EXHIBIT 10.8
SECOND AMENDMENT TO LICENSE AGREEMENT
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AMENDMENT to License Agreement, made as of the 14th day of April, 1997, by
and between XXXXX INVESTMENT CO., INC. ("Xxxxx"), a Delaware corporation, and
XXXXXXX SHOE COMPANY INC. ("Licensee"), a Delaware corporation.
W I T N E S S E T H:
WHEREAS, Xxxxx and Licensee are parties to a certain License Agreement
dated as of the 1st day of July, 1993, as amended by First Amendment to License
Agreement dated as of the 2nd day of October, 1995 ("Agreement"); and
WHEREAS, Xxxxx and Licensee are now desirous of amending the Agreement; and
WHEREAS, all terms used but not otherwise defined herein shall have the
meanings given to them in the Agreement.
NOW, THEREFORE, in consideration of the premises contained herein and their
mutual promises, the parties hereby amend the Agreement, effective as of the
date first above written, as follows:
1. Paragraph 1.1 is amended in its entirety to read in full as follows:
"1.1(a) Retail Annual Period. The period from commencement of the term of
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the Trademark Sublicense Agreement through January 31, 1998 and each consecutive
twelve (12) month period thereafter during the Term.
1.1(b) Wholesale Annual Period. The period from commencement of the Term
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through December 31, 1994 and each consecutive twelve (12) month period
thereafter during the Term."
2. Paragraph 1.7 is amended in its entirety to read in full as follows:
"1.7 (a) Wholesale Net Sales. The invoiced amount of Xxxxx
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Merchandise billed or shipped by Licensee, less actual trade discounts, returns
and allowances and sales tax, if any, with no deduction made for other discounts
or uncollectible accounts or for any cost incurred by Licensee in the
manufacture, sale, distribution, or exploitation of the Xxxxx Merchandise.
(b) Retail Net Sales. The total dollar amount of retail sales
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of SLJ Retail LLC, a Delaware limited liability company ("SLJ Retail"), of Xxxxx
Merchandise during any Retail Annual Period, net of returns, discounts and
allowances, and excluding sales taxes."
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3. Paragraph 2.1 is amended in its entirety to read in full as follows:
"2.1 Grant of License. Xxxxx hereby grants to Licensee an exclusive
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license throughout the Territory to use the Marks in connection with (a) the
manufacture, advertising, merchandising, promotion, sale and distribution of
Xxxxx Merchandise approved by Xxxxx, and (b) any retail store operation,
including placement of the Marks on signs, packaging, store fronts and retail
store advertising, as approved by Xxxxx, owned or operated by SLJ Retail, all in
accordance with the terms of this Agreement. The license granted herein extends
only to the Merchandise, Territory and retail and other uses expressly provided
for in this Agreement, and Licensee shall not use or attempt to use the Marks on
any other products or goods in any other area or any other manner whatsoever.
Notwithstanding the above, (A) the Territory for purposes of Paragraph 2.1(b)
shall only include the United States, and (B) Xxxxx and Licensee agree that
Xxxxx may sell women's footwear bearing the Marks for retail sale in retail
stores which Xxxxx or any affiliate of Xxxxx owns and which specialize in
selling women's apparel, footwear and accessories and which are located in
outlet malls or centers; however, Xxxxx and its affiliates may not sell such
footwear to retail stores (excluding mall anchor stores) which specialize in
selling first-quality footwear and accessories and which are located in enclosed
regional shopping malls."
4. Paragraph 2.2 is amended in its entirety to read in full as follows:
"2.2 Distribution Channels. Licensee acknowledges that Xxxxx has
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established a reputation for unique high quality fashionable merchandise sold in
high quality and high fashion stores, and that Xxxxx maintains a marketing
strategy of retaining and projecting to consumers that reputation and ambience
for its products. Accordingly, in order to protect Xxxxx' marketing strategy,
goodwill and prestige and reputation, Xxxxx Merchandise shall be sold only in
better department stores, better specialty stores and SLJ Retail stores in
accordance with Xxxxx' marketing strategy for sales of "Xxxxx New York" product,
and the license granted under this Agreement extends only to the use of the
Marks in connection with the manufacture, advertising, merchandising, promotion,
sale and distribution of Xxxxx merchandise for sale to customers in such better
department stores, better specialty stores and SLJ Retail stores, the locations
of which shall be reasonably approved by Xxxxx."
5. Subparagraph 3.1.1 is amended in its entirety to read in full as
follows:
"3.1.1(a) In consideration of the license granted and the services to
be performed by Xxxxx under this Agreement and subject to Guaranteed Minimums,
Licensee shall pay to Xxxxx Royalties equal to: (a) five (5%) percent of
Wholesale Net Sales of Xxxxx Merchandise for Wholesale Net Sales of $30,000,000
or less during any Wholesale Annual Period, and (b) four (4%) percent of
Wholesale Net Sales of Xxxxx Merchandise in excess of $30,000,000 during any
Wholesale Annual Period, all in accordance with all the terms and conditions of
this Agreement."
6. Subparagraph 3.1.1(b) is added as follows:
"3.1.1(b) In consideration of the license granted and the services to
be performed by Xxxxx under this Agreement, Licensee shall pay to Xxxxx
Royalties equal to (a) two
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and one-half (2.5%) percent of Retail Net Sales of Xxxxx Merchandise from the
commencement of this Second Amendment to License Agreement through and including
January 31, 1998, and (b) three (3%) percent of Retail Net Sales of Xxxxx
Merchandise thereafter, all in accordance with all the terms and conditions of
this Agreement; provided, however, in the event that Licensee sublicenses its
rights to utilize the Marks for retail sale purposes to SLJ Retail, with Xxxxx'
consent, then SLJ Retail shall be directly responsible for the payment of the
Royalties payable to Xxxxx pursuant to this subparagraph 3.1.1(b)."
7. Subparagraph 3.1.2 is amended by inserting the following before the word
"Licensee": "Subject to the provisions of subparagraph 3.1.1(b),".
8. Paragraph 3.2 is amended so that in every instance where the words
"Annual Period" appear, the word "Wholesale" is inserted before the words
"Annual Period".
9. Paragraph 3.4 is amended by inserting the word "Wholesale" before the
words "Annual Period".
10. Paragraph 3.6 is added as follows:
"3.6 Payments, Reports and Audit for Retail Operations. Xxxxx shall
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have all of the rights to receive payments and reports from and to conduct
audits of SLJ Retail as provided in Paragraphs 3.2, 3.3 and 3.4 of the Trademark
Sublicense Agreement dated as of April , 1997 between Licensee and SLJ Retail
(the "Trademark Sublicense Agreement"), attached hereto as Exhibit A. The
parties agree that with respect to any payment, reporting or other obligations
to Xxxxx arising from the retail sale license granted under Paragraph 2.1(b)
hereof, an Annual Period shall end on January 31 to coincide with the fiscal
year of SLJ Retail."
11. Subparagraphs 4.6.1 and 4.6.2 are amended so that in every instance
where the words "Net Sales" appear, the word "Wholesale" is inserted before the
words "Net Sales", and in every instance where the words "Annual Period" appear,
the word "Wholesale" is inserted before the words "Annual Period".
12. Subparagraph 8.2.1 is amended by replacing "four (4) years" with "one
(1) year" and replacing "December 31, 2000" with "December 31, 1997" and by
inserting the word "Wholesale" before the words "Annual Period".
13. Subparagraph 8.2.2 is amended in its entirety to read as follows:
"8.2.2 Second Renewal Term. Xxxxx hereby grants Licensee an option,
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and Licensee hereby exercises such option in full, to renew this Agreement for a
second renewal term ("Second Renewal Term") of five (5) years, commencing on
January 1, 1998 and ending on December 31, 2002, subject to earlier termination
as provided in this Agreement. In connection therewith, Licensee represents and
warrants to Xxxxx that Wholesale Net Sales for the twelve (12) month period
ending July 31, 1997 shall exceed $20,000,000."
14. Subparagraphs 8.2.3, 8.2.4 and 8.2.5 are added as follows:
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"8.2.3. Third Renewal Term. If Licensee has not defaulted or
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materially breached any of the terms of this Agreement, has complied with its
obligations under this Agreement in all material respects (without regard to
whether Xxxxx has given any notices of default or failure to comply), and if
Wholesale Net Sales for the twelve (12) month period ending July 31, 2002
exceeded $30,000,000, Licensee shall have the option (conditioned upon the
receipt by Xxxxx of the reports, required pursuant to Paragraphs 3.3 and 3.4
hereof, and the results contained therein), exercisable by written notice given
to Xxxxx not later than five (5) months prior to the expiration of the Second
Renewal Term, to renew this Agreement for a third renewal term ("Third Renewal
Term") of five (5) years, commencing on January 1, 2003 and ending on December
31, 2007, subject to earlier termination as provided in this Agreement.
8.2.4 Fourth Renewal Term. If Licensee has not defaulted or
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materially breached any of the terms of this Agreement, has complied with its
obligations under this Agreement in all material respects (without regard to
whether Xxxxx has given any notices of default or failure to comply), and if
Wholesale Net Sales for the twelve (12) month period ending July 31, 2007
exceeded $40,000,000, Licensee shall have the option (conditioned upon the
receipt by Xxxxx of the reports, required pursuant to Paragraphs 3.3 and 3.4
hereof, and the results contained therein), exercisable by written notice given
to Xxxxx not later than five (5) months prior to the expiration of the Third
Renewal Term, to renew this Agreement for a fourth renewal term ("Fourth Renewal
Term") of five (5) years, commencing on January 1, 2008 and ending on December
31, 2012, subject to earlier termination as provided in this Agreement.
8.2.5 Fifth Renewal Term. If Licensee has not defaulted or
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materially breached any of the terms of this Agreement, has complied with its
obligations under this Agreement in all material respects (without regard to
whether Xxxxx has given any notices of default or failure to comply), and if
Wholesale Net Sales for the twelve (12) month period ending July 31, 2012
exceeded $50,000,000, Licensee shall have the option (conditioned upon the
receipt by Xxxxx of the reports, required pursuant to Paragraphs 3.3 and 3.4
hereof, and the results contained therein), exercisable by written notice given
to Xxxxx not later than five (5) months prior to the expiration of the Fourth
Renewal Term, to renew this Agreement for a fifth renewal term ("Fifth Renewal
Term") of five (5) years, commencing on January 1, 2013 and ending on December
31, 2017, subject to earlier termination as provided in this Agreement."
15. Subparagraph 8.3.1 is amended in its entirety to read in full as
follows:
"8.3.1(a) Xxxxx may terminate this Agreement, effective immediately
upon giving Licensee written notice of termination, if (i) Licensee fails to
make any payment due to Xxxxx which Licensee is required to make under this
Agreement when such payment is due and continues such failure uncured for
fifteen (15) days after written notice thereof from Xxxxx to Licensee, (ii)
Licensee fails two (2) or more times during any Wholesale Annual Period during
the Term to make any payment due to Xxxxx which Licensee is required to make
within fifteen (15) days after such payment is due, without regard to any notice
of such failure from Xxxxx, (iii) Licensee abandons the Marks, as provided in
Paragraph 4.2, (iv) the beneficial ownership of Licensee changes in a manner so
as to change the actual control of Licensee, or (v) Licensee defaults on any
obligations secured by a security interest in or other lien or encumbrance on
Xxxxx Merchandise.
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8.3.1(b) In addition, Xxxxx may terminate the license granted pursuant
to Paragraph 2.1(b) hereof (but not the license granted pursuant to Paragraph
2.1(a) or any other provisions of this Agreement) if an entity or person other
than Licensee (or an affiliate of Licensee) serves as the managing member of SLJ
Retail (the date on which such entity or person first becomes the managing
member, the "Xxxxxxx Termination Date"). In such event, Xxxxx agrees that, if it
consents to a replacement managing member prior to the Xxxxxxx Termination Date,
it shall not act under this Paragraph 8.3.1(b) to terminate the license granted
pursuant to Paragraph 2.1(b) hereof until the expiration of ninety (90) days
after the Xxxxxxx Termination Date. Thereafter, Xxxxx may exercise its right
under this Paragraph 8.3.1(b) to terminate the license granted pursuant to
Paragraph 2.1(b) hereof in accordance with the terms hereof. Xxxxx may exercise
its right under this Paragraph 8.3.1(b) to terminate the license granted
pursuant to Paragraph 2.1(b) hereof by giving written notice of termination to
Licensee and SLJ Retail, which termination shall be effective thirty (30) days
from the date Xxxxx provides Licensee and SLJ Retail with written notice of such
termination. Licensee agrees to provide Xxxxx with prompt notice in the event
Licensee is no longer serving as managing member of SLJ Retail. Notwithstanding
the foregoing, Xxxxx may not terminate this Agreement with respect to Licensee's
rights to use the Marks in connection with Licensee's wholesale business if
there is a default in payment of Royalties based upon Retail Net Sales payable
by SLJ Retail pursuant to subparagraph 3.1.1(b) hereof, in which case Xxxxx may
terminate this Agreement only with respect to the rights of Licensee granted
under Paragraph 2.1(b) of this Agreement in accordance with the terms of this
subparagraph."
16. The following sentence is added at the end of Paragraph 8.7:
"Xxxxx shall not, however, have the right to grant subsequent licenses
to use the Marks in connection with the rights of Licensee granted under
Paragraph 2.1(a) of this Agreement upon the termination of this Agreement based
solely upon a default in connection with any of the rights granted to Licensee
under Paragraph 2.1(b)."
17. Subparagraph 9.3.2(a) is amended in its entirety to read in full as
follows:
"9.3.2 (a) This Agreement is personal to Licensee and Licensee may
not, without the prior written consent of Xxxxx, assign, sublicense or otherwise
transfer all or any portion of this Agreement or any rights or obligations
hereunder, whether voluntarily, involuntarily, by operation of law or otherwise,
and any such attempted assignment or other transfer shall be null and void and
of no effect. Notwithstanding the foregoing, Licensee may (i) assign this
Agreement and the rights hereunder to another corporation provided that such
assignee corporation is controlled by the same parties which controlled Licensee
before such assignment and provided that Licensee and its successor/assignee
remain liable for all of its obligations under this Agreement, (ii) merge with a
newly formed corporation, with no liabilities, solely for the purpose of
reincorporation and (iii) assign and sublicense retail license rights hereunder
to SLJ Retail as contemplated by the Trademark Sublicense Agreement, attached
hereto as Exhibit A, and Xxxxx hereby acknowledges and consents to the terms of
such sublicense."
Except as expressly amended hereby, the Agreement shall remain unchanged
and in full force and effect.
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IN WITNESS WHEREOF, the parties have hereunto executed this Amendment to
Agreement by officers thereunto duly authorized as of the day and year first
above written.
XXXXX INVESTMENT CO., INC.
By: /s/ Xxxxxx X. Xxxxxx
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Xxxxxx X. Xxxxxx
Vice President
XXXXXXX SHOE COMPANY INC.
By: /s/ Xxxxxxx X. Xxxx
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Xxxxxxx X. Xxxx
Chairman of the Board and
Chief Executive Officer
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EXHIBIT A
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TRADEMARK SUBLICENSE AGREEMENT BETWEEN
XXXXXXX SHOE COMPANY INC. AND SLJ RETAIL LLC
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