MANUFACTURING LICENSE AGREEMENT
BETWEEN
GUESS ?, INC.
AND
AGS, INC.
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.
TABLE OF CONTENTS
Page
1. CERTAIN DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . 2
2. TERM OF AGREEMENT. . . . . . . . . . . . . . . . . . . . . . . . . 4
2.1 INITIAL TERM . . . . . . . . . . . . . . . . . . . . . . . 4
2.2 RENEWAL TERM . . . . . . . . . . . . . . . . . . . . . . . 4
3. GRANT OF LICENSE RIGHTS. . . . . . . . . . . . . . . . . . . . . . 4
3.1 RIGHTS GRANTED . . . . . . . . . . . . . . . . . . . . . . 4
3.2 RIGHTS NOT GRANTED . . . . . . . . . . . . . . . . . . . . 4
4. MANUFACTURING. . . . . . . . . . . . . . . . . . . . . . . . . . . 5
4.1 STANDARDS. . . . . . . . . . . . . . . . . . . . . . . . . 5
4.2 APPROVAL OF SUBCONTRACTOR. . . . . . . . . . . . . . . . . 5
4.3 INFORMATION ABOUT SUPPLIERS AND SUBCONTRACTORS . . . . . . 5
4.4 SUB-SUBCONTRACTOR. . . . . . . . . . . . . . . . . . . . . 6
4.5 SUPERVISION BY AND RESPONSIBILITY OF LICENSEE. . . . . . . 6
4.6 EXPIRATION/TERMINATION OF MANUFACTURERS AGREEMENT. . . . . 6
5. DESIGN STANDARDS . . . . . . . . . . . . . . . . . . . . . . . . . 6
5.1 LICENSEE COLLECTION SUMMARY. . . . . . . . . . . . . . . . 6
5.2 STANDARDS AND MATERIALS/PRIOR APPROVAL . . . . . . . . . . 6
6. QUALITY CONTROL AND APPROVALS. . . . . . . . . . . . . . . . . . . 7
6.1 QUALITY CONTROL. . . . . . . . . . . . . . . . . . . . . . 7
6.2 STYLE NUMBER/AFFIXATION OF TRADEMARKS/THIRD PARTY
MATERIALS BEARING THE TRADEMARKS . . . . . . . . . . . . . 7
6.3 FINISHED PRODUCTS/PRIOR APPROVAL . . . . . . . . . . . . . 7
6.4 RIGHT TO INSPECT FACILITIES. . . . . . . . . . . . . . . . 8
6.5 CONSULTATION . . . . . . . . . . . . . . . . . . . . . . . 8
6.6 TRAVEL BY LICENSEE . . . . . . . . . . . . . . . . . . . . 8
6.7 TRAVEL BY GUESS. . . . . . . . . . . . . . . . . . . . . . 8
7. DISTRIBUTION . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
7.1 MANNER AND SCOPE . . . . . . . . . . . . . . . . . . . . . 8
7.2 CUSTOMER APPROVAL. . . . . . . . . . . . . . . . . . . . . 9
7.3 TRADE DISCOUNT TO GUESS. . . . . . . . . . . . . . . . . . 9
7.4 EXTRA-TERRITORIAL DISTRIBUTION RIGHTS. . . . . . . . . . . 9
7.5 LICENSEE'S DUTIES. . . . . . . . . . . . . . . . . . . . . 10
8. ADVERTISING. . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
8.1 PRIOR APPROVAL . . . . . . . . . . . . . . . . . . . . . . 13
8.2 MINIMUM ADVERTISING EXPENDITURE/BUDGET . . . . . . . . . . 13
8.3 ADVERTISING EXPENDITURE REPORT . . . . . . . . . . . . . . 14
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9. SHOWROOMS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
10. INSURANCE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
10.1 PROCUREMENT OF INSURANCE . . . . . . . . . . . . . . . . . 14
10.2 EVIDENCE OF INSURANCE. . . . . . . . . . . . . . . . . . . 15
11. OWNERSHIP AND PROTECTION OF TRADEMARKS AND IP RIGHTS . . . . . . . 15
11.1 OWNERSHIP. . . . . . . . . . . . . . . . . . . . . . . . . 15
11.2 REGISTRATION . . . . . . . . . . . . . . . . . . . . . . . 15
11.3 ASSIGNMENT OF RIGHTS . . . . . . . . . . . . . . . . . . . 15
11.4 PROHIBITED ACTS. . . . . . . . . . . . . . . . . . . . . . 16
11.5 MISUSE . . . . . . . . . . . . . . . . . . . . . . . . . . 17
11.6 REPORT TO GUESS. . . . . . . . . . . . . . . . . . . . . . 17
11.7 COMPLIANCE WITH RULES OF GUESS . . . . . . . . . . . . . . 18
12. TRADE SECRETS AND CONFIDENTIALITY. . . . . . . . . . . . . . . . . 18
13. PAYMENTS, REPORTS AND REQUIRED CAPITAL . . . . . . . . . . . . . . 18
13.1 ADVANCE. . . . . . . . . . . . . . . . . . . . . . . . . . 18
13.2 LETTER OF CREDIT . . . . . . . . . . . . . . . . . . . . . 18
13.3 ROYALTY BASIS. . . . . . . . . . . . . . . . . . . . . . . 19
13.4 DEDUCTIONS/RETURNS/CLOSEOUTS . . . . . . . . . . . . . . . 19
13.5 TRADEMARK ROYALTY AND ROYALTY MINIMUM PAYMENTS . . . . . . 20
13.6 REMITTANCE OF PAYMENT/WITHHOLDING. . . . . . . . . . . . . 20
13.7 QUARTERLY REPORTS. . . . . . . . . . . . . . . . . . . . . 21
13.8 MONTHLY SALES REPORT . . . . . . . . . . . . . . . . . . . 21
13.9 INVOICES . . . . . . . . . . . . . . . . . . . . . . . . . 21
13.10 RIGHT TO REVIEW. . . . . . . . . . . . . . . . . . . . . . 22
13.11 LATE PAYMENT . . . . . . . . . . . . . . . . . . . . . . . 22
13.12 FOREIGN CURRENCY CONVERSION. . . . . . . . . . . . . . . . 22
13.13 REQUIRED CAPITAL . . . . . . . . . . . . . . . . . . . . . 22
14. ACCOUNTING AND SYSTEMS . . . . . . . . . . . . . . . . . . . . . . 23
14.1 DUTY TO KEEP ACCOUNTS. . . . . . . . . . . . . . . . . . . 23
14.2 FINANCIAL STATEMENTS AND INVENTORY RECONCILIATION. . . . . 23
14.3 RIGHT OF INSPECTION BY GUESS . . . . . . . . . . . . . . . 23
14.4 FAILURE TO MAINTAIN RECORDS. . . . . . . . . . . . . . . . 24
14.5 SYSTEMS. . . . . . . . . . . . . . . . . . . . . . . . . . 24
15. FORCE MAJEURE. . . . . . . . . . . . . . . . . . . . . . . . . . . 24
16. BREACH AND TERMINATION . . . . . . . . . . . . . . . . . . . . . . 24
16.1 REMEDIES FOR BREACH. . . . . . . . . . . . . . . . . . . . 24
16.2 OTHER RIGHTS UNAFFECTED BY TERMINATION . . . . . . . . . . 25
16.3 TERMINATION OPTION FOR BREACH/CURE POSSIBLE. . . . . . . . 25
16.4 TERMINATION OPTION/NO CURE POSSIBLE/CHANGE OF OWNERSHIP. . 26
16.5 TERMINATION OPTION/NO CURE POSSIBLE/ADDITIONAL CAUSES. . . 27
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16.6 NO ASSIGNEE. . . . . . . . . . . . . . . . . . . . . . . . 28
17. OBLIGATIONS AT TERMINATION OR EXPIRATION . . . . . . . . . . . . . 29
17.1 SIGNS AND PROMOTIONAL MATERIALS. . . . . . . . . . . . . . 29
17.2 DIRECTORIES AND LISTINGS . . . . . . . . . . . . . . . . . 29
17.3 SUBCONTRACTORS . . . . . . . . . . . . . . . . . . . . . . 29
17.4 INVENTORY; RIGHT TO PURCHASE . . . . . . . . . . . . . . . 29
17.5 REMAINING PRODUCTS . . . . . . . . . . . . . . . . . . . . 30
17.6 LICENSEE'S OBLIGATION REGARDING SALE OF PRODUCTS . . . . . 30
18. EFFECT OF TERMINATION OR EXPIRATION. . . . . . . . . . . . . . . . 31
18.1 TERMINATION OF RIGHTS. . . . . . . . . . . . . . . . . . . 31
18.2 NO USE OF TRADEMARKS AND IP RIGHTS . . . . . . . . . . . . 31
18.3 NO LIABILITY . . . . . . . . . . . . . . . . . . . . . . . 31
19. INDEMNIFICATION, REPRESENTATIONS AND WARRANTIES. . . . . . . . . . 32
19.1 INDEMNIFICATION. . . . . . . . . . . . . . . . . . . . . . 32
19.2 DEFENSE COUNSEL. . . . . . . . . . . . . . . . . . . . . . 32
19.3 AUTHORITY. . . . . . . . . . . . . . . . . . . . . . . . . 32
19.4 COMPLIANCE WITH LAWS . . . . . . . . . . . . . . . . . . . 32
19.5 LICENSEE REPRESENTATIONS AND WARRANTIES. . . . . . . . . . 33
19.6 GUESS WARRANTY AND REPRESENTATION. . . . . . . . . . . . . 33
19.7 NO PUNITIVE DAMAGES. . . . . . . . . . . . . . . . . . . . 33
20. APPROVAL PROCEDURES. . . . . . . . . . . . . . . . . . . . . . . . 34
21. ARBITRATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
21.1 PARTIES' CONSENT TO ARBITRATION. . . . . . . . . . . . . . 34
21.2 POWERS . . . . . . . . . . . . . . . . . . . . . . . . . . 34
21.3 PROVISIONAL REMEDIES . . . . . . . . . . . . . . . . . . . 34
21.4 ENTITLEMENT TO COSTS . . . . . . . . . . . . . . . . . . . 35
22. GOVERNING LAW. . . . . . . . . . . . . . . . . . . . . . . . . . . 35
23. RELATIONSHIP OF PARTIES. . . . . . . . . . . . . . . . . . . . . . 35
24. ASSIGNABILITY. . . . . . . . . . . . . . . . . . . . . . . . . . . 35
25. INTERPRETATION . . . . . . . . . . . . . . . . . . . . . . . . . . 36
26. WAIVER AND INTEGRATION . . . . . . . . . . . . . . . . . . . . . . 36
27. NOTICES AND COMMUNICATIONS . . . . . . . . . . . . . . . . . . . . 36
28. SEVERABILITY . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
29. SURVIVAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
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30. CROSS DEFAULT. . . . . . . . . . . . . . . . . . . . . . . . . . . 38
31. EXHIBITS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
32. ENTIRE AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . 38
iv
LIST OF EXHIBITS
EXHIBIT TITLE
------- -----
A Trademarks
B Products
C Licensee Collection Summary
D-1 Licensed Product Approval Form
D-2 Fabric and/or Color Approval Form
E Licensed Property Use Approval Form
F-1 Customer Profile Form
F-2 Foreign Distribution Approval Form
F-3 Distribution Approval Form
G-1 Advertising Approval Form
G-2 Advertising Budget Form
G-3 Advertising Expenditure Form
H Royalty Minimum
I Statement of Royalties
J Minimum Net Sales
K Monthly Sales Report
L Manufacturers Agreement
M List of Current Owners and Key Executives
N Systems Requirements List
O Permitted Distributors and Retailers
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MANUFACTURING LICENSE
AGREEMENT BETWEEN
GUESS ?, INC.
AND AGS INC.
THIS MANUFACTURING LICENSE AGREEMENT ("Agreement") is made and entered into
as of March 1, 1996 by and between GUESS ?, INC., a corporation organized under
the laws of the State of Delaware, with its principal place of business at ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ("GUESS") and AGS INC., a
corporation organized and existing under the laws of California with its
principal place of business at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ("LICENSE").
AGREEMENT BACKGROUND
A. GUESS is an internationally famous designer and manufacturer of high
quality fashionable clothing and fashion accessories and other products.
B. GUESS holds all right, title and interest in and to certain
trademarks, service marks, designs, patents and copyrights used in connection
with the manufacture and sale of such products.
C. The GUESS trademarks and service marks represent the substantial
goodwill created by GUESS through its use and sale of high quality products and
by GUESS's policy of distributing its products only through retail outlets that
conform to GUESS's strict standards for appearance, image, clientele, customer
service and overall high quality.
D. LICENSEE has represented to GUESS that it is experienced in the
manufacture and distribution of certain high quality stationery, school supplies
and related products.
E. LICENSEE desires to obtain the right to use certain of such
trademarks, service marks, designs, patents and copyrights solely in connection
with the manufacture and distribution of some of such products, and GUESS is
willing to grant to LICENSEE a license for this purpose under the terms and
conditions set forth in this Agreement.
In consideration of the covenants and agreements contained herein, and for
other good and valuable consideration, the receipt and sufficiency of which are
acknowledged by the execution hereof, the parties agree as follows.
1. CERTAIN DEFINITIONS
1.1 "Advertising" means any communication by or on behalf of the
LICENSEE or any of its distributors in any medium (including electronic and
computer-based systems) directed to the trade or the public, including trade and
public directory listings, store window displays, posters, point of sale
materials and billboards.
1
1.2 "Allowances" means any written credits actually given by
LICENSEE to its customers for any purpose, other than Returns, Exempt Product
returns and Trade Discounts, and other than credits or reimbursements for
advertising, any other type of promotions and freight expenses.
1.3 "Closeouts" means Products sold at a reduction of 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%) or more from the respective Distributor
or Retailer Listed Wholesale Prices.
1.4 "Contract Year" means each year of the Initial Term and Renewal
Term, if any, as those terms are defined in Section 2.
1.5 "Distributor Listed Wholesale Price" means the wholesale price
of a Product to be sold by LICENSEE to a distributor, as stared on the
applicable LICENSED PRODUCT APPROVAL FORMS submitted to GUESS pursuant to
Section 5.2.
1.6 "Exempt Products" means time dated Products and Products shipped
to customers on terms permitting return to LICENSEE of unsold Products.
1.7 "IP Rights" means all intellectual and industrial property
interests now or hereafter owned by GUESS, other than the Trademarks, whether or
not copyrightable or patentable, including, without limitation, patterns,
designs and trade dress in and to any Products and to any prints, package
designs, labels, Advertising and other promotional materials using or used in
conjunction with any of the Trademarks or the Products, whether created by or on
behalf of GUESS or LICENSEE.
1.8 "Gross Sales" means the sales of all Products by LICENSEE
multiplied by the respective Distributor or Retailer Listed Wholesale Prices, as
applicable.
1.9 "Minimum Net Sales" means the minimum amount of Net Sales of
Products that LICENSEE is required to achieve, and as set forth in Exhibit J
attached hereto.
1.10 "Net Sales" means the Gross Sales of Products less only credits
to customers for Returns, Exempt Product returns, Trade Discounts and
Allowances, as specifically permitted by this Agreement.
1.11 "Products" means only those items specified in Exhibit B attached
hereto.
1.12 "Quarter" means calendar quarters, i.e., each of the three-month
periods during each Contract Year from (i) January through March, (ii) April
through June, (iii) July through September and (iv) October through December.
2
1.13 "Retailer Listed Wholesale Price" means the wholesale price of a
Product to be sold by LICENSEE to a retailer, as stated on the applicable
LICENSED PRODUCT APPROVAL FORMS submitted to GUESS pursuant to Section 5.2.
1.14 "Returns" means Products actually returned to LICENSEE by its
customers (except for Exempt Products) multiplied by the unit price actually
credited to the customer.
1.15 "Royalty Minimum" means the minimum amount of Trademark Royalty
payable by LICENSEE to GUESS hereunder for each Contract Year, as set forth in
Exhibit H attached hereto.
1.16 "Seconds" means damaged, imperfect, non-first quality or
defective
goods.
1.17 "Territory" means the United States, Canada, Mexico, Australia,
Brunei, Hong Kong, Indonesia, Malaysia, Singapore and Taiwan.
1.18 "Trade Discounts" means all discounts from the Distributor or
Retailer Listed Wholesale Price, as applicable, that are customary in the trade
and that are actually given by LICENSEE in writing prior to the delivery of the
specific Products.
1.19 "Trademarks" means only those trademarks as specified in Exhibit
A attached hereto. This Agreement does not grant to LICENSEE any right to any
variation of those trademarks.
1.20 "Trademark Royalty" means 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 Net Sales of Products by LICENSEE, which represents
the amount payable by LICENSEE to GUESS hereunder as the consideration for the
grant by GUESS to LICENSEE of the right to use the Trademarks and IP Rights
hereunder.
1.21 "Trade Secrets" means information, including a formula, pattern,
compilation, program, device, method, technique or process that derives
independent economic value, actual or potential, from not being generally known
to the public or to other persons who can obtain economic value from its
disclosure or use and is the subject of efforts that are reasonable, under the
circumstances, to maintain its secrecy.
2. TERM OF AGREEMENT
2.1 INITIAL TERM. This Agreement shall be effective as of the date
specified on page 1 and shall end on December 31, 2001 ("Initial Term"), unless
terminated earlier or renewed. The first Contract Year of the Initial Term shall
commence May 1, 1996 and end on December 31, 1997. Thereafter, Contract Years
shall run from January 1 through
3
December 31 of each year through the Initial Term, and if renewed, the Renewal
Term (unless terminated earlier).
2.2 RENEWAL TERM. This Agreement may be renewed for a five (5) year
term through December 31, 2006 ("Renewal Term"), if LICENSEE:
(a) requests renewal in writing at least ninety (90) days but no
more than one hundred twenty (120) days before the
expiration of the Initial Term;
(b) at the time it requests renewal, has not received a notice
of breach from GUESS (under any agreement between LICENSEE
and GUESS) and failed to completely cure such breach within
the applicable cure period;
(c) up to the time it requests renewal, has met the Minimum Net
Sales for the two (2) Contract Years prior to renewal; and
(d) agrees to meet the new Minimum Net Sales set forth on
Exhibit J.
3. GRANT OF LICENSE RIGHTS
3.1 RIGHTS GRANTED. Subject to the terms and conditions contained
herein, GUESS hereby grants to LICENSEE, and LICENSEE hereby accepts, the
following:
(a) a non-assignable, non-transferable exclusive right to use
the Trademarks and the IP Rights in connection with the
manufacture of Products but only at such places approved by
GUESS; and
(b) a non-assignable, non-transferable exclusive right to use
the Trademarks and IP Rights in connection with the
distribution at wholesale and Advertising of the Products in
the Territory.
3.2 RIGHTS NOT GRANTED. This Agreement is not an assignment or grant
to LICENSEE of any right, title or interest in or to the Trademarks or IP
Rights, or any of GUESS's other trademarks, other than the grant of rights to
use the Trademarks and IP Rights subject to the terms and conditions of this
Agreement. GUESS expressly does not grant to LICENSEE the right to use any
variation of the Trademarks that now exist or hereafter are developed by GUESS,
LICENSEE or any other person. LICENSEE agrees and acknowledges that GUESS
reserves the right to either manufacture, sell, or appoint other licensees to
manufacture or sell in the Territory lines of products whether similar or
dissimilar to the Products, that bear variations of the Trademarks, such as
"GUESS MEN'S CLASSICS" and "BABY GUESS."
4. MANUFACTURING
4
4.1 STANDARDS. LICENSEE may manufacture Products at a factory or
factories that LICENSEE owns, or may employ independent subcontractors to
manufacture Products. In either case, LICENSEE is responsible for the lawful
manufacture of high quality Products that meet the standards prescribed by
GUESS.
4.2 APPROVAL OF SUBCONTRACTOR. In all cases, LICENSEE must obtain the
approval of GUESS in advance of contracting with any independent subcontractor,
if such subcontractor will manufacture one or more components equaling at least
fifty percent (50%) of a finished Product. GUESS shall have the right to approve
each such proposed subcontractor. To be approved by GUESS, the subcontractor
must demonstrate that it has the experience and skill needed to produce products
that meet the standards of GUESS and that it conducts its operations in
compliance with all applicable laws. All subcontractors utilized by LICENSEE,
including those which must be approved by GUESS, shall:
(a) enter into a Manufacturers Agreement (Exhibit L) and deliver
an executed copy thereof to GUESS and LICENSEE, before such
subcontractor may manufacture any Products; and
(b) fully perform and observe its obligations under the
Manufacturers Agreement and comply with all applicable laws
and with the applicable provisions of this Agreement.
4.3 INFORMATION ABOUT SUPPLIERS AND SUBCONTRACTORS. Not less than
thirty (30) days prior to the beginning of manufacture of a Product by a
subcontractor and at the end of each calendar year during the Term hereof,
LICENSEE shall provide GUESS with a list of all materials bearing Trademarks
used by LICENSEE and/or any subcontractor. Upon the request of GUESS, LICENSEE
shall provide GUESS with a current list of its subcontractors for the
manufacture of Products, together with addresses, telephone and facsimile number
and the names of contact persons relating thereto. All information provided by
LICENSEE pursuant to this Section 4.3 shall be considered confidential
information for purposes of Section 12 hereof.
4.4 SUB-SUBCONTRACTOR. LICENSEE shall cause its subcontractors to
notify LICENSEE of all subcontractors used by LICENSEE's subcontractors. Not
less than thirty (30) days prior to the beginning of manufacture of a Product by
a subcontractor and at the end of each calendar year during the Term hereof,
LICENSEE shall provide GUESS with a list of the names and addresses of all
subcontractors used by LICENSEE's subcontractors.
4.5 SUPERVISION BY AND RESPONSIBILITY OF LICENSEE. LICENSEE shall be
responsible for supervising and controlling the acts of its own factory(ies) and
of its manufacturing subcontractors and sub-subcontractors to prevent the
manufacturing or sale of Products that is not expressly authorized by GUESS. If
GUESS determines that LICENSEE permitted its own employees or a subcontractor or
sub-subcontractor to manufacture or sell Products without the authorization of
GUESS, or that LICENSEE knew or should have known about such manufacture or
sale, GUESS shall have the right to terminate this Agreement immediately and
shall hold LICENSEE liable for any losses suffered by GUESS as a result of such
unauthorized manufacture or sale.
5
4.6 EXPIRATION/TERMINATION OF MANUFACTURERS AGREEMENT. GUESS shall
have the absolute right to require that LICENSEE terminate its relationship with
any subcontractor who, in the sole discretion of GUESS, is behaving in a manner
detrimental to GUESS. Upon the expiration or termination of any Manufacturers
Agreement, LICENSEE shall cause the subcontractor thereunder to immediately
cease the manufacture of Products and to fully perform and observe its
obligations under the Manufacturers Agreement and under this Agreement with
respect to such expiration or termination.
5. DESIGN STANDARDS
5.1 LICENSEE COLLECTION SUMMARY. Within sixty (60) days after the
date of this Agreement, and on each anniversary of the date of this Agreement,
LICENSEE shall submit to GUESS a completed LICENSE COLLECTION SUMMARY FORM
(Exhibit C).
5.2 STANDARDS AND MATERIALS/PRIOR APPROVAL. LICENSEE shall submit to
GUESS, for its prior written approval, (i) a complete set of actual production
standards, together with actual materials to be used in the Products, and (ii) a
style card showing each design proposed to be used for each Product type. The
production standards and materials shall be submitted with a completed LICENSED
PRODUCT APPROVAL FORM (Exhibit D4), and must be accompanied by additional
completed FABRIC AND/OR COLOR APPROVAL FORMS (Exhibit D-2), or such other forms
approved by GUESS. If LICENSEE wishes to submit separately any design bearing a
Trademark, it shall be submitted on the LICENSED PROPERTY USE APPROVAL FORM
(Exhibit E). Each design must be re-submitted for approval each Contract Year,
regardless of whether it was approved for a prior Contract Year. If GUESS
disapproves any previously approved design, LICENSEE will phase out all
manufacture and sales of Products bearing such design within six (6) months of
GUESS's disapproval. Depending upon the inventory level of such Products, GUESS
may give approval for a lengthier sell-off period.
6. QUALITY CONTROL AND APPROVALS
6.1 QUALITY CONTROL. LICENSEE acknowledges that the Trademarks and IP
Rights represent the prestige and goodwill that GUESS has earned for itself and
are well recognized in the minds of the public, and that it is of great
importance to each party that, in the manufacture and sale of Products, the high
standards, reputation and image established by GUESS be maintained at all times.
Accordingly, Products manufactured or caused to be manufactured by LICENSEE
shall be of high quality workmanship and materials with strict adherence to all
details and characteristics embodied in the IP Rights approved by GUESS or
embodied in items furnished by GUESS. Without limitation to the foregoing,
Products manufactured by and for LICENSEE and sold by LICENSEE shall strictly
adhere to the materials, color, workmanship, designs, dimensions, styling,
detail and quality previously approved by GUESS.
6.2 STYLE NUMBER/AFFIXATION OF TRADEMARKS/THIRD PARTY MATERIALS
BEARING THE TRADEMARKS. LICENSEE shall affix permanently to each Product a style
number which shall be identical to the style number used to identify the
respective Product in all of LICENSEE's books and records. Each Product shall
bear the Trademarks in the form
6
required by GUESS, with all required legends, markings and notices. Without
limitation to the requirement of Section 4.3, if LICENSEE purchases labels, tags
or other materials bearing the Trademarks from third parties, LICENSEE shall
provide to GUESS, together with the quarterly Statement of Royalties, copies of
invoices for all such materials purchased. and shall obligate all providers of
such materials to comply with all applicable provisions of this Agreement
relating to the use and misuse of the Trademarks. If providers for such items
are not available to LICENSEE in the Territory, at the request of GUESS,
LICENSEE shall obtain any or all such items directly from GUESS.
6.3 FINISHED PRODUCTS/PRIOR APPROVAL. Within two (2) weeks after each
style is first manufactured as a finished Product, LICENSEE shall deliver to
GUESS by overnight courier at least one (1) representative finished Product of
each style with the actual design affixed for GUESS to determine in its sole
discretion whether such finished Product is in strict compliance with the
production standards and design previously approved by GUESS. At any time
following any such approval of production standards and design, if such Product
is, in the sole and subjective judgment of GUESS, not manufactured in strict
compliance with the materials, color, workmanship, designs, dimensions, styling,
detail and quality previously approved in writing, GUESS shall give LICENSEE
written notice of any such non-compliance, which notice shall specify the
details thereof. Within twenty (20) days after its receipt of such notice,
LICENSEE shall, if possible, promptly correct any problem specified by GUESS
therein. If such Product, as corrected by LICENSEE, is still not approved by
GUESS, or if LICENSEE fails or is unable to correct any such problem, the
Trademarks shall, if possible, be promptly removed from such Products, at the
option of and at no cost to GUESS, in which event such Products may be sold by
LICENSEE provided they are in no way identified as a product originating from or
authorized by GUESS, or otherwise identified with GUESS or any of the Trademarks
or IP Rights. As many as four (4) times per Quarter, upon request, LICENSEE
shall provide GUESS with a reasonable number of samples of current Products. If
LICENSEE cannot, using commercially reasonable efforts, correct the Product
problems specified by GUESS and also cannot remove the Trademarks from the
Products, LICENSEE will deliver a notice to GUESS describing its efforts and the
reasons why such requirements cannot be met. Any distribution or sale of such
Products must be specifically approved in advance and in writing by GUESS, and
LICENSEE will pay a Trademark Royalty on all such sales.
6.4 RIGHT TO INSPECT FACILITIES. LICENSEE shall ensure that GUESS
shall have the right, upon seventy-two (72) hours advance notice during normal
business hours, to inspect all facilities utilized by LICENSEE and its
subcontractors, sub-subcontractors and suppliers in connection with the
manufacture, storage or distribution of Products, and to examine Products in the
process of manufacture and all documents and records related thereto. In
addition, LICENSEE consents to GUESS's examination of Products held by its
customers for resale, upon reasonable notice during normal business hours,
provided LICENSEE has such right of examination.
6.5 CONSULTATION. Upon request by GUESS, LICENSEE shall make its
personnel and the personnel of any of its subcontractors, suppliers and other
resources available by appointment during normal business hours for consultation
with GUESS and its agents or representatives. LICENSEE shall make available to
GUESS, upon reasonable
7
notice, marketing plans, reports and information that LICENSEE may have with
respect to Products.
6.6 TRAVEL BY LICENSEE. Upon two (2) weeks' prior written notice to
LICENSEE, but not more frequently than twice in a calendar year, GUESS may
require LICENSEE to meet with GUESS in the Los Angeles offices of GUESS
concerning any matter which is a subject of this Agreement. LICENSEE shall pay
all of its own costs and expenses relating to its attendance at such meetings.
6.7 TRAVEL BY GUESS. Once a year, LICENSEE shall pay all costs for
business class round trip travel and accommodations for five (5) days and five
(5) nights for two (2) representatives of GUESS to travel to LICENSEE's
principal place of business for any purpose related to this Agreement.
7. DISTRIBUTION
7.1 MANNER AND SCOPE. The manner and scope of the distribution of
Products, their availability, variety, fabrication, colors and sizes are
critical to the promotion of the Products and to the protection of the
Trademarks, the IP Rights and their associated goodwill. LICENSEE shall use
commercially reasonable efforts to exploit the rights granted hereunder
throughout the Territory, including, without limitation, selling commercial
quantities of the Products on a timely basis and maintaining a sales force
sufficient to provide effective distribution of the Products throughout the
Territory, and shall cooperate with GUESS's and GUESS's other licensees'
marketing, sales, anti-diversion and anti-counterfeiting programs.
7.2 CUSTOMER APPROVAL. GUESS hereby approves sales of Products by
LICENSEE to those retailers described on Exhibit O attached hereto. Following
execution of this Agreement, LICENSEE shall submit to GUESS for approval the
names of any additional intended customers for the Products on the CUSTOMER
PROFILE FORM (Exhibit F-1) prior to making sales to any such intended customers.
On each anniversary of the date of this Agreement, upon the request of GUESS,
LICENSEE shall send to GUESS a list of all current customers for all Products,
together with the LICENSEE COLLECTION SUMMARY FORM required under Section 5.1.
7.3 TRADE DISCOUNT TO GUESS. LICENSEE shall grant to GUESS a
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%) Trade Discount on
purchases of Products by GUESS from LICENSEE for sale in GUESS's retail and/or
factory stores. LICENSEE shall accept from GUESS for full credit in the amount
originally invoiced to GUESS, the return of any unsold Products purchased by
GUESS from LICENSEE for sale in GUESS's retail and/or factory stores. At its
sole cost and expense, LICENSEE shall provide GUESS with fixtures for the sale
of the Products at GUESS's retail and/or factory stores, the type and cost of
which shall be subject to the mutual agreement of the parties.
8
7.4 EXTRA-TERRITORIAL DISTRIBUTION RIGHTS. LICENSEE shall have the
non-exclusive right to distribute Products at wholesale outside the Territory
(the "Non-Exclusive Right"), subject to the following conditions:
(a) if LICENSEE wishes to distribute Products outside of the
Territory, LICENSEE shall submit to GUESS a list of the
country or countries to which LICENSEE wishes to distribute
the Products, together with the names and addresses of
proposed distributors and retailers, for GUESS's prior
written approval, using the FOREIGN DISTRIBUTION APPROVAL
FORM (Exhibit F-2);
(b) LICENSEE shall submit to GUESS, for GUESS's prior written
approval, a copy of any written agreement, or the terms and
conditions of any oral agreement, proposed to be entered
into between LICENSEE and any proposed distributor or
retailer. Each such agreement shall include provisions to
the effect that:
(i) such agreement will terminate when GUESS withdraws
LICENSEE's permission to sell to such distributor or
retailer, and that the distributor or retailer will
have no claims against either GUESS or LICENSEE for the
termination of the agreement; and
(ii) the distributor or retailer may not appoint
subdistributors or agents for the sale of Products, or
assign any rights under its agreement with LICENSEE
without GUESS's prior written permission;
(c) LICENSEE shall ensure that the termination of its agreement
with a distributor or retailer, whether oral or written,
will be enforceable under the laws of the country in
question without cost or liability to GUESS.
GUESS may deny approval to LICENSEE for distribution outside of the Territory,
in whole or in part, for any or no reason, in GUESS's sole and subjective
discretion. Upon ninety (90) days' prior written notice to LICENSEE, GUESS may
(a) withdraw its approval of any distributor or retailer previously approved by
GUESS, and/or (b) terminate the Non-Exclusive Right in its entirety, for any
reason or for no reason whatsoever, as GUESS may determine in its sole and
subjective discretion. Upon the effective date of the withdrawal by GUESS of any
approval of a distributor or retailer, LICENSEE shall cease any and all sales of
Products to such distributor or retailer.
7.5 LICENSEE'S DUTIES.
(a) Except as otherwise provided herein, the distribution of
Products in the Territory shall be performed only by
LICENSEE. If LICENSEE wishes to distribute Products through
independent
9
distributors LICENSEE shall submit to GUESS the names and
addresses of its proposed distributors, for GUESS's prior
written approval, using the DISTRIBUTION APPROVAL FORM
(Exhibit F-3). GUESS hereby approves LICENSEE's distribution
of Products through the independent distributors described
on Exhibit O attached hereto. LICENSEE shall submit to
GUESS, for GUESS's prior written approval, a copy of any
written agreement, or the terms and conditions of any oral
agreement, proposed to be entered into between LICENSEE and
any proposed distributor. Each such agreement shall include
provisions to the effect that:
(i) such agreement will terminate when GUESS withdraws
LICENSEE's permission to sell to such distributor, and
that the distributor will have no claims against either
GUESS or LICENSEE for the termination of the agreement;
and
(ii) the distributor may not appoint subdistributors or
agents for the sale of Products, or assign any rights
under its agreement with LICENSEE without GUESS's prior
written permission.
LICENSEE shall ensure that the termination of its agreement
with a distributor, whether oral or written, will be
enforceable under the laws of the country in question
without cost or liability to GUESS.
(b) Except as permitted by GUESS pursuant to Section 7.4,
LICENSEE shall not market or promote or seek customers for
the Products outside of the Territory and LICENSEE shall not
establish or maintain inventories of the Products outside of
the Territory.
(c) LICENSEE shall exercise its best efforts, subject to the
provisions of Section 11.5, to safeguard the prestige and
goodwill represented by the Trademarks, the IP Rights and
the image associated therewith at the same level as
heretofore maintained by GUESS.
(d) LICENSEE shall exercise its best efforts to sell Products
directly to catalogues approved by GUESS and to retail store
operators who have agreed to enter into a retail store
agreement with GUESS or to stores that otherwise meet
GUESS's standards for quality, service and appearance and
that have been approved by GUESS under this Agreement or
pursuant to the CUSTOMER PROFILE FORM. Each of such retail
store operators for
10
example, should establish a separate area in the store
devoted exclusively to the sale of Products; present a
comprehensive line of Products made available by LICENSEE;
agree to not ship any Products outside of the Territory; and
permit inspections by GUESS or its representatives of the
store facilities for the sale of Products during regular
business hours. GUESS may withdraw approval of any retail
store operator or any store at any time such operator or
store(s) fail to meet GUESS's standards for quality, service
and appearance. LICENSEE shall not sell any Products through
the Internet or any other electronic or competitor-based
systems, without GUESS's prior written consent.
(e) LICENSEE shall not use or permit any customer to use any
Products as giveaways, prizes or premiums except in
promotions that have received the prior written approval of
GUESS.
(f) LICENSEE shall not sell any Products that are Seconds
without the prior written approval of GUESS. All Seconds
approved for sale by GUESS shall be marked "Seconds" or
"Irregular" and all labels and other markings embodying the
Trademarks and IP Rights shall be removed therefrom (which
removal may be supervised by GUESS or its agent), if
possible, prior to sale. All Seconds not approved by GUESS
and/or not sold in accordance with GUESS's approval shall be
destroyed. LICENSEE shall be responsible for ensuring that
its manufacturing subcontractors comply with this
obligation.
(g) If LICENSEE sells Products through an authorized
distributor, LICENSEE shall ensure that the distributor will
comply with all reporting provisions required of LICENSEE
under this Agreement as well as with all obligations
necessary for protecting the Trademarks, the IP Rights and
the image associated therewith at the same level as
heretofore maintained by GUESS. LICENSEE will maintain such
reports on file, such that GUESS may, from time to time,
inspect CUSTOMER PROFILE FORMS, photographs of store
premises, etc., for retail store customers of the
distributors, in order for GUESS to ensure that the quality
and image associated with the Trademarks and the IP Rights
are being upheld by the distributors. GUESS may, after
notice to LICENSEE, withdraw approval of any of LICENSEE's
distributors at any time such distributor fails to meet
GUESS's standards for quality, service and appearance. If
GUESS determines such distributor could cure its failure to
meet such standards, GUESS will provide a reasonable
opportunity for it to do so.
11
(h) Prior to LICENSEE's sale of any Closeouts, LICENSEE shall
furnish to GUESS a Product description of such Closeouts and
the proposed selling price. GUESS shall have the option (but
not the obligation) to purchase all or any part of such
Closeouts from LICENSEE prior to sale to any third party,
upon the following refills:
(i) the purchase price for Closeouts shall be the same price
LICENSEE plans to offer a third party; and
(ii) LICENSEE shall deliver Closeouts purchased by GUESS within
fifteen (15) days after receipt of the notice of GUESS's
intention to purchase.
(iii) LICENSEE shall obtain GUESS's consent prior to participating
in any tradeshow where the Products or any item bearing the
Trademarks will be displayed, including GUESS's consent to
any form of presentation to be used by LICENSEE. LICENSEE
shall provide GUESS with all information requested
concerning any such tradeshow.
(iv) GUESS shall notify LICENSEE of its intention, if any, to
exercise this option and which of the Closeouts are to be
purchased, within ten (10) days after GUESS's receipt of the
Product description of the Closeouts;
8. ADVERTISING
8.1 PRIOR APPROVAL. LICENSEE shall maintain the high standards and
consistency of the Trademarks, Products and image associated therewith in all
Advertising, packaging and promotion of Products. LICENSEE shall not use any
Advertising or packaging or other business materials relating to any Products or
bearing the Trademarks, including, without limitation, any business documents,
invoices, stationery, Advertising, promotions, labels and packaging that has not
been previously approved in writing by GUESS. Before the use of Advertising
items such as posters, packaging and point of sales materials, LICENSEE shall
submit such items to GUESS for approval using the LICENSED PROPERTY USE APPROVAL
FORM referenced in Section 5.2. Before the use or the publication of any media
Advertising to the public or trade, LICENSEE shall submit such Advertising to
GUESS for approval using the ADVERTISING APPROVAL FORM (Exhibit G-1). The right
of approval shall also encompass media placement and scheduling and creative
execution. No Advertising or promotional material shall refer to LICENSEE's name
except as required by law, however, at the option of GUESS, LICENSEE shall
include on its Advertising, packaging or other business materials an indication
of the relationship of the parties in a form approved in writing by GUESS.
8.2 MINIMUM ADVERTISING EXPENDITURE/BUDGET. Except as set forth
below, each Contract Year during the term of this Agreement, LICENSEE and its
distributors and
12
retailers shall, in the aggregate, expend for Advertising an amount equal to
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 amount that is
the greater of (a) Net Sales and (b) Minimum Net Sales for such Contract Year
(the "Minimum Advertising Expenditure"). Notwithstanding the foregoing, LICENSEE
and its distributors and retailers shall, in the aggregate, expend for
Advertising at least US$CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION minimum for each of the first three
(3) Contract Years. The greater of (a) US$CONFIDENTIAL INFORMATION OMITTED AND
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION per Contract Year,
and (b) the Minimum Advertising Expenditure defined above, shall constitute the
Minimum Advertising Expenditure for each of the first three (3) Contract Years.
Within sixty (60) days following execution of this Agreement and sixty (60) days
before the start of each subsequent Contract Year, LICENSEE shall submit to
GUESS for approval an Advertising budget for the next Contract Year, using the
ADVERTISING BUDGET FORM (Exhibit G-2), broken down by each country in the
Territory, and specifying the anticipated media, the date and the anticipated
time of publication of each Advertisement or occurrence of each promotional
event. If the Advertising expenditures actually made by LICENSEE during such
Contract Year are lower than the Minimum Advertising Expenditure corresponding
to such Contract Year, LICENSEE shall expend the difference during such period
in such manner as directed by GUESS. FOR PURPOSES OF ESTABLISHING THE
ADVERTISING BUDGET AND EXPENDITURES, ITEMS SUCH AS SHOWROOM FIXTURES,
FURNISHINGS, STORE WINDOW DISPLAYS AND PACKAGING FOR THE PRODUCTS, AND THE COSTS
AND EXPENSES ASSOCIATED WITH ADVERTISING AND PROMOTION OF THE PRODUCTS TO THE
TRADE, INCLUDING, WITHOUT LIMITATION, TRADE SHOWS, CO-OPS, PRESS RELEASES AND
CATALOGUES TO THE TRADE, ARE NOT CONSIDERED TO BE ADVERTISING.
8.3 ADVERTISING EXPENDITURE REPORT. Not later than thirty (30) days
after the end of each Quarter, LICENSEE shall submit to GUESS a report showing
Advertising expenditures actually made by LICENSEE during that Quarter, using
the ADVERTISING EXPENDITURE FORM (Exhibit G-3), together with advertising tear
sheets with respect to the Products for that Quarter. Advertising expenditures
made in a foreign currency shall be listed showing the foreign currency and the
conversion to U.S. Dollars using the exchange rate for the last business clay of
the relevant Quarter as set forth in the U.S. edition of THE WALL STREET
JOURNAL.
9. SHOWROOMS Omitted.
10. INSURANCE
10.1 PROCUREMENT OF INSURANCE. Without limiting LICENSEE's liability
under the indemnity provisions hereof, during the term of this Agreement, and
for three (3) years following the date of expiration or termination hereof,
LICENSEE shall maintain with reputable insurance companies reasonably
satisfactory to GUESS comprehensive general
13
liability insurance in the amount of at least US$5,000,000.00 (US$3,000,000.00
single limit per occurrence) plus defense costs. This insurance shall include
broad form blanket contractual liability; contractor's protective; workers'
compensation; products liability and completed operations liability; advertising
injury, cross liability; special form "all risk" blanket property coverage
(including earthquake and flood protection) at replacement cost; selling price
or evidence of business interruption coverage of gross revenues for six (6)
months; brands and labels clause (with no salvage); an endorsement stating that
GUESS shall receive at least thirty (30) days written notice prior to
modification, cancellation or non-renewal of coverage; an endorsement naming
GUESS as an additional insured; an endorsement stating that the insurance shall
be primary and not contributory as to GUESS, and a waiver of subrogation in
favor of GUESS. During the term of this Agreement, LICENSEE may not engage in
the manufacture, sale or promotion of any Product unless the required insurance
coverage is in full force and effect.
10.2 EVIDENCE OF INSURANCE. No later than thirty (30) days before the
first shipment of Products, and no later than thirty (30) days before each
Renewal Term thereafter, if any, LICENSEE shall furnish to GUESS certificates of
insurance evidencing the required insurance policies. Upon request, LICENSEE
shall provide GUESS with copies of insurance policies and related endorsements
evidencing the insurance coverage required hereunder. The insurance set forth in
this Section 10 must cover the entire Territory.
11. OWNERSHIP AND PROTECTION OF TRADEMARKS AND IP RIGHTS
11.1 OWNERSHIP. LICENSEE acknowledges that GUESS is the exclusive
owner of the Trademarks and of the IP Rights and that all of LICENSEE's uses of
the Trademarks and the IP Rights shall inure to the exclusive benefit of GUESS.
LICENSEE shall place appropriate notices, including notice of copyright,
reflecting ownership of IP Rights by GUESS, on all plans, packaging tags, labels
and Advertising and promotional materials.
11.2 REGISTRATION. LICENSEE shall cooperate fully and in good faith
with GUESS for the purpose of securing and preserving GUESS's rights in and to
the Trademarks and IP Rights, including, without limitation, in the execution,
submission and prosecution of any trademark, service ▇▇▇▇, copyright or patent
applications and similar applications for registration which GUESS may desire to
submit at any time and from time to time. LICENSEE shall not directly or
indirectly submit any application to register the Trademarks for the Products or
any other products or services, or for any other trademark or service ▇▇▇▇,
copyright, design right or invention of GUESS, without the prior written
approval of GUESS.
11.3 ASSIGNMENT OF RIGHTS. LICENSEE shall disclose and freely make
available to GUESS any and all developments or improvements it makes or has made
to the Products, the Trademarks, or the IP Rights. This Agreement shall
constitute an assignment of all such developments and improvements to GUESS. If
any application must be made by LICENSEE or any third party which may have
created designs of Products hereunder, LICENSEE agrees to, and does hereby,
assign, and agrees to cause such third party to assign to GUESS, any and all
right, title and interest in all such applications and the resulting
14
registrations or patents, as the case may be. If requested by GUESS, LICENSEE
shall make, procure and execute, and cause to be made, procured and executed,
all assignments and/or all other agreements, documents or instruments determined
by GUESS to be necessary or advisable to vest ownership of the Trademarks and IP
Rights (including any developments and improvements made by or on behalf of
LICENSEE to the Products, Trademarks and IP Rights) in GUESS. Additionally,
LICENSEE hereby grants, and agrees to cause the appropriate third party to grant
to GUESS an irrevocable power of attorney, on behalf of LICENSEE or such third
party, as the case may be, to execute any and all Trademarks and/or IP Rights
applications, and other related documentation that GUESS determines are
necessary or advisable in connection with the Products, Trademarks and IP Rights
(including any developments and improvements made by or on behalf of LICENSEE to
the Products, Trademarks and IP Rights).
11.4 PROHIBITED ACTS.
LICENSEE shall not, directly or indirectly:
(a) claim ownership of the Trademarks or the IP Rights;
(b) permit the use of the Trademarks or the IP Rights in such a
way as to give the impression that they are the property of
LICENSEE;
(c) use the Trademarks or the IP Rights or any confusingly
similar trademark or other similar intellectual or
industrial property in any manner not expressly authorized
by GUESS;
(d) engage in any activity that may contest, dispute, dilute or
otherwise impair the right, title, interest or goodwill of
GUESS in the Trademarks, including, without limitation, any
action to prevent or cancel any registration of the
Trademarks;
(e) use the Trademarks in any manner that is not necessary or
beneficial for the manufacture or distribution of the
Products;
(f) use any trademarks other than the Trademarks in connection
with the manufacture, promotion and distribution of the
Products or associate the Trademarks or the IP Rights with
any other name, trademark, service ▇▇▇▇, character or
personality;
(g) use the Trademarks as part of LICENSEE's corporate or
commercial name unless expressly permitted by GUESS in
writing; or
(h) contest the fact that LICENSEE's rights under this Agreement
are solely those of a licensee and, subject to the
provisions of
15
Section 17, cease upon termination or expiration of this
Agreement.
11.5 MISUSE. LICENSEE shall cooperate fully and promptly with GUESS in
the protection of GUESS's rights to the Trademarks and the IP Rights, as GUESS
may request from time to time. Without limitation to the foregoing, LICENSEE
shall be responsible for monitoring those countries in the Territory, where
LICENSEE or any retailer or distributor of LICENSEE is selling Products, for any
infringement, counterfeiting or other misuse of the Trademarks and the IP
Rights. LICENSEE, at its own expense, shall take action immediately to stop (a)
any MINOR infringement, counterfeiting or other misuse of the Trademarks or the
IP Rights in connection with the Products, and (b) any MINOR diversion of the
Products out of the Territory by any third party, of which LICENSEE becomes
aware. LICENSEE shall not be obligated to expend more than US$CONFIDENTIAL
INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION for the Initial Term, and US$CONFIDENTIAL INFORMATION OMITTED AND
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION for any Renewal
Term, for actions taken to stop the MINOR infringements and diversions described
in subsections (a) and (b) above. This limitation will not affect or limit
LICENSEE's obligation to reimburse GUESS for costs incurred in cases where GUESS
takes action, as described below. In all such actions, LICENSEE shall use
attorneys and investigators approved by GUESS. LICENSEE shall indemnify GUESS
against all losses, damages, attorneys' fees, judgments or other costs or
expenses incurred or suffered by GUESS as a result of negligent or unlawful
actions taken by LICENSEE. LICENSEE shall notify GUESS immediately by telephone
and facsimile of any and all SUBSTANTIAL cases of infringement, counterfeiting
or misuse of the Trademarks or IP Rights and SUBSTANTIAL cases of diversion of
the Products. In all cases, GUESS shall have the right, but not the obligation,
to participate with LICENSEE in any action to stop such activities, or to take
complete control over such action. In any case where GUESS takes action to stop
such activities, GUESS may charge LICENSEE up to 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 all costs reasonably incurred relating to such actions,
provided that such charges to LICENSEE will not exceed the lower of (i) in any
one Contract Year, 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 Minimum
Net Sales for such Contract Year, and (ii) $CONFIDENTIAL INFORMATION OMITTED AND
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION aggregate over the
Initial Term. Any monetary recovery obtained in actions taken at LICENSEE's sole
expense shall be for the account of LICENSEE. Any monetary recovery obtained in
actions taken at the sole expense of GUESS shall be for the account of GUESS.
Any monetary recovery obtained in actions where expenses have been shared by
both parties shall be shared PRO RATA in accordance with each party's expenses.
11.6 REPORT TO GUESS. Within thirty (30) days after the end of each
month during the term of this Agreement, LICENSEE shall submit a report to GUESS
summarizing
16
all discovered cases of misuse or diversion with respect to the Trademarks, the
IP Rights and the Products or indicating that no such misuses have been
discovered, and summarizing the activities undertaken by LICENSEE to discover
misuses of the Trademarks or IP Rights, and diversion of Products. The report
shall also summarize the steps taken by LICENSEE, if any, to stop any such
misuse or diversion.
11.7 COMPLIANCE WITH RULES OF GUESS. GUESS may promulgate, from time
to time, rules and amendments thereto, relating to use of the Trademarks and the
IP Rights, and LICENSEE shall comply with all such rules and amendments. Such
rules and amendments shall be effective upon receipt thereof by LICENSEE. GUESS
shall attempt to use reasonable efforts to ensure that such rules and
amendments, when issued, do not have a material negative impact on those
Products already produced by LICENSEE.
12. TRADE SECRETS AND CONFIDENTIALITY
A confidential relationship is created by this Agreement. Except in
connection with their respective rights and obligations under this Agreement,
GUESS, LICENSEE and their respective affiliates, employees, attorneys and
accountants shall keep confidential and not take or use for its or their own
purpose Trade Secrets of the other or the terms of this Agreement, unless with
the prior written consent of the other party hereto, or as may be required by
law, or in connection with regulatory or administrative proceedings and only
then with reasonable advance notice of such disclosure to the other party
hereto. In the course of arbitration or litigation, LICENSEE shall not have any
right of access to GUESS's Trade Secrets and LICENSEE waives any right to see
such Trade Secrets.
13. PAYMENTS, REPORTS AND REQUIRED CAPITAL
13.1 ADVANCE. In consideration for the rights granted by GUESS
hereunder, LICENSEE shall pay to GUESS upon execution of this Agreement the non-
refundable amount of US$CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION (which is equal to 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 Royalty Minimum for the first
Contract Year) which shall be applied as a credit against the Royalty Minimum
for the first Contract Year.
13.2 LETTER OF CREDIT. LICENSEE must ensure the payment of the balance
of the Royalty Minimum for the first Contract Year with an irrevocable standby
letter of credit naming GUESS as the sole beneficiary and containing such terms
and conditions approved by GUESS. The letter of credit must be established
before GUESS executes this Agreement. An irrevocable standby letter of credit
shall secure the Royalty Minimum for the second Contract Year. If thirty (30)
days prior to the expiration of the first Contract Year, a letter of credit is
not provided to GUESS to secure the Royalty Minimum for the second Contract
Year, GUESS may cause the existing letter of credit to be paid to it in full,
without waiving its right to terminate this Agreement. All letters of credit
shall be issued and confirmed by banks in Los Angeles, California suitable to
GUESS. LICENSEE shall pay all fees related to
17
the establishment of all letters of credit. GUESS may draw down on any letter of
credit if GUESS does not receive ANY sum due from LICENSEE within ten (10) days
of when it is due, and in such case LICENSEE shall restore the full amount of
the credit obligation within ten (10) days after the draw down.
13.3 ROYALTY BASIS. The Trademark Royalty shall be calculated on the
basis of the Distributor Listed Wholesale Prices for the Products with respect
to sales made to distributors, and on the basis of the Retailer Listed Wholesale
Prices for the Products with respect to sales made to retailers, regardless of
whether LICENSEE sells Products in arms' length transactions or in transactions
with any of its affiliates or itself. All related party sales shall be stated
separately for the relevant period on the STATEMENT OF ROYALTIES FORM
(Exhibit 1). A Product shall be considered "sold" upon the date when such
Product is invoiced, shipped or paid for, whichever event occurs first. Sales of
all Products are subject to payment of the Trademark Royalty. Sales of products
embodying an IP Right, whether bearing the Trademarks or not, are also subject
to payments at the same royalty rate. All sales of Products by LICENSEE shall be
documented by invoices numbered sequentially from the first sale under this
Agreement to the last.
13.4 DEDUCTIONS/RETURNS/CLOSEOUTS. Only the following deductions from
Gross Sales will be permitted for each Contract Year for the purpose of
calculating Net Sales (and for the purpose of calculating the amount of
allowable deductions from Gross Sales, Gross Sales of Closeouts and Exempt
Products shall be excluded):
(a) Allowances shall not exceed 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 Gross Sales of the Products sold;
(b) Trade Discounts (excluding the 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%) Trade Discount granted to GUESS
pursuant to Section 7.3) shall not exceed 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 Gross Sales of the Products
sold;
(c) Returned units of Products (not including Exempt Products or
Closeouts) shall not exceed the following percentages of
total Product units sold (not including units of Closeouts
or Exempt
18
Products): (i) first Contract Year (May 1, 1996 - December
31, 1997)-CONFIDENTIAL INFORMATION OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION%;
(ii) second Contract Year (January 1, 1998 - December 31,
1998)-CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION%; and (iii)
third Contract Year (January 1, 1999 - December 31, 1999)
and thereafter for the remainder of this Agreement -
CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION%;
(d) Closeouts shall not exceed 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 total Product units sold (not including
units of Closeouts or Exempt Products); and
(e) Amounts actually credited to a customer for the actual
return of an Exempt Product to LICENSEE will be deducted in
full.
Without limitation to any other rights that GUESS may have under this Agreement,
if (i) Allowances exceed the permitted percentage described in subsection (a)
above for a Contract Year, or (ii) Trade Discounts exceed the permitted
percentage described in subsection (b) above for a Contract Year; GUESS shall
have the right in each case to adjust LICENSEE's Net Sales requirement upward by
the amount of the overage.
Without limitation to any other rights that GUESS may have under this Agreement,
if returned units of Products (not including Exempt Products) exceed the
permitted percentage for the applicable Contract Year, GUESS shall have the
right to adjust LICENSEE's Net Sales requirement upward by the amount that is
the product of (i) the average price of the returned Products during the
Contract Year, multiplied by (ii) the number of units in excess of the maximum
percentage of returned Products permitted.
Without limitation to any other rights that GUESS may have under this Agreement,
if Closeouts exceed the permitted percentage for a Contract Year, GUESS shall
have the right to adjust LICENSEE's Net Sales requirement upward by the amount
that is the product of (i) the average discount given on Closeouts during the
Contract Year, multiplied by (ii) the number of units in excess of the maximum
percentage of Closeouts permitted.
Notwithstanding anything contained herein, no deductions whatsoever will be
permitted for reserves of any kind, including reserves for bad debts, nor for
any actual write-offs of bad debts.
19
13.5 TRADEMARK ROYALTY AND ROYALTY MINIMUM PAYMENTS. LICENSEE shall
pay to GUESS quarterly during the Initial Term and any Renewal Term of this
Agreement the Trademark Royalty, as follows: the payment for January, February
and March of each year shall be due MAY 1; the payment for April, May and June
shall be due AUGUST 1; the payment for July, August and September shall be due
NOVEMBER 1; and the payment for October, November and December shall be due
FEBRUARY 1. Within thirty (30) days after the end of each Contract Year,
LICENSEE shall pay GUESS the amount, if any, by which the Royalty Minimum (as
specified in Exhibit H attached hereto) for such Contract Year exceeds the
Trademark Royalty due for such Contract Year. LICENSEE will not be relieved of
paying the Trademark Royalty by virtue of having met the Royalty Minimum, if
LICENSEE's Net Sales yield Trademark Royalty obligations in excess of the
Royalty Minimum. The obligation of LICENSEE to pay the Trademark Royalty or the
Royalty Minimum, as the case may be, is absolute, notwithstanding any claim that
LICENSEE may assert against GUESS. LICENSEE shall not have the right to set-off,
compensate or make any deduction from payments of the Trademark Royalty or the
Royalty Minimum for any reason whatsoever.
13.6 REMITTANCE OF PAYMENT/WITHHOLDING. Unless otherwise requested by
GUESS, all payments shall be made in U.S. dollars by wire transfer to the
account of Guess?, Inc., Account No. 0492-13946, at Sanwa Bank California (ABA
No. ▇▇▇▇▇▇▇▇▇), ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, or to
such other account as GUESS may designate in writing to LICENSEE from time to
time, net of bank wire or other charges. If any amount payable to GUESS is
subject to any tax, charge or duty in the Territory (excluding any income tax
imposed by the State of California or the United States and payable by GUESS),
LICENSEE shall furnish to GUESS official proof of such payment. If GUESS does
not receive full and complete U.S. tax credit for any such tax, charge or duty,
then the amount payable by LICENSEE shall be increased to provide to GUESS such
amount as would be payable to GUESS in the absence of any such tax, charge, duty
or impost.
13.7 QUARTERLY REPORTS. Not later than thirty (30) days after the end
of each Quarter, LICENSEE shall send to GUESS by overnight courier service or
personal delivery reports that contain all of the information required by the
STATEMENT OF ROYALTIES FORM (Exhibit 1) as modified by GUESS from time to time.
The reports shall also include:
(a) the quantity of Products sold to each customer during the
Quarter;
(b) the total amount of Product units sold during such Quarter
which constitute Closeouts;
(c) the total amount of Exempt Product units shipped and
returned during such Quarter;
(d) any other information relating to the Products that may be
reasonably requested by GUESS, including the information
referred to in Section 6.2 above; and
20
(e) a separate STATEMENT OF ROYALTIES FORM applicable to
Closeouts only.
All information for the STATEMENT OF ROYALTIES FORM shall be separately stated
for each country in the Territory (and outside the Territory to which LICENSEE
sells Products pursuant to the Non-Exclusive Right granted under Section 7.4),
and for each distributor, independent contractor and retail store, wherever
located.
13.8 MONTHLY SALES REPORT. Not later than thirty (30) days after the
end of each of the first two (2) months of each Quarter, LICENSEE shall send to
GUESS by facsimile a report that shall contain all of the information required
by the MONTHLY SALES REPORT FORM (Exhibit K) as modified by GUESS from time to
time.
13.9 INVOICES. Upon the request of GUESS, LICENSEE shall submit to
GUESS, its agents and/or representatives, copies of invoices, credit memoranda,
line sheets and customer lists related to the sale of Products. All Trade
Discounts (other than confidential corporate rebates, which must be disclosed to
GUESS at the time such rebates are granted) must appear on the face of each
invoice and each such Discount must be itemized as a percentage reduction in the
list price.
13.10 RIGHT TO REVIEW. Receipt or acceptance by GUESS of any
statement furnished, or of any sums paid by LICENSEE, shall not preclude
GUESS from questioning the completeness or accuracy of such statement or
payment at any time within four (4) years after the date of such statement or
payment.
13.11 LATE PAYMENT. If any payment of the Royalty Minimum, the
Trademark Royalty or any other amounts due from LICENSEE hereunder are
delayed for any reason, interest shall accrue on the unpaid principal amount
from and after the date on which the same became due at the highest rate
permitted by law in the State of California.
13.12 FOREIGN CURRENCY CONVERSION. Net Sales made in a foreign
currency shall be listed showing the foreign currency and the conversion to
U.S. Dollars using the exchange rate for the fifteenth (15th) day of the
relevant month (or the next business day if such day falls on a weekend or a
holiday) as set forth in the U.S. edition of THE WALL STREET JOURNAL.
13.13 REQUIRED CAPITAL. In order to develop and grow its business,
LICENSEE shall invest or make available for investment pursuant to lines of
credit available to LICENSEE at least US$CONFIDENTIAL INFORMATION OMITTED AND
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION in capital
("Required Capital"). For these purposes, "Capital" is defined as loans or
other funding to LICENSEE, cash invested or personal loans obtained by
LICENSEE's shareholders for the sole purpose of financing the operation of
LICENSEE's business. A minimum of US$CONFIDENTIAL INFORMATION OMITTED AND
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION in cash,
consisting of cash capital and/or the proceeds of shareholder loans, must be
invested in LICENSEE in installments as follows: $CONFIDENTIAL INFORMATION
OMITTED AND FILED SEPARATELY
21
WITH THE SECURITIES AND EXCHANGE COMMISSION as of March 31, 1996; an
additional $CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION as of June 30, 1996; and an additional
$CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION as of April 30, 1997. Such amounts cannot be
withdrawn or repaid, as the case may be, until December 31, 1998. If
reasonably required in order for LICENSEE to meet the Minimum Net Sales and
Royalty Minimums hereunder, GUESS may require that the additional
$CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION be invested in LICENSEE. LICENSEE shall make such
investment within thirty (30) days of notice from GUESS. If the investment is
not made within such period, GUESS may immediately terminate this Agreement
without any right to cure. LICENSEE shall present GUESS with such
documentation and statements that GUESS may require in order to evidence, to
GUESS's satisfaction, the existence of the Required Capital and the requisite
minimum cash investment (and any required additions thereto), by the dates
described above.
14. ACCOUNTING AND SYSTEMS
14.1 DUTY TO KEEP ACCOUNTS. LICENSEE shall at all times keep and
maintain an accurate account of all operations within the scope of this
Agreement for a period of at least four (4) years after the date of such
information, including, without limitation, separate and appropriate books of
account and records sufficient to reconcile the number of Product units
manufactured with the number of Product units sold. LICENSEE shall establish a
separate income statement and separate books of account to track the sales of
the Products.
14.2 FINANCIAL STATEMENTS AND INVENTORY RECONCILIATION.
(a) LICENSEE shall provide GUESS with annual reviewed financial
statements of LICENSEE, within sixty (60) days after the end
of each of its fiscal years, and if requested by GUESS,
internal six (6) month interim statements within twenty (20)
days of GUESS's request. Within thirty (30) days after the
end of each Contract Year LICENSEE shall also provide to
GUESS a composite royalty statement showing the aggregate
Gross Sales, Trade Discounts, Returns, Exempt Product
returns, Allowances and Closeouts, and any other deduction
taken pursuant to Section 13.4 above to arrive at the Net
Sales price of all Products sold by LICENSEE. The composite
annual statement shall be certified by the chief financial
officer of LICENSEE.
(b) LICENSEE shall provide GUESS with an annual inventory
reconciliation, within ninety (90) days after the end of
each of its fiscal years. Such reconciliation shall (i) be
certified by a certified public accountant, (ii) confirm
actual reconciliation of
22
the inventory to LICENSEE's general ledger and (iii) include
computer reports summarizing inventory by style.
14.3 RIGHT OF INSPECTION BY GUESS. At all times during this Agreement,
and for a period of one hundred and twenty (120) days after termination or
expiration of the Agreement, the internal control report (if any) and the books
of account of LICENSEE with respect to the sales of Products shall be available
for inspection, copying and audit by GUESS, its agent or representative during
normal business hours, upon not less than seventy-two (72) hours advance notice,
and shall be made by GUESS at its own expense, except as provided below. If the
audit reveals that LICENSEE's reporting and record keeping are not in accordance
with GUESS's requirements or that there is an error in favor of LICENSEE in
excess of the lesser of US$CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION and 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 royalties with respect to any Quarter or Contract Year
in computing such royalties, all costs and expenses incurred by GUESS in
connection with such inspection and audit shall be borne by LICENSEE. The
internal control report means the report prepared by LICENSEE's auditors upon
their completion of an audit, addressing the auditors' findings and
recommendations.
14.4 FAILURE TO MAINTAIN RECORDS. LICENSEE acknowledges that its
failure to maintain the books of accounts and records required hereunder in a
manner which fairly presents the financial operations of LICENSEE, will
constitute a material breach of its obligations and will cause substantial
damage to GUESS. GUESS may, therefore, in addition to exercising any other
rights hereunder, charge LICENSEE a fee of the greater of (a) US$CONFIDENTIAL
INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION, or (b) 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
Trademark Royalty for the applicable Contract Year; upon LICENSEE's breach of
its obligations under this Section 14. LICENSEE shall pay such fee within five
(5) days of demand by GUESS. GUESS may also charge such fee against the letter
of credit described in Section 13.2.
14.5 SYSTEMS. LICENSEE will obtain and maintain such accounting,
information, communication and operating systems and capabilities as GUESS may
reasonably require from time to time and which are appropriate for LICENSEE's
business. GUESS's current requirements are described on the SYSTEMS REQUIREMENTS
LIST (Exhibit N), which is subject to change in GUESS's sole discretion upon
notice to LICENSEE.
15. FORCE MAJEURE
Neither GUESS nor LICENSEE shall be held responsible for any loss,
damage or delay suffered by the other party owing to any cause that is beyond
the reasonable control
23
of the defaulting party and cannot be attributed to negligence or willful
nonperformance of its obligation. Such causes include, but are not limited to,
wars, embargoes, riots, civil disturbances, fires, storms, floods, typhoons,
earthquakes and other natural calamities, strikes and labor disputes, government
acts and restrictions, and other causes that cannot be overcome or prevented by
due diligence. Either party wishing to invoke this Section shall give notice to
the other party stating the relevant cause. The defaulting party shall promptly
resume performance of its obligations the moment such cause or causes cease to
operate; provided, however, that if the condition continues with respect to
LICENSEE for a period of more than Sixty (60) days, GUESS shall have the right
to terminate this Agreement.
16. BREACH AND TERMINATION
16.1 REMEDIES FOR BREACH. In addition to any other rights or remedies
that GUESS may have (including without limitation, any right to immediately
terminate this Agreement), upon the occurrence of any event described in
Sections 16.4 or 16.5, or upon LICENSEE's breach of any material provision of
this Agreement which breach is not cured within any applicable cure period
therefor, GUESS may immediately take any, or all of the following actions:
(a) revise the products (including deleting one or more
products) which constitute Products hereunder;
(b) revise the area (including deleting one or more countries)
which comprises the Territory hereunder; and
(c) revise the right to use the Trademarks and the IP Rights
from an exclusive to a non-exclusive basis.
16.2 OTHER RIGHTS UNAFFECTED BY TERMINATION. It is understood and
agreed that termination of this Agreement by GUESS on any ground shall be
without prejudice to any other rights or remedies that GUESS may have.
16.3 TERMINATION OPTION FOR BREACH/CURE POSSIBLE.
(a) Except as otherwise provided in this Agreement, if LICENSEE
breaches any of its obligations under this Agreement, GUESS
may terminate this Agreement by giving a notice of breach to
LICENSEE. In the case of a breach involving a failure by
LICENSEE to make any payment required or contemplated
hereunder or relating to the Products or this Agreement
(including payments owed to GUESS and any agent or licensee
of GUESS), termination will become effective automatically
unless LICENSEE completely cures the breach within ten (10)
days after the giving of the notice. In the case of any
other breach (and except as otherwise provided herein),
termination will become effective automatically unless
LICENSEE takes actual and substantial steps in good faith to
diligently commence
24
to cure such breach (and presents GUESS with evidence of
such actions) within ten (10) days after the giving of the
notice, and actually completely cures the breach within
twenty (20) days after the giving of the notice of breach.
Pending cure of any breach described in this subsection (a),
LICENSEE shall ship no Products for sale without the prior
written consent of GUESS; if LICENSEE does ship any Products
without the prior written consent of GUESS, it shall forfeit
its right to cure and its rights under this Agreement shall
be terminated automatically. To fully cure any breach
described herein, LICENSEE must also reimburse GUESS for its
reasonable attorneys' fees incurred in investigating and
analyzing the breach and issuing the notice of breach and
any other communication in connection herewith. Upon the
giving of a notice of breach of any material provision of
this Agreement for the third time during the Term of the
Agreement, for any reason, LICENSEE shall no longer have the
right to cure any violation, and termination shall be
effective upon the giving of said third notice.
(b) GUESS may also terminate this Agreement by giving a notice
of breach to LICENSEE if any of the following events occur:
(i) returned Products (not including Exempt Products)
exceed 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 total Product units sold in any
Contract Year, PROVIDED HOWEVER, that LICENSEE may
request in writing at least sixty (60) days prior to
the end of such Contract Year that GUESS approve such
excess returned Products; whereby GUESS may in its sole
and absolute discretion approve or disapprove same;
(ii) the combined total of Trade Discounts (excluding the
ten percent (CONFIDENTIAL INFORMATION OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION%) Trade Discount granted to GUESS pursuant
to Section 7.3) and Allowances exceed CONFIDENTIAL
INFORMATION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION percent
(CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY
WITH THE SECURITIES
25
AND EXCHANGE COMMISSION%) of Gross Sales of Products
for any Contract Year; or
(iii) Closeouts exceed 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 total Product units sold for any
Contract Year.
Termination under this subsection (b) will become effective
automatically, as of the end of the next Contract Year, if the
same breach occurs during such next Contract Year.
16.4 TERMINATION OPTION/NO CURE POSSIBLE/CHANGE OF OWNERSHIP. The
parties mutually acknowledge that this Agreement is being entered into based
upon GUESS's evaluation of and reliance upon the current ownership, management
and control of LICENSEE. Exhibit M is a list of the current owners (who,
together with any family trust, or other corporation, limited liability company
or partnership in which ONLY ▇▇▇▇ ▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇ together at all times hold
in excess of fifty percent (50%) of the outstanding voting securities, in the
case of a corporation, or in excess of fifty percent (50%) of the outstanding
voting power or beneficial interest in the case of other entities, are referred
to as the "Current Owners") and two key executives (the "Key Executives") of
LICENSEE. On the basis of the information provided by LICENSEE to GUESS, GUESS
has determined that current management of LICENSEE has the technical, marketing
and sales expertise, business reputation and sensitivity to GUESS's unique image
and to the goodwill represented by the Trademarks, all of which are necessary to
carry out the purposes of this Agreement. Therefore, the written consent of
GUESS shall be required prior to the consummation by LICENSEE of any "Control
Change Transaction" (as defined below); and consolidations, sales and mergers
which do not constitute Control Change Transactions are hereby permitted,
PROVIDED that LICENSEE gives GUESS prior written notice of such transactions.
For purposes of this Agreement, a "Control Change Transaction" means any
consolidation, sale or merger if the Current Owners do not, subsequent to the
consolidation, sale or merger, directly or indirectly retain the power to vote
or direct the voting of more than fifty percent (50%) of the outstanding voting
securities of LICENSEE. Further, if (i) ▇▇▇▇▇ ▇▇▇▇ leaves the employment of
LICENSEE or otherwise fails to devote the vast majority of his time and efforts
to the daily management of LICENSEE's business, or if ▇▇▇▇ ▇▇▇▇ ceases to exert,
on a regular basis, actual and bona fide management control and oversight over
LICENSEE's business, in each case for any reason other than death or total
disability; or (ii) both Key Executives listed in Exhibit M die or become
totally disabled; then in any such case GUESS shall have the right to terminate
this Agreement immediately WITHOUT ANY RIGHT TO CURE. If only one of the Key
Executives listed in Exhibit M dies or becomes totally disabled, GUESS will not
have the right to terminate this Agreement on the grounds of such death or
disability, PROVIDED, that in the case of ▇▇▇▇ ▇▇▇▇'▇ death or total disability,
▇▇▇▇▇ ▇▇▇▇ continues to devote the vast majority of his time and efforts to the
daily management of LICENSEE's business for the remainder of the Initial Term
and any Renewal Term; or in
26
the case of ▇▇▇▇▇ ▇▇▇▇'▇ death or total disability, ▇▇▇▇ ▇▇▇▇ continues to
exert, on a regular basis, actual and bona fide management control and oversight
over LICENSEE's business for the remainder of the Initial Term and any Renewal
Term; and PROVIDED FURTHER, that LICENSEE is otherwise not in breach, and does
not become in breach, of this Agreement. Upon GUESS's request, ▇▇▇▇ ▇▇▇▇ shall
present proof of his actual and bona fide involvement, on a regular basis, in
the management control and oversight of LICENSEE's business.
16.5 TERMINATION OPTION/NO CURE POSSIBLE/ADDITIONAL CAUSES. GUESS may
terminate this Agreement immediately WITHOUT ANY RIGHT TO CURE if any of the
following events occur:
(a) LICENSEE fails to establish the letter of credit as required
under Section 13.2;
(b) Except as permitted in Section 16.4, LICENSEE merges or
consolidates with or into any other corporation or other
entity, or directly or indirectly sells or otherwise
transfers, sells or disposes of all or a substantial portion
of its business or assets (except for a sale of Products in
the ordinary course of its business);
(c) the Net Sales for any Contract Year do not meet or exceed
the Minimum Net Sales required for such Contract Year as
stated in Exhibit J;
(d) LICENSEE intentionally reports incorrect or false
manufacturing, sales or financial information and reports or
statements related to this Agreement;
(e) LICENSEE is declared bankrupt or is dissolved either
compulsorily or voluntarily, or a petition is presented or
an order is made or an effective resolution is passed or
analogous proceedings are taken for bankruptcy, dissolution,
composition, concordance, reorganization or winding-up of
LICENSEE, or if LICENSEE convenes a meeting for the purpose
of making, or proposes or enters into, any arrangement or
composition for the benefit of its creditors, or if an
encumbrancer takes possession of, or a receiver or other
similar officer is appointed for, the whole or any part of
the assets or undertakings of LICENSEE, or if LICENSEE stops
payment to its creditors generally, or ceases or threatens
to cease to carry on its business or any substantial part
thereof, or becomes insolvent or unable to pay or discharge
its liabilities in the ordinary course of business, or if
LICENSEE assigns the whole or any substantial part of its
assets or undertakings for the benefit of creditors;
27
(f) a manufacturing subcontractor retained by LICENSEE
manufactures or sells Products without the express
authorization of GUESS and LICENSEE permitted such
manufacture or sale, or knew about (and failed to prevent),
or should have known about, such manufacture or sale;
(g) any other agreement between GUESS and LICENSEE relating to
the Products expires or is terminated due to breach and
following any applicable cure period; or
(h) LICENSEE fails to invest and retain at least US$CONFIDENTIAL
INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION cash in its business in the
installment amounts and by the dates described in Section
13.13.
16.6 NO ASSIGNEE. No assignee for the benefit of creditors, receiver,
liquidator, sequestrator, trustee in bankruptcy, sheriff or any other officer of
the court or official charged with taking over custody of LICENSEE's assets or
business shall have any right to continue the performance or rights of LICENSEE
under this Agreement.
17. OBLIGATIONS AT TERMINATION OR EXPIRATION
17.1 SIGNS AND PROMOTIONAL MATERIALS. Within seven (7) days after the
expiration or termination of this Agreement for any reason, LICENSEE shall
remove and deliver to GUESS, and cause its retailers and distributors to so
remove and deliver to GUESS, all exterior and interior signs and displays which
bear the Trademarks or the IP Rights as well as all other promotional materials,
including brochures, tags, business cards and letterhead, bearing the Trademarks
or the IP Rights.
17.2 DIRECTORIES AND LISTINGS. Within seven (7) days after the
expiration or termination of this Agreement for any reason, LICENSEE shall
notify in writing all telephone companies, business directories, ▇▇▇▇▇▇▇▇ of
commerce and appropriate governmental agencies of the expiration or termination
of this Agreement to terminate their listings under any of the Trademarks and
shall provide GUESS with copies of such notices.
17.3 SUBCONTRACTORS. If LICENSEE has retained manufacturing
subcontractors hereunder, LICENSEE shall be responsible for their compliance of
any and all obligations under this Agreement that are applicable to such
subcontractors.
17.4 INVENTORY; RIGHT TO PURCHASE. Not later than forty-five (45) days
prior to the expiration of this Agreement or within seven (7) days after the
termination of LICENSEE's rights under this Agreement, LICENSEE shall furnish to
GUESS a certificate listing its inventory of Products on hand (which shall
include, without limitation, all materials and packaging for the manufacture and
marketing of Products) and work in progress together with the location thereof.
GUESS shall have the right to conduct a physical inventory of such Products and
work in progress. GUESS shall have the option (but not the
28
obligation) to purchase from LICENSEE all or any part of its respective
inventory of Products on hand (which shall include without limitation, all
materials and packaging for the manufacture and marketing of Products) upon the
following terms:
(a) GUESS shall notify LICENSEE of its intention, if any, to
exercise this option within thirty (30) days after GUESS's
receipt of such certificate and shall specify which of the
Products are to be purchased;
(b) the price for Products shall be no greater than LICENSEE's
actual manufacturing cost;
(c) LICENSEE shall deliver Products purchased by GUESS within
fifteen (15) days after receipt of the notice of GUESS's
intention to purchase the inventory; and
(d) payment shall be due upon delivery; provided, however, that
GUESS may deduct from the purchase price for such Products
any amounts owed it by LICENSEE.
17.5 REMAINING PRODUCTS. Products not sold by LICENSEE in accordance
with this Section 17.5 shall be destroyed or may be sold only after the
Trademarks and features embodying IP Rights have been removed therefrom (which
removal may be inspected by GUESS, its agents and/or representatives) prior to
sale, unless the parties agree otherwise in writing.
(a) IF AGREEMENT EXPIRED. In the event this Agreement has
expired in accordance with its terms, as to any Products on
hand (which shall include, without limitation, all materials
and packaging for the manufacture and marketing of Products)
not purchased by GUESS, LICENSEE may sell such Products on a
non-exclusive basis in accordance with this Agreement;
provided, however, LICENSEE shall have only six (6) months
after the date of expiration to sell and ship such Products.
(b) IF AGREEMENT TERMINATED. If the rights granted to LICENSEE
under this Agreement have been terminated, as to any
Products on hand (which shall include, without limitation,
all materials and packaging for the manufacture and
marketing of Products) not purchased by GUESS, LICENSEE may
sell such Products on a non-exclusive basis in accordance
with this Agreement; provided, however, LICENSEE shall have
only ninety (90) days after the date of termination to sell
and ship such Products.
17.6 LICENSEE'S OBLIGATION REGARDING SALE OF PRODUCTS.
29
In the event that LICENSEE sells any Products in accordance with
this Section, LICENSEE shall:
(a) send to GUESS by facsimile the information required on the
MONTHLY SALES REPORT attached hereto as Exhibit K, within
thirty (30) days after the end of each month during the
selling period permitted under Section 17.5, except the last
month thereof;
(b) send by overnight air courier service the information
required on the STATEMENT OF ROYALTIES attached hereto as
Exhibit I, within thirty (30) days after the end of such
permitted selling period, with respect to all sales of
Products by LICENSEE during the relevant periods; and
(c) pay to GUESS, within thirty (30) days after the expiration
of such permitted selling period, the appropriate amount of
Trademark Royalty due with respect to sales of Products by
LICENSEE during such period.
18. EFFECT OF TERMINATION OR EXPIRATION
18.1 TERMINATION OF RIGHTS. Except as specifically provided in
Section 17 above, upon the termination of the rights granted hereunder to
LICENSEE under this Agreement or upon the expiration of this Agreement, all
rights of LICENSEE to use the Trademarks and the IP Rights, intending, without
limitation, rights to manufacture, distribute, offer to sell, sell and advertise
Products, shall terminate or, as appropriate, be assigned to GUESS. LICENSEE
shall execute any instruments requested by GUESS which are necessary or
desirable to accomplish or confirm the foregoing. Any such assignment, transfer
or conveyance shall be without consideration other than the mutual covenants
contained in this Agreement. GUESS may thereafter license the right to use the
Trademarks and/or the IP Rights in connection with the manufacture, wholesale,
offer for sale at wholesale, distribution and advertising of the Products in the
Territory without any restriction or obligation to LICENSEE.
18.2 NO USE OF TRADEMARKS AND IP RIGHTS. Except as permitted by GUESS,
after the termination of the rights granted to LICENSEE or upon the expiration
of this Agreement, LICENSEE shall refrain from further use of the Trademarks and
the IP Rights or any other trademark, trade name or other industrial or
intellectual property that is:
(a) confusingly similar to the Trademarks;
(b) substantially similar to the IP Rights; or
(c) associated with, or suggests an association with, the
Trademarks and the IP Rights in any way.
30
18.3 NO LIABILITY. Under no circumstances shall LICENSEE be entitled,
directly or indirectly, to any form of compensation or indemnity from GUESS, or
its affiliates, licensees or distributors, as a consequence of the expiration or
termination of this Agreement, whether as a result of the passage of time, or as
the result of any other cause of termination referenced in this Agreement.
LICENSEE waives any claim that it has or that it may have in the future against
GUESS or its affiliates, licensees or distributors arising from any alleged
goodwill created by LICENSEE with respect to the Products or from its alleged
creation or the increase of a market for the Products in the Territory. In
particular, nothing herein shall be interpreted as making LICENSEE the
commercial agent of GUESS; it being understood and agreed by the parties that:
(a) all promotional efforts by LICENSEE are under the strict
direction and control of GUESS; and
(b) LICENSEE's rights under this Agreement may be terminated at
any time it breaches the terms hereof or upon expiration of
the Initial Term (if LICENSEE is not then entitled to renew
this Agreement pursuant to Section 2.2) or any Renewal Term
hereof, and that in such event LICENSEE is not entitled to
compensation, indemnification, or other form of payment from
GUESS.
19. INDEMNIFICATION, REPRESENTATIONS AND WARRANTIES
19.1 INDEMNIFICATION. LICENSEE shall indemnify, protect, hold harmless
and defend GUESS, its officers, directors, affiliates, agents and employees from
and against any and all claims, suits, losses, liabilities, expenses and
damages, including costs of suit and attorneys' fees arising out of or in any
way connected with the manufacture, sale, or advertisement of any Product by
LICENSEE; the claim of any broker, finder or agent in connection with the making
of this Agreement or any transactions contemplated by this Agreement; the claim
of any landlord that termination or expiration of this Agreement caused it
damage; the breach of this Agreement; or the inaccuracy of any representation or
warranty made by LICENSEE herein. Compliance by LICENSEE with the insurance
provisions of this Agreement shall not relieve LICENSEE of its duty to indemnify
and defend GUESS under this Section. The duty to indemnify and defend survives
the termination or expiration of this Agreement.
19.2 DEFENSE COUNSEL. LICENSEE shall defend GUESS, with counsel
acceptable to GUESS, with respect to each and every claim for which GUESS is
indemnified by LICENSEE under this Agreement. LICENSEE shall pay for the
services of such counsel upon counsel's presentation of reasonable legal bills
or requests for retainer.
19.3 AUTHORITY. Each of the parties represents and warrants that it
has the full right, power and authority to enter into this Agreement and to
perform all of its respective obligations, that it is under no legal impediment
which would prevent its entering
31
into and performing fully its obligations under this Agreement, and that it is
financially capable of performing such obligations.
19.4 COMPLIANCE WITH LAWS. LICENSEE shall take all actions required by
any local, provincial, national, state or regional agency, government or
commission to carry out the purposes of the rights licensed hereunder in
compliance with applicable law. LICENSEE shall immediately provide GUESS with
copies of any communication to or from any such agency, government or commission
that relates to or affects this Agreement or the Trademarks or the IP Rights.
Without limitation to the foregoing, LICENSEE shall not engage in any unfair or
illegal trade practices or commit any acts or engage in any transactions that
would reflect adversely upon the goodwill associated with GUESS, the Trademarks,
the IP Rights, or the Products.
19.5 LICENSEE REPRESENTATIONS AND WARRANTIES. LICENSEE represents and
warrants to GUESS that:
(a) LICENSEE is a corporation duly incorporated, validly
existing and in good standing under the laws of California;
(b) the financial statements previously furnished to GUESS by
LICENSEE are complete and correct in all material respects
and represent accurately the financial position of LICENSEE
at the time this Agreement is executed;
(c) no event has occurred that would have a material impact on
the business, operations or condition (financial or
otherwise) of LICENSEE;
(d) LICENSEE has the ability and capacity to perform its
obligations hereunder or to cause such obligations to be
performed; and
(e) any designs submitted by LICENSEE to GUESS, for approval are
original and do not infringe the rights of any other person.
Upon request, LICENSEE shall provide GUESS with a written certification that all
such representations and warranties remain true and accurate as of the date of
such certification.
19.6 GUESS WARRANTY AND REPRESENTATION. GUESS represents and warrants
to LICENSEE that (i) the trademark information set forth in Exhibit A is true
and correct, (ii) GUESS owns the trademarks which are shown as registered on
Exhibit A, and (iii) GUESS has full corporate power and authority to enter into
this Agreement. Except as expressly set forth above, GUESS makes no
representation or warranty, either express or implied, as to any matter
whatsoever, including, without limitation, the design, merchantability,
durability, suitability of any product or other item or the fitness of any
product or other item for a particular purpose.
32
19.7 NO PUNITIVE DAMAGES. Notwithstanding anything contained herein,
in no event shall either party be liable to the other for punitive damages.
20. APPROVAL PROCEDURES
The approval of GUESS or the exercise of its discretion as to any
request or proposal made by LICENSEE under any section of this Agreement shall
be at the absolute and sole subjective discretion of GUESS. A submission for
approval shall be deemed DISAPPROVED unless GUESS delivers a notice of approval
within twenty (20) business days. GUESS has no obligation to approve, review or
consider any item that does not strictly comply with the required submission
procedures. GUESS shall designate the procedure that was not followed. Approval
by GUESS shall not be construed as a determination that the approved matter
complies with all applicable regulations and laws.
21. ARBITRATION
21.1 PARTIES' CONSENT TO ARBITRATION. Except as otherwise provided in
this Agreement, GUESS and LICENSEE consent and submit to the exclusive
jurisdiction and venue of the Stare of California, for the adjudication of any
dispute between GUESS and LICENSEE pertaining to this Agreement or the alleged
breach of any provision hereof. Except as provided in this Agreement, any
dispute, controversy or claim arising out of or relating to this Agreement or
breach thereof shall be settled by binding arbitration heard by three (3)
arbitrators, in accordance with the Commercial Arbitration Rules ("Rules") of
the American Arbitration Association. The arbitrators shall be appointed in
accordance with the Rules. The parties hereto agree that the venue of such
arbitration shall be the City of Los Angeles, Los Angeles County, California.
21.2 POWERS. The arbitrators shall be bound by the terms and
conditions of this Agreement and shall have no power, in rendering the award, to
alter or depart from any express provision of this Agreement, and their failure
to observe this limitation shall constitute grounds for vacating their award.
Except as otherwise provided in this Agreement, the arbitrators shall apply the
law specified in Section 22 below. Any award of the arbitrators shall be final
and binding upon the parties and judgment may be entered in any court of
competent jurisdiction, including, without limitation, the courts of the State
of California or any federal court in California, or any court of competent
jurisdiction within the Territory. The award and judgment thereon shall include
interest at the legal rate from the date that the sum awarded to the prevailing
party was originally due and payable, and attorneys' fees and other arbitration
costs, including, without limitation, costs associated with expert witnesses.
21.3 PROVISIONAL REMEDIES. All provisional remedies shall be the
exclusive jurisdiction of the courts. The parties may seek and obtain
provisional remedies prior to or contemporaneously with arbitration. LICENSEE
acknowledges and admits that the Trademarks and the IP Rights possess a special,
unique and extraordinary character, which makes difficult the assessment of
monetary damages that GUESS might sustain by any use which is inconsistent with
this Agreement, and that irreparable injury would be caused to GUESS by any use
of the Trademarks and/or IP Rights that is inconsistent with this Agreement,
such that injunctive and similar relief would be appropriate. Accordingly,
33
without prejudice to any other right and/or remedy GUESS may have under this
Agreement or the law, if, after notice by GUESS, LICENSEE fails to take any
action that LICENSEE is obligated to take under this Agreement, pertaining to
the protection of the Trademarks and the IP Rights, then GUESS shall be entitled
to an award of injunctive relief and/or specific performance to compel such
action.
21.4 ENTITLEMENT TO COSTS. If any legal action or dispute arises under
this Agreement, arises by reason of any asserted breach of it, or arises between
the parties and is related in any way to the subject matter of the Agreement,
the prevailing party shall be entitled to recover all costs and expenses,
including reasonable attorneys' fees, investigative costs, reasonable accounting
fees and charges for experts. The "prevailing party" shall be the party who
obtains a provisional remedy such as a preliminary injunction or who is entitled
to recover its reasonable costs of suit, whether or not the suit proceeds to
final judgment; if there is no court action, the prevailing party shall be the
party who wins any dispute. A party need not be awarded money damages or all
relief sought in order to be considered the "prevailing party" by the
arbitrator(s) or a court.
22. GOVERNING LAW
All questions concerning this Agreement, the rights and obligations of
the parties, enforcement and validity, effect, interpretation and construction
which are governed by state law shall be determined under the laws of the State
of California. United States federal law shall apply to all other issues;
however, if a provisional remedy is sought, the low of the place where such
remedy is sought shall apply.
23. RELATIONSHIP OF PARTIES
This Agreement shall not be construed to place the parties in the
relationship of legal representatives, partners, joint venturers or agents of or
with each other. Under this Agreement, LICENSEE is an independent contractor and
shall be solely responsible for the payment of all income tax withholding,
payroll taxes, contributions and other obligations relating to LICENSEE's
employment and compensation of its employees and consultants. No party shall
have any power to obligate or bind any other party in any manner whatsoever,
except as specifically provided herein.
24. ASSIGNABILITY
This Agreement shall be binding upon and inure to the benefit of the
successors and permitted assigns of the parties. GUESS may freely assign all of
its rights, duties and obligations. The rights granted to LICENSEE hereunder are
unique and personal in nature, and neither this Agreement nor the rights granted
to LICENSEE hereunder may be assigned, transferred, pledged or hypothecated by
LICENSEE without GUESS's prior written approval. Any attempt by LICENSEE to
transfer any of its rights or obligations under this Agreement, whether by
assignment, sublicense or otherwise, without having received the prior written
approval of GUESS, shall constitute a default hereunder, but shall otherwise be
null and void.
34
25. INTERPRETATION
This Agreement shall be interpreted to give GUESS maximum control
of the Trademarks and IP Rights and their usage. Any uncertainty or ambiguity
with respect to any provision of this Agreement shall not be construed for or
against any party based on attribution of drafting to either party. The headings
contained herein are for reference purposes only and shall not affect in any way
the meaning or interpretation of this Agreement.
26. WAIVER AND INTEGRATION
The failure of a party to insist upon strict adherence to any
term or provision of this Agreement, or to object to any failure to comply with
any term or provision of this Agreement, shall not be a waiver of that term or
provision, estop that party from enforcing that term or provision, or preclude
that party from enforcing that term or provision by estoppel or by laches. The
receipt by a party of any benefit from this Agreement shall neither constitute
such party's waiver nor effect an estoppel on the right of that party to enforce
any provision hereof. None of the terms of this Agreement shall be deemed to be
waived or modified, except by an express agreement in writing, signed by an
authorized officer of the party against whom enforcement of the waiver or
modification is sought, supported by new consideration.
27. NOTICES AND COMMUNICATIONS
Any notice, communication or legal service of process required or
permitted under this Agreement shall be effective when personally delivered in
writing; or on the date when the notice, service or communication is transmitted
by telex or by electronic facsimile (with a confirmation copy to be sent by
mail) or the day after the notice, service or communication is sent by overnight
air courier service; or five (5) days after the date of mailing. All notices
shall be sent to the parties at the notice addresses listed below or to such
other persons and notice addresses as may be designated in writing by the
parties to each other. The date a notice shall be deemed to be transmitted, sent
via overnight air courier or mailed shall be the date at the notifier's place of
business at the time of the transmission, sending or mailing.
TO GUESS: GUESS ?, INC.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇.▇.▇.
Attention: Licensing Department
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: GUESS ?, INC.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇.▇.▇.
Attention: General Counsel/Licensing
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
35
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
TO LICENSEE: AGS INC.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: TROOP, MEISINGER, ▇▇▇▇▇▇▇ & PASICH
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
28. SEVERABILITY
The provisions of this Agreement are severable, and if any provision
shall be held invalid or unenforceable, in whole or in part, in any
jurisdiction, then such invalidity or unenforceability shall affect only such
provision, and shall not affect such provision in any other jurisdiction. To the
extent legally permissible, a provision which reflects the original intent of
the parties shall be substituted for such invalid or unenforceable provision.
29. SURVIVAL
All obligations of the parties of a continuing nature, including
without limitation those concerning trademark rights, indemnities and trade
secrets, shall survive the termination or expiration of this Agreement.
30. CROSS DEFAULT
A breach or default under any other agreement between GUESS and
LICENSEE or any of LICENSEE's parents, subsidiaries and shareholders, shall, if
not cured within any applicable cure period, be deemed to be a breach of this
Agreement.
31. EXHIBITS
The Exhibits attached hereto and as revised by agreement of the
parties from time to time are hereby incorporated by reference and form integral
parts hereof. The reporting, approval and other similar forms of GUESS attached
as Exhibits hereto may be revised by GUESS at any time and from time to time.
32. ENTIRE AGREEMENT
This Agreement, including all Exhibits, constitutes the entire
agreement between the parties with respect to, and supersedes all prior
negotiations and agreements
36
between the parties concerning the subject matter hereof. This writing is
intended as the final, complete and exclusive statement of the terms of the
agreement between the parties with respect to the subject matter hereof and
may only be amended or terminated in writing.
IN WITNESS WHEREOF, the parties hereto have caused their duly-
authorized representatives execute this Agreement as of the date first-above
written.
AGS INC. GUESS?, INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇ By: /s/
---------------------------- ----------------------
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇
President President
Reviewed and approved as to form By: /s/
on behalf of LICENSEE: ----------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Senior Executive Vice President
By:_____________________________
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Attorney for Licensee
37
EXHIBIT A
TRADEMARKS
A. TRADEMARKS
GUESS?
GUESS? AND TRIANGLE DESIGN
TRIANGLE W/? DESIGN
B. REGISTRATIONS AND APPLICATIONS
INTERNATIONAL CLASS 16:
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
▇▇▇▇ COUNTRY APPL. NO. REG. NO. STATUS
--------------------------------------------------------------------------------
GUESS? ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ REGISTERED
GUESS? AND TRIANGLE DESIGN UNITED STATES 1435363 REGISTERED
GUESS/ AND TRIANGLE DESIGN CANADA 373753 REGISTERED
GUESS? MEXICO 319468 REGISTERED
GUESS? MEXICO 319469 REGISTERED
GUESS? MEXICO 326588 REGISTERED
GUESS? MEXICO 302554 REGISTERED
GUESS? ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ REGISTERED
TRIANGLE DESIGN
GUESS? PARIS AND MEXICO 309462 REGISTERED
TRIANGLE DESIGN
GUESS? PARIS AND MEXICO 319485 REGISTERED
TRIANGLE DESIGN
GUESS? PARIS AND MEXICO 342181 REGISTERED
TRIANGLE DESIGN
TRIANGLE W/? DESIGN MEXICO 366693 REGISTERED
GUESS? AUSTRALIA A444173 REGISTERED
GUESS? AND TRIANGLE DESIGN AUSTRALIA A444194 REGISTERED
NO FILINGS FOR IC 16 BRUNEI TO BE FILED
--------------------------------------------------------------------------------
38
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
▇▇▇▇ COUNTRY APPL. NO. REG. NO. STATUS
--------------------------------------------------------------------------------
GUESS ? AND TRIANGLE (SERIES) HONG KONG 1401A-G/86 REGISTERED
GUESS ? AND TRIANGLE (SERIES) HONG KONG 866A-D/89 REGISTERED
NO FILINGS FOR IC 16 INDONESIA* TO BE FILED*
TRIANGLE W/? DESIGN MALAYSIA MA/B1946/86 REGISTERED
GUESS? SINGAPORE 3598/86 REGISTERED
GUESS? AND TRIANGLE DESIGN SINGAPORE 3563 REGISTERED
TRIANGLE W/? DESIGN SINGAPORE 3575/86 REGISTERED
GUESS? TAIWAN 345835 REGISTERED
GUESS? AND TRIANGLE DESIGN TAIWAN 345817 REGISTERED
GUESS? AND TRIANGLE DESIGN TAIWAN 323062 REGISTERED
GUESS? AND TRIANGLE DESIGN TAIWAN 337507 REGISTERED
TRIANGLE W/? DESIGN TAIWAN 359805 REGISTERED
TRIANGLE W/? DESIGN TAIWAN 355498 REGISTERED
TRIANGLE W/? DESIGN TAIWAN 345836 REGISTERED
TRIANGLE W/? DESIGN TAIWAN 352451 REGISTERED
TRIANGLE W/? DESIGN TAIWAN 352504 REGISTERED
* Trademark has been pirated in certain classes; awaiting results of appeal
in Indonesian Supreme Court.
39
INTERNATIONAL CLASS 18
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
▇▇▇▇ COUNTRY APPL. NO. REG. NO. STATUS
--------------------------------------------------------------------------------
GUESS? AND TRIANGLE DESIGN UNITED STATES 1435363 REGISTERED
GUESS? AND TRIANGLE DESIGN CANADA TO BE FILED
GUESS? MEXICO 323627 REGISTERED
GUESS? MEXICO 326589 REGISTERED
TRIANGLE W/? DESIGN MEXICO 366693 REGISTERED
GUESS? AUSTRALIA A444174 REGISTERED
GUESS? AND TRIANGLE DESIGN AUSTRALIA A409357 REGISTERED
GUESS? BRUNEI BRU/24109 PENDING
GUESS? AND TRIANGLE DESIGN BRUNEI BRU/24107 PENDING
TRIANGLE W/? DESIGN BRUNEI BRU/24108 PENDING
GUESS? AND TRIANGLE (SERIES) HONG KONG 1402A-G/86 REGISTERED
GUESS? AND TRIANGLE HONG KONG 1119/85 REGISTERED
TRIANGLE W/? DESIGN (SERIES) HONG KONG 4094A-D88 REGISTERED
GUESS? INDONESIA 2187 PENDING
GUESS? AND TRIANGLE DESIGN INDONESIA ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ W/? DESIGN INDONESIA H4HC010 18916 PENDING
GUESS? MALAYSIA 86/00897 REGISTERED
GUESS? AND TRIANGLE DESIGN MALAYSIA MA/797/86 REGISTERED
TRIANGLE W/? DESIGN MALAYSIA MA/B1936/86 REGISTERED
GUESS? SINGAPORE 3599/86 REGISTERED
GUESS? AND TRIANGLE DESIGN SINGAPORE 3562/86 REGISTERED
GUESS? TAIWAN 330915 REGISTERED
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
40
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
▇▇▇▇ COUNTRY APPL. NO. REG. NO. STATUS
--------------------------------------------------------------------------------
TRIANGLE W/? DESIGN SINGAPORE 3576/86 REGISTERED
GUESS? AND TRIANGLE DESIGN TAIWAN 265783 REGISTERED
GUESS? AND TRIANGLE DESIGN TAIWAN 331592 REGISTERED
TRIANGLE W/? DESIGN TAIWAN 377114 REGISTERED
TRIANGLE W/ ? DESIGN TAIWAN 353833 REGISTERED
TRIANGLE W/? DESIGN TAIWAN 371354 REGISTERED
--------------------------------------------------------------------------------
41
EXHIBIT B
PRODUCTS
Stationery and the following school supplies - binders, notebooks, composition
books, file folders, note pads, agendas/day planners, pencil holders, envelopes
and letterhead, photo albums, index books, book bags, open portfolio covers, and
calendars.
42
EXHIBIT C
LICENSEE COLLECTION SUMMARY
GUESS?, INC. SUBMIT TO THE ATTENTION OF: GUESS?, INC. - LICENSING
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
FORM MUST BE SUBMITTED COMPLETE ▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Phone (▇▇▇) ▇▇▇-▇▇▇▇
FAX (▇▇▇) ▇▇▇-▇▇▇▇
LICENSEE COLLECTION SUMMARY
Name of Licensee __________________________________________________________
___________________________
Address __________________________________________________________
___________________________
__________________________________________________________
___________________________
__________________________________________________________
___________________________
Licensed Territory __________________________________________________________
___________________________
Licensed Product __________________________________________________________
___________________________
---------------------------------------------------------------------------------------------------------
SEASON LICENSEE APPROX. DATE LICENSEE LICENSEE LINE BREAK LICENSEE
CONCEPT BOARDS 1ST SAMPLES LINE BREAK LOCATION SHIPPING DATES
COMPLETE (IF RECEIVED DATE (START/SHIP) (END/SHIP)
APPLICABLE)
---------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------
----------------------------------------------------
Licensee Signature
EXHIBIT D-1
LICENSED PRODUCT APPROVAL FORM
GUESS?, INC. GUESS?, INC./ LICENSING DEPARTMENT
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
LICENSED PRODUCT APPROVAL FORM
(FOR STYLE ONLY! SEE FABRIC/COLOR APPROVAL FORM FOR FABRIC)
Name of Licensee
----------------------------------------------------------------
----------------
Licensed Product
----------------------------------------------------------------
----------------
Licensee's Address
----------------------------------------------------------------
----------------
Season
---------------------------------------
Style #
--------------------------------------
Fabrication
----------------------------------
Wholesale Price ATTACH PHOTO OF STYLE HERE
------------------------------
Colors
---------------------------------------
Sizes
----------------------------------------
Start Taking Orders
--------------------------
End Taking Orders
----------------------------
Start Ship
-----------------------------------
End Ship
-------------------------------------
---------------------------------------------- -----------------------------
Signature of Licensee Signature of Licensor
/ / Approved / / Disapproved
------------------------ ------------------------
Comments
------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Date returned to Licensee
-------------------------------------------------------
-C- GUESS?, INC, 1993 FORM NOT 3990. 3154
EXECUTIVE OFFICES: ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
-PHONE: (▇▇▇) ▇▇▇-▇▇▇▇ FAX (▇▇▇) ▇▇▇-▇▇▇▇
EXHIBIT D-2
FABRIC AND/OR COLOR APPROVAL FORM
GUESS?, INC. GUESS?, INC./ LICENSING DEPARTMENT
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
FABRIC AND/OR COLOR APPROVAL FORM
(FABRIC AND COLOR ONLY! SEE LICENSED PRODUCT APPROVAL FORM FOR STYLE)
Name of Licensee
---------------------------------------------------------------
-----------------------
Licensed Product
---------------------------------------------------------------
-----------------------
Licensee's Address
-------------------------------------------------------------
-----------------------
Season
-------------------------------------------------------------------------
-----------------------
List style numbers of garments to be manufactured in this fabric
---------------
--------------------------------------------------------------------------------
-----------------------
Fabric # and name of supplier
---------------------------------------------------
--------------------------------------------------------------------------------
------------------------------
Fabric content and weight
-------------------------------------------------------
------------------------------
PLEASE ATTACH 1 SET OF SWATCHES BELOW
Beside each swatch provide the name of color
If denim, list names of washes
/ / Approved / / Disapproved
------------------------ -------------------------
------
Comments
------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
-----------------------
--------------------------------------------------------------------------------
--------------------------------------- ---------------------------------
Signature of Licensee Signature of Licensor
Date returned to Licensee
----------------------------------
-C- GUESS?, INC, 1993 FORM NO. 3990. 3155
EXECUTIVE OFFICES: ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ -
PHONE: (▇▇▇) ▇▇▇-▇▇▇▇ FAX (▇▇▇) ▇▇▇-▇▇▇▇
EXHIBIT E
LICENSED PROPERTY USE APPROVAL FORM
GUESS?, INC. GUESS?, INC./ LICENSING DEPARTMENT
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
LICENSED PROPERTY USE APPROVAL FORM
ALL USES OF GUESS TRADEMARKS THAT ARE NOT ADVERTISING (E.G. TRIM, LABELS
STATIONARY, PACKAGING, DISPLAYS, ETC.)
Name of Licensee
-----------------------------------
-------------- (GUESS USE ONLY)
Licensed Product
-----------------------------------
-------------- Date Use Submitted----------
Date Use Returned-----------
Description of use
--------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
---------------------------------------------------
/ / Concept Design / / Color Indication / / Finished Art
/ / Production Sample / / Final Sample
/ / Approved / / Disapproved
---------------------- -------------------------
Comments/Suggestions:
-----------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------
If submission is a label or hangtag, name and address of supplier
----------------
--------------------------------------------------------------------------------
------------------------------------------------
ATTACH A SAMPLE OF USE IN THIS SPACE OR AFFIX TO A SEPARATE PAGE
--------------------------------- --------------------------------
---------
Signature of Licensee Signature of Licensor
-C- GUESS?, INC, 1993 FORM NO. 3990. 2152
EXECUTIVE OFFICES: ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
-PHONE: (▇▇▇) ▇▇▇-▇▇▇▇ FAX (▇▇▇) ▇▇▇-▇▇▇▇
EXHIBIT F-1
CUSTOMER PROFILE FORM
--------------------------------------------------------------------------------
TAG GUESS? CUSTOMER PROFILE FORM
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
CORPORATE NAME DBA NAME
--------------------------------------------------------------------------------
OWNERS NAME BUYERS NAME
--------------------------------------------------------------------------------
ADDRESS CITY
--------------------------------------------------------------------------------
STATE COUNTRY ZIP
--------------------------------------------------------------------------------
PHONE(S) FAX DATE
--------------------------------------------------------------------------------
1. Type of Account: / / Speciality / / Department / / Other
-------------------------------------------
Year Business Established At present location since
------------------------------------ ------------------------------------
2. Are you currently doing business with GUESS? / / No / / Yes Account # Division
------------------- ---------------------
3. Check the type(s) of merchandise you currently carry in your store(s).
/ / Pre-teens / / Juniors / / Misses / / Mens / / Boys
/ / Infants / / Kids / / Footwear / / Accessories / / Other
---------------------------------------------------
4. List the key manufacturers you currently carry in your store(s). (Include GUESS? Licensees, if applicable)
a. d.
------------------------------------------------ ---------------------------------------------------
b. e.
------------------------------------------------ ---------------------------------------------------
c. f.
------------------------------------------------ ---------------------------------------------------
5. Number of stores that you currently operate List your store locations. (Attach additional sheets, if
necessary) -----------------
Check stores where Guess? will be carried:
/ / / /
--------------------------------------------- ------------------------------------------------------
/ / / /
--------------------------------------------- ------------------------------------------------------
/ / / /
--------------------------------------------- ------------------------------------------------------
6. Comments
----------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------
------------------------------------------------- ----------------------------------------------------------
GUESS? Decline GUESS? Approval
Please submit typed profile to:
NOTE: ▇▇▇▇▇ ▇▇▇▇ (OF OUR PRODUCT DEPARTMENT), WILL SEND A CUSTOMIZED FORM ONCE
THE CONTRACT HAS BEEN SIGNED
EXHIBIT F-2
FOREIGN DISTRIBUTION APPROVAL FORM
Page ____ of _____
Date ____/___/____
Tag GUESS?, INC.
FORM MUST BE SUBMITTED COMPLETE & SENT TO:
GUESS? INC./ LICENSING DEPT.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
FOREIGN DISTRIBUTION APPROVAL FORM
Name of Licensee
-------------------------------------------------------
Licensed Product
-------------------------------------------------------
Country you are interested in distributing in / shipping to:
(PLEASE USE ON FORM FOR EACH COUNTRY)
-------------------------------------------
Describe what method of distribution you are planning to use
/ / you will ship directly to / / you are proposing
GUESS Retail Stores ONLY To assign a distributor
PLEASE CONTINUE ONLY IF YOU ARE ASSIGNING A DISTRIBUTOR TO SHIP THROUGHOUT
THE TERRITORY. IF NOT, PLEASE SKIP TO #6.
1. Please give us the name of the distributor, the various
products/labels they currently distribute as well as the volume they
shipped the last 3 years for each brand.
Name:
--------------------------------------
BRAND YEAR 1 YEAR 2 YEAR 3
U.S. $ U.S. $ U.S. $
--------------- -------------- ----------- ------------
U.S. $ U.S. $ U.S. $
--------------- -------------- ----------- ------------
U.S. $ U.S. $ U.S. $
--------------- -------------- ----------- ------------
2. If your distributor is planning to distribute full-scale throughout the
country, please tell us the amount they are guaranteeing to purchase from you
for the next 3 years.
UNITS DOLLARS
Year 1 U.S. $
-------------- -----------
Year 2 U.S. $
-------------- -----------
Year 3 U.S. $
-------------- -----------
FOREIGN DISTRIBUTION APPROVAL FORM Page _____ of _____
Date ____/____/____
3. Have you reviewed the proposed distributor's financial and find them
acceptable?
/ / Yes / / No
Comments:
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
4. The following items must accompany this form if you are seeking to assign a
distributor to sell throughout the territory:
Brochure of distributor (if available)
------
Background information / history
------ (i.e. how long they have been in business, levels of distribution,
Experience in the marketplace, references, etc.)
Pictures of the distributor's showroom (if applicable)
------
5. Please list the full address, fax number and a contact name of the proposed
distributor.
Address:
------------------------------------------------------------------
Fax Number:
---------------------------------------------------------------
Contact Name:
-------------------------------------------------------------
6.
------------------------------------- -----------------------------------
Signature of License Signature of Licensor - GUESS? Inc.
/ / Approved / / Disapproved
Date: ____/____/____
EXHIBIT F-3
DISTRIBUTION APPROVAL FORM
GUESS?, INC.
Page ____ of _____
Date ____/___/____
FORM MUST BE SUBMITTED COMPLETE & SENT TO: GUESS? INC./ LICENSING DEPT.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
DISTRIBUTION APPROVAL FORM
Name of Licensee
-----------------------------------------------------------
Licensed Product
-----------------------------------------------------------
Country in the territory you are interested in distributing in / shipping to:
(PLEASE USE ON FORM FOR EACH COUNTRY)
---------------------------------
1. Please give us the name of the distributor, the various products/labels
they currently distribute as well as the volume they shipped the last 3 years
for each brand.
Name:
--------------------------------------
BRAND YEAR 1 YEAR 2 YEAR 3
U.S. $ U.S. $ U.S. $
--------------- -------------- ----------- ------------
U.S. $ U.S. $ U.S. $
--------------- -------------- ----------- ------------
U.S. $ U.S. $ U.S. $
--------------- -------------- ----------- ------------
2. If your distributor is planning to distribute full-scale throughout the
country, please tell us the amount they are guaranteeing to purchase from you
for the next 3 years.
UNITS DOLLARS
Year 1 U.S. $
-------------- -----------
Year 2 U.S. $
-------------- -----------
Year 3 U.S. $
-------------- -----------
DISTRIBUTION APPROVAL FORM Page _____ of _____
ate ____/____/____
3. Have you reviewed the proposed distributor's financial and find them
acceptable?
/ / Yes / / No
Comments:
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
4. The following items must accompany this form if you are seeking to assign a
distributor to sell throughout the territory:
Brochure of distributor (if available)
------
Background information / history
------ (i.e. how long they have been in business, levels of distribution,
experience in the marketplace, references, etc.)
Pictures of the distributor's showroom (if applicable)
------
5. Please list the full address, fax number and a contact name of the proposed
distributor.
Address:
-----------------------------------------------------------------
Fax Number:
---------------------------------------------------------------
Contact Name:
------------------------------------------------------------
6.
------------------------------ ---------------------------------
Signature of License Signature of Licensor - GUESS? Inc.
/ / Approved / / Disapproved
Date:
------------------
EXHIBIT G-1
ADVERTISING APPROVAL FORM
TAG GUESS?, INC.
ADVERTISING APPROVAL FORM FOR LICENSEES
SUBMISSIONS MAY BE APPROVED ONLY IN WRITING AND ONLY IF ALL CHANGES ARE MADE
Name of Licensee:
-------------------------------------------------------------
Licensed Product:
-------------------------------------------------------------
-------------------------------------------------------------------------------
ARTWORK SUBMISSION
-------------------------------------------------------------------------------
Please check the media of advertising:
/ / Full page ad / / Billboard / / Other
-----------------------------
Name of publication:
---------------------------------------------------------
Issue date:
-------------------------------------------------------------------
Ad position (as detailed as possible):
----------------------------------------
/ / Left hand page / / Right hand page / /Full page spread
-------------------------------------------------------------------------------
F O R G U E S S U S E O N L Y
Please follow the applicable instructions:
/ / Add photo credits Date submitted
--------------------
/ / Add copyright notice Date Returned
---------------------
/ / Add GUESS? Triangle logo
/ / Use GUESS? Standard red for logo (PMS 185)
Special instructions:
----------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------- -------------------------------------------
Approved Approved with changes
Disapproved
-------------------------------------------------------------------------------
PUBLICATION SUBMISSION
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Name of publication:
(A copy of the magazine or newspaper must be included)
Frequency (check one): / / Daily / / Weekly / / Monthly / / Other
----------
Comments/Suggestions:
---------------------------------------------------------
------------------------------- -------------------------------
Approved Disapproved
-------------------------------------------------------------------------------
EXECUTIVE OFFICES: ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ -
PHONE (▇▇▇) ▇▇▇-▇▇▇▇ FAX (▇▇▇) ▇▇▇-▇▇▇▇
Form No. 3390.3159 Rev. 1/95
EXHIBIT G-2
ADVERTISING BUDGET FORM
Date ____/___/___
TAG GUESS?, INC.
ADVERTISING BUDGET FORM
Name of Licensee
---------------------------------
Licensed Product
---------------------------------
Territory/Country
---------------------------------
Projected Sales $________ Period from ___/___/___ to ___/___/___
Projected Advertising Expenses $_______ Period from ___/___/___ to ___/___/___
/ / 6 Month Budget / / 1 Year Budget
-------------------------------------------------------------------------------
* IF YOU HAVE MORE THAN ONE PRODUCT LINE, OR SALES OUTSIDE OF THE U.S. OR IN
MORE THAN ONE COUNTRY, PLEASE USE A SEPARATE FORM FOR EACH COUNTRY
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
TYPE OF ADVERTISING DOLLAR AMOUNT
-------------------------------------------------------------------------------
Consumer Advertising (List publications):
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Trade Advertising (List publications):
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Co-Op Advertising
-------------------------------------------------------------------------------
Newspapers
-------------------------------------------------------------------------------
Charity
-------------------------------------------------------------------------------
Sponsorships
-------------------------------------------------------------------------------
Special Events
-------------------------------------------------------------------------------
Billboards
-------------------------------------------------------------------------------
Promotional Items
-------------------------------------------------------------------------------
Production Fees\Shoot Fees
-------------------------------------------------------------------------------
PR Consultants Fees
-------------------------------------------------------------------------------
TV/Cinema
-------------------------------------------------------------------------------
Radio
-------------------------------------------------------------------------------
Bus Shelters
-------------------------------------------------------------------------------
Posters & Banners
-------------------------------------------------------------------------------
Other
-------------------------------------------------------------------------------
TOTAL:
-------------------------------------------------------------------------------
EXHIBIT G-3
ADVERTISING EXPENDITURE FORM
TAG GUESS?, INC.
Page ____ of ____
Date ____/___/___
SUBMIT TO THE ATTENTION TO: GUESS? INC./ LICENSING DEPT.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
ADVERTISING EXPENDITURE FORM
Name of Licensee:
-------------------------------------------------------------
Licensed Product:
-------------------------------------------------------------
Country:
-------------------------------------------------------------
Expenditures reflect the period to
----------------------
--------------------------------
Exchange Rate (when applicable)
----------------
-------------------------------------------------------------------------------
INVOICE VENDOR NAME TYPE OF ADVERTISEMENT AMOUNT SPENT
DATE (IN US $)
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
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-------------------------------------------------------------------------------
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-------------------------------------------------------------------------------
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All tear sheets and advertising invoices must accompany this form
ADVERTISING EXPENDITURE FORM
Page ____ of _____
Date ____/___/____
-------------------------------------------------------------------------------
INVOICE VENDOR NAME TYPE OF ADVERTISEMENT AMOUNT SPENT
DATE (IN US $)
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
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EXHIBIT H
ROYALTY MINIMUM
Contact Year Royalty Minimum
------------ ---------------
Initial Term
------------
First Contract Year US$CONFIDENTIAL INFORMATION
May 1, 1996 - December 31, 1997 OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND
EXCHANGE COMMISSION
Second Contract Year US$CONFIDENTIAL INFORMATION
January 1, 1998 - December 31, 1998 OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND
EXCHANGE COMMISSION
Third Contract Year US$CONFIDENTIAL INFORMATION
January 1, 1999 - December 31, 1999 OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND
EXCHANGE COMMISSION
Fourth Contract Year US$CONFIDENTIAL INFORMATION
January 1, 2000 - December 31, 2000 OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND
EXCHANGE COMMISSION
Fifth Contract Year US$CONFIDENTIAL INFORMATION
January 1, 2001 - December 31, 2001 OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND
EXCHANGE COMMISSION
Renewal Term (if any)
---------------------
Sixth Contract Year US$CONFIDENTIAL INFORMATION
January 1, 2002 - December 31, 2002 OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND
EXCHANGE COMMISSION
Seventh Contract Year US$CONFIDENTIAL INFORMATION
January 1, 2003 - December 31, 2003 OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND
EXCHANGE COMMISSION
Eighth Contract Year US$CONFIDENTIAL INFORMATION
January 1, 2004 - December 31, 2004 OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND
EXCHANGE COMMISSION
Ninth Contract Year US$CONFIDENTIAL INFORMATION
January 1, 2005 - December 31, 2005 OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND
EXCHANGE COMMISSION
Tenth Contract Year US$CONFIDENTIAL INFORMATION
January 1, 2006 - December 31, 2006 OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND
EXCHANGE COMMISSION
EXHIBIT I
STATEMENT OF ROYALTIES
STATEMENT OF ROYAL
GUESS?, INC. FOR TO
---------- ---------
ROYALTY %
----------
Licensee Name
------------------------------------
License Address
------------------------------------
Licensee Product(s)/
-------------------------------
Territory
-----------------------------------------
Item/ Number of Number of Number of Listed Gross Less Less
Style Units Close-outs Units Wholesale Sales Allowances**
No. Sold* Sold Returned Price
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
TOTALS
-------------------------------------------------------------------------
I CERTIFY THAT THE ABOVE IS ACCURATE
* Unit sold include close-outs.
** Please see the license agreement for -------------------------------
amount of permissible deductions. Signature
-------------------------------
Name
EXHIBIT J
MINIMUM NET SALES
Contact Year Minimum Net Sales
------------ -----------------
Initial Term
------------
First Contract Year US$CONFIDENTIAL INFORMATION OMITTED
May 1, 1996 - December 31, 1997 AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION
Second Contract Year US$CONFIDENTIAL INFORMATION MITTED
January 1, 1998 - December 31, AND FILED SEPARATELY WITH THE
1998 SECURITIES AND EXCHANGE COMMISSION
Third Contract Year US$CONFIDENTIAL INFORMATION OMITTED
January 1, 1999 - December 31, AND FILED SEPARATELY WITH THE
1999 SECURITIES AND EXCHANGE COMMISSION
Fourth Contract Year US$CONFIDENTIAL INFORMATION OMITTED
January 1, 2000 - December 31, AND FILED SEPARATELY WITH THE
2000 SECURITIES AND EXCHANGE COMMISSION
Fifth Contract Year US$CONFIDENTIAL INFORMATION OMITTED
January 1, 2001 - December 31, AND FILED SEPARATELY WITH THE
2001 SECURITIES AND EXCHANGE COMMISSION
Renewal Term (if any)
---------------------
Sixth Contract Year US$CONFIDENTIAL INFORMATION OMITTED
January 1, 2002 - December 31, AND FILED SEPARATELY WITH THE
2002 SECURITIES AND EXCHANGE COMMISSION
Seventh Contract Year US$CONFIDENTIAL INFORMATION OMITTED
January 1, 2003 - December 31, AND FILED SEPARATELY WITH THE
2003 SECURITIES AND EXCHANGE COMMISSION
Eighth Contract Year US$CONFIDENTIAL INFORMATION OMITTED
January 1, 2004 - December 31, AND FILED SEPARATELY WITH THE
2004 SECURITIES AND EXCHANGE COMMISSION
Ninth Contract Year US$CONFIDENTIAL INFORMATION OMITTED
January 1, 2005 - December 31, AND FILED SEPARATELY WITH THE
2005 SECURITIES AND EXCHANGE COMMISSION
Tenth Contract Year US$CONFIDENTIAL INFORMATION OMITTED
January 1, 2006 - December 31, AND FILED SEPARATELY WITH THE
2006 SECURITIES AND EXCHANGE COMMISSION
EXHIBIT K
MONTHLY SALES REPORT
GUESS?, INC.
FORM MUST BE COMPLETED AND SUBMITTED TO:
GUESS? INC./ LICENSING DEPT.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
MONTHLY SALES REPORT
NAME OF LICENSEE:
-----------------------------------
LICENSED PRODUCTS:
-----------------------------------
MONTH REPORTED:
-----------------------------------
GROSS SALES
-----------------
DEDUCTIONS
-----------------
NET SALES
-----------------
PLEASE FAX THIS FORM TO GUESS, INC., NOT LATER THAN THIRTY DAYS AFTER
THE END OF EACH OF THE FIRST TWO MONTHS OF EACH QUARTER.
FAX: 213/▇▇▇-▇▇▇▇
EXHIBIT L
MANUFACTURERS AGREEMENT
LICENSOR: GUESS?, INC.
LICENSEE:
-----------------------------------
TRADEMARKS:
-----------------------------------
PRODUCTS:
-----------------------------------
UNDERLYING LICENSE
AGREEMENT DATE: , 199
------------------- --
EXPIRATION DATE OF
UNDERLYING LICENSE AGREEMENT
(unless sooner terminated or
extended): , 199
------------------- --
NAME AND ADDRESS OF
MANUFACTURER:
-----------------------------------
-----------------------------------
LICENSED TERRITORY:
-----------------------------------
Manufacturer understands and agrees that the underlying License Agreement
permits Licensee to have manufactured on its behalf Products utilizing the
Trademarks and Products utilizing Licensor's designs (hereinafter collectively
the "Licensed Products"). In order to induce Licensor to consent to the
manufacture of the Licensed Products by Manufacturer on behalf of Licensee,
Manufacturer agrees that:
(1) It will not manufacture the Licensed Products for anyone but Licensee
without the prior express written consent of Licensor, which may be
withheld for any reason whatsoever or for no reason;
(2) It will manufacture only such Licensed Products and only such quantities of
such Licensed Products as are ordered by Licensee from time to time and
will sell any and all of such Licensed Products only to Licensee. If for
any reason the quantity of manufactured Licensed Products is in excess of
the quantity ordered by Licensee, at Licensee's option, Manufacturer shall
deliver the excess to Licensee without cost;
(3) It will cease manufacturing the Licensed Products upon expiration or
termination of the underlying License Agreement or this Agreement and
thereafter Manufacturer shall promptly deliver to Licensee all remaining
Licensed Products and components thereof including without limitation
materials, trim, tags, labels, patterns, artwork and molds;
EXHIBIT L CONTINUED
(4) It will not authorize any other party to manufacture the Licensed Products,
or any components thereof bearing the Trademarks or other trademarks owned
by Licensor or embodying Licensor's designs, without the prior express
written consent of Licensor, which may be withheld for any reason
whatsoever or for no reason;
(5) It will permit representatives of Licensor at all reasonable hours upon not
less than seventy-two (72) hours notice (by facsimile or otherwise) to
inspect the operations and facilities involved in the manufacture of the
Licensed Products, to consult with Manufacturer's personnel, and to inspect
and copy the books and records relating to the production and shipment of
the Licensed Products. All such books and records shall be meticulously
kept and shall be maintained for at least two (2) years at the premises of
Manufacturer;
(6) It acknowledges that the worldwide right, title and interest to the
Trademarks and Licensor's designs of the Products are owned by Licensor. It
shall not do anything to impair Licensor's right, title and interest to
such properties. All goodwill associated with the manufacture and sale of
the Licensed Products shall inure to the benefit of Licensor;
(7) It will not offer for sale, sell, give away, distribute or use for any
purpose whatsoever any Licensed Products or components thereof including
without limitation materials, trim, labels and tags, which are damaged,
defective, are seconds, or otherwise fail to meet the specifications and/or
quality standards and/or trademark usage and notice requirements of the
underlying License Agreement (hereinafter collectively, "Unsalable Licensed
Products and Components"). All Unsalable Licensed Products and Components
shall be delivered to Licensee without cost promptly after discovery
thereof;
(8) It will not use the Trademarks or Licensed Products in any advertisements
or promotional materials without the prior express written consent of
Licensor, which may be withheld for any reason whatsoever or for no reason;
(9) It will not use the Trademarks or Licensor's designs of the Products for
any purpose except to manufacture the Licensed Products for Licensee
pursuant to the underlying License Agreement.
EXHIBIT L CONTINUED
(10) It will look solely to Licensee for payment for Licensed Products ordered
by Licensee and it shall not hold Licensor responsible for any such
payment.
(11) If Licensor discovers that Manufacturer has transferred to any entity other
than Licensee or Licensor any of the Licensed Products, components thereof
including without limitation materials, trim, tags, labels, patterns,
artwork and molds, or any of the Unsalable Licensed Products and
Components, or colorable imitations of any of the foregoing, Licensor shall
have the option of acquiring such materials and Manufacturer shall upon the
written request of Licensor immediately reimburse Licensor for its cost of
acquiring such materials.
(12) All patentable subject matter and copyrightable subject matter developed by
Manufacturer pursuant to the manufacture of the Licensed Products shall be
assigned to Licensor upon request and without cost.
(13) It will indemnify, protect, defend and hold Licensor harmless from and
against any claims. damages, costs, attorneys' fees or other liabilities of
any nature whatsoever which may be sustained by Licensor arising out of or
in any way connected with (i) detects in the manufactured Licensed
Products, (ii) injury resulting from use of the Licensed Products, or (iii)
breach of any obligation of Manufacturer hereunder.
(14) It shall maintain strictly confidential the terms of this Agreement and any
confidential information of Licensor.
(15) It acknowledges that it is cognizant of certain terms and conditions set
forth in the underlying License Agreement and agrees to be bound to all
such terms and conditions which are applicable to its functions as
manufacturer of the Licensed Products.
(16) In addition to all other remedies available to Licensor, if Manufacturer
violates any of the above, Licensor may terminate this Agreement. In
addition, Manufacturer acknowledges that any such violation will
irreparably and immediately harm Licensor and Manufacturer consents to a
temporary restraining order and preliminary injunction enjoining such
violation.
Manufacturer
DATED:
------------------------
By:
--------------------------
Its:
--------------------------
EXHIBIT M
LIST OF CURRENT OWNERS AND KEY EXECUTIVES
SHAREHOLDERS PERCENTAGE OWNERSHIP
------------ --------------------
▇▇▇▇▇ ▇▇▇▇ 45%
▇▇▇▇ ▇▇▇▇ 45%
▇▇▇▇▇ ▇▇▇▇▇▇▇ 10%
KEY EXECUTIVES TITLE
-------------- -----
▇▇▇▇▇ ▇▇▇▇. President
▇▇▇▇ ▇▇▇▇ Executive Vice President
EXHIBIT N
SYSTEMS REQUIREMENTS LIST
[TO BE SUPPLIED BY GUESS]
EXHIBIT O
PERMITTED DISTRIBUTORS AND RETAILERS