LICENSE AGREEMENT
THIS LICENSE AGREEMENT (the "Agreement") is made as of the 30th day of
September, 1997, by and between Rampage Clothing Company, a California
corporation the ("RCC") and Xxxxxxxxx Xxxxx, Inc., a California corporation
(the "New Licensee").
RECITALS
WHEREAS, RCC and Rampage Retailing Inc. ("RRI") have filed petitions
for relief under Chapter 11 of the United States Bankruptcy Code, are debtors
in possession thereunder in jointly administered, but not substantively
consolidated, bankruptcy cases pending in the United States Bankruptcy Court
for the Central District of California, bearing case numbers LA 97-34276 SB
and LA 97-34278 SB, respectively (the "Bankruptcy Court");
WHEREAS, RRI entered into an Asset Purchase Agreement with The Wet Seal,
Inc., a Delaware corporation ("Wet Seal") dated August 21, 1997 pursuant to
which RRI agreed, subject to Bankruptcy Court approval to sell to Wet Seal
certain of its Assets, as defined in such agreement (the "Old Agreement");
WHEREAS, pursuant to the terms of the Old Agreement RRI agreed to cause
Licensor to enter into a License Agreement with Wet Seal, which License
Agreement was entered into as of August 21, 1997 (the "Old License
Agreement");
WHEREAS, except as expressly modified by this Agreement or by the Order,
as hereinafter defined, RCC and the New Licensee have agreed to RCC's license
of RCC's Trademark, as such term is defined in the Old License Agreement, to
the New Licensee pursuant to the terms of the Old License Agreement and the
Bankruptcy Court has approved of such license (the "License"), and
NOW THEREFORE, in consideration of the premises and the mutual convenants
herein contained, the parties hereto agree as follows:
1. INCORPORATION OF THE TERMS OF THE OLD LICENSE. Except as expressly
modified by the terms of this Agreement or the Orders, the parties hereto
agree that the terms of the License shall be governed by the provisions of
the Old License Agreement, which is attached here to and made a part hereof as
Exhibit "A".
2. BANKRUPTCY COURT APPROVAL. The parties hereto acknowledge and agree
that the terms and conditions of the License are subject to the terms and
conditions of the following order of the Bankruptcy Court: Order Granting
Debtors' Motion for Order Authorizing: (1) Sale of Business Assets Free and
Clear of Liens, Claims and Encumbrances Outside the Ordinary Course of
Business; and (2) Assumption and Assignment of Real and Personal Property
Leases in Connection Therewith; Except With Respect To Lease With the Taubman
Company Re: Store 2064 (Beverley Center) entered September 29, 1997 (the
"Order"). In the event of any inconsistency between the terms and conditions
of this Agreement and the Order, the terms of the Order shall be deemed to
prevail.
3. MODIFICATIONS TO THE OLD AGREEMENT. The Old Agreement is hereby
modified as follows:
(a) For all purposes "Licensee" shall be deemed to be Xxxxxxxxx
Xxxxx, Inc., a California corporation;
(b) Section 1. shall be amended to add the following definition:
"(i) The term "Effective Date" shall be deemed for all purposes in this
Agreement to be September 30, 1997 any other reference contained herein shall
be null and void and of no force or effect;
(c) Section 2(b) shall be amended to delete the amount "five
hundred thousand dollars ($500,000.00)" and insert in lieu thereof "five
million two hundred thousand dollars ($5,200,000.00)", subject to
reimbursement as provided in the Order,";
(d) Section 4(a) shall be amended to insert at the beginning
thereof the following: "Notwithstanding anything to the contrary contained
elsewhere herein to the contrary, Royalty Payments due hereunder shall be
paid for a minimum period of one (1) year," and to delete therefrom "a
percentage of Total Net Revenues from each Contract Year (the "Royalty
Payments") and insert "the Royalty Payments (the "Royalty Payments")";
(e) Subsection 10(a)(iii) shall be amended to delete "CIT/BCC,
Inc." and insert in lieu thereof "The CIT Group/Commercial Services, Inc., as
successor to The CIT Group/BCC, Inc.";
(f) Subsection 10(b)(i) shall be amended to delete "State of
Delaware" and insert in lieu thereof "State of California.";
(g) Section 11(d) shall be amended to complete the blank therein
with the insertion of "September 30";
(h) Section 19 shall be deleted in its entirety and replaced with
the following: "NOTICE. Any notice, request, demand, waiver, consent,
approval or other communication ("notice") that is required or permitted
hereunder by any party to another shall be in writing and be deemed given
only if delivered personally or by reputable overnight-courier service or
sent sent by certified mail, postage prepaid, as follows:
(a) If to Licensor to:
Rampage Clothing Company
0000 Xxxxx Xx Xxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000-0000
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ATTN: S. Xxxxxx Xxxxx
With Copies to:
Xxxxxx X. Xxxxxxxxx, Esq.
Jeffer, Mangels, Xxxxxx & Marmaro LLP
2121 Avenue of the Stars, 00xx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000-0000
Xxxxxxx X. Xxxxx, Esq.
Katz, Hoyt, Xxxxxx & Xxxxx LLP
00000 Xxxxx Xxxxxx Xxxx., Xxxxx 000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
(b) If to Licensee to:
Xxxxxxxxx Xxxxx, Inc.
0000 Xxxxxxxx Xxxxx
Xxx Xxxxx, Xxxxxxxxxx 00000
With copies to:
Xxxxxx X. Xxxxx, Esq.
Xxxxx X. Xxxxx, Esq.
Buchalter, Nemer, Fields & Younger
000 Xxxxx Xxxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000-0000
or to such other address as the addressee may have specified in a notice duly
given to the sender. Any such notice will be deemed to have been given as of
the date so delivered, or mailed.",
(i) Schedule A to the Agreement ("Royalty Schedule") shall be
changed to reflect the following:
CONTRACT YEARS ROYALTY PAYMENTS DUE
-------------- --------------------
One through Four: The Greater of One Percent (1%) or
Three Hundred Thousand Dollars ($300,000.00)
Five through Eight The Greater of One and One Half Percent (1.5%) or
Four Hundred Fifty Thousand Dollars ($450,000.00)
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Nine through Twelve The Greater of One and One Quarter Percent (1.25%)
or Three Hundred Seventy-Five Thousand Dollars
($375,000.00)
Thirteen on The Greater of One Percent (1%) or
Three Hundred Thousand Dollars ($300,000.00)".
IN WITNESS WHEREOf, the parties hereto have executed this Amendment
as of the date first above written.
LICENSOR:
RAMPAGE CLOTHING COMPANY,
a California corporation
By: /s/ XXXXXX XXXXX, CFO
--------------------------
XXXXXX XXXXX
LICENSEE:
XXXXXXXXX XXXXX, INC., a California
corporation
By: /s/ Xxx X. Xxxxxxx
---------------------------
Xxx X. Xxxxxxx
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EXHIBIT "A"
LICENSE AGREEMENT
THIS LICENSE AGREEMENT (the "Agreement") is made and entered into as of
the 21st day of August, 1997 (the "Effective Date"), by and between Rampage
Clothing Company, Debtor in Possession, Inc., a California corporation, (the
"Licensor"), and The Wet Seal, Inc., a Delaware Corporation, (the "Licensee").
W I T N E S S E T H:
WHEREAS, Licensor has established valuable goodwill in the tradename
RAMPAGE (the "Xxxx") and Licensor is the owner of such Xxxx and the United
States trademark registrations and applications pertaining thereto; and
WHEREAS, Licensee wishes to operate certain retail stores (the
"Stores") (as such term is hereinafter defined), throughout the world, and
wishes to obtain certain limited rights to use the Xxxx in connection
therewith.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. DEFINITIONS
For purposes of this Agreement, the following definitions shall apply:
(a) The term "Stores" shall mean retail stores utilizing the Xxxx as the
name of such store and through which wearing apparel, shoes, accessories
and such other merchandise as is typically offered at a RAMPAGE store is sold.
Such term shall include any retail store acquired by Licensee pursuant to
that certain Asset Purchase Agreement by and between Retailing and Licensee,
of even date herewith, as well as any retail store which Licensee may open and
operate pursuant to its rights hereunder. However, such term shall not apply
to a boutique or other segregated marketing area using the Xxxx and operated
within a retail store owned by a third party (by way of example, a RAMPAGE
boutique operated in a department store comparable to a Macy's, Riches,
Burdines or Nordstroms).
(b) The term "Xxxx" shall mean the trademark RAMPAGE.
(c) The term "Total Net Revenues" shall mean the total revenues less
returns, credits, refunds and all taxes (other than income taxes), received
by Licensee from sales of merchandise by Licensee at the Stores.
(d) The Term "Uses" shall mean those uses of the Xxxx upon the exterior
and interior signage identifying the name of a Store.
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(e) The term "Related Uses" shall mean those uses of the Xxxx upon
packing materials, hangers, billing documents, promotional materials,
advertising literature relating to the Stores and other articles (other than
the goods for sale at a store) associated with the operation of a retail
store.
(f) The term "Contract Year" shall mean each period of time between
anniversaries of the Commencement Date.
(g) The term "Quarter" shall mean every three (3) months of each
Contract Year.
(h) The term "Sublicense Revenue" shall mean the net revenue received by
Licensee from its sublicensees, if any.
2. GRANT OF LICENSE TO USE THE XXXX
(a) GRANT. Licensor, to the extent that it may be able lawfully to do so,
hereby grants to Licensee, throughout the Territory, during the term of this
Agreement and subject to its terms and conditions, the exclusive right and
license to make Use of the Xxxx and the non-exclusive right and license to make
Related Uses of the Xxxx. It is expressly understood that the rights and
license granted herein do not extend to (i) any trademark or trade symbol of
Licensor except those specific symbols set forth as the Xxxx; (ii) any
merchandise offered for sale of any kind or nature whatsoever; (iii) any use
of the Xxxx except in the manner expressly provided herein. With respect to
such other trademarks, symbols and merchandise, all rights are expressly
reserved to Licensor. Within the Territory, Licensor is hereby prohibited and
restricted from making any Use, in any form or manner, of the Xxxx, or any of
them, either alone or as a component of another trademark. Notwithstanding
the foregoing, nothing herein contained shall prohibit, limit or restrict
Licensor from making, licensing or otherwise permitting uses other than the
Uses of the Xxxx, whether such use is made by or on behalf of Licensor or by
any other person, firm, corporation, partnership or other entity for any
purpose whatsoever. Additionally, and notwithstanding the foregoing, nothing
herein contained shall prohibit, limit or restrict Licensor within the
Territory from making, licensing or otherwise permitting the Related Uses of
the Xxxx, whether such Related Use is made by or on behalf of Licensor or by
any other person, firm, corporation, partnership or other entity.
(b) FEE TO RAMPAGE RETAILING, INC. Licensor acknowledges that it
previously licensed Rampage Retailing, Inc. (hereafter, "Retailing") to Use
the Xxxx and make the Related Uses of the Xxxx. Therefore, upon the execution
of this Agreement, Licensee shall pay Retailing a one-time fee in the amount
of five hundred thousand dollars ($500,000.00) to acquire Retailing's right
to Use the Xxxx and make the Related Uses of the Xxxx. This amount is not a
Royalty Payment and shall not be applied against any royalty payable or to be
paid by Licensee to Licensor for Licensee's activities hereunder. This fee is
non-refundable.
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3. TERRITORY
(a) GENERALLY. The territory of this Agreement shall be the United
States of America, its territories and possessions.
(b) EXPANSION OF TERRITORY. In the event that Licensor can provide
Licensee with the right to Use the Xxxx and make Related Uses of the Xxxx in
other independent jurisdictions throughout the world, the parties hereto
agree that the Territory may be expanded to such other independent
jurisdictions accordingly:
(i) CANADA AND MEXICO. Licensee shall have the first option to
obtain from Licensor the exclusive right to Use the Xxxx in Canada and
Mexico as well as the non-exclusive right to make the Related Uses in
Canada and Mexico. However, should Licensee not exercise this option
before the second anniversary of the Commencement Date of this
agreement, then Licensor shall be free to Use and make Related Uses of
the Xxxx within Canada or Mexico, or to license or otherwise authorize
such Uses and Related Uses by any other entity within Canada and Mexico
and Licensee shall have no further rights with respect to Canada and
Mexico. During such two-year period, Licensor may present to Licensee a
proposal for making a Use and Related Use of the Xxxx within Canada or
Mexico. Licensee shall then have thirty (30) days to consider such
proposal and notify Licensor in writing of its acceptance or rejection of
such proposal. Should Licensee fail to notify Licensor of its
decision with respect to such proposal within such time, or if Licensee
rejects such proposal, then Licensor shall be free to proceed to
consummate all transactions relating to such proposal. Additionally,
Licensee's exclusivity with respect to Canada and Mexico shall terminate
at such time, however, should Licensor not commence Use of the Marks based
upon such proposal within six (6) months of the end of such thirty (30)
day period, then Licensee's exclusivity shall be reinstated for the
remainder of the two year period, subject to the terms of this paragraph.
(ii) REMAINDER OF THE WORLD. Each party shall have the right of
first refusal with respect to the other concerning Use of the Xxxx the
Related Uses of the Xxxx in each other country of the world. Therefore,
should either party, either directly or through a sublicensee, desire
to make Use and make the Related Uses of the Xxxx in any country within
which no Use has previously been made, such party shall present the
proposed arrangement to the other for the other's consideration. The
party to whom the proposal was made shall have thirty (30) days to
advise the other, in writing, whether such party shall undertake the Use
and Related Uses of the Xxxx in accordance with the terms of such
proposal. Should such party notify the other of its refusal to accept
such proposal, or should such party fail to notify the other of its desire
to accept such proposal within such time, then the party making such
proposal shall be free to commence Use of the Xxxx as set forth in such
proposal and the other party shall have no further rights with respect to
the Xxxx for such country.
3
(iii) EXCLUSION OF JAPAN. The parties hereto agree that Licensor
cannot provide Licensee with any rights to Japan and therefore Japan
shall be excluded from this Agreement.
(c) INABILITY OF LICENSOR TO PROVIDE RIGHTS. Should Licensor determine
that it cannot provide Licensee the right to make the Use or Related Uses of
the Xxxx within any independent jurisdiction throughout the world, such
independent jurisdiction shall be severed from this Agreement.
(d) SUBLICENSING OF RIGHTS. Licensee shall not have the right to
sublicense any of its rights pursuant to this Agreement except that Licensee
may sublicense to any entity the right to make the Use of the Xxxx and the
Related Uses of the Xxxx in any independent jurisdiction that has become a
part of the Territory pursuant to Paragraph 3(b)(ii), above. The scope of any
such sublicense can be no more broad than the scope of this Agreement. Such
sublicense must state that Licensee has derived its rights to the Xxxx
pursuant to this Agreement and that the sublicensee's rights pursuant to such
sublicense are subject to the terms and conditions of this Agreement. Such
sublicense must also contain other normal and customary restrictions as are
usually imposed upon a sublicensing relationship. No such sublicense shall be
entered into without the prior written consent of Licensor as to both the
sublicensee and the form of the sublicense, which consent may be withheld
upon the exercise of Licensor's reasonable discretion.
(e) REGISTRATION OF TRADEMARK. Licensee may, upon the express written
permission of Licensor, seek to register the Xxxx in any independent
jurisdiction within the Territory. Such registration shall be in the name of
Licensor and shall be for such services approximating the Use and Related
Uses. Licensee shall bear all costs of such registration and shall keep
Licensor duly apprised of the progress of such matter. Licensor shall provide
such assistance as may be necessary. Licensor confers upon Licensee a power
of attorney for the sole purpose of filing and prosecuting applications for
registration of the Xxxx, and maintaining as current pre-existing
registrations, however, such power is exercisable, if at all, only in the
event that neither Licensor nor a surviving entity of Licensor remain as
on-going concerns.
4. ROYALTY PAYMENTS AND SUBLICENSING REVENUES
(a) ROYALTY. As compensation for the license and other rights granted
hereunder, Licensee shall pay to Licensor a percentage of the annual Total
Net Revenues from each Contract Year (the "Royalty Payments") as more fully
set forth in Schedule A, attached hereto. Licensee shall: (i) compute the
Royalty Payment each Quarter and submit a complete report of the Total Net
Revenues received during such Quarter and an accounting of the Royalty
Payment derived therefrom to Licensor within thirty (30) after the end of
each Quarter during the term hereof, and (ii) pay to Licensor the Royalty
Payment reflected in such report simultaneously with the delivery of such
report. The report provided by Licensee shall be certified in writing by an
officer of Licensee as being true and accurate.
4
(b) ACCEPTANCE OF REPORTS AND STATEMENTS. The receipt and/or acceptance
by Licensor of any statements furnished, or Royalties paid hereunder,
including, but not limited to the cashing of any royalty checks paid
hereunder (regardless of Licensee's endorsement on such checks), shall not
preclude Licensor from questioning the correctness thereof at any time.
(c) SUBLICENSEE REVENUES. In the event that Licensee shall enter into
any sublicenses (as provided for above), the Total Net Revenue from Stores
operated by such sublicensees shall be added to Licensee's Total Net Revenue
for purposes of calculating the Royalty Payment to be made to Licensor by
Licensee. Any royalty earned by Licensee from such sublicenses in excess of
the royalty payable to Licensor shall be the property of Licensee.
5. AUDIT RIGHTS; ADJUSTMENTS
(a) Licensee shall maintain at its principal place of business separate
invoices, records and books of account pertaining to Total Net Revenues of
Licensee as well as Total Net Revenues of any individual sublicensees. Such
records and books of account shall be complete and accurate, and maintained
in accordance with generally accepted accounting principles, so as to make
the amount due and payable to Licensor under this Agreement clearly
ascertainable. Licensor shall have the right throughout the Term of this
Agreement, and for a two-year period thereafter, to inspect the books,
records and accounts of Licensee during normal business hours for the purpose
of verifying the amount due and payable hereunder.
(b) If Licensor determines that the amount owing to Licensor by Licensee
hereunder has been understated or underpaid, Licensee shall immediately pay
to Licensor all payments found to be due, with interest thereon, at the rate
of 1 1/2% per month, or the maximum legal rate, whichever is less, computed
from the date said unpaid amounts would have been due had they been properly
calculated, until the date that they are actually paid. Additionally,
Licensee shall reimburse Licensor for the cost of such audit.
6. QUALITY CONTROL
(a) Licensee agrees that the Stores shall be of at least the standard of
the stores previously operated by Licensor as Rampage stores. Stores
operated by Licensee or any sublicensee shall meet the requirement of this
paragraph, and will thus be of such style, appearance, quality and location,
as well as being merchandised so as to be suited to their exploitation to the
advantage and to the protection and enhancement of the Xxxx and the goodwill
pertaining thereto. Licensee further agrees that the Stores will be operated
in accordance with all material federal, state and local laws and that the
same shall in no manner reflect adversely upon the good name of Licensor.
(b) Licensee shall permit duly authorized representatives of Licensor to
inspect, at reasonable times, and upon reasonable notice, the Stores for
compliance with the terms of this Agreement. Additionally, Licensee shall,
upon request of Licensor, submit to Licensor, for the purposes of determining
compliance with the standards required by this Agreement, representative
samples of all Uses and Related Uses of the Xxxx. Unless written objections is
5
received by License within three (3) business days after Licensor's receipt
of such items, items furnished pursuant to this paragraph shall be deemed
acceptable to Licensor.
7. TITLE-TO-THE-XXXX
(a) Licensee recognizes the great value of the publicity and goodwill
associated with the Xxxx, and agrees that such value and goodwill, including
any such value and goodwill arising from the activities of Licensee, belong
to and shall enure exclusively to Licensor. Licensee further acknowledges
that the Xxxx has acquired a secondary meaning in the minds of purchasing
public.
(b) Licensee recognizes Licensor's title to the Xxxx and shall not, at
any time, do or suffer to be done any act or thing which will in any way
impair the rights of Licensor in and to the Xxxx. It is understood that
Licensee shall not acquire and shall not claim title to the Xxxx adverse to
Licensor by virtue of the license herein granted to Licensee, or through
Licensee's use of the Xxxx, it being the intention of the parties that all of
the use of the Xxxx by Licensee or any party acting under authority of
Licensee shall at all times inure to the benefit of Licensor.
(c) Licensee hereby acknowledges that as between Licensor and Licensee,
Licensor owns the Xxxx and all rights, registrations, applications and
filings with respect to such Xxxx, and all renewals and extensions of any
such registrations, applications and filings. Licensee further acknowledges
that it is acquiring hereunder only the right to use the Xxxx in connection
with the Uses and Related Uses in the Territory in accordance with the terms
of this Agreement, and that all rights to the Xxxx, other than those
specifically granted to Licensee herein, are reserved to Licensor for its own
use and benefit.
(d) Licensee shall, at Licensor's request, execute, acknowledge and
deliver to Licensor any documents and/or instruments that Licensor may, from
time to time, reasonably deem necessary or desirable to evidence, protect,
enforce or defend its rights or title in and to the Xxxx. Licensee hereby
irrevocably appoints Licensor as Licensee's true and lawful attorney-in-fact,
to execute, acknowledge and deliver any such documents or instruments that
Licensee fails or refuses to so execute, acknowledge or deliver.
(e) Upon termination or expiration of this Agreement, Licensee shall,
within ninety (90) days thereafter, discontinue and shall thereafter refrain
from the use of the Xxxx, or any of them, in any way or for any purpose
whatsoever, and will not use, at any time, any trademarks, tradenames,
slogans, labels, copyrights, emblems, insignia, packages or other trade
identifying symbols bearing resemblance to or confusingly similar to the Xxxx
or any of them. Any Use of the Xxxx or Related Uses of the Xxxx by Licensee
during such ninety-day period shall be on a non-exclusive basis, however, all
Royalty Payments shall continue to be made to Licensor on Total Net Revenues
during such time.
8. ABATEMENT OF INFRINGEMENT. In the event that Licensor or Licensee becomes
aware or suspects that there exists an infringement, unfair competition,
violation of 15 U.S.C. 1125a.
6
or dilution of any of the Xxxx as they pertain to Stores or Related Uses,
anywhere in North America, it shall promptly notify the other party giving
such details as are available. Licensor and Licensee shall consult together as
to the best course of action to pursue and shall diligently take such
appropriate action as is mutually agreed upon to protect the parties'
respective rights in the Xxxx. If the parties agree to bring suit, Licensor
shall control the prosecution of such suit, and Licensee agrees that in any
such suit it will render to Licensor such assistance as is reasonably
requested. All expenses relating to any such suit, including but not limited
to reasonable attorney's fees and expenses, shall be borne equally by
Licensee and Licensor. Likewise, Licensee and Licensor shall share equally in
any recovery obtained in such suit, whether by settlement, award or
judgment. If the parties do not mutually agree to file and prosecute a cause
of action to protect the Xxxx, then either party may file and prosecute such
action in its own name and at its sole expense, and the other party will
render such assistance, at the prosecuting party's expenses, as is reasonably
requested by the prosecuting party. The prosecuting party shall be entitled
to all recoveries from such suit instituted and prosecuted by it.
9. PROMOTIONAL ACTIVITIES. Licensee shall conscientiously use its best
efforts to fully and adequately promote the Stores and maintain the high
standards of Licensor as to advertising and all other promotions and
promotional material. However, notwithstanding the foregoing, Licensee shall
not distribute any promotional materials or engage in any external
advertising of the Stores without the prior written consent of Licensor,
acting in a commercially reasonable manner, as to the form, content and
placement of such promotion. Licensor shall have fifteen (15) business days
following its receipt of any submission from Licensee to approve such
submission. Should Licensor fail to notify Licensee of its rejection of such
submission within such time, then Licensor's approval shall be deemed granted.
10. REPRESENTATIONS AND WARRANTIES
(a) Licensor hereby represents and warrants to Licensee as follows:
(i) ORGANIZATION AND GOOD STANDING. Licensor is a corporation duly
organized, validly existing and in good standing under the laws of the State
of California. Licensor has the full power and authority to own the Xxxx, to
carry on its business as presently conducted and to license the Xxxx to
Licensee pursuant to the terms hereof.
(ii) POWER; AUTHORIZATION; ENFORCEABLE OBLIGATIONS. The execution,
delivery and performance of this Agreement by Licensor (1) are within
Licensor's Corporate powers; (2) have been duly authorized by all necessary
Bankruptcy Court action; (3) are not in contravention of any provision of
Licensor's other agreements, judgments or decrees; (4) will not violate any
law or regulation applicable to Licensor or any order or decree against
Licensor of any court or governmental instrumentality; and (5) except for the
Bankruptcy Court, do not require the consent or approval of any third party.
This Agreement has been duly executed and delivered by a duly authorized
representative of Licensor and constitutes the legal, valid and binding
obligation of Licensor, enforceable against Licensor in accordance with its
terms, except as such enforcement may be limited by applicable bankruptcy,
moratorium,
7
reorganization or other laws or legal principles affecting the rights of
creditors generally or by general principles of equity (whether or not a
proceeding is brought in a court of law or equity).
(iii) VALIDITY OF THE XXXX: NO INFRINGEMENT. (1) Licensor is the
owner of the Xxxx, and has not liened, pledged, hypothecated, or otherwise
encumbered such rights and knows of no lien, pledge, hypothecation or other
encumbrance of the Xxxx other than Licensor's grant of a security interest
in the Xxxx to CIT/BCC, Inc., whose consent to this transaction has been
received; (2) the Xxxx are valid and subsisting; (3) Licensor has granted no
other licenses that conflict with the rights and licenses granted to Licensee
under this Agreement; and (4) to the best of Licensor's knowledge, none of
the Xxxx licensed hereunder infringes on any trademarks or other rights owned
by any other person.
(b) Licensee hereby represents and warrants to Licensor as follows:
(i) ORGANIZATION AND GOOD STANDING. Licensee is a Corporation duly
organized, validly existing and in good standing under the laws of the State
of Delaware. Licensee has the full power and authority to own its properties,
to carry on its business as presently conducted.
(ii) POWER; AUTHORIZATION; ENFORCEABLE OBLIGATIONS. The execution,
delivery and performance of this Agreement by Licensee (1) are within
Licensee's Corporate powers; (2) have been duly authorized by all necessary
Corporate action; (3) are not in contravention of any provision of Licensee's
other agreements, judgments or decrees; (4) will not violate any law or
regulation applicable to Licensee or any order or decree against Licensee of
any court or governmental instrumentality; and (5) do not require the consent
or approval of any third party. This Agreement has been duly executed and
delivered by a duly authorized representative of Licensee and constitutes the
legal, valid and binding obligation of Licensee, enforceable against Licensee
in accordance with its terms except as such enforcement may be limited by
applicable bankruptcy, moratorium, reorganization or other laws or legal
principles affecting the rights of creditors generally or by general
principles of equity (whether or not a proceeding is brought in a court of law
or equity).
11. TERM.
(a) INITIAL TERM. Subject to the provisions for prior termination set
forth herein, this Agreement shall commence as of the Effective Date and
shall (i) continue in full force and effect until the fourth (4th)
anniversary of such date (the "Expiration Date").
(b) FIRST RENEWAL PERIOD. The Term shall automatically renew for an
additional four (4) years, or until the eighth (8th) anniversary of the
Commencement Date unless either (i) Licensee shall deliver written notice to
Licensor of its intention to not renew the Term of this Agreement by the one
hundred twentieth (120th) day prior to the conclusion of the Initial Term; or
(ii) Licensee shall be in material breach of this Agreement upon the
Expiration Date.
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(c) ADDITIONAL RENEWAL PERIODS.
(i) GENERALLY. The Term of this Agreement may be extended for
additional periods of four (4) years (a "Renewal Period") up to the
forty-eighth (48th) anniversary of the Commencement Date. However, for
Licensee to have the right to extend the Term for any Renewal Period, during
the Renewal Period that is about to conclude; (i) The Total Net Sales at the
end of such Renewal Period must be ten percent (10%) greater than the Total
Net Sales at the beginning of such Renewal Period; (ii) Licensee shall not be
in material breach of this Agreement upon the conclusion of such Renewal
Period; and (iii) Licensee shall provide Licensor with written notice of its
intention to renew the Term for an additional Renewal Period at least one
hundred twenty (120) days prior to the scheduled expiration of such Renewal
Period.
(ii) SPECIAL CONSIDERATIONS IF THE TERRITORY HAS BEEN EXPANDED. In
the event that the Territory has been expanded pursuant to Paragraph 3(b),
above, the increase in Total Net Sales shall be calculated separately: (i)
For the United States; (ii) For Canada and Mexico; and (iii) For the
remainder of the world. If such expansion occurs during a Renewal Period,
then the percentage requirement shall be pro-rated accordingly. Should
Licensee fail to satisfy such requirements for any of the United States,
Mexico and Canada, or the remainder of the world, then this Agreement shall
expire with respect to such respective area for which Licensee failed to
satisfy such requirement. However, if Licensee is in material breach of this
Agreement upon the conclusion of any Renewal Period, this Agreement shall
expire as to the entire Territory.
(d) Notwithstanding the above, Licensee shall have the unrestricted
right to cancel this Agreement upon thirty (30) days advance written notice
given at any time after __________,1998.
12. TERMINATION. The remedies provided herein are cumulative and not
exclusive. In addition to these remedies, Licensor may exercise any and all
other rights and remedies it has under other provisions of this Agreement or
applicable law. Licensor may terminate the rights of Licensee under this
Agreement for reasons set forth below or for other reasons pursuant to other
provisions of this Agreement.
(a) DEFAULT UPON LICENSE PAYMENTS: At the option of Licensor, the rights
of Licensee under this Agreement shall terminate if Licensee fails to make
timely payments of any monies required hereunder, Licensee shall have ten
days following written notice from Licensor to cure a default by payment of
the entire balance due, plus interest thereon.
(b) INSOLVENCY OR BANKRUPTCY: Licensor shall have the right to terminate
the rights of Licensee under this Agreement (i) if Licensee files a petition
in bankruptcy, or if a petition in bankruptcy is filed against it; (ii) if
Licensee becomes insolvent, or makes an assignment for the benefit of its
creditors, or files petition or otherwise seeks relief under or pursuant to
any bankruptcy, insolvency or reorganization statute or proceeding, or if it
discontinues its
9
business, or if a custodian, receiver or trustee is appointed for it, or a
substantial of its business or assets; or (iii) if Licensee becomes unable to
discharge its duties pursuant to this Agreement.
(c) ACTS DETRIMENTAL TO BRAND: Licensee acknowledges that it is one of
what could be many licensees of the Xxxx and that its actions and omissions
can have a substantial impact on the business and profits of Licensor,
business and profits of the other licensees of Licensor and the value of the
Xxxx. Therefore, if Licensee takes any action, or fails to take an action,
which action or omission is, in the reasonable opinion of Licensor,
materially harmful to the Xxxx or the business or Licensor, Licensor's other
licensees, or the brand, then, at Licensor's option, all rights of Licensee
under this Agreement shall terminate. Before Licensor terminates the rights
of Licensee under this Agreement for an act detrimental to brand, Licensor
shall give Licensee notice of the acts or omissions it believes to be
detrimental. Licensee shall have thirty (30) days after delivery of such
notice in which to cure or correct said acts or omissions or commence an
arbitration pursuant to the terms of this Agreement. If, in the reasonable
opinion of Licensor, Licensee fails to cure or correct such acts or omissions
or fails to commence an arbitration within thirty (30) days after such
notice, then Licensor may, at its sole option, thereupon immediately
terminate all of Licensee's rights under this Agreement. Licensor may give
notice at any time during the Term of this Agreement that it believes
Licensee has committed an act or omission detrimental to the Xxxx, the
business of Licensor or its other licensees, or the brand. The failure of
Licensor to give notice of any particular act or omission shall not be deemed
a waiver of Licensor's right to give notice for any other act or omission.
(d) CURE PERIOD: Before Licensor terminates the right of Licensee under
this Agreement for a default or breach of license, Licensor shall give
Licensee a chance to cure said breach or default, if it is curable. If a
provision of this Agreement specifies a certain cure or notice period, such
provision shall apply. If no such provision shall apply, Licensee shall have
30 days after notice from Licensor to cure the breach or default. If Licensee
fails to cure the breach or default with the applicable cure period, Licensor
may thereupon immediately terminate all of Licensee's rights hereunder. No
notice need be given for breaches or defaults which are not curable.
(e) RESULT OF TERMINATION. Licensee shall be obligated upon termination,
in addition to any other obligation upon Licensee hereunder, to immediately
pay Licensor all Royalty Payments that have accrued to the account of
Licensor up to such time as well as make a full accounting to Licensor of
Total Net Revenues during the current Contract Year. Additionally, Licensee
must continue to account to and pay Licensor for all Total Net Revenues
during the liquidation period, if applicable.
(f) INJUNCTIVE RELIEF: Licensee acknowledges that the Xxxx possess a
special, unique and extraordinary character which makes difficult the
assessment of monetary damages that would be sustained by Licensor from the
unauthorized use of the Xxxx, and that irreparable injury would be caused by
such use. Licensee further acknowledges that it would be difficult to fully
compensate Licensor for damages for any violation by Licensee of (i) the
10
provisions of this Agreement relating to the protection of, or the use of the
Xxxx and/or other intellectual property of Licensor; and (ii) the provisions
of this Agreement relating to quality control and approval. Accordingly,
Licensee specifically agrees that Licensor shall be entitled to temporary and
permanent injunctive relief to enforce this Agreement, and Licensee shall
expressly waive the defense that a remedy and damages would be adequate as
well as the requirement for the posting of any bond in connection with any
such injunctive relief. This provision with respect to injunctive relief shall
not, however, diminish the right of Licensor to claim and recover damages in
addition to or in lieu of injunctive relief.
13. ARBITRATION. Except as otherwise set forth in this Agreement, any claim,
dispute or controversy arising out of, or relating to any section of this
Agreement or the making, performance or interpretation of the rights and
obligations set forth in this Agreement (including, without limitation,
Paragraph 12(c)) shall be settled on an expedited basis by binding
arbitration in California before a single arbitrator from the Judicial
Arbitration Mediation Service ("JAMS") mutually agreeable to the parties
hereto, and, if no agreement is reached, before the arbitrator from JAMS
selected in accordance with the rules of JAMS then in effect, which
arbitration shall be conducted in accordance with such rules, and judgment
upon any award rendered may be entered in any court having jurisdiction
thereof. The decision of the arbitrator shall be binding on all of the
parties, and any right to judicial action on any matter subject to
arbitration hereunder is hereby waived, unless otherwise provided by
applicable law or in this Agreement, except suit to enforce the arbitration
award or in the event arbitration is not available for any reason. The
arbitrator shall be bound by the terms and conditions of this Agreement and
shall not extend, modify or suspend any of the provisions of this Agreement.
The costs associated for the payments of arbitration services with JAMS
shall be shared equally between the parties.
14. INDEMNIFICATION
(a) Licensee shall indemnify and hold harmless Licensor and each of its
affiliates, and all of their respective partners, officers, directors,
employees, agents and other representatives or consultants from and against,
any and all damages, losses, deficiencies, liabilities, costs and expenses
(including reasonable legal fees and expenses) and any and all claims,
demands, suits, investigations, proceedings, settlements and compromises
incurred or suffered by any such person that result from, relate to, or
otherwise arise out of:
(i) any breach of any representation or warranty on the part of
Licensee contained in this Agreement, or any nonfulfillment of any
agreement, convenant or other obligation on the part of Licensee under
this Agreement:
(ii) the Use or Related Use of Xxxx by Licensee; and
(iii) the enforcement of the indemnification obligations under this
Section 14(a).
11
(b) Licensor shall indemnify and hold harmless Licensee and its
affiliates, and all of their respective partners, officers, directors,
employees, agents, and other representatives or consultants, from and
against, any and all damages, losses, deficiencies, liabilities, costs, and
expenses (including reasonable legal fees and expenses) and any and all
claims, demands, suits, investigations, proceedings, settlements and
compromises incurred or suffered by any such person that result from, relate
to, or arise out of:
(i) any breach of any representation or warranty on the part of
Licensor contained in this Agreement, or any nonfulfillment of any
agreement, convenant or other obligation on the part of Licensor under
this Agreement;
(ii) Licensor's ownership or use of the Xxxx xxxxx to the
Commencement Date or the ongoing use of the Xxxx by Licensor; and
(iii) the enforcement of the indemnification obligations under this
Section 14(b).
(c) Licensee shall pay promptly to any person entitled to
indemnification from Licensee pursuant hereto, and Licensor shall pay
promptly to any person entitled to indemnification from Licensor pursuant
hereto, the amount of all damages, losses, deficiencies, liabilities, costs,
expenses, claims, settlements, compromises and other obligations owing
pursuant to this Section 14.
15. INSURANCE. Licensee shall at all times during the Term of this Agreement
carry comprehensive general liability insurance for and including, without
limitation, coverage for product liability, bodily injury, property damage,
personal injury and advertising injury (in amounts of at least $5,000,000)
with an insurer acceptable to Licensor and cause Licensor to be named as an
additional insured under all policies for such insurance. Licensee shall
furnish to Licensor certificates of insurance providing for the
above-described coverages issued an insurance company on the commencement of
the Term of this Agreement and thereafter not less than 15 days prior to the
expiration date of each policy referenced in the certificates of insurance
furnished pursuant to this Agreement. Each certificate of insurance shall
state that the corresponding policy or policies will not be canceled or
altered unless Licensor is first given 30 days prior written notice by the
insurance company. The insurance afforded by the policy or policies shall not
be limited in any way by the reason of insurance maintained by Licensor.
16. EXPENSES. Each of the parties shall pay its own costs and expenses
(including legal fees) incidental to the preparation of this Agreement, the
carrying out of the provisions of this Agreement, and the consummation of the
transactions contemplated by this Agreement.
17. CONTENTS OF AGREEMENT: ASSIGNMENT. This Agreement, including the
Schedules hereto, sets forth the entire understanding of the parties with
respect to the subject matter hereof and the transactions contemplated hereby
and it shall not be amended or modified except by written instrument duly
executed by each of the parties hereto. Without the prior written consent of
Licensor, Licensee may not assign its rights and obligations under this
Agreement except that
12
Licensee may assign its rights and obligations hereunder without such consent
(i) in connection with a sale of all or substantially all of the business or
division of Licensee which uses the Xxxx, provided the purchaser thereof
assumes all of Licensee's obligations hereunder, (ii) in connection with a
sale of 80% or more of the capital stock or other equity interests in any
entity that directly or indirectly owns the business or division of Licensee
which uses the Xxxx, or (iii) to an affiliate or subsidiary of Licensee,
provided that the business and assets of Licensee related to the subject
matter of this Agreement are transferred to such affiliate or subsidiary and
such affiliate or subsidiary assumes all of Licensee's obligations hereunder.
Any assignment of the Xxxx and the goodwill associated therewith by Licensor
or any assignee or subject assignee of Licensor shall be made subject to the
terms of this Agreement.
18. WAIVER. Any term or other provision of this Agreement may be waived at
any time by the party or parties entitled to the benefit thereof by a written
instrument duly executed by such party or parties.
19. NOTICES. Any notices, request, demand, waiver, consent, approval or
other communication ("notice") that is required or permitted hereunder shall
be in writing and shall be deemed given only if delivered personally or by
reputable overnight-courier service or sent by fax or by registered or
certified mail, postage or delivery charge prepaid, as follows:
(a) If to Licensor to:
Rampage Clothing Company
0000 Xxxxx Xxxxx Xx Xxx.
Xxxxxx, XX 00000
Fax - (000) 000-0000
Attention: Xx. Xxxxxx Xxxxx
With a copy to:
Katz, Hoyt, Xxxxxx & Xxxxx LLP
00000 Xxxxx Xxxxxx Xxxx.
Xxxxx 000
Xxx Xxxxxxx, XX 00000
Fax - (000) 000-0000
Attention: Xxxxxxx X. Xxxxx, Esq.
(b) If to Licensee to:
The Wet Seal, Inc.
00 Xxxxxxxxx
Xxxxxx, XX 00000
Facsimile No.: (000) 000-0000
Attention: Xx Xxxxxx
13
With a copy to:
Akin, Gump, Strauss, Xxxxx & Xxxx, L.L.P.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile No.: (000) 000-0000
Attention: Xxxx Xxxxxx, Esq.
or to such other address as the addressee may have specified in a notice duly
given to the sender. Any such notice will be deemed to have been given as of
the date so delivered, faxed, or mailed.
20. GOVERNING LAW: CONSENT TO JURISDICTION. This Agreement shall be
governed by and interpreted and enforced in accordance with the laws of the
State of California, without regard to the principles thereof relating to
conflicts of laws. This Agreement is deemed to be consummated in the State of
California and the forum for any dispute shall be the federal court located
in the State of California whose venue is Los Angeles County or the superior
court for the County of Los Angeles, whichever is appropriate.
21. ATTORNEY'S FEES. Should any suit be brought to enforce any of the terms
or provisions contained in this Agreement, the prevailing party shall be
entitled to reasonable attorney fees and costs.
22. NO HYPOTHECATION. Licensee shall not pledge, hypothecate, mortgage,
grant liens in or upon, grant security interest in, use as collateral or
otherwise borrow upon the license, or any of Licensee's rights under this
Agreement, without the express prior written consent of Licensor. Any such
action without Licensor's consent shall be void and of no effect and shall
entitle Licensor to immediately terminate Licensee's rights under this
Agreement.
23. HEADINGS; NUMBER AND GENDER. All section headings and other captions
contained in this Agreement are for convenience of reference only, do not
form a part of this Agreement and shall not affect in any way the meaning or
interpretation of this Agreement. Words used in this Agreement, regardless of
the number and gender specifically used, shall be deemed and construed to
include any other number, singular or plural, and any other gender,
masculine, feminine, or neuter, as the context requires.
24. SCHEDULES. All Schedules referred to in this Agreement are intended to
be and hereby are specifically made a part of this Agreement.
25. SEVERABILITY. Any provision of this Agreement that is invalid or
unenforceable in any jurisdiction shall be ineffective to the extent of such
invalidity or unenforceability without invalidating or rendering
unenforceable the remaining provisions hereof, and any such invalidity or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
14
26. COUNTERPARTS. This Agreement may be executed in two or more separate or
multiple counterparts, each of which shall be deemed an original, and which
shall be effective even if not all parties shall have executed the same
counterpart; but all such counterparts shall together evidence and constitute
a single agreement.
27. NO JOINT VENTURE. Nothing contained in this Agreement shall be
construed to place the parties in relationship of partners or joint
venturers, or as making the parties agents for one another or otherwise
having the power to bind one another to any contracts or other instruments or
to any undertakings, obligations, or other liabilities.
28. MUTUAL CONFIDENTIALITY. The parties agree that they will assure that
they and their affiliates, subsidiaries, successors and assigns and their
respective employees, agents, attorneys and representatives shall maintain as
confidential, and shall not use for their own account, disclose or cause to
be disclosed to any person or entity any proprietary information of the other
party to which such party may gain access as a result of its participation
hereunder. The foregoing shall not apply to any information that is publicly
disclosed by the original holder of such information, or which becomes
publicly known through no fault or action of the party prior to any
disclosure by such party.
29. DRAFTSMANSHIP OF AGREEMENT. This writing is the result of the mutual
effort of the parties and their respective counsel, therefore, the parties
agree that neither party shall be considered the draftsman of this Agreement.
IN WITNESS WHEREOF, the parties have duly executed and delivered this
Agreement as of the date first above written.
[LICENSOR]
RAMPAGE CLOTHING COMPANY
By: /s/ Xxxxxx Xxxxx
------------------------------
Name: Xxxxxx Xxxxx
Title: Chief Financial Officer
[LICENSEE]
THE WET SEAL, INC.
By: /s/ Xxxxxx Xxxxxx
------------------------------
Name: Xxxxxx Xxxxxx
Title: President and CEO
SCHEDULE A
ROYALTY SCHEDULE
CONTRACT YEARS PERCENTAGE
-------------- ----------
One through Four..............................................One Percent (1%)
Five through Eight.............................One and One Half Percent (1.5%)
Nine through Twelve........................One and One Quarter Percent (1.25%)
Thirteen on...................................................One Percent (1%)
