LICENSE AGREEMENT
Exhibit 10.7
LICENSE
AGREEMENT
BETWEEN
AGREEMENT
BETWEEN
OSCAR DE LA RENTA, LTD.
AND
THE FASHION HOUSE INC.
THIS LICENSE AGREEMENT (this “Agreement”) made and entered into as of the 24th day of
January, 2005, by and between OSCAR DE LA RENTA, LTD., a New York corporation having a place of
business at 000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 (“LICENSOR”), and THE FASHION HOUSE INC.,
a Delaware corporation, having a place of business located at 0000 Xxx Xxxxxxx Xxxx. #000, Xxx
Xxxxxxx, XX 00000 (“LICENSEE”).
WHEREAS, LICENSOR is authorized to grant licenses for the “LICENSED XXXX” (as hereinafter
defined) and all variants thereof; and
WHEREAS, LICENSOR and LICENSEE further recognize and acknowledge that LICENSOR’s authority
and discretions provided for in this Agreement are crucial to LICENSOR’s effective management of
its trademarks and brands;
WHEREAS, the LICENSOR and LICENSEE desire to enter into an agreement to authorize LICENSEE to
use the LICENSED XXXX in connection with the manufacturing, promotion, distribution and sale (in
accordance with the terms and conditions set forth in this Agreement) of the “ARTICLES” in the
“TERRITORY” as defined herein.
NOW, THEREFORE, in consideration of the mutual covenants herein contained, the parties do
agree as follows:
1. Definitions.
The following capitalized terms when used in this Agreement shall have the meaning set forth
below:
a. ADVERTISING MATERIALS: Shall mean designs, advertising copy and layout, photographs,
texts, fixtures, image catalogues, counter cards, in-store and trade show displays, graphics,
audiovisual, logo (and LICENSED XXXX) use and audio materials related to the ARTICLES.
b. ADVERTISING PLAN: Shall mean LICENSEE’s proposed advertising budget and media plan for
consumer, co-op and/or trade advertising, including a list of planned expenditures, together with
the dates, publications, format and size of all co-op and trade advertisements proposed by
LICENSEE.
c. ARTICLES: Shall mean the following items: women’s footwear of all kinds.
d. CLOSE-OUT: Shall mean ARTICLES offered for sale to the trade at TWENTY FIVE (25%) PERCENT
or more off of the full published wholesale price.
e. CONTRACT YEAR: A period of twelve calendar months
comprising the calendar year during which this Agreement is in effect, except that the FIRST
CONTRACT YEAR shall commence as of the date of this Agreement and end June 30, 2006.
f. DESIGN SPECIFICATIONS: Shall mean the following as it relates to the ARTICLES or any
materials relating to the ARTICLES: designs, patterns, sketches, colors, materials, fabrics,
quality and packaging, and the construction/manufacturing standards embodied therein.
g. LICENSED XXXX: Shall mean the “Oscar by Oscar de la Rental’ and “0 OSCAR”
trademarks in the forms attached hereto as Exhibit A (as are currently used in the United States
for other womenswear products), used as directed or approved by LICENSOR in accordance with the
terms of this Agreement, and all goodwill associated therewith.
h. LICENSEE: Shall mean THE FASHION HOUSE INC., a Delaware Corporation having a place of
business located at 0000 Xxx Xxxxxxx Xxxx. #000, Xxx Xxxxxxx, XX 00000.
i. LICENSOR: Shall mean OSCAR DE LA RENTA, LTD., a New York Corporation having a place of
business at 000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, the owner of the LICENSED XXXX.
j. NET SALES: Shall mean the gross invoice price of ARTICLES sold at wholesale (or, with
respect to CLOSE-OUTS, at the price at which such CLOSE-OUTS are invoiced) less sales taxes,
freight and insurance, the amounts of credit normally allowed for returns, normal trade discounts
and volume rebates actually taken by retailers and charge-backs, margin assistance and overbills.
Advertising and promotional expenditures shall not be deducted in computing NET SALES. With
respect to sales of ARTICLES to affiliated persons or entities or to persons or entities with
which LICENSEE does not deal on an arm’s length basis (other than to employees for personal use
only for which royalties shall not be payable), NET SALES shall be computed using the wholesale
price (subject to the deductions set forth above) actually charged to unaffiliated third parties
for resale. An ARTICLE shall be deemed sold when shipped.
k. QUARTERLY DATES: Shall mean each January 1, April 1, July 1 and October 1 of a given
CONTRACT YEAR.
I. ROYALTY SALES REPORTS: Reports showing LICENSEE NET SALES on the basis of which royalty
payments made by LICENSEE under Section 8.1 are calculated.
m. TERM: Shall have the meaning set forth in Section 3.1 of this Agreement.
n. TERRITORY: Shall mean the United States of America, and shall
exclude duty-free or tax-free shops, diplomatic or consular sales, airline supplies, or ship’s
stores.
2. Grant of License.
2.1.1 Exclusive License. Subject to the terms and conditions of this Agreement,
LICENSOR hereby grants to LICENSEE the exclusive non-assignable license to use (a) the DESIGN
SPECIFICATIONS either furnished or approved by
LICENSOR prior to use as provided in this Agreement, bearing the LICENSED XXXX and (b) the
LICENSED XXXX for the manufacturing, sourcing, advertising, promotion, sale and distribution of
the ARTICLES as approved by LICENSOR as provided herein, in the TERRITORY.
2.1.2 Right of First Refusal for LICENSED XXXX. Provided that LICENSEE is not in
default of any of the terms of this Agreement, LICENSOR grants to LICENSEE a right of first
refusal with regard to the LICENSED XXXX as follows: If a potential licensee other than LICENSEE
desires to license the LICENSED XXXX with respect to the ARTICLES in any area of the world outside
of the TERRITORY, and the proposed terms and conditions of such a proposed license are acceptable
to LICENSOR, LICENSOR shall notify LICENSEE of such proposed terms and conditions (the “Offer
Notice”). If LICENSEE does not send written notice to LICENSOR within twenty (20) days of receipt
of the Offer Notice stating that LICENSEE will match exactly the terms and conditions contained in
the Offer Notice, LICENSOR shall be free to license the LICENSED XXXX to the proposed licensee. If
LICENSEE does accept the terms and conditions of the Offer Notice within such period, LICENSEE
shall be required to enter into a license agreement with LICENSOR within five (5) days of
receiving a licensing agreement containing such terms and conditions from LICENSOR. If, for any
reason, LICENSEE does not execute such license agreement in such five (5) day period, LICENESE
shall lose its right of first refusal with regard to the area(s) of the world set forth in the
Offer Notice. In addition to the above, LICENSEE at any time may submit to LICENSOR a proposal to
license the LICENSED XXXX with respect to the ARTICLES in any area of the world outside of the
TERRITORY, it being understood and agreed that the decision to accept or reject any such proposal
from LICENSEE shall be left to the sole and absolute discretion of LICENSOR.
2.1.3 Rights Concerning Licensor Signature Collection. Provided that
LICENSEE is not in default of any of the terms of this Agreement, then in the event that
LICENSOR ever determines, in its sole and absolute discretion, to seek out license agreements for
ARTICLES bearing the Oscar de la Renta signature trademark (the “Signature Collection”), LICENSOR
will provide LICENSEE with written notice of the same. LICENSEE will then have thirty (30) days
after receipt of such notice to submit a proposal to LICENSOR for the licensing of the Signature
Collection, provided, however, that LICENSOR shall be under no obligation to accept any proposal
from LICENSEE and the decision to accept or reject any proposal shall be left to the sole and
absolute discretion of LICENSOR. In the event that LICENSOR, in its sole and absolute discretion,
chooses to reject any such proposal from LICENSEE, then LICENSOR will be free to enter into any
licensing or other arrangement with respect to the ARTICLES
for the Signature Collection that LICENSOR chooses in its sole and absolute discretion
without any further obligation to LICENSEE.
2.2 Limitations on Rights Granted.
2.2.1 LICENSEE shall not place the LICENSED XXXX on, or use the LICENSED XXXX in
connection with, any merchandise or goods of any kind, nature or description other than the
ARTICLES and labels, hangtags and packaging used in connection therewith as approved
hereunder. LICENSOR may also grant to others the right or license to use the LICENSED XXXX
on or in connection with goods of other types and descriptions other than
the ARTICLES in any area of the world including the TERRITORY; provided,
however, that LICENSOR shall not grant such rights to third parties that LICENSOR knows
will conduct their activities in such a way as to interfere with the rights granted to
LICENSEE under this Agreement. It is expressly understood and agreed that LICENSEE will use
its best efforts not to sell ARTICLES bearing the LICENSED XXXX to customers who LICENSEE
knows or should know will conduct their activities with respect to the ARTICLES in a manner
which, if conducted by LICENSEE, would cause LICENSEE to be in violation of this Agreement,
and, except if prohibited by law, agrees to cease selling to any such customer. In the
event it is discovered that a customer of LICENSEE conducts its business in such manner, or
ships or intends to ship or market ARTICLES in violation of this Agreement, LICENSEE shall,
at LICENSEE’s expense, cause such customer to cease such shipments.
2.2.2 LICENSEE shall not sublicense any of the rights or license herein granted.
2.2.3 LICENSEE shall not use and is not licensed to use any variation of the LICENSED
XXXX other than as (and in the manner) specifically directed in writing by LICENSOR;
provided, however, that if LICENSOR changes the manner in which the LICENSED XXXX
is to be used, LICENSEE shall not be required to revise and/or recall any previously
approved ARTICLES, CLOSE-OUTS and/or ADVERTISING MATERIALS.
2.3 Other Duties of LICENSEE. In addition to the duties of LICENSEE provided
for elsewhere in this Agreement, LICENSEE shall:
2.3.1 Develop and accomplish a line development, marketing and distribution plan as
set forth in Exhibit B for each CONTRACT YEAR (including the first CONTRACT YEAR ) for
prior review and approval by LICENSOR which, following such approval, shall be executed by
LICENSEE; and
2.3.2 Develop and accomplish an initial collection of ARTICLES bearing the 0 OSCAR
LICENSED XXXX as set forth in Exhibit B; and
2.3.3 Develop and accomplish an initial collection of ARTICLES bearing the Oscar by
Oscar de la Renta LICENSED XXXX as set forth in Exhibit B; and
2.3.4 Develop, subject to LICENSOR’s written approval, and execute an ADVERTISING PLAN, with
media budgets sufficient to advertise and promote in accordance with Section 7.1 the ARTICLES
bearing the LICENSED XXXX throughout the TERRITORY in a manner consistent with a prestigious and
important designer branded business; and
2.3.5 Assure that the ARTICLES and their packaging shall be subject to LICENSOR’s prior
written approval and of the highest standards and of such style, appearance, distinctiveness and
quality as to protect the prestige of LICENSOR
and of the LICENSED XXXX and the goodwill pertaining thereto, that the ARTICLES will be
manufactured, packaged, sold and distributed in accordance with all applicable laws and
regulations (including but not limited to all laws relating to fair labor practices), that the
ARTICLES will be manufactured in a quality consistent with LICENSEE’s highest quality collection,
and that the policy of sale, distribution and/or exploitation by LICENSEE shall be subject to
LICENSEE’s highest standards ( which standards shall be no less than those which exist as of the
date first above written) and which will enhance and maintain the goodwill and prestigious name of
the LICENSOR; and
2.3.6 Produce numbers of ARTICLES and make timely and coordinated delivery thereof to
customers consistent with LICENSEE’s highest standards/practices as described in the subparagraph
above ; and
2.3.7 Place the LICENSED XXXX on all ARTICLES prior to delivery, except as otherwise set
forth herein; and
2.3.8 Promote and maximize sales of the ARTICLES throughout the TERRITORY and in accordance
with the terms of this Agreement and use best efforts to minimize trade discounts and allowances
pertaining thereto; and
2.3.9 Establish and maintain an infrastructure necessary and adequate to establish and
maintain on a first-class basis the activities arising out of this Agreement including but not
limited to having personnel who can coordinate with, and provide vendor services to, LICENSEE’s
larger customers on a regular basis and others from time to time and who will promote and sell the
ARTICLES, and a merchandise, marketing and brand manager or managers, as appropriate. LICENSEE
shall also maintain separate sales teams, account managers and dedicated designer(s) for each of
the 0 OSCAR and Oscar by Oscar de la Renta LICENSED MARKS. LICENSEE may use its existing
facilities for accounting, order processing, production and other back office functions; and
2.3.10 Maintain a devoted area, consisting of a separate designated selling space, dedicated
to displays of complete collections of the ARTICLES in its company owned designer show rooms
located at 0000 Xxx Xxxxxxx Xxxx. Xxxxx 000, Xxx Xxxxxxx, XX 00000 by no later than September 30,
2005 and a New York showroom located in the County of New York by no later than September 30,
2006 and a representative offering of the ARTICLES in its other showroom facilities, if any; and
2.3.11 Recognizing that excessive or indiscriminate disposals of CLOSE-OUT ARTICLES may
adversely affect the importance and prestige associated with the LICENSED XXXX, LICENSEE shall use
its best efforts to minimize CLOSE-OUT sales and, without limiting the foregoing, in no event shall
the total amount of NET SALES of CLOSE-OUT ARTICLES exceed FIFTEEN (15%) PERCENT of NET SALES
(computed without including the NET SALES of CLOSE-OUT ARTICLES). CLOSE-OUT SALES shall be subject
to payment of royalties as provided in Article 8. All sales of CLOSE-OUT ARTICLES shall be fully
and separately recorded and accounted for in a manner that will enable LICENSOR to determine
LICENSEE’s compliance with the above provisions. The sale and distribution of CLOSE-OUT ARTICLES
shall be subject to Article 6 below.
2.3.12 Provide and pay for first-class travel, food expense and hotel accommodations for
travel by Mr. Oscar de la Renta and his designee, at LICENSEE’s request, outside of New York City
for personal appearances, other promotional events in connection with the promotion of the
ARTICLES, product reviews and/or showroom reviews further to subsection 4.1.2 , and promotional
purposes where such promotional purposes are jointly determined by LICENSOR and LICENSEE, or other
purposes incidental to this Agreement. LICENSEE shall also pay for business class round trip
travel, in addition to food expense and hotel accommodations for other persons reasonably requested
by LICENSOR to travel with or on behalf of Mr. Oscar de la Renta as the case may be, in connection
with the promotion or in connection with the development of the ARTICLES.
3. Term of License.
3.1 Term. The TERM of this Agreement shall be for a period of FIVE (5) CONTRACT YEARS
commencing effective upon the date hereof and terminating on June 30, 2010, the last day of the
FIFTH CONTRACT YEAR.
3.2 Renewal Term.
3.2.1 First Renewal Term. If prior to the end of the Term, the following
conditions have been satisfied:
a). LICENSEE is not then in default of any of the terms of this
Agreement; and
(b). Aggregate NET SALES of the ARTICLES for the FOURTH CONTRACT YEAR shall be at least EIGHT
MILLION FIVE HUNDRED THOUSAND ($8,500,000) DOLLARS ;
then LICENSEE shall have the option to renew this Agreement for three (3) further
CONTRACT YEARS. Such option shall be exercisable by notice received by LICENSOR in writing no later
than December 31, 2009. In the event such option is so exercised by LICENSEE, this Agreement shall
be deemed renewed for a first renewal TERM ending June 30, 2013.
3.2.2 Second Renewal Term. If prior to the end of the first Renewal
Term, the following conditions have been satisfied:
(a). LICENSEE is not then in default of any of the terms of this Agreement, and
(b). Aggregate NET SALES of the ARTICLES for the SECOND CONTRACT YEAR of the first renewal
Term shall be at least TWELVE MILLION FIVE HUNDRED THOUSAND ($12,500,00) DOLLARS ;
then LICENSEE shall have the option to renew this Agreement for three (3) further CONTRACT YEARS.
Such option shall be exercisable by notice received by LICENSOR
in writing no later than December 31, 2012. In the event such option is so exercised by LICENSEE,
this Agreement shall be deemed renewed for a second renewal TERM ending June 30, 2016.
4. Designs/Product Development.
4.1 Designs/Design Approval.
4.1.1 LICENSEE will advise LICENSOR in writing of its product development calendar and, prior
to sample development, will coordinate with LICENSOR in New York to receive design direction
offered by LICENSOR. LICENSEE shall present all ideas, concepts, proposed DESIGN SPECIFICATIONS,
sketches and designs, and samples of types of fabric, materials, and colors for the ARTICLES to
LICENSOR’s styling representative at LICENSOR’s New York office for examination, comment and
approval as soon as sketches (including, as available, fabric and material samples and color
choices) are available, and as soon as final samples are available, all in a timely manner in
advance of each season. Except as expressly provided in this subsection 4.1.1 to the contrary, all
ideas, sketches, designs, fabrics, materials, models and colors will be mutually agreed upon by
LICENSOR and LICENSEE before each collection is finalized for presentation to the market and/or
production and LICENSOR reserves the right to eliminate or to modify any of the ideas, sketches,
designs, fabrics, materials, models or colors submitted by LICENSEE pursuant to subsection 4.1.2;
provided, however, that no changes can be made to any of the foregoing once LICENSEE has
finalized the collection for presentation to the market and/or production. LICENSEE will present
all of a proposed sample line to LICENSOR for review, comment, editing and further work prior to
LICENSEE commitments to production. The presentation of market samples will be in New York, New
York. LICENSEE will incorporate DESIGN SPECIFICATIONS furnished or otherwise approved by LICENSOR,
and LICENSEE understands and agrees that the showing and/or production and/or sale of ARTICLES that
are not either approved by LICENSOR or do not conform to LICENSOR direction shall hereby be
prohibited.
4.1.2 Any material or item under this Agreement that is subject to LICENSOR approval must be
submitted to LICENSOR by LICENSEE. Approval by LICENSOR of any DESIGN SPECIFICATION with respect
to any design or item shall not be deemed an approval of the use thereof for any other design or
item or for that particular item for any other collection. DESIGN SPECIFICATIONS (including but
not limited to any copyrights related thereto) furnished or approved by LICENSOR shall be and
forever remain LICENSOR’s sole and exclusive property.
4.1.3 At LICENSOR’s request, LICENSEE, at its expense from time to time, will submit a
reasonable number of production samples of each ARTICLE manufactured hereunder so that LICENSOR
may confirm that the ARTICLES offered for distribution conform to the DESIGN SPECIFICATIONS
approved by LICENSOR.
4.1.4 LICENSOR’s right of approval hereunder shall include the right to determine what
ARTICLES should bear a particular LICENSED XXXX (or any variation or derivative thereof).
5. Manufacture of Articles.
5.1 Quality of Articles. LICENSEE covenants and agrees that the materials and
construction of all ARTICLES manufactured hereunder shall be of superior quality.
5.2 Inspection. LICENSOR will have the right, at any time during normal business
hours, with five (5) days prior notice to LICENSEE, to inspect the process of manufacturing for
any and all ARTICLES produced hereunder and LICENSEE shall at all times during the TERM (including
renewals, if any) hereof use its diligent efforts to make its manufacturing, warehouse and
distribution facilities available to LICENSOR for inspection by LICENSOR or its representatives at
LICENSOR’s cost and expense during normal working hours.
6. Distribution.
6.1 Authorization of Sales Points. LICENSEE recognizes that the prestige and image of
the LICENSED XXXX depends upon, among several factors, the selection of top-ranked retail sales
outlets of the highest caliber and excellent reputation which project an image of high fashion and
prestige consistent with the reputation of Mr. Oscar de la Renta and that retail comparable
prestigious designer name goods. LICENSEE further recognizes that LICENSOR as the grantor of
licenses of the LICENSED XXXX for the manufacture and sale of other articles under the LICENSED
XXXX must participate in the designation of retail outlets to which LICENSEE may offer to sell
ARTICLES to assure a consistent quality of image of retail sales points under this and other
licenses. Except as otherwise set forth herein or required by law, the ARTICLES shall not be sold
to sales points objected to by LICENSOR as not in accordance with a plan of distribution approved
in advance by LICENSOR. Additionally,
LICENSEE shall sell ARTICLES on a wholesale basis only. If requested by LICENSOR and if permitted
by law, LICENSOR shall have the right to cause LICENSEE, immediately upon notice, to cease selling
the ARTICLES to any such retail sales outlet (including any catalog(s) and internet portals)
designated by LICENSOR and to use its best efforts to sell ARTICLES to such retail sales points as
LICENSOR may request in writing. Further, the ARTICLES bearing the LICENSED XXXX shall not be sold
to mass merchandisers, or off-price, or discount stores (such as Walmart, K-mart, and Sears), or
through telemarketing, television, internet, or mail order catalogue sales (except with regard to
the catalogs and internet portals set forth on Exhibit C.) Notwithstanding the foregoing, subject
to the restrictions otherwise set forth in this Agreement, LICENSEE may sell CLOSE-OUTS to
off-price stores which do not advertise or display brand names or trademarks of the goods they
sell and further, that the selection of such stores shall be approved by LICENSOR in the manner
set forth in Section 4.1.2 above. Any arrangements between LICENSEE and any of its distributors
shall be subject to LICENSEE’S duties and LICENSOR’s rights under this Agreement the breach of
which will be deemed a breach of this License by LICENSEE. LICENSEE shall enforce LICENSOR’s
rights under this Agreement with respect to third parties with which LICENSEE does business
relating to this Agreement. Notwithstanding the foregoing, LICENSEE’s plan of distribution
consisting of those stores, catalogs and Internet portals set forth in Exhibit C attached hereto
(as may be amended from time to time in writing signed by LICENSOR and LICENSEE) is hereby
approved by LICENSOR subject to the conditions set out above.
6.2 Plan of Distribution. LICENSEE’s plan of distribution for the sale of ARTICLES
bearing the LICENSED XXXX shall be subject to LICENSOR’s prior approval. The method of approval
shall be as set forth under Section 4.1.2 above.
6.3 Minimum Retail Pricinq. Except as provided herein, or unless otherwise required
or prohibited by law, LICENSEE shall be required to provide all approved retailers under Section
6.1 with a list of suggested minimum retail prices for the ARTICLES that contains a suggested
retail price of not less than $140 nor greater than $225 for each ARTICLE bearing the Oscar by
Oscar de la Renta LICENSED XXXX and not less than $69.99 nor greater than $109.99 for each ARTICLE
bearing the 0 OSCAR LICENSED XXXX.
6.4 Sales Minimums. In the event that NET SALES of the ARTICLES do not meet the
following mimimum amounts, then LICENSOR shall have the right to terminate this Agreement
immediately upon written notice to LICENSEE: (i) for ARTICLES bearing the 0 OSCAR LICENSED XXXX,
TWO MILLION ($2,000,000) DOLLARS for each CONTRACT YEAR, including each CONTRACT YEAR of any
renewal term; and (ii) for ARTICLES bearing the Oscar by Oscar de la Renta LICENSED XXXX, ONE
MILLION FIVE HUNDRED THOUSAND ($1,500,000) DOLLARS for each of the SECOND, THIRD, FOURTH AND FIFTH
CONTRACT YEARS as well as each CONTRACT YEAR of any renewal term. Notwithstanding anything else
contained in this Agreement, a failure to meet the sales minimum amounts in this Section with
respect to a LICENSED XXXX will be deemed a failure to meet the sales minimum amounts in this
Section for the other LICENSED XXXX,
regardless of the actual sales amounts for the other LICENSED XXXX, entitling LICENSOR to
terminate this Agreement with respect to both LICENSED MARKS pursuant to this Section.
7. Advertising.
7.1 General. Any initial advertising will be planned and accomplished as mutually
agreed between LICENSOR and LICENSEE but shall, in any event, conform with any other trade
advertising applicable to products bearing the LICENSED XXXX, as may be communicated, planned
and/or coordinated by LICENSOR. During the TERM, LICENSEE shall promote the availability of the
ARTICLES throughout the TERRITORY both in print and in trade shows appropriate for the importance
of the ARTICLES bearing the LICENSED XXXX in accordance with an ADVERTISING PLAN, ADVERTISING
MATERIALS, and budget approved in advance by LICENSOR.
7.2 Advertising Plan. Within a reasonable time before the end of each CONTRACT YEAR,
LICENSEE shall submit to LICENSOR for approval LICENSEE’s proposed ADVERTISING PLAN for the
ensuing CONTRACT YEAR. The ADVERTISING PLAN approved by LICENSOR may be amended or modified by
LICENSOR and LICENSEE (subject to LICENSOR approval) from time to time during the CONTRACT YEAR
to reflect changes in strategies and promotional activities. LICENSEE will incorporate into its
ADVERTISING PLAN otherwise approved by LICENSOR materials, graphics and directions, if any,
submitted by LICENSOR. LICENSEE will cooperate with LICENSOR to coordinate LICENSEE’s advertising
program with those of LICENSOR’s other licensees so that a comprehensive and coordinated
look and approach to placement can be accomplished.
7.3 Corporate and Image Advertisinq. In addition to all other amounts payable to
LICENSOR or otherwise payable by LICENSEE hereunder, LICENSEE will pay to LICENSOR amounts equal
to TWO (2.0%) PERCENT of NET SALES of the ARTICLES (including CLOSE-OUT ARTICLES) for LICENSOR’s
use in its sole and absolute discretion in connection with its corporate and/or image advertising
program as LICENSOR may have in effect from time to time. Such amounts shall be reported and paid
to LICENSOR within THIRTY (30) days following each QUARTERLY DATE as and when reporting under
Article 9 is accomplished.
7.4 Advertising Materials. All ADVERTISING MATERIALS for advertising placed by the
LICENSEE will use only those designs, photographs, catalogues, in-store displays, texts,
graphics, audiovisual and audio materials in form and in content furnished or approved in writing
by LICENSOR. LICENSEE may source creative and placement services subject, however, to LICENSOR’s
prior written approval. LICENSEE shall submit to LICENSOR the ADVERTISING MATERIALS for its
written approval prior to use. Any ADVERTISING MATERIALS approved by LICENSOR shall be used by
LICENSEE only in the manner, form and presentation directed or approved by LICENSOR. Approval by
LICENSOR of any ADVERTISING PLAN or ADVERTISING MATERIALS shall not be deemed an approval of the
use thereof for any other season, use or purpose other than the one for which such approval is
sought.
7.5 Reimbursement of Costs. In addition to the amounts required to be expended by
LICENSEE in this Agreement, LICENSEE shall reimburse LICENSOR for the out-of-pocket cost of
ADVERTISING MATERIALS furnished by LICENSOR to LICENSEE including production costs incurred by
LICENSOR. In the event LICENSOR directs the preparation of or prepares ADVERTISING MATERIALS, it
must have received prior written approval from LICENSEE (not to be delayed, conditioned or
withheld unreasonably) as to the plan LICENSOR intends to accomplish which shall include those
items reasonably requested by LICENSEE, including but not limited to, budget, objectives and
specific deliverables. Such costs include model fees (except for Mr. de la Renta who, if used by
LICENSOR in connection with ADVERTISING MATERIALS hereunder, shall be provided without additional
charge to LICENSEE except for reimbursement of travel expenses as set out in Section 2.3.12
above), photography fees and expenses and artwork.
7.6 Accounting for Advertising. Within 30 days following the end of each CONTRACT
YEAR, LICENSEE shall present to LICENSOR a detailed substantiation (together with tear sheets and
lists of publications with dates) of all co-op, media and trade advertising performed by LICENSEE
during such calendar year specifying the amounts spent on advertising with categorical breakdown
among media, co-op, trade, and consumer.
7.7 Samples. At LICENSOR’s request, LICENSEE will furnish a reasonable number of
samples of ARTICLES to LICENSOR for purposes of preparing photographs, designs, and illustrations
for ADVERTISING MATERIALS or for other promotional or informational purposes. ARTICLES otherwise
requested by LICENSOR for any other use or purpose will be furnished to LICENSOR at LICENSEE’s FOB
factory cost for same.
7.8 Sales to LICENSOR. LICENSEE shall sell directly to LICENSOR, for the benefit of
LICENSOR’s employees and as may be requested by LICENSOR from time to time, ARTICLES at a price
equal to twenty-five (25%) percent below LICENSEE’s wholesale cost, it being agreed and understood
that all sales made pursuant to this Section shall be excluded from the calculation of NET SALES.
7.9 Sales to LICENSOR-Owned Stores. LICENSEE shall sell ARTICLES to LICENSOR-owned
stores in the United States at a price equal to twenty percent (20%) below the wholesale price
being charged by LICENSEE. LICENSOR shall not sell any ARTICLES bought pursuant to the price
structure set forth in this section below the suggested retail price then in existence in the
territory in which the LICENSOR-owned store is located.
8. Royalty Payments.
8.1 Royalties.
8.1.1 LICENSEE will pay royalties to LICENSOR at a rate equal to EIGHT (8.0%) PERCENT of NET
SALES of the ARTICLES. Such amounts shall be paid at the time, and on the conditions, set forth in
Section 8.3 below. LICENSEE will not pay any royalties on sales made pursuant to Sections 7.8
and/or 7.9, above.
8.2 Minimum Payments.
8.2.1. LICENSEE shall pay to LICENSOR TWO HUNDRED TEN ($210,000) DOLLARS for and during the
the FIRST CONTRACT YEAR (beginning effective January 1, 2005 and ending June 30, 2006) as
guaranteed, non-refundable, minimum annual royalties for such CONTRACT YEAR as an advance against
such payments due hereunder for such year. Such amount shall be payable in full as follows: ONE
HUNDRED FIFTY THOUSAND ($150,000) DOLLARS upon the execution of this Agreement; TWENTY THOUSAND
($20,000) DOLLARS on or before October 1, 2005; TWENTY THOUSAND ($20,000) DOLLARS on or before
January 1, 2006; and TWENTY THOUSAND ($20,000) DOLLARS on or before April 1, 2006.
8.2.2. LICENSEE shall pay to LICENSOR THREE HUNDRED SIXTY THOUSAND ($360,000) DOLLARS for and
during the SECOND CONTRACT YEAR (beginning effective July 1, 2006 and ending June 30, 2007) as
guaranteed, non-refundable, minimum annual royalties for such CONTRACT YEAR as an advance against
such payments due hereunder for such year. Such amount shall be payable as follows: ONE HUNDRED
EIGHTY THOUSAND ($180,000) DOLLARS on or before the July 1, 2006 QUARTERLY DATE and SIXTY THOUSAND
($60,000) DOLLARS on or before each of the remaining three QUARTERLY DATES beginning October 1,
2006.
8.2.3 LICENSEE shall pay to LICENSOR FOUR HUNDRED EIGHTY THOUSAND ($480,000) DOLLARS for and
during the THIRD CONTRACT YEAR (beginning effective July 1, 2007 and ending June 30, 2008) as
guaranteed, non-refundable, minimum annual royalties for such CONTRACT YEAR as an advance against
such payments due hereunder for such year. Such amount shall be payable as follows: TWO HUNDRED
FORTY THOUSAND ($240,000) DOLLARS on or before the July 1, 2007 QUARTERLY DATE and EIGHTY THOUSAND
($80,000) DOLLARS on or before each of the remaining three QUARTERLY DATES beginning October 1,
2007.
8.2.4 LICENSEE shall pay to LICENSOR SIX HUNDRED EIGHTY THOUSAND ($680,000) DOLLARS for and
during the FOURTH CONTRACT YEAR (beginning effective July 1, 2008 and ending June 30, 2009) as
guaranteed, non-refundable minimum annual royalties for such CONTRACT YEAR as an advance against
such payments due hereunder for such year. Such amount shall be payable as follows: THREE HUNDRED
FORTY THOUSAND ($340,000) DOLLARS on or before the July 1, 2008 QUARTERLY DATE and ONE HUNDRED
THIRTEEN THOUSAND THREE HUNDRED THIRTY THREE DOLLARS AND THIRTY THREE CENTS ($113,333.33) on or
before each of the remaining three QUARTERLY DATES beginning October 1, 2008.
8.2.5 LICENSEE shall pay to LICENSOR EIGHT HUNDRED EIGHTY THOUSAND ($880,000) DOLLARS for and
during the FIFTH CONTRACT YEAR (beginning effective July 1, 2009 and ending June 30, 2010) as
guaranteed, non-refundable minimum annual royalties for such CONTRACT YEAR as an advance against
such payments due hereunder for such year. Such amount shall be payable as follows: FOUR HUNDRED
FORTY THOUSAND ($440,000) DOLLARS on or before the July 1, 2009 QUARTERLY DATE and ONE HUNDRED
FORTY SIX THOUSAND SIX HUNDRED SIXTY SIX DOLLARS AND SIXTY SEVEN CENTS ($146,666.67) on or before
each of the QUARTERLY DATES beginning October 1, 2009.
8.2.6 In the event this Agreement is renewed for a first renewal TERM, LICENSEE shall pay to
LICENSOR ONE MILLION ($1,000,000) DOLLARS for and during the SIXTH CONTRACT YEAR (beginning
effective July 1, 2010 and ending June 30, 2011) as guaranteed, non-refundable minimum annual
royalties for such CONTRACT YEAR as an advance against such payments due hereunder for such year.
Such amount shall be payable as follows: FIVE HUNDRED THOUSAND ($500,000) DOLLARS on or before the
July 1, 2010 QUARTERLY DATE and ONE HUNDRED SIXTY SIX THOUSAND SIX HUNDRED SIXTY SIX DOLLARS AND
SIXTY SEVEN CENTS on or before each of the QUARTERLY DATES beginning October 1, 2010.
8.2.7 In the event this Agreement is renewed for a first renewal TERM, LICENSEE shall pay to
LICENSOR ONE MILLION ($1,000,000) DOLLARS for and during the SEVENTH CONTRACT YEAR (beginning
effective July 1, 2011 and ending June 30, 2012) as guaranteed, non-refundable minimum annual
royalties for such CONTRACT YEAR as an advance against such payments due hereunder for such year.
Such amount shall be payable as follows: FIVE HUNDRED THOUSAND ($500,000) DOLLARS on or before the
July 1, 2011 QUARTERLY DATE and ONE HUNDRED SIXTY SIX THOUSAND SIX HUNDRED SIXTY SIX DOLLARS AND
SIXTY SEVEN CENTS on or before each of the QUARTERLY DATES beginning October 1, 2011.
8.2.8 In the event this Agreement is renewed for a first renewal TERM, LICENSEE shall pay to
LICENSOR ONE MILLION ($1,000,000) DOLLARS for and during the EIGHTH CONTRACT YEAR (beginning
effective July 1, 2012 and ending June 30, 2013) as guaranteed, non-refundable minimum annual
royalties for
such CONTRACT YEAR as an advance against such payments due hereunder for such year. Such amount
shall be payable as follows: FIVE HUNDRED THOUSAND ($500,000) DOLLARS on or before the July 1,
2012 QUARTERLY DATE and ONE HUNDRED SIXTY SIX THOUSAND SIX HUNDRED
SIXTY SIX DOLLARS AND SIXTY
SEVEN CENTS on or before each of the QUARTERLY DATES beginning October 1, 2012.
8.2.9 In the event this Agreement is renewed for a second renewal TERM, LICENSEE shall pay to
LICENSOR ONE MILLION ($1,000,000) DOLLARS for and during the NINTH CONTRACT YEAR (beginning
effective July 1, 2013 and ending June 30, 2014) as guaranteed, non-refundable minimum annual
royalties for such CONTRACT YEAR as an advance against such payments due hereunder for such year.
Such amount shall be payable as follows: FIVE HUNDRED THOUSAND ($500,000) DOLLARS on or before the
July 1, 2013 QUARTERLY DATE and ONE HUNDRED
SIXTY SIX THOUSAND SIX HUNDRED SIXTY SIX DOLLARS AND SIXTY SEVEN CENTS on or before each of
the QUARTERLY DATES beginning October 1, 2013.
8.2.10 In the event this Agreement is renewed for a second renewal TERM, LICENSEE shall pay
to LICENSOR ONE MILLION ($1,000,000) DOLLARS for and during the TENTH CONTRACT YEAR (beginning
effective July 1, 2014 and ending June 30, 2015) as guaranteed, non-refundable minimum annual
royalties for such CONTRACT YEAR as an advance against such payments due hereunder for such year.
Such amount shall be payable as follows: FIVE HUNDRED THOUSAND ($500,000) DOLLARS on or before the
July 1, 2014 QUARTERLY DATE and ONE HUNDRED SIXTY SIX THOUSAND SIX HUNDRED SIXTY SIX DOLLARS AND
SIXTY SEVEN CENTS on or before each of the QUARTERLY DATES beginning October 1, 2014.
8.2.11 In the event this Agreement is renewed for a second renewal TERM, LICENSEE shall pay
to LICENSOR ONE MILLION ($1,000,000) DOLLARS for and during the ELEVENTH CONTRACT YEAR (beginning
effective July 1, 2015 and ending June 30, 2016) as guaranteed, non-refundable minimum annual
royalties for such CONTRACT YEAR as an advance against such payments due hereunder for such year.
Such amount shall be payable as follows: FIVE HUNDRED THOUSAND ($500,000) DOLLARS on or before the
July 1, 2015 QUARTERLY DATE and ONE HUNDRED SIXTY SIX THOUSAND SIX HUNDRED SIXTY SIX DOLLARS AND
SIXTY SEVEN CENTS on or before each of the QUARTERLY DATES beginning October 1, 2015.
8.3 Timing of Payments. LICENSEE shall submit ROYALTY SALES REPORTS and royalty
adjustment payments, if any, quarterly, to LICENSOR no later than THIRTY (30) days following the
end of each quarter during each CONTRACT YEAR of this Agreement on all NET SALES.
8.4 Late Payment. If all or any part of any payment from LICENSEE to
LICENSOR is not made when due, in addition and without prejudice to any other remedies LICENSOR
has, LICENSEE shall pay interest on such unpaid amount at a rate per annum equal to the prime rate
of interest charged by Fleet Bank, N.A., New York (or any successor in interest thereto) in effect
at the time of such delinquency, plus one (1%) percent per annum, if allowed by applicable law,
otherwise the maximum rate of interest allowed by applicable law shall be applied.
8.5 Currency. All payments to be made hereunder shall be made in U.S. Dollars. The
Dollar denomination throughout Section 8.2 shall refer to U.S. Dollars. All payments to be made
hereunder shall be made to LICENSOR at its place of business located at 000 Xxxxxxx Xxxxxx, Xxx
Xxxx, Xxx Xxxx. Any sales of ARTICLES under the LICENSED XXXX, which are denominated in a currency
other than U.S. Dollars, shall be reported to LICENSOR and converted to U.S. Dollars at the
exchange rate effective at the end of each applicable quarter. The obligation of LICENSEE to pay
royalties is absolute notwithstanding any claim that LICENSEE may assert against LICENSOR. Subject
to applicable withholding taxes required under law, LICENSEE
shall not have the right to set-off, compensate or make any deduction from such royalty
payments for any reason whatsoever.
9. Royalty Accounting and Reporting.
9.1 Statements. All ROYALTY SALES REPORTS shall consist of a full and accurate
statement consisting of the following: (a) The number of units of the ARTICLES shipped for the
preceding quarter of the current CONTRACT YEAR on a cumulative basis setting forth the number
(with corresponding descriptions) of each such ARTICLE sold, returns actually received, normal
trade discounts and allowances actually granted, the resulting computation of NET SALES and the
royalty due on NET SALES; and (b) the list of stores (annually) (including address and telephone
number of each if requested by LICENSOR) to which ARTICLES are sold with NET SALES presented on a
store-by-store basis. In addition, LICENSEE will provide to LICENSOR such additional information
available to LICENSEE concerning sales of the ARTICLES and ARTICLES sold as requested by LICENSOR
in writing. LICENSOR will keep confidential all ROYALTY SALES REPORTS, except that LICENSOR will
be permitted to disclose these reports to its financial, accounting, legal and other professional
advisors and if compelled to do so by a court or governmental authority.
9.2 Certification of Reports. The ROYALTY SALES REPORTS will set forth the
information required in Section 9.1 above and will be certified to LICENSOR by the chief financial
officer of LICENSEE.
9.3 No Waiver. Receipt or acceptance by LICENSOR of any of the statements furnished,
or of any sums paid during a CONTRACT YEAR pursuant to this Agreement, will not preclude LICENSOR
from questioning their correctness at any time within the three year period after the CONTRACT
YEAR during which such payments or reports were received.
9.4 Other Information. LICENSEE shall furnish any and all additional
information reasonably requested by LICENSOR concerning LICENSEE pertaining to this Agreement.
9.5 Books and Records. LICENSEE will maintain appropriate books of account in which
accurate entries will be made concerning all transactions within the scope of this Agreement.
LICENSOR will have the right during normal business hours, through any accountant or other
authorized representative of its choice, on five (5) business days advance notice to LICENSEE, to
examine and copy all or part of the books of account and all other records, documents and material
in the possession or under the control of LICENSEE which pertain to the manufacture, warehousing,
distribution, advertisement and sale of the ARTICLES and any other records necessary to verify the
information reported by LICENSEE under this Article. LICENSOR and its representatives will be free
to make copies of all or part of LICENSEE’s relevant books, records or other documents and
materials (pertaining to this Agreement). LICENSEE shall render all reasonable assistance to
LICENSOR or its representatives for the performance of an audit and shall not interfere in any
manner with the performance of their duties. The cost of the audit shall be paid by LICENSOR,
provided, however, if the audit shows a deficiency in the aggregate amount required to be paid to
LICENSOR by LICENSEE in excess of FIVE (5%) percent, LICENSEE shall bear the cost of the audit.
If the audit reveals the underpayment of any royalty payable under Section 8 of this
Agreement, LICENSEE shall immediately pay such amount to LICENSOR together with interest in an
amount calculated in accordance with Section 8.4 of this Agreement. All books of account and
records will be kept available by LICENSEE for at least three (3) years after the close of each
reporting year and shall be kept confidential by LICENSOR, except and only to the extent as may be
required by law or court order.
10. Indemnification.
10.1 Indemnification by Licensee. LICENSEE hereby indemnifies and agrees to hold
LICENSOR harmless from and against any claims, suits, losses, damages, demands, injuries and
expenses (including reasonable attorneys’ fees), arising out of or related to any alleged defects
in the material or workmanship of any ARTICLES produced by LICENSEE or the manufacture or sale of
ARTICLES produced by or on behalf of LICENSEE or the use of the LICENSED XXXX in connection with
the labeling, distribution or advertisement of any ARTICLES by LICENSEE in violation of any
national, state or local law or regulation (excluding laws relating to intangible property or
defamation where such use is specifically approved herein or otherwise in writing by LICENSOR where
LICENSOR knew or should have reasonably known the specific use would trigger such liability)
whether or not the ARTICLES were approved by LICENSOR pursuant to this Agreement. In addition,
LICENSEE agrees to defend and hold LICENSOR harmless from and against any claims, suits, losses,
damages, demands, injuries and expenses (including reasonable attorneys’ fees), by reason of any
acts, whether by omission or commission that may be committed by LICENSEE or any of its servants,
agents, contractors or employees. LICENSOR shall give LICENSEE immediate notice of any claims or
suits, and LICENSEE shall defend the same, at its own expense, through counsel of its own choice
subject to LICENSOR’s approval which will not be unreasonably withheld. In the event there is a
conflict of
interest which makes it advisable for LICENSOR to retain separate counsel, LICENSEE will reimburse
LICENSOR for LICENSOR’s reasonable counsel fees and expenses LICENSOR incurs as a result. The
indemnities provided for in this Section shall survive the termination of this Agreement
throughout the applicable statute of
limitations.
limitations.
10.2 Indemnification by Licensor. LICENSOR hereby indemnifies and agrees to hold
LICENSEE harmless from and against any actual damages, costs and expenses (including reasonable
attorneys’ fees), paid and/or incurred and resulting from a final, non-appealable judicial
determination that any of the ARTICLES bearing the LICENSED XXXX (and as based upon DESIGN
SPECIFICATIONS specifically provided by LICENSOR to LICENSEE) infringe any intellectual property
right or other property right (including trade secret right) of a third party. LICENSEE shall give
LICENSOR immediate notice of any claims or suits, and LICENSOR, at its discretion, may elect to
defend the same, at its own expense, through counsel of its own choice subject to LICENSEE’s
approval which will not be unreasonably withheld. In the event there is a conflict of interest
which makes it advisable for LICENSEE to retain separate counsel, then, upon a final,
non-appealable judicial determination of infringement as referred to above, LICENSOR will
reimburse LICENSEE for LICENSEE’s reasonable counsel fees and expenses LICENSEE incurs as a
result. The indemnity provided for in this Section shall survive the termination of this Agreement
throughout the applicable statute of limitations.
11. Insurance.
11.1 Insurance Policy. During the TERM and for the applicable statute of limitations
period thereafter, LICENSEE shall procure and maintain at its own expense in full force and effect
at all times during which ARTICLES are being sold, with reputable insurance carrier(s) an amount
equal to LICENSEE’s own coverage but in no event less than THREE MILLION ($3,000,000) Dollars in
the aggregate in insurance coverage in order to protect LICENSOR against any liabilities with which
it may be subject due to damage or injuries suffered by any servants, agents, contractors,
employees or customers of LICENSEE or by the general public, resulting from the use or sale of the
ARTICLES imported, manufactured, distributed, advertised, or sold by LICENSEE or by LICENSEE’s
contractors. Such insurance shall name LICENSOR as an additional insured and shall provide for at
least thirty (30) days’ prior written notice to LICENSOR and LICENSEE of the cancellation or
substantial modification thereof. Such insurance may be obtained for LICENSOR by LICENSEE in
conjunction with a policy of product liability insurance which covers products other than the
ARTICLES. LICENSEE shall use its best efforts to require its insurance carrier to agree, and to
provide for same in its insurance policy, that, in the event it takes title to any ARTICLES
produced hereunder pursuant to the terms of any policy, it only may sell such ARTICLES in a manner
consistent with the manner in which LICENSEE may sell ARTICLES, and only may sell such ARTICLES to
customers to which LICENSEE may sell ARTICLES, pursuant to the terms of this Agreement.
11.2 Evidence of Insurance. LICENSEE shall promptly furnish or cause to be furnished
to LICENSOR evidence in form and substance reasonably satisfactory to LICENSOR of the maintenance
of the insurance required by subparagraph 11.1. above (but in no event not later than thirty (30)
days from the date of execution of this Agreement), including, but not limited to, originals or
copies of policies, certificates of insurance (with applicable riders and endorsements), and proof
of premium payments.
12. Rights and Obligations with Respect to Trademark, other Intangible Property
Image and Likeness of Mr. Oscar de la Renta.
12.1 Title in LICENSED XXXX and Design Specifications.
12.1.1 LICENSEE acknowledges that LICENSOR is the owner of the LICENSED XXXX. All goodwill
associated with use of the LICENSED XXXX by LICENSEE on or in connection with the ARTICLES
produced hereunder shall inure to the benefit of LICENSOR and LICENSEE acknowledges and agrees
that it will not, during the term of this Agreement and thereafter, attack or infringe upon
LICENSOR’s right, title or interest in and to the LICENSED XXXX or attack the validity of this
license. LICENSEE shall not at any time acquire or claim any right, title or interest of any
nature whatsoever in any trademark, trade name, copyright or design owned or controlled by
LICENSOR which LICENSEE is authorized to use by virtue of this Agreement. Any right, title,
goodwill or interest in or relating to any such trademark, trade name or copyright, pattern or
design connected with the ARTICLES which comes into existence during the term of this License
shall immediately and automatically vest in LICENSOR as LICENSOR’s sole and exclusive property
(excluding any technology, business processes or weavings, the right, title, goodwill or interest
in which shall remain vested in LICENSEE.) LICENSEE agrees to execute any and all documents
reasonably requested by LICENSOR in order to evidence LICENSOR’s right, title or interest to the
same or to transfer to such persons any beneficial or legal right, title or interest which is
acquired by LICENSEE as a result of the use thereof by LICENSEE, by operation of law or
otherwise. LICENSOR and its affiliates reserve all rights to the LICENSED XXXX and the DESIGN
SPECIFICATIONS for their own use and benefit which may not be transferred or assigned voluntarily
by LICENSEE or by operation of law to any other person or entity.
12.1.2 The parties hereto represent and warrant that they have the full right, power and
authority to enter into and perform all of its obligations hereunder, that they are under no legal
impediment which would prevent their signing of this Agreement or consummating the same and the
entering into this Agreement will not create any default under any other agreement or breach of
same to which they or any of their affiliates may be a party or to an order, judgement, or decree
to which they may be subject or bound. LICENSOR further represents and warrants that (a) it owns
all right, title and interest in and to the LICENSED MARKS in the United States; (b) as of the
effective date of this Agreement there will be no licenses in effect granted by LICENSOR to any
third party permitting the use of the LICENSED MARKS on ARTICLES in the TERRITORY, and (c)
LICENSOR has no obligation to renew existing licenses.
12.2 Use of LICENSED XXXX. LICENSEE shall use the graphics, colors and layout for the
LICENSED XXXX specified or approved in writing by LICENSOR. LICENSOR may, but is not required to,
prepare for LICENSEE the design and format of all labels, and other identifying material to be
used on the ARTICLES and LICENSEE shall use only the LICENSED XXXX in the design, format and
layout furnished or approved in writing by LICENSOR with respect to all uses. In the event
LICENSEE requests items for use in programs exclusive to LICENSEE, then LICENSOR will develop same
at LICENSEE’s sole expense; provided, however, that LICENSEE has previously approved in
writing any such amounts. LICENSEE shall use the LICENSED XXXX only, and only in the form
registered, or otherwise approved in writing by LICENSOR, and shall not use any abbreviation or
part of the LICENSED XXXX. LICENSEE shall use the LICENSED XXXX in such manner and in such
location on the ARTICLES as LICENSOR specifically designates or approves in writing.
12.3 Restrictions on Use of LICENSED XXXX. LICENSEE agrees that it will not use or
associate the LICENSED XXXX with any other trademark, trade name, logo or designation on labels,
hang-tags, boxes, wrapping, advertising or promotional materials without LICENSOR’s written
consent, except as LICENSEE is required by law and/or does so in form, manner and content approved
by LICENSOR as set forth in Section 4.1.2. LICENSEE shall not use the LICENSED XXXX or any
abbreviation or combination thereof as its corporate, divisional or trade name or otherwise except
as a trademark. LICENSEE shall not be permitted to use the LICENSED XXXX on its invoices,
stationery, letterhead, business cards, telephone and directory listings or other communications
from LICENSEE unless it shall have prior to such use submitted such communications to LICENSOR,
and LICENSOR shall have approved same in writing. Any such submission, and use of the LICENSED
XXXX must clearly indicate that LICENSEE is acting as a licensee only and must clearly show the
corporate name and address of LICENSEE, and a description of the ARTICLES.
12.4 Applications and Registered User Agreements. LICENSEE agrees to cooperate with
LICENSOR in the prosecution of any trademark or copyright applications for the LICENSED XXXX as
used in connection with the ARTICLES that are advisable, required or desired by LICENSOR or any of
its affiliates throughout the
TERRITORY. To this end, LICENSEE agrees to supply to LICENSOR from time to time such
reasonable number of labels and similar material as may reasonably be required in connection with
any such application, the governmental filling fees and expenses related to which shall be shared
equally between LICENSOR and LICENSEE.
12.5 Copyrights. Any copyright which may be created in any package, design, pattern,
DESIGN SPECIFICATION (developed for the ARTICLES or otherwise unique to the market place for items
consisting of the ARTICLES), label or the like bearing the LICENSED XXXX hereunder shall be the
property of LICENSOR or its affiliates (as the case may be) and LICENSEE will place appropriate
copyright notices as designated or approved in writing by LICENSOR on the ARTICLES, packages,
labels and advertising and promotional materials as may be necessary or appropriate to protect the
copyright.
12.6 Infringements.
LICENSEE agrees that in the event it learns of any use by any person of the LICENSED XXXX
which infringes the license granted by this Agreement or of the use of a trademark similar to the
LICENSED XXXX, or of an infringement of any copyright of LICENSOR, it shall promptly notify
LICENSOR of such use and, if requested by LICENSOR, it shall join with LICENSOR, at LICENSOR’s
expense, in such action as LICENSOR, in its sole discretion, may deem advisable for the protection
of its (or its affiliate’s) rights in and to the LICENSED XXXX or such copyright. Nothing
contained herein, however, shall require LICENSOR to take any action if it deems it inadvisable to
do so, and LICENSEE shall have no right to take any action with respect to the LICENSED XXXX or
any copyright. In the event that LICENSOR’s rights to the LICENSED XXXX subject to this agreement
is canceled, defeated, or limited, notwithstanding anything in this Agreement to the contrary,
LICENSOR, and any affiliate shall not have any liability or responsibility as a result of such
cancellation, defeat or limitation. In the event of any such infringement which has a material
adverse impact on the rights being granted hereunder with respect to such trademark, LICENSEE’s
sole remedy is to terminate this Agreement without recourse to LICENSOR.
12.7 Legends, Markings, and Notices. LICENSEE will cause to appear on the ARTICLES
produced hereunder, all legends, markings, and notices as may be required by any law or regulation
in the TERRITORY or as otherwise directed by LICENSOR. All such items shall be submitted to
LICENSOR for approval prior to use.
12.8 Image or Likeness or Statements Regarding Mr. Oscar de la Renta. LICENSEE
shall not use the image or likeness of Mr. Oscar de la Renta or any photographic or other
reproduction thereof, without receiving LICENSOR’s written consent to such use in advance and in
writing. LICENSEE shall not refer to Mr. Oscar de la Renta or the LICENSED XXXX in any press
release, publication or other communication other than by press releases, publications or other
communications furnished to LICENSEE by LICENSOR or in texts which prior to their communication
have been submitted to LICENSOR in writing and have received LICENSOR’s written consent prior to
their proposed
communication. Subject to buyout rights of third party photographers or agencies, and subject to the other provisions of this agreement, LICENSEE shall
not be responsible to LICENSOR or to Mr. de la Renta for fees in exchange for Mr. de la Renta’s
image or likeness or for personal appearances he might render further to this Agreement.
13. Termination.
13.1 Default/Non-Use. 13.1.2 If LICENSEE fails to make any payment due hereunder, and
if such default shall continue uncured for a period of TEN (10) business days after LICENSEE’s
receipt of written notice of such default, LICENSOR shall have the right to terminate this
Agreement effective immediately upon written notice. If LICENSEE (a) discontinues its business in
connection with the manufacture, sale and distribution of the ARTICLES for a period of thirty (30)
or more days (except for an Act of God or force majeure), or (b) for a period of twelve (12)
consecutive months fails to present for sale to the trade a broadly representative and fair
assortment of ARTICLES bearing either the 0 OSCAR or Oscar by Oscar de la Renta LICENSED MARKS, or
(c) fails to meet the sales minimums set forth in Section 6.4, supra, or (d) defaults on
any obligation which is secured by a security interest in any ARTICLE as to which default LICENSEE
has been notified in writing by the holder of the security interest (unless LICENSEE shall post a
bond with respect to such security interest in an amount sufficient to secure such default, or
unless such default is unrelated to the timely payment of such secured obligation) as to which
LICENSEE shall provide immediate notice to LICENSOR or (e) has current liabilities which exceed
current assets during any continuous thirty (30) day period (unless, after such 30-day period,
LICENSEE can demonstrate that it pays its current liabilities on a timely basis in the normal and
ordinary course of its business and that it maintains ordinary facilities to continue its ability
to do so), or (f) violates or fails to perform, in any material respect, any other of its material
obligations hereunder (for reasons other than an Act of God or force majeure) more than three (3)
times during the TERM (including renewals thereof), LICENSOR shall have the right to terminate this
Agreement effective immediately upon written notice.
13.1.3 If, in addition to the foregoing (and not by way of limitation), either party shall
violate or fail to perform any of its material obligations hereunder, the non-breaching party shall
have the right to terminate this Agreement upon thirty (30) days after receipt of written notice,
and such notice of termination shall become effective unless the breaching party shall completely
remedy the default in all material respects within such thirty (30) day period (or unless such
default was due to an Act of God or force majeure).
13.2 Bankruptcy/Insolvency.
13.2.1 In the event that LICENSEE files a petition in
bankruptcy, is adjudicated a bankrupt or files a petition or otherwise seeks relief under or
pursuant to any bankruptcy, insolvency or reorganization statute or proceeding, or if
a petition in bankruptcy is filed against it (which is not stayed or dismissed within THIRTY (30)
days of the filing date) or it becomes insolvent or makes a general assignment for the benefit of
its creditors or a custodian, receiver or trustee is appointed for it or substantial portion of
its business or assets, this Agreement shall terminate automatically and forthwith.
13.2.2 No assignee for the benefit of creditors, custodian, receiver, trustee in bankruptcy,
sheriff or any other officer of the court or official charged with taking over custody of
LICENSEE’s assets or business shall have any right to continue this Agreement or to exploit it in
any way to use the LICENSED XXXX if this agreement terminates pursuant to Section 13.2.1 above.
13.2.3 If LICENSEE dissolves, liquidates, winds-up, sells or otherwise disposes of
substantially all of its business or assets to a third party or otherwise or ceases normal
business operations for a period of fifteen (15) days or more (except for an Act of God, force
majeure or scheduled periods of furlough), LICENSOR shall have the right, without prejudice to any
other rights it may have, to terminate this Agreement by giving notice to LICENSEE effective
immediately.
13.3 Change of Business.
This Agreement may not be assigned, sold or transferred voluntarily or by operation of law by
LICENSEE, or its shareholder(s). In the event of an assignment of this Agreement, LICENSOR shall
have the option to terminate this Agreement effective upon notice. A sale or other transfer of
more than fifty (50%) percent of the common voting shares of LICENSEE by its current shareholders
shall be deemed to be an assignment of this Agreement prohibited hereby. Notwithstanding the
foregoing, the following transfers of the common voting shares of LICENSEE shall be allowed: (a)
Transfers to existing shareholders of LICENSEE or to a corporation which is owned or controlled by
LICENSEE or by shareholders who own or control 50% or more of LICENSEE just prior to the
transaction; and (b) where such transfers are to family members of shareholders of LICENSEE or
trusts for the benefit of such family member.
14. Effect of Termination.
14.1 Reversion of Rights. Upon the expiration or termination of this Agreement for
any reason whatsoever (including, without limitation, any sell-off period), except as expressly
set out in Article 12 above, all rights in the LICENSED XXXX, copyrights created as a result of or
further to this Agreement,
any of the DESIGN SPECIFICATIONS, patterns and/or designs developed by LICENSOR or LICENSEE,
whether or not with LICENSOR, or for use with the ARTICLES, and any samples will automatically
revert to LICENSOR. LICENSEE immediately will cease and thereafter refrain from all use of the
LICENSED XXXX, any trademarks which are similar to the LICENSED XXXX and all such DESIGN
SPECIFICATIONS, patterns and/or designs, and samples. LICENSEE shall remove
all tags and labels bearing the LICENSED XXXX from ARTICLES in inventory and otherwise. LICENSEE
shall destroy, or if requested by LICENSOR, shall immediately deliver to LICENSOR all DESIGN
SPECIFICATIONS, patterns and/or designs, samples and ADVERTISING MATERIALS of all kinds and other
items or materials in its possession, custody or control with LICENSOR’s tradename or LICENSED
XXXX thereon. In addition to the foregoing, at LICENSOR’S request, LICENSEE shall provide LICENSOR or the successor to the licenses granted hereunder information with respect to the sourcing of ARTICLES. A termination under this Agreement shall result in a termination under any other license agreement between LICENSOR and LICENSEE (or an affiliate of LICENSEE).
XXXX thereon. In addition to the foregoing, at LICENSOR’S request, LICENSEE shall provide LICENSOR or the successor to the licenses granted hereunder information with respect to the sourcing of ARTICLES. A termination under this Agreement shall result in a termination under any other license agreement between LICENSOR and LICENSEE (or an affiliate of LICENSEE).
14.2 Minimum Royalty/Advertising Deficiencies.
In the event this Agreement is terminated by LICENSOR pursuant to Article 13 prior to the
expiration of the TERM by reason of LICENSEE’s default hereunder, or in the event LICENSEE
abandons this Agreement, LICENSOR shall be entitled to retain all minimum royalties previously
paid, to collect and retain all minimum royalties due as of the date of such termination, and to
receive immediately all minimum royalty installments set forth in Section 8.2 due and payable for
the remaining Term of this Agreement (excluding any Renewal Term(s) that, as of the date of
termination, have not yet been exercised) notwithstanding the fact that the termination occurred
prior to the end of any CONTRACT YEAR or the TERM (in addition to amounts otherwise payable under
Articles 7 and 8). The parties agree that the amounts so payable are as unmitigable liquidated
damages, not as a penalty. Notwithstanding any other provision to the contrary herein, the
preceding shall be non-exclusive and cumulative with all other remedies and/or claims to which
LICENSOR would otherwise be entitled to assert including but not limited to percentage royalties
otherwise due and/or owing.
14.3 Inventory. Within TEN (10) business days from the termination of this Agreement,
LICENSEE shall deliver to LICENSOR a schedule of LICENSEE’s inventory of ARTICLES and ARTICLES in
the process of manufacture then on hand to be prepared as of the close of business on the date of
such termination. LICENSEE will have NINETY (90) days from the effective date of termination to
sell out its then existing inventory of ARTICLES bearing the LICENSED XXXX (on a non-exclusive
basis) subject to all other terms and
conditions hereof provided such termination is not effected under Article 13 of this Agreement due
to a breach by LICENSEE. In no event shall LICENSEE be permitted to sell any ARTICLES pursuant to
this section that were produced more than NINE (9) months prior to the termination of the
Agreement. All sales of ARTICLES bearing the LICENSED XXXX shall be subject to the payment of the
royalty rates set forth in Section 8.1, above. No sell-off period will be allowed in the event the
termination hereunder is due to the default of LICENSEE. LICENSEE will account for, and pay
royalties on, all such sales not later than THIRTY (30) days after the close of the applicable
sell-off period, if any. LICENSOR shall have the sole and exclusive option
to purchase any of LICENSEE’s remaining inventory as of the date of termination if LICENSOR
notifies in writing LICENSEE of its intent to so purchase no later than TEN (10) days following the
receipt by LICENSOR of the reporting required under the first sentence of this section with the
purchase price as determined below. In the event LICENSOR chooses to exercise this option, the
purchase price LICENSOR shall pay for all of LICENSEE’s remaining inventory of ARTICLES will be
equal to LICENSEE’s cost. LICENSOR will have SIXTY (60) days following its notice to collect the
inventory referred to therein in which event LICENSOR will pay for such inventory upon collection.
In the event such notice is not sent, LICENSEE may dispose of the inventory during and subject to
this section and no royalty shall be payable on such sales to LICENSOR in the event LICENSOR’s
right to purchase is exercised. Nothing herein shall prevent or preclude LICENSOR from licensing
the LICENSED XXXX on or in connection with the ARTICLES in the TERRITORY during such sell-off
period following the termination of this Agreement. Upon the termination of this Agreement for any
reason, LICENSEE shall, upon written request by LICENSOR deliver to LICENSOR all patterns, designs,
samples, and other DESIGN SPECIFICATIONS relating to the ARTICLES designed, produced and sold under
this Agreement to which LICENSOR has rights under Section 12.1.1 above). LICENSOR has no rights to
the tools, heads, dies and other tangible manufacturing assets nor to any manufacturing software
data developed for the ARTICLES. In addition, nothing herein shall prevent or preclude LICENSOR at
any time from entering into a licensing agreement or similar arrangement for the LICENSED XXXX on
or in connection with the ARTICLES in the TERRITORY that is to take effect upon the termination of
this Agreement. Any such new licensee shall be permitted to commence marketing efforts with respect
to the ARTICLES or items similar to the ARTICLES up to THREE (3) months prior to the termination of
this Agreement.
14.4 No Rights for Others. No assignee for the benefit of creditors, custodian,
receiver, trustee, sheriff, any officer of the court or official charged with taking over custody
of LICENSEE’S assets or business shall have any right to continue this Agreement or to exploit or
in any way use the LICENSED XXXX if this Agreement is terminated.
15. Competitive Licenses and Non-Disclosure.
15.1 Proprietary Materials. Except as otherwise expressly set out in Article 12
above, all advertising, and promotional materials, DESIGN SPECIFICATIONS associated with the
ARTICLES, and/or such samples approved by LICENSOR hereunder shall be proprietary to LICENSOR and
shall be used by LICENSEE only in accordance with this Agreement and shall not be used for, in
connection with or as the source for the manufacture, distribution, or sale of any other article
or product of any kind unless otherwise authorized and approved in writing by LICENSOR..
16. Relationship of Parties.
Nothing contained herein shall be construed to place the parties in the relationship of legal
representative, partners, joint venturers, or agency, and LICENSEE shall have no power to obligate
or bind LICENSOR and LICENSOR shall have no power to obligate or bind LICENSEE in any manner.
17. Payment of Taxes and Duties.
LICENSEE shall pay or cause to be paid all taxes and customs duties payable by reason of the
manufacture, importation, distribution, marketing and sale of the ARTICLES by LICENSEE.
18. Notices.
Any notice or other communication under this Agreement shall be in writing and shall be
considered given when delivered personally (including by overnight courier service) or sent by
telecopier or mailed by registered or courier mail, return receipt requested, to the parties at
the following addresses (or at such other address as a party may specify by notice to the other):
TO LICENSOR: OSCAR DE LA RENTA, LTD.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Telecopier (000) 000-0000
Attn: Xxxxxxxxx X. Xxxxx, Chief Executive Officer
Xxx Xxxx, XX 00000
Telecopier (000) 000-0000
Attn: Xxxxxxxxx X. Xxxxx, Chief Executive Officer
TO LICENSEE: THE FASHION HOUSE INC.
0000 Xxx Xxxxxxx Xxxx., #000
Xxx Xxxxxxx, XX 00000
Telecopier: (000) 000-0000 Attn:
Xxx Xxxxxxx, VP — Sales
Xxx Xxxxxxx, XX 00000
Telecopier: (000) 000-0000 Attn:
Xxx Xxxxxxx, VP — Sales
19. Waiver.
The failure of a party to insist upon strict adherence to any term of
this Agreement on any occasion shall not be considered a waiver or deprive or limit that party of
the right thereafter to insist upon strict adherence to that term or any other term of this
Agreement. Any waiver must be in writing.
20. Complete Agreement.
This Agreement contains a complete statement of all arrangements between the parties with
respect to the subject matter hereof, and cannot be changed or amended except in writing signed by
both parties. This Agreement shall be binding upon, and inure to the benefit of, the parties
hereto and their respective successors and assigns. In the event this agreement is to appear in
any language other than the English language, the English language version shall control.
21. Headings.
The headings of each of the provisions contained herein are solely for reference and shall
not affect in any manner the meaning or interpretation of such provisions or of this Agreement.
22. Copies and Interpretation.
This Agreement may be signed in one or more copies, each of which shall be deemed to be an
original but which, collectively, shall constitute one single instrument. The parties to this
Agreement acknowledge that it is a product of their negotiation and that, as a result, authorship
does not attach to one party and that the terms of this Agreement are not to be construed against
either party.
23. Divisibility.
As and whenever possible, each of the provisions of this Agreement shall be interpreted in
order to be valid and effective pursuant to the law applicable hereto. The aforesaid
notwithstanding, in the event that any of the provisions hereof are deemed to be prohibited or
invalid pursuant to any applicable law, said provisions shall automatically cease to have effect
solely insofar as any such prohibition or invalidity is concerned.
24. Brokerage Fees.
LICENSEE agrees that in the event a broker or finder was retained in connection with the
transactions contemplated in and by this Agreement, LICENSEE shall be responsible for paying such
broker or finder any brokerage or finder’s commission, fee or similar compensation (collectively,
the “FEE”) that may be due or owed. LICENSEE agrees that LICENSOR shall have no
responsibility whatsoever for the payment of the FEE, and LICENSEE shall indemnify and hold
LICENSOR harmless from any loss, damages or claim arising from or with respect to the FEE or any
other aspect of LICENSEE’s relationship with such broker or finder.
25. Jurisdiction.
For the construction and compliance hereunder, the parties hereby agree that this Agreement
shall be governed by and construed in accordance with the laws of the United States of America, and
the State of New York applicable to agreements made and to be performed in New York. The parties
hereto consent to. the exclusive jurisdiction of the courts, State and Federal, located
in the County of New York, State of New York. In no event shall LICENSEE be entitled to subpoena or
notice for testimony Mr. Oscar de la Renta in any case, controversy, suit, action or proceeding
arising out of or in connection with or related to this Agreement or any agreement made pursuant to
this Agreement. LICENSOR and LICENSEE agree, therefore, that to whatever extent the presentation or
discovery of testimony is sought by LICENSEE from Mr. Oscar de la Renta it only shall be in the
form of written interrogatories.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the
date first above written.
| OSCAR DE LA RENTA, LTD. | ||||||||
| By: | ||||||||
| Name: | ||||||||
| Title: | ||||||||
Approved:
Oscar de la Renta, as Chairman
| THE FASHION HOUSE INC. | ||||||||
| By: | ||||||||
| Name: | ||||||||
| Title: | ||||||||
The following is the time line for successful implementation of the “0 Oscar” and “Oscar by
Oscar de la Renta” product launches during the first license year.
Fall I: Begin showing December with delivery May in-store.
Fall II: Begin showing in February with delivery July/August in-store
Holiday/Cruise: Begin showing in June with delivery Nov/Dec in-store
Spring/Summer: Begin showing in August with delivery February/March in-store
Fall II: Begin showing in February with delivery July/August in-store
Holiday/Cruise: Begin showing in June with delivery Nov/Dec in-store
Spring/Summer: Begin showing in August with delivery February/March in-store
January, 2005.
Execute License Agreement.
Present initial designs to Licensor of product to be presented to the target retail customers
for July 2005, to be delivered in November, 2005.
February, 2005 (last week)
Present final line plan, and materials, including hardware and embellishments to
Licensor.
Present preliminary sketches for August Collection to be delivered in-store in February,
2006 to Licensor.
March, 2005 (first week)
Present final line plan, and material including hardware for August
Collection.
March, 2005 (last week)
Prepare prototypes of packaging and sock linings.
April, 2005
Present prototypes of each construction and “pull-overs” of the proposed collection.
April, 2005 (last week) to May (first week)
May, 2005 (first week)
Preset prototypes for each construction and “pull-overs” of each style (August
Collection).
June, 2005
Meet with management from targeted retailers to present the 0 Oscar footwear concept with
story boards and a limited sample offering one month prior to showing the complete offering to
the buyers/DMM’s/GMM’s
June, 2005 (last week)
Present to Licensor final assortment prior to debuting to the target retail merchants (July
Collection).
June, 2005
Present the July Collection to retail buyers.
July, 2005
Present the August Collection to retail buyers.
July, 2005
Present Fourth Quarter delivery to targeted retailers and collect orders.
July, 2005
Present Fall I line plan to Licensor to include sketches, materials and embellishments.
July, 2005 (first week)
Present the August Collection to Licensor.
July, 2005 (last week)
Place orders for merchandise to be delivered in-store November 1, 2005.
September 2005
Present to Licensor preliminary line plan for Fall II 06 collection to include materials,
hardware, and embellishments (both 0 Oscar and Oscar by Oscar de la Renta).
October, 2005
Prototype review of the Fall I collection of each construction and “pull-overs” of each
style ( 0 Oscar only).
November, 2005
Present Fall I assortment to Licensor ( 0 Oscar only).
First delivery of Holiday/Cruise 0 Oscar merchandise to retail stores, territory managers and
customers service staff to conduct in-store seminars and events to start a “grass roots” marketing
effort and stimulate sales at retail.
Present final Fall II assortment plan to Licensor ( 0 Oscar and Oscar by Oscar de la
Renta).
December, 2005
Prototype review of each construction and “pull-overs” of the Fall II collection (0 Oscar and
Oscar by Oscar de la Renta).
Present Fall Ito retail buyers (0 Oscar only).
January, 2006
Present Fall II collection to Licensor (0 Oscar and Oscar by Oscar de la Renta).
February, 2006
Present Fall II collections to retail buyers (Premiere offering for Oscar by Oscar de la
Renta).
From this point forward all time lines will pertain to both 0 Oscar and Oscar by Oscar de la
Renta and will follow a similar cadence to previous year.
EXHIBIT C
Distribution for ARTICLES bearing the “0 Oscar” LICENSED XXXX
Xxxx Stores
Federated Department Stores
Dillard’s
Xxxxxxxx Xxxxx’x
Lord & Taylor
Saks Inc.
Federated Department Stores
Dillard’s
Xxxxxxxx Xxxxx’x
Lord & Taylor
Saks Inc.
Distribution for ARTICLES bearing the “Oscar by Oscar de la Renta” LICENSED XXXX
Federated Department Stores
Dillard’s
Saks, Inc.
Bloomingdale’s (operated separately from Macy’s)
Xxxxxxxx Xxxxxx
Lord & Taylor
Saks Fifth Avenue
Xxxxxx-Xxxxxx specialty stores
Nordstrom
Dillard’s
Saks, Inc.
Bloomingdale’s (operated separately from Macy’s)
Xxxxxxxx Xxxxxx
Lord & Taylor
Saks Fifth Avenue
Xxxxxx-Xxxxxx specialty stores
Nordstrom
Catalog Distribution for ARTICLES bearing the LICENSED XXXX
Bloomingdales
Nordstroms
Xxxxxx-Xxxxxx
Victoria’s Secret
Nordstroms
Xxxxxx-Xxxxxx
Victoria’s Secret
Internet Portals for ARTICLES bearing the LICENSED XXXX
xxxxxx.xxx xxxx.xxx
