EXHIBIT 10.36
CONFIDENTIAL TREATMENT REQUESTED
VERSATILE ENTERTAINMENT, INC.
000 Xxxx Xxxxxxxxx Xxxxxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
December 16, 2008
Xxxxxxxxx Xxxxx Merchandising, Inc.
0000 Xxxxxx Xxxxxxxxx
Xxx Xxxxx, XX 00000
Attn: Xxxxxx Xxxxxxxxx
RE: LETTER AGREEMENT
Ladies and Gentlemen:
Further to our discussions, we are pleased to set forth below the terms
of our agreement for the exclusive sale by Versatile Entertainment, Inc., a
California corporation, and its parent People's Liberation, Inc., a Delaware
corporation (collectively, "VE"), to Xxxxxxxxx Xxxxx Merchandising, Inc., a
California corporation, and its parent Xxxxxxxxx Xxxxx Holding, Inc., a Delaware
corporation (collectively, "CR"), of apparel and apparel accessories bearing the
trademark PEOPLE'S LIBERATION in all its forms and variations (collectively,
"MARKS"), and the provision of services by VE in connection therewith. When
signed by VE and CR, in the manner hereinafter provided, this letter agreement
(this "AGREEMENT") shall constitute the binding agreement of VE and CR with
respect to the matters described herein.
EXCLUSIVE DISTRIBUTION: During the Term (as defined below), VE shall
design, source, manufacture, purchase, import
or otherwise acquire each season (as such term
is understood in the clothing and apparel
industries) such assortment of Products (as
defined below) selected by VE and CR for sale
to CR, which VE shall offer to sell to CR at
such prices as determined by VE and CR in
accordance with this Agreement. CR shall issue
its standard purchase order for such Products
that CR desires to purchase from VE.
During the Term, CR shall have the exclusive
right to market, distribute, and sell the
Products purchased by CR from VE in the
Territory solely through the Approved Stores.
Neither VE nor any of its Affiliates, shall
sell, distribute or otherwise make available to
customers any Products in any part of the
Territory or authorize, assist, support,
directly or indirectly, any other party to do
so.
VE shall cease all distribution and sale of
Products to third parties in the Territory from
and after April 30, 2009, and shall not market
or authorize any third party to market Products
in the Territory after April 30, 2009 except as
provided herein.
EXCLUSIVE LICENSE: VE licenses to CR on a wholly exclusive basis
throughout the Term, the right, but not the
obligation (with the exception of the Primary
Products as defined hereafter), to use the
Marks throughout the Territory on and in
connection with the marketing, distribution and
sale (but not the sourcing or manufacturing) of
the Products solely in the Approved Stores.
MARKS: PEOPLE'S LIBERATION
[GRAPHICS OMITTED]
(ATTACHED HERETO AS EXHIBIT A IS A LISTING OF
ALL REGISTERED AND PENDING U.S. TRADEMARK
REGISTRATIONS AND APPLICATIONS OF VERSATILE
ENTERTAINMENT, INC. FOR THE MARKS, INCLUDING
THE REGISTRATION/APPLICATION NUMBER,
REGISTRATION/APPLICATION FILING DATE,
CLASSIFICATION AND GOODS.)
TERRITORY: North America and Central America, including
all its territories. VE expressly reserves the
right to sell, or to grant licensees rights to
sell, Products outside the Territory.
PRODUCTS: Finished goods for all markets (E.G., women's,
kids, juniors, etc.) bearing the Marks, either
alone or in connection with the Xxxxxxxxx
Xxxxx(TM) trademarks (subject to VE's prior
approval), in the following categories, which
finished goods have been produced by or at the
direction of VE for sale to CR:
Clothing, Footwear, Headgear (INTERNATIONAL
CLASS 25) Bags, and Leather Goods in respect of
which the Marks are registered or pending
registration or are otherwise approved by VE to
be marketed, sold, or distributed under the
Marks (INTERNATIONAL CLASS 18) Cosmetics,
Fragrances (INTERNATIONAL CLASS 3) Eyewear
(INTERNATIONAL CLASS 9) Jewelry, Watches
(INTERNATIONAL CLASS 14)
Products in International Classes ***(1) are
referred to herein as "PRIMARY Products", and
Products in International Classes *** are
referred to herein as "SECONDARY PRODUCTS".
PRODUCT QUALITY VE will ensure that all Products are
AND PRICING: commensurate with the current reputation,
image, styling and prestige of the Marks; of
high quality and design as to workmanship,
construction, trim, appearance, fabrication,
design and materials used therein; and at least
equal in quality to the samples of Products
submitted by VE to CR. CR acknowledges that its
current intention is to offer the Primary
Products for sale at ***, and accordingly ***
for the Primary Products may reflect ***(2).
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(1) Terms represented by this symbol are considered confidential. These
confidential terms have been omitted pursuant to a Confidential Treatment
Request filed with the Securities and Exchange Commission ("SEC") and have
been filed separately with the SEC.
2
VE and CR acknowledge and agree that the
categories of Products identified on EXHIBIT B
shall have an initial retail price within the
ranges set forth on EXHIBIT B or as otherwise
agreed by the parties. Products shall be
offered to CR at wholesale pricing which shall
be determined by the retail pricing set forth
in EXHIBIT B or, to the extent not identified
on EXHIBIT B, set by CR in its reasonable
discretion after consultation with VE in order
to allow for a retail price with an initial
xxxx-up of ***%.
OWNERSHIP: VE acknowledges that, to the best of its
knowledge, (i) it is the sole and exclusive
owner of the Marks in the United States for the
goods in the applications/registrations listed
in EXHIBIT A, and (ii) it is not aware of any
third party obstacle, or third party challenge
or claim to VE's use and/or registration of the
Marks or URL (defined below) in the Territory
for the Products. CR acknowledges that all use
of the Marks and all rights and goodwill
attaching to or arising out of such use, shall
accrue to the benefit of VE. VE has filed in
the U.S. the trademark applications for the
Marks listed on EXHIBIT A. Within fourteen (14)
days of the execution of this Agreement, VE
shall, at its expense and as is necessary, file
applications for the national registration of
the Marks in the United States (to the extent
not already filed), Canada, and Mexico for the
Products, and shall vigorously prosecute said
applications. CR acknowledges that any refusal
to register a Xxxx by a national trademark
office in of itself shall not constitute a
breach of this Agreement by VE.
VE acknowledges that it is the sole and
exclusive owner of the URL
XXX.XXXXXXXXXXXXXXXXX.XXX (the "URL").
(ATTACHED HERETO AS EXHIBIT A IS A LISTING OF
SUCH URL, INCLUDING THE "WHOIS" RECORD(S) AND
EXPIRATION DATE(S).)
APPROVED DISTRIBUTION: Xxxxxxxxx Xxxxx(TM) branded retail stores and
related Xxxxxxxxx Xxxxx(TM) distribution
channels in the ordinary course of business in
effect on the date hereof, including outlet
locations and direct-to-consumer sales (E.G.,
E-COMMERCE, MAILERS, CATALOG SALES), and any
other distribution channels as agreed between
the parties.
VE grants to CR the exclusive right to solely
utilize the URL for commercial and marketing
purposes with respect to the Products in the
Territory throughout the Term.
CLOSE-OUTS AND CR may sell Close-Outs and Off-Price Products
OFF-PRICE SALES: in the ordinary course of business, provided
that Close-Outs may not exceed ***% of total
Net Sales of Products in any Contract Year and
Off-Price sales may not exceed ***% percent of
total Net Sales of Products in any Contract
Year. For the purposes hereof, Close-Outs are
first quality Products that cannot be sold or
are not sold to regular customers (E.G., excess
inventory), and Off-Price sales are any sale at
a price that is more than *** (***%) percent
less than the listed wholesale price.
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(2) Terms represented by this symbol are considered confidential. These
confidential terms have been omitted pursuant to a Confidential Treatment
Request filed with the SEC and have been filed separately with the SEC
3
***(3), and any outlet stores owned by,
operated by or affiliated with Xxxxxxxxx
Xxxxx(TM) are deemed to be approved
distribution channels for such Close-Outs and
Off-Price sales.
TERM: Commencing on the date hereof and continuing
until December 31, 2012 (the "INITIAL TERM"),
comprised of three Contract Years with the
first Contract Year commencing on the date
hereof and ending on June 30, 2010, the second
commencing July 1, 2010 and ending December 31,
2011, and the third commencing January 1, 2012
and ending December 31, 2012.
EXTENSION OF TERM: CR shall have two 1-year renewal periods
(CONTRACT YEAR 4: JANUARY 1, 2013 - DECEMBER
31, 2013 AND CONTRACT YEAR 5: JANUARY 1, 2014 -
DECEMBER 31, 2014) provided that: (a) CR
notifies VE of its intent to renew within nine
(9) months of the expiration of the
then-current term; and (b) CR has not been in
material default during the then-current term
of this Agreement. The Initial Term and any
extension term(s) are collectively referred to
herein as the "TERM."
NO SUBLICENSE: CR shall not sublicense, transfer or assign its
rights to the Marks without the prior written
consent of VE, which consent may be withheld by
VE in its sole discretion. Notwithstanding the
foregoing, CR may, upon notice to VE,
sublicense, transfer or assign said rights to
an entity under the same direction, ownership
and control as CR, provided that ***.
QUALITY STANDARDS: CR agrees that the nature and quality of: (1)
all services and goods rendered by CR in
connection with the Marks; (2) all goods
produced, distributed or sold by CR under the
Marks; and (3) all related advertising,
promotional, and other related uses of the
Marks by CR shall conform to standards set by,
and be under the control of, VE. CR
acknowledges and agrees that the presentation
and image of the Marks should be uniform and
consistent with respect to all services,
activities and products associated with the
Marks. Accordingly, CR agrees to use the Marks
solely in the manner which VE shall specify
from time to time in VE's sole discretion. Upon
VE's request, CR shall furnish to VE
representative samples of materials containing
the Marks that CR currently distributes and
agrees to permit reasonable, periodic
inspection of CR's operations, at reasonable
times and with reasonable notice. If VE
believes that the Marks are being used in a
manner that could diminish VE's rights in or
protection of the Marks, or the value of any of
the Xxxxx, XX agrees to make whatever
reasonable and commercially practicable changes
and/or corrections VE deems necessary to
protect the Marks.
APPROVALS: Unless otherwise set forth in this Agreement,
submissions for approval by either party
hereunder shall be deemed approved unless the
other party delivers a notice of disapproval
within fifteen (15) business days after receipt
of request. Approvals shall not be unreasonably
withheld or delayed.
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(3) Terms represented by this symbol are considered confidential. These
confidential terms have been omitted pursuant to a Confidential Treatment
Request filed with the SEC and have been filed separately with the SEC
4
INFRINGEMENT AND CR shall notify VE promptly of any actual or
INDEMNIFICATION: threatened infringements, imitations, or
unauthorized use of the Marks by third parties
in the Territory of which CR becomes aware. VE
shall have the sole right, at its expense, to
bring in its discretion any action on account
of any such infringements, imitations, or
unauthorized use, and CR shall cooperate with
VE, as VE may reasonably request, in connection
with any such action brought by VE. VE shall
retain any and all damages, settlement and/or
compensation paid in connection with any such
action brought by VE.
CR, at its expense, shall defend and indemnify,
and save and hold VE harmless from and against
any and all liabilities, claims, causes of
action, suits, damages and expenses, including
reasonable attorneys' fees and expenses, for
which VE becomes liable, or may incur or be
compelled to pay by reason of CR's activities
or breach of the terms of this Agreement,
including but not limited to: (i) claims of
infringement of any third party intellectual
property or proprietary right, except to the
extent such liability arose solely from CR's
use of the Marks as specified by VE; (ii)
product liability suits by direct or indirect
customers of CR with respect to products
designed and sourced by CR (if permitted by
VE); (iii) failure to comply with any law, rule
or regulation in connection with CR directed
export, import, sale, and/or distribution of
goods/services in the Territory bearing any of
the Marks; (iv) violations of applicable labor
laws and regulations with respect to products
manufactured or sourced by CR (if permitted by
VE); and (v) CR's use of the Marks in any
manner not expressly authorized herein.
VE, at its expense, shall defend and indemnify,
and save and hold CR harmless from and against
any and all liabilities, claims, causes of
action, suits, damages and expenses, including
reasonable attorneys' fees and expenses, for
which CR becomes liable, or may incur or be
compelled to pay by reason of VE's activities
or breach of the terms of this Agreement,
including but not limited to: (i) claims that
the Marks as used in connection with the
Products and as specified by VE infringe any
third party intellectual property or
proprietary right in the United States, Canada,
or Mexico; (ii) product liability and suits by
direct or indirect customers of VE with respect
to products designed and sourced by VE; and
(iii) any violations of applicable labor laws
and regulations with respect to products
manufactured or sourced by VE.
MINIMUM PURCHASE In consideration for the exclusivity and rights
REQUIREMENTS: granted, and the services to be provided, to CR
by VE herein, CR shall ensure the following
minimum purchases of Products from VE per
Contract Year:
DATE AMOUNT
---- ------
CONTRACT YEAR 1
DATE OF EXECUTION - JUNE 30, 2010 ***(4)
CONTRACT YEAR 2
JULY 1, 2010 - DECEMBER 31, 2011 $***
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(4) *** Terms represented by this symbol are considered confidential. These
confidential terms have been omitted pursuant to a Confidential Treatment
Request filed with the SEC and have been filed separately with the SEC.
5
CONTRACT YEAR 3
JANUARY 1, 2012 - DECEMBER 31, 2012 ***(5)
If Applicable:
CONTRACT YEAR 4
JANUARY 1, 2013 - DECEMBER 31, 2013 $***
CONTRACT YEAR 5 (AND THEREAFTER, IF APPLICABLE)
JANUARY 1, 2014 - DECEMBER 31, 2014 $***
Minimum Purchase payments for each Contract
Year shall be made in ***, with adjustments
made for actual purchase amounts already paid
for Products for said ***. Notwithstanding the
foregoing, with respect to Contract Years 1 and
2, Minimum Purchase payments shall be made as
follows:
PAYMENT DATE PAYMENT AMOUNT
------------ --------------
CONTRACT YEAR 1
Date of Execution (ADVANCE PAYMENT) $1,000,000
*** $***
*** $***
*** $***
*** $***
*** $***
*** $***
CONTRACT YEAR 2
*** $***
*** $***
*** $***
*** $***
*** $***
*** $***
Payments for Products shall be made within ***
of receipt of invoice, except as follows:
o If a Minimum Purchase payment is due
and paid at the end of a *** (i.e.,
actual payments for Products during
the *** have not reduced the Minimum
Purchase payment for such *** to
zero), such Minimum Purchase payment
shall be applied in payment of
outstanding invoices.
o If the actual payments for Products
during a *** have matched or exceeded
the Minimum Purchase payment amount
for such ***, no Minimum Purchase
payment for said *** shall be due and
payable.
o If the actual payments for Products
during a *** exceed the Minimum
Purchase payment amount for such ***,
the excess amount of actual payment
shall be applied to the Minimum
Purchase payment in the subsequent
***.
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(5) *** Terms represented by this symbol are considered confidential. These
confidential terms have been omitted pursuant to a Confidential Treatment
Request filed with the SEC and have been filed separately with the SEC.
6
Notwithstanding the foregoing, in no event
shall the Minimum Payment due and payable in
one Contract Year be applied in payment of
Products invoiced in any other Contract Year.
If CR terminates this Agreement in a manner
permitted hereunder at any time before the
expiration of the Term, CR shall only be
obligated to make the Minimum Purchase payments
that are scheduled, PRO RATA, through the
effective termination date of this Agreement.
ADVANCE PAYMENT: With respect to Contract Year 1 only, CR shall
make an advance payment to VE to be credited
toward the Minimum Purchase amount set forth
above, as follows:
PAYMENT DATE PAYMENT AMOUNT
------------ --------------
Upon execution of Agreement $1,000,000
ROYALTIES: Royalties shall be due and payable each
calendar quarter, no later than *** following
the end of the applicable calendar quarter.
CR shall provide VE with a written royalty
statement in the form approved by VE from time
to time no later than the *** following the end
of the applicable calendar quarter. Such
royalty statement shall be certified as
accurate by a duly authorized officer of CR.
The receipt or acceptance by VE of any royalty
statement, or the receipt or acceptance of any
royalty payment made, shall not prevent VE from
challenging the validity or accuracy of such
statement or payment.
Commencing January 1, 2013 with Contract Year
4, if applicable, in addition to the Minimum
Purchase payments, CR will pay VE a Royalty
equal to ***(6) percent (***%) of Wholesale
Sales of Primary Products to CR and *** percent
(***%) of Wholesale Sales of Secondary Products
to CR for each Contract Year, or portion
thereof, in excess of the amount of Minimum
Purchase payments for such Contract Year, or
portion thereof. No royalties shall be payable
through December 31, 2012 for sales of
Products. For example, for the period January
1, 2013 through December 31, 2013, no royalties
shall be payable with respect to the first $***
in Wholesale Sales of Products to CR, and for
each dollar of Wholesale Sales to CR
thereafter, CR shall pay VE a royalty of ***%
for Primary Products and ***% for Secondary
Products.
Notwithstanding the foregoing, for Secondary
Products only, no royalties shall be due with
respect to Wholesales Sales of any Products
within a category of Secondary Products for the
first *** months from the initial launch of the
first Product in such category of Secondary
Product to account for ***. For example, if CR
commences the sale of cosmetics, no royalties
shall be due for *** months from the initial
sale of the first item of cosmetics.
"WHOLESALE SALES" shall mean the gross
wholesale price paid by CR for Products less:
(a) returns of Products actually credited; and
(b) allowances (credits to a customer after
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(6) *** Terms represented by this symbol are considered confidential. These
confidential terms have been omitted pursuant to a Confidential Treatment
Request filed with the SEC and have been filed separately with the SEC.
7
delivery including credits for returns). The
foregoing deductions shall not exceed ***(7)%
of the gross sales of Products shipped in any
Contract Year. Sales taxes on Wholesale Sales,
if any, shall be deducted and separately
listed. No other deductions shall be taken.
AUDIT RIGHTS: All books and records relative to CR's
obligations hereunder shall be maintained and
kept accessible and available to VE for
inspection for at least two (2) years after
termination of this Agreement.
VE shall have the right, upon at least thirty
(30) calendar days written notice and no more
than once per calendar year, to inspect those
books and records of CR as are necessary for
the purpose of confirming the accuracy of the
Royalty, at the place or places where such
records are normally retained by CR.
In the event that such inspection reveals an
underpayment in the amount of the Royalty owed
VE from what was actually paid, CR shall
immediately pay such underpayment and, if the
amount of such underpayment exceeds five (5%)
percent, the cost of inspection.
PRODUCT MANAGEMENT VE shall provide the following Product
SERVICES: Management Services described below for
Contract Years 1, 2 and 3, and any extension
periods, for Primary Products only:
1. Design and Sourcing Services
2. Technical Designs / Cost Sheets Estimates
for each CMT style
3. Sample and Fit Approvals
4. Marketing and Advertising Support
Product Management Services shall be provided
by VE (i) in a timely manner in accordance with
seasonal design, development, production and
market calendars as determined by CR; and (ii)
with consideration for the commercial needs and
merchandising objectives designated by CR
DESIGN AND SOURCING VE shall provide creative concepts and fashion
SERVICES: direction, and develop and source the Primary
Products each Season. The Seasons are: Summer,
Fall 1, Fall 2, Holiday, Spring 1, Spring 2.
Design and Sourcing Services shall consist of
the following:
o Initial Merchandising Review - In
person meetings with CR personnel to
outline SKU plan for the applicable
season
o SKU plan Development - VE to present
initial SKU plan by category and
price. SKU count not to exceed ***
SKU's per year
o Product designs, based on agreed SKU
plan
o Wash Development
o Fabric Sourcing
o Trim Design
o Sourcing - assist with identifying
domestic and international fabric
suppliers and production suppliers,
and assist with shipping/importation
as necessary
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(7) *** Terms represented by this symbol are considered confidential. These
confidential terms have been omitted pursuant to a Confidential Treatment
Request filed with the SEC and have been filed separately with the SEC.
8
VE shall have responsibility for all washes,
fabric sourcing, trim design and sourcing, and
finished product manufacturing for all Primary
Products.
VE shall supervise the manufacturing process
and otherwise monitor the production of samples
and finished stock to ensure the quality of
Primary Products (i) meet the parties' agreed
specifications and calendar; and (ii) are
accurately priced, invoiced, labeled, and
shipped in accordance with the laws and
regulations of the Territory.
TECHNICAL DESIGN: Technical Design Services shall consist of the
following:
o Technical Specifications - VE will
provide technical specifications for
each Primary Product fabrication
o VE will assisting in providing
costing for each Primary Product
SAMPLE AND FIT VE will deliver at least one (1) full sample
APPROVALS: line of Primary Products to CR in advance of
each Season. VE shall provide and fit approve
one (1) standard fit size for each SKU, which
will then be marked and graded. VE will be
responsible for all product development and
associated expenses, including samples and any
costs associated with the preparation and
submission of designs.
MARKETING SUPPORT: VE will provide Marketing and Branding Support
for Primary Products in line with CR's
marketing plan and calendar, as follows:
o Assist in PR campaigns, photo shoots,
fixture designs, and fashion shows
o Assist in viral campaign (web)
o Assist in shop-in-shop concept
(signage, pop, pos)
o Assist in development of marketing
collateral
o Provide CR with access to and copies
of any and all marketing material and
other collateral bearing the Marks
that is developed for the brand
outside the Territory
ORGANIZATION: VE will, at its sole cost and expense, employ a
dedicated division head or person with similar
title and responsibility (CURRENTLY XXXXX XXXX,
CHIEF EXECUTIVE Officer), and dedicated design
and sourcing staff as mutually agreed upon, who
will work exclusively with CR's representatives
on CR's business arising under this Agreement.
VE acknowledges that the continual
participation of Xxxxx Xxxx and Xxxxxxxx
Xxxxxxxxx (CREATIVE DIRECTOR), in the business
arising under this Agreement is an inducement
for CR to enter into this Agreement. If
Xxxxxxxx Xxxxxxxxx is employed by or providing
services to VE or any its affiliates, then VE
shall use its best efforts to cause her to be
actively involved in the People's
Liberation(TM) apparel business during the
Term. VE further ensures that Xxxxxxxx
Xxxxxxxxx shall participate in the People's
Liberation(TM) business at least through
***(8), and shall use its best efforts to
provide CR with at least 60 days prior written
notice should Xxxxxxxx Xxxxxxxxx cease to be
employed by or provide services to VE
thereafter. If either (i) Xxxxxxxx Xxxxxxxxx or
a designer of
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(8) *** Terms represented by this symbol are considered confidential. These
confidential terms have been omitted pursuant to a Confidential Treatment
Request filed with the SEC and have been filed separately with the SEC.
9
comparable quality and reputation, or (ii)
Xxxxx Xxxx, is not actively involved in the
People's Liberation(TM) apparel business at any
time during the Term, and CR has not approved a
replacement for said person, CR may terminate
this Agreement upon 30 days' prior written
notice delivered at any time within 60 days'
following the date any of the aforesaid persons
are no longer so actively involved in the
business.
TERMINATION: This Agreement may be terminated prior to
expiration of the Term as follows:
(a) CR may terminate this Agreement for
convenience by delivering written notice of
termination between January 1 and June 30,
2011. Such termination would be effective, at
CR's election, either: i) July 1, 2011, with a
payment from CR to VE of $***(9) as an early
termination fee; or ii) December 31, 2011.
(b) This Agreement shall automatically
terminate thirty (30) days after written notice
by one party to the other party of any material
breach or default by such other party in the
performance of its obligations under this
Agreement, which notice shall include a
detailed description of the breach or default,
unless such breach or default is cured within
such thirty (30)-day period. If a material
breach is timely cured, the notice of breach
shall be withdrawn and this Agreement shall not
terminate. Any termination of this Agreement
resulting from a breach or default by a party
shall not relieve such party of its obligations
which accrued prior to the effective date of
termination.
(c) VE shall have the right to terminate this
Agreement immediately upon written notice to CR
if: (i) CR asserts any ownership or proprietary
interest in any of the Marks or contests VE's
ownership rights therein, or assists any third
party in any of the foregoing activities; (ii)
CR (w) seeks protection under any bankruptcy,
receivership, trust deed, creditors
arrangement, composition or comparable
proceeding, or if any such proceeding is
instituted against CR and not dismissed within
sixty (60) days, (x) is declared insolvent, (y)
makes an assignment for the benefit of
creditors or (z) dissolves, is liquidated,
ceases to do business in the ordinary course or
otherwise terminates its business operations;
(iii) a custodian, trustee or receiver is
appointed for CR and is not discharged within
thirty (30) days; (iv) CR fails to commence the
sale of Clothing included within Products on or
before ***; or (v) CR intentionally makes an
unauthorized material disclosure of
confidential information, trade secrets, or
materials provided to CR by VE.
(d) Notwithstanding the Assignment provisions
set forth below, CR shall have the right to
terminate this Agreement immediately upon
written notice to VE if: (i) a purchaser of all
or substantially all of VE's People's
Liberation(TM) apparel business is a direct
retail competitor of CR (A REPRESENTATIVE BUT
NOT EXHAUSTIVE LISTING OF SUCH COMPETITORS
INCLUDES BUT IS NOT LIMITED TO: ***); (ii) VE
(w) seeks protection under any bankruptcy,
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(9) *** Terms represented by this symbol are considered confidential. These
confidential terms have been omitted pursuant to a Confidential Treatment
Request filed with the SEC and have been filed separately with the SEC.
10
receivership, trust deed, creditors
arrangement, composition or comparable
proceeding, or if any such proceeding is
instituted against VE and not dismissed within
sixty (60) days, (x) is declared insolvent, (y)
makes an assignment for the benefit of
creditors or (z) dissolves, is liquidated,
ceases to do business in the ordinary course or
otherwise terminates its business operations;
(iii) a custodian, trustee or receiver is
appointed for VE and is not discharged within
thirty (30) days; (iv) VE's ownership or
proprietary interest in any of the Marks is
assigned to a third party in a manner
prohibited by this Agreement; (v) VE's
ownership or proprietary interest in any of the
Marks in the United States of America is
validly contested; or (vi) VE intentionally
makes an unauthorized material disclosure of
confidential information, trade secrets, or
materials provided to VE by CR.
EFFECT OF EXPIRATION CR may fill and ship pending orders and
OR TERMINATION: consummate all sales of Products to dispose of
any remaining inventory for a period of six (6)
months after expiration or termination of this
Agreement, other than termination of this
Agreement by VE following CR's uncured breach.
At the end of such six (6) month period (or
immediately upon termination by VE for CR's
uncured breach), any Products remaining in CR's
possession will, at the request of VE, either
be destroyed or have all Marks removed
therefrom.
ASSIGNMENT: This Agreement is personal to the parties.
Neither party may assign its rights or delegate
its performance hereunder, in whole or in part,
without the prior written consent of the other
party, and any attempted assignment by VE or CR
without such prior written consent shall be
void and shall constitute a breach by such
party of its obligations hereunder. Any change
of control of VE or CR shall be deemed an
assignment by VE or CR, as applicable,
requiring prior written consent hereunder.
Notwithstanding the foregoing, (i) VE may
assign this Agreement to any purchaser of all
or substantially all of VE's People's
Liberation(TM) apparel business, and (ii) CR
may assign this Agreement to any purchaser of
all or substantially all of CR's Xxxxxxxxx
Xxxxx(TM) retail store business. Subject to the
foregoing, this Agreement shall be binding upon
and inure to the benefit of the parties hereto
and their respective legal representatives,
successors and assigns.
RIGHT OF FIRST REFUSAL: During the Term, VE shall permit CR the
opportunity to offer to acquire the Marks from
VE prior to VE offering to assign either the
Marks or VE's People's Liberation(TM) apparel
business or both (collectively, "ASSETS") to a
third party. VE shall provide written notice to
CR of its willingness to divest the Assets, or
of a third party's offer to purchase the Assets
from VE and the terms of said offer. CR shall
then have fourteen (14) days from receipt of
said notice to submit a written purchase offer
to VE to acquire the Assets or to match the
third party offer, if applicable. Thereafter VE
and CR shall negotiate in good faith to
finalize the acquisition by CR of the Assets.
If the parties are unable to reach agreement
within 60 days from VE's receipt of CR's offer,
VE may entertain third party offers to acquire
the Assets.
DISCLOSURE AND PRESS Neither party shall issue either formally or
RELEASE: informally a press release or public statement
regarding this Agreement without first
receiving the approval of the other party,
which approval shall not be unreasonably
withheld or delayed. The parties shall use good
faith efforts to issue joint public statements
11
when possible. The parties agree to keep this
Agreement and its contents confidential, and,
except as may be required by applicable law or
any listing agreement with any national
securities exchange or quotation system, will
not issue any press release or public statement
with respect to this Agreement or the
transactions contemplated hereby without the
consent of the other party. The parties shall
mutually agree upon the redaction of any and
all sensitive or confidential information as
permitted by law in the event that it is
necessary to disclose the terms of (or file)
this Agreement, or substantial portions
thereof, in a party's filings with the
Securities and Exchange Commission or to any
national securities exchange or quotation
system.
ENTIRE AGREEMENT: This Agreement constitutes the entire agreement
between the parties with respect to the subject
matter hereof and supersedes all previous
agreements, promises, representations,
understandings, and negotiations, whether
written or oral. No modification, amendment,
supplement to or waiver of this Agreement or
any of its provisions shall be binding upon the
parties hereto unless made in writing and duly
signed by both of the parties to this
Agreement. A waiver by either party of any of
the terms or conditions of this Agreement in
any one instance shall not be deemed a waiver
of such terms or conditions in the future.
APPLICABLE LAW: This Agreement shall be governed by and
construed in accordance with the laws of the
State of California, United States of America,
without regard to principles of conflicts of
laws. Any case, controversy, suit, action, or
proceeding arising out of, in connection with,
or related to, this Agreement shall be brought
in any Federal or State court located in Los
Angeles County and the State of California.
BINDING AGREEMENT: This Agreement shall be binding on, and shall
inure to the benefit of, the parties hereto and
their respective heirs, devisees, successors
and assigns.
FORCE MAJEURE: If any party to this Agreement is delayed in
the performance of any of its obligations under
this Agreement or is prevented from performing
any such obligations due to causes or events
beyond its control, including, without
limitation, acts of God, fire, flood, strike or
other labor problem, injunction or other legal
restraint, present or future law, governmental
order, rule or regulation, then such delay or
nonperformance shall be excused and the time
for performance thereof shall be extended to
include the period of such delay or
non-performance. In any such event, the
non-performing party shall be excused from any
further performance or observance of the
obligation so affected only for so long as such
circumstances prevail and such party continues
to use commercially reasonable efforts to
recommence performance or observance as soon as
reasonably practicable. Should non-performance
continue for beyond 30 consecutive days, the
affected party may terminate this Agreement
upon 30 days' prior written notice.
MISCELLANEOUS: This Agreement may be executed in one or more
counterparts, each of which shall be deemed an
original and all such counterparts together
shall constitute one and the same Agreement.
Scanned or faxed signatures shall have the same
force and effect as if in original ink.
12
The invalidity or unenforceability of any
provision of this Agreement, or the invalidity
or unenforceability of any provision of this
Agreement as applied to a particular occurrence
or circumstance, shall not affect the validity
or enforceability of any of the other
provisions of this Agreement or any other
applications of such provisions, as the case
may be.
The parties hereby covenant and agree to
execute and deliver all such documents, make
such governmental filings, and do or cause to
be done all such acts or things as may
reasonably be necessary to complete and effect
the transactions contemplated hereby.
The language used in this Agreement shall be
deemed to be the language chosen by both
parties to express their mutual intent, and no
rule of strict construction shall be applied
against either party as drafter.
The headings used in this Agreement will be
used only for the purpose of reference and
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 be given any legal effect whatsoever.
Any deadline in this Agreement that should fall
on a Saturday, Sunday, or U.S. federal holiday
shall be deemed to be the earliest business day
thereafter.
This Agreement does not constitute and shall
not be construed as constituting a partnership
or joint venture between VE and CR. Neither CR
nor VE shall have any right to obligate or bind
the other party in any manner whatsoever, and
nothing herein contained shall give or is
intended to give any rights of any kind to any
third persons.
(SIGNATURES ON FOLLOWING PAGE)
13
If this letter meets with your approval, we request that you indicate
such approval by returning the enclosed copy of this letter, appropriately
signed, whereupon it shall become our binding and enforceable agreement. Each
party shall be responsible for payment of its own expenses in connection with
these transactions.
Sincerely,
VERSATILE ENTERTAINMENT, INC.
By:
-----------------------------------
Xxxxx Xxxx
Title: Chief Executive Officer
PEOPLE'S LIBERATION, INC.
By:
-----------------------------------
Xxxxx Xxxx
Chief Executive Officer
AGREED TO AND ACCEPTED AS OF
THE DATE FIRST SET FORTH ABOVE:
XXXXXXXXX XXXXX MERCHANDISING, INC.
By:
-----------------------------------
Name:
Title:
XXXXXXXXX XXXXX HOLDING, INC.
By:
-----------------------------------
Name:
Title:
14
EXHIBIT A
THE MARKS
============================= ====================== ======================== ==========
XXXX U.S. APP. NO. APP. FILING DATE CLASS
----------------------------- ---------------------- ------------------------ ----------
Miscellaneous Design 77/619,060 November 20, 2008 14
[GRAPHIC OMITTED]
----------------------------- ---------------------- ------------------------ ----------
Miscellaneous Design 77/619,068 November 20, 2008 18
[GRAPHIC OMITTED]
----------------------------- ---------------------- ------------------------ ----------
Miscellaneous Design 77/520,632 July 11, 2008 25
[GRAPHIC OMITTED]
----------------------------- ---------------------- ------------------------ ----------
PEOPLE'S LIBERATION & Design 77/619,080 November 20, 2008 14
[GRAPHIC OMITTED]
----------------------------- ---------------------- ------------------------ ----------
PEOPLE'S LIBERATION & Design 77/619,095 November 20, 2008 18
[GRAPHIC OMITTED]
----------------------------- ---------------------- ------------------------ ----------
PEOPLE'S LIBERATION & Design 77/520,628 July 11, 2008 25
[GRAPHIC OMITTED]
----------------------------- ---------------------- ------------------------ ----------
PEOPLE'S LIBERATION 78/786043 January 5, 2006 18
----------------------------- ---------------------- ------------------------ ----------
PEOPLE'S LIBERATION 78/428261 June 1, 2004 25
[Reg. No. 3083655] Reg. April 18, 2006]
============================= ====================== ======================== ==========
EXHIBIT A - CONTINUED
URL
REGISTRANT:
Peoples Liberation
000 X. Xxxxxxxxx Xxxx.
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Xxxxxx Xxxxxx
REGISTERED THROUGH:
XxXxxxx.xxx, Inc. (xxxx://xxx.xxxxxxx.xxx)
DOMAIN NAME:
XXXXXXXXXXXXXXXXX.XXX
Created on: 01-Jun-04
Expires on: 01-Jun-13
Last Updated on: 13-Mar-08
ADMINISTRATIVE CONTACT:
Xxxxxx, Xxxxxx - xxxxxxxxxx@xxxxxxxxxx.xxx
Peoples Liberation
000 X. Xxxxxxxxx Xxxx.
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Xxxxxx Xxxxxx
213.745.2123
TECHNICAL CONTACT:
Xxxxxx, Xxxxx xxxxx.xxxxxx@xxxxxxxxxx-xx.xxx
Visionaire
3900 Xxxxxx Xxxxxxx Xxx
Xxxxx 000
Xxxx Xxxxx, Xxxxxxxxxx 00000
Xxxxxx Xxxxxx
562.216.7160
EXHIBIT B
PRICING MATRIX
RETAIL
PRODUCT CATEGORY PRICE RANGE
------------------------------------- -----------
Denim................................ ***(10)
Knit Tops............................ ***
Thermal and Zip Up Hoodies........... ***
Sweat Bottoms........................ ***
Graphic Tees......................... ***
----------
(10) *** Terms represented by this symbol are considered confidential. These
confidential terms have been omitted pursuant to a Confidential Treatment
Request filed with the SEC and have been filed separately with the SEC.
