Exhibit 10.5
LICENSE AGREEMENT
XXXXX XXXXXX MANUFACTURING B.V.
AND
USA OPTICAL DISTRIBUTORS, INC.
Certain portions of this agreement have been omitted and filed separately
with the Securities and Exchange Commission pursuant to a request for an order
granting confidential treatment pursuant to Rule 406 of the General Rules and
Regulations under the Securities Act of 1933.
LICENSE AGREEMENT
THIS AGREEMENT is made the 28th day of May, 1991.
BETWEEN
1. XXXXX ASHLEY MANUFACTURING B.V., a company incorporated in the Netherlands
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and having its principal place of business at Xxxxxxxxxxxxx 00, 0000 XX
Xxxxxxxxx, Xxx Xxxxxxxxxxx (hereinafter called "the Licensor") of the one
part; and
2. USA OPTICAL DISTRIBUTORS, INC., a company incorporated in the State of
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California having its principal office at 000X Xxxxx Xxxxxx Xxxxxx,
Xxxxxxxxx, XX 00000, X.X.X. (hereinafter called "the Licensee") of the
other part
WHEREAS:
1. The Licensor is a member of the Xxxxx Xxxxxx group of companies which
designs, manufactures and retails home furnishing products and garments,
marketed and sold in many countries of the world, including North America.
2. The Licensor is the registered proprietor of the trademarks XXXXX ASHLEY
and a distinctive oval device.
3. The Licensor is the proprietor of a wide range of distinctive textile
designs and patterns featured on Xxxxx Xxxxxx home furniture products and
garments.
4. The Licensee is an established designer, importer and wholesaler of
fashionable eyeglass frames, including in its range of eyewear styles a
portfolio of recognized brand names.
5. The Licensee now wishes to design, import and sell in North America certain
styles of eyeglass frames under the XXXXX XXXXXX xxxxx name.
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IT IS THEREFORE AGREED AND DECLARED AS FOLLOWS:
1. DEFINITIONS
As used in this Agreement:
1.1 "Affiliate" of a party means a company which is affiliated to such party by
one or more shareholdings such that, directly or indirectly, one of them is
subject to the control of the other or both are subject to the common
control of a third party;
1.2 "Approved Outlets" means first class retail outlets of a quality and
standing consistent both with the high reputation of the Licensor for
design, merchandising excellence and service and having the image and
market positioning of the XXXXX XXXXXX xxxxx;
1.3 "Commencement Date" means September 1, 1991, or such later date prior to
October 1, 1991 when the Licensor notifies the Licensee of its approval of
the Marketing Plan for the First Contract Year.
1.4 "Contract Term" means the term of this Agreement as provided in Clause 13;
1.5 "Contract Year" means a period of twelve consecutive months from 1st
February to 31st January during the Contract Term save that the first
Contract Year shall be deemed to commence on the Commencement Date and to
end on 31st January 1993 and the last Contract Year shall be deemed to
commence on 1st February of the Year during which the Contract Term
terminates and to end on the date of actual termination;
1.6 "Xxxxx Ashley Designs" means surface prints originated or developed by the
Licensor or its Affiliates;
1.7 "Xxxxx Xxxxxx Group" means the Licensor and its Affiliates referred to
collectively;
1.8 "Xxxxx Ashley Outlets" means outlets operated by a member of the Xxxxx
Xxxxxx Group in the Territory under the XXXXX ASHLEY name with the consent
of the Licensor;
1.9 "Licensee" means USA Optical Distributors, Inc., and any of its Affiliates;
1.10 "Licensor" means Xxxxx Xxxxxx Manufacturing B.V.;
1.11 "Marketing Plan" means a plan for marketing Products prepared by the
Licensee and agreed with the Licensor for each Contract Year as provided in
Clause 6;
1.12 "Minimum Royalty" means the minimum sum payable to the Licensor by the
Licensee by way of Royalty in respect of each Contract Year as provided in
sub-clause 9.3;
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1.13 "Net Sales" means the gross amount of wholesale sales of Products invoiced
by the Licensee less any deductions for returns, discounts or allowances
granted to customers, all of which are reasonable and customary in the
eyewear industry in the Territory, and less any bad debts, as that term is
recognized under generally accepted accounting principles in the Territory;
1.14 "Parties" means the Licensor and the Licensee;
1.15 "Products" means ophthalmic frames for prescription eyeglasses, eyeglass
cases and other accessories and related items, all of which are agreed as
Products intended for sale bearing the Trademarks, and which are listed in
Schedule I to this Agreement;
1.16 "Royalty" means the Royalty payable by the Licensee to the Licensor and
described in Clause 9;
1.17 "Selected Designs" means Xxxxx Xxxxxx Designs selected from time to time by
agreement between the Parties for application to the Products or packaging
or promotional materials therefor;
1.18 "Territory" means the United States of America, its territories and
possessions and Canada;
1.19 "Trademarks" means the trademarks of the Licensor listed in Schedule II,
together with such additional trademarks (if any) as may be included in
this Agreement from time to time by agreement between the parties;
2. CONDITION PRECEDENT
The Licensor's approval of the Marketing Plan for the first Contract Year
under sub-clause 6.4 is a condition precedent to the Licensor's grant of
the license under clause 3, and to all other rights, duties and obligations
under this Agreement which are unrelated to the Licensor's approval of the
Licensee's first Marketing Plan or to the Parties' confidentiality
obligations under clause 10. If the Licensor does not approve the
Licensee's first Marketing Plan by October 1, 1991, then this Agreement
shall (unless the Parties otherwise agree in writing) terminate on that
date. Upon such a termination, the parties shall have no further rights,
duties or obligations under this Agreement, except the confidentially
obligations under clause 10.
3. GRANT OF LICENSE
3.1 With effect from the Commencement Date the Licensor hereby grants to the
Licensee exclusive rights throughout the Contract Term
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(a) to use the Trademarks on or in connection with the importation,
distribution, marketing and sale of Products, and
(b) to apply Selected Designs to packaging or promotional materials for
the Products in the Territory upon the terms and conditions of this
Agreement.
3.2 Whilst the Licensor shall not, throughout the Contract Term, grant to any
third party the right to use the Trademarks for the sale of Products within
the Territory, nothing herein shall restrict the use, licensing,
manufacture or sale (as the case may be) by the Licensor or any Licensor
Affiliate either in the Territory or elsewhere of any goods other than
Products.
4. PRODUCT QUALITY AND APPROVAL
4.1 The type and quality of each item to be imported, marketed, distributed or
sold as a Product by the Licensee shall be the subject of discussion and
agreement with the Licensor prior to its adoption as a Product.
4.2 The Licensee may propose new styles to the Licensor at two possible times:
either at the same time as it is proposing a new Marketing Plan pursuant to
sub-clause 6.5, or at other times during the course of any Contract Year.
Styles proposed by the Licensee at the same time as the Marketing Plan
shall fall within categories of Products approved in that Marketing Plan.
Styles proposed at any other time during the Contract Year must fall within
categories of Products previously approved by the Licensor as part of the
most recently approved Marketing Plan.
4.3 Each style approved by the Licensor as a Product shall be included in
Schedule I.
4.4 Approval of a Product shall be evidenced by the authorized officers of the
Licensor and Licensee initialing that item when it is newly included
therein; PROVIDED THAT, without prejudice to the Licensor's absolute right
to approve the quality of any Product sold by the Licensee as elsewhere
herein provided, the Licensor's approval of any style as a Product shall be
deemed to have been granted if the Licensor fails to respond to the
Licensee's request therefor:
(a) in the case of styles submitted with the Marketing Plan, within TWENTY
(20) business days of receiving that request;
(b) in the case of styles submitted at other times during the Contract
Year, within FIFTEEN (15) business days of receiving that request.
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4.5 Products shall be of the best quality materials and consistent both with
the highest standards of craft and skill associated with the reputation of
the Licensor as designer, manufacturer and retailer of high quality fashion
goods.
4.6 Prior to commissioning production in commercial quantities of any Product
the Licensee shall:
(a) procure that the Licensor shall, if it so chooses, have the right to
inspect the places of proposed manufacture of such Product for the
purpose of ascertaining that the Licensor's quality standards are
being met, and
(b) submit free of charge at least three samples of each such Product to
the Licensor for approval. No Product shall be sold by the Licensee
in the absence of such approval. All Products thereafter offered for
sale shall correspond with the approved sample.
4.7 No item which fails to meet the quality standards set forth in sub-clause
4.2 shall be sold as a Product. The Licensee shall procure that its
suppliers are held to the same requirement.
4.8 The Licensee shall ensure that all Products shall conform with all laws and
regulations applicable thereto in the Territory.
5. SALES AND PROMOTION
5.1 The Licensee shall use its best efforts to promote and extend the sale of
Products throughout the Territory to all potential Approved Outlets.
5.2 The Licensee shall secure and maintain the distribution of adequate stocks
of Products to (and only to) Approved Outlets such that the Products may be
made readily and continuously available to customers.
5.3 The Licensor hereby places the Licensee on notice that it may inspect such
Approved Outlets at any time throughout the Contract Term to assure itself
that the provisions of this Clause are being complied with. If the
Licensor notifies the Licensee that an outlet at which Products are sold
does not (in the absolute discretion of the Licensor) meet the standards of
an Approved Outlet, the Licensee shall procure that sales of Products at
such outlets be discontinued at the earliest possible opportunity.
5.4 Products shall not be exported or sold by the Licensee for re-sale outside
the Territory.
5.5 All advertising and promotional materials and activities relating to the
Products shall require the Licensor's prior approval and all advertising
and promotional proposals for
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the Products shall accordingly be submitted by the Licensee to the Licensor
for prior approval. In respect of proposals by the Licensee for
promotional materials and activities which have been contemplated by the
Marketing Plan for the period to which they relate, the Licensor shall
respond as quickly as practicable and in any event within FIFTEEN (15)
business days from receipt of the same, in default of which response the
Licensor's approval shall be deemed to have been granted.
5.6 The Licensor and its Affiliates in the Territory may purchase Products from
the Licensee at the lower of
(a) Licensee's standard wholesale price, including customary trade
discounts and advertising allowances, or
(b) the lowest wholesale price at which the Licensee sells equivalent
quantities of Products to its customers in the Territory, on at least
net THIRTY (30) day terms.
6. MARKETING
Marketing Plans
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6.1 The Licensee shall, in consultation with the Licensor, prepare and propose
to the Licensor a Marketing Plan in respect of each Contract Year.
6.2 The Marketing Plan shall summarize all market information relevant to the
period to which it relates including (without limitation):
(a) a description of the Products to be sold, together with proposals for
categories and for designs of Products, and including proposed sources
of supply;
(b) the number and identity of prospective customer accounts;
(c) suggested wholesale price points for the Products;
(d) the anticipated volume expected to be sold of each of the Products;
(e) an analysis of competitors' Products by price band;
(f) proposals for the interpretation of the Xxxxx Xxxxxx xxxxx image in
terms of advertising concepts and point of sale and other promotional
materials;
(g) proposed advertising and promotional activities and expenditures for
the Products; and
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(h) proposed methods of sales and distribution.
6.3 To the extent practicable, the Licensee shall, upon submission of the
Marketing Plan, provide the Licensor with three (3) samples of each Product
which is described in the Marketing Plan and which is being submitted for
approval.
6.4 The Marketing Plan for the First Contract Year shall be proposed to the
Licensor by the Licensee no later than 31st July 1991. The Licensor shall
respond to such proposal no later than 31st August 1991. Subsequent
Marketing Plans shall be submitted to the Licensor for approval no later
than SIX (6) months in advance of the commencement of the Contract Year to
which they relate.
Approval by Licensor
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6.5 No Marketing Plan shall be implemented unless and until the written
approval of the Licensor has been obtained, provided that if the Licensor
fails to respond to the proposal for a Marketing Plan referred to in sub-
clause 6.4 within TWENTY (20) business days after receipt thereof, the Plan
shall be deemed approved as submitted.
6.6 The Licensee shall spend no less than CONFIDENTIAL INFORMATION OMITTED AND
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION of its annual
Net Sales of Products on advertising and promotional activities for the
Products in the Territory.
Additional Products
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6.7 The Parties recognize a request by the Licensee to sell sunglasses bearing
the Trademarks, either under this Agreement or a separate agreement.
Accordingly the Licensor agrees to enter into good faith discussions with
the Licensee within ONE HUNDRED AND EIGHTY (180) days from the Commencement
Date, with a view to accommodating the Licensee's proposal. The Licensor
further agrees that, until such period has expired, it will not approach
other potential distributors for sunglasses in the Territory, provided that
such restriction shall not in any event endure beyond a period of ONE
HUNDRED AND EIGHTY (180) days from the Commencement Date. If the Licensor
and the Licensee do not enter into an agreement for the Licensee to sell
sunglasses bearing the Trademarks, whether pursuant to this or another
agreement, and the Licensor enters into an agreement with a third party to
sell sunglasses bearing the Trademarks in the Territory, the Licensor shall
hold that third party to the same standards as the Licensee under this
Agreement with respect to quality, styling and Approved Outlets.
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7. MARKET REPORT
Within two months of the end of each Contract Year the Licensee shall
submit to the Licensor a written report giving a full resume of sales and
promotional activities and expenditures during the Year.
8. TRADEMARKS AND COPYRIGHT
8.1 The Licensee acknowledges that the Trademarks and the goodwill attaching
thereto are and shall remain the property of the Licensor.
8.2 The Licensee shall not promote or sell Products except in conjunction with
Trademarks and shall not use Trademarks or Selected Designs except in
relation to Products in a manner approved by the Licensor.
8.3 All labels, packaging, display, and promotional and advertising materials
relating to the Products and their promotion and sale shall bear an
acknowledgement as to the proprietorship of the Trademarks and the license
granted to the Licensee as follows:
"Sold by USA Optical under license from Xxxxx Ashley"
8.4 Wherever Selected Designs are used on packaging (and elsewhere as the
Licensor may require or approve) the Licensee shall affix or apply a notice
acknowledging the Licensor's copyright ownership as follows:
"(C) Xxxxx Xxxxxx 19 [date* of design]"
8.5 Save as provided in sub-clause 8.3 and except as otherwise agreed in
writing, there shall be no use of the Licensee's name or trademarks on the
Products or on any labels, packaging, display or advertising materials
related to the Products.
8.6 All rights arising from the use by the Licensee of the Trademarks shall
enure to the benefit of the Licensor. This license shall operate solely as
a permission for the Licensee to use the Trademarks and Selected Designs in
the manner herein specified and shall not be deemed to confer on the
Licensee any proprietary right in the Trademarks or Selected Designs, nor
shall the Licensee acquire any registered design, registered trademark or
other industrial property rights relating thereto.
8.7 If the Licensee becomes aware of any infringements of the Trademarks or
copyrights in the Selected Designs, or any act of unfair competition or any
trademark application in the Territory which in any way may impair the
value or validity of the Trademarks, or the other rights granted by the
Licensor hereunder, the Licensee will promptly notify the Licensor of that
event. The Licensor undertakes that it will respond to such notification
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by taking such steps as it may deem reasonably necessary to protect the
Licensee's rights hereunder, it being understood that the institution and
conduct of any litigation which ensues, the selection of counsel and the
settlement of the litigation and claims affecting the Trademarks or
Selected Designs shall be entirely within the discretion of the Licensor,
under the Licensor's control and at the Licensor's expense. Should legal
action against a third party be deemed necessary or desirable by the
Licensor, the Licensee will, if requested by the Licensor, cooperate with
the Licensor in rendering appropriate assistance in instituting and
prosecuting such legal action, provided that the reasonable expenses which
the Licensee thereby incurs and the other costs and expenses of such legal
action, including legal fees, shall be borne by the Licensor.
8.8 During the Contract Term, or upon the termination of this Agreement for any
reason, the Licensee shall, upon request of the Licensor, execute such
documents as the Licensor may reasonably require, including registered user
agreements, to reflect the Licensor's ownership of the Trademarks. The
Licensee hereby grants to the Licensor a power of attorney coupled with an
interest to execute such agreements as Licensee's attorney-in-fact. The
Licensor shall promptly provide the Licensee with copies of any such
agreements.
8.9 The Licensor represents to the Licensee:
(a) that it is the owner of the Trademarks and of the copyrights in all
the Selected Designs;
(b) that it has the sole and exclusive right to deal with the same and to
enter into license agreements therefor;
(c) that none of the Trademarks or the Selected Designs infringes any
trademark, service xxxx, trade name, copyright design or work of any
other party.
9. ROYALTY
9.1 In consideration for the rights herein granted (and subject to the payments
of Minimum Royalty herein contained), the Licensee shall pay to the
Licensor a royalty at such rate as, after deduction of any withholding or
other taxes (if any) imposed within the Territory and required to be
deducted by the Licensee, shall amount to CONFIDENTIAL INFORMATION OMITTED
AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION of the Net
Sales of all Products sold by the Licensee.
9.2 The Royalty shall be determined and paid in respect of each Contract Year
quarter ending on 30th April, 31st July, 31st October and 31st January
during the Contract Term.
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9.3 In respect of each Contract Year, the amount of Royalty payable to the
Licensor shall in no event be less than the Minimum Royalty quoted below:
Contract Year US $
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1991/93 CONFIDENTIAL INFORMATION
1993/94 OMITTED AND FILED SEPARATELY
1994/95 WITH THE SECURITIES AND
1995/96 EXCHANGE COMMISSION
Minimum Royalty shall be appropriately pro-rated for any period during the
Contract Term that is less than a full Contract Year.
9.4 the Minimum Royalty shall be payable as follows:
9.4.1 with respect to the Contract Year 1991/93
(a) on the CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION, a first CONFIDENTIAL
INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION installment of CONFIDENTIAL INFORMATION
OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION;
(b) within CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION of the end of each of the
last CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION, further installments each
of CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION;
9.4.2 with respect to each subsequent Contract Year, within CONFIDENTIAL
INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION of the end of each CONFIDENTIAL INFORMATION
OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION, a sum equivalent to CONFIDENTIAL INFORMATION OMITTED AND
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
attributable to such CONFIDENTIAL INFORMATION OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION;
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provided that, in each Contract Year, any excess of actual Royalty paid per
quarter over the applicable installment of Minimum Royalty shall be carried
forward and credited against subsequent installments of Minimum Royalty
payable in respect of such Contract Year.
9.5 Except as provided in subclauses 13.4 and 13.5, failure to pay the Minimum
Royalty as provided in sub-clause 9.4 shall constitute a material breach of
this Agreement within the meaning of sub-clause 13.2(a).
9.6 Royalty payments pursuant to sub-clause 9.7 shall credit the Licensee with
amounts of Minimum Royalty, and Minimum Royalty payments pursuant to sub-
clause 9.4.2 shall credit the Licensee with amounts of Royalty paid during
the Contract Year in excess of the Minimum Royalty.
9.7 Payment of Royalty in respect of each quarter shall be effected within
CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION of the end thereof, and payment shall be
accompanied by a report from the Licensee showing the names of customers to
whom the Licensee sold Products during the period, and a precise
computation of Net Sales upon which the Royalty payment was based,
including the quantity, description and value of Products sold by the
Licensee during the quarter, and any deductions for returns, discounts,
allowances granted to customers, or bad debts.
9.8 The Licensee shall keep adequate and accurate records in sufficient detail
to enable the Royalty to be readily determined and shall, upon the
Licensor's request, permit such records to be examined by the Licensor's
representative at any time during normal business hours to verify Royalty
reports and payments. In the event that such examination reveals an
understatement of Royalty due to the Licensor in excess of FOUR PER CENT
(4%), the Licensee shall be liable for costs of the Licensor's audit and
the incidental expenses incurred in connection with the audit. Those costs
and expenses shall be separate from and in addition to the Royalties owed
to the Licensor.
9.9 Unless otherwise specified by the Licensor, all payments due by the
Licensee to the Licensor hereunder shall be computed and paid in US
dollars.
9.10 All overdue amounts shall bear interest at the rate of ONE PER CENT (1%)
per month.
9.11 Until further notice from Licensor, all sums due to the Licensor hereunder
shall be paid in US dollars by international wire transfer to the following
account:
ABN Bank
Xxxxxxxxxxxx 00-00
Xxxxxxxxx 0000 XX
00
Xxx Xxxxxxxxxxx
Account Name: Xxxxx Ashley Manufacturing B.V.
Account No.:54 02 74 348
Swift Code: ABN ANL 2A
10. CONFIDENTIALITY
Any information acquired by one Party (the "First Party") in the course of
this Agreement regarding the affairs and business of the other Party (the
"Second Party") and its Affiliates shall, during the Contract Term and for
TEN (10) years thereafter, be treated by it as confidential and shall not
be disclosed without the prior consent of the Second Party, whether such
information is disclosed to the Second Party by the First Party or
otherwise obtained by the First Party as a result of its association with
Second Party except to the extent either required to be divulged in the
performance of this Agreement or that such information falls within the
public domain. Information to be treated as confidential under this
Agreement shall include, without limitation, the Parties' customer lists,
unpublished designs, marketing and business plans, telemarketing and other
unique sales techniques, and sources of supply.
11. LIABILITY, INDEMNITY AND INSURANCE
11.1 The Licensor and the Licensee each acknowledges and represents to the other
that it is not a joint venturer, partner or co-venturer with the other and
that neither party shall incur any liability on behalf of the other party
or purport to pledge the credit of the other party or accept any order or
obligation to be binding upon the other party.
11.2 The Licensee shall indemnify and hold the Licensor, its Affiliates and
their respective officers and directors, harmless from all claims, suits,
demands, actions, losses, damages and costs, including reasonable legal
fees and court costs, which the Licensor may incur or suffer by reason of
any acts or omissions of the Licensee in connection with the importation,
distribution, marketing or sale of the Products, including, but not limited
to
(a) any manufacturing defect in a Product;
(b) the Licensee's manufacture, distribution or sale of the Products; or
(c) the labelling, packaging or advertising of the Products in violation
of any applicable federal, state or local law or regulation.
11.3 So long as this Agreement remains in effect and for a period of not less
than THREE (3) years thereafter, the Licensee agrees at its expense to
carry product liability insurance
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with respect to the Products with limits of liability of not less than ONE
MILLION US DOLLARS (US$1,000,000) per accident and ONE MILLION US DOLLARS
(US$1,000,000) per person and to name the Licensor and its Affiliates and
their respective officers, employees and directors, as a party insured
under such insurance policy (with a waiver of subrogation in favor of the
Licensor). Prior to offering any of the Products for sale and within TEN
(10) days of a request by the Licensor, the Licensee shall furnish the
Licensor a certificate of insurance evidencing that the policy with the
minimum of coverage limits set forth in the preceding sentence is in full
force and effect.
12. COMPETITION
The Licensee undertakes that it will not without the prior consent of the
Licensor, throughout the Contract Term and for a period of SIX (6) months
thereafter, engage directly or indirectly in the Territory in the
importation, distribution, promotion or sale (either on its own account or
for or on behalf of any other party) of any range of ladies' designer
eyewear that is similar to the Products in price and any of (i) style, (ii)
market position and (iii) market segment, nor engage in activities which
would prejudice the performance of its obligations under this Agreement,
provided that the Parties acknowledge that:
(a) the wholesale distribution of ladies' and men's designer eyewear as
currently carried on by the Licensee; and
(b) the importation, distribution, promotion and sale of the lines of
ladies designer eyewear set forth in Schedule III
do not constitute prejudicial activities.
13. DURATION
13.1 The Contract Term shall commence on the Commencement Date and shall
continue, unless terminated earlier according to sub-clause 13.2, until
31st January 1996.
13.2 Either party may terminate this Agreement at any time by giving the other
party notice to that effect, stating the precise reasons therefor,
effective on the date when notice is given or any subsequent date specified
in the notice, in any of the following events:
(a) any material breach by the other party for which effective remedial
action has not been undertaken within THIRTY (30) days after notice is
given specifying the breach and requiring remedy of the same;
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(b) if the other party shall be unable to pay its debts in the ordinary
course of business or shall enter into liquidation (otherwise than for
reason of corporate amalgamation or reconstruction) or shall become
bankrupt or insolvent, or shall be placed in the control of a receiver
or trustee, whether compulsorily or voluntarily.
13.3 Without prejudice to the foregoing, the Licensor shall have the right to
terminate this Agreement as in the manner aforesaid in the following
events:
(a) the Licensee fails in respect of each of any two Contract Years to
generate and pay to the Licensor amounts by way of Royalty which
exceed the Minimum Royalty relative to such Year;
(b) the Licensee fails to propose a selection of styles of eyewear and/or
accessories which the Licensor is willing to approve as Products after
consideration in good faith and having regard to the nature of the
target market and the particular requirements of the Product customer;
(c) the Licensee fails in any Contract Year to spend more than
CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION of annual Net Sales on advertising
and promotional activities as contemplated by sub-clause 6.6;
(d) the management and/or control of the Licensee passes from the present
managers, shareholders, owners or controllers to other parties whom
the Licensor may reasonably regard as unsuitable.
13.4 Without prejudice to the foregoing, any acts or omissions by the Licensor
resulting in one or more of the following events shall be deemed a material
breach of this Agreement by the Licensor:
(a) a third-party licensee of sunglasses bearing the Trademarks, as
contemplated by sub-clause 6.7, is not held to the same standards as
the Licensee under this Agreement with respect to quality, styling or
Approved Outlets, and as a result the value of the Trademarks is
significantly impaired;
(b) any claim or litigation referred to in sub-clause 8.7 is not pursued
with sufficient rigor, resulting in significant impairment to the
value or validity of the Trademarks.
13.5 In the event of a material breach under sub-clause 13.4, the Licensee shall
have the right to withhold all Minimum Royalty and Royalty payments until
such time as the material breach has been remedied, at which time all such
Minimum Royalty and Royalty
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payments shall be due and payable. No withholding of Minimum Royalty or
Royalty payment under this sub-clause 13.5 shall constitute a material
breach of this Agreement.
14. CONSEQUENCES OF TERMINATION
On termination of this Agreement (other than a termination pursuant to sub-
clause 3.3):
14.1 the Licensee shall promptly pay to the Licensor all amounts due by way of
Royalty or otherwise to the date of termination (which shall be deemed to
be the end of the calendar quarter in which it falls);
14.2 the Licensee shall make no further use of the Trademarks or Selected
Designs (subject to sub-clause 14.3);
14.3 the Licensor will, except where termination based on material breach was
occasioned by the Licensor by reason of the Licensee's gross misconduct,
permit the Licensee to dispose of any stock then in hand within up to SIX
(6) months following the date of termination subject to payment of Royalty
in respect of such sales as provided in Clause 9; and
14.4 the Licensor shall be given a right of first refusal to purchase stocks of
Products on the terms, subject to the conditions, and at a price, no less
favorable than the terms conditions and price offered to third party
purchasers.
15. EXPENSES
The expenses incurred by the Licensee in performance of this Agreement,
including all travel and out-of-pocket expenses, shall be solely for its
own account.
16. AGREEMENT PERSONAL
This Agreement is personal to the Parties and may not be assigned or sub-
contracted by either party without the consent of the other.
17. DISPUTES
17.1 Any controversy arising out of or relating to this Agreement shall be
submitted to and decided by arbitration only in the City of New York,
pursuant to the Rules then outstanding of the American Arbitration
Association. Unless the parties agree otherwise, there shall be three
arbitrators in the arbitration proceedings. Each party shall choose one
arbitrator, and the two arbitrators chosen shall choose a third arbitrator.
The New York State laws of evidence at trial, and of discovery in civil
matters, shall apply to the arbitration proceedings. The arbitrators
sitting in any controversy shall have no power
15
to alter or modify any provision of this Agreement or to render any award
which, by its terms, effects any such alteration or modification. The
parties consent to the jurisdiction of the Supreme Court of the State of
New York for all purposes in connection with this agreement to arbitrate,
and the parties consent that such Court may take the necessary proceedings
for the confirmation or disaffirmance of any award and may enter judgment
thereon. Any process, notice of motion or other application to said Court
or to a Justice thereof may be served within or without the territorial
jurisdiction of said Court, by registered or certified mail, return receipt
requested, or by personal service, or in such other manner as is
permissible under the Rules of said Court, provided a reasonable time for
appearance, not less than TEN (10) business days, is allowed. In the event
of a dispute or controversy arising under this Agreement, the prevailing
party shall have the right to recover its reasonable attorney's fees and
costs.
17.2 This Agreement shall be governed by, and interpreted in accordance with,
the laws of the State of New York.
18. PURCHASE OF SELECTED DESIGNS
The Licensee may purchase materials bearing Selected Designs from the
Licensor or its Affiliates at the lower of
(a) the Licensor's or its Affiliates' standard wholesale price, including
customary trade discounts, or
(b) the lowest wholesale price at which the Licensor or its Affiliates
sell such materials to its customers, on at least net THIRTY (30) day
terms, provided that the Licensee's purchase orders relate to similar
quantities of the Selected Designs, to the extent that such materials
may be reasonably required by the Licensee for the production of
Products or for the purposes of marketing or promoting the Products
hereunder.
19. GENERAL PROVISIONS
Entire Understanding
--------------------
19.1 This Agreement (including the Marketing Plans and other documents to be
agreed to pursuant this Agreement) constitutes the sole agreement between
the Parties.
Modifications
-------------
19.2 This Agreement may not be modified otherwise than by written instrument
signed by both Parties.
16
Communications
--------------
19.3 Every notice or other communication under this Agreement shall be in
writing delivered personally, by telex, or by facsimile addressed to the
relevant Party, with its address set out below, or to any telex or
facsimile number published as belonging to it (or such other address, telex
or facsimile number as is notified in the manner herein provided by one
Party to the other). Every notice or other communication shall be deemed
to have been received, in the case of a telex message or facsimile
transmission, at the time of dispatch or transmission, and in the case of a
letter when delivered personally.
19.4 In proving the giving of a notice hereunder it shall be sufficient to prove
that the notice was left or that the telex bears the correct answerback of
the Party to whom the notice was sent, or that the sender's original
facsimile has printed on it or attached to it a proper automated
endorsement to the effect that it was received by or at the facsimile
number of the Party to whom the facsimile was sent.
Communications to the Licensor:
------------------------------
Xxxxx Xxxxxx Manufacturing B.V.
Xxxxxxxxxxxxx 00
0000 XX
Xxx Xxxxxxxxxxx
For the Attention of the Managing Director
with copy to:
Xxxxx Ashley Holdings plc
000 Xxxx Xxxx
Xxxxxxxxxx
Xxxxxxxxx
XX0 0XX
United Kingdom
For the Attention of the Company Secretary
Communications to the Licensee:
------------------------------
USA Optical Distributors, Inc.
000X Xxxxx Xxxxxx Xxxxxx
Xxxxxxxxx
XX 00000
Xxxxxx Xxxxxx of America
For the Attention of the President
17
Severability
------------
19.5 The provisions contained in this Agreement are considered reasonable by the
Parties, but if any such provision is found to be invalid or unenforceable
but would be valid if some part thereof were deleted or the scope of
application reduced, such provision shall apply with such modifications as
may be necessary to render it valid or enforceable. In any event the
balance of this Agreement shall remain in effect.
IN WITNESS WHEREOF the Parties hereto have caused this Agreement to be executed
by their duly authorized representatives the day and year first above written.
SIGNED by A.M.S. ) /s/ A.M.S.
----------------------------- -------------------------------
for and on behalf of )
XXXXX XXXXXX MANUFACTURING B.V. )
-------------------------------
SIGNED by Xxxxxxx Xxxxx ) /s/ Xxxxxxx Xxxxx
------------------------ --------------------------------
for and on behalf of )
USA OPTICAL DISTRIBUTORS, INC. )
------------------------------
18
SCHEDULE I
PRODUCTS
[Agreed styles to be described]
19
SCHEDULE II
TRADEMARKS
XXXXX ASHLEY
[Trademark Graphic]
20
SCHEDULE III
LINES OF LADIES DESIGNER EYEWEAR
WHICH DO NOT CONSTITUTE PREJUDICIAL ACTIVITIES
WIMBLEDON
CALIFORNIA ATTITUDES
GENERIKA
CAMELOT
21
AMENDING AGREEMENT
THIS AGREEMENT is made the 2nd day of August, 1993.
BETWEEN
1. XXXXX XXXXXX MANUFACTURING B.V. a company incorporated in the
-------------------------------
Netherlands and having its principal place of business at Xxxxxxxxxxxxx 00, 0000
XX Xxxxxxxxx, Xxx Xxxxxxxxxxx (hereinafter called "the Licensor") of the one
part; and
2. SIGNATURE EYEWEAR, INC., (formerly known as USA OPTICAL DISTRIBUTORS,
-----------------------
INC.), a company incorporated in the State of California having its principal
office at 000 Xxxxx Xxxxxx Xxxxxx, Xxxxxxxxx, XX 00000, X.X.X. (hereinafter
called "the Licensee") of the second part; and
3. XXXXX XXXXXX LIMITED, a company incorporated in England and having its
--------------------
registered office at 000 Xxxx Xxxx, Xxxxxxxxxx, Xxxxxxxxx, Xxxxxxx (hereinafter
called "the Additional Licensor") of the third part.
WHEREAS:
1. The Licensor and the Licensee entered into a License Agreement dated
28 May, 1991 (the "License Agreement") granting the Licensee certain rights to
use the Trademarks in connection with the importation, distribution, marketing
and sales of Products; and
2. The Licensor and the Licensee desire to amend the License Agreement as
set forth herein; and
3. The Additional Licensor is the owner of the Trademarks in the United
Kingdom, and the Licensor is the owner of the Trademarks in territories outside
the United Kingdom.
IT IS THEREFORE AGREED AND DECLARED AS FOLLOWS:
1. Except as otherwise set forth in this Agreement, all defined terms shall
have the same meaning as set forth in the License Agreement.
2. Sub-clause 1.15 is hereby deleted, and the following substituted in its
place:
"1.15 "Products" means such ophthalmic frames for prescription eyeglasses,
sunglasses, eyeglass cases and other accessories and
related items,
1
all of which are intended for sale bearing the
Trademark, which are listed in Schedule I to this
Agreement, as amended from time to time;"
3. Sub-clause 1.18 is hereby deleted, and the following substituted in its
place:
"1.18 "Territory" means the United States of America (including its
territories and possessions) and Canada, as well as the
following countries added as of the date of this
Amending Agreement, subject to the restrictions set
forth in sub-clauses 3,1.2 and 3.1.3 below: Mexico, New
Zealand, Australia, South Africa, the United Kingdom,
and every other country in Europe (individually, an
"Additional Country");"
4. Clause 3.1 is hereby deleted, and the following is substituted in its
place:
"3.1.1 The Commencement Date of this Agreement was 19 September, 1991. As
of February 1, 1993, the Licensor and the Additional Licensor (in
respect of the United Kingdom) hereby grant to the Licensee exclusive
rights, subject to sub-clauses 3.1.2 and 3.1.3 below, throughout the
Contract Term
(a) to use the Trademarks on or in connection with the importation,
distribution, marketing and sale of Products, and
(b) to apply Selected Designs to packaging or promotional materials
for the Products
in the Territory upon the terms and conditions of this Agreement;
3.1.2 Until January 31, 1994, the Licensee shall have the exclusive right
to present a marketing plan relating to the Licensee's marketing and
sales of Products in any country outside the United States or Canada
(an "Additional Country Marketing Plan"). The Licensor's approval of
the Licensee's Additional Country Marketing Plan for any specific
country, as presented to the Licensor, shall be a condition precedent
to the Licensee's sales of Products in that country. If the Licensor
fails to respond to any such Additional Country Marketing Plan within
30 days after receipt thereof, that Additional Country Marketing shall
be deemed approved as submitted.
If the Licensor has not approved an Additional Country Marketing Plan
for any specific Additional Country after 31 January, 1994 (or, in the
case of an Additional Country Marketing Plan presented during January
1994, 30 days after Licensor's receipt thereof), then the Licensee
shall no longer have the exclusive
2
right to present to the Licensor an Additional Country Marketing Plan
for that Additional Country. Instead, the Licensee shall have the
right of first refusal to sell Products in any such country, in
accordance with sub-clause 3.1.3 below.
3.1.3. Under the right of first refusal granted in sub-clause 3.1.2, on or
after 1 February, 1994, the Licensor shall have the right to grant to
a third party the exclusive right to sell Products in any specified
Additional Country for which the Licensor has not already approved a
plan by Licensee to sell Products, subject to the terms of this
subclause 3.1.3. In the event that the Licensor grants such a right
to a third party, the definition of the term "Territory" under sub-
clause 1.18 of this Agreement shall be amended to reflect that grant.
The procedures for granting such a right are as follows.
If, on or after 1 February, 1994, the Licensor receives an Additional
Country Marketing Plan from a third party, the Licensor shall deliver
a written notice (the "Licensor's Notice") to the Licensee specifying
the following material terms of the offer: the amount of any advance
payment, the amount of minimum royalty payable, the territory covered
by the offer, the length of the proposed license, and the commencement
date of the proposed license. The Licensor shall not be required to
deliver to the Licensee any information with respect to any other term
of the third party's offer. The Licensor's Notice shall further state
(a) that the third party licensee shall be held to the same standards
as the Licensee under this Agreement with respect to quality, styling
and Approved Outlets, and (b) that the third party licensee shall not
be permitted to use the marketing materials or the eyeglass frame
styles developed by the Licensee pursuant to this Agreement.
The Licensee shall have 30 days to respond to the Licensor's Notice.
If the Licensee does not respond to the Licensor's Notice within 30
days, then the Licensor shall have the right to grant an exclusive
license to the third party, under the terms set forth in the
Licensor's Notice (the "Third Party License"). If the Licensee
responds to the Licensor's Notice within that 30 day period,
delivering an Additional Country Marketing Plan for the territory
specified in the notice, and specifying terms that do not exceed the
-------------
third party's offer in all material respects (the "Licensee's
Notice"), then the Licensor shall have the right to determine in the
Licensor's sole discretion whether to grant the exclusive right to
sell Products in that Additional Country to the Licensee or the third
party, or to refrain from granting that right at that time. If the
Licensee's Notice specifies terms that exceed the third party's offer
------
in all material respects, then the Licensor shall not have the right
to grant the exclusive right to sell Products in that Additional
Country to the third party at that time, but may, in its discretion,
(a) grant that right to the Licensee, (b) solicit from the third party
an offer which matches or exceeds the Licensee's offer in all material
respects, or (c) refrain from granting that right at that time. If
Licensor elects to solicit such an offer
3
from the third party, and then within a reasonable period of time
obtains from the third party an offer which matches or exceeds the
Licensee's offer in all material respects, the Licensor shall have the
right to grant the exclusive right to sell Products in that Additional
Country to the third party.
In determining whether or not the Licensee's offer matches or exceeds
the third party's offer, the Licensor shall examine the Licensee's
past performance in countries outside the United States and Canada,
taking into consideration the Licensee's decisions, after consultation
with Licensor, to grow slowly in order to ensure success.
The Licensee's right of first refusal relating to the territory
covered by the Licensor's Notice shall terminate once the Licensor and
the third party have entered into the Third Party License. If the
Third Party License is terminated for any reason, the Licensor shall
notify the Licensee within a reasonable period of time of such
termination, and the Licensee shall have the right to make an offer to
have the exclusive license for the territory previously covered by the
Third Party License, but shall no longer have a right of first refusal
related to that territory.
Any disputes arising out of or otherwise related to the right of first
refusal granted under sub-clauses 3.1.2 and 3.1.3 of this Agreement
shall be submitted to arbitration pursuant to the rules of the
American Arbitration Association."
5. The portion of Clause 8 in quotation marks is hereby deleted, and the
following substituted in its place:
"Sold by Signature Eyewear under license from Xxxxx Xxxxxx"
6. Clause 9.3 is hereby deleted, and the following substituted in its place:
"9.3 The Amount of Royalty in U.S. dollars payable for each Contract Year
for each Category defined in sub-clause 13.1.4 shall in no event be
less than the Minimum Royalty amount for that Category as set forth
below:
4
Minimum Minimum Minimum
------- ------- -------
Royalty Royalty Royalty
------- ------- -------
for for for
--- --- ---
USA & Additional Non-
----- ---------- ----
Canada Countries Optical Total
------ ---------- ------- -----
Contract Optional Optical Sunwear Minimum
-------- -------- ------- ------- -------
Year Sales Sales Sales Royalty
---- ----- ----- ----- -------
INITIAL TERM:
1993/94 CONFIDENTIAL INFORMATION OMITTED
1994/95 AND FILED SEPARATELY WITH THE
1995/96 SECURITIES AND EXCHANGE COMMISSION
FIRST RENEWAL TERM
1996/97
1997/98 CONFIDENTIAL INFORMATION OMITTED
1998/99 AND FILED SEPARATELY WITH THE
1999/00 SECURITIES AND EXCHANGE COMMISSION
2000/01
ADDITIONAL RENEWAL TERMS
2001/02
2002/03 CONFIDENTIAL INFORMATION OMITTED
2003/04 AND FILED SEPARATELY WITH THE
2004/05 SECURITIES AND EXCHANGE COMMISSION
2005/06
7. Clause 13.1 is hereby deleted, and the following substituted in its place:
"13.1.1 The Contract Term commenced 19 September, 1991, and shall, unless
terminated earlier in accordance with sub-clauses 13.2, 13.3 or
13.4(b) below, remain in effect for an initial term ending on 31
January, 1996 (the "Initial Term"). The Contract Term is subject
to a first automatic renewal term of five Contract Years (the
"First Renewal Term"), as set forth in sub-clause 13.1.2, and
additional one-year renewal terms (individually, an "Additional
Renewal Term"), as set forth in sub-clause 13.1.3 below.
13.1.2 Subject to sub-clauses 13.2 and 13.4(b), on February 1, 1996 the
Contract Term shall be automatically renewed for the First
Renewal Term for all
5
Categories (as defined in sub-clause 13.1.4), provided that the
amount of Royalty payable to the Licensor for each of the final
two Contract Years of the Initial Term for each such Category is
equal to or greater than the Minimum Royalty for that Category
during those Contract Years, as set forth in sub-clause 9.3
above.
The Licensor shall have the right, for a period of 90 days after
31 January, 1996, to terminate the Licensee's rights with respect
to any Category defined under sub-clause 13.1.4 above if the
Licensee fails in respect of any two Contract Years to have
sufficient Net Sales to generate Royalty amounts which equal or
exceed the Minimum Royalty for that Category and those Contract
Years; if the Licensor does not exercise such right to terminate
the Licensee's rights within the 90 day period, the Licensor's
right to terminate shall be deemed to be waived.
13.1.3 Subject to sub-clauses 13.2 and 13.4(b), on February 1, 2001, and
on February 1 of each succeeding year, the Contract Term shall be
automatically renewed for an Additional Renewal Term, for all
Categories (as defined in sub-clause 13.1.4), provided that the
amount of Royalty payable to the Licensor for each of the
previous two Contract Years for each Category is equal to or
greater than the Minimum Royalty for that Category during those
Contract Years, as set forth in sub-clause 9.3 above.
The Licensor shall have the right, for a period of 90 days after
31 January of any Additional Renewal Term Contract Year, to
terminate the Licensee's rights with respect to any Category
defined under sub-clause 13.1.4 above if the Licensee fails, in
respect of the two Contract Years then ended, to have sufficient
Net Sales to generate Royalty amounts which equal or exceed the
Minimum Royalty for that Category and those Contract Years;
provided that, if the Licensor does not exercise such right to
terminate the Licensee's rights within the 90 day period, the
Licensor's right to terminate shall be deemed to be waived.
13.1.4 For the purposes of determining the Minimum Royalty payable under
this Agreement, the following categories (the "Categories") have
the meanings set forth below:
"USA & Canada Optical Sales" means sales of Products in the
United States of America (including its territories and
possessions) and Canada which are made to stores specializing in
ophthalmic frames for prescription eyeglasses, whether those
sales are made directly to such stores or through distributors
which specialize in selling to such stores.
6
"Additional Countries Optical Sales" means sales of Products in
all other countries within the Territory other than the United
States and Canada which are made to stores specializing in
ophthalmic frames for prescription eyeglasses, whether those
sales are made directly to such stores or through distributors
which specialize in selling to such stores.
"Non-Optical Sunwear Sales" means sales of sunglasses which are
Products made to stores which do not specialize in ophthalmic
------
frames for prescription eyeglasses, whether those sales are made
directly to such stores or through distributors which specialize
in selling to such stores."
8. Sub-clause 13.2 is hereby amended (a) to be known hereafter as sub-clause
13.2.1, and (b) to add the following sub-clause 13.2.2:
"13.2.2 The Licensor shall have the right, for a period of 90 days after
any Contract Year, to terminate the Licensee's rights with
respect to any Category defined under sub-clause 13.1.4 above if
the Licensee fails in respect of any two Contract Years to have
sufficient Net Sales to generate Royalty amounts which equal or
exceed the Minimum Royalty for that Category and those Contract
Years; provided that, if the Licensor does not exercise such
right to terminate the Licensee's rights within a 90 day period
after the end of any Contract Year, that right shall be deemed to
be waived.
9. Sub-clause 13.4(a) is hereby deleted, and the following substituted in its
place:
(a) a third-party licensee which obtains the license to sell eyeglass
frames bearing the Trademarks, in any of the Categories, as
contemplated by sub-clauses 13.1.2, 13.1.3 and 13.1.4 above, is not
held to the same standards as the Licensee under this Agreement with
respect to quality, styling or Approved Outlets, and as a result the
value of the Trademarks is significantly impaired;"
10. The portion of Clause 19.4 entitled "Communications to the Licensee" is
hereby deleted, and the following is substituted in its place:
"Communications to the Licensee:
------------------------------
Signature Eyewear, Inc.
000 Xxxxx Xxxxxx Xxx.
Xxxxxxxxx, XX 00000
Xxxxxx Xxxxxx of America
For the Attention of the President
7
Communications to the Additional Licensor:
-----------------------------------------
Xxxxx Ashley Limited
000 Xxxx Xxxx
Xxxxxxxxxx, Xxxxxxxxx
Xxxxxxx
For the Attention of the Company Secretary"
11. Clause 6.7 and sub-clause 13.3(a) are hereby deleted.
12. Except as otherwise stated herein, all remaining clauses of the License
Agreement shall remain in full force and effect, provided that all
references to the Licensor therein shall be deemed to include the
Additional Licensor where applicable.
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed
by their duly authorized representatives the day and year first above written.
SIGNED by ) /s/
-----------------
for and on behalf of )
XXXXX XXXXXX MANUFACTURING B.V. )
----------------------------------
SIGNED by ) /s/
-----------------
for and on behalf of )
XXXXX ASHLEY LIMITED )
----------------------------------
SIGNED by ) /s/ Xxxxx Xxxxxxx
-----------------
for and on behalf of )
SIGNATURE EYEWEAR, INC. )
-----------------------
(formerly known as
USA OPTICAL DISTRIBUTORS, INC.)
8
SCHEDULE I
PRODUCTS
The following are the styles of eyeglass frames approved by Licensor, as of
April 30, 1993.
1. Xxxxx Ashley eyeglass frames for women:
XXXX
ARABELLA
XXXXX
XXXXXXXXX
EMMA
XXXXXXX
XXXXXXXX
XXXXX
XXX
JULIET
XXXX
XXXXXXX
XXXXXXXX
SOMERSET
TESS
2. Xxxxx Ashley sunglasses:
SUN 101
SUN 102
SUN 103
3. Xxxxx Xxxxxx for Girls eyeglasses:
XXX
XXXXX
LILY
