Exhibit 10.14
LICENSE AGREEMENT
Dated June 2, 1995
Between
Revlon Consumer Products Corporation
("Licensor")
and
Signature Eyewear, Inc.
("Licensee")
Certain portions of this agreement have been omitted and filed separately
with the Securities and Exchange Commission pursuant to a request for an order
granting confidential treatment pursuant to Rule 406 of the General Rules and
Regulations under the Securities Act of 1933.
EXHIBIT 10.14
LICENSE AGREEMENT
THIS AGREEMENT, made and entered into as of June 2, 1995 by and
between REVLON CONSUMER PRODUCTS CORPORATION, a Delaware corporation, and/or its
designated affiliate, with its principal offices at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ (hereinafter referred to as "Licensor"), and SIGNATURE
EYEWEAR, INC., a California corporation, with its principal offices at ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ (hereinafter referred to as "Licensee").
WITNESSETH:
WHEREAS Licensee desires to obtain a license to use the Licensed ▇▇▇▇
(as defined below) in connection with the manufacture, merchandising, promotion,
advertising, sale and distribution of Merchandise (as defined below), and
Licensor is willing to grant such license subject to all the terms of this
Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants hereinafter set forth, Licensor and Licensee agree as follows:
1. Definitions
-----------
The following definitions shall be applicable
throughout this Agreement:
A. The term "Licensed ▇▇▇▇" shall mean the trademark "JEAN NATE," in
the form set forth on Schedule 1A, and any simulations or variations thereof,
all in the form approved in writing by Licensor for use by Licensee hereunder.
B. The term "Licensed Merchandise" shall mean Merchandise (as that
term is defined in Section 1.C below) that is approved by Licensor in accordance
with Section 4 hereof and sold or promoted by Licensee under the Licensed ▇▇▇▇.
C. The term "Merchandise" shall mean those categories of goods listed
in Exhibit A attached hereto.
D. The term "Prototype" shall mean any and all styles or samples of
Licensed Merchandise together with the respective Packaging (as hereinafter
defined), except that the "Final Prototype" shall mean the actual final sample
of each style of Licensed Merchandise with the respective Packaging which has
been approved by Licensor and from which the first commercial production thereof
will be made.
E. The term "Territory" shall mean the United States of America and
Canada, and any other countries of the world which may become part of the
Territory pursuant to Section 2G of this Agreement.
F. The term "Net Sales" shall mean the total invoiced price of the
Licensed Merchandise shipped by Licensee to its customers other than Licensor
and its Affiliates (" Gross
Sales") less (i) federal, state and local sales, use and excise taxes, freight
and insurance (if separately stated), customary trade discounts and allowances
if actually granted including co-op advertising allowances to the extent such
allowances are directly deducted off invoice (which total deduction for such co-
op advertising allowances shall not exceed CONFIDENTIAL INFORMATION OMITTED AND
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION% of Gross Sales),
(ii) actual returns, and (iii) all Specified Bad Debts. The term "Specified Bad
Debt" shall mean a debt in an amount in excess of $CONFIDENTIAL INFORMATION
OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION owed to
Licensee by one of its customers and/or such customer's Affiliates arising from
the sale of Licensed Merchandise to such customer and its Affiliates and with
respect to which such customer and/or its Affiliates shall take or become
subject to any of the actions or proceedings described in Section 12 D of this
Agreement, as if such customer and its Affiliates had been described therein as
opposed to a party to this Agreement. If any Specified Bad Debt is subtracted
from Net Sales and thereafter Licensee recovers all or some portion of such
Specified Bad Debt, the amount of such recovery shall be added to Net Sales
during the quarter in which such recovery is received.
G. "Affiliate" of any Person shall mean a Person that, directly or
indirectly through one or more intermediaries, controls, is controlled by, or is
under common control with such Person. "Control" means the possession, direct or
indirect, of the power to cause the direction of the management and policies of
a Person, whether through the ownership of voting securities, by contract or
otherwise.
H. "Acquiror" means a Person or a group of persons acting in concert
but excluding a stockholder of Licensee as of the date of this Agreement, any
Affiliate of such stockholder, or any member of the immediate family of such
stockholder.
I. "Change of Control" shall be deemed to occur if: (i) an Acquiror
acquires in excess of 50% of the outstanding voting securities of Licensee (or
any successor corporation or entity by reason of merger, consolidation or other
reorganization of Licensee); or (ii) Licensee sells, transfers and/or assigns
all or substantially all of its assets involved in the Exploitation of eyeglass
frames (including frames for sunglasses) and related accessories; or (iii) the
transfer and assignment of Licensee's rights under this Agreement to a third
party as part of a foreclosure of a security interest in such rights.
J. "Change of Control Notice" shall mean a written notice to Licensor
of a proposed or completed Change of Control.
K. "Exploit" shall mean manufacture, advertise, merchandise, promote,
publicize, sell, use, market and distribute.
L. "Proper Purpose" shall mean: (i) the Acquiror is a competitor of
Licensor or any Affiliate of Licensor; or (ii) Licensor has a reasonable basis
to believe that the Acquiror lacks the capability adequately to market or
distribute the Licensed Merchandise or otherwise to maintain the prestige and
reputation of the Licensed ▇▇▇▇, based on past or current activities of the
Acquiror.
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M. The term "Term" shall mean the duration of this Agreement, as set
forth in Section 3 and 12 below, and shall include any renewal period as
described therein.
N. "Person" shall mean individual, corporation, partnership, limited
liability company, trust or other entity.
2. License Grant
-------------
A. Licensor hereby grants to Licensee an exclusive license the
"License" throughout the world during the Term to use the Licensed ▇▇▇▇ as a
trademark in connection with the Exploitation of Licensed Merchandise, subject
to all the terms and conditions of this Agreement; provided, however, that
Licensee may Exploit the License during the Term only in the Territory.
B. Licensee accepts said grant, and agrees to use its reasonable best
efforts to Exploit the License granted herein including, without limitation,
maintaining a sales force sufficient to provide effective distribution of the
Licensed Merchandise, and complying with Licensor's advertising, marketing,
merchandising, sales and anti-counterfeiting programs; provided, however, that
"reasonable best efforts" shall not require Licensee to spend more in connection
with advertising and promotion than required pursuant to Section 5C of this
Agreement and provided further, however, that Licensor's sole remedy with
respect to the failure of Licensee to achieve any specified sales levels shall
be to terminate this Agreement in accordance with Section 12A of this Agreement
for failure to achieve minimum Net Sales. Licensee shall at all times act in a
manner consistent with good business practices and the terms and conditions of
this Agreement. Licensee further agrees not to Exploit either directly or by or
through any of its Affiliates or by or through any officer, director or
shareholder of Licensee or any of its Affiliates, any Merchandise under any
other trademark or brand name primarily known as a cosmetic, toiletry, fragrance
or haircare trademark or brandname unless such trademark or brandname is one
licensed to Licensee by Licensor pursuant to a written agreement.
C. Licensee may use the Licensed ▇▇▇▇ only in connection with the
Exploitation of Licensed Merchandise. No license is granted hereunder to Exploit
the Licensed ▇▇▇▇ for any purpose other than upon or in connection with the
Licensed Merchandise. No license is granted hereunder to Exploit the Licensed
Merchandise in combination sales with other merchandise or as premiums,
promotional items or giveaways, or for disposal under or in connection with any
similar methods of merchandising except as approved in advance by Licensor on a
case by case basis.
D. Licensor reserves all rights at any time during the Term and
thereafter to use and grant to third parties the right to use the Licensed ▇▇▇▇
in any geographical area on products other than Merchandise. During the Term,
Licensor shall not grant to any third party the right to use the Licensed ▇▇▇▇
in connection with Exploitation of Merchandise. Without limiting the generality
of the foregoing, Licensor agrees not to grant to any third party or parties the
right to use the Licensed ▇▇▇▇ in connection with the Exploitation of
Merchandise in any country not included within the Territory. Licensor has
advised Licensee that because of the decentralized nature of the operations of
Licensor, the potential exists that promotional
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Merchandise including the Licensed ▇▇▇▇ ▇▇▇ be sold by Licensor during the Term
in conjunction with a promotion of Licensor's regular product line under the
Licensed ▇▇▇▇. Licensee agrees that such sales shall not be deemed a violation
of this Agreement provided that: (i) Licensor's Licensing Division has made
reasonable efforts in advance to advise appropriate individuals within Licensor
that during the Term Licensee has the exclusive right to Exploit the Licensed
▇▇▇▇ in connection with the Merchandise; (ii) such sale of Merchandise with the
Licensed ▇▇▇▇ is part of a local promotion of Licensor's regular product line
and has not been authorized or approved by Licensor's Licensing Division; and
(iii) upon Licensor's Licensing Division becoming aware of such program Licensor
uses its best efforts to terminate such program, or to narrow the scope of the
program to minimize the amount of Merchandise containing the Licensed ▇▇▇▇ being
distributed in connection with the program.
E. Nothing herein is intended to restrict or otherwise prohibit
Licensor from manufacturing, merchandising, promoting, advertising, selling,
sublicensing or distributing products of the type or description identified as
Merchandise hereunder under any trademark or trade name other than the Licensed
▇▇▇▇, and Licensor reserves all rights at any time during the Term and
thereafter to do so.
F. Licensee may not sell, assign, transfer or sublicense ("Transfer")
to an Acquiror any of the rights granted to Licensee under this Agreement except
with the prior written approval of Licensor, which approval may be withheld only
for a Proper Purpose. For purposes of this Section 2F, the term "Transfer" shall
not be deemed to include: (i) the sale, assignment or transfer by Licensee of
all of its rights under this Agreement as part of the sale, transfer and/or
assignment of all or substantially all of the assets of Licensee involved in the
Exploitation of eyeglass frames (including frames for sunglasses) and related
accessories; (ii) assignments or transfers by operation of law as a result of a
merger, consolidation or other reorganization of Licensee or the change in the
operating form of Licensee (such as a change from corporation to partnership or
limit liability company); and (iii) the grant of a security interest in its
rights under this Agreement in connection with obtaining a loan or other
financing. In such cases, Licensor may terminate this Agreement for a Proper
Purpose pursuant to Section 12.E hereof.
G. Licensee may from time to time request in writing to expand the
Territory to include an additional country (the "Additional Country"). Upon
receipt of any such written request, Licensor shall promptly determine and
advise Licensee whether or not the grant of the right to Exploit the Licensed
Merchandise in the Additional Country would violate the rights of any Person
(other than Persons claiming its rights through Licensor). If Licensor
determines that such grant would not violate any such Person's rights: (i)
Licensee shall prepare and provide to Licensor a marketing plan with respect to
the distribution of the License Merchandise in the Additional Country and (ii)
Licensor shall take all necessary actions as may be required to permit Licensee
to Exploit the Licensed ▇▇▇▇ in connection with Merchandise in such Additional
Country and to prohibit other Persons from Exploiting the Licensed ▇▇▇▇ in
connection with Merchandise in the Additional Territory, including, without
limitation, the registration of the Licensed ▇▇▇▇ in the Additional Country
(such latter actions to be referred to as "Protective Actions"); provided,
however, the Licensor shall not be obligated to institute litigation or
opposition proceedings or to purchase the rights of any third party which
purports to have the lawful right to prevent the Licensee from Exploiting the
Licensed ▇▇▇▇ in connection with the
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Merchandise in the Additional Country. Licensor shall provide its written
comments on, or its approval of, the marketing plan for any Additional Country
within 20 days of receipt; the failure to provide written comments within 20
days shall be deemed to be approval of the marketing plan. If Licensor does not
approve the marketing plan, Licensee may modify the marketing plan in response
to Licensor's comments, and the parties shall attempt to develop a marketing
plan mutually satisfactory to Licensor and Licensee. Upon approval of a
marketing plan, and upon notice from Licensor to Licensee that all Protective
Actions have been taken, the Additional Country shall be included in the
Territory hereof, and the terms and conditions of this Agreement shall forthwith
become applicable to Licensee's use of the Licensed ▇▇▇▇ in such Country.
3. Term
----
A. This Agreement shall become effective as of the date first above
written, and shall terminate on September 30, 1997 (the "Initial Term") unless
terminated prior thereto in accordance with he terms and conditions hereof.
B. Licensee shall have the option to renew this Agreement for an
additional three (3) year period (the "First Renewal Term") by giving Licensor
written notice at least ninety (90) days prior to the end of the Initial Term;
provided that Licensee is in compliance in all material respects with all
material terms and conditions of this Agreement including without limitation the
Minimum Net Sales requirements for the two (2) preceding License Years.
C. If Licensee elects to renew this Agreement for the First Renewal
Term pursuant to Section 3.B, Licensee shall have the option to renew this
Agreement for an additional four (4) year period (the "Second Renewal Term") by
giving Licensor written notice at least ninety (90) days prior to the end of the
First Renewal Term; provided that Licensee is in compliance in all material
respects with all material terms and conditions of this Agreement including
without limitation the Minimum Net Sales requirements for the prior two (2)
preceding License Years.
D. If Licensee elects to renew this Agreement for the First Renewal
Term or the Second Renewal Term, such renewal shall be deemed effective unless
Licensor gives written notice that such renewal is not effective because
Licensee shall not be in compliance in all material respects with all material
terms and conditions of this Agreement, which notice must be given within 60
days of receipt of the renewal notice and must specify the nature of such non-
compliance.
4. Licensed Merchandise and Quality Control
----------------------------------------
A. Licensee agrees that Licensed Merchandise will be designed,
manufactured, advertised, promoted, publicized, distributed and sold only in a
manner which is consistent with industry safety standards and with the quality
and design commensurate with the prestige and reputation of the Licensed ▇▇▇▇.
B. Licensor shall provide reasonable assistance to Licensee
concerning, inter alia, the design direction and quality guidelines for the
----- ----
Licensed Merchandise, provided that
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Licensor's travel expenses for on-site consultation requested by Licensee shall
be at the expense of Licensee.
C. Licensee must obtain the prior written approval of Licensor for
all designs, specifications, colors, materials, contract manufacturers and
quality standards of all Merchandise and components thereof intended to be sold
as Licensed Merchandise, including any labels, instructions, packaging,
containers and displays (said labels, instructions, packaging, containers and
displays hereinafter collectively "Packaging") intended to be utilized in
connection with the Licensed Merchandise. With respect to obtaining of such
approvals by Licensee, the following shall apply:
(i) As soon as practicable following the execution of this Agreement,
Licensee shall submit to Licensor for its approval a marketing
plan for the Licensed Merchandise, including a market overview
and analysis, projected positioning, distribution, merchandising,
packaging and suggested retail pricing of the Licensed
Merchandise, and such other related information as Licensor may
request. Licensor shall provide its written comments on, or its
approval of, the marketing plan within twenty (20) days of
receipt, and Licensee shall resubmit the marketing plan in
response to any comments of Licensor.
(ii) In connection with the submission of the marketing plan
contemplated by Section 4C(i), Licensee shall provide Licensor
for its reasonable approval with a list of contract manufacturers
initially proposed for production of the Licensed Merchandise and
Packaging, and thereafter from time to time during the Term any
additional manufacturers which might be used as well as
information regarding such manufacturers as reasonably requested
by Licensor. Licensor shall notify Licensee in writing of any
objections to such manufacturers within ten (10) days.
(iii) With respect to the initial line of Merchandise proposed by
Licensee to be sold as Licensed Merchandise, and thereafter from
time to time during the Term with respect to any additional items
of Merchandise proposed by Licensee to be sold as Licensed
Merchandise, Licensee may submit to Licensor design proposals of
the Licensed Merchandise and Packaging, including specifications
and explanations of any applicable governmental or other
standards and unique benefits of each of the products in
sufficient detail to allow Licensor to evaluate the potential of
the proposal.
(iv) During the ten (10) days following submission of the design
proposals of the Licensed Merchandise and Packaging proposed,
Licensor will review the proposals and Licensee will provide its
full assistance and cooperation to Licensor in such review,
including making available a qualified person(s) appointed by
Licensee to meet with Licensor and assist Licensor in its review.
Not later than the end of such ten (10) days period, Licensor
shall notify Licensee of which, if any, of the design proposals,
or Packaging Licensor has approved and Licensor shall provide
Licensee
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with objections, if any, to any aspect of the design proposals or
Packaging which it deems objectionable.
(v) Licensee shall submit to Licensor, free of charge, two Prototypes
of each item of Licensed Merchandise and Packaging. Within ten
(10) days of its receipt of Prototypes and Packaging, Licensor
shall notify Licensee of any objections to such Prototypes or
Packaging. In the event Licensor objects to any aspect of any
Prototype or Packaging, Licensor shall state the particulars of
such objections in writing and shall further set forth Licensor's
suggested modifications in order to remove such objections.
Licensee shall be entitled to resubmit a correct sample of the
Prototype or Packaging for approval. Licensee shall not
manufacture, use or sell any Merchandise or use any Packaging
under the Licensed ▇▇▇▇ without having received the prior written
approval of Licensor pursuant to this Section 4.C.
(vi) With respect to an item properly submitted by Licensee to
Licensor for approval pursuant to Subsections 4.C.(ii) through
(v) above, in the event that Licensor fails to respond to
Licensee concerning such item within the ten-day period required
therein for approvals, Licensor's approval of such submitted item
shall be deemed given.
(vii) The initial line of Licensed Merchandise shall be in commercial
distribution not later than May 31, 1996.
D. The Licensed Merchandise and Packaging manufactured, sold,
advertised or promoted by Licensee shall be substantially identical in all
respects, including, without limitation, materials, color, workmanship, designs,
dimensions, performance, styling, quality and specifications to the Final
Prototype and Packaging approved by Licensor in accordance herewith. Immediately
upon commencement of commercial production of any Licensed Merchandise and
Packaging, Licensee shall send Licensor a production sample of each stock
keeping unit (an "SKU") of the Licensed Merchandise and Packaging. If, in
Licensor's judgment (which judgment shall be reasonable in connection with
technical matters but may be the sole judgement of Licensor for other matters),
the production sample is not substantially identical to the Final Prototype and
Packaging approved by Licensor in accordance herewith (hereinafter
"Nonconforming"), Licensor shall promptly notify Licensee and shall specify in
which respects the sample is Nonconforming with the Final Prototype and
Packaging approved by Licensor. Upon receipt of such notice, Licensee shall
immediately stop production of the Nonconforming Licensed Merchandise and
Packaging until a production sample is submitted to Licensor which Licensor
determines is substantially identical in all respects to the Final Prototype and
Packaging approved by Licensor. Any Licensed Merchandise and Packaging which is
Nonconforming shall be destroyed at Licensee's sole cost and expense unless
Licensor expressly approves in writing some other use of such Licensed
Merchandise and Packaging.
E. If Licensor determines in its judgment (which judgment shall be
reasonable in connection with technical matters but may be sole judgment of
Licensor for other matters), that the materials, color, workmanship, design,
dimensions, performance, styling, quality or
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specifications of any Licensed Merchandise or Packaging at any time are
Nonconforming, Licensor shall have the right to withdraw its approval of such
Licensed Merchandise and Packaging at any time. Upon receipt of written notice
from Licensor of its election to withdraw such approval which shall list the
specific Merchandise or Packaging and specify in what respects it is
Nonconforming, Licensee shall immediately cease the use of the Licensed ▇▇▇▇ in
connection with the promotion, advertising, sale, manufacture, distribution and
use of such Nonconforming Licensed Merchandise and Packaging. Notice of such
election by Licensor to withdraw approval shall not relieve Licensee from its
obligation to pay royalties on sales of such Licensed Merchandise made by
Licensee to the date of disapproval or thereafter if and to the extent
permitted.
F. Licensor also may require Licensee to remove from commercial
distribution, at Licensee's expense, any Licensed Merchandise which is
Nonconforming. In the event Licensee fails promptly to take all reasonable steps
to effect such removal, Licensor may purchase at Licensee's expense any Licensed
Merchandise found in the marketplace which in Licensor's sole judgment is
Nonconforming.
G. For purposes of monitoring quality, Licensee agrees to provide
Licensor, free of charge, at least one sample of each SKU of Licensed
Merchandise and related Packaging at regular intervals, upon request, but at
least annually and upon any material change in the SKU or manufacturer
throughout the Term.
H. Licensee will comply in all material respects with all
laws,rules, regulations and requirements of any governmental or administrative
body (including, without limitation, the Consumer Product Safety Commission),
which may be applicable to the manufacture, advertising, merchandising,
packaging, publicity, promotion, sale, distribution, shipment, import and export
of the Licensed Merchandise and its componentry except to the extent that such
failure to so comply (i) would not have a material adverse effect upon the
ability of Licensee to Exploit the License or upon the prestige and reputation
of the Licensed ▇▇▇▇, and (ii) would not subject Licensor or its Affiliates to
potential liabilities.
I. Licensor and its duly authorized representatives, accompanied by
Licensee, shall have the right, during normal business hours and upon reasonable
notice, during the Term to inspect all manufacturing facilities utilized by
Licensee (and, to the extent Licensee is authorized, its contractors and
suppliers to the extent Licensee may use the same) and to examine all processes
and records relating to the manufacturing, packaging, warehousing and
distribution of the Licensed Merchandise and Packaging including, without
limitation, the right to make such tests and inspections as it shall deem
necessary to insure the quality of the Licensed Merchandise and Packaging.
Licensees shall take all necessary steps requested by Licensor to correct any
deficiencies that might affect the quality of the Licensed Merchandise and/or
Packaging.
J. Licensee agrees to use its best efforts to safeguard the prestige
of the Licensed ▇▇▇▇ for the benefit of Licensor. Licensee shall not market any
of the Licensed Merchandise as irregulars, except as approved in advance by
Licensor in writing on a case-by-case basis.
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K. All Licensed Merchandise will bear at least one label or display
with the Licensed ▇▇▇▇ in a form approved by Licensor in advance in accordance
with Section 4.C hereof and will bear no label or display of the Licensed ▇▇▇▇
unless previously approved by Licensor.
L. To preserve the prestige of the Licensed ▇▇▇▇, and to make
available to customers a wide range of products bearing the Licensed ▇▇▇▇ at
each retail outlet, the Licensed Merchandise shall be sold by Licensee only to
the same retail outlets to which Licensor sells its products under the Licensed
▇▇▇▇ and to other reputable optical retailers, wholesalers and distributors, and
subject to Licensor's prior written approval, which approval shall not be
unreasonably withheld and shall be deemed given if Licensor fails to respond to
Licensee within ten (10) days of Licensor's receipt of Licensee's written
approval request, to such other wholesalers, distributors, and retail outlets
with positioning and image consistent with the retail outlets where Licensor's
products under the Licensed ▇▇▇▇ are sold. Licensee will not, directly or
indirectly, sell Licensed Merchandise to customers, or establish any branch or
maintain any distribution depot in respect of the Licensed Merchandise, outside
of the Territory. In addition, the following shall apply with respect to
distribution of the Licensed Merchandise:
(i) Licensee shall submit to Licensor, in connection with submission
of the marketing plan contemplated by Section 4C(i), for approval
a list of all major retail customers (including all retail
chains) to whom it proposes to sell the Licensed Merchandise, and
upon Licensor's request from time to time, the entire list of
Licensee's retail customers for review and approval;
(ii) Licensee shall not sell or distribute any Licensed Merchandise to
jobbers, diverters or any other entity which does not sell to
consumers at retail exclusively.
(iii) Licensee shall have the right to appoint distributors to sell
and distribute Licensed Merchandise within the Territory, subject
to Licensee obtaining Licensor's prior written approval of each
such distributor and the form and terms of Licensee's
distribution agreement with each such approved distributor.
(iv) In connection with submission of the marketing plan contemplated
by Section 4(c)(i), Licensee shall provide to Licensor for
Licensor's approval a list of all sales representatives,
distributors and sales agents, if any, which Licensee intends to
use to distribute the Licensed Merchandise;
(v) Licensee shall not sell the Licensed Merchandise directly to the
public in retail stores, catalogues, television or otherwise
unless, and then only to the extent that, such sale has been
previously approved in writing by Licensor;
(vi) Licensee shall not use the Licensed Merchandise as giveaways,
prizes or premiums, including retail promotional programs
("purchase with
9
purchase" and "gift with purchase" promotions) unless, and only
to the extent that, such retail promotional programs have
received the prior written approval of Licensor;
(vii) Licensee shall not sell Licensed Merchandise to any Affiliate
of Licensee or any of Licensee's or such Affiliate's directors,
officers, employees or any entity in which any such director,
officer or employee is an officer, director, shareholder, partner
or principal, without the prior written approval of Licensor;
provided, however, that Licensee may sell limited quantities of
Licensed Merchandise to employees of Licensee and its Affiliates
for their personal use.
(viii) Licensee shall immediately stop selling Licensed Merchandise
to any customer of which Licensor, having approved said customer,
subsequently disapproves because of any material change in its
business or methods of conducting its business; provided,
however, that this shall not prevent Licensee from selling
Licensed Merchandise pursuant to binding commitments in existence
as of the date of such disapproval, which commitments may not
lawfully be terminated by Licensee.
(ix) Licensor shall have the right to approve all aspects of the
competitive positioning of the Licensed Merchandise.
M. During the Term and thereafter, Licensee shall not use, nor
license or otherwise permit the use of any specification, design, logo or
pattern which either incorporates the Licensed ▇▇▇▇ or which has acquired
secondary meaning associating it with the Licensed ▇▇▇▇ in connection with the
sale of Licensed Merchandise, to make products for sale under any trademark,
including Licensee's own trademarks, other than the Licensed ▇▇▇▇. Licensee's
obligations hereunder shall survive termination or expiration of this Agreement.
N. At Licensor's request, and upon reasonable prior notice, Licensee
shall sell to Licensor Merchandise at no more than the lower of Licensee's best
price to the trade or 110% of Licensee's actual cost plus freight, duties,
insurance and taxes for use by Licensor in promotions for or with respect to
Licensor's or its Affiliates' products. In addition, Licensee shall provide to
Licensor, free of charge, reasonable quantities of each item of Licensed
Merchandise and its related Packaging for public relations purposes, and one
sample of each item for display purposes at Licensor's headquarters.
5. Public Relations, Advertising and Promotion
-------------------------------------------
A. Licensee shall submit to Licensor for its prior written approval
any and all public relations and promotional programs to be conducted by
Licensee for the Licensed Merchandise. Licensee shall also submit to Licensor
any and all written public statements, press releases and responses to press
inquiries which specifically identify Licensor and/or the Licensed ▇▇▇▇ and
include any description of either (other than a statement which merely
identifies that Licensee has a product line under the name of the Licensed ▇▇▇▇
and/or statements regarding revenues or sales of Merchandise by Licensee).
Licensee may not make any such written public
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statement, press release or response to press inquiry without the prior consent
of Licensor (which may be written or oral); provided, however, that
notwithstanding Licensor's objection, Licensee may make such disclosure if
Licensee is advised by counsel that such disclosure is required by applicable
law or regulation, provided that Licensee shall attempt to respond to any
objections of Licensor and make such changes as may be permitted under
applicable law. Licensor shall use its best efforts to respond to any such
request for consent as promptly as practicable, but in no event later than two
(2) business days after receipt of the request (and such consents shall be
deemed given if no objection is received within such two-business day period).
B. Licensee acknowledges that Licensor shall have complete control
over the creative content and themes of all advertising of Licensed Merchandise
and, to the extent Licensee desires to use an agency for creation of
advertising, Licensor shall have the right to approve in advance the proposed
advertising agency to be used by Licensee for the creation of all advertising.
Without limitation of the foregoing, Licensor shall have the right to approve in
advance any and all advertising, marketing, promotion, or public relations
programs to be conducted by Licensee, including, without limitation, the
materials, themes, talent, spokespersons, media, standards, policies and uses of
such materials and programs, for the Licensed Merchandise and all trade
materials, business cards, invoices, stationery and other printed matter
prepared by or for Licensee for use in connection with the Licensed Merchandise
and Licensed ▇▇▇▇. Licensee shall submit to Licensor for its prior written
approval copies of all of the foregoing, which approval shall be deemed given if
Licensor fails to approve or disapprove Licensee's materials submitted for
approval within ten (10) days of receipt of same by Licensor.
C. At least once each year, Licensee will submit for Licensor's
approval a presentation detailing Licensee's plans to market, promote and
advertise the Licensed Merchandise and a complete business plan, including
marketing, advertising and sales plans detailing sales, advertising and
promotional programs and expenditures for each quarter. Licensee agrees to spend
at least CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION Dollars ($CONFIDENTIAL INFORMATION OMITTED
AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION) during the
first License Year, and during each subsequent License Year Licensee agrees to
spend at least CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION percent (CONFIDENTIAL INFORMATION OMITTED AND
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION%) of the Minimum
Net Sales for the subject License Year, on consumer and trade advertising (not
including co-operative advertising allowances and packaging) or selling
sheets/brochures to the trade, point of purchase materials and trade shows in
connection with the Licensed Merchandise pursuant to the approved advertising
plan. Licensee shall submit to Licensor a written quarterly report documenting
such advertising and promotion expenditures, including copies of all ads and
tear sheets. Such report shall be submitted simultaneously with the Royalty
Report required in Section 6.C below.
D. Upon Licensee's request, Licensor shall use its best efforts to
sell Licensee reasonable quantities of Licensor's toiletry products sold under
the Licensed ▇▇▇▇ at a price lower than Licensor's wholesale price for such
products for use solely in connection with
11
Licensee's promotions of the Licensed Merchandise that may be approved by
Licensor from time to time.
6. Royalty Payments
----------------
A. Licensee shall pay Licensor a royalty at the rates set forth on
Exhibit B (the "Earned Royalty"); provided, however, that in no event shall the
-------- -------
royalty paid be less than the Minimum Royalties set forth on Exhibit B (the
"Minimum Royalty"). For purposes of this Agreement, a "License Year" shall be
defined as the twelve (12) month period commencing October 1 of each year and
ending September 30 of the same year; provided, however, that the first License
Year hereunder shall commence on the date hereof and end on September 30, 1996.
B. Within thirty (30) days following the close of each calendar
quarter, Licensee shall pay to Licensor an amount equal to: (i) the greater of
(A) the applicable portion of the Minimum Royalty for such License Year payable
through the end of such calendar quarter or (B) the Earned Royalty from the
commencement of such License Year through the end of such calendar quarter; less
(ii) the amount of royalty payments made by Licensee to Licensor with respect to
the prior calendar quarters of such License Year.
C. Each royalty payment shall be accompanied by a statement signed
and certified by the Chief Financial Officer of Licensee. Each such accounting
statement shall be in such form as Licensor may specify and shall show the total
Gross Sales of Licensed Merchandise made during the preceding quarter by product
code, the amount of deductions (each separately stated) from total Gross Sales,
and a computation of the amount of Net Sales and the Earned Royalty payable
hereunder in respect of such Net Sales for such period (the "Royalty Report").
Such Royalty Report shall be furnished to Licensor whether or not any Earned
Royalty payments are payable over and above the Minimum Royalty required by
Section 6.A for such period. The first Royalty Report due under this Agreement
shall be for the quarter ending September 30, 1995. Upon request by Licensor,
Licensee shall submit computer printouts substantiating the reported
information, in addition to a summary by customer and product code and other
supporting documentation. Receipt or acceptance by Licensor of any Royalty
Report furnished, or of any sums paid by Licensee, shall not preclude Licensor
from questioning their correctness for so long as Licensee shall be required to
maintain records with respect to the matters covered by such Report pursuant to
Section 8; provided, however, that Royalty Reports submitted by Licensee shall
be binding on Licensee in the event of any termination based on a breach by
Licensee arising out of any such payment or any such Royalty Report.
D. In the event of termination of this Agreement, the greater of the
Earned Royalty or the applicable portion of the Minimum Royalty shall be payable
within thirty (30) days after such termination for the portion of the calendar
quarter up to the date of such termination. In the event Licensee exercises its
option pursuant to Section 13.B hereof to extend the license herein granted for
purposes of liquidating its inventory of Licensed Merchandise, Licensee shall
pay all royalties with the accompanying Royalty Report quarterly within thirty
(30) days following the close of each calendar quarter during the extension
period following termination.
12
E. As soon as practicable, but not later than one hundred and twenty
(120) days after the end of each of Licensee's fiscal years (which fiscal year
ends October 31) during the Term, and within one hundred and twenty (120) days
after the close of Licensee's fiscal year following the expiration or
termination of the Term, Licensee shall submit to Licensor a representation
letter of Licensee's Chief Financial Officer using the form attached hereto as
Exhibit C. Within 15 days following completion of its audited financial
statements each year, Licensee shall submit to Licenser a copy of such audited
financial statements.
F. All royalty payments and accounting statements are to be directed
as provided in Section 17.B, below.
G. Licensee will bear (and the royalty payable to Licensor herewith
shall be without reduction for) all taxes, duties and other governmental charges
in the Territory relating to or arising under this Agreement, including without
limitation, any withholding taxes, any stamp or documentary taxes or duties,
turnover, sales or use taxes, value added taxes, excise taxes, customs or
exchange control duties or any other charges relating to or on any royalty
payable by Licensee to Licensor, except that Licensor shall be responsible for
any tax imposed on Licensor's income by the United States or any state thereof.
H. All royalty payments shall accrue upon the sale of the Licensed
Merchandise regardless of the time of collection by Licensee. For purposes of
this Agreement, Licensed Merchandise shall be considered "sold" upon the date of
invoicing. It is understood that "consignment" sales are not invoiced until the
end of the consignment period.
I. Royalty payments shall be based on U.S. dollar calculations and
paid by Licensee in U.S. dollars. Exchange rates used to convert local currency
sales to U.S. dollars shall be the month and exchange rates of New York banks as
published in the Wall Street Journal.
-------------------
J. If any foreign governmental entity restricts or prohibits, by
exchange controls or otherwise, the payment by Licensee to Licensor of any sums
due to Licensor hereunder, Licensee shall, notwithstanding any such restriction,
pay to Licensor in the United States any and all such sums due Licensor by
licensee hereunder in U.S. dollars, as and when due in accordance with the terms
hereof; provided, however, that if such foreign funds are blocked by a
-------- -------
governmental entity for a significant period of time, Licensor may, on a case by
case basis, if feasible, arrange for Licensee's payment directly to Licensor's
local affiliate of royalties based on Licensee's Net Sales in the foreign
country in that country's local currency.
7. Use of Licensed ▇▇▇▇
--------------------
A. Licensee agrees that it will use and display the Licensed ▇▇▇▇
only on such items and in such form and manner as is specifically approved by
Licensor in writing, which approval or disapproval by Licensor shall be given by
Licensor within ten (10) days of Licensor's receipt of Licensee's submission,
failing which Licensor's approval of the items submitted shall be deemed given.
Once an item has been approved by Licensor, Licensee shall have no obligation to
resubmit the same item prior to each subsequent use; provided, that Licensor may
at any time and from time to time during the Term, in its sole discretion,
change
13
its advertising and promotional theme and content and provide Licensee with
written notice that it shall not after the period covered by its then approved
marketing plan use any such previously approved materials to the extent not
entirely consistent with any such revised theme and content; and provided
further, that Licensee will use its reasonable best efforts to make such changes
more quickly if possible. The Licensed ▇▇▇▇ shall be physically affixed and
displayed on each item of Licensed Merchandise manufactured or sold by Licensee
pursuant to this Agreement. Any labels and tags bearing the Licensed ▇▇▇▇ placed
on the Licensed Merchandise shall comply in all material respects with all
applicable statutes, rules and regulations promulgated by any governmental
agency, including such designations as may be required or permitted to indicate
the proprietary nature of the Licensed ▇▇▇▇.
B. Licensee will not use the Licensed ▇▇▇▇ as a corporate name or as
a trade name, in whole or in part, or in such a way as, in Licensor's sole
judgment, may give the impression that the Licensed ▇▇▇▇ is the property of
Licensee. No name or names shall be cojoined or used by Licensee in connection
with the Licensed ▇▇▇▇ in or on any advertising, publicity, trade or promotional
material or Packaging utilized by Licensee in connection with the Licensed
Merchandise except and only to the extent that such is specifically required by
law to indicate the source of manufacture or distribution of the Licensed
Merchandise. Licensee shall not use any name which, in Licensor's sole judgment,
may be confusingly similar to the Licensed ▇▇▇▇ on Merchandise or otherwise,
during the Term or thereafter.
C. Licensee acknowledges that the Licensed ▇▇▇▇ has acquired
valuable goodwill with the public and that any products bearing the Licensed
▇▇▇▇ have acquired a reputation of high quality, prestige and style. Licensee
acknowledges that Licensor has represented to it that Licensor is the owner of
all right, title and interest in and to the Licensed ▇▇▇▇ in any and all forms
or embodiments thereof, and is also the owner of the goodwill attached to the
Licensed ▇▇▇▇ including that which arises from the sale of Licensed Merchandise
hereunder. All use by Licensee of the Licensed ▇▇▇▇ shall be deemed to have been
made by and for the benefit of Licensor for the purposes of securing and
maintaining trademark rights, applications and/or registrations, and all uses of
the Licensed ▇▇▇▇ by Licensee, or by any sublicensee or assignee, and any
goodwill arising therefrom, shall inure to the sole and exclusive benefit of
Licensor.
D. Licensee hereby assigns to Licensor any rights to the Licensed
▇▇▇▇ which may, by operation of law or otherwise, vest in Licensee as a
consequence of Licensee's activities under this Agreement, and any goodwill
arising therefrom, which shall in any event inure to the sole and exclusive
benefit of Licensor. Licensee will not, at any time, do or suffer to be done,
any act or thing which will, in any way, impair or adversely affect the
ownership or the rights of Licensor in or to the Licensed ▇▇▇▇ or its
reputation, and Licensee will make no applications nor seek any registration or
ownership rights in or to the Licensed ▇▇▇▇ in the Territory or elsewhere.
E. Except as the parties may otherwise agree in writing, all right,
title and interest in and to the unique designs incorporating the Licensed ▇▇▇▇
or a logo or pattern which has acquired a secondary meaning associating it with
the Licensed ▇▇▇▇ shall be the sole property of Licensor, and any tools, dies or
molds shall be the sole property of Licensee, subject to the restrictions on
their use set forth in Section 4.M, which restrictions shall survive
14
termination or expiration of this Agreement. Upon the termination or expiration
hereof, Licensor shall have the right to purchase all or any part of the tools,
dies and molds owned by Licensee used to produce unique designs of Licensed
Merchandise incorporating the Licensed ▇▇▇▇ or a logo or pattern which has
acquired a secondary meaning associating it with the Licensed ▇▇▇▇, at a price
based upon the cost of such items to Licensee, depreciated on a straight-line
basis over a period of five (5) years. In order to effectuate the vesting of
such proprietary rights, the parties agree to execute appropriate documents,
assigning to the other party whatever rights that party may have in accordance
with the foregoing. However, in no event, during the Term or thereafter, shall
Licensee claim, or acquire, whether by operation of law or otherwise, any right,
title, or interest in or to the Licensed ▇▇▇▇. Licensee shall not manufacture,
advertise, merchandise, promote, sell or distribute any of the Licensed
Merchandise created for Licensor hereunder under any name other than the
Licensed ▇▇▇▇; provided, however, that subject to Section 4.M above, Licensee
-------- -------
may manufacture, advertise, merchandise, promote, sell or distribute under
another brand name any Merchandise sold under the Licensed ▇▇▇▇ which does not
bear a unique design incorporating the Licensed ▇▇▇▇ or a logo or pattern which
has acquired a secondary meaning associating it with the Licensed ▇▇▇▇, provided
all Packaging incorporating the Licensed ▇▇▇▇ are completely removed.
F. Licensee acknowledges that only Licensor may file or prosecute
trademark applications to register the Licensed ▇▇▇▇. Licensee will cooperate
with Licensor in connection with the filing and prosecution by Licensor of any
such applications, and the maintenance or renewal of any trademark registration
for the Licensed ▇▇▇▇, and will supply Licensor with Merchandise bearing the
Licensed ▇▇▇▇, including samples, Packaging and other uses of the Licensed ▇▇▇▇,
as may reasonably be requested by Licensor in connection herewith. Licensee
shall execute all documents, including, but not limited to, registered user
agreements and any cancellations thereof, which Licensor may request in order to
obtain or maintain a registration or to establish or to maintain Licensor's
ownership of the Licensed ▇▇▇▇. Licensor will pay all costs and fees incurred by
it (or by Licensee, if Licensee incurs such expenses at the request of
Licensor), in connection with filing for, obtaining, maintaining or renewing any
trademark registration of the Licensed ▇▇▇▇. The rights and obligations under
this Section 7.F shall survive termination or expiration of this Agreement.
G. Licensee agrees and undertakes to use the Licensed ▇▇▇▇ strictly
in compliance with any and all applicable trademark and other laws and to use
such legends, markings or notices in connection therewith as are required by law
or otherwise reasonably required by Licensor to protect its rights. Upon
expiration or termination of this Agreement for any reason whatsoever, Licensee
will execute and file any and all documents reasonably required by Licensor
regarding the Licensed ▇▇▇▇ which Licensor shall require. Licensor shall bear
all expenses reasonably incurred in preparing and recording any such documents.
H. Licensee agrees not (i) to challenge the validity of or
Licensor's ownership of the Licensed ▇▇▇▇ or any application for registration
thereof, or any trademark registration thereof, in any jurisdiction or (ii) to
contest the fact that Licensee's rights under this Agreement terminate upon
termination or expiration of this Agreement. The provisions of this Section 7.H
shall survive termination or expiration of this Agreement.
15
I. Licensee shall promptly notify Licensor of any infringement,
imitation or act inconsistent with Licensor's ownership of the Licensed ▇▇▇▇ by
third parties, or any act of unfair competition by third parties relating to the
Licensed ▇▇▇▇ (collectively, an "Infringement"), wherever and whenever such
Infringement shall come to Licensee's attention. After receipt of such notice
from Licensee if the Infringement has occurred or is occurring in the United
States or Canada, Licensor shall, at its cost and expense, use its best efforts
to stop such Infringement. Licensee shall fully cooperate with Licensor in such
action and, if requested by Licensor, shall join with Licensor as a party in any
such action brought by Licensor. Any recovery as a result of such action shall
belong solely to Licensor. If the Infringement has occurred or is incurring in
any Additional Country included in the Territory other than the United States or
Canada, Licensor shall send correspondence demanding that the Infringement
cease, but may in its sole discretion decide whether to bring a legal action to
stop such Infringement. All such actions shall be at the cost and expense of
Licensor. If Licensor does not take legal or other action to stop such
Infringement in any Additional Country included in the Territory, Licensee may,
at its cost and expense (including all attorney fees and expenses), take such
action; provided, however, that notwithstanding the foregoing, Licensee shall
not, without the consent of Licensor, settle or compromise any claim or consent
to the entry of any judgment which settlement, compromise or judgment would
affect Licensor or the value, reputation or prestige of the Licensed ▇▇▇▇. In
either circumstance, Licensee and Licensor shall fully cooperate with the other,
and shall join with the other as party to any such action, if necessary. Any
recovery as a result of such action shall belong to the party bringing such
action.
J. Licensee shall not at any time use the Licensed ▇▇▇▇ or the
Licensed Merchandise, or any material utilizing or reproducing the Licensed ▇▇▇▇
or Licensed Merchandise, in a manner that could derogate the value, reputation
or goodwill associated with the Licensed ▇▇▇▇.
K. To the extent Licensee employs any contract manufacturers in
connection with this Agreement, Licensee shall obtain from each of said contract
manufacturers as a condition to using them for any manufacturing of or with
respect to Licensed Merchandise or Packaging, a binding written agreement signed
by each such contract manufacturer in form and substance as set forth on Exhibit
D, attached hereto. A copy of said written commitment signed by each of said
contract manufacturers shall be delivered to Licensor within thirty (30) days of
the signing of such document by such contract manufacturer. In no event,
however, shall the use of any contract manufacturer(s) absolve or excuse
Licensee from any of its responsibilities to Licensor under this Agreement. If
at any time Licensor provides reasonably satisfactory evidence to Licensee that
any contract manufacturer which Licensee intends to use, has used or is using in
connection with this Agreement has taken or may take any action inconsistent
with Licensor's absolute ownership of the Licensed ▇▇▇▇, Licensee shall
immediately cease using and shall not thereafter use said contract manufacturer
in connection with this Agreement and take commercially reasonable efforts to
secure the return of all tools, dies and molds, if any, in the possession of
such contract manufacturer used or usable in connection with the manufacture of
Licensed Merchandise or Packaging.
8. Books and Records
-----------------
16
Licensee shall maintain, at its main offices, true and accurate books
and records, in accordance with generally accepted accounting principles,
containing all particulars which may be necessary for the purpose of verifying
compliance with the terms and conditions hereof and for determining Net Sales,
Royalties, Advertising and Promotional expenditures and all amounts payable to
Licensor hereunder, which books and records shall be separate and distinct from
those relating to Licensee's businesses other than the sale of Licensed
Merchandise. Licensee shall be obligated to maintain books and records for any
particular License Year for five years following such License Year or two years
following the termination or expiration of this Agreement, whichever is less.
Licensee shall make such books and records available to Licensor and its
designated representatives during regular business hours and upon reasonable
notice during the period in which Licensee is obligated to maintain such books
and records, for the purpose of auditing Licensee's reports, accounting
statements and royalty payments hereunder. Licensor shall be entitled to make
copies, at its expense, of any such records. Without limitation of Licensor's
rights under Section 12, if Licensor uncovers an error in the royalty due to
Licensor, Licensee agrees to pay immediately all sums due (with interest at the
prime rate plus 3% if such error exceeds the greater of $25,000 or five percent
(5%) of the amount of the royalty shown on any statement prepared by Licensee
hereunder), and if such error exceeds the greater of $25,000 or five percent
(5%) of the amount of the royalty shown on any statement prepared by Licensee
hereunder, Licensee will at the same time reimburse Licensor for its reasonable
costs of conducting such audit.
9. Representations and Warranties of Licensee
------------------------------------------
A. Organization. Licensee is a corporation duly organized and
------------
validly existing under the laws of the State of California.
B. Authority Relative to this Agreement. Licensee has full corporate
------------------------------------
power and authority to execute, perform and deliver this Agreement. The
execution and delivery of this Agreement has been duly and validly authorized by
all necessary corporate action, and no other corporate proceedings on the part
of Licensee are necessary to authorize this Agreement. This Agreement has been
duly and validly executed and delivered by Licensee and constitutes a valid and
binding agreement of Licensee, enforceable in accordance with its terms, except
that (i) such enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to creditors' rights and (ii) the remedy of specific performance and
injunctive and other forms of equitable relief may be subject to equitable
defenses and to the discretion of the court before which any proceeding therefor
may be brought.
C. No Violation. The execution, performance and delivery of this
------------
Agreement by Licensee will not (i) violate any provision of the Articles of
Incorporation and By Laws of Licensee, (ii) violate, or be in conflict with, or
constitute a default or termination event (or an event which, with notice or
lapse of time or both, would constitute a default or a termination event) under,
any agreement or commitment to which Licensee is a party, or (iii) violate any
applicable statute or law or any judgment, decree, order, regulation or rule of
any court or governmental authority binding on Licensee.
D. Consents and Approvals. No consent, approval or authorization of,
----------------------
or declaration, filing or registration with, any governmental or regulatory
authority is required in
17
connection with the execution, delivery and performance of this Agreement by
Licensee. No consent of any person is necessary for the execution, performance
or delivery of this Agreement by Licensee, including, without limitation,
consents from parties to loans, contracts, leases or other agreements to which
Licensee is a party other than ▇▇▇▇▇ ▇▇▇▇▇▇ Manufacturing, B.V., which consent
has been obtained by Licensee prior to its execution of this Agreement.
E. Licensee's Financial and Other Information. Attached as Schedule
------------------------------------------
9E is a true and complete copy of Licensee's audited balance sheet at October
31, 1994, and its audited statement of operations for the year then ended (the
"Financial Statements") which Licensee acknowledges is being relied upon by
Licensor in Licensor's entering into this Agreement. The Financial Statements
present fairly, in accordance with generally accepted accounting principles, the
business, operations, financial condition, assets and liabilities of the
Licensee for the periods covered thereby. Since the date of Financial Statements
there has not been any material adverse change in the business, operations,
financial condition, assets, liabilities or prospects of Licensee. Licensee has
informed Licensor of all material facts and has not omitted to state any
material fact about its business, operations, financial condition, assets,
liabilities and prospects which Licensor might reasonably be expected to require
knowledge of in making its decision to enter into this Agreement.
F. Products Liability and Other Litigation and Claims. Schedule 9F
--------------------------------------------------
set forth a true and complete listing of (i) all warranty and products liability
claims, actions and proceedings relating to the manufacture, distribution or
sale by Licensee of any and all products which are similar to the Merchandise
for the past five calendar years; and (ii) all other claims, actions and
proceedings which are pending or, to Licensee's knowledge, threatened which, if
adversely determined, could have a material adverse effect on Licensee's
business, operations, financial condition or the performance of its obligations
hereunder.
10. Representation and Warranties of Licensor
-----------------------------------------
A. Organization. Licensor is a corporation duly organized and
------------
validly existing under the laws of the State of Delaware.
B. Authority Relative to this Agreement. Licensor has full corporate
------------------------------------
power and authority to execute, perform and deliver this Agreement. The
execution and delivery of this Agreement has been duly and validly authorized by
all necessary corporate action, and no other corporate proceedings on the part
of Licensor are necessary to authorize this Agreement. This Agreement has been
duly and validly executed and delivered by Licensor and constitutes a valid and
binding agreement of Licensor, enforceable in accordance with its terms, except
that (i) such enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to creditors' rights and (ii) the remedy of specific performance and
injunctive and other forms of equitable relief may be subject to equitable
defenses and to the discretion of the court before which any proceeding therefor
may be brought.
C. No Violation. The execution, performance and delivery of this
------------
Agreement by Licensor will not (i) violate any provision of the Certificate of
Incorporation or By Laws of Licensor (ii) violate, or be in conflict with, or
constitute a default or termination event (or an event which, with notice or
lapse of time or both, would constitute a default or a termination
18
event) under, any agreement or commitment to which Licensor is a party, or (iii)
violate any applicable statute or law or any judgment, decree, order, regulation
or rule of any court or governmental authority binding on Licensor.
D. Consents and Approvals. No consent, approval or authorization of,
----------------------
or declaration, filing or registration with, any governmental or regulatory
authority is required in connection with the execution, delivery and performance
of this Agreement by Licensor. No consent of any person is necessary for the
execution, performance or delivery of this Agreement by Licensor, including,
without limitation, consents from parties to loans, contracts, leases or other
agreements to which Licensor is a party.
E. Ownership of Licensed ▇▇▇▇. Licensor is the sole and exclusive
--------------------------
owner (legal and beneficial) of the Licensed ▇▇▇▇ in any and all forms and
embodiments thereof with respect to beauty care products, cosmetic goods and
Merchandise in the Territory and all goodwill attached to the Licensed ▇▇▇▇;
Licensor has the sole and exclusive right to use the Licensed ▇▇▇▇ as a
trademark or otherwise in connection with the Exploitation of Merchandise in the
Territory and has not sold, transferred, assigned or granted to any third party
the right to use the Licensed ▇▇▇▇ in connection with the Exploitation of
Merchandise anywhere in the world; the use of the Licensed ▇▇▇▇ by the Licensee
in the manner contemplated by this Agreement will not subject Licensee or any of
its shareholders, officers, directors, employees and agents (collectively
"Licensee Indemnified Parties") to any liability (including, without limitation,
damages and/or injunctive or other equitable relief) for infringement of
statutory or common law trademark, trade name or similar rights of third
parties; and to the knowledge of Licensor, the Exploitation of the Licensed ▇▇▇▇
by Licensee as contemplated by this Agreement in any Additional Country included
in the Territory pursuant to Section 2G would not subject any Licensee
Indemnified Party to any liability (including damages or injunctive or other
equitable relief) for infringement of statutory or common law trademark, trade
name or similar rights of third parties.
11. Indemnification and Insurance
-----------------------------
A. Licensor hereby agrees to indemnify and hold harmless Licensee,
its Affiliates and each of their respective shareholders, officers, directors,
employees and agents against any and all liability, claims, causes of action,
suits, damages and expenses (including reasonable attorneys' fees), for which
they or any of them may become liable or may incur or be compelled to pay in any
action or claim against them or any of them arising from (a) infringement of
statutory or common law trademark or trade name rights of others through the use
of the Licensed ▇▇▇▇ by Licensee as contemplated by this Agreement, or (b) the
breach by Licensor of any of its representations, warranties or agreements in
this Agreement, provided that Licensee: (i) gives Licensor written notice of
each such action or claim promptly following its receipt thereof, (ii) gives
Licensor the opportunity to undertake and to control the defense and settlement
of such claim through counsel of its own choosing, and (iii) fully cooperates
with Licensor in the investigation, defense and settlement of any such claim
provided, however, that if any such settlement would prohibit Licensee from
Exploitation of the License in all or any portion of the Territory, Licensee
shall be reasonably compensated by Licensor for costs and expenditures which
Licensee shall have incurred or become obligated to pay in connection with the
Exploitation of the License in such portion of the Territory. Licensee shall
have the right to
19
participate in (but not to control) any such defense through counsel of its
choice, but at Licensee's expense. If Licensor fails or refuses to undertake the
defense of any such claim within a reasonable period after notice from Licensee,
Licensee shall be entitled to defend such claim through counsel of its choice,
and all actual costs and expenses (including reasonable attorneys' fees) which
are incurred by Licensee in the investigation, defense and settlement of such
claim, as well as any damages ultimately awarded against Licensee which are
indemnifiable hereunder, shall be the sole obligation of Licensor.
B. Licensee agrees to indemnify and hold harmless Licensor, its
Affiliates and each of their respective shareholders, officers, directors,
employees and agents against any and all liability, claims, causes of action,
suits, damages and expenses for which they or any of them may become liable or
may incur or be compelled to pay in any action or claim against them or any of
them by any Persons other than Licensor for or by reason of (a) the infringement
of design rights, patents, trade secret rights or rights to any intellectual
property of third Persons as a result of the manufacture, warehousing,
marketing, promotion, publicity, advertising, sale or distribution of Licensed
Merchandise by Licensee or any of its agents, representatives, contractors or
sublicensees (other than by reason of use of the Licensed ▇▇▇▇ as contemplated
by this Agreement), (b) any acts, whether of omission or commission, that may be
committed or suffered by Licensee or any of its agents, representatives,
contractors or sublicensees in breach of this Agreement, (c) any liability
(including, without limitation, any personal injury or property damage) arising
out of the manufacture, warehousing, marketing, promotion, publicity, sale,
advertising, or distribution of or the use by any professional or consumer of,
Licensed Merchandise, or any violation of any warranty, representation or
agreement made by Licensee or any of its agents, representatives, contractors or
sublicensees with respect to the Licensed Merchandise, or (d) the breach by
Licensee of any of its representations, warranties or covenants in this
Agreement. Licensor shall give Licensee written notice of any such claim
promptly following its receipt thereof. Licensee shall have the opportunity to
undertake and to control the defense and settlement thereof through attorneys
selected by Licensee after notice to and consultation with Licensor and good
faith negotiations regarding alternative counsel if Licensor has reasonable
objections to Licensee's choice of counsel. Notwithstanding the foregoing,
Licensee shall not, without the consent of Licensor, settle or compromise any
claim or consent to the entry of any judgment which settlement, compromise or
judgment would affect Licensor or the value, reputation or prestige of the
Licensed ▇▇▇▇. Licensor will cooperate with Licensee in the investigation,
defense and settlement of any such claim and shall have the right to participate
in (but not to control) any such defense through counsel of its own choice, but
at Licensor's own expense. If Licensee elects not to undertake the defense of
any such claim, it will be responsible for reimbursing Licensor for any expenses
incurred by Licensor, including but not limited to reasonable attorneys',
accountants', and other experts' fees and expenses in the investigation, defense
and settlement of such claim and in enforcing its rights pursuant to this
Section 11.B, in addition to any damages and penalties ultimately awarded
against Licensor.
C. Without limiting the indemnification provided in Section 11.B
above and in addition to it, Licensee agrees to carry and maintain, throughout
the Term (including all renewal terms, if any) and for five years thereafter,
with an insurance carrier authorized to do business in the State of California
and having a rating of A VI or better according to Best's Insurance Reports, a
broad form Comprehensive General Liability Insurance Policy or, if such policy
is not reasonably available, such other policy as would provide substantially
the same
20
protection to Licensee and Licensor written on occurrence basis covering
Licensee's activities with respect to the Licensed Merchandise which includes
but is not limited to coverage for contractual liability, premises operations,
products liability, personal injury and advertising injury liability and broad
form property damage liability, which shall provide protection to Licensor of at
least One Million Dollars ($1,000,000) per occurrence and in the aggregate.
Licensee shall have Licensor named as an additional insured on such policies.
Licensee shall, within thirty (30) days after the date hereof, provide to
Licensor a certificate of such insurance from the insurance carrier which sets
forth the scope of coverage and the limits of liability stated above without any
provision for deductibles or self-insured retentions, and further provides that
the policies may not be materially changed or cancelled without at least thirty
(30) days' prior written notice to Licensor. Prior to any such cancellation,
Licensee shall provide Licensor with a certificate of insurance evidencing that
a new insurance policy with the same coverage and terms described above will be
in place prior to such termination. Upon reasonable request by Licensor during
the Term, Licensee shall deliver to Licensor evidence in form and substance
reasonably satisfactory to Licensor, of the maintenance and renewal of the
required insurance, including without limitation, renewal certificates and
copies of those portions of policies, riders and endorsements pertaining to this
Agreement. Any insurance policy purchased by or carried by Licensor or any of
its Affiliates shall not be required to contribute in case of any loss by any
Person, including Licensor or Licensee and their Affiliates, relating to the
Licensed Merchandise and either the certificate of insurance to be provided
hereunder or an endorsement to such policy shall state the same.
12. Termination
-----------
Notwithstanding the terms and conditions of Section 3 hereof, this
Agreement may be terminated in accordance with the following provisions:
A. Within fifteen (15) days following the receipt by Licensor of
either of the statements required to be furnished by Licensee pursuant to
Sections 6.C and 6.E hereof with respect to a License Year, Licensor shall have
the right to terminate this Agreement if Net Sales for two (2) consecutive
License Years are less than the Minimum Net Sales required for the respective
Merchandise set forth in Exhibit B for said License Years.
B. Licensor may terminate this Agreement immediately by giving
notice in writing to Licensee in the event Licensee fails to make payment of
royalties and any other amounts due hereunder as and when due, and fails to cure
such default within three (3) working days after delivery of written notice of
such default by Licensor.
C. Except as otherwise expressly provided in Sections 12 A, B, D, or
E, either party may terminate this Agreement immediately by giving notice in
writing to the other party in the event the other party fails to perform its
obligations hereunder (including, without limitation, the obligations to submit
timely its quarterly reports; to obtain prior approvals of inter alia products,
----- ----
advertising and promotions, as required hereby; to distribute only through
approved distribution channels; to maintain adequate insurance and to use only
as expressly permitted hereunder the Licensed ▇▇▇▇) or otherwise breaches any of
its covenants, representations or warranties as set forth in this Agreement and
such party fails to cure such
21
default to the other's reasonable satisfaction within thirty (30) days after
delivery of written notice of such default from the other party.
D. If either party shall make an assignment for the benefit of
creditors, or shall generally not pay its debts as they become due, or shall
file a petition commencing a voluntary case under the Bankruptcy Reform Act of
1978, 11 U.S.C. Section 101 et seq., as amended or any successor thereto (the
"Bankruptcy Code"), or shall be adjudicated an insolvent, or shall file any
petition or answer seeking for itself any reorganization, arrangement,
composition, readjustment, liquidation, dissolution, or similar relief under any
present or future statute, law or regulations, or shall file any answer
admitting or shall fail to deny the material allegations of such petition filed
against it for such relief, or consent to the filing of any such petition or
shall seek or consent to or acquiesce in the appointment of any agent, trustee,
receiver, custodian, liquidator or similar officer for it or of all or any
substantial part of its assets or properties, or its directors or majority
stockholders shall take any action authorizing any of the foregoing or looking
to its dissolution or liquidation, or it shall cease doing business as a going
concern, or an order for relief shall be entered against it under any chapter of
the Bankruptcy Code, or if, within sixty (60) days after the filing of any
petition or the commencement of any proceeding against either party seeking any
reorganization, arrangement, composition, readjustment, liquidation, dissolution
or similar relief under the Bankruptcy Code or any other present or future
statute, law or regulation, such proceeding shall not have been dismissed, or a
decree or order of a court having competent jurisdiction shall have been entered
approving as properly filed any such petition, or if, within sixty (60) days
after the appointment, without the consent or acquiescence of such party, of any
agent, trustee, receiver, custodian, liquidator or similar officer for it or of
all or any substantial part of its properties, such appointment shall not have
been vacated this Agreement shall automatically, without notice or any further
act or deed of any party, terminate and be of no further force or effect, except
that any and all liabilities and obligations of the parties at the time
outstanding under or in connection with this Agreement shall automatically,
without notice or any creditors act or deed of any party, become due and
payable.
E. In the event of a Change of Control of Licensee, Licensor may
terminate this Agreement for a Proper Purpose by written notice (a "Termination
Notice") to Licensee within 20 days of the date Licensor receives a Change of
Control Notice. Such termination shall be effective upon the later to occur of
the Change of Control or the date specified in the Termination Notice; provided
that if such Change of Control Notice shall be given prior to the Change of
Control, this Agreement shall not be terminated if such Change of Control shall
not occur. If Licensor does not exercise its right to terminate this Agreement
within such 20-day period, Licensor shall not have the right to terminate this
Agreement as a result of such Change of Control.
13. Effect of Expiration or Termination
-----------------------------------
A. Except to the extent provided in Section 13.B hereof, upon the
expiration or termination of this Agreement for any reason, neither Licensee nor
its receivers, representatives, agents, successors or assigns shall have any
right to exploit or in any way use the Licensed ▇▇▇▇. Except to the extent
provided in Section 13.B hereof, upon such expiration or termination of this
Agreement, Licensee shall forthwith discontinue all use of the Licensed
22
▇▇▇▇ and shall not thereafter use the Licensed ▇▇▇▇ or any variation or
simulation thereof, or any ▇▇▇▇ which in Licensor's sole judgment is or may be
confusingly similar thereto, and Licensee hereby irrevocably releases and
disclaims any right or interest in or to the Licensed ▇▇▇▇. Within thirty (30)
days of the expiration or termination of this Agreement, Licensee shall provide
Licensor with an accurate schedule of all work in process and finished inventory
(hereinafter the "Inventory") of Licensed Merchandise which is on hand as of the
close of business on the date of such expiration or termination.
B. If, upon the expiration or termination of this Agreement (other
than pursuant to Section 12 B or by Licensor pursuant to Section 12 C hereof),
Licensee shall have on hand any Inventory of the Licensed Merchandise, Licensee
may continue to use the Licensed ▇▇▇▇ solely in connection with the Exploitation
of the Inventory of Licensed Merchandise for a period of up to six (6) months
following the expiration or termination of this Agreement. During such six (6)
month period, Licensee shall be obligated to continue to pay Licensor the Earned
Royalty provided for in Section 6.A (but there shall be no Minimum Royalty). If
Licensee elects to continue to use the Licensed ▇▇▇▇ as provided under this
paragraph, it shall notify Licensor of its election at least thirty (30) days
prior to the expiration or termination of this Agreement. Such notice shall
include a complete and accurate schedule of Inventory of Licensed Merchandise
which is projected to be on hand as of the close of business on the date of such
expiration or termination and shall reflect Licensee's actual cost of each such
item to be calculated in accordance with generally accepted accounting
principles ("Licensee's Standard Cost").
C. Notwithstanding the foregoing, or Licensee's desire to use the
Licensed ▇▇▇▇ as provided in Section 13.B above, Licensor shall have the
overriding option, exercisable by written notice to Licensee within thirty (30)
days after its receipt from Licensee of the complete Inventory schedule as
provided in Section 13.A or 13.B, to purchase any or all of the Inventory,
subject to outstanding non-cancelable purchase orders, for an amount equal to
Licensee's Standard Cost of the Inventory and freight, taxes, duties and
insurance, which sum may be offset against amounts then owing to Licensor
hereunder. In the event that Licensor notifies Licensee of its desire to
purchase the Inventory on hand, such notice shall apply only to the Inventory
remaining in Licensee's possession or control on the date said notice is
received by Licensee. Licensee shall deliver the Inventory as directed by
Licensor, and Licensor shall purchase only such Inventory received in marketable
condition (and shall return all Inventory not accepted).
D. Upon the expiration or termination of this Agreement or, if
applicable, upon the expiration of the period provided for in Section 13.B
hereof, Licensee shall, at its own expense, either destroy or remove the
Licensed ▇▇▇▇ from all Inventory, Packaging, advertising and promotional
materials bearing the Licensed ▇▇▇▇ or prepared for use in connection with the
Licensed Merchandise.
E. In order to enable Licensor to maintain continuity of sale of
Merchandise within the Territory, during and after the expiration of any period
provided in Section 13.B, Licensor may manufacture, advertise, promote, sell and
distribute Merchandise directly or through others, and grant licenses to third
parties with respect to the Merchandise and the Licensed ▇▇▇▇.
23
14. [Intentionally omitted]
15. Confidentiality
---------------
A. In connection with the performance of this Agreement, Licensor
and Licensee will have access to certain confidential and proprietary
information of the other party, including, but not limited to, business and
marketing plans, proposed advertising, designs, sales records, financial data
and manufacturer's know-how, and also including the business terms of this
Agreement. Recognizing that such information represents valuable assets and
property of the disclosing party, and the harm that may befall such party if any
of such information is disclosed, the recipient agrees to hold all such
information in strict confidence and not to use or otherwise disclose any such
information to third parties without having received the prior written consent
of the disclosing party and a written agreement from such third party to
maintain such information in strict confidence. The obligation of
confidentiality created herein shall survive the expiration or termination of
this Agreement.
B. The obligations of confidentiality created herein shall cease to
apply:
(i) to information which comes into the public domain, provided it
did not come into the public domain through the unauthorized
acts of the receiving party;
(ii) to information which was in the receiving party's possession
prior to its disclosure, or was later disclosed to the receiving
party by a third party who is lawfully in possession of such
and, to the receiving party's knowledge, was under no obligation
to keep such information confidential;
(iii) to information which, in the opinion of the receiving party's
counsel, is required to be disclosed by law,but only to the
extent so required and only upon prior written notice to the
other party hereto; and
(iv) to information of Licensee which Licensor may be required to
disclose in order to enforce its rights under this Agreement.
C. Licensee shall have no right of access to any information
proprietary to Licensor including any formula, pattern, compilation, program,
device, method, technique, or process (collectively, "Trade Secrets") and waives
any and all rights to access to such Trade Secrets in the course of litigation
or otherwise, except for the Trade Secrets related to the Licensed Merchandise
and/or the rights of Licensee under this Agreement.
16. Bankruptcy
----------
A. Notwithstanding the provisions of Section 12.D, in the event
that it is determined by any court or bankruptcy trustee that this Agreement may
be assumed or assigned in connection with a case commenced by or against either
party under the Bankruptcy Code, Licensor and Licensee hereby acknowledge that
adequate assurance of future performance under
24
this Agreement (within the meaning of the Bankruptcy Code) shall include, inter
alia, adequate assurance:
(i) that any and all royalty payments and other consideration
due from Licensee to Licensor under or pursuant to this
Agreement shall be duly and timely paid and shall not
decline from the levels specified in this Agreement;
(ii) that the assumption or assignment of this Agreement will not
result in the breach by either party of any provision in any
other license, contract, or agreement relating to the
Licensed ▇▇▇▇ or otherwise;
(iii) that any person or entity that assumes this Agreement or
to which this Agreement is assigned shall fully and
faithfully assume, observe and comply with all of the
covenants, requirements and restrictions provided for under
this Agreement and that termination rights for breach of
this Agreement shall continue to apply without change; and
(iv) that the value of the Licensed ▇▇▇▇ to Licensor shall not be
materially diminished by reason of the assumption or
assignment of this Agreement.
B. Any person or entity to which this Agreement is assigned pursuant
to the provisions of the Bankruptcy Code shall be deemed without further act or
deed to have assumed all of the obligations arising under this Agreement on and
after the date of such assignment. Any such assignees shall upon demand execute
and deliver to Licensor or Licensee, as the case may be, an instrument
confirming such assumption.
17. Miscellaneous
-------------
A. Each of the parties hereby represents and warrants to the other
that it has not employed or dealt with any broker or finder in connection with
this Agreement or the transactions contemplated hereby.
B. All notice required or permitted by this Agreement to be given to
a party shall be in writing and shall be deemed to be duly given if hand
delivered or sent by overnight courier or mailed by certified or registered
mail, return receipt requested, provided a copy is sent by telefax with
confirmation of receipt at sender's telefax as follows:
If to Licensor:
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: President - Licensing Division
Telefax No.: (▇▇▇) ▇▇▇-▇▇▇▇
25
With a Copy to:
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Senior Vice President and General Counsel
Telefax No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to Licensee:
▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Chief Financial Officer and President
Telefax No.: (▇▇▇) ▇▇▇-▇▇▇▇
Either party may change the address to which such notice and
communications shall be sent by written notice to the other party, provided that
any notice of change of address shall be effective only upon receipt.
C. This Agreement (including Schedules and Exhibits) sets forth the
entire agreement and understanding between the parties hereto relating in any
way to the use of the Licensed ▇▇▇▇ on the Licensed Merchandise, and to any
other subject matter contained herein and merges all prior discussions between
them. Neither party shall be bound by any definition, condition, warranty or
representation other than as expressly stated in this Agreement, and this
Agreement may not be amended or modified except by a written instrument signed
by the party against whom such modification or amendment is to be enforced.
D. In any review or consultation conducted by or on behalf of
Licensor hereunder, Licensor is acting in an advisory capacity only, and shall
have no responsibility for the operation of Licensee's business or its
manufacturing, distribution, sales or facilities used in connection therewith,
whether upon the recommendation of Licensor or otherwise.
E. All time limits stated in this Agreement are of the essence to
this Agreement.
F. Nothing herein contained shall be construed to constitute the
parties hereto as partners or as joint venturers, or either as an employee or
agent of the other.
G. This Agreement shall be deemed to be a contract made under the
laws of the State of New York and shall be governed by and construed in
accordance with the laws of such State, without regard to that State's rules on
conflicts of law.
H. The headings in this Agreement are for the convenience of the
parties only and shall not affect the meaning or interpretation of this
Agreement or any provisions thereof.
I. No waiver by either party, whether expressed or implied, of any
provision of this Agreement, or of any breach or default, shall constitute a
continuing waiver of such provision or a waiver of any other provision of this
Agreement. Acceptance of payments by Licensor shall not be deemed a waiver of
any violation of, or default in, any of the provisions of this Agreement by
Licensee.
26
J. Except as otherwise provided herein, this Agreement shall be
binding upon and inure to the benefit of the parties, theft successors and
permitted assigns.
IN WITNESS WHEREOF, Licensee and Revlon Consumer Products Corporation
for itself and/or on behalf of its designated affiliate have duly executed this
Agreement as of the date and year first above written.
REVLON CONSUMER PRODUCTS CORPORATION
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇
-------------------------------
Title: President - Licensing Division
-------------------------------
SIGNATURE EYEWEAR, INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇
--------------------------------
Title: President
-------------------------------
27
LIST OF EXHIBITS
EXHIBIT DESCRIPTION
------- -----------
A..................................... Licensed Merchandise
B..................................... Royalty Rates
Minimum Royalties and
Minimum Net Sales
C..................................... Licensee's CFO
Representation Letter
D..................................... Licensee's Contract
Manufacturer's Agreement
28
EXHIBIT A
MERCHANDISE
-----------
Eyeglass frames (including frames for sunglasses) and related accessories.
29
EXHIBIT B
ROYALTY RATES
-------------
First License Year: CONFIDENTIAL INFORMATION OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION% of Net Sales up to $CONFIDENTIAL
INFORMATION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION
CONFIDENTIAL INFORMATION OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION% of Net Sales from $CONFIDENTIAL
INFORMATION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION to
$CONFIDENTIAL INFORMATION OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION
CONFIDENTIAL INFORMATION OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION% of Net Sales greater than
$CONFIDENTIAL INFORMATION OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION
Second License Year: CONFIDENTIAL INFORMATION OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION% of Net Sales up to $CONFIDENTIAL
INFORMATION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION
CONFIDENTIAL INFORMATION OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION% of Net Sales greater than
$CONFIDENTIAL INFORMATION OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION
30
Each License Year thereafter: CONFIDENTIAL INFORMATION OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION% of Net Sales
MINIMUM ROYALTIES
-----------------
Each License Year: Minimum Net Sales for the subject License Year
multiplied by the appropriate royalty rate set
forth above for the Minimum Net Sales amount.
MINIMUM NET SALES
-----------------
First License Year: CONFIDENTIAL INFORMATION OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION
Second License Year: $CONFIDENTIAL INFORMATION OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION
Third License Year: $CONFIDENTIAL INFORMATION OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION
Each License Year thereafter: CONFIDENTIAL INFORMATION OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION% of prior License Year's actual Net
Sales or prior License Year's Minimum Net Sales
plus CONFIDENTIAL INFORMATION OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION%, whichever is greater; provided,
however, that in no event shall Minimum Net Sales
for the subject License Year exceed $CONFIDENTIAL
INFORMATION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
31
EXHIBIT C
CFO REPRESENTATION LETTER
-------------------------
I, __________________, Chief Financial Officer of Signature Eyewear, Inc.
("Licensee"), hereby certify to the truth and accuracy of the following
representations:
After a review of the quarterly Royalty Reports furnished by Licensee to
Revlon Consumer Products Corporation for the year ended _____________,
________________, as well as Licensee's related books of account and other
records, I believe (i) that such quarterly Royalty Reports have been prepared in
accordance with generally accepted accounting principles applied on a basis
consistent with Licensee's audited financial statements, except to the extent
deviations from generally accepted accounting principles are required pursuant
to the Agreement (ii) that such Royalty Reports are accurate and (iii) that such
Royalty Reports are in accordance with the License Agreement.
________________________________
Chief Financial Officer
Signature Eyewear, Inc.
Date: __________________________
32
EXHIBIT D
CONTRACT MANUFACTURER AGREEMENT
-------------------------------
____________, 1995
[Manufacturer]
-------------------
-------------------
-------------------
Dear _______________:
As we have discussed with you, ____________________ ("Licensee") has entered
into a license agreement (the "License Agreement") with Revlon Consumer Products
Corporation ("Revlon") granting to Licensee the right to use the "Jean Nate"
label, trademark and logo ("Licensed ▇▇▇▇") in conjunction with the following
merchandise (the "Merchandise") for resale to retailers designated by Revlon:
____________________________. We anticipate that your services will be used by
Licensee in manufacturing Merchandise and/or related packaging under this
program. In consideration of Revlon's approval of the manufacture by you of any
Merchandise or related packaging to be sold or promoted by Licensee under the
Licensed ▇▇▇▇ (hereafter referred to as the "Licensed Merchandise") pursuant to
an agreement between you and Licensee (the "Manufacturing Agreement"), it is
essential that you understand and agree to the following:
1. You acknowledge that Revlon has advised us that it is the absolute owner of
all right, title and interest in and to the Licensed ▇▇▇▇.
2. You now and forever disclaim any and all right or claim in or to the
Licensed ▇▇▇▇.
3. You agree to perform your obligations in a manner consistent with
Licensee's responsibilities under the License Agreement, to respect,
preserve and protect the Licensed ▇▇▇▇ and Revlon's absolute ownership of
the Licensed ▇▇▇▇.
4. You agree that your right to manufacture Licensed Merchandise is in all
respects subject to the terms and conditions in the License Agreement,
including, but not limited to, the termination provisions and restrictions
on the use of the Licensed ▇▇▇▇. You shall sell Licensed Merchandise only
to Licensee. You agree that your manufacture of Licensed Merchandise shall
give you no right to use the Licensed ▇▇▇▇ or to use or sell Licensed
Merchandise that bears the Licensed ▇▇▇▇ or was created especially for use
in connection with the Licensed ▇▇▇▇ beyond the earlier of the expiration
or termination of the License Agreement or the expiration or termination of
the Manufacturing Agreement. You agree not to use any information or
knowhow that you may obtain in connection with your manufacture of Licensed
Merchandise in the manufacture of products except pursuant to the
Manufacturing Agreement. If Licensee's right to use the Licensed ▇▇▇▇
expires or terminates, you agree to make no claim against Revlon for any
reason.
33
5. You further agree and acknowledge that any use by you or your agents,
employees or subcontractors inconsistent with the terms of this agreement
or the License Agreement will subject you to all remedies at law or equity
available to Revlon and/or Licensee including, but not limited to,
injunctive relief, damages, costs and attorneys' fees.
6. You further agree that the provisions of this agreement shall take
precedence over and supersede any other agreements between us which may
conflict with the terms stated herein.
7. This agreement shall be governed by and construed in accordance with the
laws of the State of New York, without reference to conflicts of laws
principles.
Please acknowledge your acceptance of the above terms by signing below and
returning one fully executed original to my attention.
Sincerely,
[Licensee]
By: _____________________________
Acknowledged and Agreed: Title:____________________________
[Manufacturer]
By:______________________________
Title:___________________________
Date:____________________________
Approved:
Revlon Consumer Products Corporation
By:______________________________
Title:___________________________
Date:____________________________
34
LIST OF SCHEDULES
1A.............................. Licensed ▇▇▇▇
9E.............................. Licensed Audited Financial Statements
9F.............................. Litigation and Claims against Licensee
relating to Merchandise or otherwise affecting
License
35
SCHEDULE 1A
Licensed ▇▇▇▇
36
SCHEDULE 9E
[TO BE PROVIDED]
37
SCHEDULE 9F
None.
38
FIRST AMENDMENT TO LICENSE AGREEMENT
This FIRST AMENDMENT dated as of May 29, 1997 amends the License Agreement dated
as of June 2, 1995 by and between REVLON CONSUMER PRODUCTS CORPORATION and/or
its designated affiliate ("Licensor") and SIGNATURE EYEWEAR, INC. ("Licensee")
(the "Agreement"). Unless otherwise stated herein, all capitalized terms
utilized herein shall be as defined in the Agreement.
WHEREAS, REVLON (SUISSE) S.A. ("Revlon Suisse), an affiliate of REVLON CONSUMER
PRODUCTS CORPORATION ("Revlon"), is the record owner of the Licensed ▇▇▇▇ in
Canada and other countries of the world which may become part of the Territory
during the Term pursuant to Section 2.G of the Agreement, and hereinafter shall
also be named as the Licensor with respect to the grant of rights under the
Agreement to Licensee; and
WHEREAS, the parties hereto desire to extend the Initial Term for an additional
year in accordance with the terms and conditions herein;
NOW THEREFORE, in consideration of the premises and the mutual covenants set
forth herein, Licensor and Licensee agree as follows:
1. Section 3.A. of the Agreement shall be amended to read as follows: "This
Agreement shall become effective as of the date first above written, and
shall terminate on September 30, 1998, unless terminated prior thereto in
accordance with the terms and conditions of the Agreement."
The year ending September 30, 1998 shall be referred to as the "Third License
Year".
2. Exhibit B to the Agreement shall be amended by the modification of the
Royalty Rates and Minimum Net Sales for such License Years as follows:
"Amended Exhibit B
-----------------
Royalty Rates
-------------
Third License Year: CONFIDENTIAL INFORMATION
OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND
EXCHANGE COMMISSION% of Net Sales
up to U.S. $CONFIDENTIAL
INFORMATION OMITTED AND FILED
SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION
Each License Year CONFIDENTIAL INFORMATION
thereafter (if any): OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND
EXCHANGE COMMISSION% of Net Sales
Minimum Net Sales
-----------------
Third License Year: $CONFIDENTIAL INFORMATION OMITTED
AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE
COMMISSION
Fourth License Year $CONFIDENTIAL INFORMATION OMITTED
(if any): AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE
COMMISSION
Each License Year CONFIDENTIAL INFORMATION OMITTED
thereafter (if any): AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE
COMMISSION% of prior License Year's actual
Net Sales or prior License Year's Minimum Net
Sales plus CONFIDENTIAL INFORMATION
OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE
COMMISSION percent (CONFIDENTIAL
INFORMATION OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION%), whichever is
greater; provided, however, that in no event shall
Minimum Net Sales for the subject License Year
exceed $CONFIDENTIAL INFORMATION
OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE
COMMISSION.
3. The parties agree the Licensee's Net Sales of Licensed Merchandise to ▇▇▇▇
National Corporation and Pearle Vision, Inc. during the Third License Year
shall not be credited against Licensee's Minimum Net Sales obligation.
4. For the purposes of Sections 2.A, 11.A(b), 15 and 16 of the Agreement, the
term "Licensor" shall mean Revlon and Revlon Suisse. Revlon and Revlon
Suisse jointly and severally represent and warrant that Revlon Suisse is
the record owner of the Licensed ▇▇▇▇ in any and all forms and embodiments
thereof with respect to beauty care products, cosmetic goods and
Merchandise in Canada and Australia (collectively, the "Other
Territories"), and all goodwill attached to the Licensed ▇▇▇▇ in the Other
Territories. Revlon Suisse has the sole and exclusive right to use the
Licensed ▇▇▇▇ as a trademark or otherwise in connection with the
Exploitation of Merchandise in the Other Territories and has not sold,
transferred, assigned or granted to any third party the right to use the
Licensed ▇▇▇▇ in connection with the Exploitation of Merchandise anywhere
in the world; and the Exploitation of the Licensed ▇▇▇▇ by Licensee as
contemplated by this Agreement in any Other Territory would not subject any
Licensee Indemnified Party to
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any liability (including damages or injunctive or equitable relief) for
infringement of statutory or common law trademark, tradename or similar
rights of third parties.
5. Except as otherwise set forth herein, all terms and conditions of the
Agreement shall remain unchanged and in full force and effect.
IN WITNESS WHEREOF, the parties hereto have executed this First Amendment as of
the date first written above.
REVLON CONSUMER PRODUCTS REVLON (SUISSE) S.A.
CORPORATION
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇ By: /s/
------------------------------ --------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇▇
President/Licensing Division Title: Authorized Representative
-----------------------------
SIGNATURE EYEWEAR, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
------------------------------
Title: Chief Financial Officer
---------------------------
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