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EXHIBIT 10.34 **
LICENSE AGREEMENT
This Agreement is entered into as of October 31, 1999, by and between
Movado Corporation, a Delaware corporation with offices at ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (sometimes hereinafter referred to as "U.S.
Licensor"); Movado Watch Company SA, a Swiss corporation with offices at 8
Bettlachstrasse, ▇▇-▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ (sometimes hereinafter referred
to as "International Licensor") and ▇▇▇▇▇▇ Eyewear Corporation, a New Jersey
corporation with offices at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
(hereinafter referred to as "Licensee").
WHEREAS, U.S. Licensor is the owner of the Licensed Trademarks (as
hereinafter defined) in the United States and International Licensor is the
owner of the Licensed Trademarks in the rest of the world (U.S. Licensor and
International Licensor are sometimes hereinafter referred to together as
"Licensor"); and
WHEREAS, the Licensed Trademarks have been used by Licensor and/or by
related and predecessor entities in connection with the manufacture, sale,
distribution, marketing and advertising of watches, clocks and other goods and
accessories and are the subject of pending applications and/or registrations for
various goods including without limitation optical frames and sunglasses, and
have thereby acquired very valuable good will and secondary meaning and;
(** CONFIDENTIAL PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED FROM PAGES 3, 5, 14,
15, 17, 19, 22-24, 27, 31, 38, 43, 45 AND FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION ("SEC") PURSUANT TO RULE 24b-2 OF THE SECURITIES
EXCHANGE ACT OF 1934 ("1934 Act")).
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WHEREAS, Licensee manufactures, make and sells non-prescription
sunglasses, ophthalmic frames and other eyewear products and accessories, and
desires to use the Licensed Trademarks in connection with the manufacture,
marketing and sale of Licensed Products (as hereinafter defined); and
WHEREAS, U.S. Licensor is willing to grant Licensee the right to use
the Licensed Trademarks in the United States and International Licensor is
willing to grant Licensee the right to use the Licensed Trademarks in the rest
of the world, in each case, under the terms and conditions hereinafter set
forth;
NOW THEREFORE, in consideration of the mutual covenants contained
herein and other good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the parties agree as follows:
1. DEFINITIONS
As used herein the term(s):
1.1 "Acquiror" shall mean a Person or group of Persons acting in
concert, but shall not include the Person(s) in Control of Licensee on the date
hereof or any Affiliate of any such Persons.
1.2 "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.
1.3 "Authorized Marks" shall have the meaning as set forth in Section
2.2 hereof.
1.4 "Authorized Retailer" shall mean any retail outlet approved for the
sale of Licensed Products pursuant to Section 8.2. hereunder.
1.5 "Bankruptcy shall have the meaning as set forth in Section 15.7.
1.6 "Change of Control" with respect to Licensee shall be deemed to
occur if (i) an Acquiror obtains Control of Licensee; or (ii) Licensee sells,
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conveys or otherwise transfers to an Acquiror all or substantially all of its
assets involved in the Exploitation of Products.
1.7 "Change Of Control Notice" shall mean a written notice to Licensor
of a proposed or completed Change of Control and which explains with reasonable
specificity the nature and extent of the Change of Control and the anticipated
effect of the Change of Control on the Licensee.
1.8 "Closeout" shall mean any Licensed Product sold (i) to a retailer
at a sales price which is * or (ii) to any Person other than a retailer at a
sales price *.
1.9 "Contract Quarter" shall mean a three-month period ending on the
last day of the third, sixth, ninth and twelfth full calendar months of a
Contract Year, provided that if Market Roll-Out does not occur on the first day
of August, November, February or May then the first Contract Quarter shall mean
the period from Market Roll-Out until the last day of the three (3) month period
following the first day of whichever August, November, February or May is the
first to occur after Market Roll-Out.
1.10 "Contract Year" shall mean each twelve (12) month period following
Market Roll-Out if Market Roll-Out occurs on the first day of August, November,
February or May, provided that if Market Roll-Out does not occur on the first
day of August, November, February or May, then "Contract Year" shall mean the
period from Market Roll-Out until the last day of the twelve (12) month period
following the first day of whichever August, November, February or May is the
first to occur after Market Roll-Out and each twelve (12) month period
thereafter.
1.11 "Consumer Advertising Payments" shall have the meaning set forth
in section 11.3.
* (CONFIDENTIAL PORTION OF THIS EXHIBIT OMITTED AND FILED SEPARATELY WITH THE
SEC PURSUANT TO RULE 24b-2 OF THE 1934 ACT.)
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1.12 "Control" shall mean the possession, direct or indirect, of the
power to cause the direction of the management and policies of the Person,
whether through the ownership of voting securities, by contract or otherwise.
1.13 "Exploit" shall mean manufacture, publicize, use, or distribute,
and "Exploitation" shall have a correlative meaning.
1.14 "International Minimum Sales" shall have the meaning set forth in
section 8.5.
1.15 "International Plan" shall have the meaning set forth in section
11.1.
1.16 "Licensor Affiliate" shall mean any Affiliate of Licensor.
1.17 "Licensed Products" shall mean Products bearing or sold under or
in connection with any of the Licensed Trademarks.
1.18 "Licensed Trademarks" shall mean any of the trademarks listed on
Schedule A annexed hereto.
1.19 "Manufacturers" shall have the meaning set forth in section 5.4
1.20 "Market Roll-Out" shall mean the date of Licensee's initial
distribution of Licensed Products in the Territory to Authorized Retailers.
1.21 "Minimum Communication Expenditures" shall have the meaning set
forth in section 11.3.
1.22 "Minimum Royalty" shall have the meaning set forth in Section
10.1.
1.23 "Minimum Sales" shall have the meaning set forth in Section 8.6
1.24 "Net Sales" during any period shall mean (a) the sum of the sales
all Licensed Products invoiced to customers during such period, less (b) the sum
of all sales previously included in Net Sales for Licensed Products returned by
customers during such period. The sales price invoiced to customers shall not be
deemed to include amounts invoiced for sales, use, excise, or other taxes,
freight, insurance, and normal and customary trade discounts so long as
separately stated.
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1.25 "North America" shall mean the United States, Canada and the
Caribbean Islands listed on Schedule C annexed hereto and "North American" shall
have a correlative meaning.
1.26 "North American Minimum Sales" shall have the meaning set forth in
section 8.4.
1.27 "North American Plan" shall have the meaning set forth in section
11.1.
1.28 "Packaging" with respect to Licensed Products shall mean labels,
packaging, containers and displays utilized with such Licensed Products.
1.29 "Person" shall mean any individual, corporation, association,
partnership or limited liability company, trust or other entity.
1.30 "Plan" shall have the meaning set forth in section 11.1.
1.31 "Products" shall mean ophthalmic eyeglasses, spectacles, readers,
sunglasses, eyeglass and sunglass cases, eyeglass and sunglass cords, eyeglass
and sunglass frames and eyeglass and sunglass lenses.
1.32 "Royalty Rate" shall have the meaning set forth in Section 10.1.
1.33 "Term" shall mean the duration of this Agreement, as determined
pursuant to section 15.1 hereof.
1.34 "Territory" shall mean the world except to the extent otherwise
limited pursuant to Sections, 2.1, 8.6 and 15.1.
1.35 "United States" shall mean the United States of America and all
territories and possessions within its jurisdiction including all United States
military bases and installations wherever located and further including *.
* (CONFIDENTIAL PORTION OF THIS EXHIBIT OMITTED AND FILED SEPARATELY WITH THE
SEC PURSUANT TO RULE 24b-2 OF THE 1934 ACT.)
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2. GRANT OF LICENSE
2.1 Upon the terms and conditions hereinafter set forth, (a) U.S.
Licensor grants to Licensee a license to use the Licensed Trademarks in
connection with the Exploitation of Licensed Products in the United States
and(b) International Licensor grants to Licensee a license to use the Licensed
Trademarks in connection with the Exploitation of Licensed Products in (i) the
remainder of North America outside the United States and (ii) the rest of the
world subject to agreement with Licensee on an International Plan for the first
Contract Year as provided in section 11.1 hereof and, further, subject to
agreement with Licensee, no later than the last date by which International
Licensor may object to such International Plan as originally submitted or as
revised, on International Minimum Sales which such agreement shall be evidenced
by International Licensor and Licensee causing such International Minimum Sales
as agreed upon to be set forth on and executing a schedule which shall be
annexed hereto in the form of Schedule D annexed hereto. The licenses granted
hereunder shall be exclusive to Licensee.
2.2 Licensee shall not use other marks, including without limitation,
trademarks, trade names, sub-brands, line names, collection names, model names,
designs, logos or endorsements (hereinafter referred to as "Authorized Marks")
in connection with the Exploitation of the Licensed Products, except as
specifically authorized by Licensor pursuant to the terms of this Agreement.
Licensee acknowledges that Licensor is and at all times shall be the owner of
all right, title, and interest in and to such Authorized Marks and that all use
thereof shall inure to the benefit of Licensor. To the extent any rights in and
to such Authorized Marks, or with respect to any materials used in the
Exploitation of the Licensed Products, including without limitation, copy,
artwork, and photographs, are deemed to accrue to Licensee pursuant to this
Agreement or otherwise, Licensee hereby assigns any and all such rights, at such
time as they may be deemed to accrue, to Licensor. Licensee agrees that it will
execute and deliver to Licensor any
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documents reasonably requested by Licensor necessary to effect any such
assignment.
2.3 Licensor reserves the right to Exploit and to grant to other
Persons the right to Exploit the Licensed Trademarks on any products or
merchandise or services other than Products.
3. OWNERSHIP OF LICENSED TRADEMARKS
3.1 Licensee recognizes the great value of the good will associated
with the Licensed Trademarks and acknowledges that the Licensed Trademarks and
all right, title and interest therein, and good will pertaining thereto, belong
exclusively to U.S. Licensor in the United States and to International Licensor
in the rest of the world and agrees that it will not, during the term of this
Agreement or thereafter, challenge Licensor's rights in and to the same or do or
knowingly permit to be done any act or thing by any Person that will, in any
way, impair the rights of Licensor in and to the Licensed Trademarks or which
will affect the validity thereof. Licensee further agrees that it will not
attack the validity of the license granted hereunder. Licensee further
acknowledges that all use of the Licensed Trademarks by Licensee shall inure to
the benefit of Licensor.
3.2 Licensee agrees promptly to notify Licensor in writing of any
infringement of any of the Licensed Trademarks which comes to Licensee's
attention and to cooperate with Licensor, but at Licensor's expense, in such
legal actions as Licensor may take to compel cessation of such infringement.
Licensee shall have no right whatsoever itself to ▇▇▇ any Person for
infringement of any of the Licensed Trademarks; such right and the election to
▇▇▇ or not to ▇▇▇ shall belong exclusively to Licensor.
3.3 Licensor shall take such steps as Licensor in its sole discretion
believes appropriate to cause cessation of any infringement of the Licensed
Trademarks, or any of them, which substantially and adversely affects the
business of Licensee in the sale of Licensed Products; provided, however, that
if
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Licensor shall fail to cause the cessation, substantially, of any infringement
in any country or countries within the Territory and such infringement continues
for at least 12 months after notice by Licensee as provided in section 3.2 then
the North American Minimum Sales requirements in section 8.4 (if such
infringement is in North America) or the International Minimum Sales
requirements in section 8.5 (if such infringement is outside North America)
shall be decreased from the date of such notice but only for so long as such
infringement continues to fairly reflect the adverse impact on Licensee's Net
Sales of such continuing infringement in the country or countries affected.
3.4 At Licensor's request, Licensee will execute and deliver any and
all documents necessary or desirable to record the license granted hereunder in
all jurisdictions in which Licensor in its sole discretion deems appropriate or
necessary.
4. RELATIONSHIP OF PARTIES
4.1 No party is an agent or employee of the other nor shall any party
in any event be liable for any acts or omissions of any other. This Agreement
does not, and shall not, be deemed to make any party hereto the agent, partner,
joint venturer or legal representative of any other party for any purpose
whatsoever. Neither Licensor nor Licensee shall have the right or authority to
assume or create any obligations or responsibility whatsoever, express or
implied, on behalf of, or in the name of, the other, or to bind the other in any
respect whatsoever, except as may otherwise be expressly herein provided.
5. USE OF THE LICENSED TRADEMARKS
5.1 Licensee recognizes and acknowledges that the favorable reputation
and goodwill attached to the Licensed Trademarks are valuable property rights of
Licensor and are dependent for their preservation upon the proper manufacture
and quality of the products on or in connection with which such trademarks are
used. Accordingly, Licensee agrees that it will not use any of
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the Licensed Trademarks except as expressly permitted hereunder and in the form
approved by and in accordance with the standards and requirements established by
Licensor from time to time and that it will not use any trademark, trade name or
commercial name on or in connection with products if such trademark, trade name
or commercial name is confusingly similar to any of the Licensed Trademarks in
sound, appearance or meaning, or if it possesses such similarity that confusion,
deception, mistake or dilution may result. The provisions of this section 5.1
shall survive any termination or cancellation of this Agreement.
5.2 Licensee agrees that its every use of the Licensed Trademarks shall
be strictly in accordance with the requirements as to marking, labeling and
advertising established from time to time by Licensor, which requirements
Licensor will not modify without giving Licensee at least sixty (60) days prior
written notice. Licensee will not make any use whatsoever of any Packaging,
product literature, advertising or promotional matter or any other materials in
connection with the Licensed Products without the prior written approval of
Licensor which Licensor shall have the right to grant or withhold on its sole
and absolute discretion. Licensee will submit samples of all such materials to
Licensor for advance approval at least ten (10) business days before the
proposed use thereof unless such matter is a copy of identical matter previously
submitted to Licensor for approval pursuant to this Section 5.2 and approved by
Licensor in writing. Licensor shall respond promptly to submissions under this
Section 5.2; such responses shall be in writing and any objections shall be
stated together with the reason therefor. Notwithstanding the foregoing,
Licensor and Licensee acknowledge that on occasion due to special circumstances
it may be necessary for Licensor to approve or disapprove of proposed
advertising or promotional material within twenty four (24) hours of their
submission to Licensor, and in such cases Licensor will use its reasonable
commercial efforts to respond, but shall not be obligated to respond, to such
submission within such period.
5.3 Licensee shall prepare and submit to U.S. Licensor for its review
and comments specific suggested retail prices for the Licensed Products in the
United States and shall prepare and submit to International Licensor for its
review
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and comments specific suggested retail prices for the Licensed Products in the
rest of the world. Subject to the next two sentences, all initial suggested
retail prices, and any subsequent changes thereto, must be approved, in writing,
by U.S. Licensor or by International Licensor as appropriate, such approval not
to be unreasonably withheld or delayed. Licensee acknowledges that in order to
preserve the good will attached to the Licensed Trademarks, the suggested retail
prices for the Licensed Products should reflect the prestigious nature of the
Licensed Trademarks, it being understood, however, that Licensor is not
empowered to fix or regulate the prices at which the Licensed Products are to be
sold. Nothing contained in this Agreement is intended or will be construed as
giving either party any right of approval with respect to any of the prices at
which the other party sells or offers to sell any of the Licensed Products.
5.4 Subject to Section 5.5, Licensee will have the right to engage one
or more third party manufacturers, subcontractors or vendors to produce the
Licensed Products or any component parts thereof exclusively on Licensee's
behalf (collectively "Manufacturers") provided that (a) each such Manufacturer
is approved in advance in writing by Licensor, which approval Licensor shall not
unreasonably withhold (with the reason for any such nonapproval to be provided
in writing to Licensee) and (b) each such Manufacturer enters into an agreement
with Licensee which is approved by Licensor and which contains such provisions
as Licensor shall approve, including a covenant prohibiting the Manufacturer
from selling or otherwise disposing of Licensed Products (or components thereof)
except to Licensee, Licensor or any Licensor Affiliate.
5.5 Licensor requires and Licensee warrants that all Licensed Products
shall be manufactured and/or produced in accordance with the terms of the
manufacturing agreement referred to in section 5.4 (b) hereof and with all
applicable laws, rules and regulations in the country where the Licensed
Products are manufactured, including, but not limited to, such laws, rules and
regulations related to minimum age of employment, minimum wages, forced labor,
safety, sanitation, building codes and working conditions. Licensee shall adopt
a program to ensure that each Manufacturer complies with the aforesaid which
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program shall be in writing and submitted to Licensor for review and approval.
At a minimum, such program shall include a physical inspection of each
Manufacturer and interview with the owner and/or senior management of
Manufacturer prior to the first performance of any work on the Licensed Products
and each Contract Year thereafter. A written report of the inspection signed by
Licensee and setting forth the scope of the inspection and the results thereof
shall be provided to Licensor as a condition precedent to Licensee's right to
sell the Licensed Products produced by such Manufacturer. Such inspections,
together with a written report, shall be required at least once annually
thereafter during the Term and any subsequent term, to ensure compliance. In the
event Licensee fails to implement or, once implemented, to abide by and to
continue, such a program, Licensor may, at its option, terminate the License
and/or require Licensee to terminate its relationship with Manufacturer. In the
event that it is determined by Licensor, or any other entity, whether or not a
party to this License, and upon notice to Licensee, that a Manufacturer does not
meet applicable laws, rules and/or regulations, Licensee shall demand such
Manufacturer to come into compliance with such laws, rules and/or regulations
within the sooner of thirty (30) days of notice of such noncompliance or the
time period required by the local governing body. In the event that such
Manufacturer fails to comply, Licensee shall terminate its relationship with
such Manufacturer. In the event Licensee fails to terminate its relationship
with such Manufacturer, Licensor may, at its option, terminate this License. In
no event shall Licensee or any Manufacturer utilize forced labor or establish a
minimum age of employment below the age of completion of compulsory education in
the applicable country.
6. QUALITY CONTROL
6.1 Before Licensee commences the manufacture of any one or more of the
Licensed Products, Licensee shall submit to Licensor one prototype piece for
approval which Licensor shall have the right to grant or withhold in its sole
and absolute discretion. Following such approval, Licensee shall submit to
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Licensor production samples of Licensed Product from the initial production run
for such examination and testing as Licensor may reasonably require. Licensee
shall not commence the sale of any Licensed Product until Licensor has given
written approval of the production samples submitted by Licensee for approval,
which approval Licensor shall have the right to grant or withhold in its
absolute discretion for quality reasons and which Licensor shall not
unreasonably withhold for any other reason. Under no circumstances shall
Licensor have any obligation to approve any production sample that does not
strictly conform to the approved prototype and any applicable specifications
approved by Licensor. Written approval of the prototype piece and of the
production samples or written reasons for disapproval (including, in the case of
disapproval of production samples for any quality reason, an explanation of such
reason) shall be given to Licensee reasonably promptly after submission of the
prototype piece and the production samples to Licensor; in general, Licensor
shall endeavor, but shall not be obligated to give written approval or
disapproval within ten (10) business days after receipt of such prototype piece
or the samples, whichever is the case. Unless within such ten (10) business day
period Licensor has either approved or disapproved the prototype piece or
production samples as provided above or informed Licensee in writing that it
requires additional time, then if Licensee continues to want Licensor to approve
such prototype or samples, as the case may be, it will send Licensor a written
notice to that effect and Licensor shall have ten (10) business days after
receipt of such notice to approve or disapprove of such prototype or samples or
to notify Licensee that proper testing of the prototype or production samples
requires a longer period and in the event Licensor does not so respond within
such ten (10) business day period then approval of such prototype piece or
production samples will be deemed to have been given upon the expiration of such
period, regardless of whether approval otherwise has been given by the Licensor.
6.2 Licensee agrees that all Licensed Products sold by Licensee under
this Agreement, shall be identical in all material respects to the prototypes
and samples approved by Licensor under Section 6.1 and shall be of a high
quality
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relative to other like products on the market and shall be manufactured in
strict compliance with such standards and requirements applicable thereto as
established by Licensor and as in effect from time to time. Licensor shall have
the right at any time and from time to time on written notice to Licensee to
alter or amend said standards and requirements, but no such alteration or
amendment shall take effect as to any Licensed Products until Licensee shall
have had a reasonable time (not more than ninety (90) days after such written
notice) to effect corresponding manufacturing or marketing changes and such
alteration or amendment shall apply only to Licensed Products manufactured after
the date which is ninety (90) days after the date of such notice. Licensee
agrees to submit to Licensor for approval prior to sale at least two (2)
representative samples of any Licensed Product manufactured by Licensee which
differ in any respect from the Licensed Products previously approved under
Section 6.1 hereof; approval or disapproval by Licensor shall be communicated to
Licensee as provided for in Section 6.1 hereof.
6.3 Licensor shall have the right to inspect each manufacturing
facility for the Licensed Products up to two times per Contract Year. Any such
inspection will occur during business hours and only after giving Licensee at
least ten (10) business days written notice of such inspection.
6.4 Licensee shall be solely responsible, whether or not the same shall
be covered by the applicable warranty, for the handling of all customer
inquiries, complaints and service relating to the Licensed Products. Such
service shall include all necessary repair and replacement of all the Licensed
Products and all costs associated therewith shall be borne exclusively by
Licensee. Licensee will submit to Licensor for approval after sales service
guidelines and a manufacturer's limited warranty relating to the Licensed
Products and will adhere to such guidelines and offer such warranty as approved
by Licensor. Licensor may require Licensee to recall any Licensed Products sold
by Licensee which do not comply with the quality standards and specifications
established for such products pursuant
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to sections 6.1 and 6.2. Licensee shall provide replacement products for the
recalled products at Licensee's expense, including shipping expense.
7. PRODUCT DEVELOPMENT
7.1 Licensee shall prepare and submit to Licensor for approval all
proposed designs and prototypes relating to the Licensed Products, provided
however, that Licensor may from time to time, at its option and without any
obligation to do so or to continue to do so, furnish Licensee with proposed
designs, sketches, samples and other materials to assist Licensee in the design
and production of the Licensed Products. All product designs, prototypes,
sketches, samples, drawings and copyrights relating to the Licensed Products,
whether prepared by Licensee or by Licensor, shall be owned exclusively by
Licensor provided, however, that any such designs, prototypes, sketches,
samples, drawings and copyrights developed exclusively by Licensee and not used
on or as any part of any Licensed Product any time during the term hereof shall
remain the property of Licensee. Nothing herein shall be construed as preventing
or limiting Licensee from using in its business any design attributes in respect
of which Licensor does not have exclusive rights (provided that use of any
design attributes on or in connection with the Licensed Products is first
approved by Licensor as provided under this Agreement) provided that such design
attributes, if used on the Licensed Products, have been in use * and that, in
any event, such design attributes have become widely employed by Persons other
than Licensee in sunglass and/or ophthalmic frame designs. Licensee will execute
and deliver all documents necessary or desirable to confirm Licensor's ownership
of such designs, prototypes, sketches, samples, drawings and copyrights. All
costs associated with the design and production of the Licensed Products, shall
be the sole responsibility of Licensee.
* (CONFIDENTIAL PORTION OF THIS EXHIBIT OMITTED AND FILED SEPARATELY WITH THE
SEC PURSUANT TO RULE 24b-2 of the 1934 ACT.)
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7.2 Subject to Sections 5.1, 5.2 and 6.1 the Licensor and Licensee
shall use their best efforts to reach agreement on the styles of the Licensed
Products that will comprise the seasonal collections to be sold by Licensee. The
Licensor and Licensee acknowledge that subjectivity and taste are major elements
involved in the design and development of new products, and in that context that
Licensee's understanding of the eyewear market will have to be balanced with
Licensor's perception of what eyewear bearing the Licensed Trademarks needs to
be, if saleable collections of the Licensed Products are to be introduced.
Accordingly, if (i) after following the procedures in Section 7.1 and using
their best efforts as above provided, Licensor and Licensee in good faith fail
to agree on * and (ii) Licensee, by notice to Licensor within thirty (30) days
after the date of Licensee's last design submission under Section 7.1, sets
forth in reasonable detail a description of how said design submission, together
with all other designs comprising the same collection, * and (iii) thereafter
Licensee, having used its best efforts to exploit the right and license granted
under this Agreement as provided in Section 8.1, fails to make the North
American Minimum Sales for the Contract Year when such collection was
introduced, then Licensee shall have the right to terminate this Agreement as of
the end of the next ensuing Contract Year by giving Licensor written notice
thereof within sixty (60) days following the end of the Contract Year in which
it failed to make such Minimum Sales.
7.3 Licensee may discontinue production of any one or more of the
models of Licensed Products previously approved by Licensor on at least thirty
(30) days prior notice to Licensor. Licensor may disapprove any one or more of
the models of Licensed Products previously approved at least two (2) years
earlier
* (CONFIDENTIAL PORTION OF THIS EXHIBIT OMITTED AND FILED SEPARATELY WITH THE
SEC PURSUANT TO RULE 24b-2 OF THE 1934 ACT.)
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by Licensor on at least ninety (90) days prior notice to Licensee; after which
time Licensee shall cease all production of and make no further use of the
Licensed Trademarks in connection with such disapproved model in the United
States, if such disapproval was by U.S. Licensor, or outside the United States,
if such disapproval was by International Licensor, except that Licensee shall
provide Licensor with a complete list of its inventory thereof and shall have
the right to sell its remaining inventory of such model.
8. SALES AND DISTRIBUTION
8.1 Licensee will use its best efforts in Exploiting the right and
license granted hereunder.
8.2 Licensee will sell Licensed Products only to such retailers or
other accounts (i) as Licensor shall approve in writing in its sole and absolute
discretion or (ii) which are department stores authorized to sell Movado watches
and in which Movado watches are sold or (iii) which are authorized to sell, and
only for so long as any such retailer or account continues to sell, optical
eyewear sold under at least three (3) of the brand names listed on Schedule B
annexed hereto and made a part hereof, which Schedule Licensor shall have the
right to modify in its sole and absolute discretion on thirty (30) days prior
notice to Licensee ("Authorized Retailers"). Any such retailer or account which
is an Authorized Retailer by reason of 8.2 (iii) above shall cease to be so
authorized at such time as it shall no longer sell at least three (3) brands of
the optical eyewear listed on Schedule B, either by reason of modification of
Schedule B or otherwise. Licensee will sell Licensed Products only to Authorized
Retailers within the Territory and will not sell Licensed Products to any
account which Licensee has reason to know will ship or resell any of such
Licensed Products outside the Territory or sell all or any of such Licensed
Products to anyone other than consumers.
8.3 Licensee will not sell or offer for sale or permit any Authorized
Retailer or any other Person to sell or offer for sale any Licensed Products
directly
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to consumers through catalogs, television, the Internet or otherwise
without the express prior written approval of Licensor.
8.4 Each Contract Year during the term of this Agreement, Licensee
shall make no less than the following total Net Sales of Licensed Products in
North America ("North American Minimum Sales").
*
8.5 Each Contract Year during the term of this Agreement, provided that
International Licensor shall have granted Licensee the license to Exploit the
Licensed Trademarks outside North America as provided in section 2.1 (b) (ii)
hereof, Licensee shall make no less than the total Net Sales of Licensed
Products outside North America as set forth on Schedule D annexed hereto
("International Minimum Sales"). For purposes of determining whether
International Minimum Sales have been achieved in any Contract Year, the
equivalent U.S. Dollar amount of total Net Sales invoiced in any currency other
than the U.S. Dollar shall be the average of the spot prices for the relevant
foreign currency on the first and last days for each Contract Quarter as
reported in THE WALL STREET JOURNAL.
8.6 In the event Licensee fails to achieve either North American
Minimum Sales or International Minimum Sales (together "Minimum Sales") in any
Contract Year then U.S. Licensor and International Licensor, respectively, shall
have the right at any time, upon thirty (30) days prior written notice to
* (CONFIDENTIAL PORTION OF THIS EXHIBIT OMITTED AND FILED SEPARATELY WITH THE
SEC PURSUANT TO RULE 24b-2 OF THE 1934 ACT.)
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Licensee, (i) to terminate the license granted hereunder as provided in
Article 15 or (ii) to appoint one or more other Persons, including without
limitation, one or more Licensor Affiliates, to Exploit the Licensed Products in
all or any portion of North America (in the event North American Minimum Sales
were not achieved) and in all or any portion of the Territory outside North
America (in the event International Minimum Sales were not achieved) in which
case the North American Minimum Sales and/or the International Minimum Sales, as
appropriate, be adjusted to reflect the non-exclusivity of the licenses granted
herein. Licensor's sole recourse if Licensee fails to achieve either North
American Minimum Sales or International Minimum Sales, or both in any Contract
Year shall be as provided in the preceding sentence provided, however, that the
foregoing shall not be deemed to in any way limit or waive Licensor's right to
any and all available remedies as a result of any breach by Licensee of any
other provision hereof.
9. MARKET ROLL-OUT
It is the intention of the parties that the Market Roll-Out of the Licensed
Products will commence on or about August 1, 2000. Licensee shall provide
Licensor with written notice of the actual date Market Roll-Out occurs. If by
March 1, 2001 the Market Roll-Out has not occurred, and if such delay is not due
to the act or acts of Licensor or Licensor's failure to act, or by reason of
force majeure, then Market Roll-Out shall be deemed to have occurred in August
1, 2000 and Licensee shall be in material breach of this Agreement.
10. ROYALTIES
10.1 Within forty-five (45) days following the end of each Contract
Quarter during each Contract Year, Licensee shall pay a royalty in an amount
equal to: (i) the greater of: (A) the Minimum Royalty which became due since the
beginning of that Contract Year and (B) the product of the Royalty Rate
multiplied by all Net Sales during that Contract Year less (ii) all royalty
payments
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previously made relating to Net Sales during that Contract Year. The Minimum
Royalty shall be deemed to accrue on a quarterly basis in an amount equal to
one-fourth of the Minimum Royalty for the applicable Contract Year. The Minimum
Royalty due for any Contract Year shall equal the product of the Royalty Rate
multiplied by the applicable Minimum Sales for such Contract Year. The Royalty
Rate in effect as of any date during any Contract Year ("Determination Date")
shall be determined in accordance with the following table based on the greater
of (x) the highest total cumulative Net Sales made in any prior Contract Year
and (y) total cumulative Net Sales made since the beginning of such Contract
Year through the Determination Date and (z) the highest applicable Minimum Sales
required in any prior Contract Year:
*
For example, if Licensee's total Net Sales for each of the first three (3)
Contract Quarters of Contract Year 3 are * and Net Sales in no prior Contract
Year exceeded * , then the Royalty Rate in effect as to all Net Sales made in
Contract Year 3 totaling less than * and the Royalty Rate in effect as to all
Net Sales made in Contract Year 3 exceeding * will be the Royalty Rate in effect
as to all Net Sales made after Contract Year 3 until the Royalty Rate is next
increased. In no event will the Royalty Rate ever decrease after it has
increased.
10.2 Royalties calculated on Net Sales made in the United States shall
be paid to U.S. Licensor; royalties calculated on Net Sales made in the rest of
the world shall be paid to International Licensor. In the event the North
American
* (CONFIDENTIAL PORTION OF THIS EXHIBIT OMITTED AND FILED SEPARATELY WITH THE
SEC PURSUANT TO RULE 24b-2 OF THE 1934 ACT.)
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Minimum Royalty to be paid for any Contract Quarter exceeds the product
of the Royalty Rate multiplied by all applicable Net Sales for such Contract
Quarter made in North America, then such excess shall be paid to U.S. Licensor
and to International Licensor, respectively, in the same proportions as the
respective proportions of Net Sales made for such Contract Quarter in the United
States and to Authorized Retailers in the rest of the world. The "North American
Minimum Royalty" due for any Contract Year shall equal the product of the
Royalty Rate multiplied by the applicable North American Minimum Sales for such
Contract Year. For the purpose of calculating royalties, Net Sales in foreign
currencies shall be converted to United States Dollars as provided in section
8.5.
10.3 If the license shall terminate other than on the last day of a
Contract Year, the royalty due for such Contract Year shall be an amount equal
to (i) the greater of (A) the Minimum Royalty for such Contract Year multiplied
by a fraction, the numerator of which shall be the number of days in such
Contract Year to and including the date of termination of the license and the
denominator of which shall be 365 and (B) the product of the Royalty Rate
multiplied by all Net Sales during that Contract Year less (ii) all royalty
payments previously made relating to Net Sales during that Contract Year.
10.4 Together with each royalty payment due each Contract Quarter,
Licensee shall provide Licensor with a written statement certified as accurate
by Licensee's Chief Financial Officer and setting forth (i) total Net Sales of
all Licensed Products made by Licensee both in the United States and such total
Net Sales made by Licensee outside the United States (with the latter broken out
by country and by geographic region as described in Schedule D) since the
beginning of such Contract Year through the last day of such Contract Quarter;
and (ii) the computation of the applicable Royalty Rate and the royalty due on
such Net Sales. Each such statement shall also identify by model number or SKU
number, or in such other appropriate manner as Licensor shall reasonably
request, the different
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Licensed Products and the total units sold of each included in such statement
and sub totals of each sold to each Authorized Retailer separately identified by
name and address. All products shall be deemed to have been sold when invoiced,
shipped or paid for, whichever first shall occur.
11. MARKETING AND ADVERTISING
11.1 No later than ninety (90) days prior to the beginning of each
Contract Year during the term of this Agreement, Licensee shall prepare and
present (i) to U.S. Licensor for feedback and input and, as required hereunder,
approval, an annual marketing plan setting forth the information described below
with respect to the United States (the "U.S. Plan") and (ii) to International
Licensor for feedback and input and approval, an annual marketing plan setting
forth the information described below with respect to the Territory outside the
United States (the "International Plan"). The U.S. Plan and the International
Plan are sometimes hereinafter referred to as the "Plan". The Plan shall set
forth in reasonable detail, Licensee's plans for conducting the Licensed
Products business for the next Contract Year, with particular emphasis on the
marketing, promotion and sales of the Licensed Products. The Plan shall include,
without limitation, (a) a description (including timing) of the types and
numbers of designs intended to be developed or manufactured (including any new
products); (b) sales volume projections by channel and country, in units and
dollars; (c) marketing strategies, including wholesale and suggested retail
pricing by collection and market; (d) assessment of customer base and customers;
(e) distribution, including distribution outlets; (f) advertising and sales
promotion plans, including number of and cost of advertisements and promotions
already scheduled, where advertisements will be published or promotions will be
scheduled, the proposed media schedule and costs of any and all advertising
campaigns, the format and the structure for all advertising not already approved
by Licensor; (g) Packaging, point of sale and trade exhibition plans; (h) the
results of any market research relating to the Licensed Products and similar
products, and market trends; and (i)
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any other information Licensor shall reasonably request. Licensor shall promptly
review and shall not unreasonably withhold approval of such marketing Plan each
Contract Year and shall notify Licensee that it either approves or objects to
such Plan, which notice shall specify the objection or objections in reasonable
detail. Licensor and Licensee shall communicate with respect to such objections
and shall develop a mutually acceptable marketing Plan for such Contract Year.
Licensee shall thereafter submit a revised marketing Plan which Licensor shall
review. At such time as a mutually acceptable marketing Plan is completed,
Licensor shall notify Licensee of its approval of the Plan. If Licensor fails to
notify Licensee of its approval or objections to the marketing Plan within
thirty (30) days following submission of the initial marketing Plan, or fifteen
(15) days following submission of any revised marketing Plan, such marketing
Plan shall be deemed approved by Licensor. Licensee shall abide by and adhere to
the Plan as finally approved provided, however, that in the event of any
conflict between any provision contained in the Plan and this Agreement, the
latter shall control. In the event International Licensor timely disapproves of
the International Plan and it is unable to agree with Licensee on an
International Plan prior to the beginning of the relevant Contract Year, then
International Licensor shall have the right upon notice to Licensee, to
terminate this Agreement as between International Licensor and Licensee as to
all or any portion of the Territory outside of the United States. In the event
U.S. Licensor timely disapproves of the U.S. Plan and it is unable to agree with
Licensee on a U.S. Plan prior to the beginning of the relevant Contract Year,
then U.S. Licensor shall have the right upon notice to Licensee to terminate
this Agreement as between U.S. Licensor and Licensee.
11.2 As soon as possible upon the execution hereof and thereafter at
all times during the term hereof, * .
* (CONFIDENTIAL PORTION OF THIS EXHIBIT OMITTED AND FILED SEPARATELY WITH THE
SEC PURSUANT TO RULE 24b-2 OF THE 1934 ACT.)
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11.3 Each Contract Year Licensee will make, at a minimum, advertising
and marketing expenditures exclusively in connection with the Licensed Products
equal to: * ("Minimum Communication Expenditures"). Licensee further agrees to
pay the following portions of such Minimum Communication Expenditures directly
to Licensor (such direct payments hereinafter referred to as "Consumer
Advertising Payments"):
*
The Consumer Advertising Payments shall be paid to U.S. Licensor and to
International Licensor each Contract Year in the same proportions, respectively,
as Net Sales estimated to be made in the United States and outside the United
States bear to total estimated Net Sales based on the Plan for such Contract
Year. The Consumer Advertising Payments shall be made to Licensor in equal
quarterly payments no later than the beginning of each Contract Year Quarter.
Licensor will spend an amount equal to the Consumer Advertising Payments for the
creation, production and placement of consumer advertising of the Licensed
Products for which it shall be solely responsible; provided, however, that
Licensor will furnish Licensee within sixty (60) days after each Contract Year
with a statement of such expenditures made by Licensor and a list of all such
consumer advertising placed in such Contract Year. Notwithstanding the
foregoing, Licensee will pay Licensor * against the Consumer Advertising
Payments due in the first Contract Year no later than one hundred twenty (120)
days prior to Market Roll-Out.
* (CONFIDENTIAL PORTION OF THIS EXHIBIT OMITTED AND FILED SEPARATELY WITH THE
SEC PURSUANT TO RULE 24b-2 OF THE 1934 ACT.)
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For purposes of this section 11.3 Minimum Communications Expenditures, other
than the portion thereof paid to Licensor as Consumer Advertising Payments,
shall be deemed to include only those expenditures incurred by Licensee for
marketing and promotion purposes involving the display of the Trademark (other
than for purposes of packaging the Licensed Product), including, but not limited
to, * . Such expenditures shall be in accordance and consistent with the
marketing Plan as approved by Licensor or otherwise as expressly approved by
Licensor in writing.
11.4 Together with the final royalty statement due following each
Contract Year pursuant to section 10.4 hereof, Licensee shall include a final
calculation and statement of the total Consumer Advertising Payments and total
Minimum Communication Expenditures due for such Contract Year and shall,
together therewith, remit to Licensor any underpayment of the Consumer
Advertising Payments and either spend in the next succeeding two (2) Contract
Quarters any underpayment of Minimum Communication Expenditures or set off from
the Minimum Communication Expenditures due in the next succeeding two (2)
Contract Quarters any overpayment of Minimum Communications Expenditures; and
Licensor, within thirty (30) days after receipt of such statement, shall pay to
Licensee any overpayment of Consumer Advertising Payments to the extent Licensor
agrees with Licensee's statement and calculation thereof.
11.5 Licensee shall use such advertising agency or agencies as Licensor
shall require in connection with the Exploitation of the Licensed Products;
provided the charges of any such agency are reasonable and customary.
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* (CONFIDENTIAL PORTION OF THIS EXHIBIT OMITTED AND FILED SEPARATELY WITH THE
SEC PURSUANT TO RULE 24b-2 OF THE 1934 ACT.)
12. BOOKS AND RECORDS
12.1 Licensee shall keep and maintain at its regular place of business
complete and accurate records and accounts on the basis of which, it prepares
financial statements that are in accordance with GAAP, showing the business
transacted in connection with the Licensed Products manufactured and sold
pursuant to this Agreement, including without limitation records and accounts
relating to Net Sales, shipments and orders for Licensed Products and
expenditures on marketing, promotion and advertising. In the case of termination
of this Agreement, such information shall be provided for the period ending at
termination. Such records and accounts shall be kept until the earlier to occur
of (i) the third year following the Contract Year in which such Net Sales were
received and (ii) two years following the termination or expiration of this
Agreement.
12.2 Licensor, or its duly authorized agents or representatives, shall
have access to and the right to examine and make copies of all records and
accounts that Licensee is required to maintain pursuant to Section 12.1 at
Licensee's premises, provided that any such examination (a) shall be at
Licensor's expense, (b) shall be during normal business hours upon reasonable
prior notice which shall be no less than five (5) business days, and (c) shall
not unreasonably interfere with Licensee's operations and activities. Should an
audit disclose that Licensee underpaid royalties for any given Contract Year,
Licensee shall forthwith and upon written demand pay Licensor the amount owed,
together with interest thereon, at a rate of ten percent (10%) per annum
calculated from the due date of such royalties. Should an audit disclose that
Licensee's actual advertising and marketing expenditures in any given Contract
Year failed to meet the
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Minimum Communication Expenditures required hereunder, Licensee shall forthwith
and upon written demand pay Licensor the difference. Further, Licensee shall pay
for the cost of the audit, if it should be disclosed that Licensee underpaid
royalties by a margin exceeding five percent (5%) in any given Contract Year, or
that Licensee's actual advertising and marketing expenditures failed to meet the
Minimum Communication Expenditures required hereunder by a margin exceeding five
percent (5%) and Licensee had not obtained Licensor's approval to apply such
deficiency in advertising expenditures to the next Contract Year.
12.3 Promptly after the date hereof, Licensee will furnish Licensor
with copies of Licensee's audited financial statements for its 1998 and 1999
fiscal years together with the opinion of Licensee's independent certified
public accountants thereon. In addition, for so long as Licensee is not subject
to or in compliance with the reporting requirements of section 13 or 15(d) of
the Securities Exchange Act of 1934, as amended, ("1934 Act") Licensee shall
provide Licensor in writing (a) a statement certified by Licensee's Chief
Financial Officer to be delivered to Licensor within four (4) months after the
end of each fiscal year of Licensee and (b) a six (6) month interim statement
certified by Licensee's Chief Financial Officer to be delivered to Licensor
within sixty (60) days after the end of the six (6) month period, both
evidencing all of the following:
(i) There is no default or event of default which has not been
affirmatively waived under any agreement covering Licensee's
indebtedness as of the end of the period to which the certified
statement relates. (Licensee shall provide Licensor with copies of all
quarterly officer's certifications simultaneously with the sending of
the same by Licensee to Licensee's lenders);
(ii) After the date hereof, Licensee has not had Operating Losses
(defined as income/losses before interest and taxes) for two (2)
consecutive fiscal quarters;
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(iii) At the end of each fiscal year of Licensee, Licensee has not
had Operating Losses for such fiscal year;
(iv) Licensee's net shipments of all of its products during the
period to which the certified statement relates were * which by their
terms were to be filled prior to the end of such period; and
(v) Cash flow, defined as operating income plus depreciation and
amortization, is * .
In addition, in the event Licensee's net worth for any period covered by any of
the foregoing statements is less than Licensee's net worth for its fiscal year
1999, then Licensee will provide Licensor with copies of Licensee's audited
financial statements and accompanying opinions of its independent certified
public accountants for each fiscal year thereafter for the duration of this
Agreement unless Licensee becomes subject to the 1934 Act reporting requirements
referred to above.
13. REPRESENTATIONS AND WARRANTIES OF LICENSEE
Licensee represents and warrants to Licensor as follows:
13.1 Licensee is a corporation duly organized, validly existing and
in good standing under the laws of the State of New Jersey.
* (CONFIDENTIAL PORTION OF THIS EXHIBIT OMITTED AND FILED SEPARATELY WITH THE
SEC PURSUANT TO RULE 24b-2 OF THE 1934 ACT.)
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13.2 Licensee has corporate power and authority to execute and deliver
this Agreement and to perform its obligations under this Agreement. The
execution and delivery of this Agreement by Licensee have been duly and validly
authorized by all necessary corporate action. This Agreement has been duly
authorized, executed and delivered by Licensee and constitutes a valid and
binding obligation of Licensee, enforceable against Licensee 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 creditor's rights and (ii) the remedy of specific performance
and injunctive and other forms of equitable relief may be subject to equitable
defenses and the discretion of the court in which any proceeding therefor may be
brought.
13.3 The execution, delivery and performance of this Agreement by
Licensee will not (i) violate any provision of the Articles of Incorporation or
By-Laws of Licensee, (ii) violate, or be in conflict with, or constitute a
default of or termination event (or an event which, with notice or lapse of time
to both, would constitute a default or a termination event) under, any agreement
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.
13.4 No consent, approval or authorization of, or declaration, filing
or registration with, any governmental or regulatory authority or other Person
is required in connection with the execution, delivery and performance of this
Agreement by Licensee.
13.5 Licensee has provided to Licensor a copy of its audited financial
statements for its 1998 and 1999 fiscal years (the "Licensee Financial
Statements"). The Licensee Financial Statements have been prepared from the
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books and records of Licensee in accordance with generally accepted accounting
principles, consistently applied, and present fairly in all material respects,
the financial condition of Licensee at July 31, 1999 and the results of
operations and cash flows for Licensee for each of the two years in the period
ended July 31, 1999. Since the date of the Licensee Financial Statements, there
has not been any material adverse change in the business, operations, financial
condition, assets or liabilities of Licensee.
14. REPRESENTATIONS AND WARRANTIES OF LICENSOR.
Licensor represents and warrants to Licensee as follows:
14.1 U. S. Licensor is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware and International
Licensor is a corporation duly organized, validly existing and in good standing
under the laws of Switzerland.
14.2 Licensor has corporate power and authority to execute and deliver
this Agreement and to perform its obligations under this Agreement. The
execution and delivery of this Agreement by Licensor have been duly authorized,
executed and delivered by Licensor and constitutes a valid and binding
obligation of Licensor, enforceable against Licensor 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 creditor's rights and (ii) the remedy of specific performance
and injunctive and other forms of equitable relief may be subject to equitable
defenses and the discretion of the court in which any proceeding therefor may be
brought.
14.3 The execution, delivery and performance of this Agreement by
Licensor will not (i) violate any provision of the Articles of Incorporation or
By-Laws of Licensor, (ii) violate, or be in conflict with, or constitute a
default of or termination event (or an event which with notice or lapse of time
or both, would
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constitute a default or a termination event) under, any agreement to which
Licensor is a party, or (iii) violate any applicable statute or law or any
judgment, decree, order, regulation or rule or any court or governmental
authority binding on Licensor.
14.4 No consent, approval or authorization of, or declaration, filing
or registration with, any governmental or regulatory authority or other Person,
except any which have already been obtained, is required in connection with the
execution, delivery and performance of this Agreement by Licensor.
14.5 U.S. Licensor is the sole and exclusive owner of the Licensed
Trademarks and the goodwill attached thereto in the United States and has the
sole and exclusive right to grant to Licensee the rights purported to be granted
hereunder to use the Licensed Trademarks in connection with the Exploitation of
Licensed Products in the United States. International Licensor is the sole and
exclusive owner of the Licensed Trademarks and the goodwill attached thereto in
the rest of the world and has the sole and exclusive right to grant to Licensee
the rights purported to be granted hereunder to use the Licensed Trademarks in
connection with the Exploitation of Licensed Products in the rest of the world.
No proceedings have been instituted, are pending or, to the knowledge of
Licensor, threatened, which challenge the rights of Licensor in respect to the
Licensed Trademarks or the validity thereof which, if resulting in a judgment
adverse to Licensor, would materially and adversely affect the rights granted to
Licensee hereunder; to the knowledge of Licensor, none of the Licensed
Trademarks infringes upon or otherwise violates the rights of others or is being
infringed by others and none is subject to any outstanding order, decree,
judgment, stipulation or charge which will materially and adversely affect the
rights granted to Licensee hereunder.
15. TERM AND TERMINATION
15.1 This Agreement shall remain in full force and effect from the date
this Agreement is entered into by the parties until the end of the fifth
Contract
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Year unless earlier terminated as provided herein. Licensee shall have the right
to renew this Agreement for an additional five (5) years upon notice to the
Licensor given at least 180 days prior to the end of the initial Term if during
the initial Term the Minimum Sales have been achieved, no event has occurred
that upon the giving of notice or lapse of time, or both, would entitle the
Licensor to terminate this Agreement and Net Sales in North America for the
fourth Contract Year were at least double the North American Minimum Sales
required for such Contract Year; provided, however, that there shall be excluded
from the Territory in the renewal Term any geographic region set forth on
Schedule D hereof (i.e.,Europe, Asia/Australia, and Other) in which Licensee's
Net Sales in the fourth Contract Year were not at least double the required Net
Sales for such region as set forth on Schedule D. In the event this Agreement is
renewed as provided above in this section 15.1 then the Minimum Sales for each
Contract Year in such renewal Term shall be no less than the greater of *
Contract Year. The allocation of Minimum Sales for each Contract Year during the
renewal Term as between North American Minimum Sales and International Minimum
Sales shall be determined by Licensor in accordance with the foregoing and set
forth in a notice which Licensor shall deliver to Licensee as soon as reasonably
practicable after Licensee's exercise of its renewal right as set forth above.
15.2 No right of Licensor or obligation of Licensee accruing under this
Agreement prior to any termination thereof shall be affected by such
termination; without limiting the generality of the foregoing, Licensee agrees
promptly after termination (i) to make all payments that became due hereunder on
or before the effective date of termination and (ii) render all statements
required hereunder through the effective date of termination.
* (CONFIDENTIAL PORTION OF THIS EXHIBIT OMITTED AND FILED SEPARATELY WITH THE
SEC PURSUANT TO RULE 24b-2 OF THE 1934 ACT.)
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15.3 In addition to its rights to terminate under Section 15.4 and 15.5
Licensor shall have the right to terminate this Agreement immediately upon
notice to Licensee if Licensee shall breach or default in the observance or
performance of any one, or more provisions hereof and (a) if such breach or
default is remediable, Licensee shall have failed to effect such remedy to
Licensor's reasonable satisfaction within thirty (30) days after notice of such
breach or default from Licensor or (b) such breach or default is not remediable
to the reasonable satisfaction of Licensor and is not immaterial.
15.4 U.S. Licensor shall have the right to terminate this Agreement
immediately upon notice to Licensee in the event this Agreement is terminated by
International Licensor except in the case of termination by International
Licensor under Section 8.6. International Licensor and/or Licensee shall have
the right to terminate this Agreement immediately upon notice to the other party
in the event this Agreement is terminated by U.S. Licensor.
15.5 Licensor will have the right to terminate this Agreement forthwith
upon notice to Licensee in the event:
(a) Licensee fails to achieve Minimum Sales in any Contract Year;
or
(b) Licensee breaches any of the provisions set forth in Article 5
hereof; or
(c) Licensee fails to procure Licensor's prior approval as
provided in Sections 6.1, 6.2, 7.1, 8.2; or
(d) Licensee fails to make timely payment of all royalties due
hereunder more than twice during any eight (8) consecutive
Contract Year quarters; or
(e) Licensee underpays royalties more than once by more than 5%.
15.6 Licensee shall have the right to terminate this Agreement as
follows:
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(a) By giving Licensor at least six (6) months written notice of such
termination in the event that Licensor shall breach or default in the observance
or performance of any one, or more provisions hereof and (i) if such breach or
default is remediable, Licensor shall have failed to effect such remedy to
Licensee's reasonable satisfaction within thirty (30) days after notice of such
breach or default from Licensee or (ii) such breach or default is not remediable
to the reasonable satisfaction of Licensee and is not immaterial
(b) If the U.S. Licensor's rights in the trademark MOVADO in the United
States are canceled, defeated or limited to items that do not include watches
and/or eyewear or determined to be invalid in a non-appealable judgment of a
court of competent jurisdiction, Licensee shall have the right to terminate this
Agreement upon notice to Licensor. If the International Licensor's rights in the
trademark MOVADO in any country included within the Territory outside the United
States are cancelled, defeated or limited to items that do not include watches
and/or eyewear or are determined to be invalid in a non-appealable judgment of a
court of competent jurisdiction then International Minimum Sales for each
Contract Year following the Contract Year in which such rights have been so
affected shall be reduced by an amount equal to the Net Sales made in such
country in the immediately preceding Contract Year.
15.7 In the event Licensee files a petition in bankruptcy, or is
adjudicated a bankrupt, or if a petition in bankruptcy is filed against Licensee
and is not dismissed within thirty (30) days or if Licensee becomes insolvent or
makes an assignment for the benefit of creditors or any arrangement pursuant to
any bankruptcy law, or if Licensee discontinues its business or if a receiver is
appointed for Licensee (any of the foregoing hereinafter referred to as a
"Bankruptcy"), this Agreement shall automatically terminate without any notice
whatsoever being necessary, to the full extent allowed by applicable law. All
royalties on sales made prior to such Bankruptcy shall become immediately due
and payable. In the event this Agreement is terminated pursuant to this section,
Licensee, its receivers, representatives, trustees, agents, administrators,
successors
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and/or assigns, shall have no right to sell any of the Licensed Products covered
by this Agreement, except with the special consent in accordance with the
written instructions of Licensor. The non-assumption of this Agreement by or on
behalf of the debtor in connection with any Bankruptcy, shall operate to
automatically terminate this Agreement, without any notice whatsoever being
necessary, effective as of the date of the commencement of the Bankruptcy.
15.8 In the event that this Agreement is terminated for any reason
whatsoever, Licensee shall immediately discontinue all use of the Licensed
Trademarks or any of them in any form and/or in any manner whatsoever; and shall
promptly provide Licensor with a list of its inventory of Licensed Products
provided that Licensee shall have the right for a nine (9) month period after
such termination to continue to sell Licensed Products then in Licensee's
inventory at the date of such termination in accordance with the terms hereof,
subject, however, to Licensor's repurchase option. Licensee hereby grants to
Licensor the right and option, exercisable by Licensor upon notice at any time
and from time to time after the effective date of termination, to purchase at
cost (excluding any intercompany markups) from Licensee all or any portion
selected by Licensor of unused labels, wrappers, tags, cartons, bags, boxes,
advertising material and Licensed Products on which any Licensed Trademark
appears. No Royalty shall be payable on sales of Licensed Products to the
Licensor as provided in this section 15.8. This Section 15.8 shall survive any
termination of this Agreement.
16. INSURANCE; INDEMNITY
16.1 Except as to such matters in respect of which Licensor is required
to indemnify Licensee under Section 16.2, Licensee will indemnify and hold
Licensor harmless from any claim, suit, loss, damage or expense (including
reasonable attorney's fees) arising out of the breach of this Agreement by
Licensee or the manufacture, labeling, sale, distribution or advertisement of
any
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Licensed Product by Licensee. Licensor shall give to Licensee timely notice of
any such claim or suit.
16.2 Licensor will indemnify and hold Licensee harmless from any claim,
suit, loss, damage or expense (including, without limitation, reasonable
attorneys' fees) arising out of the alleged infringement by any of the Licensed
Trademarks of the trademarks, patents or copyrights owned by any third party.
Licensee will give Licensor timely notice of any such claim or suit.
16.3 Licensee shall maintain, at its own expense, in full force and
effect at all times during which Licensed Products bearing a Licensed Trademark
are being sold, with a responsible insurance carrier acceptable to Licensor
comprehensive general liability insurance which includes, among other things,
products liability insurance with coverage limits of no less than $2,000,000 per
occurrence and $10,000,000 in the aggregate. Such insurance shall provide
primary insurance protection to Licensor and shall name Licensor as an
additional insured and Licensee shall give at least thirty (30) days prior
written notice to Licensor of the cancellation of, or any substantial
modification in, such insurance policy. Licensee shall, from time to time, upon
reasonable request by Licensor, promptly furnish or cause to be furnished to
Licensor evidence in form and substance satisfactory to Licensor of the
maintenance of the insurance required hereunder, including, but not limited to,
originals or, copies of policies, certificates of insurance (with applicable
riders and endorsements) and proof of premium payments.
17. NO ASSIGNMENT OR SUBLICENSE BY LICENSEE
17.1 This Agreement and all its rights and duties hereunder are
personal to the Licensee and shall not, without the prior written consent of
Licensor, which consent Licensor shall have the right to grant or withhold in
its sole and absolute discretion, be assigned, sublicensed or otherwise
encumbered by Licensee whether
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by operation of law or otherwise. Any such purported assignment, sublicense or
encumbrance without such consent shall be void and of no effect whatsoever.
17.2 At least 60 days prior to the completion of any proposed Change of
Control of Licensee, Licensee shall send a Change of Control Notice to Licensor
who may terminate the License by written notice to Licensee within 20 days after
Licensor receives a Change of Control Notice effective upon the later to occur
of the Change of Control and the date specified in any such termination notice;
provided, however, that the License shall not be terminated if such Change of
Control shall not occur. If Licensor does not exercise its right to terminate
the License within such 60 day period, Licensor shall not have the right to
terminate the License as a result of such Change of Control. In the event that
Licensor learns of a completed Change of Control for which Licensor did not
receive a Change of Control Notice, Licensor may terminate the License forthwith
by written notice to Licensee.
18. MISCELLANEOUS
18.1 In the event that Licensor or Licensee shall, at any time, waive
any of its rights under this Agreement, or the performance by the other party of
any of its obligations hereunder, such waiver shall not be construed as a
continuing waiver of the same rights or obligations or a waiver of any other
rights or obligations.
18.2 Each party acknowledges that all information relating to the
business and operations of the other party and its affiliates which either party
learns during the term, or has learned during negotiation, of this Agreement,
subject to section 7.1 all special design concepts which either party or its
affiliates provide to the other party hereunder and all sketches and designs
received by either party from the other party or its affiliates (hereinafter
referred to as "Confidential Data"), are valuable property of the party from
whom obtained.
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Confidential Data shall not include publicly available information unless the
same becomes publicly available through a breach of this Agreement. Each party
acknowledges the need to preserve the confidentiality and secrecy of
Confidential Data and agrees that, both during and after the term of this
Agreement neither shall, and shall not permit any third party to, use or
disclose Confidential Data except to the extent any such disclosure is required
by a count of competent jurisdiction or by a lawfully issued subpoena, in which
event such party shall immediately notify the other party of such required
disclosure and use reasonable efforts to obtain an appropriate stipulation under
which the confidentiality of the disclosed Confidential Data is preserved to the
extent practicable. Each party shall take all necessary steps to ensure that all
use of Confidential Data by it or its authorized representatives and employees
(which use shall be solely as necessary for, and in connection with, performance
of its obligations under this Agreement) shall preserve in all respects the
confidentiality of Confidential Data.
18.3 Licensee shall sell all Licensed Products ordered by Licensor or
by Licensor Affiliate to Licensor or such Licensor Affiliate at the lowest price
the same Licensed Products have been sold by Licensee or by any Affiliate of
Licensee to any other Person within the preceding twelve (12) months. If, within
six (6) months subsequent to any such sale to Licensor or any Licensor
Affiliate, Licensee or any Affiliate of Licensee sells any of the same Licensed
Products purchased by Licensor or any Licensor Affiliate in such prior six (6)
month period to any other Person at a price less than that paid by Licensor or
any such Licensor Affiliate, then Licensee will issue a credit note to Licensor
or such Licensor Affiliate, as the case may be, equal to the per unit difference
paid multiplied by the total number of units purchased by Licensor or Licensor
Affiliate within thirty (30) days after the date of such sale to such other
Person or, at the request of Licensor or such Licensor Affiliate, Licensee will
refund to Licensor or such Licensor Affiliate the amount of such price
difference.
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18.4 In no event will sales of Closeouts * any Contract Year. All
Closeouts shall be sold only with Licensor's prior written approval, which
Licensor may withhold in its sole discretion, * terms and conditions as
Licensee, in its reasonable discretion, determines appropriate and shall not be
sold to any Person which Licensee knows, or has reason to know, will export such
Closeouts from the country in which the Licensed Products were to have been
sold.
18.5 This Agreement constitutes the entire Agreement between the
parties as to the subject matter hereof and no modifications or revisions hereof
shall be of any force or effect unless the same are in writing and executed by
the parties hereto.
18.6 Any provisions of this Agreement which are, or shall be determined
to be, invalid shall be ineffective, but such invalidity shall not affect the
remaining provisions hereof. Section headings herein are for convenience only
and have no substantive effect.
18.7 This Agreement is binding upon the parties hereto, and their
permitted successors and assigns. Licensor shall have the right to assign this
Agreement including without limitation any or all of its rights or obligations
hereunder to any other person upon notice to Licensee.
18.8 This Agreement shall be construed in accordance with and be
governed by the laws of the State of New York, applicable to contracts made and
to be wholly performed therein without regard to its conflict of laws rules. Any
action or proceeding arising out of or relating in any way to this Agreement,
shall be brought and enforced in the courts of the United States for the
Southern
* (CONFIDENTIAL PORTION OF THIS EXHIBIT OMITTED AND FILED SEPARATELY WITH THE
SEC PURSUANT TO RULE 24b-2 OF THE 1934 ACT.)
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District of New York, or, if such courts do not have, or do not accept, subject
matter jurisdiction over the action or proceeding, in the courts of the state of
New York for New York County and each party hereby consents to the personal
jurisdiction of each such court in respect of any action or proceeding. Each
party consents to service of process in any such action or proceeding by the
mailing of copies thereof by Registered or Certified Mail, postage prepaid,
return receipt requested, to it at its address provided for notices hereunder.
The foregoing shall not limit the right of any party of the parties to serve
process in any other manner permitted by law or to obtain execution or
enforcement of any judgment in any other jurisdiction. Each party hereby waives
(a) any objection that it may now or hereafter have to the laying of venue in
any action or proceeding arising under or related to this Agreement in any court
located in the Borough of Manhattan, City and State of New York, (b) any claim
that a court located in the Borough of Manhattan, City and State of New York is
not a convenient forum for any action or proceeding, and (c) any claim that it
is not subject to the personal jurisdiction of the United States of District
Court for the Southern District of New York or of the courts of the State of New
York located in the Borough of Manhattan, City and State of New York.
18.9 All notices and authorizations hereunder shall be in writing and,
together with all statements, reports and payments, shall be dispatched by
overnight courier, or certified mail/return receipt requested or hand delivered
or faxed (with a confirmation copy sent by overnight courier, hand delivered or
registered mail) addressed to Licensee or Licensor as set forth below, and shall
be effective upon receipt:
Licensee: Executive Vice President
▇▇▇▇▇▇ Eyewear
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
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Copies to: General Counsel
▇▇▇▇▇▇ Eyewear Corporation
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
U.S. Licensor: President
Movado Corporation
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Copies to: Executive Vice President
Movado Group, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
General Counsel
Movado Group, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
International Licensor: President
Movado Watch Company SA
8 Bettlachstrasse
▇▇-▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇
Copies to: Executive Vice President
Movado Group, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
General Counsel
Movado Group, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
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18.10 This Agreement may be executed in any number of counterparts,
each of which shall be deemed to be an original, but all such counterparts shall
together constitute one and the same Agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their duly authorized officers as of the date first above written.
MOVADO CORPORATION ▇▇▇▇▇▇ EYEWEAR CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
----------------------------- -------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
--------------------------- -----------------------------
Title: General Counsel/Secretary Title: Executive VP
-------------------------- ----------------------------
MOVADO WATCH COMPANY S.A.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇
-----------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇
---------------------------
Title: Director
--------------------------
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SCHEDULE A
LICENSED TRADEMARKS
MOVADO
M Logo
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SCHEDULE B
BRAND NAMES
*
* (CONFIDENTIAL PORTION OF THIS EXHIBIT OMITTED AND FILED SEPARATELY WITH THE
SEC PURSUANT TO RULE 24b-2 OF THE 1934 ACT. )
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▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇
Haiti
Dominican Republic
Puerto Rico
British Virgin Islands
Anguilla
St. ▇▇▇▇▇▇
St. Barthelemy
St. Kitts & Nevis
Antigua & Barbuda
Montserrat
Guadeloupe
Dominica
Martinque
St. Lucia
Barbados
Grenada
Trinidad & Tobago
Aruba
Curacao
Cuba
Turks & ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇
▇▇. ▇▇▇▇▇▇▇ & ▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇ Antilles
Tortola
Virgin Gorda
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SCHEDULE D
International Minimum Sales (in thousands)
*
MOVADO CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------
Title: General Counsel/Secretary
----------------------------------
▇▇▇▇▇▇ EYEWEAR CORPORATION
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇
----------------------------------
Title: E.V.P. ▇▇▇▇▇▇ Eyewear
----------------------------------
MOVADO WATCH COMPANY S.A.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
----------------------------------
Title: Director
----------------------------------
* (CONFIDENTIAL PORTION OF THIS EXHIBIT OMITTED AND FILED SEPARATELY WITH THE
SEC PURSUANT TO RULE 24b-2 OF THE 1934 ACT.)
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