CONFORMED COPY
TRADEMARK PURCHASE
AND LICENSE ASSIGNMENT AGREEMENT
TRADEMARK PURCHASE AND LICENSE ASSIGNMENT AGREEMENT (this "AGREEMENT")
dated as of December 23, 1997, between Cherokee, Inc., a Delaware corporation
("CHEROKEE") and SPELL C. LLC, a Delaware limited liability company ("SPV").
W I T N E S S E T H:
WHEREAS, Cherokee owns the Trademark (as defined below);
WHEREAS, Cherokee and Licensee (as defined below) have entered into a
License Agreement (as defined below), whereby Cherokee granted Licensee certain
rights to use the Trademark pursuant to the License Agreement;
WHEREAS, SPV is a direct, wholly-owned, bankruptcy-remote limited purpose
subsidiary of Cherokee; and
WHEREAS, Cherokee desires to sell, and SPV desires to purchase, the
Trademark Rights (as defined below), and Cherokee desires to assign, and SPV
desires to assume, the License Rights, in each case upon the terms and subject
to the conditions hereinafter set forth;
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE 1
Definitions
Section 1.0. Definitions. Capitalized terms used but not defined herein
shall have the respective meanings given to such terms in the Indenture dated
December 23, 1997 between SPV and Wilmington Trust Company, as Trustee (the
"INDENTURE"). The following additional terms, as used herein, have the
following respective meanings:
"AGREEMENT" has the meaning assigned to that term in the first paragraph
hereof.
"ASSIGNED RIGHTS" has the meaning assigned to that term in Section 2.01.
"ASSIGNMENT" has the meaning assigned to that term in Section 2.01.
"CHEROKEE" has the meaning assigned to that term in the first paragraph
hereof.
"CHEROKEE LICENSES" has the meaning assigned to that term in Section 2.01.
"INDIAN HEAD DESIGN" means the design included in Exhibit A.
"INDENTURE" has the meaning assigned to that term in the introductory
sentence to this Section 1.01.
"LICENSE AGREEMENT" has the meaning assigned to that term in Section 2.01.
"LICENSEE" has the meaning assigned to that term in Section 2.01.
"LICENSE RIGHTS" has the meaning assigned to that term in Section 2.01.
"OTHER EXISTING LICENSES" has the meaning assigned to that term in Section
2.01.
"OTHER PERMITTED LICENSES" means the Cherokee Licenses and the license
granted by SPV to Cherokee pursuant to Section 4.01 hereof.
"SPV" has the meaning assigned to that term in the first paragraph hereof.
"SPV INDEMNIFIED PARTIES" has the meaning assigned to that term in Section
8.11.
"TRADEMARK" means all United States right, title and interest of Cherokee
in and to the "Cherokee" trademark and other marks incorporating the name
Cherokee, with various stylized designs, including the "Indian Head Design," as
used and registered in the United States Patent and Trademark Office, copies of
which registrations are attached as Exhibit A hereto.
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"TRADEMARK RIGHTS" has the meaning assigned to that term in Section 2.01.
ARTICLE 2
Sale, Assignment and Transfer
Section 2.01. Transfer to SPV. On the terms set forth herein and subject
to (i) the due execution and delivery of this Agreement by each of the parties
hereto and (ii the receipt by Cherokee of the payment required to be made under
Section 3.01 hereof, as of the date hereof Cherokee hereby:
(a) assigns all of its rights and obligations as licensor under the
License Agreement (the "LICENSE AGREEMENT") dated as of November 12, 1997
between Cherokee and Xxxxxx Xxxxxx Corporation (the "LICENSEE") together with
all rights and privileges granted, secured and provided thereby (the "LICENSE
RIGHTS"), such rights to be held and enjoyed by SPV from and after the date
hereof, for its own use and benefit and for the use and benefit of its
successors, assigns or other legal representatives, as fully and entirely as the
same would have been held and enjoyed by Cherokee if this assignment and
assumption had not been made; and
(b) sells, assigns and transfers to SPV all of its right, title and
interest in, to and under the Trademark, together with any United States
extensions or renewals thereof, United States trademark registrations and
trademark applications for the Cherokee trademark, any other xxxx incorporating
the Cherokee name or the Indian Head Design, and United States common law rights
to the Cherokee trademark, other marks incorporating the name Cherokee and the
Indian Head Design, whether presently existing or hereafter arising or acquired,
together with the good will of the business connected with the use of or
symbolized by the foregoing, together with all rights and privileges granted and
secured thereby, including without limitation any and all claims and causes of
action which may hereafter arise by reason of unfair competition therewith,
infringement, violation or dilution thereof or injury to the associated goodwill
or otherwise, such rights to be held and enjoyed by SPV, for its own use and
benefit and for the use and benefit of its successors, assigns or other legal
representatives as fully and entirely as the same would have been held and
enjoyed by Cherokee if this assignment had not been made (the "TRADEMARK RIGHTS"
and, together with the License Rights, the "ASSIGNED RIGHTS"); provided, that
the sale, assignment and transfer contemplated in this clause (b) is subject to
(x) the License Agreement, (y) the other existing licenses of the Trademark set
forth in
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Schedule 2.01 (the "OTHER EXISTING LICENSES") and (z) retail license
agreements (in the category of cosmetics, bath and body products only) hereafter
granted by Cherokee as permitted by Section 7(b)(v)(b) of the License Agreement
and Section 4.01 hereof (such other retail license agreements referred to in
(z), together with the Other Existing Licenses, the "CHEROKEE LICENSES"), and
conveys no interest in the Cherokee Licenses.
The sale, assignment and transfer contemplated in this Section 2.01 shall
together be referred to herein as the "ASSIGNMENT."
Section 2.02. Acceptance and Assumption. SPV hereby acknowledges its
acceptance and assumption of all right, title and interest in and to the
Trademark and the License Agreement. SPV hereby expressly assumes all of
Cherokee's liabilities and obligations under the License Agreement.
Section 2.03. Absolute Transfer. Cherokee and SPV hereby agree and
acknowledge that the Assignment is an absolute and irrevocable transfer of the
Trademark and the License Agreement, and is not intended to be a transfer for
purposes of security.
Section 2.04. No Recourse. The Assignment shall be without recourse,
representation or warranty except as expressly provided herein. Without
limiting the generality of the foregoing, Cherokee shall have no responsibility
for performance by the Licensee of its obligations under the License Agreement.
ARTICLE 3
Payment of Purchase Price
Section 3.01. Purchase Price. As consideration for the Assignment, SPV
shall, by not later than 1:00 p.m. New York time on the date hereof, pay or
cause to be paid to Cherokee an amount equal to $47,845,558.83.
Section 3.02. Allocation. Cherokee and SPV agree that any payments due
pursuant to the License Agreement after the date hereof shall be payable to, and
for the account of, SPV, regardless of whether some portion thereof may have
accrued prior to the date hereof.
Section 3.03. Account Information. The payment hereunder to Cherokee shall
be made in immediately available funds, without setoff, deduction or
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counterclaim by payment to such bank account as Cherokee may specify for this
purpose.
ARTICLE 4
Other Permitted Licenses
Section 4.01. License to Cherokee. SPV hereby grants to Cherokee, and
Cherokee hereby accepts, the right and license to use the Trademark to the
extent necessary or appropriate to enable Cherokee to grant and maintain the
Cherokee Licenses and perform its obligations thereunder and receive the rights
and benefits thereof, in each case subject to Section 4.02. Except as
contemplated by Section 4.02, no royalty shall be payable by Cherokee for any
license granted pursuant to this Section 4.01. The license granted pursuant to
this Section 4.01 shall be memorialized in a license agreement in the form of
Exhibit D.
Section 4.02. Extension of Other Permitted Licenses. Cherokee will not
grant, extend or amend any of the Cherokee Licenses in contravention of Section
7(b)(v) of the License Agreement. In addition, Cherokee will not, without the
prior written consent of SPV, extend the term of the Other Existing Licenses
with Brylane, Calder and/or Pamida or with Xxxxxx Xxxxxx Corporation; provided
that notwithstanding the foregoing Cherokee may agree to extend the term of any
of such Other Existing Licenses (other than the Other Existing License with
Xxxxxx Xxxxxx Corporation) so long as, prior thereto, Cherokee shall have
assigned to SPV, absolutely, the right to receive 50% of all royalties payable
under such Other Existing License during its extended term, and made
arrangements for the payment of such portion of the royalty directly to the
Trustee for the account of SPV, all pursuant to documents reasonably
satisfactory in form and substance to SPV and the Trustee. Upon and subject to
such arrangements having been made, the license granted pursuant to Section 4.01
shall apply to the extended term of such Other Existing License.
ARTICLE 5
Representations and Warranties of Cherokee
Cherokee represents and warrants to SPV as of the date hereof that:
Section 5.01. Trademark. (a) The Trademark is validly registered under
the Xxxxxx Act as set forth in Exhibit A. Except as set forth in Schedule 5.01,
no
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other registration or filing with any governmental authority is necessary or
appropriate to maintain and protect the Trademark for the uses contemplated by
the License Agreement.
(b) Prior to the transfer and assignment contemplated in Section 2.01
hereof, Cherokee owns and possesses all right, title and interest in and to the
Trademark, and, except for the License Agreement, the Other Permitted Licenses
and the Strategic Partners Agreement dated July 17, 1995, between Cherokee and
Strategic Partners, Inc., the Trademark Rights are not subject to any judgment,
injunction, order, decree, pledge, encumbrance or agreement restricting the use
thereof or restricting the licensing thereof to any Person.
(c) To Cherokee's knowledge, there are no existing or threatened claims or
proceedings alleging that use of the Trademark Rights by Cherokee or any of its
licensees in the United States infringes any third party's rights or challenging
the ownership of any registration of the Trademark in any jurisdiction in the
United States and Cherokee is not aware of any grounds for any such claims or
proceedings, except as set forth in Schedule 5.01.
(d) The Trademark Rights include all trademarks or service marks owned and
used by Cherokee in connection with the transactions described in the License
Agreement, except as set forth in Schedule 5.01.
(e) The use of the Trademark Rights permitted by the License Agreement
does not infringe any rights owned or possessed by any third party.
(f) To Cherokee's knowledge, no Person is infringing or misappropriating
any of the Trademark Rights, except as set forth in Schedule 5.01.
Section 5.02. License Agreement. The License Agreement is a valid and
binding agreement of each of Cherokee and the Licensee and is in full force and
effect, and neither Cherokee nor Licensee is in default or breach in any
material respect under the terms of the License Agreement. A true and correct
copy of the License Agreement as in effect on the date hereof is set forth in
Exhibit B hereto.
Section 5.03. Transfer Effective. This Agreement is effective in
accordance with its terms to transfer the Assigned Rights to SPV, and upon
satisfaction of the conditions specified in clauses (i) and (ii) of Section
2.01, SPV will be the owner of the Assigned Rights free and clear of any claim,
judgment, injunction, order, decree, pledge, encumbrance or agreement
restricting the use thereof or restricting licensing thereof to any Person,
except as set forth in Section 5.01(b). Except for the recordation of a
Memorandum of Assignment in
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substantially the form of Exhibit C hereto with the United States Patent and
Trademark Office, no registration or filing with any governmental authority is
necessary or appropriate in connection with the transfer of the Assigned Rights
by Cherokee to SPV pursuant to this Agreement.
Section 5.04. Corporate Existence and Power. Cherokee is a corporation
duly incorporated, validly existing and in good standing under the laws of its
jurisdiction of incorporation and has all corporate powers and all governmental
licenses, authorizations, permits, consents and approvals required to carry on
its business as now conducted.
Section 5.05. Corporate Authorization. The execution, delivery and
performance by Cherokee of this Agreement and the Administrative Services
Agreement and the consummation of the transactions contemplated hereby and
thereby are within Cherokee's corporate powers and have been duly authorized by
all necessary corporate action on the part of Cherokee. This Agreement and the
Administrative Services Agreement each constitutes a valid and binding agreement
of Cherokee enforceable against Cherokee in accordance with its terms, except as
the enforceability thereof may be limited by (i) bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the enforcement of
creditors rights generally and (ii) general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law).
Section 5.06. Governmental Authorization. The execution, delivery and
performance by Cherokee of this Agreement and the Administrative Services
Agreement and the consummation of the transactions contemplated hereby and
thereby require no action by or in respect of, or filing with, any governmental
body, agency or official, except, with respect to this Agreement, for the filing
of an instrument of transfer in the form of Exhibit C with the United States
Patent and Trademark Office.
Section 5.07. Noncontravention. The execution, delivery and performance by
Cherokee of this Agreement and the Administrative Services Agreement and the
consummation of the transactions contemplated hereby and thereby do not and will
not (i) violate the certificate of incorporation or bylaws of Cherokee, (ii)
violate any applicable law, rule, regulation, judgment, injunction, order or
decree or (iii) constitute a default under, require any consent under, or give
rise to any right of termination, cancellation or acceleration of any right or
obligation of Cherokee or to a loss of any benefit relating to the Trademark or
the License Agreement to which Cherokee is entitled under, any provision of any
agreement or other instrument binding upon Cherokee.
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ARTICLE 6
Representations and Warranties of SPV
SPV represents and warrants to Cherokee as of the date hereof that:
Section 6.01. Limited Liability Company Existence and Power. SPV is a
limited liability company duly formed, validly existing and in good standing
under the laws of the State of Delaware and has all legal powers and all
material governmental licenses, authorizations, permits, consents and approvals
required to carry on its business as now conducted.
Section 6.02. Limited Liability Company Authorization. The execution,
delivery and performance by SPV of this Agreement and the Administrative
Services Agreement and the consummation of the transactions contemplated hereby
and thereby are within the legal powers of SPV and have been duly authorized by
all necessary legal action on the part of SPV. This Agreement and the
Administrative Services Agreement each constitutes a valid and binding agreement
of SPV enforceable against SPV in accordance with its terms, except as the
enforceability thereof may be limited by (i) bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the enforcement of
creditors rights generally and (ii) general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law).
Section 6.03. Governmental Authorization. The execution, delivery and
performance by SPV of this Agreement and the Administrative Services Agreement
and the consummation of the transactions contemplated hereby and thereby require
no action by or in respect of, or filing with, any governmental body, agency or
official.
Section 6.04. Non-Contravention. The execution, delivery and performance
by SPV of this Agreement and the Administrative Services Agreement and the
consummation of the transactions contemplated hereby and thereby do not and will
not (i) violate the certificate of formation or limited liability company
agreement of SPV, (ii) violate any applicable law, rule, regulation, judgment,
injunction, order or decree or (iii) constitute a default under, require any
consent under, or give rise to any right of termination, cancellation or
acceleration of any right or obligation of SPV or to a loss of any benefit
relating to the Trademark or the License Agreement to which SPV is entitled
under, any provision of any agreement or other instrument binding upon SPV.
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ARTICLE 7
Confidentiality
Section 7.01. Confidentiality. (a) The parties hereby agree that the
disclosure of the arrangements and understandings contemplated hereby shall only
be made at such time and in such manner as the parties shall specifically agree.
(b) Notwithstanding clause (a) of this Section 7.01, disclosures of such
arrangements and understandings may be made to the Noteholders and the Trustee
to the extent necessary to allow the performance of the Basic Documents by the
parties thereto, to the Licensee to the extent necessary to allow the
performance of the License Agreement by the parties thereto and may be made to
other third parties (i) if such arrangements and understandings are in the
public domain and have entered the public domain through no fault of the party
seeking to make such disclosure or its affiliates or representatives, or (ii) to
the extent disclosure is compelled by law or court order.
ARTICLE 8
Miscellaneous
Section 8.01. Further Assurances. Cherokee will, from time to time, at its
expense, execute, deliver, file and record any statement, assignment,
instrument, document, agreement or other paper and take any other action
(including, without limitation, any filings with the United States Patent and
Trademark Office) that from time to time may be necessary, or that SPV may
reasonably request, in furtherance of the purposes of this Agreement.
Section 8.02. Notices. All notices and other communications hereunder
shall be in writing (including telecopy or similar writing) and shall be given
to such party (x) in the case of Cherokee, at 0000 Xxxxxxx Xxxxxx, Xxx Xxxx, XX
00000 or (y) in the case of SPV at 000 Xxxxxx Xxxx, Xxxxxxxx, XX 00000 (with
copies in each case to Wilmington Trust Company, at its address set forth in the
Indenture) or such other address or telecopy number as such party may hereafter
specify for such purpose by notice given hereunder. Each such notice, request
or other communication shall be effective when received.
Section 8.03. Severability. Should any provision of this Agreement for any
reason be declared invalid or unenforceable, such declaration shall not affect
the validity or enforceability of any of the other provisions of this Agreement,
which other provisions shall remain in full force and effect and the application
of
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such invalid or unenforceable provision to persons or circumstances other than
those as to which it has been held invalid or unenforceable shall be valid and
enforced to the fullest extent permitted by law.
Section 8.04. Binding Effect; Assignment. This Agreement and all of the
provisions hereof shall be binding upon and shall inure to the benefit of the
parties hereto and their respective successors and permitted assigns. Neither
this Agreement nor any of the rights, interests or obligations hereunder shall
be assigned, directly or indirectly, including without limitation, by operation
of law, by any party hereto without the prior written consent of the other party
hereto; provided, that SPV may assign such rights, interests and obligations in
accordance with the Security Agreement.
Section 8.05. Dispute Resolution. Any action or proceeding seeking to
enforce any provision of, or based on any right arising out of, this Agreement
may be brought only in the courts of the State of New York and of the United
States of America, in each case located in the County of New York, and each of
the parties consents to the jurisdiction of such courts (and of the appropriate
appellate courts) and waives any objection to venue laid therein. Each of the
parties agrees that service of process in any such action or proceeding may be
effected by mailing a copy thereof by registered or certified mail (or any
substantially similar form of mail), postage prepaid, to such party at its
address for notices under Section 8.02.
Section 8.06. Entire Agreement. This Agreement constitutes the entire
agreement among the parties with respect to the subject matter hereof, and
supersedes all other prior agreements and understandings, both written and oral,
between the parties with respect to the subject matter hereof.
Section 8.07. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of California (regardless of
the laws that might otherwise govern under applicable principles of conflicts of
laws thereof) as to all matters, including but not limited to matters of
validity, construction, effect, performance and remedies.
Section 8.08. Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one and the same agreement.
Section 8.09. Waiver. Any failure by any party to comply with any
obligation, covenant or agreement herein or to fulfill any condition herein may
be waived only by a written notice from the party entitled to the benefits
thereof. No failure by either party hereto to exercise, and no delay in
exercising, any right hereunder shall operate as a waiver thereof, nor shall any
single or partial exercise
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of any right hereunder preclude any other or future exercise of that right or
any other right hereunder by that party.
Section 8.10. Expenses. Except as otherwise specifically provided in this
Agreement, each of SPV and Cherokee will bear the cost of its own performance
under this Agreement.
Section 8.11. Indemnity. Cherokee shall indemnify and hold harmless SPV
and its officers, directors, employees, agents and representatives
(collectively, the "SPV INDEMNIFIED PARTIES") from and against any and all
liabilities, losses, claims, suits, damages, reasonable costs and expense
(including, without limitation, reasonable fees and disbursement of legal
counsel, accountants and other experts) incurred by the SPV Indemnified Parties
arising out of or in connection with (i) any breach by Cherokee of any of its
representations and warranties or covenants under this Agreement or (ii) to the
extent arising from transactions occurring or circumstances existing at or prior
to the date of this Agreement any actual or alleged trademark infringement,
unfair competition or infringement of similar proprietary rights, arising solely
out of the use by SPV and/or the Licensee of the Trademark as authorized
pursuant to the License Agreement.
Section 8.12. No Petition. Cherokee hereby agrees that it shall not
acquiesce in, petition or otherwise invoke or cause SPV to invoke the process of
any court or governmental authority for the purpose of commencing or sustaining
a case against SPV under any federal or state bankruptcy, insolvency or similar
law or appointing a receiver, liquidator, assignee, trustee, custodian,
sequestrator or other similar official of SPV or any substantial part of the
property of SPV, or ordering the winding up or liquidation of the affairs of
SPV.
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IN WITNESS WHEREOF, the parties have each caused this Agreement to be
executed by its duly authorized representative as of the day and year first
above written.
CHEROKEE, INC.
By: /s/ Xxxxxx Xxxxxxxx
--------------------------
Name: Xxxxxx Xxxxxxxx
Title: Chairman of the Board
of Directors and Chief
Executive Officer
SPELL C. LLC
By: /s/ Xxxxx Xxxxxxx
--------------------------
Name: Xxxxx Xxxxxxx
Title: Secretary and Treasurer
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