TRADEMARK LICENSE AGREEMENT
Exhibit 10.8
THIS AGREEMENT (hereinafter “Agreement”) is effective as of November 27, 2002 (hereinafter
“Effective Date”) by and between:
Xxxxx Xxxxxxxxxxx Inc., a corporation organized and existing under the laws of the State of
California, located at 0000 Xxxxxx Xxxxxx, Xxxxxxxx Xxxx, Xxxxxxxxxx 91755(hereinafter
“LICENSOR”), and The Fashion House, Inc., a corporation organized and existing under the laws of
the State of Delaware, located at 000 Xxxxx Xxxxxxxxx Xxxxxxxxx, Xxxxx 000, Xxxxxxx Xxxxx,
Xxxxxxxxxx 00000 (hereinafter “LICENSEE”).
WHEREAS, LICENSOR is the owner of the trademark “Tyler” by Xxxxxxx Xxxxx, and certain
simulations and variations thereof as set forth on Schedule I annexed hereto and incorporated
herein by reference (hereinafter referred to collectively as the “Marks”);
WHEREAS, LICENSEE desires to obtain a license from LICENSOR to use the Marks on the
Licensed Products (as hereinafter defined) in the Territory (as hereinafter defined);
WHEREAS, LICENSEE acknowledges that the Marks and associated goodwill are of great
significance and value to LICENSOR and that strict adherence to the quality control standards
provided in this Agreement is essential to the maintenance of the significance and value of the
Marks and associated goodwill; and
WHEREAS, LICENSEE pledges its active cooperation in and support of LICENSOR’S marketing
programs, the spirit and intent of which are to maintain and enhance the value and significance
of the Marks throughout the world.
NOW, THEREFORE, in consideration of their mutual covenants, undertakings and promises
contained herein, and other good and valuable consideration, the receipt and adequacy of which the
parties hereby acknowledge, the parties agree as follows:
1. DEFINITIONS
In this Agreement, the following terms shall have the meanings set forth below:
1.1 “Competitor” shall mean those trademarks, trade names or other identifying words or
symbols of any third party clothing designer which are used on products which are similar to the
Licensed Products in category, image, quality and price points, and which are sold through
distribution channels of the same like and kind as the
Licensed Products.
1.2 “Inventory” shall be any and all remaining (i.e. on hand or in stock) Licensed Products
and tangible items bearing the Marks, including but not limited to, raw material, work in process,
labels, tags, etc.
1.3 “Licensed Product(s)” shall be women’s shoes and boots, including fashion
sports shoes but expressly not including athletic shoes.
1.4 “Net Sales” shall mean the gross dollar amount of all sales by LICENSEE of the Licensed
Products (hereinafter “Gross Sales” ) less the following items insofar as they are separately
stated but included in the amounts invoiced to customers: usual trade discounts actually taken,
returns and allowances. No costs incurred in the manufacture, sale, distribution, advertisement,
or promotion of the Licensed Products shall be deducted from Gross Sales or from any Royalty
(defined below) payable to LICENSOR, except as otherwise expressly set forth herein. Local, State
or Federal taxes of any nature whatsoever including, without limitation, tariffs, sales tax, use
taxes, value added and inventory taxes, shall not be included in Gross Sales, or deducted from
Gross Sales for purposes of computing Net Sales. Net Sales shall include the sale of
Secondary Goods (as defined below), but shall not include the sale of samples to LICENSEE’S
Licensed Product sales force.
Except as otherwise expressly set forth herein, any sales or transfers of Licensed Products
made by LICENSEE to any person or entity that does not deal at arm’s length with LICENSEE shall be
computed, for the purpose of determining Net Sales, at an amount equal to the price at which
LICENSEE would have invoiced or charged purchasers who deal at arm’s length with LICENSEE and all
Royalties shall be paid to LICENSOR thereon.
1.5 “Notice Address” shall be the addresses set forth for the parties at the beginning of
this Agreement, or such other addresses as a party may hereafter designate to the other party in
writing from time to time. At no time shall LICENSEE have a notice address outside of the United
States.
1.6 “Territory” shall be Worldwide. Licensee will have 24 months from the effective date of
this License Agreement to exploit the Japanese market or Licensor shall have the right to assign
another Licensee for Japan.
1.7 “Use” (or “Used,” “Uses” or “Using”) shall mean (1) the placement of the Marks on the
Licensed Products; and (2) the use of the Marks in the broadest sense of publication, that is any
visual and aural form which to the average person would indicate that the Licensed Products are
associated with the Marks, including, but not limited to, print media, labels, tags, point of sale
and showroom
displays, signage, packaging, stationery, business cards and forms, and electronic media now
known or hereafter devised, and the form and content of the subject matter associated with all the
aforementioned; and (3) all other uses of the Marks approved by LICENSOR in writing prior to the
use.
1.8 “Material Term” shall include any numbered provision within the paragraphs headed
“Minimums and Payment,” “Reporting, Accounting and Auditing,” and “Quality Standards,” a breach of
any of which shall be deemed “material.”
1.9 “Advertising” shall include expenditures made in connection with the public
promotion, through standard media, of the Licensed Product for sale and distribution, and
shall not include coop advertising and sales promotions “Advertising” shall not include any
expense incurred in connection with the preparation and/or construction or dismantling of a booth
at any trade show, or entertainment expenses.
1.10 “Close-Out Sales” shall mean Sales of Licensed Merchandise for less than 50% of its
regular wholesale price made to the following approved retailers: Xxxxxxxx’x, X.X.Maxx,
Xxxxxxx’x, Xxxx Stores, Syms, Daffy’s, Century 21, Filene’s Basement, and Luggage Factory Outlet,
as well as to such other discount retailers as LICENSOR shall hereafter approve in its sole
discretion in writing.
1.11 “Season” shall mean any of four seasons. Such seasons are: February (Fall), June
(Resort), August(Spring), and December (Prefall).
2. TERM
2.1 TERM: Subject to the provisions of Article 11 (Termination) herein, this Agreement shall
continue in force for Five (5)years from the Effective Date . LICENSEE shall have the option to
extend the term of this Agreement for an additional period of Two (2) years provided: (i)
LICENSEE is in full compliance with all the terms and conditions of this Agreement immediately
prior to the exercise of the option to renew, and (ii) LICENSEE gives LICENSOR notice of its
desire to renew at least six (6) months prior to the end of the Initial Term, and Unless
otherwise agreed to by written amendment, the Option Term, if any, shall be upon the same terms
and conditions as provided for in this Agreement, excepting there shall be no further extension
of the Initial Term without mutual agreement of the parties. Should LICENSOR at any time exercise
its right under this Agreement to terminate the rights of LICENSEE, all options to extend the
term shall likewise be terminated.
2.2 LICENSED TERM, YEAR, AND QUARTER DEFINED: The Initial Term, Option Term, if any, and the
Winding-Up Period (defined below), if any, shall collectively be referred to as the “Licensed
Term” or “Term.” The quarters of the Term shall be every three (3) month period.
3. GRANT OF LICENSE
3.1 LICENSE: Subject to the provisions of this Agreement, LICENSOR grants to LICENSEE, and
LICENSEE accepts, an exclusive, nontransferable license to Use the Marks in the Territory only as
specifically provided for in this Agreement including, but not limited to, the right to produce,
sell and distribute the Licensed Products (hereinafter “License”).
3.2 BEST EFFORTS: During the Licensed Term, LICENSEE shall use its best efforts to exploit the
License granted herein throughout the Territory, including, but not limited to, offering for sale
Licensed Products so that they may be sold to the consumer on a timely basis; coordinating the
characteristics and marketing of its Licensed Products with the products of LICENSOR’S other
licensees; cooperating with LICENSOR and its licensees’ marketing and sales programs; and offering
a collection of the Licensed Products for sale in the Territory at all times for
each and every season.
3.3 ADDITIONAL RIGHTS TO LICENSE:
(A) LICENSEE acknowledges that LICENSOR has previously licensed the use or Use of the Marks
in connection with products other than the Licensed Products to third parties and that LICENSOR
shall grant additional licenses in the future for territories or products that are not presently
licensedand that are not within the scope of this License.
(B) For the purpose of this Section 3.3(B), when the term “LICENSEES” or “Licensees” is used,
it is intended that said terms mean the whole or part of the whole group of all of LICENSOR’S
licensees, which includes LICENSEE. LICENSEE hereby acknowledges that, due to the nature of the
industry, precise definition of the scope of goods covered as Licensed Product is sometimes not
possible. LICENSEE therefore agrees to accept at all times the sole judgment of LICENSOR with
respect to whether a particular style, design or product is a Licensed Product within the scope of
the License. LICENSEE agrees that it will not market, either directly or indirectly, any style,
design or product which LICENSOR, in its sole discretion, determines is not a Licensed Product
within the scope of the License. LICENSEE further agrees that in the event of a dispute between any
of the Licensees arising out of or based upon a claim that a product being manufactured or
sold as a Licensed Product by one “Licensee” infringes upon the license
granted by LICENSOR to another “Licensee,” regardless of the legal grounds upon which the
cause of action or claim is based, LICENSOR shall reasonably and consistent with the terms and
spirit of this License investigate the claim and LICENSEE shall cooperate in all respects with said
investigation. LICENSOR shall then submit to any affected Licensee a written determination, which
may include a procedure for mitigating any losses that might occur.
Said determination and procedure shall be conclusive as to all parties including LICENSEE, and
all shall be bound thereby without legal recourse.
3.4 OPTION: In the event Licensor decides to License Men’s footwear Licensor shall
advise Licensee in writing of pending negotiations with a third party. Licensee shall come
up with an acceptable proposal. If an agreement cannot be reached within 30 days, Licensor
shall have the right to enter into License for men’s shoes with a 3rd
party.
4. MINIMUMS AND PAYMENT
4.1 MINIMUM SALES VOLUMES: If LICENSEE’S Net Sales in the Territory do not reach the
following dollar volume levels for each Year of the Licensed Term (hereinafter “Minimum Sales
Volumes”), then LICENSOR shall have the right, but not the obligation, to
terminate this Agreement:
The Minimum Sales Volume shall be the greater of those figures established below or 75% of the
average of the actual sales for the preceding two years.
Year One: (2003) |
$ | 1,500,000 | ||||||
(Adjusted for August) |
$ | 750,000 | ||||||
Year Two: (2004) |
$ | 1,875,000 | ||||||
Year Three: (2005) |
$ | 2,345,000 | ||||||
Year Four: (2006) |
$ | 2,930,000 | ||||||
Year Five: (2007) |
$ | 3,662,500 | Option Terms | |||||
Year Six: (2008) |
$ | 4,578,000 | ||||||
Year Seven: (2009) |
$ | 5,722,600 | ||||||
Notwithstanding the preceding, LICENSEE may avoid termination of this Agreement for failure
to meet the Minimum Sales Volumes in a given Year by paying the GMTR due for that Year as
defined below in Sections 4.2 and 4.3.
4.2 TRADEMARK ROYALTY:
(A) As a royalty, LICENSEE shall pay to LICENSOR a sum equal to seven percent (7%) of Net
Sales of the Licensed Products, except, as set forth in Paragraph 4.4 herein below, the
Trademark Royalty on Close-out goods shall be three percent (3%) (hereinafter “Trademark
Royalty”) on a quarterly basis no later than the twentieth (20th) day of the month immediately
following the quarter in which said
Net Sales are made.
(B) GUARANTEED MINIMUM TRADEMARK ROYALTY: Whether or not LICENSEE achieves the required Minimum
Sales Volumes, LICENSEE shall pay to LICENSOR (as set forth in 4.2(C) below) the greater of
either the Trademark Royalty or the Guaranteed Minimum Trademark Royalty (hereinafter “GMTR”) as
follows:
The Minimum Trademark Royalty shall be the greater of those figures established below or
75% of the average of the actual Royalty for the preceding two years.
Year One: (2003) |
$ | 105,000 | ||||||
(Adjusted for August) |
$ | 52,500 | (Only two collections) | |||||
Year Two: (2004) |
$ | 131,250 | ||||||
Year Three: (2005) |
$ | 164,150 | ||||||
Year Four: (2006) |
$ | 205,100 | ||||||
Year Five: (2007) |
$ | 256,375 | ||||||
Option Terms |
||||||||
Year Six: (2008) |
$ | 320,460 | ||||||
Year Seven: (2009) |
$ | 400,580 | ||||||
(C) Subject to the provisions of paragraph 4.5 below, the GMTR shall be paid in two equal
payments for each year (on Feb.1 st and July 1st), with the exception of Year One where one payment
of $26,250 shall be made on July 1, 2003, and a second payment of $26,250 shall be paid
on December 1, 2003.
(D) All royalty payments (whether Trademark Royalty. Advertising Payment, or GMTR, herein
collectively referred to as “Royalty” or “Royalties”) shall be sent to Licensor via overnight
courier together with the Quarterly Report, defined hereinbelow, and shall be paid automatically
by LICENSEE without billing therefor by LICENSOR.
(E) LICENSOR shall have the right to purchase such styles and quantities of Licensed Product
for its wholly owned retail stores as it desires. LICENSOR’S cost for all such purchases shall be
discounted Twenty Percent (20%) from LICENSEE’S regular wholesale prices. No royalty shall be due
to LICENSOR on such sales such sales do not count toward minimum sales volume. Notwithstanding
anything to the contrary contained herein, LICENSOR shall have no obligation to purchase or sell
any Licensed Product.
4.3 ADVERTISING EXPENDITURE: LICENSEE must spend, at a minimum, three percent (3%) of Net
Sales on advertising and/or public relations related to the Licensed Products (“Advertising
Funds”). LICENSEE shall arrange for at least one print advertisement for the Licensed Products in a
prestigious magazine with national distribution such as Glamour, Cosmopolitan, Elle, WWD, or
Mademoiselle annually during the Term. For the first year of the Term, LICENSEE shall spend at
least Forty five
Thousand ($45,000) Dollars as Advertising Funds. All Advertising Funds shall be in addition to
all other payments due LICENSOR hereunder. LICENSOR shall have the right to approve all copy,
layout and artwork of all advertisements placed by LICENSEE for the Licensed Products. LICENSEE
shall forward copies to LICENSOR sufficiently in advance of the date of use for LICENSOR to review.
In no event will any advertising or promotional piece for the Licensed Products be disseminated or
utilized by LICENSEE without LICENSOR’ S advance written approval. Any earned advertising
percentage not spent during the year shall be paid directly to Licensor.
4.4 CLOSE-OUT SALES (Royalty): The reduced Trademark Royalty on Close-Outs shall be three
percent (3%). Licensee is only entitled to these reduced royalty rates on a maximum of twenty
percent (20%) of Gross Sales per Year of the Licensed Term. On sales of Close-Outs in excess of
this twenty percent (20%) limit, LICENSEE, shall pay the standard Trademark Royalty percentages as
set forth in Section 4.2 above.
Each quarter LICENSEE shall provide LICENSOR with an accounting of the sales of Close-Outs
on the Quarterly Report for said quarter. If any such accounting reveals that LICENSEE has paid
the reduced royalty on more than twenty percent (20%) of Gross Sales from the beginning of that
Year through the end of the relevant quarter, LICENSEE shall immediately pay to LICENSOR the
amount of the calculated underpayment of Royalty. Should any such payment result (as of the end
of any Year) in an overpayment of Royalty by LICENSEE, LICENSOR shall credit the overpayment to
LICENSEE against the next Royalty payment due.
4.5 ADVANCE TRADEMARK ROYALTY: In addition to all other payments required hereunder,
LICENSEE, shall pay to LICENSOR, an advance Trademark Royalty (hereinafter “Advance Trademark
Royalty”). This Advance Trademark Royalty shall be credited
against the GMTR due for the year of the Initial Term. The balance of the GMTR shall be paid in
accordance with the provisions of paragraph 4.2(c) above.
5. REPORTING, ACCOUNTING AND AUDITING
5.1 QUARTERLY REPORTS: No later than the twentieth (20th) day of the month immediately
following each quarter of the Licensed Term, LICENSEE shall submit to LICENSOR a written report on
a form provided by LICENSOR (see Exhibit A) from time to time which shall include a written
statement of LICENSEE’S inventory and Net Sales during such quarterly period showing the number
and type of Net Sales of each Licensed Product, a calculation of the Royalty due based thereon,
and all other information requested by LICENSOR in this Agreement or Exhibit A (hereinafter
“Quarterly Report”). Each Quarterly Report shall be accompanied by the remittance to LICENSOR of
the Royalties shown to be due on the report, shall be sent via overnight courier, and shall be
certified as correct by the Chief Executive Officer or Chief Financial Officer of LICENSEE or such
other officers or employees of
LICENSEE as shall be designated by LICENSOR. In the event of an inquiry by LICENSOR regarding
any such report, LICENSEE shall comply promptly with LICENSOR’S reasonable request for information
in the manner requested. Within twenty (20) days after any expiration or termination of this
Agreement, LICENSEE shall provide LICENSOR a Quarterly Report for the last whole or partial
quarterly period during the Term, and LICENSEE shall continue to submit such reports and all
Royalty payment obligations to LICENSOR within twenty (20) days following each thirty (30) day
period during the Winding Up Period, if any.
5.2 LATE PAYMENTS: It is specifically understood by LICENSEE that, with respect to royalty
payments and accounting statements, time is of the essence and any payment due pursuant to this
Agreement (including, but not limited to all Royalties, trade show bills, and other bills for
expenses or services agreed upon by LICENSEE, etc.), that is late shall bear interest from seven
(7) days after the date that notice of payment default is received from LICENSOR, unless the same
is cured within the seven (7) day period, until remittance thereof to LICENSOR at the prime rate
of interest established by EAB — European American Bank of New York, New York, from time to time
during said period, plus two percent (2%) per annum or the highest rate allowed by law, which is
greater. The operation of this clause is without prejudice to any other right or remedy LICENSOR
may have pursuant to the terms of this Agreement or the law. LICENSEE shall not set off any
amounts against any payment of its Royalties or bills due LICENSOR unless agreed in writing by
LICENSOR prior thereto.
5.3 PAYMENT DEFAULT: The acceptance of late payments hereunder, or the acceptance of payment
without a Quarterly Report or with an incomplete or incorrect Quarterly Report, or any restrictive
endorsement (I) shall not constitute a waiver of timely payments, (2) shall not cure any default
which might exist, and (3) shall be without prejudice to any of the rights or remedies LICENSOR may
have hereunder.
In the event that a default is declared and the rights of LICENSEE under this Agreement are
terminated, all payments required hereunder, including, but not limited to, Trademark Royalty and
Advertising Payments on past sales, and all GMTR for the Licensed Term, unpaid bills, etc., shall
be immediately due and payable to LICENSOR, in full, plus any interest
due thereon at the rate prescribed in 5.2 above.
5.4 PROPER BOOKS AND RECORDS: LICENSEE shall maintain separate and appropriate books
of account or computer records relating to the Licensed Products, in accordance with
generally accepted accounting principles (including, without limitation, a sales journal,
sales return journal, cash receipt book, general ledger, and to the extent reasonably
available, purchase orders, cutting tickets, and Inventory records) and shall make
accurate entries concerning all transactions relevant to this Agreement. The Licensed
Products shall be assigned unique style numbers which shall be identical to the style
numbers utilized to identify each respective Licensed Product in all Licensee’s books and
records and computer records, and on all sales invoices
and related documents. LICENSEE’S books and records shall at all times during the
Licensed Term and for three years (3) thereafter (or in the event of a dispute between
the parties hereto, until three (3) years after said dispute is resolved, whichever is
later) be kept at LICENSEE’S Notice Address. LICENSEE shall not change the address at
which the books and records are kept without prior written notice to LICENSOR.
5.5 ANNUAL FINANCIAL STATEMENTS: No later than one hundred and twenty (120) days
after each December 31st during the Term, LICENSEE shall furnish LICENSOR with its audited
annual financial statements (if they are prepared in its ordinary course of business)
prepared in accordance with generally accepted accounting principles consistently applied.
In the event an audited statement is not prepared by LICENSEE, LICENSEE shall furnish
LICENSOR within ninety (90) days after LICENSEE’S fiscal year end with its unaudited
financial statements, reviewed by an independent certified public accountant and certified
to be correct by the Chief Executive Officer and Chief Financial Officer of LICENSEE or by
such other officers or employees of LICENSEE as LICENSOR shall designate.
5.6 RIGHT TO AUDIT: Upon not less than ten (10) day’s notice to LICENSEE, LICENSOR,
at its expense, shall have the right during the Licensed Term and for three (3) years
thereafter at any time during regular business hours, not more frequently than one time
annually,. to have a qualified accountant selected by LICENSOR audit the records of
LICENSEE to the extent necessary to verify LICENSEE’S statements and payments of
Royalties, including the right to examine, photocopy and make extracts from such records.
Such records shall be made available to LICENSOR’S accountant at LICENSEE’S Notice
Address stated above. LICENSEE shall cooperate with and assist LICENSOR’S accountant for
the purpose of facilitating such audit. The provisions of this paragraph shall survive
the termination or expiration of this Agreement.
If, as a result of such audit, LICENSOR’S accountant determines that the amount of
Royalties due was greater than the amount reported by LICENSEE in any Quarterly Report
furnished pursuant to Section 5. 1, LICENSOR shall promptly furnish to LICENSEE a copy of
the report of its accountant setting forth the amount of the deficiency showing, in
reasonable detail, the basis upon which such deficiency was determined. LICENSEE shall
promptly remit to LICENSOR a sum equal to such deficiency, together with interest thereon
at the rate prescribed in Section 5.2 from the date such Royalty was due until the date
of such remittance. In addition, if the audit reveals underpayment by more than three
percent (3%) of the Royalties in any quarterly period, LICENSEE shall pay to LICENSOR
the cost of such audit.
If, as a result of such audit, LICENSOR’S accountant determines
that the amount of Royalties paid was greater than the amount actually due, such
overpayment will be promptly refunded to LICENSEE.
5.7 PAYMENT CURRENCY: All calculations and payments required under this Agreement
shall be in United States Dollars.
6. QUALITY STANDARDS
6.1 QUALITY STANDARDS: LICENSEE acknowledges that the continued maintenance of the
great significance and value of the Marks and their associated goodwill, the continued
maintenance of LICENSOR’S quality standards, and the merchandising and coordination of the
products associated with the Marks are all essential elements of the License granted
herein. LICENSEE agrees that the nature and quality of all Uses of the Marks by LICENSEE
shall conform to standards set by, and be under the control of, LICENSOR. All Uses, and
any later permitted use as set forth in Section 1.7 above, shall require the prior written
consent of LICENSOR. (See Approval Procedure Section 6.2 below).
The Marks shall be used only in the form set forth in Schedule 1. Upon written
notice, LICENSOR may change, at its sole discretion, such approved form of the Marks.
LICENSEE shall comply with said change as soon as all remaining Inventory and any
Inventory contracted for prior to such notice are Used in connection with the Licensed
Products, but in no event shall they be Used beyond six (6) months from the date of
notice. This Agreement shall automatically apply to such later developed trademarks
which, at the sole option of LICENSOR, are specifically instructed for a Use by LICENSEE.
The term “Xxxx” as used in this Agreement is intended to include all such later developed
trademarks which LICENSEE has been instructed to Use under the terms of this Section. The
“Showing” shoes shall be provided free of charge to LICENSOR four (4) times per year as
follows: February (Fall) and August (Spring) not exceeding (80) pairs for each
collection; June (Resort) and December (Prefall) not exceeding (30) pairs
for each collection. Shoes shall be in sizes 7 1/2 to 11 to fit models
6.2 APPROVAL PROCEDURE: Before offering for sale any product LICENSEE intends to
offer as a Licensed Product, and before committing to a Use of the Marks, LICENSEE
shall obtain LICENSOR’S prior written approval of such product and/or Use. The Licensed
Product and Marks Use approval process is critical to the License granted herein, and
must be strictly adhered to at all times by LICENSEE. Once LICENSOR has approved any
Licensed Product or Use, the approval shall remain in effect unless LICENSOR notifies
LICENSEE to the contrary in writing. LICENSOR shall notify LICENSEE of its approval or
disapproval within five (5) business days after its receipt of a product.
6.3 MAINTENANCE OF AND CONTINUED QUALITY CONTROL:
(A) LICENSEE agrees to cooperate with LICENSOR in facilitating LICENSOR’S control of
the nature and quality of the Licensed Products, to permit reasonable, periodic inspection
of LICENSEE’S operations, at reasonable times and with reasonable notice, and to supply
LICENSOR with specimens of all Uses of the Marks as set forth in this Agreement, and
upon request of LICENSOR. LICENSEE shall provide LICENSOR, when and if requested for the purpose of
quality control or for investigating an issue involving the Marks, with the name, address,
telephone number and name of principals of any plants, factories or other manufacturing facilities
of any third party (hereinafter “Third Party Facility”), and any symbol or number a Third Party
Facility may use or be required to use to identify itself as a source of goods. In the event the
Licensed Products or components thereof are manufactured or displayed other than by LICENSEE,
LICENSEE shall at all times obtain compliance with this Article 6.
(B) In Order for LICENSOR to determine and assure itself that LICENSEE is maintaining the
quality control standards set forth by LICENSOR by manufacturing the Licensed Products in
accordance with the samples approved by LICENSOR as per the approval procedure set forth in 6.2
above, within ten (10) business days after the commencement of each Licensed Product’s first
production run, LICENSEE shall deliver to LICENSOR not less than one (1) pair of each first
production run of Licensed Product without charge. LICENSEE shall also deliver to LICENSOR,
promptly upon LICENSOR’S request from time to time, but not more than four (4) times per year, a
reasonable amount of specific Licensed Products without charge for quality control checking. If
at any time, LICENSOR reasonably determines, in its sole discretion, that a Licensed Product is
of lesser quality than the sample approved pursuant to Section 6.2 above, LICENSOR shall give
LICENSEE written notice thereof, setting forth specifically the elements of variation in quality
and reasons for disapproval. LICENSEE shall immediately cease production and distribution of that
Licensed Product until its quality is improved to the sole reasonable satisfaction of LICENSOR;
however, in no case shall LICENSEE have longer than thirty (30) days to cure said defect.
Repeated failures by LICENSEE, after notice, to correct a recurring Licensed Product defect,
shall constitute cause for immediate termination of this Agreement by LICENSOR with no right to
cure by LICENSEE.
(C) In the event that the standard, style, appearance or quality of any Licensed Product
ceases to be acceptable to Licensor, Licensor shall have the right, exercisable in its reasonable
discretion, to withdraw its approval of such Licensed Products. Within thirty (30) days of receipt
of written notice from Licensor of its determination to withdraw such approval, Licensee shall
either correct the deficiencies in the Licensed Products to the satisfaction of Licensor or
immediately cease the use of the Xxxx(s) in connection with the manufacture, distribution, sale,
marketing, advertising, merchandising, publicity and promotion of such Licensed Products except
that work in process may be completed and finished inventory may be sold to customers. Upon
request, Licensee shall provide Licensor with a list of all work in progress and all completed
inventories related to such Licensed Products. Licensor’s election to withdraw approval from any
or all Licensed Products shall not relieve Licensee from its obligation
to pay royalties on any Sales of such Licensed Products theretofore or thereafter made, as
permitted herein.
6.4 SECONDARY GOODS: LICENSEE shall not market any of the Licensed Products as seconds or
irregulars (“Secondary Goods”): (a) unless such Secondary Goods do not constitute, during any
four (4) consecutive Quarterly Periods, in excess of five percent (5%) of the total volume of
Licensee’s production of the Licensed Products during such Quarterly Periods; or (b) unless the
Xxxx(s) are obliterated or rendered illegible to the reasonable satisfaction and approval of
LICENSOR, which approval must be in writing; or (c) unless LICENSOR otherwise specifically
authorizes LICENSEE to sell such Secondary Goods with the Xxxx(s) thereon, strictly
in compliance with LICENSOR’S instructions. Notwithstanding LICENSEE’S sale of such
products, such sales shall be deemed Net Sales and entitle LICENSOR to the payment
of the Percentage Royalty related thereto.
6.5 COMPLIANCE WITH LAWS: Any and all Uses and manufacture of the Licensed Products
shall be in compliance with all necessary governmental approvals and all applicable laws,
rules and regulations, including, but not limited to, Title 29, section 212 of the United
States Code and the Xxxxxxxx-Xxxx Warranty Act as to express and implied warranties.
LICENSEE shall pretest all proposed and approved Licensed Products and shall cause
truthful labeling regarding care, maintenance, and use to be affixed to the Licensed
Products, along with any other disclosures required by law or reasonably required by
LICENSOR (including, but not limited to, copyright and trademark ownership notices which
shall be included with any Use of the Marks at all times, the legend “Manufactured by
[name of LICENSEE] under license from Tyler by Xxxxxxx Xxxxx” on all Licensed Products
[hangtags, labels or packaging as appropriate] to disclose the relationship established by
this Agreement, and any legally required Xxxxxxxx-Xxxx warranty notices clearly
identifying LICENSEE as responsible for the warranty). LICENSEE shall immediately inform
LICENSOR in writing of any material complaint by any consumer or governmental body
relevant to the Licensed Products, and the status and resolution thereof. LICENSEE shall
move expeditiously to resolve any such complaint.
6.6 PRODUCTION/IMPORTATION:
(A) Licensed Products may only be manufactured by LICENSEE at a facility it does not
own or lease if and only if it notifies LICENSOR that such third-party manufacturer shall
be retained, and further submits to LICENSOR such information, specifications and samples
as LICENSOR requests. LICENSOR reserves the right to reject, in the exercise of its
reasonable discretion, any such third-party manufacturer, and may impose reasonable
inspection and supervision fees on approved manufacturers to cover
LICENSOR’S costs incurred in making such determination. Such inspection and
supervision fees shall be paid by LICENSEE.
(B) LICENSOR may demand that LICENSEE impose reasonable restrictions on such
third-party manufacturers manufacture of products relating to the Xxxx(s)s and/or designs
provided by the LICENSOR, including, but not limited to, having such manufacturers and
their key production managers execute confidentiality and anti-pirating agreements in
connection with same.
(C) Any Licensed Product caused to be manufactured by LICENSEE outside the United
States shall be imported into the United States under the name of LICENSEE and only
LICENSEE. Any and all Licensed Products imported under a name other than that of LICENSEE
shall be deemed counterfeit by LICENSOR and LICENSEE, and may be so represented to U.S.
Customs Service and prosecuted accordingly.
In order to prevent the importation of counterfeit merchandise, LICENSEE shall use a
customs broker for all Licensed Merchandise imported under this Agreement. LICENSEE shall
promptly notify LICENSOR of the identity of each such customs broker as LICENSEE shall
use from time to time during the Term for Licensed Merchandise imported hereunder.
LICENSOR shall not be liable for any acts of or transactions with said broker.
LICENSEE agrees that it will not engage in “unlawful transshipment” of merchandise,
as that term is defined by the U.S. Customs Service, or utilize manufacturers that engage
in such “unlawful transshipment.” LICENSEE further agrees that all merchandise
manufactured outside the United States will have labels permanently affixed thereto that
reflect the actual “country of origin” as that term is defined by the U.S. Custom Service.
6.7 ALL APPROVALS SEASONAL: LICENSOR’S approval of any materials for use in
connection with the manufacture, distribution, sale, marketing, advertising,
merchandising, publicity and promotion of any particular Season’s Licensed Products shall
constitute approval for such use in connection with such Season unless LICENSOR notifies
LICENSEE to the contrary in writing.
6.8 LICENSEE acknowledges and agrees that although LICENSOR may conduct reviews of
various items for LICENSEE, including, without limitation, Licensed Products, prototypes
or samples and may make various recommendations to LICENSEE, regardless of whether such
reviews or recommendations are required or voluntary under the terms of this Agreement,
LICENSOR shall have no responsibility or liability for the operation of LICENSEE’S
business or its manufacturing, distribution, sales or facilities used in connection
therewith. Nor shall LICENSOR’S approval of any Prototype, Final
Prototype, Packaging or artwork be construed to mean the LICENSOR has determined that
the sample or artwork conforms to the laws or regulations of any jurisdiction, or that it
is not in conflict with any other licensed articles and Licensor shall not bear any
liability for such approval.
7. THE MARKS
7.1 OWNERSHIP RIGHTS DEFINED: LICENSEE acknowledges the ownership of the Marks by
LICENSOR, agrees that it will do nothing inconsistent with such ownership, and that all
Use (and any other use thereof) of the Marks by LICENSEE and all good will developed there
from shall inure to the benefit of and be on behalf of LICENSOR. LICENSEE agrees that
nothing in this Agreement shall give LICENSEE any right, title, or interest in the Marks
other than the right to Use the Marks in accordance with this Agreement and LICENSEE
agrees that it will not attack the title of LICENSOR to the Marks, the validity of the
Marks, any rights of LICENSOR that may have arisen from this Agreement, or the validity of
this Agreement.
LICENSOR has the right to use any Licensed Product designed and used by LICENSEE
and/or LICENSOR as part of LICENSEE’S obligation under this Agreement in any manner
LICENSOR may deem beneficial to the exploitation of the Marks anywhere in the world,
including, but not limited to, the production, sale and distribution of the Licensed
Products through a third party contractor or a new licensee, should this License expire
or terminate for any reason (with no right to a Winding-Up Period) prior to the
fulfillment of any outstanding orders or as otherwise necessary to protect the reputation
and goodwill of the Marks. LICENSEE shall be entitled to reimbursement for actual
out-of-pocket expenses associated with the duplication of art work, designs, patterns,
etc. developed by LICENSEE (which shall be duplicated and forwarded to LICENSOR promptly
after requested by LICENSOR) for use as set forth in this paragraph.
7.2 COPYRIGHT NOTICES: LICENSOR shall be deemed the author, with the right but not the
obligation in its sole discretion, to register a claim to any copyright within an art work or a
writing that is developed by LICENSEE as part of the obligations of LICENSEE toward the Licensed
Products. LICENSEE agrees that all such copyrighted artwork and writings are a work for hire, and
shall be protected as the sole and exclusive property of LICENSOR. In the event any such artwork
and writings are deemed to not be works for hire, LICENSEE hereby assigns all copyright rights in
and to the artwork and writings to LICENSOR. LICENSEE agrees to execute such documents as may be
requested by LICENSOR to give effect to this provision. LICENSEE shall place a legally sufficient
copyright notice which protects the rights of LICENSOR on each and every design, style, garment,
creation or writing which is capable of protection pursuant to the copyright laws of the United
States of America. Any public distribution of goods bearing copyrightable works of LICENSOR by
LICENSEE without a copyright
notice as required above, if not authorized, is a violation of this Agreement.
7.3 CONFIRMATION OF OWNERSHIP: Whenever requested by LICENSOR, whether during the Licensed
Term or thereafter, LICENSEE shall execute such documents or applications as LICENSOR may deem
necessary to confirm LICENSOR’S ownership of all their rights, to maintain the validity of the
Marks and the copyright(s) referred to above in Section 7.2, and to obtain, or maintain any
registration thereof.
7.4 LABELS/PACKAGING: All Licensed Products shall contain a label, hangtag and/or packaging
(hereinafter c collectively “labeling” or “label(s)”) as designated by LICENSOR from time to
time. LICENSEE understands the importance of maintaining the security and integrity of all
trademarked labeling used on the Licensed Products, and LICENSEE agrees to use its best efforts
to maintain, and to require any subcontractors to maintain, a strict, accurate and current
inventory of all labels throughout the manufacturing process of the Licensed Products so as to
preclude any diversion of the labels, and, if any such diversion occurs, LICENSEE agrees to
notify LICENSOR in writing immediately upon discovery thereof
7.5 TRADEMARK REGISTRATION: In the event the Territory includes countries in which one or
more of the Marks has not yet been registered, LICENSOR has the right, but not the obligation, to
obtain trademark registration of any of the Marks in such countries. LICENSOR makes no
representation or warranty that the Marks will be registered or are registerable in the
Territory, and the failure to obtain or maintain registrations thereof shall not be deemed a
breach hereof by LICENSOR.
8. MARKETING AND DISTRIBUTION
8.1 PARTICIPATION PLEDGED: LICENSEE acknowledges that the marketing programs that may be
developed by or for LICENSOR are for the benefit of all licensees of the Marks, and LICENSEE’S
cooperation and support thereof are an integral part of such program and this Agreement.
Therefore, LICENSEE pledges its direct and active support of all licensee meetings and any
marketing program LICENSOR may develop, including, without limitation, participation in sales
presentations and fashion shows, presentations and distributions to the various media, special
events and special promotions by the timely giving of Licensed Products, direct assistance, sales
and other relevant information.
8.2 MARKETING, WHOLESALE & SHIPMENT POLICY: LICENSEE acknowledges that the availability and
selection of product, styles, fabrication, quality, colors and sizes of the Licensed Products (as
the case may be depending on the category of Licensed Product) are an integral part of the high
reputation and value which the trade and consumers have come to associate with the Marks. To
further protect that reputation and value, LICENSEE agrees that its policy of sale, distribution,
and exploitation shall be of the high standard established by LICENSOR from time to time in its
sole discretion reasonably applied (see the Licensee Guidelines), and any variance from such
standards
shall be only upon the prior written approval of LICENSOR or when necessary to comply with any
applicable law, rule or regulation with prior written notice thereof to LICENSOR. LICENSEE hereby
acknowledges that the timely shipment of all Licensed Products approved for shipment to a customer
is a critical element of this License, and LICENSEE agrees that it will use high diligence to
timely ship all such orders.
LICENSEE shall not sell the Licensed Products to any person or entity LICENSEE knows, should
have known, or had reason to believe would sell them outside the Territory.
8.3 DISTRIBUTION: LICENSEE’S distribution shall be solely to retail outlets to which LICENSOR
and other of LICENSOR’S licensees sell products bearing the Xxxx(s) and to such specialty shops,
department stores and other retail outlets dealing in products similar in quality to the Licensed
Products and where operations are consistent with the standards of quality, taste and prestige
associated with the Xxxx(s). The Licensed Merchandise shall be sold by LICENSEE only at wholesale
and at wholesale prices. LICENSEE shall not (i) subject to Section 4.4, sell or distribute any
Licensed Merchandise to discounters, wholesalers, jobbers, diverters, or any other entity which
does not sell at retail exclusively, or (ii) sell the Licensed Merchandise directly to the public
in retail stores, catalogs or otherwise unless LICENSEE submits a proposal to LICENSOR outlining
its plans for the development of such a business and LICENSOR approves, in the exercise of its
sole discretion, such proposal. Within thirty (30) days after the execution of this Agreement,
LICENSEE shall provide LICENSOR with a list of its customers for the Licensed Merchandise.
LICENSEE shall submit all changes in its customer list with the regular statement of royalties or
more frequently if needed. LICENSOR shall have the right to disapprove all or any portion of such
list. LICENSEE shall not sell Licensed Merchandise to any customer without first obtaining
currently effective approval from LICENSOR.
8.4 SAMPLES FOR SALES FORCE: Prior to the showing of a new line, and subsequent to Use
approvals (see Section 6.2), LICENSEE shall furnish to its Licensed Product sales force
sufficient samples of the Licensed Products for their use in selling said product and for the
display of said Licensed Products at trade shows and showrooms. At the same time and at no cost,
LICENSEE shall give LICENSOR three complete lines of the Licensed Products for display at its
showroom along with all other products bearing the Marks and as otherwise determined by
LICENSOR, and shall provide a reasonable quantity of Licensed Product for the use of any public
relations or advertising firm or individual hired to promote said Licensed Products and/or the
Marks through editorials, advertising and the like, also at no cost to LICENSOR.
8.5 MERCHANDISER/DESIGNER: LICENSEE shall provide, at its own. expense, a full time or
part time (as is necessary) employee or independent contractor qualified to
act as a designer, merchandiser and/or production/sample coordinator (or the equivalent
as the case may be depending on the Licensed Product category) with respect to the Licensed
Products. This employee shall devote the necessary amount of his/her working time on the
development and coordination of the line in conjunction with the merchandising staff of LICENSOR.
8.6 APPEARANCE OF ONE PRODUCT LINE: LICENSEE acknowledges that to the extent reasonably
possible and prudent LICENSOR and its merchandiser/designers/production coordinators will attempt
to make the product lines of all licensees of the Marks coherent and consistent and appear to be
the product of one company. LICENSEE agrees to reasonably cooperate with LICENSOR in this
endeavor.
9. INFRINGEMENT
LICENSEE shall notify LICENSOR promptly of any actual or threatened infringements, imitations,
or unauthorized use of the Marks by third parties of which LICENSEE becomes aware. LICENSOR shall
have the sole right, at its expense, to bring any action on account of any such infringements,
imitations or unauthorized use, and LICENSEE shall cooperate with LICENSOR, at LICENSOR’S expense,
as LICENSOR may reasonably request, in connection with any such action brought by LICENSOR.
LICENSOR shall retain any and all damages, settlement and/or compensation paid in connection with
any such action brought by LICENSOR. In no event shall LICENSOR be responsible to LICENSEE for any
damages that may result from said infringement(s), subject to Section 10. 1 hereof
(Indemnification). Notwithstanding anything to the contrary contained herein, in the event LICENSOR
fails or refuses to commence an action on account of any infringements, imitations or unauthorized
use of the Marks, LICENSEE shall have the right to do so after advance written notice of its intent
to LICENSOR. In such event, LICENSEE shall pay all costs and expenses incurred by it in connection
with such action, and shall retain any and all damages, settlement and/or compensation paid in
connection with any such action brought by LICENSEE. Notwithstanding the preceding, in no event
will LICENSEE enter into any settlement without the express prior written approval of LICENSOR,
which approval it may grant or withhold in its sole discretion. No costs or expenses incurred by
LICENSEE in any such action shall be deducted from or offset against the Royalties otherwise do
LICENSOR. In the event LICENSEE requests that LICENSOR cooperate in any such action, LICENSOR will
do so at the sole cost and expense, including counsel of LICENSOR’S own choosing, of LICENSEE. In
no event shall LICENSOR be responsible to LICENSEE for any damages that may result from said
infringement(s),
| 10. | INSURANCE AND INDEMNIFICATION |
10.1 INDEMNIFICATION :
(A) LICENSEE hereby indemnifies and holds LICENSOR, its successors and assigns, and any
entity owning or controlling LICENSOR and its owners, officers, directors, employees, agents and
representatives (hereinafter individually or collectively referred to as “Licensor Corporate”)
harmless from and against any and all liabilities, claims, causes of action, suits, damages,
including without limitation, suits for personal injury or death of third parties, and expenses,
including reasonable attorneys’ fees and expenses, for which LICENSOR or Licensor
Corporate may become liable or may incur or be compelled to pay as a result of (i) LICENSEE’S
performance of (or its failure to perform) its obligations or responsibilities hereunder, or (ii)
LICENSEE’S breach of any of its covenants, representations and warranties under this Agreement, or
(iii) any claim based upon allegations of negligence or strict liability which are attributable to
any act of LICENSEE, or (iv) claims of infringement of any intellectual property right that would
not be included under Section 10. 1 (B) below. In the event there is a claim against LICENSOR for
which indemnification from LICENSEE is sought hereunder, LICENSEE shall have the right to defend,
settle or contest said claim, at LICENSEE’S sole discretion, so long as the exercise of
such discretion does not adversely affect LICENSOR in a substantial manner and does not affect the
Marks in any way. This paragraph shall survive expiration or termination of the Licensed Term.
(B) LICENSOR hereby indemnifies and holds LICENSEE, its successors and assigns, and any
entity owning or controlling LICENSEE and its officers, directors, employees, agents and
representatives (hereinafter individually or collectively referred to as “Licensee Corporate”)
harmless from and against liabilities, claims, causes of action, suits, damages, including
without limitation, suits for bodily injury or death of third parties, and expenses, including
reasonable attorneys’ fees and expenses, for which LICENSEE or Licensee Corporate may become
liable or may incur or be compelled to pay as a result of an infringement of any third party’s
registered trademark in the Territory resulting from LICENSEE’S Use of the Marks in compliance
with all the terms and conditions of this Agreement (including, but not limited to, the Approval
Process set forth in 6.2). In the event there is a claim against LICENSEE for which
indemnification from LICENSOR is sought hereunder, LICENSOR shall have the sole right to elect to
defend, settle or contest said claim, at LICENSOR’S sole discretion, except as otherwise provided
herein. This paragraph shall survive expiration or termination of the Licensed Term.
10.2 EFFECT OF APPROVAL: The approval by LICENSOR of any Licensed Product, Use or
distribution channel shall not be construed as a consent by LICENSOR to any infringement or
violation of the law or rights of third parties occasioned by the approved License Product, Use
or distribution channel, nor as an indemnification by LICENSOR or assumption of any
responsibility for any such claim beyond the indemnification set forth in Section 10. 1 (B)
above.
10.3 INSURANCE: LICENSEE shall promptly procure and maintain in
full force and effect at all times during the Licensed Term, with a responsible insurance
carrier or carriers reasonably acceptable to LICENSOR, at least Two Million Dollars ($2,000,000)
coverage through a commercial general liability policy, including products liability, and a Two
Million Dollar ($2,000,000) umbrella general liability policy that specifically includes any and
all risks related to the sale or Use of the Licensed Products, and that identifies the LICENSOR,
owners, their officers, directors, employees, subcontractors, agents and managers.
LICENSEE shall automatically furnish or cause to be furnished to LICENSOR within
thirty (30) days of the Effective Date (and on the anniversary date thereof for every Year
thereafter) evidence, in form and substance reasonably satisfactory to LICENSOR, of the
maintenance and renewal of the insurance required herein, including, but not limited to, copies
of policies with applicable riders and endorsements, Certificates of Insurance, and Continuing
Certificates of Insurance.
11. TERMINATION
TERMINATION: Subject to the continuing obligations arising from a breach hereof and
those terms and obligations that survive cessation of this Agreement by the clear import
of their language (including, but not limited to, Articles 4 [Payment], 5 [Accounting], 7
[Marks] and 10 [Insurance & Indemnification]), this Agreement and all rights relevant
thereto shall cease upon the earlier of termination, for whatever reason, or expiration,
except that the exercise of any right of termination under this Article II shall not
affect any rights which have accrued prior to termination and shall be without prejudice
to any other legal or equitable remedies to which LICENSOR may be entitled by reason of
such rights.
(A) WITHOUT CURE: LICENSOR shall have the right to terminate this Agreement
effective immediately (without right to cure by LICENSEE) (1) upon LICENSEE’S receipt of
written notice from LICENSOR in the event of any affirmative act of insolvency by
LICENSEE; or (2) upon the appointment of any receiver or trustee to take possession of
the properties of LICENSEE; or (3) upon the winding-up, sale, consolidation, merger, or
any sequestration by governmental authority of LICENSEE; or (4) upon the breach by
LICENSEE of any Material Term herein, except as expressly set forth in paragraph II (B)
hereof, or (5) upon the decision of a court of first impression having competent
jurisdiction to permanently enjoin LICENSEE’S unlawful use of the Marks or use of the
Marks in a manner specifically denied in this Agreement, or adjudges such use to be
violative of the trademark or other rights of any third party; or (6) upon performance
by LICENSEE of any act specifically set forth in this Agreement as a non-curable breach.
If this License is terminated as set forth above with no right to cure by
LICENSEE, then LICENSEE shall have no right to a Winding-Up Period (as defined here and
below) and shall promptly transfer all remaining Inventory to LICENSOR at LICENSEE’S
direct and actual cost of goods to LICENSOR.
(B) WITH CURE: LICENSOR shall have the right to terminate this Agreement, after
notice to LICENSEE and expiration of a ten (10) day cure period for payment and or
reporting defaults and expiration of a thirty (30) day cure period for all other
defaults (but excluding any non-curable default as set forth in Section II (A) above
which shall not be subject to this Section 11 (13)) if said defaults are capable of
being cured, (1) upon the breach of any of the terms or conditions of this Agreement by
LICENSEE, or (2) if LICENSEE takes any act or fails to act, and such action or omission
is, in the reasonable opinion of LICENSOR, materially harmful to the Marks or the
business of LICENSOR, or LICENSOR’S other licensees, or the brand. If a breach is not
capable of being cured, then termination shall become effective as of the date of
notice.
12. EFFECTS OF AND PROCEDURE ON TERMINATION
12.1 DISCONTINUE USE OF THE MARKS: Upon the expiration or termination of this
Agreement and any Winding-Up Period (as defined below), LICENSEE agrees (1) immediately
to discontinue all Use of the Marks and copyrights of LICENSOR and any term, trademark
or trade dress confusingly similar thereto; and (2) at no cost
to LICENSOR, to transfer promptly to LICENSOR or destroy all printed materials bearing any of the Marks or
copyrights of LICENSOR, and all tapes, heat stamps, dyes and the like used by LICENSEE
(and any third party subcontractor) for reproduction of the Marks or copyrights of
LICENSOR. In the event LICENSEE destroys such items, it shall provide a sworn statement
to that effect detailing what was destroyed, the manner of destruction, and the date of
destruction which is signed by an officer of LICENSEE. LICENSEE further agrees as set
forth in Article 7 hereof that in the event of expiration or termination of this
Agreement, that all rights in and to the Marks, the copyrights of LICENSOR and the good
will connected therewith shall remain the property of LICENSOR. LICENSEE acknowledges
that any Use or use of the Marks or copyrights of LICENSOR by LICENSEE after the date
that termination or expiration is effective, which shall be effective upon the date set
forth in any notice of Termination or upon the expiration of any Winding Up
Period, whichever is later, shall constitute an infringement of the Marks and/or
copyrights of LICENSOR.
12.2 WINDING-UP PERIOD: Upon the expiration or termination of this Agreement and
subject to LICENSOR’S right to purchase the Inventory as set forth in Section 12.3 below,
LICENSEE shall have a reasonable time (as determined by LICENSOR upon receipt and review
of the Inventory Statement and verification of the Inventory size), not to exceed nine
(9) months from the Commencement Date (defined below) of the Winding-Up Period, on a
non-exclusive basis, in which to dispose of its Inventory, if any, according to all the
terms and conditions of this Agreement (hereinafter “Winding Up Period”). LICENSEE shall
have no right to dispose of or otherwise deal in any Licensed
Products or use tangible items bearing the Marks if it refuses to allow LICENSOR to
exercise its rights under this Section 12.2 or if it fails to allow LICENSOR to resolve
any objections to the Inventory Statement to the satisfaction of LICENSOR.
(A) WINDING-UP PROCEDURE: No later than sixty (60) days prior to expiration of this
Agreement or within fifteen (15) days after termination, as the case may be, LICENSEE
shall deliver to LICENSOR a complete and detailed statement setting forth the number and
description of the then remaining Inventory, advertising (only if said advertising has
previously been purchased and set for publication), copies of orders LICENSEE intends to
fill, and the like (hereinafter “Inventory Statement” ). LICENSEE shall permit LICENSOR
to be present at the time (with at least ten (10) day’s notice of the time and date of
the compilation of data in preparation for the Inventory Statement) and at all reasonable
times thereafter during the Winding-Up Period to have sufficient access to verify the
accuracy of the Inventory Statement. If LICENSOR does not make a written objection to any
part of the Inventory Statement within fourteen (14) days of receipt thereof, said
statement shall be deemed accurate. The Winding-Up Period shall commence upon the earlier
of the expiration of said fourteen (14) day period or the date of written notice to
proceed with winding-up from LICENSOR (hereinafter “Commencement Date”).
(B) EXPIRATION OF THE WINDING-UP PERIOD: Within twenty (20) business days following
(i) expiration of the Winding-Up Period, or (ii) the actual liquidation of all remaining
Licensed Products, or (iii) upon expiration of the fifteen (15) day or sixty (60) day
deadline (depending on whether termination or expiration has occurred) for submission of
the Inventory Statement by LICENSEE if none is received by LICENSOR within said time
period, or (iv) the termination or expiration of this Agreement without right to a
Winding-Up period, or (v) the exercise of LICENSOR’S right to purchase the Inventory as
set forth in Section 12.3 below
(unless LICENSOR does not purchase all remaining Inventory in which case LICENSEE
shall have a right to a Winding-Up Period to sell-off the Inventory not so purchased),
whichever is earlier, LICENSEE shall remit the last requisite Royalty payments and
reports on the sale thereof (as required in Section 5. 1)[Paymentj, and shall, at the
same time, remove and send to LICENSOR, at no cost to LICENSOR, any and all then
remaining Inventory, and shall cease to Use the Marks or otherwise act in any way
which may lead another to believe the LICENSEE still has the right to Use the Marks.
12.3 LICENSOR’S RIGHT TO PURCHASE INVENTORY: Upon expiration or termination of this
Agreement for any reason, LICENSOR shall have the right and option superior to any right
of LICENSEE to a Winding-Up Period to be exercised in writing and mailed or delivered to
LICENSEE no later than fourteen (14) days after receipt of the Inventory Statement, to
purchase any or all remaining Inventory at LICENSEE’S actual
and direct cost of the goods. No general overhead or indirect costs shall be
included in computing LICENSEE’S actual cost of the goods.
13. RELATIONSHIP OF THE PARTIES
The relationship of LICENSEE to LICENSOR is that of an independent contractor and
neither LICENSEE nor its agents or employees shall be considered employees or agents
of LICENSOR. This Agreement does not constitute and shall not be construed as
consisting of a partnership or joint venture or grant of a franchise between LICENSOR
and LICENSEE. LICENSEE shall not have the right, nor shall it represent that it has
the right, to bind LICENSOR to any obligations to third parties.
14. ASSIGNMENT
14.1 ASSIGNMENT: This Agreement may be assigned by LICENSOR but shall not be
assignable or transferable by LICENSEE without the prior written consent of LICENSOR
reasonably applied, and any attempted assignment, sublicense or pledge thereof by
LICENSEE without such prior written consent shall be void and shall constitute a
non-curable breach of the obligations of LICENSEE hereunder and shall be subject to
termination by the LICENSOR at LICENSOR’S sole discretion.
14.2 DEFINITION OF ASSIGNMENT: Assignment for purposes of this Agreement shall be
the sale, transfer or assignment of fifty percent (50%) or more of the shares of
LICENSEE, including by way of transfer, or assignment of any amount of authorized but
unissued shares, a merger or consolidation; (or, if a partnership, then any change in at
least fifty percent (50%) or more of the partners’ interest) in which LICENSEE is not the
surviving entity; or, a sale of a substantial part of LICENSEE’S assets.
15. NOTICES
15.1 NOTICES: Any notice, demand, waiver, consent, approval or disapproval
(collectively referred to as “notice”) required or permitted herein shall be in
writing and shall be
given personally, by messenger, by air courier, or by prepaid registered or certified mail,
with return receipt requested, addressed to the parties at their respective Notice Address.
15.2 A notice shall be deemed received on the date of receipt.
16. ARBITRATION AND APPLICABLE LAW
16.1 ARBITRATION & APPLICABLE LAW: Any controversy or claim arising under or in relation to
this Agreement, or the breach thereof, or the relations between LICENSEE and LICENSOR or LICENSEE
and OWNER (excluding disputes falling within paragraph 3.4(B), supra , or 16.2 below) shall be
settled by arbitration by a panel of three arbitrators (unless the amount in dispute is less than
Twenty-Five Thousand Dollars ($25,000) in which case there shall be only one arbitrator) in the
City of Los Angeles, California, administered by the American Arbitration Association under the
then applicable General Arbitration Rules of the Council of the Textiles and Apparel Industries (or
if said Rules no longer exist, then the equivalent applicable arbitration rules generally accepted
by the apparel industry), and judgment on the award rendered by the arbitrator(s) may be entered in
any court having jurisdiction thereof, provided however, that the arbitrator(s) shall be bound by
the laws of the State of California and, regarding any questions related thereto, the trademark
statutes of the United States of America, and shall have no power to extend this Agreement beyond
its termination date, nor to award punitive, consequential, multiple, incidental or any other
damages in excess of the economic damages actually sustained by the claimant. If, and only if, the
arbitrator(s) shall determine that either party’s position in arbitration was not maintained in
good faith, then the arbitrators shall have the power to order reinstatement or other continuation
of the parties’ relationship after termination, and to award the other party a reasonable
attorney’s fee.
The choice of law governing any and all questions and issues in any way related to this
Agreement, except as set forth in the above paragraph) shall be the laws of the State of New
York and the trademark statutes of the United States of America.
16.2 EQUITABLE RELIEF: LICENSEE recognizes that the Marks possess a special, unique and
extraordinary character which makes difficult the assessment of monetary damages which LICENSOR
might sustain by an unauthorized use. LICENSEE agrees that irreparable injury would be caused by
LICENSEE by such unauthorized use, and that injunctive relief, including specific performance as
applicable, would be appropriate in the event of breach of this Agreement. The loser of said
action shall pay any and all reasonable costs, expenses, attorney’s fees and disbursements
incurred by the other party with respect thereto.
This Section 16.2 shall be an exception to the mandatory arbitration provision set forth
in Section 16.1 above.
17. CONFIDENTIALITY OF INFORMATION
17.1 CONFIDENTIAL INFORMATION: LICENSEE and LICENSOR shall regard and preserve as
confidential all Confidential Information (defined below) related to the business of the
other party, except that information which is public knowledge, which may be
obtained by it from any source as a result of this Agreement, or otherwise. The parties
agree that they shall not and they shall cause their employees, representatives, agents and
licensees not to divulge, furnish or make accessible to anyone such Confidential Information,
except as may be necessary from time to time in performance of their duties hereunder on a
limited “need to know” basis. This provision shall survive the termination of this Agreement.
LICENSEE shall confine and limit the use of all Confidential Information obtained from
LICENSOR, its designees, its licensees or its agents exclusively to the development and sale of the
Licensed Products, and shall not use or adopt such Confidential Information obtained from LICENSOR,
including, but not limited to customer lists, pricing methods, marketing programs, in connection
with any product which is not a Licensed Product. Upon expiration or termination of the Agreement
for any reason, LICENSEE shall forthwith deliver to LICENSOR any such Confidential Information and
thereafter cease using the same.
LICENSOR shall confine and limit the use of all Confidential Information obtained from
LICENSEE, its designees, or agents exclusively to the development, marketing and sale of the Marks.
17.2 DEFINITION: “Confidential Information” shall be written information marked confidential
and oral information designated confidential and confirmed as such in writing delivered not later
than ten (10) days after such disclosure, and shall include this Agreement, customer/account
lists, and marketing plans of LICENSOR or LICENSEE whether or not marked as confidential or
confirmed as such in writing.
18. MISCELLANEOUS
18.1 LIMITATION ON USE OF OTHER TRADEMARKS: LICENSEE does hereby acknowledge that any attempt
by it, or by any other corporation, partnership, or business organization in which any officers,
directors, stockholders, partners of LICENSEE are owners thereof, to manufacture, sell or
distribute the Licensed Products under any trademark, trade name, or other identifying word or
symbol of any Competitor other than the Marks, excluding those used by LICENSEE as of the date of
this Agreement as set forth on Schedule 2 attached hereto, constitutes a violation of its
obligation to use its best efforts to exploit the License granted herein and is a breach of this
Agreement. LICENSEE does hereby assume the liability for its officers, directors, and shareholders
(or partners) for such conduct and agrees that any such conduct shall constitute a breach of this
Agreement. For purposes of clarification, LICENSEE may license, manufacture and sell products
which are similar to the Licensed Products in category, image, quality and price points, and which
are sold through distribution channels of the same like and kind as the Licensed Products under
the xxxx of any third party, so long as it does not use the same designs or styles as are used for
the Licensed Products hereunder in connection with any third party xxxx.
18.2 HEADINGS: The headings contained in this Agreement are for
convenience and reference purposes only. They do not form a part hereof and shall not affect
the meaning or interpretation of this Agreement.
18.3 LICENSOR’S RIGHT TO APPOINT REPRESENTATIVES: LICENSOR shall have the right at
any time to appoint in writing an authorized representative or representatives who shall
be empowered to act on behalf of the LICENSOR with regard to any matter pertaining to
this Agreement. It is understood that such appointment shall be strictly limited to the
provisions of the written appointment, that the representative shall have no authority
beyond the scope of such appointment, and that LICENSEE shall act only in accordance with
such written appointment.
18.4 WAIVER OF RIGHTS: The failure of a party to insist upon strict adherence to any
provision of this Agreement on any occasion shall not be considered or deemed to be a
waiver nor considered or deemed to deprive that party of the right thereafter to insist
upon strict adherence to that provision or any other provision of this Agreement. Any
waiver must be in writing.
18.5 COMPLETE AGREEMENT & NO ORAL MODIFICATION: This Agreement is a complete
statement of all agreements among the parties with respect to the subject matter hereof
Any amendment, modification, alteration, change or waiver must be in writing. LICENSEE
acknowledges that LICENSOR has made no warranties or representations except those
expressly stated herein, if any.
18.6 SEVERABILITY: If any provisions of this Agreement is for any reason
declared to be invalid or unenforceable, the validity of the remaining provisions
shall not be affected thereby.
18.7 INCORPORATION BY REFERENCE: The recitals, Schedules and Exhibits are hereby
incorporated in this Agreement. Paragraph headings are used solely for convenience and
should not be given any weight in the interpretation of this Agreement.
18.8 WARRANTIES OF CORPORATE FITNESS: The parties each warrant the following: (1)
that the delivery of this Agreement has been duly authorized by all requisite corporate
action of its company; (2) that the execution and delivery of this Agreement does not
violate its Articles of Incorporation or By-laws, or any contract or commitment to which
it is a party or by which it is bound; and (3) that it is not a party to any suit,
action, administrative proceeding, or investigation which, if successful, would have a
material, adverse effect on its properties, financial conditions or business.
18.9 CONSTRUCTION: This Agreement’s terms and conditions were freely negotiated.
LICENSOR drafted the Agreement for the convenience of the parties only. As such, the
language shall be interpreted without regard to
any rule, law or presumption requiring the language to be construed, interpreted or
applied against LICENSOR.
18.10 RESERVATION OF RIGHTS: LICENSOR reserves all rights not
specifically granted to LICENSEE hereunder.
18.11 USE OF COUNSEL: The parties hereto represent that they have each consulted
with counsel of their own choosing in connection with the negotiation and execution of
this agreement or have knowingly chosen not to do so.
IN WITNESS WHEREOF, the parties have first caused this Agreement to be executed as
of the Effective Date.
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By:
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Name:
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Title:
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| THE FASHION HOUSE, INC. | ||||||
By:
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Name:
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Title:
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