EXHIBIT 10.29
AMENDMENT TO THE SPEEDO LICENSES
BY AND BETWEEN
SPEEDO INTERNATIONAL LIMITED
AND
AUTHENTIC FITNESS CORPORATION
AND
AUTHENTIC FITNESS PRODUCTS, INC.
NOVEMBER 25, 2002
PORTIONS OF THIS EXHIBIT MARKED BY AN *** HAVE BEEN OMITTED
PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
AMENDMENT TO THE SPEEDO LICENSES
This agreement amending the Speedo Licenses as hereinafter defined (the
"Amendment") is by and between SPEEDO INTERNATIONAL LIMITED, a company duly
organized under the laws of England and Wales having a principal place of
business and offices at Xxx Xxxxxxxx Xxxxxx, Xxxxxxx Xxxx, Xxxxxx X0 0XX
("Licensor"), and AUTHENTIC FITNESS CORPORATION and AUTHENTIC FITNESS PRODUCTS,
INC., Delaware corporations, having their principal place of business and
offices at 0000 Xxxxxxx Xxxxxxxxx, Xxx Xxxxxxx, Xxxxxxxxxx and 00 Xxxx Xxxxxx,
Xxx Xxxx, Xxx Xxxx 00000, U.S.A., each an indirect subsidiary of The Warnaco
Group, Inc. (collectively, "Licensee").
WHEREAS, predecessors in interest of the parties to this Amendment entered
into two license agreements dated May 10, 1990 (the "1990 Licenses"), copies of
which are attached hereto as Exhibit 1, concerning use of the SPEEDO Trade Xxxx
and related marks in, respectively, (a) the United States and Canada ("US 1990
License"), and (b) Mexico and the Caribbean Islands, as such territories are
defined therein ("Mexico 1990 License");
WHEREAS, the parties to the 1990 Licenses have entered into a number of
subsequent agreements relating to the 1990 Licenses, including the assignment
documents copies of which are attached hereto as Exhibit 2; the May 8, 1992
agreement (the "Name Agreement" effective as of April 29, 1992) attached as
Exhibit 3; the letter agreement dated December 7, 1995 attached as Exhibit 4;
the Addendum dated December 15, 1995 attached as Exhibit 5; and the Memorandum
of Understanding Regarding the Calculation of Royalties for Licensed Products
Sold By The Speedo Authentic Fitness Retail Stores dated December 15, 1995
attached as Exhibit 6 (the 1990 Licenses and the other agreements listed above
are referred to collectively herein as the "Speedo Licenses").
WHEREAS, Licensor is the current licensor under the Speedo Licenses, and
Licensee is the current licensee under the Speedo Licenses;
WHEREAS, on September 14, 2000, Licensor filed Civil Action No. 00-6931 in
the United States District Court for the Southern District of New York against
Licensee and certain affiliated entities claiming, among other things, that
Licensee had breached the Speedo Licenses (the "Civil Action");
WHEREAS, as a condition to and pursuant to the Settlement Agreement entered
into simultaneously herewith between Speedo International Limited, on the one
hand, and Authentic Fitness Corporation, Authentic Fitness Products, Inc., The
Warnaco Group, Inc., and Warnaco Inc., on the other hand, pursuant to which
Licensor's claims in the Civil Action are being settled (the "Settlement
Agreement"), the parties wish to make certain specified amendments to the Speedo
Licenses and clarify certain provisions thereof;
NOW, THEREFORE, for good and valuable consideration, the receipt of which
is hereby acknowledged, the parties agree as follows:
1. Amendment.
The Speedo Licenses (as previously amended), are hereby amended as set
forth below. The effective date of this Amendment (the "Effective Date") shall
be the "effective date" of the Settlement Agreement (as defined therein).
2. Parties.
The parties acknowledge that, notwithstanding anything to the contrary
contained in the "Whereas" section on pages 1-4 of the 1990 Licenses or
elsewhere in the Speedo Licenses, the current owner of the Licensor's rights
under the Speedo Licenses is Licensor, and the current owner of the Licensee's
rights under the Speedo Licenses is Licensee.
3. Speedo Group.
The definition of "Speedo Group" at Clause VI of the 1990 Licenses is
amended to read, "Speedo Group' means Speedo International Limited and Speedo
Holdings, B. V. and their affiliates as that term is defined in Clause I of the
Addendum dated 15 December 1995."
4. Royalties.
Clause 4(a) of the 1990 Licenses is amended to add the following:
"For the purpose of clarification, the parties acknowledge that the royalty
rates pursuant to paragraph 4(a) were increased on July 1, 1996 and are
currently as follows:
(i) ***
(ii) ***
(iii) ***
Effective July 1, 2003, and continuing thereafter, the percentage royalty rate
based on Net Sales shall be adjusted and calculated as follows:
(i) ***
(ii) ***
(iii) ***
The parties acknowledge that the sales levels referred to above and in Clause
4(a) of the 1990 Licenses will be ***.
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5. Accounting Cooperation.
In the mutual interest of accurate royalty accounting, the parties agree to
ensure that within 90 days of the Effective Date the Licensor's and Licensee's
royalty accounting personnel counterparts shall meet at Licensee's premises for
the purpose of Licensor better understanding the methodology of Licensee's
compilation and computation of the royalty accounts pursuant to the Speedo
Licenses including the calculation of royalties for Licensed Products sold in
the Retail Stores. Licensor's and Licensee's royalty accounting personnel shall
thereafter meet every 12 months or at such other time interval as the parties
shall mutually agree in writing. This is without limiting the obligations in
Clause 8 of the 1990 Licenses -- "Books and Records."
6. Audit.
Clause 8 of the 1990 Licenses is amended to add the following:
"In the event that an inspection and audit of Licensee's books and records
under this provision results in a determination (as agreed upon by the parties
or as provided for under Clause 31 of the 1990 Licenses or judicially) of an
underpayment of four percent (4%) or more of total payments made by Licensee for
the period covered by the audit or inspection, Licensee shall promptly upon
receipt of written notice reimburse Licensor for the reasonable documented cost
of such inspection and audit."
7. Clarification on Approvals.
a. By way of clarification of Clause 11(d), (e), and (f) of the 1990
Licenses, all legends indicating that the Trade Marks (including unregistered
trade marks) are the property of the Licensor and manufactured under license
from the Licensor shall be stated visibly and prominently so as to identify that
the Licensor is the proprietary owner of such Trade Marks.
b. With respect to Clause 11(h)(A) of the 1990 Licenses, all materials
(including without limiting the generality of the foregoing, any label,
brochure, packaging, business card, letterhead, advertisement, point-of-sale and
publicity materials, telephone or other directory entry, sign, decal and
illumination ("Materials")) which are used or proposed to be used by the
Licensee containing or displaying any Trade Marks shall be submitted to the
Licensor for its approval in accordance with Clause 8 below.
c. With respect to Clause 16 of the 1990 Licenses, not less than once every
six (6) months, and where reasonably possible prior to manufacture, Licensee
shall provide to Licensor CAD or photographs of similarly high quality of each
Spring/Summer and Autumn/Winter ranges of Licensed Products together with
representative samples of such Licensed Products which the Licensee intends to
produce for such ranges so that Licensor may give reasonable direction to
Licensee as provided for by Clause 16 of the 1990 Licenses, in accordance with
Clause 8 below.
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d. Clauses b and c above shall take effect in relation to the range of
Licensed Products (and related Materials) which are compiled between 2003 and
2005 for showing in June 2005 (intended for sale until June 2005) except that:
(i) swim wear, accessories and other products produced for and made
available by Licensee to athletes, swimmers and other persons in connection with
the 2004 Olympics in Athens (to the extent permitted by a national or Olympic
governing authority) must conform with the Brand Guidelines (in relation to this
clause d (i) the time periods provided for compliance with the Brand Guidelines,
in clause 16 below, shall not apply); and
(ii) the Licensee agrees to consult in good faith with Licensor in relation
to the Licensed Products and Materials being developed for showing by Licensee
in June 2003 and June 2004.
8. Housekeeping Clause.
Subject to the provisions of Clause 7 d above, the Licensee shall ensure
that all Materials or samples of Licensed Products which require approval (where
approvals are provided for or required) or consultation (where consultation is
provided for or required) or reasonable direction (where reasonable direction
may be given) by or with the Licensor in accordance with the Speedo Licenses and
this Amendment are sent by Federal Express or another courier service that
provides a similar overnight service, such that receipt is signed for by the
Licensor, and:
a. upon receipt of and within five (5) days of receipt of such samples or
Materials, the Licensor shall acknowledge receipt by e-mail or fax to
the Licensee;
b. in the event that the Licensor does not propose any changes to such
samples within twenty one (21) days or to such Materials within
fourteen (14) days of receipt by the Licensee of such acknowledgement,
the samples or Materials shall be deemed satisfactory for use by the
Licensee; and
c. the Licensee shall comply with any direction reasonably made by the
Licensor relating to the improvement in the quality, material or
workmanship of the samples or content, presentation or otherwise of
the Materials (in accordance with the provisions of the Speedo
Licenses).
9. Intellectual Property.
Without limitation to Clause 14A and Clause 15 of the 1990 Licenses it is
agreed that:
In the event that the Licensee, without prior written authorization
from Licensor, either directly or indirectly, registers or otherwise
acquires or asserts any interest or ownership in the Licensor's Trade
Marks, or other
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intellectual property belonging to Licensor in connection with the Speedo
Licenses (collectively, "Licensor's Intellectual Property"), Licensee shall
be deemed to hold such Licensor's Intellectual Property in constructive
trust for the benefit of the Licensor together with any goodwill associated
therewith. Without limitation to any other remedies to which Licensor may
be entitled, Licensee must assign any such Licensor's Intellectual Property
to Licensor without charge or commercial gain and shall do so within seven
(7) days of receipt of notice from Licensor to do so, and shall pay all
costs incurred by Licensor (including in connection with initial filings in
respect of such transfer), subject to Licensee's continuing right to use
such Licensor's Intellectual Property solely to the extent authorized under
the Speedo Licenses.
Licensee shall at no time directly or indirectly hold itself out or
otherwise portray itself as the owner of the Trade Marks on, without
limitation, product, packaging and/or advertising nor in any public forum
including without limitation in any press or public statements or in any
court or Trade Xxxx Office proceedings. Licensee may continue to identify
itself as the exclusive licensee of the Trade Marks in the Licensed
Territory.
10. Product Improvements.
By way of further clarification to Clause 12.1:
Any intellectual property concerning improvements or inventions which
it might develop in relation to the Licensed Products or their manufacture
(including without limitation new designs, materials or patentable
technology) shall automatically be deemed the intellectual property of the
Licensor, and may be shared with such of its other licensees which comply
with Clause 12.1 of the 1990 Licenses, subject to Licensee's continued
right to use such intellectual property to the extent authorized by the
Speedo Licenses.
Nothing in the Speedo Licenses shall prevent the Licensor from
utilizing factories in the Territory for the manufacture of any product for
use or shipment outside the Licensed Territory and Licensor shall enjoy
such right without any interference, charge or permission from the
Licensee.
11. Retail Stores.
Notwithstanding anything to the contrary contained in the December 15, 1995
Addendum, including Clause 2.2(16B(c)(ii) and (iii)) thereof, Licensee may offer
for sale and sell apparel, accessories and other products that are not Licensed
Products in the Retail Stores doing business as SPEEDO AUTHENTIC FITNESS in
accordance with applicable laws and provided that:
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a. notwithstanding the foregoing, Licensee shall not offer for sale or
sell any swim wear not sold under the Trade Marks in the Retail Stores
except that Licensee shall be permitted to sell in the Retail Stores
fashion swim wear manufactured and sold under the Xxxxx Lauren family
of trademarks or the Xxxx Xxxx trademarks as such trademarks exist as
of the date of this Amendment. Further the parties agree that Licensee
with the written consent of Licensor can add other fashion swimwear
for sale in the Retail Stores from time to time;
b. nothing herein permits Licensee to sell any products bearing or
identified by the xxxx AUTHENTIC FITNESS, and all use of that name or
xxxx continues to be subject to the provisions of the 1992 Name
Agreement and any other applicable provisions of the Speedo Licenses;
and
c. if the level of merchandise bearing the Trade Marks sold at all such
Retail Stores does not equal or exceed fifty percent (50%) of the net
sales (i.e. for purposes of this clause 11(c) defined to mean gross
sales less all returns actually accepted and discounts actually given)
in such stores for any twelve (12) month period, Licensor shall have
the right to require Licensee, upon written notice and following a
reasonable transition not to exceed six (6) months, to change the name
of such Retail Stores to eliminate "SPEEDO" as part of their name,
including without limitation, removal of "SPEEDO" on all signage,
advertising and promotional materials (or as the parties may otherwise
agree).
12. Service Xxxx.
With respect to clause 2.2 (16B) of the 1995 Addendum:
Licensee has agreed that all uses of the Service Xxxx for the Retail Stores
shall reflect creditably on Licensor. Licensee hereby agrees that the use of the
Service Xxxx on or in the Retail Stores and any use of the Trade Marks on
products sold in the Retail Stores, in any point-of-sale or other materials
bearing the Trade Marks shall be consistent with the high quality, character and
image of the Trade Marks.
13. Sub-Licensees.
The Licensee acknowledges the importance to Licensor of a consistent
worldwide brand image with respect to the Trade Marks, and therefore, wherever
possible or appropriate, the value of having one global licensee or sublicensee
for products or accessories which the parties do not wish to produce and/or
distribute themselves. In the event that this is impossible or impractical or
Licensee otherwise makes a commercial determination to appoint a sub-licensee in
the Licensed Territory in accordance with Clause 20(a)(i) of the 1990 License
Agreements, it is agreed as follows:
a. At the earliest opportunity the Licensee will notify the Licensor in
writing and will then consult in good faith with the Licensor
concerning the nature of the proposed sub-license and the identity of
the sub-licensee;
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b. At least ten (10) business days prior to executing a sub-license
agreement, the Licensee shall submit the agreement to the Licensor for
review (but for the avoidance of doubt such agreement shall not be
subject to the approval of the Licensor);
c. Within five (5) business days of receipt of the agreement, the
Licensor shall notify the Licensee in writing as to whether it
requires the proposed sub-licensee to enter into a written agreement
pursuant to Clause 20(a)(iii) (the "Sub-Licensee Quality Agreement");
and
d. On receipt of notification of such requirement by the Licensee, the
Licensee shall procure that the proposed sub-licensee shall sign the
Sub-Licensee Quality Agreement within a reasonable period thereafter
to be entered into with the Licensor.
Further, any sub-license agreement executed in accordance with Clause 20(a)(1)
of the 1990 Licenses shall not be perpetual and shall be for an initial term not
to exceed twenty (20) years, and at or near the expiration of such term Licensee
shall be entitled to enter into further extensions with such sub-licensee
provided however that no such subsequent extension shall exceed twenty (20)
years.
14. Distribution.
In order to enhance the image and value of the Trade Marks, the Licensor
has developed and is continuing to develop a distribution policy and criteria.
Such policy provides:
a. any stores which do not meet the requirements of the criteria whether
due to the presentation, character, quality or otherwise shall not be
supplied with products bearing any of the SPEEDO marks;
b. product will be segmented so that high end stores are supplied with
high end product and other stores are supplied with core product
consistent with applicable laws and in accordance with the
above-referenced criteria;
Licensee hereby acknowledges the value of enhancing the image and value of
the Trade Marks and the SPEEDO brand and will consult with the Licensor, in good
faith, concerning distribution policies and criteria.
15. Anti-Counterfeit.
Both parties acknowledge the importance of mutual co-operation in order to
guard against counterfeiting of products under the Trade Marks. It is therefore
agreed as follows:
a. It is acknowledged that Customs authorities in stopping counterfeit
goods frequently allow a short period of time for the brand owner to
confirm the goods are counterfeit. Therefore, where it is necessary
for either party to
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identify whether any product identified or stopped by Customs, or any
other person, is a counterfeit or genuine product of the other party
(or otherwise), the relevant party shall:
(1) send a sample of such product to the other (the "Receiving
Party") by Federal Express or another courier providing a similar
overnight service;
(2) within two (2) business days of receipt, the Receiving Party
shall confirm whether to the best of its knowledge such product
is a genuine or counterfeit product (or otherwise); and
(3) the Receiving Party shall provide all reasonable assistance to
the other party in identifying the source of any counterfeit or
parallel import products.
b. Each party shall use best efforts in guarding against the
counterfeiting of its products under the Trade Marks including in
providing all reasonable assistance requested by the other in
preventing the import of grey market or parallel import products.
Further, it is acknowledged that the Licensor uses anti-counterfeit
technology to assist in worldwide protection of the brand and is in
the course of implementing security labeling in its products. The
Licensee agrees to consult with the Licensor in good faith regarding
the implementation of security labels in its product sold under the
Speedo Licenses and the Licensor agrees to provide all reasonable
assistance and advice concerning the same. To assist in this process,
the head of Licensor's Corporate Security shall within ninety (90)
days of the Effective Date meet with Licensee's counterpart or other
appropriate personnel for this purpose. Licensee will retain the
ultimate right to make decisions with respect to any proposed use or
implementation of security labeling by Licensee.
16. Brand Guidelines.
In order to ensure consistent representation of the Trade Marks by all the
Licensor's licensees the Licensor produces Brand Guidelines which include
guidance as to how the type face and color of the Trade Marks should be
presented. Without limitation to Licensee's existing obligations under the
Speedo Licenses, Licensee agrees to comply with such Brand Guidelines in its use
of the Trade Marks unless the Licensor agrees otherwise in writing. The Licensee
shall have a period of twelve (12) months from the Effective Date to fully
comply with this provision. Licensee may, however, market and sell any Licensed
Products and distribute related Materials bearing the Trade Marks (where such
use of the Trade Marks is not in conformity with the Brand Guidelines)
manufactured or caused to be manufactured prior to the expiration of such period
provided that such sales do not occur following the date which is thirty six
(36) months from the Effective Date without Licensor's prior written consent and
any surplus
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Licensed Product not in compliance with this provision in existence following
the expiration of the aforementioned period shall be immediately destroyed by
Licensee.
17. Notices.
The persons to whom notices are to be given pursuant to Clause 28 of the
1990 Agreements are as follows, subject to change by written notice:
(i) if to the Licensor:
Speedo International Limited
c/o The Pentland Group
Xxxxxxx Xxxx
Xxxxxx X0 0XX, XX
Facsimile: 44 208 343 4876
E-mail address: xxxxxx@xxxxxxxx.xxx
Attention: General Counsel
with a copy to:
Xxxxx X. Xxxxx, Esq.
Xxxxx X. Xxxxx, Esq.
Xxxxx Xxxxxxx Xxxxxxx & Xxxxx, P.C.
000 Xxxxxx Xxxxxxx Xxxxx
Xxx Xxxx, XX 00000
Facsimile: (000) 000-0000
E-mail address: xxxxxx@xxxx.xxx
E-mail address: xxxxxx@xxxx.xxx
(ii) If to the Licensee:
The Warnaco Group, Inc.
00 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: General Counsel
Facsimile: (000) 000-0000
E-mail address: xxxxxxxxxxxx@xxxxxxx.xxx
with a copy to:
Xxxxx Xxxx Ash, Esq.
Xxxxxx Xxxxxx Xxxxx Xxxxxxxx
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Facsimile: (000) 000-0000
E-mail address: xxxxx.xxx@xxxx.xxx
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18. Tied Material Breach.
Clause 25 of the 1990 Licenses is amended so that where there is an uncured
material breach of the US 1990 License, then the Mexico 1990 License shall be
deemed to have been materially breached.
19. 1992 Name Agreement.
It is acknowledged that nothing herein shall affect any continued operation
of provisions of the 1992 Name Agreement following any termination or conclusion
of the Speedo Licenses to the extent provided for in such 1992 Name Agreement in
accordance with its terms.
20. Education.
In house counsel for Licensor shall within forty-five (45) days of the
Effective Date produce a Power Point presentation in a form agreed with in house
counsel for Licensee for the purpose of ensuring that the relevant Licensor and
Licensee personnel are fully informed of the obligations and duties both have
under the Speedo Licenses including this Amendment. It is acknowledged that such
Power Point presentation should be given to both relevant Licensor and Licensee
personnel simultaneously, at the same location, within ninety (90) days of the
date of the Effective Date. It is further acknowledged that if such a meeting
proves impractical to hold within ninety (90) days of the Effective Date,
separate presentations shall be given to relevant personnel of Licensor and
Licensee within the ninety (90) day period provided that relevant key personnel
are present from Licensee at the Licensor presentation and vice versa.
21. Choice of Law.
Notwithstanding anything to the contrary contained in Clause 31.2 of the
1990 Licenses or elsewhere in the Speedo Licenses, the Speedo Licenses
(including this Amendment) shall be governed by and construed in accordance with
the laws of the State of New York applicable to contracts entered into and
performed fully therein, without reference to any choice of law, and the
substantive laws applicable to trade marks, copyrights and patents in each
country in the Territory, as applicable.
22. Confidentiality.
The parties agree to maintain as confidential the terms and conditions of
the Speedo Licenses (including this Amendment) and shall not disclose the
contents of the same, or information or records disclosing in any way the
content of their negotiations, to anyone unless such disclosure is (i) lawfully
required by any governmental agency; (ii) produced in response to a discovery
request in a civil litigation or from a governmental agency or official (iii)
otherwise required to be disclosed by law, including legally required financial
reporting, or to the extent required by any internationally recognized
securities exchange (including the NYSE and the NASDAQ); (iv) necessary in any
legal proceeding in order to enforce any provision of the Speedo Licenses; (v)
to counsel of record in the Civil Action; or (vi) required to obtain the
Bankruptcy Court Approval
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Order. If it shall become necessary to make a disclosure under any of the
circumstances identified in subsections (ii), (iv) or (vi) above, the party
proposing such disclosure shall advise the other party in writing at least ten
(10) days prior to such anticipated disclosure, and such time would enable the
other party to take any steps on its own behalf to address or prevent such
disclosure and the other party will cooperate with reasonable requests relating
thereto (e.g. seeking a protective order in connection with any disclosure
required and/or redacting royalty and other sensitive terms). The terms and
conditions of the Speedo Licenses and Amendments may not be disclosed, under any
circumstances, to any vendors, customers, competitors or the press.
23. Headings.
The headings herein are solely for the convenience of the parties and do
not constitute a substantive part of this Amendment.
SIGNATURE PAGE FOLLOWS
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IN WITNESS WHEREOF, the parties have executed this Amendment to Speedo
Licenses as of the Effective Date:
SPEEDO INTERNATIONAL LIMITED AUTHENTIC FITNESS CORPORATION
By: /s/ Xxxxxx X. Xxxxx By: /s/ Xxxxxxx X. Xxxxxxxxxxx
------------------------------ ----------------------------------
Name: Xxxxxx X. Xxxxx Name: Xxxxxxx X. Xxxxxxxxxxx
---------------------------- --------------------------------
Title: Director Title: President
--------------------------- -------------------------------
Date: November 25, 2002 Date: November 25, 2002
---------------------------- --------------------------------
AUTHENTIC FITNESS PRODUCTS, INC.
By: /s/ Xxxxxxx X. Xxxxxxxxxxx
----------------------------------
Name: Xxxxxxx X. Xxxxxxxxxxx
--------------------------------
Title: President
-------------------------------
Date: November 25, 2002
--------------------------------
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