Exhibit 10.18
AMENDMENT
Simultaneously with the execution by I.C. Xxxxxx & Co., L.P.
("Xxxxxx") of an "Assignment of Licenses" attached hereto as Exhibit A
with respect to the assignment to Xxxxxx of certain "Exclusive Domestic
License Agreements" identified therein (the "Women's License Agreements"),
Xxxxxx and BHPC Marketing, Inc., the Licensor in said Women's License
Agreements, hereby agree to amend the Women's Licenser Agreements as follows:
1. The royalty rate identified in the "License Agreement Detail
Schedule" and in Paragraph 8 (a) (i) that is a part of each Women's License
Agreement is deleted and amended to be Five Percent (5%) for the term and any
renewal of each Women's License Agreement.
2. Paragraph 8 (a) (ii) of each Women's License Agreement is deleted in
its entirety and amended to read the same as Paragraph 8 (a) (ii) of the
"Exclusive Domestic License Agreement" for men's wear executed by Licensor
and Xxxxxx simultaneously herewith (the "Men's Agreement"). A conforming
change shall be made in Item 6 of the "License Agreement Detail Schedule"
attached to each Women's License Agreement.
3. The changes noted in highlighted or handwritten fashion on the
attached copy (as exhibit B) of the Men's Agreement (which do not include any
changes in the "License Agreement Detail Schedule" of the Women's License
Agreements except as stated above) are hereby made a part of each Women's
License Agreement. For purposes of clarity, the parties may choose to restate
each Women's License Agreement to reflect these amendments.
4. Licensor has granted to Xxxxxx a right of first refusal with respect
to women's wear on the same terms as Paragraph 36 of the Men's License, for
women's active wear including, but not limited to, basic T-shirts and basic
sweat shirts.
Executed as of September 1, 1993, intending this document to be binding.
/s/ Xxxxxx X. Xxxxx /s/ Xxx Xxxxxxxx
------------------------------------- --------------------------------
I.C. Xxxxxx & Co., L.P. BHPC Marketing, Inc.
Title: Chairman Title: Director of Licensing
------------------------------ --------------------------
EXHIBIT A
ASSIGNMENT
EXHIBIT B
CONFORMING CHANGES TO WOMEN'S LICENSE AGREEMENTS
------------------------------------------------
EXCLUSIVE DOMESTIC LICENSE AGREEMENT BHPC.12
THIS AGREEMENT is made and entered into this 1st day of September, 1993
by and between BHPC Marketing, Inc., a corporation duly organized and
existing under the laws of California, having its principal place of business
at 000 Xxxx 000xx Xxxxxx, Xxxxxxx, Xxxxxxxxxx 00000 (hereinafter referred to
as "LICENSOR"), and I.C. Xxxxxx & Co., L.P., a Delaware Limited Partnership,
having its principal place of business at 0000 Xxxx Xxxxxx, Xxxxxxxxx,
Xxxxxxxx, 00000 (hereinafter referred to as "LICENSEE").
WHEREAS, LICENSOR is the owner with the right to grant licenses of the
Trademarks illustrated in Exhibit "A" attached hereto (the "Trademarks"); and
WHEREAS, LICENSEE is desirous of obtaining the exclusive right to use
the aforesaid Trademarks in connection with the import or manufacture and
sale of certain licensed products defined herein.
NOW, THEREFORE, it is agreed by the parties as follows:
1. DEFINITIONS
The following terms shall have meanings as set forth below:
a. "Trademarks" shall mean the Trademarks set forth in Exhibit "A", AND
ANY SUCH VARIATIONS AS LICENSEE DEVELOPS WITH LICENSOR'S PRIOR WRITTEN
APPROVAL;
b. "Territory" shall mean that geographical area defined in item 1 of the
attached License Agreement Detail Schedule.
c. "Licensed Product" shall be defined as set forth in item 2 of the
attached License Agreement Detail Schedule.
d. "Net Shipments" shall mean the aggregate total of the gross dollar
amount invoiced its purchasers by LICENSEE for all the Licensed Product
sold under the Trademarks reduced by the amount OF SHIPPING COSTS,
TAXES, INSURANCE, any customary trade allowances and, subject to the
provisions of Paragraph 8f.,k returns actually credited. No deduction
shall be made for commissions nor for any costs incurred in the
manufacture, sale, distribution or exploitation of the Licensed Product.
2. RIGHTS GRANTED
LICENSOR hereby grants to LICENSEE, upon the terms and conditions set
forth herein, an exclusive, personal, non-transferable, non-assignable
license, without the right to grant sublicenses, to use the Trademarks
solely on or in conjunction with the design, manufacture, import,
distribution, advertising, promotion, shipment, and sale of the
Licensed Product in the Territory. This license is extended to and
includes wholesale sales only and does not include retail sales.
3. OWNERSHIP OF ARTWORK AND DESIGNS
LICENSEE acknowledges and agrees that LICENSOR is the owner of all
artwork and designs involving the Licensed Product and/or Trademarks,
or any reproductions thereof, notwithstanding their invention or use by
LICENSEE and that such artwork and designs will remain the property of
LICENSOR who shall be entitled to use and license others to use same,
subject to the provisions of this Agreement. THIS PARAGRAPH 3 DOES NOT
EXTEND TO ARTWORK AND DESIGNS DEVELOPED FOR LICENSEE BY THIRD PARTIES
AND NOT OWNED BY LICENSEE IF THEY DO NOT INVOLVE THE TRADEMARKS, AND
GENERIC ARTWORK AND DESIGNS WHICH ARE NOT DEVELOPED SPECIFICALLY FOR
THE LICENSED PRODUCTS AND WHICH LICENSEE USES OR INTENDS TO USE, DEVOID
OF THE TRADEMARKS, WITH LICENSEE'S OTHER PRODUCT LINES. THROUGHOUT THE
TERM OF THIS AGREEMENT, LICENSOR WILL CONTINUE TO PROVIDE LICENSEE
ARTWORK, DESIGNS, AND COPY READY MATERIALS REGARDING THE TRADEMARKS AS
LICENSOR PROVIDES TO ITS LICENSEES GENERALLY, AND AS REASONABLY
REQUESTED BY LICENSEE.
4. GOOD WILL AND PROMOTIONAL VALUE
a. LICENSEE recognizes the value of the good will associated with the
Trademarks and acknowledges that the Trademarks, and all rights therein
and the good will pertaining thereto, belong exclusively to LICENSOR.
LICENSEE further recognizes and acknowledges that the Trademarks have
acquired secondary meaning in the mind of the public.
b. LICENSEE agrees that its use of the Trademarks shall inure to the
benefit of LICENSOR and that LICENSEE shall not, at any time, acquire
any rights in the Trademarks by virtue of any use it may make of the
Trademarks.
c. LICENSEE acknowledges that LICENSOR is entering into this Agreement not
only in consideration of the royalties paid hereunder but also for the
good will and promotional value to be secured by LICENSOR for the
Trademarks as a result of the manufacture, offering for sale, sale,
advertising, promotion, shipment and distribution of the Licensed
Product by LICENSEE.
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5. QUALITY STANDARDS, PRODUCT APPROVALS, AND INSPECTION
a. The quality of the Licensed Product, as well as the quality of all
promotional, advertising and packaging material (see Paragraph 6) which
includes the Trademarks (the "promotional and Packaging Material"),
shall be at least as high as the best quality of similar products and
promotional, advertising and packaging material presently shipped,
distributed, sold, used, manufactured or licensed by LICENSOR in the
Territory and shall be in full conformance with all applicable laws and
regulations. LICENSEE acknowledges that the maintenance of the high
quality of the Licensed Product, and the control by LICENSOR over the
nature, quality and manner of distribution of all Licensed Products,
are essential elements of this license. All elements of the Licensed
Product and use of the Trademarks shall be subject to the prior written
approval of LICENSOR. Except as specifically provided in Paragraph 8d,
below, LICENSEE shall not offer for sale, advertise, promote,
distribute, or use for any purpose any Licensed Product that is damaged,
defective, or are "seconds".
b. In order to maintain the high quality standard prescribed by LICENSOR,
LICENSEE may not manufacture, use, offer for sale, advertise, promote,
ship and/or distribute any Licensed Product or any Promotional
Packaging Material relating to the Licensed Product until it has
received all written approvals of same from LICENSOR in the manner
provided herein. Such approval shall not be unreasonably withheld.
Should LICENSOR fail to approve in writing any of the submissions
furnished it by LICENSEE within fourteen (14) days from the date of
submission thereof, such failure shall be considered to be a
disapproval thereof. LICENSOR SHALL EXERCISE REASONABLE EFFORTS TO
EXPRESSLY COMMUNICATE APPROVAL OR DISAPPROVAL TO LICENSEE AND TO
PROVIDE ADEQUATE EXPLANATIONS TO LICENSEE FOR ANY DISAPPROVAL.
c. Before commencing, or authorizing third parties to commence, the design
or development of any Licensed Product or of any Promotional and
Packaging Material which have not been previously approved in writing
by LICENSOR:
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(i) Prior to the production of the Licensed Product, there shall be a
pre-production showing of the Licensed Product at a time and date to be
mutually agreed upon by the parties. DURING THIS SHOWING, LICENSEE
shall submit for LICENSOR's prior written approval all final designs,
specifications, fabrications, and color information.
(ii) Prior to the production of each collection (also known in the
trade as a "line" or a "season"), LICENSEE shall submit to LICENSOR a
completed "Sample Approval Form" (Exhibit "B-1") for each proposed
item of the Licensed Product along with: at least one (1) final sample
of each style in the collection; two (2) sets of material which shows
color and fabrication, to be attached to a "Swatch Approval Form"
(Exhibit "B-2"), and one (1) photograph or rendering of each sample to
be attached to the "Sample Approval Form" (Exhibit "B-1"). Samples
submitted for approval shall be of the same quality as the Licensed
Product that is produced and distributed. Once a proposed item of the
Licensed Product has been approved, LICENSEE shall not deviate in any
material respect from: (1) any information, description or
specification on the "Sample-Approval-Form" or "Swatch Approval Form";
or (2) the quality of or material used on an approved sample, without
the prior written consent of LICENSOR. Each style, color and
fabrication must be approved for each season, regardless of whether it
was approved for a prior season, PROVIDED THAT PREVIOUSLY APPROVED
LICENSED PRODUCTS SHALL NOT BE DISAPPROVED FOR A NEW COLLECTION EXCEPT
FOR SUBSTANTIAL REASONS.
(iii) Within two (2) weeks following the commencement of each first
production run of the Licensed Product (or, if production of the
various styles of the Licensed Product commences at different times,
within two (2) weeks after commencement of each style's first
production run), LICENSEE shall deliver to LICENSOR, at least one (1),
but no more than two (2), finished production samples of each style. If
the style, appearance or quality of any production sample is MATERIALLY
different from what was previously approved, LICENSEE shall make the
necessary changes so that it conforms to what was originally approved
OR SHALL OTHERWISE SEEK LICENSOR'S APPROVAL.
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d. LICENSEE agrees that the Licensed Product and all Promotional and
Packaging Material shall contain only those PROPRIETARY legends,
markings and/or notices as REASONABLY required from time to time by
LICENSOR to give appropriate notice to the consuming public of
LICENSOR's right, title and interest thereto. THE FORM OF SUCH
LEGENDS, XXXXXXXX AND NOTICES SHALL BE AS DESCRIBED IN "EXHIBIT A"
ATTACHED HERETO, UNLESS THE PARTIES AGREE OTHERWISE.
e. LICENSOR may, periodically and from time to time during the term of
this Agreement, AT REASONABLE INTERVALS, require that LICENSEE
submit to LICENSOR, at no cost to LICENSOR, or LICENSOR or its
designees may randomly select and retain during the inspection
referred to in Subparagraph 5f, below, one (1) additional set of
Production Samples of the Licensed Product and/or the Promotional
and Packaging Material relating to the Licensed Product for
subsequent review and written approval of trademark usage and
notice on same. LICENSOR WILL PROMPTLY ADVISE LICENSEE OF ANY
CONCERNS REGARDING TRADEMARK USAGE AND NOTICE, AND THE PARTIES WILL
COOPERATE IN GOOD FAITH TO RESOLVE THE CONCERNS.
f. To assure that the provisions of this Paragraph 5 are being observed,
LICENSEE agrees that it will allow LICENSOR or its designees,
periodically and from time to time AT REASONABLE INTERVALS during
the term of this Agreement, to enter LICENSEE's premises and/or the
premises where the Licensed Product is being manufactured or
inventoried during regular business hours and upon reasonable
notice, for the purposes of inspecting and CONFIRMING the Licensed
Product and the Promotional and Packaging Material relating to the
Licensed Product CONFORM TO THE SAMPLES PREVIOUSLY APPROVED BY
LICENSOR. LICENSEE shall provide to LICENSOR the addresses and
telephone numbers of all facilities, including third party
manufacturers, at which the Licensed Product is manufactured.
LICENSEE's agreements with third party manufacturers and
warehousing facilities shall provide for the right of LICENSOR to
inspect such third party's facilities. Inspections, WHICH WILL BE
AT LICENSOR'S COST, may include any reasonable actions necessary to
assure LICENSOR that the Licensed Product is made and displayed in
accordance
5
with this Agreement, including, but not limited to, laboratory testing.
g. In the event that the quality standards and/or trademark and copyright
usage and notice requirements hereinabove referred to are not met,
then, upon receipt of written notice from LICENSOR THE PARTIES
SHALL COOPERATE IN GOOD FAITH TO RESOLVE LICENSOR'S CONCERNS AND,
absent resolution, LICENSEE shall immediately discontinue any and
all activities with respect to the Licensed Product in connection
with which the said quality standards and/or trademark and
copyright usage and notice requirements have not been met. LICENSEE
SHALL NOT BE REQUIRED TO DISCONTINUE ANY PRACTICE PREVIOUSLY
APPROVED IN WRITING BY LICENSOR.
6. ADVERTISING/USE OF THE TRADEMARK
a. LICENSEE will adopt and carry out its own marketing and advertising
program with respect to the Licensed Product. LICENSEE agrees that
LICENSEE's advertising, public relations and sales promotion
activities will be subject to prior consultation with, and written
approval by, LICENSOR as to the general form and content only with
respect to the use of the Trademarks and other notices.
b. Before publication of any advertisement or promotion, LICENSEE shall
submit every element of the advertisement or promotion to LICENSOR for
written approval hereunder using the "Advertising Approval Form"
(Exhibit "B-3").
c. SUBJECT TO LICENSED PRODUCT AVAILABILITY AT THE TIME OF THE REQUEST,
LICENSEE agrees that upon request of LICENSOR, AND AT LICENSOR'S
COST FOR SHIPPING, DELIVERY AND INSURANCE, IT shall loan a reasonable
number of Licensed Products to LICENSOR and its other licensees for
advertising and promotional purposes. LICENSEE SHALL RECEIVE THE SAME
BENEFIT FROM OTHER LICENSEES OF LICENSOR. SAID PRODUCTS SHALL BE
RETURNED TO LICENSEE IN THE ORIGINAL CONDITION.
d. LICENSOR may purchase the Licensed Product from LICENSEE at the cost
of manufacture, PLUS SHIPPING, DELIVERY, TAXES AND INSURANCE COSTS TO
LICENSEE, PROVIDED NO SUCH LICENSED PRODUCTS MAY BE USED BY LICENSOR
FOR RESALE. No royalty shall be payable to LICENSOR.
e. Advertising directed to the public may not feature the name of
6
LICENSEE. If approved, advertising directed to the trade may feature
the following: BHPC Marketing, Inc. under Trademark License to (Name
of LICENSEE).
f. LICENSEE agrees that the Trademark will appear on each Licensed
Product and its packaging, if any. LICENSEE shall use only those tags,
labels and packaging materials which have been previously approved in
writing. All tags, labels and packaging materials bearing the
Trademark must be submitted on the "Advertising Approval Form"
(Exhibit "B-3").
g. LICENSEE shall affix such legends, markings and notices on all License
Product as are required by LICENSOR UNDER SUBPARAGRAPH 5.D. AND the
law.
h. LICENSEE must submit for approval to LICENSOR a printer's proof of
each ADVERTISING AND PROMOTIONAL ITEM before final printing.
7. DURATION OF THE AGREEMENT
a. This Agreement shall continue for three (3) consecutive Contract Years
in respective durations as set forth in item 3 of the attached License
Agreement Detail Schedule (hereinafter collectively the "Initial
Term") and shall then expire unless sooner terminated in accordance
with the terms and conditions set forth herein.
b. If LICENSEE is not in breach of this Agreement at the time of renewal,
notice is given to LICENSOR, LICENSEE shall have three (3) consecutive
options to renew this Agreement for three (3) consecutive contract
periods, i.e. Contract Years, of one (1) year each (hereinafter
collectively the "Renewal Term"). In order to exercise each individual
option, LICENSEE must provide LICENSOR with written notice of its
intention to exercise each respective option and such written notice
must be received by LICENSOR no later than one hundred eighty (180)
days prior to the expiration of the Initial Term or immediately
preceding Contract Year of the Renewal Term. In the event that
LICENSEE fails to exercise any of the aforementioned options in a
timely manner, the license granted herein to LICENSEE will thereafter
become non-exclusive for the remaining term of this Agreement ONLY FOR
THE PURPOSES OF ALLOWING LICENSOR TO enter into such arrangements as
it deems appropriate with respect to the licensing of the Trademarks
and the
7
Licensed Product, BUT NO LICENSED PRODUCTS MANUFACTURED BY ANOTHER
PARTY SHALL BE SOLD PRIOR TO THE EXPIRATION OF THIS AGREEMENT. Except
as specifically set forth herein to the contrary, LICENSEE's
performance in the Renewal Term shall be pursuant to the same terms
and conditions recited herein for the Initial Term.
8. ROYALTIES
a. "Royalty", as used in this Agreement, shall consist of the sum of the
following:
(i) LICENSEE agrees to pay LICENSOR, during the term of this
Agreement, a Royalty in an amount equal to five percent (5%) of the
Net Shipments by LICENSEE for Licensed Product sold under the
Trademarks; and
(ii) LICENSEE agrees to expend during the term of this Agreement, an
amount equal to one percent (1%) of the Net Shipments by LICENSEE for
Licensed Product sold under the Trademarks in advertising of the
Licensed Product and Trademarks. LICENSEE shall, on the day following
the last day of each respective Contract Year, submit to LICENSOR any
documentation as shall be reasonably requested by LICENSOR to evidence
the expenditure of the Advertising Royalty. In the event that LICENSEE
fails to spend the entire Advertising Royalty during the respective
Contract Year in which the Advertising Royalty was to be expended
hereunder, LICENSEE will, on the day following the last day of the
respective Contract Year, pay to LICENSOR the total sum of the
Advertising Royalty which was not expended hereunder. No Advertising
Royalty will be paid on "Off Price" Merchandise.
b. LICENSEE shall pay to LICENSOR, concurrently with the execution of
this Agreement with respect to the First Contract Year, an Advance
Royalty Payment equal to the amount set forth in item 5 of the
attached License Agreement Detail Schedule, no part of which shall be
refundable. The Advance Royalty Payment shall not reduce or offset the
payment of any Guaranteed Annual Minimum Royalty hereunder. However,
the Advance Royalty Payment may be applied to reduce and offset the
payment of any royalty due hereunder in excess of the Guaranteed
Annual Minimum Royalty DUE IN THE FIRST TWO (2) CONTRACT YEARS.
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BHPC.12
c. Promotional Merchandise shall be defined as regular line Licensed
Product which is sold as an incentive at a discounted price. In the event
LICENSEE is desirous of increasing Promotional Merchandise shipping
beyond fifteen percent (15%) of total production of Licensed Product
in any Contract Year, LICENSEE must first receive LICENSOR's prior
written approval thereof on a case-by-case basis.
d. Off-priced Merchandise shall be defined as either close-out Licensed
Product or substandard Licensed Product. In the event LICENSEE is
desirous of increasing Off-priced Merchandise shipping beyond fifteen
percent (15%) of total production of Licensed Product in any Contract
Year, LICENSEE must receive LICENSOR's prior written approval thereof
on a case-by-case basis. In no event will LICENSEE offer for sale, or
distribute any substandard Licensed Product unless the Licensed Product
are clearly identified to the consuming public as being "seconds".
e. LICENSEE shall keep complete, detailed and accurate records of all
Promotional and Off-priced Merchandise sales, which records shall be
available to LICENSOR for inspection AT LICENSEE'S PREMISES during
regular business hours.
f. For the purposes of this Agreement, LICENSEE agrees that aggregate
returns of the Licensed Product credited during any Contract Year
hereunder shall not exceed FIVE percent (5%) of the gross dollar
amount invoiced by LICENSEE for all the Licensed Product sold during
the respective Contract Year (the "Returns Limitation"). In the event
that aggregate returns of the Licensed Product exceed the Returns
Limitation, all returns of the Licensed Product in excess of the Returns
Limitation shall not be deducted from the gross dollar amount of
sales of the Licensed Product in determining Net Shipments hereunder.
9. PAYMENT
a. The payments provided for in Paragraph 8, above, shall be based upon
all Net Shipments in each calendar month (the "Royalty Period") and
shall be due and payable by LICENSEE to LICENSOR by the twentieth
(20th) day of the next following calendar month. All Guaranteed Monthly
Royalty Payments are due and payable IN ACCORDANCE WITH PARAGRAPH 1.0(E)
BELOW by LICENSEE to LICENSOR on the twentieth
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BHPC.12
(20th) day of each respective calendar month for that Contract Year.
At the time of each such payment, LICENSEE shall provide LICENSOR with a
complete, accurate, written statement of its Net Shipments of Licensed
Product for the Royalty Period. The written statement of Net Shipments
of Licensed Product (a copy of which is attached hereto as Exhibit "B-4")
must be certified as accurate by LICENSEE and will include, but will not
be limited to, information as to: each respective invoice number (in
sequential order inclusive of all "voided" invoices), invoice date,
customer name or number, gross dollar amount invoiced, terms of any
customary trade allowances (as a percentage and in aggregate dollars),
actually credited returns (in aggregate dollars), and other deductions
taken against the gross dollar amount invoiced, and any such other
further information as LICENSOR may from time to time REASONABLY
REQUEST, SOLELY FOR PURPOSES OF VERIFYING THE ACCURACY OF THE ROYALTY
PAYMENTS. Such statements shall be furnished to LICENSOR whether or not
any Licensed Product has been shipped, distributed and/or sold during the
preceding Royalty Period and whether or not any monies are then due
LICENSOR.
b. LICENSEE's statements and all amounts payable to LICENSOR by LICENSEE
shall be submitted to:
BHPC Marketing, Inc.
000 Xxxx 000xx Xxxxxx
Xxxxxxx, Xxxxxxxxxx 00000
Attn: Royalty Receivables Department
c. The receipt and/or acceptance by LICENSOR of any of the statements or
reports furnished or payments paid hereunder to LICENSOR (or the
cashing of any checks paid hereunder) shall not preclude LICENSOR from
questioning the correctness thereof at any REASONABLE time THEREAFTER
and, in the event that any inconsistencies or mistakes are discovered
in such statements, reports, or payments, they shall immediately be
rectified by LICENSEE and the appropriate payment shall immediately be
made by LICENSEE UNLESS LICENSEE DISPUTES IN GOOD FAITH LICENSOR'S
EVALUATION OF THE PAYMENTS IN WHICH CASE THE PARTIES WILL HAVE 20 DAYS
TO RESOLVE THE DISPUTE.
d. All payments made hereunder shall be in United States currency or
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checks drawn on a United States bank.
e. Time is of the essence with respect to all payments to be made
hereunder by LICENSEE. In the event LICENSEE shall fail to pay any sum
required to be paid by this Agreement after the due date thereof, the
amount owing shall thereupon bear interest at the maximum annual
percentage rate allowable by law from the due date until paid.
10. GUARANTEES
a. Guaranteed Annual Royalty Payments - LICENSEE shall pay, for each
Contract Year during the term of this Agreement, beginning with the First
Contract Year, the respective Guaranteed Annual Royalty Payments set
forth in item 7 of the attached License Agreement Detail Schedule.
b. Guaranteed Target Net Shipments - If, in any Contract Year, LICENSEE
does not achieve the Guaranteed Target Net Shipment Volume figure set
forth in item 7 of the attached License Agreement Detail Schedule
LICENSOR may, at its option, immediately thereafter terminate this
Agreement in writing BY GIVING LICENSEE WRITTEN NOTICE NOT LATER THAN
THIRTY (30) DAYS AFTER THE END OF THE CONTRACT YEAR.
c. Guaranteed Net Shipments - If, in any Contract Year, LICENSEE does not
achieve the Guaranteed Net Shipments figure set forth in item 7 of the
attached License Agreement Detail Schedule LICENSOR may, at its option,
immediately thereafter terminate this Agreement in writing by giving
LICENSEE WRITTEN NOTICE NOT LATER THAN THIRTY (30) DAYS AFTER THE END
OF THE CONTRACT YEAR.
D. TERMINATION UNDER SUBPARAGRAPHS 10.B. AND 10.C. ABOVE SHALL BE WITHOUT
FURTHER RECOURSE BY LICENSOR UNDER THIS AGREEMENT; EXCEPT FOR PAST
ROYALTIES DUE.
E. Guaranteed Monthly Royalty Payments - In order to ensure that the
above guarantees are met, LICENSEE shall pay to LICENSOR each month
pursuant to Paragraphs 8 and 9, above, the respective Guaranteed Monthly
Royalty Payments set forth in item 7 of the attached License Agreement
Detail Schedule for each Contract Year during the term of this Agreement.
In the event that any actual Monthly Royalty Payment calculated in
accordance with Paragraph 8, above, is less than the applicable
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BHPC.12
Guaranteed Monthly Royalty Payment, LICENSEE shall pay to LICENSOR the
Guaranteed Monthly Royalty Payment in accordance with Paragraph 9. In
the event that any actual Monthly Royalty Payment calculated in
accordance with Paragraph 9 exceeds the Guaranteed Monthly Royalty
Payment, the actual Royalty payment shall be paid to LICENSOR in
accordance with Paragraph 9.
f. In the event of the termination of this entire Agreement, LICENSEE is
obligated to pay the balance of the Guaranteed Annual Royalty Payments
due for the remainder of the Contract Years IN THE THEN CURRENT TERM,
and payment in full shall be due and payable within thirty (30) days
of said termination AS LICENSOR'S ONLY RECOURSE IN THE EVENT OF
TERMINATION.
11. EXPLOITATION BY LICENSEE
a. LICENSEE agrees to commence, and diligently continue thereafter, the
distribution, shipment and sale of each category of the Licensed
Product in commercially reasonable quantities in the Territory on or
before the respective distribution date set forth next to each
category of the Licensed Product described in item 2 of the attached
License Agreement Detail Schedule.
b. LICENSEE agrees that the Licensed Product will be sold, shipped and
distributed outright, at a competitive price DETERMINED BY LICENSEE,
and not on an approval, tie-in, consignment, or "sale or return"
basis. LICENSEE further agrees that the Licensed Product will only be
KNOWINGLY sold to retailers, jobbers, wholesalers and distributors for
sale, shipment and distribution to retail stores and merchants
commonly considered and referred to in the industry as MODERATE OR
BETTER department stores and specialty stores for sale, shipment and
distribution direct to the public. Notwithstanding the foregoing to the
contrary, LICENSOR agrees that the Licensed Product may also be sold to
those retail stores commonly considered and referred to in the industry
as "Warehouse Clubs" (such as Price Club, Sam's Warehouse, Pace, Costco,
X.X.'s) so long as the total Net Shipment volume of Licensed Product
sold to such "Warehouse Clubs" does not exceed twenty five percent (25%)
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BHPC.12
of LICENSEE's annual Net Shipment volume. Any sale of Licensed Product
exceeding twenty five percent (25%) of LICENSEE's Net Shipment volume
will be deemed a material breach of this Agreement and LICENSOR will
have the right thereafter to terminate this Agreement. The manner and
scope of the distribution of the Licensed Product, availability,
variety, fabrication, colors and sizes are critical to the promotion,
enhancement and protection of the Trademarks and their associated
goodwill. LICENSEE acknowledges that it has no right to and shall not
sell or distribute the Licensed Product to any diverter or to anyone
whose sales or distribution are or will be made for publicity,
promotional or tie-in purposes, combination sales, premiums, giveaways,
direct mail, electronic shopping, vending machines or similar methods
of merchandising, or whose business methods are or are reported to be
questionable.
c. LICENSEE further agrees to sell to LICENSOR, if requested to do so
by LICENSOR, any product manufactured or sold by LICENSEE, from
LICENSEE's regular production at LICENSEE's customary net selling price.
12. BOOKS, RECORDS, AND RIGHTS TO AUDIT
a. LICENSEE agrees that it shall keep complete and accurate written
books of accounts and records, maintained in accordance with generally
accepted accounting principles consistently applied, at its principal
place of business, covering all Licensed Product manufactured,
distributed, and sold under the Trademarks. LICENSEE shall provide
LICENSOR with the following:
(i) an audited, set of financial statements (i.e., balance sheet,
income statement, and sources and uses of funds) to be delivered to
LICENSOR within ONE HUNDRED TWENTY (120) days after the end of each
fiscal year of LICENSEE; and
(ii) an interim set of financial statements to be delivered to
LICENSOR within SIXTY (60) days following the end of the first six (6)
months of each fiscal year of LICENSEE. All such financial information
must be prepared by an independent certified public accountant,
approved in writing by LICENSOR. LICENSOR HEREBY APPROVES XXXXXXX &
XXXXXXX AS THE
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ACCOUNTANT.
b. LICENSOR and its duly authorized representatives shall have the
right, AT LICENSOR'S EXPENSE, at all reasonable BUSINESS hours of the
day, with reasonable notice to audit LICENSEE's books of account and
records and all other documents and material in the possession or under
the control of LICENSEE with respect to the subject matter and the
terms of this Agreement and to make copies and extracts thereof. Within
ten (10) days following any written request by LICENSOR, LICENSEE will
deliver copies and extracts of any books of account, records,
documents, materials, and information as are requested by LICENSOR
inclusive of, but not limited to: financial statements, general ledger
detail and supporting journals, documents, sales and credit memo
registers, financial projections and wholesale price listings. All
books of account and records of LICENSEE covering all transactions
relating to this Agreement shall be retained by LICENSEE for at least
three (3) years after the expiration or termination of this Agreement
for inspection by LICENSOR. In the event that any such audit reveals an
underpayment by LICENSEE, LICENSEE shall immediately remit payment to
LICENSOR in the amount of such underpayment plus interest calculated at
the maximum annual percentage rate allowable by law, compounded daily,
calculated from the date such payment was actually due until the date
when such payment is, in fact, actually made. In the event that any
material underpayment is revealed by any such audit, LICENSEE shall pay
all reasonable costs and expenses of the examination and audit,
including any reasonable travel expenses incurred by LICENSOR in making
such examination, and costs and expenses of any accountants or other
persons retained by LICENSOR to examine, audit, or analyze LICENSEE's
records. A "material underpayment" is hereby defined as an underpayment
of five percent (5%) or more.
13. INSURANCE
LICENSEE shall, throughout the term of this Agreement, obtain and
maintain at its own cost and expense from a qualified insurance company
acceptable to LICENSOR, a policy or policies of insurance, insuring
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against those risks customarily insured against under broad form
comprehensive general liability policies arising out of any defects or
failure to perform, alleged or otherwise, of the Licensed Product or
any use thereof, including "product liability", "completed operations",
"advertisers' liability insurance", etc and any liability of LICENSEE
arising out of Paragraph 20, below. All such policies of insurance
shall have endorsements or coverage with combined single limits of not
less than $1,000,000 with deductibles reasonably acceptable to LICENSOR
and shall name LICENSOR, and those designated by LICENSOR, WITH
LICENSEE'S APPROVAL, as additional insureds thereunder. Such policies
of insurance shall contain:
a. severability of interest;
b. cross liability; and
c. endorsement stating: "Such insurance as is afforded by this policy
for the benefit of BHPC Marketing, Inc. shall be primary as respects
any liability of claims arising out of (LICENSEE's) operation, and any
insurance carried by BHPC Marketing, Inc. shall be excess and
non-contributory."
The policies shall provide for ten (10) days notice to LICENSOR from
the insurer by Registered or Certified Mail, return receipt requested,
in the event of any modification, cancellation or termination. LICENSEE
agrees to furnish LICENSOR a certificate of insurance or copy of the
policies evidencing same within thirty (30) days after execution of
this Agreement and from time to time as requested by LICENSOR within
ten (10) days of LICENSOR's request; in no event, shall LICENSEE
manufacture, offer for sale, sell, advertise, promote, ship and/or
distribute the Licensed Product prior to receipt by LICENSOR of such
evidence of insurance. If LICENSEE fails to procure, maintain and/or
pay for at the times and for the durations specified in this Agreement,
the insurance required hereunder, or fails to carry insurance required
by any governmental requirement, LICENSOR may (but without obligation
to do so), and without notice to LICENSEE, perform such obligations on
behalf of LICENSEE, and the cost thereof, together with interest
thereon at the
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BHPC.12
maximum rate allowed by law, shall immediately become due and payable
to LICENSOR.
14. USE, DISPLAY, AND SALE INVOLVING THE TRADEMARKS AND COPYRIGHT
a. In order to protect the Trademarks and LICENSOR's reputation,
LICENSEE will manufacture, distribute and sell the Licensed Product in
compliance with all applicable laws. DURING THE TERM OF THIS AGREEMENT,
in no event shall LICENSEE, or any affiliated entity, manufacture or
import, distribute or sell any products using trademark or other
designation containing the words "XXXXXXX HILLS", or "POLO", or
depicting any equestrian figure, without the written consent of
LICENSOR.
b. It is specifically understood and agreed that LICENSEE may engage
in the manufacture and distribution of products similar to or
competitive with the Licensed Product for its own account or pursuant
to license agreements with others, provided, however, neither LICENSEE
nor any employee, shareholder, officer, director, parent, subsidiary or
affiliate of LICENSEE shall manufacture or import, distribute or sell
merchandise, THE BRAND NAME OF which has a closely resembling
similarity to the Trademarks. LICENSEE further agrees not to use a
closely resembling similarity of any graphic, style or design supplied
by LICENSOR TO LICENSEE EXCEPT FOR SUCH ITEMS AS ARE GENERIC OR
STANDARD STYLES AND DESIGNS AND THOSE ITEMS WHICH LICENSEE HAS ALREADY
BEEN USING ON THE DATE OF THIS AGREEMENT FOR ITS OTHER PRODUCT LINES.
c. LICENSEE shall exercise reasonable efforts, within the limits
allowed by the laws and governmental regulations in effect in the
Territory, to ensure that its merchandising and sale of the Licensed
Product shall conform to policies and methods suitable for goods of
high quality sold under a prestigious label of worldwide repute.
15. OWNERSHIP OF THE TRADEMARKS
a. LICENSEE agrees that nothing in this Agreement shall give LICENSEE
any right, title, or interest in the Trademarks other than the license
to use the Trademarks on the Licensed Product; that such marks are the
sole property of LICENSOR; that all such uses by LICENSEE of such marks
shall inure only to the benefit of LICENSOR; and it being understood
that all
16
BHPC.12
right, title and interest relating thereto are expressly reserved by
the LICENSOR except for the rights being licensed hereunder.
b. LICENSEE recognizes that LICENSOR may already have entered into
license agreements with respect to the Trademarks for products which
fall into the same general product category as the Licensed Product,
but which are not sold to the same retail store departments as the
Licensed Product, and which may be similar to, but not the same as, the
Licensed Product in terms of function, or otherwise. LICENSOR WILL
ADVISE LICENSEE OF THE SPECIFICS OF EACH SUCH AGREEMENT. LICENSEE
hereby expressly concedes that the existence of said xxxxxxx xxxx xxx
and shall xxx xxxxxxx x breach of this Agreement by the LICENSOR.
NOTHING HEREIN SHALL PERMIT LICENSOR TO LICENSE A RETAIL OUTLET
DIRECTLY TO MAKE LICENSED PRODUCTS OR PRODUCTS SUBSTANTIALLY SIMILAR
THERETO, IT BEING UNDERSTOOD THAT ANY SUCH PRODUCTS TO BE SOLD BY THE
RETAIL OUTLET MUST BE PURCHASED FROM LICENSEE.
c. LICENSEE agrees and acknowledges that if it has obtained or obtains
in the future, in any country, any right, title, or interest in any
marks which are confusingly similar to the Trademark, (including the
filing of any application for trademarks or service mark registration or
the obtaining of any issued registration), that LICENSEE has acted or
will act as an agent and for the benefit of LICENSOR. LICENSEE further
agrees to execute any and all instruments deemed by LICENSOR, its
attorneys or representatives, to be necessary to transfer such right,
title, or interest to LICENSOR to protect LICENSOR's right, title and
interest in such marks.
d. LICENSEE agrees not to raise or cause to be raised to third
parties, either during the term of this Agreement or after its
expiration or termination, on any grounds whatsoever, any questions
concerning the validity of the Trademarks or LICENSOR's rights therein.
16. COMPLIANCE WITH LIMITATIONS ON USE OF TRADEMARKS
LICENSEE agrees that the Licensed Product, and all labels, hang
tags, packaging and other trade dress, used in connection with such
Licensed Products, shall not violate any restrictions on use or display
of the
17
marks as provided in that Settlement Agreement and Consent Judgement
with Polo Fashions, Inc., a copy of which is attached hereto as Exhibit
"D". Nothing contained in this Agreement makes Polo Fashions, Inc., or
any related company, a third party beneficiary of this Agreement. IN THE
EVENT LICENSEE IS SUBJECT TO LOSS OR LIABILITY UNDER SAID SETTLEMENT
AGREEMENT AND/OR CONSENT JUDGMENT FOR ANY ACTIONS NOT IN BREACH OF THIS
AGREEMENT OR ACTIONS OF LICENSEE APPROVED BY LICENSOR PURSUANT TO THIS
AGREEMENT; LICENSOR SHALL INDEMNIFY AND HOLD HARMLESS THE LICENSEE AND
ITS DIRECTORS, OFFICERS AND RELATED COMPANIES, INCLUDING IN THE EVENT
LICENSEE'S RIGHTS UNDER THIS AGREEMENT ARE MATERIALLY AND ADVERSELY
IMPAIRED THROUGH NO BREACH BY LICENSEE.
17. THIRD PARTY INFRINGEMENT
LICENSOR WARRANTS THAT IT OWNS THE TRADEMARKS AND HAS ALL NECESSARY
RIGHTS AND AUTHORITY TO ENTER INTO THIS AGREEMENT, THAT IT WILL EXERCISE
BEST EFFORTS TO KEEP THE TRADEMARKS VALID AND SUBSISTING AND UNIMPAIRED
BY ITS ACTIONS, AND THAT IT HAS NO KNOWLEDGE OF ANY INFRINGEMENT OF THE
TRADEMARKS IN CONNECTION WITH PRODUCTS SIMILAR TO THE LICENSED PRODUCTS.
LICENSEE agrees to notify LICENSOR in writing of any infringements or
imitations by third parties of the Trademarks, the Licensed Product
and/or the Promotional and Packaging Material which may come to
LICENSEE's attention. In the event that a third party should infringe
any of the Trademark rights or any other rights under this Agreement in
the Territory, LICENSOR shall have the sole right to determine whether
any action shall be taken on the account of such infringement, and
LICENSEE shall not take any action on account of any infringement
without first obtaining written consent of LICENSOR, such consent not to
be unreasonably withheld.
18. ASSIGNABILITY AND MANUFACTURING
a. The license granted hereunder is, and shall remain, personal to LICENSEE
and shall not be granted, assigned, or otherwise conveyed by any act of
LICENSEE or by operation of law. For the purposes of this Paragraph 18,
any sale or transfer of any ownership interest in LICENSEE shall
constitute a prohibited assignment of the license granted hereunder.
18
LICENSEE shall have not right to grant any sublicenses without LICENSOR's
prior to express written approval. Any attempt on the part of LICENSEE
to arrange to sublicense or assign to third parties its rights under
this Agreement, shall constitute a material breach of this Agreement.
NOTHING HEREIN PRECLUDES LICENSEE FROM PLEDGING THIS AGREEMENT AS
COLLATERAL OR SECURITY FOR FINANCING TO ITS PRIMARY LENDERS OR HIRING
THIRD PARTIES TO MANUFACTURE, ASSEMBLE OR SELL THE LICENSED PRODUCTS.
b. LICENSOR shall have the right to assign its rights and obligations under
this Agreement without the approval of LICENSEE.
19. NO AGENCY, JOINT VENTURE, PARTNERSHIP
The parties hereby agree that no agency, joint venture, or partnership
is created by this Agreement, and that neither party shall incur any
obligation in the name of the other without the other's prior written
consent.
20. INDEMNIFICATION
a. Except for claims of trademark infringement, UNFAIR COMPETITION or
similar claims, LICENSEE will indemnify, defend and hold LICENSOR
harmless from any and all THIRD PARTY liabilities, claims, obligations,
suits, judgments and expenses whatsoever, including court costs and
REASONABLE attorney's fees, which LICENSOR may incur or which may be
asserted against LICENSOR and which arise or occur with respect to the
operation of LICENSEE's business as it relates to the design, import,
manufacture, distribution, promotion, advertisement, and sale of the
Licensed Product under the Trademarks or with respect to this Agreement
and LICENSEE's performance hereunder; AND FURTHER PROVIDED THAT WITH
RESPECT TO ANY MATTER FOR WHICH LICENSEE HAS AN OBLIGATION TO INDEMNIFY
LICENSOR, LICENSEE SHALL HAVE THE RIGHT TO UNDERTAKE AND CONDUCT THE
DEFENSE OF ANY CAUSE OF ACTION SO BROUGHT AND HANDLE ANY SUCH CLAIM OR
DEMAND, PROVIDED THAT LICENSEE SHALL CONSULT WITH LICENSOR IN GOOD FAITH
REGARDING THE HANDLING OF THE CLAIM AND OBTAIN LICENSOR'S CONSENT FOR
ANY SETTLEMENT OR COMPROMISE THAT ADVERSELY AFFECTS LICENSOR'S BUSINESS.
B. LICENSOR WILL INDEMNIFY, DEFEND AND HOLD LICENSEE HARMLESS FROM ANY AND
ALL THIRD PARTY LIABILITIES, CLAIMS, OBLIGATIONS, SUITS, JUDGMENTS
19
AND EXPENSES WHATSOEVER, INCLUDING COURT COSTS AND REASONABLE ATTORNEY'S
FEES, WHICH LICENSEE MAY INCUR OR WHICH MAY BE ASSERTED AGAINST LICENSEE
AND WHICH ARISE OR OCCUR WITH RESPECT TO THE OPERATION OF LICENSOR'S
BUSINESS OR THE CONDUCT OF LICENSOR'S OTHER LICENSEES OF THE TRADEMARKS,
OR ANY CLAIM OF INFRINGEMENT, UNFAIR COMPETITION, AND THE LIKE WITH
RESPECT TO LICENSEE'S USE OF THE TRADEMARKS IN COMPLIANCE WITH THE TERMS
OF THIS AGREEMENT; AND FURTHER PROVIDED THAT WITH RESPECT TO ANY MATTER
FOR WHICH LICENSOR HAS AN OBLIGATION TO INDEMNIFY LICENSEE, LICENSOR
SHALL HAVE THE RIGHT TO UNDERTAKE AND CONDUCT THE DEFENSE OF ANY CAUSE
OF ACTION SO BROUGHT AND HANDLE ANY SUCH CLAIM OR DEMAND, PROVIDED THAT
LICENSOR SHALL CONSULT WITH LICENSEE IN GOOD FAITH REGARDING THE
HANDLING OF THE CLAIM AND OBTAIN LICENSEE'S CONSENT FOR ANY SETTLEMENT
OR COMPROMISE THAT ADVERSELY AFFECTS LICENSEE'S BUSINESS. SUCH INDEMNITY
SHALL EXTEND TO LIABILITIES AND CLAIMS INCURRED AFTER THE EXPIRATION OR
TERMINATION OF THIS AGREEMENT BUT WHICH ARE BASED ON ACTS OR EVENTS
WHOSE PROXIMATE CAUSE AROSE DURING THIS AGREEMENT.
21. TERMINATION
a. In addition to the termination rights provided elsewhere in this
Agreement, EACH PARTY will have the right to terminate this Agreement in
the event that:
(i) THE OTHER PARTY violates or fails to perform any agreement,
obligation, term, or condition of this Agreement and that violation or
failure to perform is not cured within THIRTY (30) days following
written notice thereof; or
(ii) THE OTHER PARTY becomes insolvent, files a voluntary petition in
bankruptcy, a petition is filed against THAT PARTY to have THAT PARTY
adjudicated as bankrupt and same is not dismissed in sixty (60) days,
THAT PARTY enters into any composition with ITS creditors, BUT NOT
INCLUDING reorganization under the Bankruptcy Code. Provided, however,
such termination BY LICENSEE shall not relieve LICENSEE of the
obligation to pay any Royalty EARNED BY LICENSOR up to the effective
date of termination, nor prejudice any cause of action or claim of THE
TERMINATING PARTY accrued, or to accrue, on account of the breach or
20
default of THE OTHER PARTY.
b. Notwithstanding the provisions of sub-paragraph 21a. (i) to the contrary,
in the event that LICENSEE violates this Agreement or fails to perform
any MATERIAL agreement, obligation, term, or condition of this Agreement
for the third (3rd) time, for any reason EXCEPT FORCE MAJEURE, LICENSEE
shall forfeit the right to cure such violation or failure to perform,
and this Agreement will terminate upon the giving of the written notice
thereof.
22. EFFECT OF EXPIRATION OR TERMINATION
a. EXCEPT FOR THE LIMITED PURPOSES INDICATED BELOW, upon expiration or
termination of this Agreement, all rights and licenses granted to
LICENSEE hereunder shall immediately expire, shall forthwith revert to
LICENSOR, and LICENSEE shall immediately cease and desist from using the
Trademarks and any technical information supplied by LICENSOR to
LICENSEE hereunder. To this end, LICENSEE will be deemed to have
automatically assigned to LICENSOR, PURSUANT TO THE EXPRESS PROVISIONS
OF THIS AGREEMENT, upon such expiration or termination, the Trademarks,
equities, good will, titles, and other rights in or to the Licensed
Product and all adaptations, compilations, modifications, translations
and versions thereof, and all other trademarks used in connection
therewith (NOT INCLUDING ANY OF LICENSEE'S TRADEMARKS AND LOGOS) which
have been or may be obtained by LICENSEE or which may vest in LICENSEE
and which have not already been assigned to LICENSOR BUT NOT INCLUDING
ANY GENERIC OR STANDARD STYLES, LABELS, TAGS, DESIGNS, GRAPHICS, AND THE
LIKE. LICENSOR may thereafter, in its sole discretion enter into such
arrangements as it deems desirable, with any other party, for the
manufacture, promotion and sale of the Licensed Product in the Territory.
b. Any Licensed Product, finished or in progress, shall be disposed of as
follows:
(A) UPON EXPIRATION OF THIS AGREEMENT OR TERMINATION FOR BREACH BY
LICENSOR; any finished Licensed Product in LICENSEE's possession OR IN
PROGRESS unsold OR SOLD BUT NOT DELIVERED on the date of the expiration
21
of this Agreement may, subject to payment of the Royalty payable to
LICENSOR, be sold by LICENSEE, pursuant to a plan to be approved by
LICENSOR, OR TO THE CUSTOMERS TO WHOM LICENSEE IS COMMITTED OR HAVE
BOUGHT SAID PRODUCT; for a period of one hundred twenty (120) days after
expiration hereof. Any Royalty paid by LICENSEE to LICENSOR during the
aforementioned one hundred twenty (120) day period is separate and apart
from the Royalty generated during the term of the Agreement and such
Royalty is not to be applied to the Guaranteed Annual Royalty Payments
as outlined in Subparagraph 10b. and column (C) of item 7 of the
attached License Agreement Detail Schedule. All inventory remaining
after such one hundred twenty (120) day period shall be destroyed or
stripped of all imprints, lettering, mentions or other reproductions of
or references to the Trademarks and related logos; and all molds,
patterns, transfers, and other property bearing the Trademarks of
relating thereto shall be destroyed; all under the supervision of
LICENSOR, AT LICENSOR'S COST IF ANY TRAVEL INVOLVED. EXCEPT FOR GOODS
ALREADY COMMITTED OR SOLD TO LICENSEE'S CUSTOMERS, LICENSOR shall have
the first right to purchase said Licensed Product at the direct cost
price (comprised of material and direct labor expenses as set forth in
LICENSEE's books and records, plus five percent (5%) for overhead) upon
expiration or termination of this Agreement.
(B) Any finished Licensed Product in LICENSEE's possession unsold on the
date of termination of this Agreement (OTHER THAN FOR BREACH BY
LICENSOR), and all molds, patterns, transfers and other property bearing
the Trademarks or relating thereto shall be destroyed OR DEFACED TO
REMOVE THE TRADEMARKS by LICENSEE within thirty (30) days following the
termination of this Agreement; further, LICENSEE agrees, on or before
the LAST DAY OF THE ONE HUNDRED DAY (120) PERIOD, to provide LICENSOR
with a certificate signed by LICENSEE's Chief Executive Officer
certifying under penalty of perjury that such UNSOLD inventory, molds,
patterns, transfers, and other property have been destroyed OR DEFACED
SO AS TO INCLUDE THE TRADEMARKS AND LOGO OF LICENSOR. SOLD PRODUCT MAY
BE DELIVERED TO THE CUSTOMERS. LICENSEE shall, within SIXTY (60)
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days after expiration or termination of this Agreement as the case may
be, furnish LICENSOR with a full and detailed written statement of the
Licensed Product in its inventory or the Licensed Product in progress as
STATED IN SUBPARAGRAPH 22.C. BELOW. LICENSOR shall have the option of
conducting a physical inventory at the time of expiration or termination
and/or at a later date (WITHIN THIRTY (30) DAYS OF TERMINATION OR
EXPIRATION) in order to ascertain or verify such statement. In the event
that the LICENSEE refuses to permit LICENSOR to conduct such physical
inventory, LICENSEE shall forfeit its rights hereunder to dispose of such
UNSOLD inventory. In addition to such forfeiture, LICENSOR shall have
recourse to all other remedies available to it.
c. Upon the termination of this Agreement, LICENSEE shall, within ten (10)
days following termination, give written notice to LICENSOR of the:
(i) Licensed Product, by style, in its possession or under its
control;
(ii) location of the inventory of the Licensed Product;
(iii) amount of the work in process;
(iv) Licensed Product in transit; and
(v) name, address, and telephone number of each contractor,
shipper and/or sales representative.
d. EXCEPT FOR THE INVENTORY PHASE-OUT RIGHTS AS STATED ABOVE, LICENSEE
shall accept no order, or undertake any new production, that would be
delivered after the date of expiration of this Agreement. Three (3)
months prior to the expiration of this Agreement, and monthly thereafter
until expiration, LICENSEE shall provide to LICENSOR an inventory, by
style, of all the Licensed Product in its possession or under its
control, and all work in process. Three (3) months prior to the
expiration of this Agreement, and MONTHLY until expiration, LICENSEE
shall provide LICENSOR with copies of all orders, invoices, bills of
lading, credit memoranda, and statements provided to LICENSEE's factor
(if any).
e. LICENSEE shall deliver to LICENSOR, upon termination of this Agreement
or thirty (30) days prior to the expiration of this Agreement the names,
addresses, and telephone numbers of each supplier of any item having the
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Trademarks. LICENSEE shall be responsible to LICENSOR for any damages
caused by the unauthorized use by LICENSEE or by others ONLY IF CAUSED
BY THE RECKLESS CONDUCT OF LICENSEE of such reproduction materials which
are not turned over to LICENSOR.
23. MODIFICATION; WAIVER
No modification of any of the terms or provisions of this agreement
shall be valid unless contained in a writing signed by the parties. No
waiver by either party of a breach or a default hereunder shall be
deemed a waiver by such party of a subsequent breach or default of a
like or similar nature. EXCEPT AS OTHERWISE STATED IN THIS AGREEMENT,
resort by LICENSOR OR LICENSEE to any remedies referred to in this
Agreement or arising by reason of a breach of this Agreement by LICENSEE
OR LICENSOR shall not be construed as a waiver by LICENSOR of its right
to resort to any and all other legal and equitable remedies available to
LICENSOR OR LICENSEE.
24. FORCE MAJEURE
Neither LICENSOR nor LICENSEE shall be liable to each other or be
deemed in breach or default of any obligations contained in this
Agreement, for any delay or failure to perform due to causes beyond its
reasonable control, including but not limited to delay due to the
elements, acts of the United States Government, acts of a foreign
government, acts of God, fires, floods, epidemics, embargoes, riots,
strikes, any of the foregoing events being referred to as a "Force
Majeure" condition. In such event, dates for performance shall be
extended for the period of delay resulting from the Force Majeure
condition. The party affected by a Force Majeure condition shall, as
soon as practicable, notify the other party of the nature and extent of
such condition.
25. NOTICE
All notices, approvals, consents, requests, demands, or other
communications to be given to either party in writing may be effected by
personal delivery or by depositing the same in the United States mail,
certified and return receipt requested, postage prepaid. Such
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BHPC.12
communication shall be addressed to LICENSEE and LICENSOR at their
respective addresses as set forth in the preamble above.
26. CONSTRUCTION; VENUE
This Agreement shall be construed in accordance with the laws of the
State of California, U.S.A., and the parties agree that it is executed
and delivered in that state, and any claims arising hereunder shall, at
LICENSOR's election, be prosecuted in the appropriate Court of the State
of California in Los Angeles County or any Federal District Court
therein.
27. ENTIRE AGREEMENT
This Agreement, contains the entire understanding of the parties and
there are no representations, warranties, promises, or undertakings
other than those contained herein. This Agreement supersedes and
cancels all previous agreements between the parties hereto.
28. CONFIDENTIAL INFORMATION
LICENSOR and LICENSEE agree (and shall instruct their partners,
officers, directors, designers, and other persons to whom disclosure is
made) to keep strictly confidential all designs, manufacturing
instructions, and other information relating to the Licensed Product or
THE CUSTOMERS AND BUSINESS OPERATIONS OF THE OTHER PARTY that are not
otherwise available to the public, whether furnished by one to the other
or in any way acquired by either party; and the same shall be used by
either party solely under this Agreement and for the purpose of
marketing of the Licensed Product. THIS PROVISION, AS WELL AS ALL
INDEMNIFICATIONS PROVIDED IN THIS AGREEMENT, SURVIVE TERMINATION OF
EXPIRATION.
29. EQUITABLE RELIEF
LICENSEE acknowledges and agrees that:
(i) LICENSEE's failure to meet the quality standards herein;
(ii) LICENSEE's failure: (a) to use the Trademarks, or (b) to
manufacture, offer for sale, sell, advertise, promote, ship or
distribute the Licensed Product, both in accordance with the provisions
of this Agreement; or
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BHPC.12
(iii) any unauthorized use or disclosure of confidential information of
LICENSOR OR LICENSEE, cannot be compensated adequately with a remedy at
law and will cause irreparable damage to LICENSOR OR LICENSEE.
Accordingly, the parties agree that LICENSOR OR LICENSEE may seek from
any court having jurisdiction, such equitable relief by way of temporary
restraining orders, permanent injunctions or otherwise as is available
to compel the discontinuance of such conduct. LICENSEE agrees that any
court of general jurisdiction in Los Angeles County or any Federal
District Court therein shall have jurisdiction of such claim.
30. ATTORNEYS' FEES
In the event any legal action becomes necessary to enforce or interpret
the terms of this Agreement, the prevailing party shall be entitled, in
addition to its court costs, to such reasonable attorneys' fees as shall
be fixed by a court of competent jurisdiction.
31. BINDING EFFECT
This Agreement shall be binding on the parties, and their successors and
assigns.
32. SURVIVAL OF THE RIGHTS
Notwithstanding anything to the contrary contained herein, such
obligations which remain executory after expiration of the term or
termination of this Agreement shall remain in full force and effect
until discharged by performance and such rights as pertain thereto shall
remain in force until their expiration.
33. SEVERABILITY
In the event that any term or provision of this Agreement shall for any
reason be held to be invalid, illegal or unenforceable in any respect,
such invalidity or unenforceability shall not affect any other term or
provision and this Agreement shall be interpreted and construed as if
such term or provision, to the extent the same shall have been held to
be invalid, illegal or unenforceable, had never been contained herein.
34. CAPTIONS
The captions used in connection with the paragraphs and subparagraphs of
this Agreement are inserted only for purpose of reference. Such
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BHPC.12
captions shall not be deemed to govern, limit, modify or in any other
manner affect the scope, meaning or intent of the provisions of this
Agreement or any part thereof nor shall such captions otherwise be given
any legal effect.
35. INCORPORATION OF EXHIBITS
LICENSOR and LICENSEE acknowledge and agree that the provisions of
Exhibits "A" through "D" attached hereto (the "Exhibits") are integral
to this Agreement and that the provisions of the Exhibits are all hereby
incorporated herein and made a part hereof as if set out in full in this
Agreement.
36. RIGHT OF FIRST REFUSAL
LICENSOR will offer to LICENSEE the Right of First Refusal to license
the product category of men's warm up suits in all fabrications,
excluding silk, men's basic pique and jersey polo shirts, men's
beachwear, i.e. swimwear, crew neck fleece tops in solid colors,
embroidery, screen prints and color block, matching basic t-shirts and
tank tops, and basic fleece pants. LICENSOR will submit in writing to
LICENSEE the terms and conditions of ANY GOOD FAITH offer to license ANY
OF said product categories in the United States. LICENSEE will have
fifteen (15) days from receipt of said notice to notify LICENSOR in
writing that it is willing to accept a License Agreement under the same
terms and conditions as the offer. If LICENSOR is not notified within
said time period, LICENSOR will deem that LICENSEE has refused the offer
and will pursue the license with the offering party ON THE SAME TERMS
AND CONDITIONS PRESENTED TO LICENSEE. IF THE TERMS AND CONDITIONS
CHANGE, LICENSOR SHALL OFFER THE RIGHT OF FIRST REFUSAL TO LICENSEE ONCE
AGAIN. THESE RIGHTS OF FIRST REFUSAL SHALL CONTINUE THROUGH THE TERM OF
THIS AGREEMENT WHENEVER THE RIGHTS FOR SAID PRODUCT CATEGORIES ARE
OFFERED TO A THIRD PARTY FOR LICENSING.
37. APPROVALS
ALL APPROVALS OR CONSENTS REQUIRED TO BE GIVEN BY ONE PARTY TO THE OTHER
UNDER THIS AGREEMENT SHALL NOT BE UNREASONABLY WITHHELD OR DELAYED
NOTWITHSTANDING ANYTHING IN THE AGREEMENT TO THE CONTRARY.
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BHPC.12
IN WITNESS WHEREOF, the parties hereto agree that this Agreement shall
take effect as of the date and year first above written above.
LICENSOR: LICENSEE:
BHPC MARKETING, INC., I. C. XXXXXX & CO., L.P.
a California Corporation a Delaware Limited Partnership
BY: BY:
-------------------------------- ------------------------------
Xxx Xxxxxxxx Xxxxx Xxxx
Licensing Director President, C.E.O.
Date: Date:
------------------------------ ----------------------------
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SECTION (I)
NET SHIPMENT STATEMENT
The written statement of Net Shipments of Licensed Product (a copy of
which is attached hereto as Exhibit "F") referred to in Paragraph 9a must be
certified as accurate by LICENSEE and will include, but will not be limited
to, information as to: each respective invoice number (in sequential order
inclusive of all "voided" invoices), invoice date, customer name or number,
gross dollar amount invoiced, terms of any customary trade allowances (as a
percentage and in aggregate dollars), actually credited returns (in aggregate
dollars), and other deductions taken against the gross dollar amount
invoiced, and any such other further information as LICENSOR may from time to
time request. Such statements shall be furnished to LICENSOR whether or not
any Licensed Product has been shipped, distributed and/or sold during the
preceding Royalty Period and whether or not any monies are then due LICENSOR.
SECTION (II)
BOOKS, RECORDS, AND RIGHTS TO AUDIT
Within ten (10) days following any written request by LICENSOR, LICENSEE
will deliver copies and extracts of any books of account, records,
documents, materials, and information as are requested by LICENSOR
inclusive of, but not limited to: financial statements, general ledger
detail and supporting journals, documents, sales and credit memo
registers, financial projections and wholesale price listings. All books
of account and records of LICENSEE covering all transactions relating to
this Agreement shall be retained by LICENSEE for at least three (3)
years after the expiration or termination of this Agreement for
inspection by LICENSOR.
EXHIBIT "C"
Page 1 of 3
BHPC.12
SECTION (III)
INSURANCE REQUIREMENTS
All such policies of insurance shall have endorsements or coverage with
combined single limits of not less than $1,000,000 with deductibles
reasonably acceptable to LICENSOR and shall name LICENSOR, and those
designated by LICENSOR, with LICENSEE's approval, as additional insureds
thereunder. Such policies of insurance shall contain:
a. severability of interest;
b. cross liability; and
c. endorsement stating: "Such insurance as is afforded by this policy
for the benefit of BHPC Marketing, Inc. shall be primary as respects any
liability of claims arising out of (LICENSEE's) operation, and any
insurance carried by BHPC Marketing, Inc. shall be excess and non-
contributory."
The policies shall provide for ten (10) days notice to LICENSOR from the
insurer by Registered or Certified Mail, return receipt requested, in the
event of any modification, cancellation or termination. LICENSEE agrees to
furnish LICENSOR a certificate of insurance or copy of the policies
evidencing same within thirty (30) days after execution of this Agreement and
from time to time as requested by LICENSOR within ten (10) days of LICENSOR's
request, in no event, shall LICENSEE manufacture, offer for sale, sell,
advertise, promote, ship and/or distribute the Licensed Product prior to
receipt by LICENSOR of such evidence of insurance.
SECTION (IV)
DISPOSAL OF INVENTORY ON EXPIRATION OR TERMINATION
(A) Upon expiration of the term of this Agreement, any finished Licensed
Product in LICENSEE's possession or in progress unsold or sold but not
delivered on the date of the expiration of this Agreement may, subject to
payment of the Royalty payable to LICENSOR, be sold by LICENSEE, pursuant to
a plan to be approved by LICENSOR, or to the customers to whom LICENSEE is
committed or have bought said product, for a period of one hundred twenty
(120) days after expiration hereof. Any Royalty paid by LICENSEE to LICENSOR
during the aforementioned one hundred twenty (120) day period is separate and
apart from the Royalty generated during the term of the Agreement and such
Royalty is not to be applied to the Guaranteed Annual Royalty Payments as
outlined in Subparagraph 10b, and column (C) of item 7 of the attached
License Agreement Detail Schedule. All inventory remaining after such one
hundred twenty (120) day period shall be destroyed or stripped of all
imprints, lettering, mentions or other reproductions of or references to the
Trademarks and related logos; and all molds, patterns, transfers, and other
property bearing the Trademarks of relating thereto shall be destroyed; all
under the supervision of LICENSOR, at LICENSOR's cost if travel involved.
EXHIBIT "C"
Page 2 of 3
BHPC.12
Except for goods already committed or sold to LICENSEE's customers, LICENSOR
shall have the first right to purchase said Licensed Product at the direct
cost price (comprised of material and direct labor expenses as set forth in
LICENSEE's books and records, plus five percent (5%) for overhead) upon
expiration or termination of this Agreement.
(B) Any finished Licensed Product in LICENSEE's possession unsold on the date
of termination of this Agreement (other than for breach by LICENSOR), and all
molds, patterns, transfers, and other property bearing the Trademarks or
relating thereto, shall be destroyed or defaced to remove the Trademarks by
LICENSEE within thirty (30) days following the termination of this Agreement;
further, LICENSEE agrees, on or before the last day of the one hundred twenty
(120) day period, to provide LICENSOR with a certificate signed by XXXXXXXX's
Chief Executive Officer certifying under penalty of perjury that such unsold
inventory, molds, patterns, transfers, and other property have been destroyed
or defaced so as not to include the Trademarks and logo of LICENSOR.
EXHIBIT "C"
Page 3 of 3
