EXHIBIT 10.6
AMENDMENT AND EXTENSION OF
LICENSE AND TECHNICAL SERVICES AGREEMENT
AND EXPORT SALES AGREEMENT
This Amendment and Extension of License and Technical Services
Agreement and Export Sales Agreement ("Amendment") is entered into this 30th day
of July, 2001 by and among XXXXXXX SHOES PRIVATE LIMITED, a company incorporated
under the Companies Act of 1956, and having its Registered Office at 00 Xxxxxxx
Xxxx, Xxxxxxxxxxxx, Xxxxxxx 000 000, Xxxxx ("Xxxxxxx") and Florsheim Group Inc.,
a Delaware corporation whose principal place of business is located at 000 Xxxxx
XxXxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx 00000 U.S.A. ("Florsheim").
1. Background. Xxxxxxx and Interco Incorporated, through its Florsheim
Shoe Company division ("Interco") entered into that certain Renewed
Joint Venture Agreement as of February 4, 1994 ("Joint Venture
Agreement"). Prior to the execution of the Joint Venture Agreement, the
parties were parties to other written agreements. As a result,
Florsheim's joint venture partner, K.Xxxxxxx Xxxxxx and his affiliates
have been engaged in the business of manufacturing products for and
selling products to Florsheim and its predecessors for a number of
years before execution of the Joint Venture Agreement.
a. In conjunction with the Joint Venture Agreement, Interco and
Xxxxxxx entered into that certain renewed Export Sales
Agreement on February 4, 1994, effective as of June 20, 1994
(the "Xxxxxxx Sales Agreement"), and that certain License and
Technical Services Agreement on February 4, 1994, effective as
of June 20, 1994 (the "Xxxxxxx License").
b. Interco assigned and delegated to The Florsheim Shoe Company,
and The Florsheim Shoe Company assumed from Interco, all of
Interco's rights and obligations under the Joint Venture
Agreement, the Xxxxxxx Sales Agreement and the Xxxxxxx
License. The Florsheim Shoe Company acquired from Interco all
of the common stock of Xxxxxxx issued to Interco. The
Florsheim Shoe Company changed its name in 1996 and is now
known as Florsheim Group Inc.
c. Concurrently with the execution of this Amendment, the current
shareholders of Xxxxxxx (collectively, the "Shareholders")
desire to purchase from Florsheim, and Florsheim desires to
sell to Shareholders, all of the shares of common stock of
Xxxxxxx owned by Florsheim, all pursuant to the terms and
conditions contained in that certain Stock Sale Agreement
entered into of even date herewith.
d. Florsheim and Xxxxxxx desire to extend the terms of the
Xxxxxxx Sales Agreement and the Xxxxxxx License, all pursuant
to the terms and conditions contained herein.
NOW, THEREFORE, in consideration of the foregoing and the mutual
promises and covenants hereinafter contained, and other good and valuable
consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereby agree as set
forth in this Amendment.
2. Amendment of Xxxxxxx Sales Agreement. Florsheim and Xxxxxxx hereby
agree to modify and amend the Xxxxxxx Sales Agreement, as follows:
a. If, in any calendar year, Florsheim and its designees do not
purchase at least fifty percent (50%) of the Current Capacity
of Products (the "Minimum Capacity"), then Xxxxxxx, shall be
entitled to manufacture such volume of products for persons or
entities other than Florsheim and its designees so that
Xxxxxxx is meeting its Minimum Capacity (but no more than such
volume). Notwithstanding the foregoing, Xxxxxxx may not use
any of Florsheim's trademarks, lasts, dies, patterns or other
intellectual property, including, without limitation, any of
the information provided under the Xxxxxxx License, in the
manufacture of any products for any person other than
Florsheim. All capitalized terms used in this Section are
defined on Exhibit A.
b. The Xxxxxxx Sales Agreement may be terminated by Xxxxxxx, upon
ninety (90) days written notice to Florsheim if Florsheim
shall be in breach of the applicable Agreement for sixty (60)
days following the date Xxxxxxx gave Florsheim written notice
of such breach. Xxxxxxx acknowledges that notice of
termination may be given to Florsheim only after expiration of
Florsheim's cure period described in this Section.
3. Extension of Agreements. In consideration for Florind's Shareholders'
execution and performance under a separate stock sale agreement,
Florsheim agrees that, upon payment in full of all amounts due to
Florsheim under the said Agreement, the term of the Xxxxxxx Sales
Agreement, and the Xxxxxxx License and, as any of them may be amended
by this Amendment, shall be automatically extended for an additional
term of ten (10) years up to and including June 20, 2014. As expressly
modified by this Amendment, the Xxxxxxx Sales Agreement, the Xxxxxxx
License will continue in full force and effect and Florsheim and
Xxxxxxx hereby ratify and affirm the same.
a. Notwithstanding the foregoing, Xxxxxxx and Florsheim agree
that Florsheim's current payment terms will continue in force
throughout the additional term of the Xxxxxxx Sales Agreement
and the Xxxxxxx License provided Xxxxxxx receives prompt
payment for their export bills from Florsheim, in a manner
consistent with past practices or as otherwise agreed between
the parties.
x. Xxxxxxx and Florsheim must agree on all price changes for
Products. Xxxxxxx agrees that all increases in the prices it
charges Florsheim for Products will be supported by
documentation reasonably acceptable to Florsheim indicating a
corresponding increase in Florind's costs of manufacturing the
Products. Xxxxxxx
-2-
may not increase the prices it charges Florsheim unless
Xxxxxxx has incurred a corresponding increase in its costs of
manufacturing, and all price increases will be limited to the
amount necessary to maintain Florind's current margin levels
after taking into account the increases in Florind's direct
costs of manufacturing the Products. All price changes shall
take effect only for orders accepted by Xxxxxxx after the date
that Florsheim and Xxxxxxx agree upon the same.
x. Xxxxxxx agrees that, upon the request of Xxxxxxxxx, Xxxxxxx
will meet with Florsheim to discuss methods to increase
Florind's efficiency in manufacturing Products and review the
prices charged by Xxxxxxx for Products. At Florsheim's
request, such discussions may include, without limitation,
negotiating in good faith to reduce the prices charged
Florsheim for Products where increased efficiency, volume or
other circumstances or market conditions warrant such
decreases.
4. Termination of Joint Venture Agreement. The Joint Venture Agreement
shall be terminated as of the Closing Date, without any further
obligation of any party thereunder to any other party, except for the
obligations of Xxxxxxx and Florsheim under the Xxxxxxx Sales Agreement
and the Xxxxxxx License.
5. Conditions Precedent to Amendment. This Amendment is contingent upon
the condition precedent that Florsheim must sell all of the shares of
stock of Xxxxxxx owned by Florsheim to the Shareholders. Until and
unless the Shareholders purchase such shares, this Amendment shall not
be of any force and effect.
6 Construction. This Amendment will be governed, construed and
interpreted in accordance with the laws and decisions of the State of
Illinois.
a. The Exhibits attached hereto, as may be modified from time to
time in accordance with this Amendment, are incorporated
herein and made a part hereof by this reference.
b. This Amendment constitutes the entire agreement among the
parties with respect to the subject matter hereof and
supersede any and all prior and contemporaneous oral or
written agreements among the parties with respect thereto.
c. This Amendment may not be amended, changed, modified or
terminated except by a writing signed by Florsheim,
Shareholders and Xxxxxxx.
d. This Amendment and the rights, covenants, duties and
obligations of the parties hereunder will be binding upon and
inure to the benefit of each of the parties hereto and each of
their respective legal representatives, successors and
permitted assigns, if any.
-3-
IN WITNESS WHEREOF, the parties have entered into this Amendment as of
the date first written above.
FLORSHEIM GROUP INC. XXXXXXX SHOES PRIVATE LIMITED
By: Xxxxxx X. Xxxxx By: K. Xxxxxxx Xxxxxx
-------------------------------- --------------------------
Title: Executive Vice President, CFO Title: Chairman
-4-
EXHIBIT A
"Current Capacity" means the percentage of Florind's "Full Capacity" currently
utilized by Florsheim and its designees which is Eight Thousand Four Hundred
(8,400) pairs of "Products" per day.
"Full Capacity" means Florind's full, annual manufacturing capacity, or Twelve
Thousand (12,000) units of "Products" per day.
"Products" has the meaning set forth in the Xxxxxxx Sales Agreement.
-5-
