EXHIBIT 10.3
LICENSE AGREEMENT
This license agreement (this "Agreement") is made as
of the day of March 2001, between Xxxxxxx Xxxxxx & Co.,
Inc., a California corporation, with offices at 000
Xxxxxxxx Xxxxxx, Xxxxxxxx, Xxx Xxxx 00000 ("Licensor"), and
Innovo, Inc., with offices at 0000 Xxxxxxxx Xxxx, Xxxxx 000,
Xxxxxxxxx, XX 00000 ("Licensee") (collectively, the
"Parties").
WHEREAS, Licensor has, as a result of its substantial
use and promotion, become identified with the trade name,
trademark and service xxxx "BONGO", particularly for
footwear and accessories and products and services related
thereto, and as a result of such substantial use and
promotion has developed a reputation for products and
accessories that represent a certain lifestyle, quality and
distinctiveness; and
WHEREAS, Licensee desires to acquire the right and
license from Licensor to use the trade name, trademarks and
service: xxxx, whether or not registered, consisting of
"BONGO", and such variations and derivations thereof as
Licensor in its sole discretion shall designate as usable by
Licensee (the Licensed Xxxx"), in connection with the
design, manufacture, sale, marketing, distribution,
advertising and promotion of Articles (as defined herein),
upon such terms and subject to such conditions as set forth
herein.
NOW THEREFORE, in consideration of the mutual
representations, warranties and covenants hereinafter set
forth, the Parties hereby agree as follows:
1. GRANT AND USF OF LICENSE.
1.1 General. Licensor hereby grants to Licensee during
the Term (as defined In Section 2.1 and subject to the terms
and conditions of this Agreement, an exclusive right and
license, without the right to assign or sublicense any of
the rights hereunder, to use the Licensed Xxxx in connection
with the manufacture, sale, marketing, distribution,
advertising and promotion of bags, belts and small
leather/pvc goods (the "Articles") throughout the Territory
(as defined in Section 1.2).
1.2 Territory. Licensee shall have the right to sell,
market, distribute, advertise and promote Articles
throughout the United Stars, including its territories and
possessions, Mexico, Central and South America and Canada
(the "Territory"). Notwithstanding the foregoing, it is
understood that Licensor only has applied for or registered
the Licensed Xxxx in the countries set forth in Exhibit A
hereto, and that If Licensee desires to sell Articles within
a country not included in Exhibit A, Licensor shall
cooperate with Licensee in applying for and/or registering
such xxxx in its name, but Licensee shall be solely
responsible far all such costs, expenses and fees associated
therewith and shall, upon Licensor's submission to Licensee
of documentation reflecting such costs, fees and expenses,
promptly reimburse Licensor for any and all amounts so
expended by Licensor.
1.3 Best Efforts of Licensee. Licensee shall use its
best efforts to exploit the rights herein granted throughout
the Territory and to sell the maximum quantity of Articles
consistent with this Agreement. Licensee shall not
distribute or sell Articles in any country or region of the
world outside the Territory or sell to any third party that
it has reason to: believe may sell or export Articles
outside the Territory.
1.4 Reservation of Rights. Licensor reserves all
rights to the Licensed Xxxx except such as are
specifically granted herein to Licensee.
1.5 Trade Shows Licensee shall participate in all
major accessories markets and trade shows so as to sell and
promote a maximum of Articles during the Term. Licensee
shall beaR all costs associated with such shows.
1.6 Showroom. .Licensee shall have the right to display
Articles in the showroom operated by Unzipped- Apparel LLC
("Unzipped"), located at 000 Xxxx 00xx Xxxxxx, xx Xxx Xxxx
City, subject to approval of displays by Licensor and space
availability in the showroom as designated by Unzipped.
2. TERM.
2.1 Term. The term of this Agreement shall be the
period commencing as of the date hereof and continuing
through March 31, 2003 (the "Term"). It Is understood that
in the event that the Licensed Xxxx is sold or transferred
In its entirety prior to the end of the Term, this License
shall terminate upon the dosing of such sale or transfer.
2.2 Definition of Year and Quarter. (a) The first Year
of the Term shall be the period from the date hereof through
March 31, 2002. The second Year of the Term shall be the
period 4/1/02- 3/31/03. Each quarter 'of each Year
(commencing January 1, April 1, July 1 and November 1) shall
be a "Quarter".
3. MANUFACTURE OF ARTICLES; QUALITY CONTROL
3.1 Production of Articles. Licensee shall, at its own
expense, manufacture, sell, market, distribute, advertise
and promote Articles bearing the Licensed Xxxx, along with
any Packaging Materials (as defined in Section 3.2) used in
connection therewith, of a good quality that are at least
comparable to similar items offered at comparable prices for
the BONGO brand and of such style, appearance and
distinctiveness so as to protect and enhance, and in no
manner reflect adversely upon, the prestige of Licensor and
the Licensed Xxxx and the goodwill pertaining thereto.
3.2 Contractors and Suppliers. All Articles shall be
manufactured, sold, distributed, marketed, advertised,
promoted, labeled, packaged and, if applicable, imported
in compliance with all applicable laws, rules and
regulations. Licensee shall use such legends, markings
and notices as may be required by law on the
Articles and on any materials in which the Articles are
packaged, including, but not limited to tags, labels,
boxes and bags ("Packaging Materials").
3.3 Approvals by Licensor. (a) Licensee shall submit to
Licensor for product and quality approval pre-production
samples of all Articles or Packaging Materials, and any and
all items or components used or intended to be used by
Licensee In connection therewith. If Licensor shall
disapprove of any such Articles or Packaging Materials,
Licensee. shall use all commercially practicable efforts to
refrain from using such item(s) or components) or to modify
such Articles or Packaging Materials so as to comply with
Licensor's standards. Licensor shall have 10 Business Days
from the time of submission of Articles or Packaging
Materials by Licensee to communicate its disapproval to
Licensee of such Articles or Packaging Materials, and if no
such disapproval is communicated, such Articles or Packaging
Materials shall be deemed approved. For the purposes of this
Agreement, "Business Day" means the days on which banks in
the City of New York are required to be open for business.
(b) After Licensor's approval has been obtained for Articles
or Packaging Materials, Licensee shall not depart therefrom
in any material manner with regard to materials,
workmanship, design, style and quality without again
obtaining prior approval from Licensor.
4. DISTRIBUTION OF ARTICLES.
4.1 Distribution of Articles. The permitted distribution
channels for Articles shall be the same as the distribution
channels through which Licensor sells its footwear bearing
the Licensed Xxxx and Unzipped sells Its jeanswear bearing
the Licensed Xxxx, This includes sales of off-season
Articles, which may only be sold where Licensor sells its
off season footwear. In no event shall Articles be sold to
mass merchandisers, club stores or discounters.
Notwithstanding the foregoing, Licensee shall be permitted
to sell to the following off-price retailers: Marmaxx, Xxxx
Stores, Value City, Burlington Coat Factory, Rainbow
Apparel, Century 21 and Xxxxx.
4.2 No Other Chanels or Internet. No distribution
channel (including on the Internet) other than those set
forth herein is permitted unless Licensee has obtained
Licensor's prior approval.
5. MINIMUM NET SALES AND ROYALTIES
5.1 Minimum Net Sales. (a) In furtherance of its duties
and obligations hereunder, Licensee shall use its best
efforts to promote diligently the manufacture, sale,
marketing, distribution, advertisement and promotion of
Articles in accordance with the terms of this Agreement, and
without limiting the generality of the foregoing, achieve
Minimum Net Sales during the Term in the amount equal to or
greater than one million dollars ($1 million) "Minimum Net
Sales")_
5.2 $7,500 Payment. Licensee shall pay to Licensor, upon
the execution of this Agreement, the sum of $7,500 (the
"Payment"). The Payment shall be credited against the
payment of Royalties to Licensor by Licensee as set forth
herein.
5.3. Percentage Royalties. (a) Licensee shall pay to
Licensor percentage royalties equal to five percent (5%)
of Net Sales ("Percentage Royalties"). It is understood
that Licensee shall guarantee payment to Licensor during
the Term of an amount equal to or greater than $50,000
(5% of Minimum Net Sales of $1 million). (b) In the event
that at the end of the Term, Licensee has failed to pay
to Licensor Percentage Royalties in an amount equal or
greater than $50,000, Licensee shall pay to Licensor
within 10 days following the end of the Term, the
difference between the amount of Percentage Royalties
paid and $50,000, Notwithstanding the foregoing, it is
understood that in the event that the License is
terminated as a result of a sale or transfer pursuant to
Section 2.1, Licensee shall not be obligated to pay such
differential amount upon termination.
5.4 Advertising Royalties. Licensee shall pay to
Licensor for contribution to advertising royalties equal
to two percent (2%) of Net Sales ("Advertising
Royalties", together with Percentage Royalties,
"Royalties").
5.5 Definition of Net Sales: For purposes of this
Agreement, the term "Net Sales" shall mean the aggregate
gross invoiced amount in United States dollars of
Articles shipped by Licensee to customers at wholesale
prices (invoiced list prices) less any refunds,
allowances, deductions or credits for returns and damages
that are directly applicable to Products and actually
taken by Licensee's customers not to exceed ten percent
(10%) of aggregate Net Sales in each Year. No deductions
shall be made for other discounts, special promotions,
advertising, warehouse, distribution and year-end or
other allowances, or any other costs incurred by
Licensee. In computing Net Sales, the gross invoiced
amount resulting from any sale of Articles shall be
determined based on the invoice price or amounts charged
for sales to unrelated parties at arm's length, and
Articles shall be considered finally "sold" upon the date
of billing, shipping or payment, whichever event occurs
first.
5.6 . Payment of Royalties. Royalties shall be
accounted for on the basis of each Quarter, end shall be
paid in United States Dollars within thirty (30) days
following the last day of each Quarter (or portion
thereof in the event of prior termination of this
Agreement for any reason). All payments shall be in
accordance with this Section and Section 11.5.
6. OWNERSHIP OF LICENSED XXXX.
6.1 Unauthorized Uses. Licensee shall not use the
Licensed Xxxx, in whole or in part, as any other
corporate name or trade name, or in any manner not
previously approved by Licensor. Licensee shall not join
any name or names with the Licensed Xxxx so as to form a
new xxxx. Licensee shall take no action that shall
injure or degrade the reputation of the Licensed Xxxx.
6.2 Licensor to Remain Owner. Licensee
acknowledges that Licensor is the owner of (or applicant
for) all right, title and interest in and to the Licensed
Xxxx in the Territory
and is also the owner of the goodwill attached or which
shall become attached thereto Licensee agrees that it
shall never challenge Licensor's ownership of or the
validity of the
Licensed Xxxx.
6.3 Notification to Licensor. In the event Licensee
learns of any infringement or imitation of the Licensed
Xxxx, it shall give prompt written notice to Licensor
thereof. Licensor thereupon shall take such action as it
deems advisable for the protection of its rights in and
to the Licensed Xxxx and Licensee shall cooperate with
Licensor in connection therewith.
7. REPORTS; RECORDS; AUDITS.
7.1 Quarterly Statements and Reports. Licensee shall
deliver to Licensor, in a format acceptable to Licensor,
within thirty (30) days after the end of each Quarter (or
portion thereof, in the event of prior termination of the
Term for any reason), a report, certified to be complete
and accurate by Licensee's Chief Financial Officer,
reflecting: (i) the number of units of Articles and,
where appropriate, aggregate wholesale and retail prices
by categories of the Articles shipped and/or sold by
Licensee during such Quarter, (ii) information on an
itemized basis for any returns or markdowns made during
such Quarter, and (iii) Net Sales and the computation of
Royalties payable for such Quarter, together with such
other information as Licensor may reasonably require.
7.2 Annual Statements and Reports. Licensee shall
deliver to Licensor within 60 days after the end of each
applicable Year (or portion thereof, in the event of
prior termination of the Term for any reason) in detail
reasonably satisfactory to Licensor, statements and a
report reflecting for such Year the information provided
Quarter by Quarter pursuant to Section 7.1.
7.3 Books and Records; Audits. (a) Licensee shall
prepare and maintain, in such manner as will allow
accountants to perform an audit in accordance with
generally accepted accounting principles, complete and
accurate books of account. and records covering all
transactions arising out of or relating to this
Agreement. Licensor and its duly authorized
representatives shall have the right at any time and from
time to time, with reasonable notice during regular
business hours, to inspect and/or audit said books of
account and records and examine all other documents and
material in the possession or under the control of
Licensee with respect to 'the subject matter of this
Agreement. If an audit reveals a deficiency of four
percent (4%) or greater between the amounts Licensee owed
and the amounts Licensee paid to Licensor hereunder,
Licensee shall reimburse Licensor for all costs and
expenses of the inspection or audit.
8. TFRMINATION.
8.1 Nonpayment of Financial Obligations. Licensor
may terminate this Agreement upon fifteen (15) Business
Days written notice if Licensee defaults In any of its
payment obligations set forth In this Agreement and
thereafter fails to cure the default within such fifteen
(15) day period.
8.2 Material Breach of Agreement. Either party may
terminate this Agreement upon thirty (30) Business Days
written notice setting forth the nature of the breach if
the other party commits a material breach of any of its
obligations set forth in this Agreement and thereafter
fails to cure the breach within such thirty (30) day
period.
9. RIGHTS UPON TERMINATION
9.1 Sell-Off: Termination of Production (a) Upon the
expiration or termination of this Agreement, Licensee shall
cease all manufacture, distribution, sale, advertising,
promotion and sourcing of Articles, except with respect to
the sell off of goods under Section 9.3 hereof. All labels,
tags, and other such items and Packaging Materials bearing
the Licensed Xxxx that are not required to complete work in
process shall be, at Licensor's option, sent-or shipped to
Licensor immediately (at no cost to Licensor) or destroyed.
9.2 Inventory. Upon the expiration or termination of this
Agreement, Licensee shall immediately deliver to Licensor a
complete and accurate schedule of Licensee's inventory of
finished Articles, related work-in-process then on hand and
confirmed orders. Such schedule shall be prepared as of the
close of business an the date of such expiration or
termination and shall reflect Licensee's cost of each such
item.
9.3 Sell-off. If Licensor has not terminated the
Agreement based upon a material breach that would diminish
the value and reputation of the Licensed Xxxx, and Licensee
shall be entitled, for a period of three (3) months
following the expiration or termination of this Agreement,
to sell and dispose of the Inventory. Such sales shall be
made subject to all of the provisions of this Agreement,
including but not limited to an accounting therefore and the
payment of Royalties thereon.
9.4 Termination of Rights Except as specifically
provided herein, upon the expiration or termination of this
Agreement all of the rights of Licensee under this Agreement
shall terminate forthwith and shall revert immediately to
Licensor and Licensee no longer shall have the right to use
the Licensed Xxxx.
10. HOLD HARMLESS.
10.1. Licensee's Indemnification. (a) Licensee shall
indemnify and hold harmless Licensor and each of its
directors, officers, employees, contractors, agents and
affiliates from any and all claims, suits, judgments,
losses, damages and expenses, including reasonable
attorneys' fees, of any kind whatsoever brought by a third
party (collectively, "Losses") that arise in any way from:
(i) Licensee's material breach of this Agreement; and (ii)
the manufacture, sale, distribution, production, promotion,
advertising, or transportation of Articles, except to the
extent that such Losses are directly caused by Licensor's
gross negligence or willful misconduct. (b) throughout the
Term Licensee shall maintain products liability insurance,
or insurance providing protection against claims of the
nature commonly provided against by such insurance, in
either case, providing coverage against claims on an
"occurrence" basis, in an amount not less than three million
dollars ($3,000,000), with an aggregate limit of not less
than ($5,000,000).
10.2 Licensor's Indemnification. Licensor shall defend,
indemnify and hold Licensee and each of its directors,
officers, employees, contractors, agents and affiliates,
harmless from and against any Losses of any kind whatsoever
that arise in any way from any actual or alleged patent,
trademark, trade dress or copyright infringement resulting
from the use of the Licensed Xxxx by Licensee as permitted
or authorized under this Agreement to the extent that such
Losses are not caused by Licensee's gross negligence or
willful misconduct.
11. MISCELLANEQLLS.
11.1. Governing Law Forum. This Agreement shall be
interpreted and construed In accordance with the laws of the
State of New York, without regard to its internal conflict
of laws principles. In connection with any litigation
relating hereto, the Parties shall subject themselves
exclusively to the jurisdiction of the federal and state
courts sitting within the City of New York.
11.2 Binding Effect. The rights and obligations set
forth in this Agreement shall be binding upon and shall
inure to the benefit of the legal successors and permitted
assigns of Licensor and Licensee.
11.3 No Partnership. Nothing in this Agreement shall be
construed to create a partnership or joint venture among the
Parties. Nothing herein shall be construed to appoint
Licensee as an agent for Licensor in other arrangements
outside of this Agreement.
11.4. Licensor's Sole Discretion. Unless specifically
stated otherwise herein, it is understood and agreed that
where this Agreement provides that Licensor shall approve of
any matter, such approval or disapproval shall be based
solely on Licensor's subjective standards and determined in
accordance with Licensor's sole and absolute discretion,
11.5 Manner of Payment. All amounts payable to
Licensor by Licensee pursuant to this Agreement shall be
paid by wire transfer in United States Dollars by
Licensee to Licensor in accordance with the reasonable
instructions of Licensor, or by check sent to the
attention of Xxxxxxx Xxxxxxxxxx, Candie's, Inc., 000
Xxxxxxxx Xxxxxx, Xxxxxxxx, Xxx Xxxx, 00000. Checks should
be made payable to "Xxxxxxx Xxxxxx & Co., Inc.", or to
such payee as Licensor shall designate at any time by
written notice to Licensee.
11.6 Interest. If Licensee fails to make any payment
due hereunder, the unpaid balance shall be subject to
interest charges per month equal to the prime rate in
effect at Licensor's principal commercial lender as of
the date that the amount is due, plus three points. If
Licensor must take legal action to collect any amount due
under this Agreement, Licensee shall pay Licensor's
collection costs, including attorneys' fees
11.7 Assignment. Licensee shall not assign or
sublicense any of its rights under this Agreement,
including the right to distribute Articles or to appoint
any manager or agent in connection therewith, to any
other Person without the prior written consent of
Licensor.
11.8 Severability. If any portion of this Agreement is
held to be invalid or unenforceable, the remaining
provisions shall not be affected and shall remain in full
force and effect. In the event that any portion or clause of
this Agreement is rendered invalid, that portion or clause
shall be stricken here from, and the remainder of the
Agreement shall remain in full force and effect.
11.9 Modification or Waiver This Agreement may be
modified or a requirement thereof waived only by a writing
signed by all Parties. The waiver of any requirement set
forth in this Agreement shall not constitute a permanent
waiver of that requirement or a waiver of any other
provision hereof.
11.10 Notices (a) All notices, requests, waivers, consents
and other communications hereunder shall be in writing
and shall be personally delivered, mailed by overnight
mail, overnight courier, certified U.S. Mail, postage
prepaid, return receipt requested or faxed (with
confirmation of receipt) to the addresses first named
above.
11.11 Entire Agreament. This Agreement embodies the
entire agreement of the Parties with respect to the subject
matter hereof and there are no further agreements or
understandings among the Parties with respect to such
subject matter,
IN WITNESS WHEREOF, this Agreement has been duly executed
and delivered as of the date first above written,
CANDIE'S INC. INNOVO, INC.
By: By: /s/ Xxxxxx Xxxxxx Xxxxxx, Xx
-----------------------------
Name: Name: Xxxxxx Xxxxxx Xxxxxx, Xx.
Title: Title: President
BONGO XXXX REGISTRATION INFORMATION
[FOR CANADA, MEXICO, PANAMA & UNITED STATES]
INNOVO GROUP INC.
July 26, 2002
Xx. Xxxxxxx X. Xxxxxxx
Director, Licensing & New Business Development
Candie's, Inc.
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
RE: License Agreement between Xxxxxxx Xxxxxx & Co., and
Innovo, Inc.
Dear Xxxxxxx:
This letter confirms that we have agreed to give up our
right to design, manufacture, market, sell, promote,
distribute, and/or advertise Bongo belts under the agreement
dated March 26, 2001.
Very truly,
/s/ Xxx Xxxxxx
--------------
Xxx Xxxxxx
President, Innovo Group Inc.
