxx XxXxxxx
------------------------------------
Title: Vice President
------------------------------------
GFSI, INC., d/b/a Gear For Sports
By: /s/ Xxxxx Xxxxxxx
------------------------------------
Name: Xxxxx Xxxxxxx
----------------------------------
Title: President, COO
---------------------------------
