UMBRO LICENSE AGREEMENT
THIS UMBRO LICENSE AGREEMENT (this "Agreement") is entered into as of
_________________, 1998 (the "Effective Date"), by and between UMBRO
INTERNATIONAL, INC., a company organized and existing under the laws of the
State of South Carolina, U.S.A., having its principal office at Post ▇▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ("UMBRO"), and Varsity Spirit
Fashions & Supplies, Inc., a company organized and existing under the laws of
Minnesota, having its principal office at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
("Licensee"). Definitions for capitalized terms used in this Agreement and not
otherwise defined are included in the Glossary attached hereto which is
incorporated as part of this Agreement.
Background
UMBRO is a leading world-wide manufacturer and marketer of soccer
equipment and apparel bearing the Trademarks. Licensee has the desire and
capability to market and sell (and to manufacture or arrange for the manufacture
of certain of) the Products bearing the Trademarks within the Territory.
Therefore, UMBRO desires to grant the License to Licensee, and Licensee desires
to accept such License from UMBRO, according to the terms and conditions of this
Agreement.
W I T N E S S E T H
The parties hereto hereby mutually agree as follows:
ARTICLE 1
Appointment; Products; Business Plans; Sponsorships
1.1 Grant of License. UMBRO hereby appoints Licensee, and grants to Licensee
a License to use the Trademarks in the Territory for purposes of the
manufacture, marketing and sale of all of the Products as agreed between
both parties during the Term of this Agreement, all in accordance with
the terms hereof and with the exclusivity set forth in Section 2.1
hereof. Licensee hereby agrees to distribute and supply the Products
under the Trademarks for use in the Territory.
1.2 Products.
1.2.1 The License granted under this Agreement is particular only to
the Products.
1.2.2 Right of First Refusal for Excepted Products.
If after May 31, ▇▇▇▇ ▇▇▇▇▇ or any of its Affiliates desires
to use any Trademark on any Excepted Product in any
channel of distribution itself
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without entering into a license agreement or other
understanding with a third party to market and/or sell
such product bearing any Trademark, it will give Licensee
written notice of such desire and thirty (30) days to
exercise its right of first refusal described below. If
after May 31, 1999 UMBRO desires to grant Licensee a
license to manufacture, sell, or market any Excepted
Product, it will give Licensee written notice of such
desire and thirty (30) days to exercise its right of first
refusal. Licensee will have a right of first refusal for
30 days from receipt of any such notice to advise UMBRO in
writing of Licensee's desire to license the Excepted
Products in the Team Channel of Distribution. Effective
immediately and automatically upon giving written notice
of its desire to license such Excepted Product, such
Excepted Product will be a Product under this Agreement
for manufacture, sale and/or marketing by Licensee in the
Team Channel of Distribution and such other channels of
distribution as UMBRO shall reasonably approve, with no
adjustment to the Minimum Sales, Minimum Royalty, royalty
or other provisions hereof.
UMBRO shall deliver written notice to Licensee at such time
after May 31, 1999 that UMBRO or any of its Affiliates
desires to enter into a license or similar arrangement
granting an Excepted Products Licensee the right to use
any Trademark in connection with the sale and/or marketing
of any Excepted Products in any channel of distribution,
detailing the specifics of the prospective use and the
terms of such proposed license or other arrangement (the
"Excepted Product License Notice"). The following terms
shall govern the parties' rights and obligations in this
connection:
Licensee will have a right of first refusal for 30 days (the
"Exercise Period") from receipt of such Expected Products
License Notice to notify UMBRO in writing that it desires
to manufacture, market and/or sell such Excepted Product
in the Territory in the Team Channel of Distribution upon
substantially the same terms and conditions as set forth
in the Excepted Products License Notice or upon such other
principal business terms as Licensee shall specify in its
notice to UMBRO.
At such time during the Exercise Period that Licensee delivers
written notice to UMBRO of its desire to license such
Excepted Product on substantially the same terms as set
forth in the Excepted
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Products Notice, such Excepted Product shall be deemed a
Product hereunder and may be manufactured, sold and/or
marketed by Licensee thereafter on such terms set forth in
Licensee's notice in the Team Channel of Distribution and
such other channels of distribution as UMBRO shall
reasonably approve.
If Licensee proposes terms for such license that are not
substantially the same terms as set forth in the Expected
Products Licensee Notice, then UMBRO shall negotiate with
Licensee in good faith with respect to any term or
condition that Licensee proposes. If on or before the last
day of the Exercise Period UMBRO and Licensee agree upon
the principal business terms of a license for such
Excepted Product, then effective immediately and
automatically upon such agreement, such Excepted Product
will be a Product under this Agreement for manufacture,
sale and/or marketing by Licensee thereafter upon such
terms and conditions in the Team Channel of Distribution
and such other channels of distribution as UMBRO may
reasonably approve.
In the event Licensee does not desire to license the Excepted
Products or, if applicable, the parties fail to negotiate
the terms of the license, despite their good faith
efforts, UMBRO may proceed with its plans to license (on
no more favorable terms than offered to Licensee) or
market directly the Excepted Products to the Branded
Channel of Distribution.
The following provisions shall apply to the licensing/direct
marketing of Excepted Products:
(i) The licensee must market any Excepted Products it
handles directly and may not sublicensee any
Excepted Products.
(ii) In the event UMBRO fails to market directly or
finalize a license to market the Excepted Products
within 180 days of the expiration of the above 90
day period, the rights to such Excepted Products
will revert to Licensee for the Team Channel of
Distribution.
(iii) No more than one Excepted Product Licensee may be
added in any given calendar year, and no more than
a total of two
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Excepted Product Licensees may be added during the
Term (including any renewal Term).
(iv) The licensing and marketing of Excepted Products
must adhere to the Standards and Marketing Policy.
(v) For Excepted Products, whenever introduced,
Licensee will receive, until the later of December
31, 2003 or the fourth anniversary of the
introduction of the Excepted Product, one (1%)
percent of the higher of (a) the net sales by UMBRO
or Excepted Products Licensee of Excepted Products
or (b) the minimum net sales by Excepted Products
Licensee of Excepted Products. After the later of
the conclusion of the four year anniversary or
December 31, 2003, Licensee will receive until the
end of the renewal term one-half (1/2%) percent of
the higher of (a) the net sales by UMBRO or
Excepted Products Licensee of Excepted Products or
(b) the minimum net sales by Excepted Products
Licensee of Excepted Products. Such receipts shall
be subject to this Agreement being in effect at the
time of payment of such receipts.
(vi) If the Excepted Products Licensee or UMBRO plans to
manufacture, sell or market footwear as used on the
field of play for football or baseball/softball,
either as a single product or along with any number
of Products or product categories, then Licensee
may exercise its right of first refusal as set
forth in Section 1.2.2 with respect to the football
or baseball/softball footwear separately from the
other Excepted Products or product categories to be
manufactured, sold or marketed by the Excepted
Products Licensee or UMBRO.
1.3 Business Plans.
(a) Throughout the Term of this Agreement, UMBRO and Licensee shall
confer at least twice each year in order to update and establish
Licensee's business plans in a manner reasonably acceptable to
UMBRO ("Business Plans"). The Business Plans shall cover
strategies and activities intended to build, strengthen and
protect the value and distinction of the Trademarks, as well as
manage sales volume and profitability for the Products. Licensee
and any sublicensees requested by UMBRO shall also participate at
Licensee's discretion in the review of Strategic
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Planning Systems, which are systems for the analysis of trademark
dynamics, and UMBRO's and competitors' relative market positions,
all with a view to set strategy and initiatives for the ensuing
period as may be scheduled by UMBRO from time to time.
(b) Specific areas to be addressed in the Business Plans shall
generally include the matters described in Sections 3.1, 4.1, and
4.5 hereof.
1.4 Sponsorship Agreements.
(a) Licensee may enter into appropriate sponsorship, promotion or
endorsement agreements with leagues, teams and individual players
operating in the Territory (a "Licensee Sponsorship Agreement").
Licensee agrees to use reasonable efforts to cause each such
Licensee Sponsorship Agreement to be wholly and exclusively
assignable by Licensee to UMBRO or UMBRO's designee without fee
and without the necessity of consent by the sponsor upon
termination of this Agreement.
(b) UMBRO may, exclusively at UMBRO's option, enter into sponsorship,
promotion or endorsement agreements with leagues, teams or
individual players operating in the Territory. If UMBRO does so,
sales of Products in the Territory in connection with such
agreements to the Team Channel of Distribution will be made
exclusively by or through Licensee on such terms as may be agreed
by Licensee and UMBRO, but in no event shall Licensee be required
to sell any Product at an amount that is less than Licensee's
wholesale price for such Product to similar buyers. Except as
otherwise set forth in this Section 1.4, UMBRO shall not take
commercially unreasonable actions with regard to the obligations
listed on The Sports Marketing Financial Obligation Schedules
dated April 13, 1998, a copy of which is attached hereto as
Appendix B, that may adversely impact the global goodwill
associated with the Trademarks.
▇▇▇▇▇▇▇ ▇▇▇▇▇▇.
For the period beginning January 1, 1999 through the end of the term of
the agreement dated July 9, 1997 between UMBRO and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
as in effect on the Effective Date ("▇▇▇▇▇▇ Contract"), and
provided UMBRO obtains for Licensee the right to use ▇▇▇▇▇▇'▇
name, likeness, signature and image to the same extent UMBRO has
under the ▇▇▇▇▇▇ Contract, and subject to the outcome of pending
arbitration proceedings, Licensee will pay to ▇▇▇▇▇▇ on behalf of
UMBRO 40% of the amounts due under Sections B.1.d, 3(a) and 3(b)
thereof. Notwithstanding the foregoing, Licensee will
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not be obligated to pay any amount relating to the sale of any
Product bearing ▇▇▇▇▇▇'▇ endorsement unless such Product is sold
by Licensee. In the event UMBRO is required to advance 1999 or
subsequent sponsorship payments to ▇▇▇▇▇▇, Licensee will reimburse
40% of those advanced payments to UMBRO by making such payments to
UMBRO on the same payment schedule set forth in the ▇▇▇▇▇▇
Contract
Furthermore, Licensee will supply ▇▇▇▇▇▇ with up to 40% of the Core
Category Products required to be supplied under the ▇▇▇▇▇▇
Contract in accordance with its terms.
In no event shall Licensee be obligated to pay (including the price of
Product) in the aggregate more than US$50,000 per calendar year
with respect to the ▇▇▇▇▇▇ Contract.
Licensee and the Primary Branded Licensee shall have the sole right to
renew the ▇▇▇▇▇▇ Contract. UMBRO shall not be a party to any
renewal of the ▇▇▇▇▇▇ Contract by Licensee and the Primary Branded
Licensee.
(d) USISL.
For the period January 1, 1999 through December 31, 1999 and provided
the consent required by Section 1.4(d)(ii) has been obtained and
the USISL Contract is in effect, Licensee shall pay USISL on
behalf of UMBRO the lesser of $250,000 or 40% of the amounts
required to be paid, including the cost of all Product required to
be supplied (including shipping) by UMBRO under Section 2.3 of the
Sponsorship Agreement dated November 3, 1995 between UMBRO and
USISL, renewed on January 9, 1997 and as amended on or about
November 9, 1998 (the "USISL Contract"), payable at such dates set
forth in Section 2.3 of the USISL Contract. UMBRO further agrees
that any outstanding payable owed to USISL by UMBRO as of the
Effective Date will be paid in full within eighteen months
following the Effective Date. In the event such outstanding
payable is not paid in full within eighteen months of the
Effective Date, Licensee shall have the option to pay to USISL on
UMBRO's behalf the remaining portion of such outstanding balance
and offset all such amounts against royalties due to UMBRO until
such amounts are repaid in full to Licensee.
On or before December 31, ▇▇▇▇ ▇▇▇▇▇ shall obtain the written consent of
USISL for Licensee to use the USISL trademarks, logos and other
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intellectual property rights to the same extent as UMBRO is
granted such rights under the USISL Contract.
UMBRO shall notify Licensee in writing promptly upon receipt of notice
of any alleged breach of any provision of the USISL Contract or of
alleged termination or expiration thereof.
(e) Miami Fusion.
Except as set forth herein, UMBRO will be responsible for cash payments
and required products at cost to the Miami Fusion or MLS through
the end of the agreement dated April 15, 1997, between UMBRO and
MLS (the "Fusion Agreement") and will use its commercially
reasonable efforts to renew the Fusion Agreement through the 2003
season.
If the Fusion Agreement is not renewed or maintained during the Initial
Term of this Agreement due to the cost of the Fusion Agreement
exceeding $800,000 per year, then UMBRO may, at its option,
sponsor another team within the MLS at a similar cost. If the
Miami Fusion or such other MLS team is not sponsored by UMBRO or
the cost of sponsoring the Miami Fusion or such other MLS team is
less than $800,000 per year, then during each Annual Period UMBRO
will fund other types of marketing support acceptable to Licensee
through the Initial Term of this Agreement equal to the lesser of
(i) 40% of the difference between $800,000 and the actual annual
sponsorship cost of the Miami Fusion or such other MLS team or
(ii) Licensee's past calendar year royalties less $80,000.
During calendar year 1999, Licensee will advance funds and products at
cost as needed to UMBRO, up to a maximum of $320,000, to satisfy
UMBRO's obligations under the Fusion Agreement. These advanced
funds will be repaid to Licensee in the form of a credit against
royalties, due UMBRO commencing January 1, 2000 and ending when
all advanced Fusion Agreement funds have been recovered. In
addition, the royalty rate for calendar year 2000 as set forth in
Appendix J shall be reduced by 0.6%. Notwithstanding the
foregoing, if this Agreement expires or terminates prior to full
recovery by Licensee, UMBRO shall pay Licensee such shortfall upon
expiration or termination.
UMBRO shall take reasonable efforts to attempt to obtain for Licensee
the right to
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use the Club Badge of the Miami Fusion or any other MLS team
sponsored by UMBRO on the Products and related advertising and
promotional materials in the manner allowed under the Fusion
Agreement or any other agreement with an MLS team sponsored by
UMBRO.
UMBRO shall notify Licensee in writing promptly upon receipt of notice
of any alleged breach of any provision of the Fusion Agreement or
any renewal thereof or of any MLS sponsorship agreement or any
alleged termination or expiration thereof.
1.5 Appendices. The following Appendices attached to this Agreement are
hereby incorporated as part of this Agreement:
Appendix A List of Core Category Products
Appendix B Sports Marketing Obligation Schedule
Appendix C Form of Quarterly Report
Appendix D Notices and Communications
Appendix E Trademarks
Appendix F Standards
Appendix G Application for Authorized Manufacturer
Appendix H (omitted)
Appendix I Authorized Manufacturers
Appendix J Royalty Schedule
Appendix K Manufacturer's Authorization Agreement
Appendix L Approved Team Channel of Distribution Accounts
ARTICLE 2
Exclusive Rights and Limitations
2.1 Scope of Exclusivity in Territory.
(a) During the Term of this Agreement except as provided in Sections 1.2.2,
2.1(c) and 12.1, UMBRO and its Affiliates will not directly and
will not authorize others to sell Products in the Territory under
the Trademarks or variations thereof; however, UMBRO shall have no
responsibility other than stated in Section 2.1(b) as to the sale
of any Products that may occur in the Territory without UMBRO's
authorization.
(b) In the event that UMBRO learns that its other licensees and/or
distributors who are authorized to sell the Products in locations
outside the Territory are in fact directly
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or indirectly, selling the Products in the Territory, UMBRO shall
take all action reasonably and legally available to stop such
sales and to prevent the sales from recurring.
(c) (i) Nothing contained herein shall prohibit UMBRO and its Affiliates
or other licensees from the manufacture and sourcing of Products
in the Territory;
(ii) It is acknowledged that UMBRO may sell and/or ship Core Category
Products from its existing inventory through its historical
channels of distribution, including but not limited to, UMBRO
owned retail stores for (x) orders on hand and (y) until December
31, 1998 from its existing inventory of Core Category Products
which Licensee has not purchased from UMBRO as of the execution of
this Agreement (the "UMBRO Inventory Sales"). UMBRO agrees to
consult with Licensee concerning UMBRO's disposition of Core
Category Products in order to minimize the impact of such
disposition on the image/goodwill of the Trademarks.;
(iii) It is acknowledged that UMBRO will be entering into a license
agreement with the Primary Branded Licensee for the manufacture,
marketing and sale of Branded Products for the Branded Channel of
Distribution (the "Branded License Agreement"). UMBRO agrees that
each of the Primary Branded Licensee and Licensee may sell the
other's respective products in their respective channels of
distribution. Licensee acknowledges that it shall not have the
exclusive right to manufacture or sell Branded Products in the
Territory.
(d) (i) Licensee shall have the exclusive right to market and sell Core
Category Products bearing the Trademarks in the Team Channel of
Distribution in the Territory with the exceptions that the Primary
Branded Licensee may sell Core Category Products in the Branded
Channel of Distribution and that UMBRO may make UMBRO Inventory
Sales under Section 2.1(c)(ii). Licensee shall also have the
non-exclusive right to manufacture Core Category Products bearing
the Trademarks in the Team Channel of Distribution in the
Territory. If Licensee desires to sell Core Category Products to a
sporting goods store which is not already approved and listed on
Appendix L, then it shall request the approval of UMBRO to do so
by sending UMBRO written notice of the identity of such account
and providing such other information as UMBRO shall reasonably
request. UMBRO may disapprove of adding such account to the Team
Channel of Distribution in its reasonable determination. Failure
by UMBRO to give written disapproval of the addition of such new
account providing the reasons therefore within seven (7) days from
the date of receipt of the request by UMBRO will be deemed
approval.
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(ii) Licensee acknowledges it shall not have the right to manufacture
International Licensed Products and must source all International
Licensed Products through UMBRO, except as provided in Section
3.3(a).
(iii) Licensee shall have the right to sub-license the manufacture,
marketing and sale of certain accessory Core Category Products
such as caps and socks subject to UMBRO's right to disapprove the
sub-licensee for just cause.
If Licensee desires to sublicense the manufacture, marketing or sale of
any Core or Non-Core Category Products (other than accessory Core
Category Products including caps and socks), it shall request the
written approval of UMBRO, identifying the Product and proposed
sublicense and providing such other information as UMBRO shall
reasonably request. UMBRO shall have thirty (30) days to approve
or disapprove such request, with the disapproval relating to
Non-Core Category Products being in UMBRO's reasonable judgment.
In the event UMBRO does not notify Licensee of its approval or
disapproval with thirty (30) days, Licensee shall so inform UMBRO.
UMBRO shall then have an additional fifteen (15) days in which to
approve or disapprove such request. Failure by UMBRO to notify
Licensee of its approval or disapproval with such fifteen (15) day
period will be deemed an approval by UMBRO.
(e) (i) Licensee has the exclusive right to manufacture, market and sell
Non-Core Category Products in all channels of distribution in the
Territory. If Licensee desires to sell a Non-Core Category
Product, Licensee shall request the Advance Approval of UMBRO to
sell such Product, identifying the Product and providing such
other information as UMBRO shall reasonably request. UMBRO may
approve or disapprove such request in its reasonable judgment.
(f) (i) Licensee has the non-exclusive right to manufacture and, subject
to the Primary Branded Licensee's rights set forth in Section
2.4(b), the exclusive rights to market and sell Other Goods in all
channels of distribution in the Territory. If Licensee desires to
sell an Other Good, Licensee shall request the Advance Approval of
UMBRO to sell such Product, identifying the Product and providing
such other information as UMBRO shall reasonably request. UMBRO
may approve or disapprove such request in its reasonable judgment.
(ii) Licensee acknowledges that the terms of the Branded License as in
effect on the date hereof grants the Primary Branded Licensee
substantially the same rights to manufacture, sell and market
Other Goods; consequently, in the event that the
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Primary Branded License and Licensee at substantially the same
time request UMBRO's consent to sell the same type of Other Goods,
then UMBRO shall within 14 days after receiving such conflicting
requests determine in its good faith business judgment whether
Licensee or the Primary Branded Licensee shall have the exclusive
license for such Other Goods.
(iii) If Licensee desires to sublicense the manufacture, marketing or
sale of any Other Goods, it shall request the written approval of
UMBRO, identifying the Product and proposed sublicensee and
providing such other information as UMBRO shall reasonably
request. In the exercise of its reasonable business judgment,
UMBRO may approve or disapprove such request and will provide the
reasons, if any, for disapproval in writing. Failure by UMBRO to
give written disapproval of such request within seven (7) days
from the date of submission will be deemed approval.
(iv) If Licensee sublicenses its rights to sell an Other Good, then
Licensee shall pay the Primary Branded Licensee 60% of the
royalties received from such sublicensee, net of any amounts due
to UMBRO hereunder, expenses of Licensee attributable to such
sublicense and any fees and expenses required to be paid by
Licensee to any third party licensing agent with respect to such
sublicense. Licensee shall remit such payments at such times as
royalties are paid to UMBRO with respect to Net Sales by such
sublicensee.
2.2 Limitations on Actions Outside Territory. Licensee agrees not to do any
of the following during the Term of this Agreement without UMBRO's prior
written consent:
(a) advertise the Products outside the Territory, or canvass or
solicit orders for the Products outside the Territory other than
as permitted under Section 13.18;
(b) open sales outlets or distribution depots for the resale of the
Products outside the Territory;
(c) otherwise dispose of the Products or supply the Products to anyone
(inside or outside the Territory) who Licensee knows or should
know intends to resell or distribute the Products outside the
Territory except to other licensees and distributors authorized by
UMBRO to sell the Products in the locations to which such Products
are destined; or
(d) invoice, supply or otherwise dispose of Products to anyone outside
the Territory other than UMBRO or, with UMBRO's written consent,
UMBRO's Affiliates.
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2.3 Branded License Agreement.
(a) In the event the Branded License Agreement is terminated or
expires without renewal for any reason during the Initial Term or
the renewal Term of this Agreement, UMBRO agrees to give Licensee
written notice of any such termination. Licensee will then have
the right to assume responsibility for the Branded License
Agreement at its option by giving written notice to UMBRO and
taking over the Primary Branded Licensee's rights and obligations
within thirty (30) days of receipt of such notice from UMBRO.
Licensee's assumption of the Branded License Agreement shall be on
the following terms:
(i) If the Primary Branded Licensee termination occurs with no
outstanding monetary obligations of the Primary Branded
Licensee to UMBRO, or if Licensee elects to make all payments
due under the Branded License, then Licensee may assume the
Branded License under the same terms and conditions as held by
the Primary Branded Licensee.
If the Primary Branded Licensee has not paid all amounts due under
the Branded License and Licensee elects not to make these
payments, then Licensee may assume the Branded License on the
same terms and conditions as held by the Primary Branded
Licensee, but at a flat 8% royalty rate during the
remainder of the initial Branded License term and at the
"prevailing UMBRO worldwide license rate" if the license
assumption occurs during the Branded License renewal term.
(b) UMBRO shall promptly notify Licensee in writing upon receipt of
notice that the Branded Licensee seeks to assign, sell, dispose of
or otherwise transfer or has so transferred the Branded License.
Licensee shall have the right to disapprove in writing all such
transactions. Licensee shall use its commercially reasonable
judgment in exercising this right. With regard to the successor of
the initial Primary Branded Licensee, Licensee shall not be deemed
unreasonable if it fails to approve such Primary Branded Licensee
that does not agree in a writing acceptable to Licensee to make
the Joint Marketing Fund Allocation payments referenced in section
5.4.
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ARTICLE 3
General Undertakings of Licensee
3.1 Best Efforts.
(a) Licensee agrees to use its best efforts to promote and increase the sale
of the Products throughout the Territory under the Trademarks.
(b) Licensee shall maintain sufficient staff, including a sales force of
sufficient size, to distribute, sell and promote the sale of the
Products throughout the Territory under the Trademarks. Such a
staff shall include a sales manager (who may also have other
duties) whose responsibilities shall include controlling the
distribution of the Products and ensuring that the Products are
distributed only to purchasers whose image and reputation are in
keeping with UMBRO's image and the Marketing Policy. UMBRO agrees
that the purchasers listed on Appendix L are in compliance with
UMBRO's image and Marketing Policy.
(c) Licensee agrees to use its best efforts to ensure that the Products are
not distributed by unsuitable dealers. The criteria for
determining the suitability of a dealer are set forth in the Brand
and Product Marketing Manual, which has been delivered to Licensee
either prior to or contemporaneously with the execution of this
Agreement.
(d) Licensee will ensure that all of its activities hereunder conform in all
material respects with all applicable legislation, rules,
regulations and statutory requirements in relation to its
activities hereunder.
(e) Licensee shall, in its good faith reasonable judgment, maintain
sufficient inventory of Products to satisfy market needs and will
report to UMBRO on a regular basis as requested by UMBRO
concerning Licensee's inventory levels and movements in inventory.
(f) Licensee shall ensure that each invoice for Products as sold hereunder
will reflect the full cost of delivery, if any, charged to the
customer with regard to such Products, and Licensee shall not
charge its customer any additional amount not reflected on the
invoice.
(g) Licensee shall use all reasonable means to offer and maintain the supply
of Products to UMBRO and all its licensees and distributors if
requested to do so by UMBRO with due regard for Licensee's
production capacity, lead times, Territory Product requirements,
minimum order requirements, inventory levels and other similar
factors.
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3.2 Competing Lines.
Except as set forth in Section 3.2(b), Licensee and its Affiliates agree
during the Term of this Agreement not to manufacture, market,
distribute and/or sell any other line of competitive apparel,
footwear or accessories for or to the same channels of
distribution as the Products sold by Licensee in accordance with
this Agreement. Apparel, footwear or accessories handled by
Licensee shall be deemed to be competitive with the Products only
if such goods are intended to be used mainly for on-the-field
soccer participation or if such goods are directly or indirectly
sold by Licensee in marketing channels that cater primarily to
soccer and meet the criteria set forth in the Brand and Product
Marketing Manual for an UMBRO account.
Licensee and its Affiliates agree not to sell any apparel, footwear or
accessories which are competitive with the Products to the extent
set forth in Section 3.2(a). Nonetheless, UMBRO acknowledges that
Licensee and its Affiliates have granted third parties broad
license rights to manufacture, sell and/or market apparel,
footwear, equipment and accessories that bear trademarks and
designs other than the Trademarks and may be used for on-the-field
participation in soccer. Such products are not deemed to be
competitive products and may continue to be manufactured, marketed
and/or sold by licensees of Licensee and its Affiliates. In
addition, UMBRO acknowledges that Licensee and its Affiliates
manufacture, market and/or sell through a direct sales force
practice wear (including without limitation, tee shirts, shorts,
sweats, etc.) bearing trademarks other than the Trademarks which
may be used for on-the-field participation in soccer. Such
products are not deemed to be competitive products and may
continue to be manufactured, sold and/or marketed by Licensee or
its Affiliates so long as such products are sold by the direct
sales force of Licensee and its Affiliates to schools and so long
as the Core Category Products sold to the Team Channel of
Distribution are sold through sales representatives and not by
such sales force.
Notwithstanding Sections 3.2(a) or (b) or any other provision herein,
Licensee shall not be permitted to manufacture, market or sell any
products designed by UMBRO or its Affiliates or designed by
Licensee for use as a Product herein, without such product bearing
one or more of the Trademarks.
3.3 Sourcing of Products.
(a) Licensee shall not carry, market or sell Products other than those
(i) purchased from UMBRO or its Affiliates, (ii) manufactured by
Licensee or its Affiliates (unless
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such manufacture is prohibited under the terms of this Agreement)
(inside or outside the Territory), or (iii) manufactured by an
Authorized Manufacturer (if permitted hereunder) upon terms and
conditions agreed to between Licensee and Authorized Manufacturer
and consistent with the Manufacturer's Authorization Agreement.
Licensee may not manufacture and may not source International
Licensed Products, except for International Licensed Products
bearing the Miami Fusion Club Badge, or the Club Badge of any MLS
team subsequently sponsored by UMBRO, if any, from anyone other
than UMBRO.
(b) Supply, delivery, price and payment terms with respect to Products
purchased from UMBRO will be based upon UMBRO's standard terms and
conditions at the time of order information. Other than for
confirmed orders, Licensee agrees that UMBRO reserves the right
upon 30 day written notice in its absolute discretion to vary up
or down any price to be charged by UMBRO on any purchases
thereafter. In addition, other than for confirmed orders, Licensee
agrees that UMBRO is authorized to apportion Product among UMBRO,
its Affiliates, Licensee, and other licensees and distributors in
UMBRO's sole discretion.
(c) Under the terms of Article 7, Licensee and its Affiliates are
authorized to manufacture Products or, subject to UMBRO's
approval, designate Authorized Manufacturers for the manufacture
of Products.
(d) An intentional and knowing material violation by Licensee of any
of the sourcing requirements contained in this Section 3.3 or
Sections 7.1, 7.3 and 7.5 shall result in a material breach of
this Agreement without the opportunity or right to cure pursuant
to Section 11.2(g) hereof. In this Section 3.3(d), "material"
shall mean a violation that, in UMBRO's reasonable good faith
judgment, undermines the purpose of the Authorized Manufacturer
designation by preventing UMBRO, among other things, from
controlling the source of manufacturing, the quality of
manufacturing, the goodwill of the Trademarks or UMBRO's
reputation in the global marketplace.
(e) In all purchases of Products from Licensee by UMBRO, Licensee's
standard conditions of purchase as may prevail from time to time
shall apply and each such order shall constitute a separate and
distinct contract of purchase.
(f) UMBRO agrees that Licensee reserves the right upon thirty (30)
days written notice in its absolute discretion to vary up or down
any price to be charged by Licensee on any purchase thereafter by
UMBRO.
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3.4 Committees. UMBRO may, subject to Licensee's approval, appoint Licensee
from time to time as a member of various committees or teams related to
the Products or this Agreement. In that event, Licensee will through
suitable personnel attend a reasonable number of the meetings at times
and places selected by UMBRO upon at least 14 days' written notice to
Licensee. Licensee shall pay the cost of its participation in such
meetings.
ARTICLE 4
Marketing; Sales Budget
4.1 Marketing Policy.
(a) Licensee shall market, promote and sell the Products in accordance
with the material and applicable policies and guidelines set forth
in the Marketing Policy. Licensee acknowledges its receipt of
UMBRO's current Brand and Product Marketing Manual prior to or
contemporaneously with the execution of this Agreement. UMBRO
reserves the right to make reasonable modifications to the
Marketing Policy from time to time and shall provide Licensee with
any modifications to the Brand and Product Marketing Manual,
provided any such addition to or modification of the Marketing
Policy will be consistent with UMBRO's global marketing policy and
no change to the Marketing Policy will be primarily applicable
only in the Territory so that it adversely impacts the rights and
obligations of Licensee under this Agreement as of the date of the
change in the Marketing Policy.
(b) UMBRO Products will be sold and distributed by Licensee and its
sublicensees, distributors and wholesalers so as to present an
image of quality and value, consistent with merchandise priced in
the middle-to-upper range among competitive brands in the market.
Bargain sales and non-customary discount retail practices will be
avoided although a reasonable number of such sales may be made to
dispose of overstocks, unpopular styles, seconds, out of season
merchandise or incomplete stock in accordance with general
industry practice.
(c) There will be joint consultation by both parties on the
implementation of the Marketing Policy in the Territory.
4.2 Wholesalers. Licensee may sell the Products to wholesalers for resale in
the Territory provided that Licensee selects and manages such
wholesalers so that they operate in accordance with the Marketing
Policy.
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4.3 Sales Budget. Licensee shall submit to UMBRO on or before October15 of
each Annual Period a schedule in such form as UMBRO may from time to
time by notice to Licensee reasonably require, showing in detail and by
product category the projected sales of the Products hereunder for the
following Annual Period (the "Sales Budget"). In addition, Licensee
shall submit to UMBRO on or before April 15 of each Annual Period a
Sales Budget for the remainder of such Annual Period. Licensee shall
promptly give notice to UMBRO of any changes in circumstances which may
materially affect the information provided in any such schedule.
4.4 Other Sales Information. Licensee shall within thirty (30) days after
the end of each Quarter provide UMBRO with a completed Quarterly Report
and within fifteen (15) days after the end of each month provide UMBRO
with a completed Monthly Report.
4.5 Product Catalog. Licensee shall prepare and submit to UMBRO for UMBRO's
approval Product catalogs in order to support the sale of Products.
ARTICLE 5
Advertising and Promotion
5.1 A&P Expenditure.
(a) Licensee shall be responsible for arranging and conducting
Advertising & Promotion ("A&P") in the Territory. During each
Annual Period, including its commitments under Section 1.4 and
5.1(d), Licensee shall expend at least three (3%) percent of the
greater of (i) Licensee's Annual Net Sales for the preceding
Annual Period, or (ii) the Annual Net Sales which would need to be
achieved in the current Annual Period in order to generate the
Minimum Royalty. This amount shall constitute the "A&P Budget".
(b) The A&P Budget shall be spent in connection with catalogs, public
relations activities, trade shows, sales conferences, exhibitions,
point of sale promotions, advertising displays, media advertising
(including co-op advertising expenditures), promotional samples,
sponsorships and other similar advertising and promotional
activities to promote the UMBRO brand. Production costs in
connection with the preparation of the foregoing materials shall
also be allowable expenditures.
(c) Amounts spent as part of the A&P Budget shall consist of actual
costs of catalogs, public relations activities, trade shows, sales
conferences, exhibitions, point of sale promotions, advertising
displays, media advertising (including co-op advertising
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expenditures), promotional samples, sponsorships and other similar
advertising and promotional activities to promote the UMBRO brand
(but excluding sales meetings, sales commissions, discounts and
rebates).
(d) For calendar year 1999, Licensee agrees to pay, after receipt of
invoices, one-third (1/3) of the Super Show costs up to $150,000
for exhibition space, set-up, rentals, storage and other direct
costs (collectively, the "Direct Costs") and UMBRO agrees to pay a
like amount. Licensee will pay its one-third (1/3) share as funds
are disbursed by UMBRO for the 1999 Super Show and will reimburse
on the Effective Date one-third (1/3) of the amounts already
advanced by UMBRO for the 1999 Super show. Thereafter, Licensee
will consult with UMBRO and any other U.S. licensees to determine
the annual Super Show expense with UMBRO to be responsible for,
but in no event shall Licensee's expense be greater than one-third
(1/3) of the Direct Costs. Licensee and UMBRO agree to share
equally with the Primary Branded Licensee any contribution made to
the Direct Costs by any other U.S. licensees. UMBRO, Licensee and
the Primary Branded Licensee agree to explore opportunities to
reduce their respective Direct Costs with respect to future Super
Shows. In addition, prior to the 1999 Super Show, UMBRO shall
supply Licensee with UMBRO's Super Show materials (banners,
display cases, etc....) on hand.
5.2 Advance Approval of Advertising.
(a) Licensee shall submit in written or printed form to UMBRO, for
UMBRO's Advance Approval, all advertising, packaging and other
promotional material, while still in the conceptual stages and
before such material is used, circulated or displayed. Licensee
shall take reasonable steps to assure that advertising material is
used (by customers and others) only as approved by UMBRO and only
in accordance with applicable laws and regulations.
(b) In the event Licensee offers a cooperative advertising program and
if requested by UMBRO, Licensee shall submit to UMBRO suitable
evidence (such as "tear sheets") to prove that cooperative
advertising material is properly used. If Licensee's publicity
results in any publication or broadcast of the Trademarks,
Licensee shall ensure that the publication or broadcast presents
the Trademarks in an appropriate manner and in accordance with
applicable Standards.
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5.3 Prizes, Contests, etc. Licensee may not use the Products as prizes or in
connection with any contest other than an athletic contest without the
prior written approval of UMBRO. Licensee may not use the Products in
any sweepstakes, lotteries, or games of chance or as an incentive to
purchase any goods or services, except that, upon prior written approval
from UMBRO, the Products may be used in the promotion of, or as an
incentive in, the sale of other Products.
5.4 Joint Marketing Budget.
UMBRO and its Affiliates agree that any Branded License other than the
Branded License with Signal Apparel Company, Inc. shall require
the Primary Branded Licensee to pay the Joint Marketing Fund
Allocation at such times as Licensee and such other licensees
shall agree to be spent promoting the Trademarks and Products in
such a manner as agreed to by Licensee and such other licensees.
(b) In the Event that Licensee and any Primary Branded Licensees other
than Signal Apparel Company, Inc. cannot agree on the manner in
which to spend the Joint Marketing Fund Allocation, UMBRO shall in
writing make such determination by exercising its reasonable
business judgment within 14 days after notice from Licensee of
such failure to agree.
5.5 UMBRO Marketing Support. UMBRO and its Affiliates agree to provide
leadership for design, Product supply, and marketing direction for the
Trademarks and for the benefit of Licensee in the Territory.
ARTICLE 6
Use of Trademarks
6.1 Use on Products. All Products Licensee carries, markets or sells shall
include and display the appropriate Trademarks (printed directly on
Products, and on labels and packaging), in the manner directed by UMBRO.
6.2 Use for Marketing and Distribution. Licensee may use and display the
Trademarks during the Term of this Agreement on signs, letterheads,
packaging materials, and other advertising materials created for
purposes of marketing and distributing the Products.
6.3 Standards. All use and display of the Trademarks by Licensee must be in
conformity with applicable Standards.
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6.4 Right to Review and Approve Usage. At UMBRO's request, Licensee shall
permit UMBRO to examine Licensee's manufacturing, marketing, and
distribution facilities during normal business hours and practices in
order to verify Licensee's conformity with applicable Standards. In
addition, at UMBRO's request, Licensee shall provide UMBRO with samples,
photographs or copies of the use of the Trademarks in connection with
the Products or on signs, letterheads, packaging materials, or other
advertising materials in order to verify Licensee's conformity with
applicable Standards. In the event that UMBRO determines that Licensee's
use of the Trademarks does not satisfy applicable Standards, Licensee
shall immediately, at UMBRO's request, take all steps necessary or
appropriate to ensure that such Standards are met.
6.5 Prohibited Actions.
(a) No goods or materials that Licensee carries, markets or sells may
include or display the Trademarks (in printed form on the
Products, or on labels or packaging), except as authorized by this
Agreement in connection with the advertising, sale and
distribution of the Products.
(b) Licensee shall not engage in any practice or activity likely to
mislead potential purchasers or customers into believing that an
item is one of the Products when in fact it is not. Licensee
agrees not to use, or authorize others to use, the Trademarks in
any way that disparages the Trademarks or the Products, or
otherwise diminishes the stature or image of quality of the
Trademarks and the Products among the public.
(c) Licensee shall not use the name "UMBRO" or any of the Trademarks
as part of Licensee's corporate, business or trading name or
style, except with UMBRO's prior written consent and in
conjunction with appropriate language indicating Licensee is a
licensee of UMBRO. UMBRO acknowledges that Licensee intends to
utilize the tradename "Umbro America" and consents to such use
subject to the terms and conditions of this Agreement. During the
Term, UMBRO shall not grant the right to use a tradename
containing the word "Umbro" to any party for the purpose of
offering goods or services to the Teamwear Channel of Distribution
in the Territory other than Licensee.
(d) In the event Licensee wishes to identify itself, then Licensee
shall only identify itself on the packaging of those Products it
has manufactured solely as UMBRO's licensed manufacturer of such
Products.
(e) Except as otherwise agreed in writing with UMBRO, in no event
shall Licensee
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deviate in any manner in its use of any Trademark from the form of
that Trademark detailed in Appendix E.
6.6 Use of Trademarks in Manufacturing.
(a) In connection with the manufacture of the Products, Licensee may apply
the Trademarks to the Products or their packaging by means of
labels, hang tags, embroidery, imprints or otherwise, provided
that the use and presentation of the Trademarks is approved by
UMBRO in each instance.
(b) Licensee may not apply the Trademarks to any item manufactured by
Licensee or its contractors unless the item is a Product, or
packaging for Products or advertising and promotional materials
approved by UMBRO under Section 5.2.
ARTICLE 7
Manufacturing
7.1 Right to Manufacture. During the Term of this Agreement Licensee and its
Affiliates are authorized to manufacture Products (other than those
International Licensed Products excluded in Section 3.3), either in
their own factories, using their own vendors existing as of the
Effective Date or using Authorized Manufacturers. Vendors which are
approved as of the Effective Date shall remain approved until January
31, 1999. Licensee will submit to UMBRO on or before November 30, 1998 a
request to designate such vendors as Authorized Manufacturers. Such
vendors will be deemed Authorized Manufacturers unless UMBRO, in the
exercise of its reasonable discretion, informs Licensee in writing on or
before December 31, 1998 that such vendor will not be designated as an
Authorized Manufacturer. In the event UMBRO provides such notice to
Licensee, the such vendor's authorization will expire on January 31,
1999. Such manufacturing is not limited to the Territory. All
manufacturing of Products by Licensee and by all Authorized
Manufacturers shall be solely for purposes of distribution and resale of
all resulting Products by Licensee pursuant to this Agreement and/or by
other licensees or distributors approved by UMBRO.
(a) In respect of any technical Product (i.e. any Product for the
sport of soccer which UMBRO considers in its good faith and
reasonable judgment to be technically innovative in that it
contains unique features, construction and/or fabrications not
found in competitive soccer products or any Product incorporating
an UMBRO owned patent ) which UMBRO has designed and developed,
UMBRO reserves the right to nominate an official manufacturer and,
Licensee shall not be entitled to manufacture such Product or
source such Product from any other manufacturer or
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Authorized Manufacturer. UMBRO reserves the right to designate, or
to remove from such designation, Products which must be sourced in
this manner, from time to time. In the event UMBRO, in its sole
discretion, authorizes Licensee to manufacture such Product
described in this Section 7.1(a), UMBRO and Licensee shall enter
into a royalty-free patent license, if necessary, for the
manufacture, sale and use of such patented technology on terms to
be agreed at the time of entering into the patent license; and/or
(b) In respect of any Product for which sales samples have been
supplied to Licensee by UMBRO, Licensee may only order bulk
supplies of such Products, from the manufacturer of such sales
sample. For Products which UMBRO has designed and Licensee has the
right to manufacture, in the event that Licensee does not order
sales samples through UMBRO but reasonably wishes to order sales
samples and bulk supplies of such Products from its own sources,
Umbro will provide Licensee with necessary Product data to enable
Licensee to procure the manufacture of such Product pursuant to
the terms of this Agreement.
7.2 Use of Authorization Statement. Whenever the Trademarks are used on or
with a Product an Authorization Statement will be included with the
Product, wherever aesthetically possible.
7.3 Advance Approval of Product Design. Prior to production and offering for
sale of any Products which are to be manufactured by Licensee or any
Authorized Manufacturer acting for Licensee, Licensee shall obtain
Advance Approval from UMBRO, such approval not to be unreasonably
withheld, with respect to proposed product design, materials, color
palate, "themes", and Trademark usage. Request for Advance Approval
shall be in the form of a full color line drawing or photograph with
product specifications as appropriate. The production runs of each of
the approved designs shall be in accordance with approved line drawings
and specifications in all material respects.
7.4 Advance Approval of First Run Production Samples. Upon the introduction
of a new Product by Licensee or upon Licensee's first time use of a new
Authorized Manufacturer for any Product, Licensee shall submit to UMBRO
first run production samples of each Product manufactured by Licensee or
any Authorized Manufacturer acting for Licensee, together with a request
for Advance Approval of the samples based on applicable Standards. At
the time of submission, Licensee shall indicate any known deviation from
such Standards, it being agreed that minor variations from the Standards
in a previously approved Product or sample made to customize apparel to
identify that team do not constitute "Deviations" from Standards.
Production runs shall not be carried on except based on first run
samples which have received Advance Approval.
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7.5 Use of Authorized Manufacturer. In the event that Licensee desires
to use either its own facilities or an outside contractor to
manufacture the Products, then the Licensee's facilities or the
contractor as the case may be must first be approved as an
Authorized Manufacturer by UMBRO. A form of an application for
approval of a contractor or Licensee as an Authorized Manufacturer
is attached hereto as Appendix G. No contractor may use or
otherwise deal with any of the Trademarks, unless the contractor is
an Authorized Manufacturer. If Licensee wishes to manufacture
Products in its own facilities, Licensee shall provide UMBRO with
the same information described below with regard to an outside
contractor. If a contractor that Licensee desires to use is not
already qualified as an Authorized Manufacturer, Licensee shall
notify UMBRO by giving UMBRO the (1) name and location of the
contractor, (2) if possible, relevant details concerning the
contractor's ownership and operation, (3) a description of the
Products to be manufactured, (4) if possible, the contractor's
capacity and number of operatives, (5) the price and terms of the
agreement between Licensee and contractor, including the intended
duration of the manufacturing contract, and (6) such other
information as UMBRO may reasonably require. UMBRO will approve
Licensee's proposal within twenty (20) days after UMBRO receives
such information, or else provide detailed explanations for its
disapproval of the proposal. Licensee shall not, in any
circumstances, have the right to use the proposed contractor during
the aforementioned twenty (20) day approval period unless and until
such approval has been given. In accordance with the definition of
Authorized Manufacturer contained in the Glossary of this
Agreement, UMBRO shall have the right to de-authorize an Authorized
Manufacturer; provided, however, Licensee and its Affiliates shall
not be de-authorized by UMBRO unless the Products as manufactured
by Licensee or its Affiliates fail to meet the Standards.
7.6 Standards. Licensee shall ensure that it will and will ensure that
any Authorized Manufacturer acting for it will, comply with all
applicable Standards in all material respects.
7.7 Licensee's Responsibility for Authorized Manufacturer's Actions. In
connection with any business done between Licensee and the
Authorized Manufacturer that will manufacture Products, Licensee
shall be responsible for ensuring the Authorized Manufacturer's
performance of all applicable terms of any Manufacturing
Authorization Agreement which UMBRO may require the Authorized
Manufacturer to enter into as a condition to qualifying as an
Authorized Manufacturer. UMBRO will promptly notify Licensee of the
termination of any Authorized Manufacturer's authorization which
UMBRO requires Licensee to use pursuant to Section 7.1(a) and
Appendix A. Licensee shall not be responsible for any actions of
such terminated Authorized Manufacturer which occur between the
termination of such Authorized Manufacturer and Licensee's receipt
of the notice of termination from UMBRO.
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7.8 UMBRO Sourcing from Authorized Manufacturer. Where UMBRO notifies
Licensee of its desire to purchase any Product from any Authorized
Manufacturer other than Licensee for markets other than the
Territory, Licensee shall reasonably cooperate with UMBRO in this
regard.
ARTICLE 8
Ownership and Registration of Trademarks
8.1 Ownership of Trademarks by UMBRO. UMBRO represents and warrants its
Affiliate, Umbro Trademark, Inc. ("Umbro Trademark") is the owner
of the Trademarks in the Territory and that Umbro Trademark has
granted UMBRO an exclusive license to use and/or sublicense others
to use the Trademarks in the Territory as set forth in this
Agreement. Licensee hereby acknowledges that:
(a) UMBRO's Affiliate, Umbro Trademark, is the owner of the
Trademarks in the Territory and any goodwill related thereto
that derives from or is based on the marketing and
distribution of the Products or the use or display of the
Trademarks in the Territory; that Umbro Trademark has granted
UMBRO an exclusive license to use and/or sublicense others to
use the Trademarks in the Territory as set forth in this
Agreement; and that UMBRO has agreed to maintain, or assist
Umbro Trademark to maintain, the Trademarks in the Territory
during the Term;
(b) that Licensee, by reason of this Agreement, does not acquire
any right, title, interest or other claim of ownership to the
Trademarks, other than the License on the terms and conditions
obtained by Licensee hereunder;
(c) all rights not expressly granted by UMBRO to Licensee
hereunder are reserved and retained by UMBRO; and
(d) any rights granted to the Licensee hereunder shall immediately
extinguish upon the expiration or termination of this
Agreement, for whatever reason.
8.2 Licensee's Assistance.
(a) Licensee agrees to cooperate with UMBRO, at UMBRO's request
and expense, with respect to the protection and enforcement of
the Trademarks in the Territory, including through the
registration of the Trademarks in UMBRO's name.
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(b) Licensee agrees not to contest or challenge the validity of
the Trademarks, any registrations of the Trademarks in UMBRO's
name, or the ownership of the Trademarks by UMBRO.
(c) Licensee agrees to assist UMBRO in the registration and
maintenance of the Trademarks in the Territory in the name of
UMBRO or its Affiliates (as UMBRO may designate), but Licensee
shall not be required to share the cost of such registration.
Any secondary trademarks and designs employed or adopted by
Licensee in connection with the Products or in combination
with the Trademarks shall, together with any goodwill related
thereto, be assigned to UMBRO.
(d) Licensee shall follow UMBRO's reasonable instructions with
respect to actions UMBRO may deem necessary or desirable to
perfect registration and protection (and to alter any such
registration as necessary upon termination of this Agreement
or otherwise) in the Territory of the Trademarks and the
exclusivity of their use, in the name of UMBRO, including the
registration of registered user agreements as necessary or
desirable under laws applicable in the Territory, provided
that registered user agreements may be registered under the
names of both UMBRO and Licensee as required by UMBRO. Subject
to the foregoing, UMBRO shall have final responsibility for
the validity, registration and enforcement of the Trademarks
in the Territory.
8.3 Notices and Legends. Licensee agrees to affix to any materials
bearing the Trademarks (including labels, packaging, advertising
and promotional materials) any statutory notices or legends
reasonably required by UMBRO, in advance of production of such
Products.
8.4 Trademark Registrations.
UMBRO, at Licensee's commercially reasonable request, shall use its
best efforts to pursue registration with the United States
Patent and Trademark Office, in the name of Umbro Trademark,
Inc. or other appropriate Affiliate, at UMBRO's cost, of
additional trademarks which Licensee reasonably believes to be
necessary for the marketing and sale of Products under this
Agreement. Licensee agrees to cooperate with UMBRO in the
prosecution of such trademark applications and to supply UMBRO,
free of charge, with sufficient samples as may be required for
the filing of such trademark applications.
(b) UMBRO shall cooperate with Licensee to ensure the proper
filings are made with U.S. Customs so as to provide for Licensee to
be recorded as an authorized importer of UMBRO.
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ARTICLE 9
Infringement of Trademarks
9.1 Notice of Infringement and Notice of Modification. Licensee shall
promptly notify UMBRO in the event that Licensee obtains knowledge
of any unauthorized use of, or unauthorized plans to use, any of
the Trademarks. Licensee shall also promptly notify UMBRO in the
event Licensee obtains knowledge of any allegation that any of the
Trademarks is invalid or claimed to be owned by others, or that the
use of the Trademarks or the manufacturing, marketing or
distribution of the Products authorized by this Agreement infringes
or violates any rights of any other person.
9.2 Legal Proceedings.
(a) UMBRO shall be solely entitled to determine and carry out,
in its discretion, the course of action, if any, that may
be appropriate for responding to instances of infringement
of the Trademarks or violations of UMBRO's or Licensee's
rights with respect to the Products, and UMBRO shall have
no obligation to Licensee regarding UMBRO's decision
whether to take action or regarding any course of action
UMBRO may choose to take, provided that UMBRO shall
exercise sound judgment and take all reasonable care to
protect and defend its rights in the Trademarks in the
Territory and the exclusive rights granted to Licensee
under this Agreement.
(b) If Licensee believes that additional or different action
should be taken against infringement occurring in the
Territory, then Licensee may so notify UMBRO in writing
and, if UMBRO so elects in UMBRO's sole discretion,
Licensee may take action itself, at Licensee's own
expense. If Licensee takes action under such
circumstances, UMBRO may elect at any time to resume
responsibility, at UMBRO's expense, for carrying out or
disposing of such action. Licensee shall keep UMBRO
reasonably and timely informed of any action it takes
hereunder and shall further provide UMBRO with such
specific information as UMBRO may require. Licensee shall
be entitled to retain any damages and other monetary
relief obtained pursuant to any judgment or settlement
relating to such legal proceedings initiated by Licensee
pursuant to this Section 9.2(b).
9.3 Cooperation. At UMBRO's request, Licensee shall cooperate fully
with UMBRO (including by being named as a complainant or
co-complainant) in any action, claim or proceedings brought or
threatened in respect of the Trademarks or the Products in the
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Territory. If Licensee recovers money in such action, Licensee
agrees to pay to UMBRO, and hereby waives all claims to, all
damages or other monetary relief recovered in such action by reason
of a judgment or settlement, up to the total damages and costs
incurred by UMBRO with respect to all legal actions theretofore
taken by UMBRO in the Territory during the Term of this Agreement
with the remaining monetary relief deemed to be "Excess Proceeds".
Licensee shall be entitled to receive or retain Excess Proceeds,
but to the extent such Excess Proceeds exceed any damages or costs
incurred by Licensee, shall pay a royalty to UMBRO on such Excess
Proceeds as though they were Net Sales in the Annual Period
received.
ARTICLE 10
Royalties; Payments; Record Keeping
10.1 Royalty Payments and Rates. Licensee shall pay UMBRO a royalty
calculated on the Net Sales of all invoiced sales of the Products
by Licensee (and on any excess proceeds referred to in Section
9.3). In addition to the standard royalty, International Licensed
Products shall have an additional separate royalty rate as set
forth in Appendix C which rate may be varied upon six (6) months
notice by UMBRO to Licensee. The royalty rate for Products is
indicated in Appendix J hereto.
If Licensee purchases Products from Authorized Manufacturers,
royalties are payable by Licensee and not by the Authorized
Manufacturers with respect to the Net Sales on Licensee's resale of
those Products.
10.2 Calculation and Payment of Royalties. Royalties shall be calculated
based on Net Sales occurring during each Quarter (or portion
thereof). The royalties calculated for each Quarter shall be paid
by Licensee within thirty (30) days following the end of that
Quarter.
10.3 Minimum Royalties.
(a) Licensee shall pay UMBRO royalties pursuant to Articles
10.1 and 10.2 for each Annual Period at least equal to the
Minimum Royalty as set out in Appendix J. Within fourteen
days of receipt of the fourth Quarterly Report of each
Annual Period, UMBRO shall calculate the total royalties
paid by Licensee to UMBRO in respect of such Annual Period
and notify Licensee whether or not Licensee has satisfied
the Minimum Royalty for such Annual Period, and if not,
the extent of the shortfall. In calculating whether or not
the Minimum Royalty has been met, royalties paid to UMBRO
for International Licensed Products or any Excess Proceeds
referred to in Section 9.3 shall not be taken into
account. If the Minimum
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Royalty is not met by Licensee in the Annual Period, then
Licensee shall forthwith pay a sum equal to such shortfall
to UMBRO.
(b) In the event that this Agreement terminates during an
Annual Period, the Minimum Royalty shall be prorated for
the portion of the Annual Period during which this
Agreement was in effect.
(c) Royalty amounts actually paid by Licensee in excess of the
Minimum Royalty as to one Annual Period may not be
credited towards Licensee's Minimum Royalty obligations in
the preceding or following Annual Period(s).
10.4 Quarterly Report; Business Records.
(a) Licensee shall provide UMBRO within fifteen (15) days
after the end of each month during the term, a Monthly
Report containing the information set out in Appendix C,
Part 1, signed by a responsible official of Licensee, and
if there were no invoiced sales of Products, a statement
to that effect.
(b) Licensee shall provide UMBRO within thirty (30) days after
the end of each Quarter, a Quarterly Report containing
such information in the format shown in Appendix C, Part
2, signed by a responsible official of Licensee and
accompanied by payment due, if any. If no invoiced sales
of Products are made by licensee during the relevant
period, a report stating that fact shall be provided.
(c) Licensee shall keep full and accurate records showing the
number, Net Sales, date of shipment or other transfer of
all Products shipped or otherwise transferred by Licensee,
and records of purchase and manufacture and Licensee
warrants the Monthly Reports and Quarterly Reports
produced pursuant to Section 10.4(a) and (b) are accurate.
10.5 Audit Rights. During the Term of this Agreement and for a period of
two (2) years after the termination of this Agreement, Licensee
shall permit UMBRO's representatives to have access, after written
notice to Licensee at least two (2) days prior to such audit, at
all reasonable times during normal business hours, subject to the
confidentiality provisions of Section 13.9 hereof, to Licensee's
business records relating to this Agreement for purposes of
verifying the royalties paid or payable to UMBRO, verifying
information provided to UMBRO by Licensee, and/or obtaining any
other information relevant to the parties' respective rights and
obligations under this Agreement. Licensee acknowledges that this
type of audit is part of standard business practice and that
Licensee shall be audited pursuant to this Section 10.5 at least
once during the Term of this Agreement. Licensee
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shall cooperate with respect to the determination of the amount of
royalties due for the period examined, gross and net sales
(including itemized deductions), promotional spending (measured
media, point of sale, free goods, promotions), reduced margins
goods and current inventory levels. The cost of the audit by
UMBRO's representatives shall be borne by UMBRO unless a deficiency
in royalties is found to exceed by five percent (5%) or more the
royalties previously paid by Licensee for the applicable period, in
which event Licensee shall immediately reimburse to UMBRO the costs
of such audit.
ARTICLE 11
Term, Termination and Renewal
11.1 Term. This Agreement shall commence on the Effective Date. Unless
earlier terminated in accordance with the terms of this Agreement,
this Agreement shall thereafter remain in effect for the Term. The
Agreement may be renewed under the same terms and conditions
(except as set forth below) at Licensee's option exercised in
writing on or before August 15, 2003 for an additional period of
five years through December 31, 2008 provided that:
(a) Licensee has achieved $15,000,000 in sales during any twelve
month period commencing January 1, 2002 and ending June 30, 2003;
and
(b) UMBRO has not in good faith delivered written notice pursuant
to Section 11.2 of a material breach of this Agreement by Licensee
and the breach alleged in such notice remains uncured fifteen (15)
days after Licensee exercises its renewal rights.
If this Agreement is renewed, the Minimum Sales (and corresponding
minimum royalties) during the renewal Term shall be, at UMBRO's
option, either (a) $15 million in year 2004 increasing 10% per
year during the renewal term or (b) 75% of calendar year 2003
Annual Net Sales for each year of the renewal Term.
11.2 Termination by UMBRO upon Default, etc. UMBRO may terminate this
Agreement forthwith upon notice to Licensee if:
(a) Licensee assigns this Agreement or any rights hereunder,
without the prior written consent of UMBRO; UMBRO agrees
to a commercially reasonable standard in deciding whether
to allow an assignment to a wholly-owned Affiliate of
Licensee.
(b) a Competitor acquires more than 30% of the issued and
outstanding shares of Licensee;
(c) Licensee fails to pay in full any sum due UMBRO (whether
under this Agreement or
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any other contract between the parties) when due, and such
delinquency continues for seven (7) days or longer after
UMBRO notifies Licensee of such failure in writing;
(d) Licensee commits a material breach of its material
obligations under this Agreement or any other contract
between the parties, and such breach is not fully cured
within thirty (30) days after UMBRO notifies Licensee of
such breach in writing; provided, however, if such breach
is of a nature that it is unable to be cured within such
thirty (30) day period despite the good faith efforts of
Licensee, then UMBRO may not terminate this Agreement so
long as Licensee is diligently procuring such cure and, in
fact, effects such cure. Nothing in this section, however,
is intended to limit UMBRO's rights under Section 13.16;
(e) Licensee becomes insolvent, or has any distress or
execution levied upon its goods or effects, or initiates
or is the subject of winding up or bankruptcy proceedings,
or a receiver is appointed over its assets, or suffers any
similar action in consequence of debt;
(f) Licensee ceases to do business for any period of thirty
(30) consecutive days (other than for annual holidays) or
otherwise, for any reason, is substantially prevented from
performing or is unable to perform its material
obligations under this Agreement; or
(g) Licensee knowingly and intentionally violates any of the
material sourcing requirements contained in Section 3.3
hereof or any of the provisions contained in Articles 7.1,
7.3 or 7.5 hereof. Any such violation shall constitute a
material breach of this Agreement and Licensee shall not
have the opportunity or right to cure. In this Section
11.2(g), "material" shall mean a violation that, in
UMBRO's reasonable good faith judgment, undermines the
purpose of the Authorized Manufacturer designation by
preventing UMBRO, among other things, from controlling the
source of manufacturing, the quality of manufacturing, the
goodwill of the Trademarks or UMBRO's reputation in the
global marketplace; or
(h) An audit conducted pursuant to section 10.5 reveals a
deficiency in royalties in excess of 5% or more than the
royalties paid by Licensee for the audited quarter and
such underpayment is a knowing and intentional act of
Licensee. Any such violation shall constitute a material
breach of this Agreement and Licensee shall not have the
opportunity or right to cure; or
(i) Licensee ceases to offer for sale or distribute Products
for any period of thirty (30) consecutive days.
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11.3 Termination by Licensee upon Default, etc. Licensee may terminate
this Agreement forthwith upon notice to UMBRO if:
(a) the Trademarks, or any of them that are substantial in
importance, are abandoned or cease to be eligible for
protection in the Territory, despite reasonable effort and
cooperation of the parties;
(b) UMBRO commits a material breach of any its material
obligations under this Agreement, including its
obligations under Section 5.5, and such breach is not
fully cured within thirty (30) days after Licensee
notifies UMBRO of such breach in writing;
(c) UMBRO ceases to do business for any period of thirty (30)
consecutive days (other than for annual holidays) or
otherwise, for any reason, is substantially prevented from
performing or is unable to perform its obligations under
this Agreement; or
any Primary Branded Licensee other than Signal Apparel
Company, Inc. fails to pay the amounts set forth in
Section 5.4 when due if such delinquency continues for
fourteen (14) days or longer after Licensee notifies UMBRO
in writing of same.
11.4 Failure to Meet Minimum Sales. If in any two consecutive Annual
Periods commencing January 1, 2000, Licensee fails to produce the
required Minimum Sales, UMBRO shall have the right to terminate
this Agreement with thirty (30) days prior written notice.
11.5 Cumulative Rights and Remedies. Any right of UMBRO to terminate
this Agreement or obtain other relief as provided in this Article
11 is in addition to and without prejudice to any right or remedy
UMBRO may otherwise have under this Agreement or at law in respect
of any breach of this Agreement.
ARTICLE 12
Consequences of Termination
In connection with any termination of this Agreement
regardless of the reason, including expiration of the Term, the parties agree as
follows:
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12.1 Appointment of Successor. UMBRO may, during the period of twelve
(12) months preceding the prescribed date of termination of this
Agreement, negotiate with and appoint Licensee's successor(s) or
replacement(s) (if any) for the Territory (or any portion thereof)
and authorize such successor(s) or replacement(s), no earlier than
five (5) months preceding the prescribed date of termination of
this Agreement , to make themselves known as authorized licensees
or distributors of UMBRO able to do business with some or all of
the Products in some or all of the Territory and otherwise to take
all actions as a licensee or distributor; provided, however, no
orders shall be solicited or accepted before three (3) months
preceding the prescribed date of termination of this Agreement and
any orders taken during the three months preceding the prescribed
date of termination of this Agreement shall be for delivery after
the end of the Term.
12.2 Option to Purchase Inventory Upon Termination.
(a) Upon termination of this Agreement, Licensee shall
immediately deliver to UMBRO a written statement listing
Licensee's remaining inventory of Products, including raw
materials, work-in-progress and finished goods, as well as
advertising, packaging and other promotional material.
Such statement shall also indicate Licensee's actual cost
for each item (determined consistent with Licensee's
current valuation of such inventory based upon U.S. GAAP).
In the event of the termination of this Agreement, UMBRO
shall have the right to purchase, at its sole option but
subject to the rights of any lenders of Licensee holding
valid liens on Licensee's inventory, some or all (as
chosen by UMBRO) of such items (excluding those items that
Licensee is contractually obligated to supply to existing
customers in the ordinary course of business, as shown in
contractual documentation provided to UMBRO) for an amount
equal to:
(i) Licensee's actual cost for those items that are
then being sold or offered for sale to the trade
at original list wholesale price, except that
the price shall be 75% of actual cost of those
items that are slow moving or obsolete ("slow
moving or obsolete" for that purpose meaning
goods not listed in the most current market
catalog for the Territory, or not purchased or
manufactured within the preceding twelve (12)
months, or exceeding three (3) months' worth of
requirements Licensee normally would have for
the sale of such items) or are being sold or
offered for sale to the trade at a discount from
original list wholesale price of more than 25%;
(ii) for an amount equal to the actual salvage value
for those items that are defective, unsaleable,
discounted for sale by a factor of greater than
50%, or unusable; and
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(iii) an amount for advertising, packaging and other
promotional material shall be the reasonable
original cost for any new material that can be
readily used for the same or similar purposes
within the ensuing six (6) month period by UMBRO
and/or a replacement licensee.
(b) For the purpose of facilitating the operation of this
provision, Licensee shall permit representatives of UMBRO
on fourteen (14) days prior written notice and during
normal business hours to inspect such inventory. If UMBRO
exercises its right to purchase some or all of the
foregoing assets, Licensee agrees that UMBRO may act to
take immediate ownership and possession of them, which
shall be provided unencumbered by other claims or
interests, and UMBRO shall pay Licensee the applicable
purchase price for such assets within ten (10) days after
UMBRO has taken ownership and possession of such assets
and obtained such conveyance instruments and
acknowledgments as UMBRO may reasonably request in order
more properly to evidence UMBRO's ownership thereof.
12.3 Sell-Off of Products. If and to the extent that UMBRO, within
thirty (30) days after termination or expiration, does not exercise
the right to purchase Licensee's remaining inventory of Products
upon termination of this Agreement as provided in Section 12.2
hereof, for a period of six (6) months following the termination or
expiration of this Agreement (or such longer period as the parties
may agree in writing), Licensee shall have a non-exclusive right to
sell any Products remaining in stock at the date of termination of
this Agreement; provided, however, that Licensee may only do so in
compliance with the provisions applicable to the marketing and sale
of Products under this Agreement; and provided, further, that
Licensee shall have the right to sell such Products only if
Licensee has paid all royalties due under this Agreement and
continues to pay royalties on Products then being sold. Except for
the sale of Products remaining in stock, Licensee shall not be
entitled following termination of this Agreement to exercise any
rights granted by this Agreement.
12.4 Removal of Trademarks. Upon termination or expiration of this
Agreement and upon end of sell-off period if applicable, Licensee
shall, at its own expense, immediately remove all Trademarks from
any signs, letterheads, unused packaging materials or other
advertising materials used or created by Licensee. If Licensee
fails to do so, UMBRO may take action as it reasonably requires to
do so, at Licensee's expense.
12.5 Return of Materials. Upon termination or expiration of this
Agreement or the conclusion of any allowed sell-off period under
section 12.3, Licensee shall, at UMBRO's request,
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promptly deliver to UMBRO all materials and media of any nature
whatsoever in Licensee's possession or control relating to the
Products, the Trademarks or UMBRO, or relating to the activities of
Licensee involving the Products, the Trademarks or UMBRO, other
than business records and correspondence between Licensee and UMBRO
which do not relate to technical matters. Such obligation will
apply to advertising, packaging and other promotional material
owned by Licensee only as provided in Section 12.2, but, regardless
of whether such material is provided to UMBRO, Licensee will have
no right to use such material for any purpose so long as it
includes or references the Trademarks, the Products or UMBRO.
12.6 Assignment of Consents, etc. Upon the later of the termination or
expiration of this Agreement or end of the sell-off period, if
applicable, and to the extent permitted by applicable law, Licensee
shall, upon UMBRO's written request, use commercially reasonable
efforts to assign to UMBRO or UMBRO's designee, free of charge,
such permissions, consents, licenses, the Licensee Sponsorship
Agreements, sublicense agreements (to the extent assignable by the
terms thereof or with the applicable sublicensee's consent),
distribution agreements (to the extent assignable by the terms
thereof or with the applicable distributor's consent), and purchase
orders issued by Licensee (if any) as UMBRO may request relating to
the marketing, distribution or sale of the Products, and Licensee
shall execute all documents and do all things necessary to ensure
that UMBRO or its designee shall enjoy the benefit of the same.
UMBRO shall not be obligated to accept assignment of any of the
above, but shall exercise its discretion in requesting assignment
of those items it selects for assignment. Licensee in no event
shall be required to cure any defaults under any such agreement.
12.7 Payments. All outstanding unpaid invoices relating to Products or
other merchandise or materials sold by UMBRO to Licensee shall
continue to be paid when and as due by Licensee. UMBRO may, at its
option, require reasonable assurance of payment for such invoices
and for payment on any orders received from Licensee for Products
or other merchandise or materials which have not yet been shipped.
12.8 No Further Obligations. Provided that UMBRO in its actions
otherwise complies with the terms of this Agreement, Licensee shall
have no claim against UMBRO for compensation for loss of goodwill,
investment of capital or labor, or any similar loss and all
liabilities of UMBRO to the Licensee are excluded to the fullest
extent permitted by law other than its payment obligations under
Section 1.4(e)(iii).
12.9 Survival. Sections 6.3, 6.4, 6.5, and 7.6 and Articles 10, 12 and
13 shall survive and continue in full force and effect in
accordance with their terms, notwithstanding the termination of
this Agreement.
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ARTICLE 13
Miscellaneous
13.1 Affiliates. In undertaking and performing its obligations under
this Agreement, UMBRO shall be entitled to act through or on behalf
of its Affiliates, and shall be entitled to sublicense or assign
its rights and obligations under this Agreement to its Affiliates,
in whole or in part, provided that UMBRO shall remain responsible
to Licensee for the full performance of any such obligations as
required by this Agreement but only to the extent the assignee
fails to perform.
13.2 Governing Law. It is the intent of the parties that the express
terms of this Agreement be given their maximum literal effect. To
the fullest extent not in conflict with the terms of this
Agreement, the rights and obligations of the parties with respect
to the subject of this Agreement, and the validity, construction
and performance of this Agreement, shall be determined exclusively
in accordance with, and governed exclusively by the laws of the
State of South Carolina, USA applicable to contracts executed and
fully performed within that State.
13.3 Arbitration.
(a) In the event of any dispute controversy or claim arising out
of relating to or in connection with this Agreement, including
the breach, termination or validity thereof, such dispute
controversy or claim shall upon demand of either party, be
submitted to final and binding arbitration to be conducted in
accordance with the Rules of Arbitration of the American
Arbitration Association, as then in effect, as modified herein
or by mutual agreement of the parties (the "Rules").
(b) Arbitration hereunder shall be the sole and exclusive forum
for the resolution of such disputes, controversies or claims,
but each party retains the right to seek judicial assistance
(i) to compel arbitration, (ii) to obtain interim measures of
protection pending arbitration, and (iii) to enforce any
decision of the arbitrators, including the final award.
(c) At such time as arbitration is demanded, the parties shall
endeavor to select a single arbitrator to conduct the
arbitration, but if the parties cannot agree on the identity
of a single arbitrator within thirty (30) days of receipt of
the arbitration demand, each of UMBRO and Licensee each shall
appoint one (1) arbitrator and the party-appointed arbitrators
shall appoint within thirty (30) days of their appointment a
third arbitrator. If UMBRO or Licensee fails to nominate an
arbitrator, or the two party-nominated arbitrators are unable
to select a third arbitrator within such thirty (30) days, the
arbitrator or
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arbitrators in question shall be appointed by AAA in
accordance with the Rules.
(d) It is the intention of the parties that the arbitrator or
arbitrators shall forthwith determine the merits of the claim,
controversy or dispute, and shall deliver its or their
decision within ninety (90) days of the date of receipt of the
arbitration demand specifying such remedy (including money
damages) as shall fully implement the intent and purposes of
this Agreement.
(e) In addition to the authority conferred on the arbitrator or
arbitrators by the Rules, the arbitrator or arbitrators shall
have the authority to order such discovery and production of
documents, including the deposition of party witnesses, as it
may deem just and equitable.
(f) The exclusive seat of the arbitration shall be Atlanta, and it
shall be conducted in the English language.
(g) Either party may submit testimony or documentary evidence in
its native language and shall, on the request of the other
party, furnish a translation or interpretation in English of
any such testimony or documentary evidence.
(h) The arbitral award shall be in writing and shall be final and
binding on the parties and may include an award of costs,
including reasonable attorneys' fees and disbursements.
(i) Judgment upon the award may be entered by any court having
jurisdiction thereof or having jurisdiction over the parties
or their assets.
13.4 Entire Agreement. The provisions of this Agreement constitute the
entire agreement between the parties and supersede all prior
agreements, oral or written, and all other communications relating
to the subject matter hereof. Each party acknowledges that, in
entering into this Agreement it does not do so on the basis of, and
does not rely on, any representation, warranty or other provision
except as expressly referred to in this Agreement, and all
conditions, warranties or other terms implied by statute or common
law are excluded to the fullest extent permitted by law.
13.5 Notices. All notices or other communications required or permitted
to be given hereunder shall be given in writing (including in the
form of a telex or a facsimile). All notices or other
communications to a party shall be marked for the attention of the
person, and directed to the address or telex or facsimile number,
specified under the name of that party in Appendix D hereto. Each
notice or other communication shall be either delivered by hand
during normal business hours or sent by telex, registered or
nearest equivalent post
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(where possible by air mail), or facsimile. A notice or other
communication shall be effective for purposes of this Agreement,
and shall be deemed to have been received by the party to whom it
is sent:
(a) If delivered by hand, upon receipt by the person to whose
attention it is properly addressed, or upon receipt by
another person then upon the premises at the relevant
address who reasonably appears to be authorized to receive
post or other messages on behalf of the relevant party;
(b) If sent by registered or nearest equivalent post, seven
(7) days after the date upon the registration receipt
provided by the relevant postal authority;
(c) If sent by facsimile, on the commencement of business of
the next usual business day following the time of
transmission.
Each party shall notify the other party in writing of any change in
address, individual contact, telex, or facsimile number which
differs from the information specified in Appendix D.
13.6 Independent Parties. Licensee and any sublicensee are and will be
considered independent contractors with the entire control and
direction of their business and operations, subject only to the
conditions and obligations established by this Agreement. No
agency, employment or partnership relationship is created by this
Agreement. Licensee's and sublicensees' businesses are separate and
apart from any that may be owned or conducted by UMBRO. No party to
this Agreement shall make any representation intending to create an
apparent agency, employment or partnership with respect to the
other, nor shall any party have authority to act for any other
party in any manner to create obligations or debts binding on any
other party or be responsible for any obligations or expenses
whatsoever of any other party.
13.7 No Waiver, etc. A waiver of enforcement by either party of any
provision of this Agreement shall not be construed as a waiver of
any other provision herein. The terms of this Agreement are
severable. If any term is declared invalid, it shall not affect the
remaining terms which shall continue to be binding and subsisting.
13.8 No Delegation Without UMBRO's Consent.
(a) Licensee shall not delegate its duty or performance or assign
its rights or obligations under this Agreement without first
obtaining the written consent of UMBRO, and any attempted
delegation or assignment without such written consent shall be
a material breach of this Agreement.
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All investment decisions of Licensee are its own voluntary and
independent investment decisions made without any expectancy
of recompense by UMBRO.
This Agreement shall bind and inure to the benefit of Licensee and
UMBRO and their respective successors and assigns.
13.9 Confidentiality.
(a) UMBRO will provide Licensee with information relating to the
business operations, processes, plans, inventions, know-how,
designs, trade secrets, customers, market information and data
relating to its historic United States business in Products.
Each party acknowledges and agrees that all information given
to it by the other party including, without limitation, any
information relating to the other party's business,
operations, processes, plans, inventions, know-how, designs,
trade secrets, customers, market information and data pursuant
to or in connection with this Agreement ("Confidential
Information") is confidential and proprietary to the other
party.
(b) Each party agrees not to use any of the Confidential
Information during the term of this Agreement and for a period
of three (3) consecutive years thereafter for any purpose
other than as permitted or required for performance by the
parties hereunder.
(c) Each party further agrees not to disclose or provide any of
such Confidential Information to any third party and to take
all necessary measures to prevent any such disclosure by its
employees, agents, contractors or consultants during the term
hereof and for a period of three (3) consecutive years
thereafter.
(d) Nothing herein shall prevent either party from using,
disclosing or authorizing disclosure of any Confidential
Information which is, or hereafter becomes, part of the public
domain through no fault of the party or from disclosing
information which it is required to disclose in order to
comply with any applicable law (including without limitations,
securities regulations) or governmental requirement.
Confidential Information provided by UMBRO to other licensees,
distributors, Authorized Manufacturers, Affiliates of either
party or Connected Persons shall not be deemed to be in the
public domain for purposes of this Section 13.9 solely as a
result of such limited disclosure.
13.10 Indemnification by Licensee. Licensee shall at all times be solely
responsible for, and shall defend, indemnify and hold harmless
UMBRO and UMBRO's Affiliates (together with
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their respective officers, directors, agents, and employees) from
and against, any and all liabilities, losses, claims, demands,
causes of action, damages, costs and expenses (including reasonable
attorney's fees) of any nature whatsoever they may incur or suffer
arising out of or in connection with (1) the advertising or
promotion of any Products (excluding products purchased from UMBRO)
by Licensee, (2) Licensee's dealings with any sublicensees and
distributors, and (3) the sale or use of Products manufactured by
Licensee or Authorized Manufacturers (excluding products
manufactured by UMBRO or its Affiliates) selected by Licensee in
each case notwithstanding any approval which may have been given by
UMBRO, exclusive, however, of the matters addressed in Section
13.11 hereof.
13.11 Indemnification by UMBRO.
In the event that Licensee, as a result of its use of the
Trademarks in compliance with this Agreement, is alleged by
any other person to have infringed or violated the trademark
rights of such person in the Territory, UMBRO agrees to
defend, indemnify and hold harmless Licensee and its
Affiliates, their respective officers, directors, agents and
employees from and against any and all liabilities, losses,
claims, demands, causes of action, damages, costs and
expenses (including reasonable attorney's fees) of any nature
whatsoever arising out of such allegation; provided that (a)
Licensee shall promptly give notice of such matter to UMBRO
and (b) Licensee shall give UMBRO immediate and complete
control of, and all reasonable assistance in connection with,
the defense and disposition of such matter, including any
negotiations for its settlement or compromise. Licensee's
right to obtain indemnification with respect to Trademarks
owned by other organizations (such as football leagues, teams
or clubs) and used by UMBRO and/or Licensee under license
from such organizations shall be limited to the
indemnification provided by those organizations. The
foregoing states the entire liability of UMBRO to Licensee in
respect of any infringement of the intellectual property
rights (of whatever nature) of any person.
UMBRO shall at all times be solely responsible for, and shall
defend, indemnify and hold harmless Licensee and its
Affiliates (together with their respective officers,
directors, agents, and employees) from and against, any and
all liabilities, losses, claims, demands, causes of action,
damages, costs and expenses (including reasonable attorney's
fees) of any nature whatsoever they may incur or suffer
arising out of or in connection with manufacturing or design
defects occurring in Products manufactured or designed by
UMBRO or its Affiliates or on their behalf.
(iii) UMBRO's indemnification responsibility under this Section
13.11 shall apply only to such amounts not covered by
insurance under the policies required pursuant to Section
13.12 or otherwise.
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13.12 Insurance by Licensee. Licensee agrees that, throughout the Term of
this Agreement and for two (2) years afterwards, it will maintain
insurance with a reputable insurance company reasonably acceptable
to UMBRO against claims based upon product liability for Products
in the amount of not less than one million US dollars ($1,000,000),
combined single limit. Licensee shall cause its insurance policy to
be endorsed and in force from the Effective Date of this Agreement,
and to name UMBRO and UMBRO's Affiliates (and their respective
officers, directors, employees, and agents) as additional insureds
under such policies of insurance. Such endorsement shall stipulate
that the required coverage will not be reduced or canceled without
sixty (60) days' prior written notice having been provided to
UMBRO. Evidence of such coverage shall be supplied to UMBRO within
30 days of the Effective Date.
13.13 Limitations. Except as provided in Sections 13.10, 13.11, or 13.12,
neither party shall be responsible for special, incidental,
consequential, indirect, punitive or similar damages based on any
claim or proceeding of the other party relating to the subject
matter of this Agreement, regardless of the form of action. This
provision shall not apply, however, to any manufacture or
distribution of Products by Licensee in a manner which is not
authorized by this Agreement.
13.14 Headings for Convenience Only. The headings used in this Agreement
are included for convenience only and are not to be used in
construing or interpreting this Agreement.
13.15 Authorization; Validity. Each party hereto represents and warrants
that this Agreement is legal and binding and enforceable against
such party in accordance with its terms. Each individual signing
this Agreement on behalf of a party hereto represents and warrants
that he has been fully empowered to sign this Agreement and that
all necessary action to authorize his signature of this Agreement
has been taken.
13.16 Force Majeure.
(a) Upon giving notice to the other party, a party affected by
an event of Force Majeure shall be relieved without any
liability on its part from the performance of its
obligations under this Agreement, except for the
obligation to pay any amounts due and owing hereunder, but
only to the extent and only for the period that its
performance of such obligations is prevented by the event
of Force Majeure. Such notice shall include a description
of the nature of the event of Force Majeure, and its cause
and possible consequences. The party claiming Force
Majeure shall
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promptly notify the other party of the termination of such
event.
(b) The party invoking Force Majeure shall provide to the
other party confirmation of the existence of the
circumstances constituting Force Majeure in such detail as
shall reasonably be requested by the other party. Such
evidence, if satisfactory to the other party, may consist
of a statement or certificate of an appropriate
governmental department or agency where available, or a
statement describing in detail the facts claimed to
constitute Force Majeure.
(c) During the period that the performance by one of the
parties of its obligations under this Agreement has been
suspended by reason of an event of Force Majeure, the
other party may likewise suspend the performance of all or
part of its obligations hereunder to the extent that such
suspension is commercially reasonable.
13.17 Currency, Tax, Interest, No Set-Off.
(a) Any payments to be made by Licensee to UMBRO under this
Agreement shall be paid to UMBRO in United States dollars
at such depository as UMBRO may specify
(b) All payments due to UMBRO shall be remitted in full
without charges or deductions of any kind except
withholding taxes levied in accordance with the tax laws
prevailing in the Territory and then only if there is a
treaty or convention in effect at the date of payment
between the government(s) of the Territory, the United
Kingdom or the United States as the case may be, and
allowing UMBRO to offset such withholding tax against tax
UMBRO would otherwise pay in another jurisdiction as tax
on the royalties received and provided that Licensee shall
promptly (and in any event no more than thirty working
days after payment) furnish UMBRO all necessary receipts
and documentation to enable it to file for available tax
credits in applicable jurisdictions.
(c) If Licensee fails to pay any payment due to UMBRO under
this Agreement within the time stipulated in this
Agreement then (in addition to and without prejudice to
any other remedy available to UMBRO) Licensee shall also
pay interest on the amount outstanding at an annual rate
of 3% (three percent) above the base rate of Chase
Manhattan Bank prevailing from time to time, until full
payment of such amount is received by UMBRO.
(d) In no event may Licensee suspend payment of its
obligations due to UMBRO, or set-off such payment against
obligations due to Licensee except to recover unpaid
reimbursement of advances described in Sections 1.4(d)(i)
and 1.4(e)(iii).
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13.18 Electronic Commerce and Catalogs.
(a) The use of Internet or other electronic networks (which
would include internet, television or similar technology)
for the transaction of commerce is a global reality. UMBRO
reserves the right to conduct commerce electronically
through a network site designed for that purpose. Such
commerce has the potential of global reach to various
distribution channels and consumers. It will be UMBRO's
sole decision and right to establish such a site and
conduct electronic commerce in any portion of the global
marketplace. So long as UMBRO maintains such a site, at
Licensee's request, UMBRO shall link its site in a
commercially acceptable manner to the Internet web side
described in Section 13.18(b).
(b) Subject to the terms and conditions of this Agreement,
Licensee may sell all Products through an Internet web
site so long as (i) the Products are shipped to end
customers located within the Territory, (ii) the Products
are accessed from a domain name mutually agreed upon by
UMBRO and Licensee, (iii) Licensee maintains a viable, in
the field, sales force in the Territory which physically
calls on historical customer accounts for Teamwear
Products and (iv) Licensee keeps full and accurate records
of all customer orders made via the Internet and all
Products shipped to fill Internet orders. UMBRO agrees not
to make Internet sales to customers located in the
Territory, or knowingly to customers outside the Territory
that UMBRO knows or reasonably should know intends to sell
in the Territory.
(c) The Internet domain name used by Licensee to sell Products
shall contain the word "Umbro" and shall be owned by and
registered under UMBRO's name. Upon receipt of a notice of
termination of this Agreement, Licensee shall cease
selling Products through the Internet web site within 24
hours of receipt of such notice. Licensee may link such
site to other Internet web sites of Licensee and its
Affiliates.
(d) UMBRO cannot fully control the use of electronic commerce
or catalogues by its customers, nor can it control the use
of electronic commerce or catalogues by other Licensees'
customers. UMBRO is not responsible for Licensee's sales
that are impacted by electronic commerce or catalogs.
13.19 Intranet. UMBRO is developing an internal network that allows UMBRO
Affiliates, licensees and other persons selected by UMBRO to
communicate through computers and may establish other
communications systems in the future (the "UMBRO Intranet"). UMBRO
and Licensee acknowledge and agree that the use of the UMBRO
Intranet by UMBRO, its licensees and other selected persons will
facilitate the sharing of ideas and will increase the speed and
efficiency of communication among the participants. When
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established UMBRO shall offer Licensee the opportunity to
participate actively in the UMBRO Intranet. Licensee may, in its
discretion, choose to participate in the UMBRO Intranet. If it
participates, Licensee shall acquire the compatible technology
necessary to utilize the UMBRO Intranet.
13.20 Interpretations. Each party acknowledges that both parties are
sophisticated in business matters and are represented by legal
counsel, and that this Agreement has been extensively negotiated.
Consequently, no rules of construction shall apply that would favor
one party or the other, regardless of which party has principal
responsibility for drafting or the choice of language. Course of
dealing and trade practice shall not apply to limit or modify terms
which are otherwise clear in this Agreement.
13.21 Governmental Reports. Licensee shall timely file all necessary
governmental reports with the competent governmental authorities in
the Territory arising out of the entering into of this Agreement.
13.22 Severability. In the event that any of the terms of the Agreement
are in conflict with any rule of law or statutory provision or are
otherwise unenforceable under the laws or regulations of any
government or subdivision thereof, such terms shall be deemed
stricken from this Agreement, but such invalidity or
unenforceability shall not invalidate any of the other terms of
this Agreement and this Agreement shall continue in force, unless
the invalidity or unenforceability of any such provisions hereof
does substantial violence to, or where the invalid or unenforceable
provisions comprise an integral part of, or are otherwise
inseparable from, the remainder of this Agreement.
13.23 Lender's Liens on Inventory. Notwithstanding anything to the
contrary contained herein, UMBRO acknowledges that the lenders of
Licensee or its direct or indirect parent may require a lien be
placed on Licensee's inventory of Products, and during the Term and
sell-off period UMBRO agrees to allow such liens with such terms as
are reasonable or are substantially in the form presented to UMBRO
prior to the Effective Date.
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IN WITNESS WHEREOF, this Agreement has been executed and delivered
by authorized representatives of the parties, as of the date first above
written.
UMBRO INTERNATIONAL, INC.
/s/
--------------------------------------
By:
----------------------------------
Title:
--------------------------------
LICENSEE
/s/
--------------------------------------
By:
-----------------------------------
Title:
--------------------------------
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GLOSSARY
Capitalized terms used in this Agreement and not elsewhere defined shall have
the following meaning:
"A&P Budget" shall have the meaning set forth in Section 5.1.
"Activities and Events" means activities and events related to the
enjoyment, practice and play of soccer, including without limitation, clinics,
camps, competitions, training programs, education programs, travel tours and
other programs and events as reasonably approved by UMBRO in accordance with
Section 2.1(e).
"Advance Approval" or "Advance Approved" means physical submission by
Licensee to UMBRO of the goods or materials for which approval is sought. In
each case where Advance Approval is required, approval shall be considered given
by UMBRO if UMBRO does not notify Licensee in writing of its disapproval within
seven (7) days after UMBRO's receipt of Licensee's submission. Approval, once
obtained, shall be effective until the termination of this Agreement.
"Affiliate" means any person, corporation, partnership or other entity
that is in or under the direct or indirect control of, or controlling,
controlled by or under common control with, a referenced person or entity. For
such purpose "control" shall exist whenever there is an ownership, profits,
voting or similar interest (including any right or option to obtain such an
interest) representing at least 30% of the total interests of the pertinent
entity then outstanding (treating as outstanding any interests obtainable
pursuant to the exercise of the aforementioned rights or options); and "control"
shall be deemed to exist whenever by agreement or practice the referenced person
or entity has substantial influence or participation in the business affairs of
the pertinent person, corporation, partnership or other entity.
"Annual Net Sales" means the aggregate Net Sales of all Products sold,
transferred, or otherwise disposed of by Licensee during the Annual Period in
question.
"Annual Period" means each period of twelve (12) months, commencing on
January 1 and ending on December 31. The first Annual Period shall begin on
January 1, 1999 and end on December 31, 1999. The last Annual Period shall begin
on January 1, 2003 and ending on December 31, 2003, subject to the renewal of
this Agreement.
"Authorization Statement" means a statement on a label or in packaging
accompanying each Product manufactured by Licensee or any Authorized
Manufacturers that the Product is produced under license and the Trademarks are
the property of UMBRO. UMBRO may specify the wording and placement of the
Authorization Statement.
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"Authorized Manufacturer" means a person or entity that UMBRO has
authorized in writing to manufacture all or certain of the Products for sale to
Licensee for distribution pursuant to this Agreement. Any such person or entity
shall cease to be an Authorized Manufacturer immediately at such time as UMBRO
notifies Licensee to such effect. UMBRO may require the applicable person or
entity to enter into and comply with a Manufacturing Authorization Agreement in
the form requested by UMBRO as a condition to qualifying as an Authorized
Manufacturer. Licensee and its Affiliates shall not be de-authorized by UMBRO
unless the Products as manufactured by Licensee or its Affiliates fail to meet
the Standards. UMBRO reserves the right to authorize and de-authorize other
third-party Authorized Manufacturers in UMBRO's reasonable good faith judgment .
"Branded Channel of Distribution" means sporting goods stores
designated by UMBRO, specialty stores (excluding soccer specialty stores),
department stores, UMBRO owned retail stores, and all other non-team accounts
carrying major athletic brands such as Nike, Adidas, Champion and Reebok
including but not limited to those accounts designated by UMBRO in the Branded
License Agreement as well as accounts previously designated as accounts for the
Branded Channel of Distribution by UMBRO as well as all other accounts having
the same attributes as any of the foregoing.
"Branded License" means that license agreement executed by and between
UMBRO or its Affiliates and the Primary Branded Licensee for Products in the
Branded Channel of Distribution in the Territory and any amendment, renewal or
replacement thereof.
"Club Badge" means the officially adopted badge of teams or leagues
from which UMBRO has licensed the right to use the badge, name, other logos and
marks.
"Collectibles" includes without limitation, the following
soccer-related products (but excluding any such products which are apparel or
footwear) toys, games, back-to-school products, premium and fund-raising
products, lamps, desk accessories, souvenirs and similar products as reasonably
approved by UMBRO and such other products as determined pursuant to Section
2.1(e) hereof.
"Competitor" means any of the eight largest marketers of branded
sporting goods apparel, footwear and accessories in the Territory that
manufactures, markets and/or distributes soccer apparel, footwear and
accessories similar to the Products in the same channels of distribution
including, but not limited to, the brands Nike, adidas, and Reebok.
"Connected Person" means any person who in the reasonable opinion of
UMBRO (with whom Licensee must confer in any case of doubt) is so closely allied
to Licensee, Licensee's owners, or Licensee's personnel as to prevent
arms-length bargaining.
"Consumer Price Index" means the price index issued by the U.S.
Department of Labor in
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January of each Annual Period.
"Core Category Products" means the goods listed in Appendix A.
"Excepted Products" consist of: (i) replica and authentic apparel of
professional teams for sports other than soccer and football, (ii) footwear as
used on the field of play other than for the sport of soccer, (iii) equipment
for team sports other than soccer, football and baseball/softball that is
co-licensed with a sports celebrity and/or sports team and (iv) equipment and
footwear for non-team sports such as golf, tennis, skiing, etc.
"Excepted Products Licensee" means any person or entity to whom a
license is granted by UMBRO or its Affiliates granting such person or entity the
right to use the Trademarks for the manufacture, sale and/or marketing of
Excepted Products in the Territory in any channel of distribution.
"Force Majeure" means any event or condition, not existing as of the
date of signature of this Agreement, not reasonably foreseeable by an ordinary
person as of such date and not reasonably within the control of either party,
which prevents in whole or in material part the performance by one of the
parties of its obligations hereunder or which renders the performance of such
obligations so difficult or costly as to make such performance commercially
unreasonable. Without limiting the foregoing, the following, by way of example,
shall constitute events or conditions of Force Majeure: acts of State,
governmental or political action, riots, disturbance, casualty, war, embargo,
quota, boycott, strikes, lockouts, slowdowns, transportation, supply or
production delay, breakdown, prolonged shortage or inability to secure
materials, energy supplies, supplies, power or shipping space, accident, act of
God, epidemics, fire, flood, hurricane, typhoon, earthquake, lightning and
explosion, or other causes or circumstances beyond either party's reasonable
control affecting transportation or production of the Products.
"Initial Term" means the period from the Effective Date of this
Agreement through December 31, 2003.
"International Licensed Product" means a Core Category Product which
incorporates a Club Badge.
"Joint Marketing Budget" means $600,000, as adjusted commencing January
1, 2000 and each anniversary thereof, by the Consumer Price Index for the
immediately preceding calendar year on a cumulative basis.
"License" means the rights, obligations and license granted to Licensee
under this Agreement.
"Licensee Sponsorship Agreements" as defined in Section 1.4(a) hereof.
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"Manufacturer's Authorization Agreement" means an agreement in the form
set out in Appendix K.
"Marketing Policy" means the set of principles described in a certain
Brand and Product Marketing Manual, which has been provided to Licensee prior to
or contemporaneously with the execution of this Agreement. UMBRO reserves the
right to make reasonable modifications to the Marketing Policy at any time,
provided any such addition or modification will be consistent with UMBRO's
global marketing policy and no change to the Marketing Policy will be primarily
applicable only in the Territory so that it adversely impacts the rights and
obligations of Licensee under this Agreement as of the date of the change in the
Marketing Policy.
"Minimum Royalty" is defined in Appendix J hereof.
"Minimum Sales" means the amount of Net Sales of the Products in an
Annual Period which, pursuant to Section 10.1 hereof, generates sufficient
royalties to meet the Minimum Royalty requirement for the same Annual Period, as
set forth in Appendix J hereof.
"MLS" means Major League Soccer, LLC.
"Monthly Report" means a completed report in the format as set out in
Appendix C, Part 1.
"Net Sales" means the gross invoice price of the Products sold, shipped
or otherwise disposed of by Licensee at wholesale price less only deductions
for:
(a) where shown on the invoice, reasonable shipping cost and all
taxes which are paid to any governmental authority in respect
of the supply of the Products;
(b) credits and allowances actually given for returned or
defective Products;
where shown on the invoice, allowances (other than "Coop"
advertising), quantity discounts and trade and cash discounts
actually granted, or chargebacks; and
where included in the sales price of Products purchased by Licensee
directly from UMBRO or its Affiliates, built in royalties on
such Products.
If the Products are sold, transferred or otherwise disposed of by Licensee to an
Affiliate or Connected Person of Licensee on terms that call for the payment of
less than the ordinary sales price for comparable types and quantities of
Products when sold by Licensee at arm's length, then the invoice price for
purposes of determining Net Sales shall be the greater of the actual invoice
price or the ordinary sales price for comparable types and quantities of
Products.
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"Non-Core Category Products" means Collectibles and Activities and
Events, as reasonably approved by UMBRO as provided in Section 2.1(e).
"Other Goods" means all goods and services not included in the
definition of Core Category Products, Non-Core Category Products or Excepted
Products such as home furnishings and restaurant services.
"Primary Branded Licensee" means Signal Apparel Company, Inc., its
successors and assigns, or any other party to the Branded License.
"Products" means Core Category Products, Non-Core Category Products and
Other Goods bearing one or more of the Trademarks. UMBRO reserves the right to
add to or modify the Products, provided any such addition to or modification of
the Products will be consistent with UMBRO's global product line generally in
effect in all territories where Products are marketed and no change to the
Products will be primarily applicable only in the Territory so that it adversely
impacts the rights and obligations of Licensee under this Agreement as of the
date of the change in the Products.
"Quarter" means each 3 calendar monthly period ending March 31, June
30, September 30 and December 31 in each Annual Period.
"Quarterly Report" means a completed report in the format as set out in
Appendix C, Part 2.
"Sponsorship Agreements" means agreements to use the name, likeness,
trademark, and/or logos of an organization or individual related to the sport of
football for consideration in the manufacture, promotion, and/or sale of
football merchandise.
"Standards" means the standards and specifications for brand image,
quality, consistency and reliability established by UMBRO from time to time for
Brand Positioning, Sports Marketing, Products, Trademarks and Communications,
including those contained in the standards manuals set forth in Appendix F.
Brand Advertising, Sports Sponsorships, Products and Communications must meet
applicable Standards. The Standards require the quality of all Products and
Services to be as good as or better than competitive products and services that
are provided in comparable fashion in the market. All elements of each Product
and Service must reflect those high standards, including design, labeling,
packaging, as well as other forms of marketing communication. UMBRO reserves the
right to add to, modify or delete such standards and specifications in the
ordinary course of its business in the reasonable exercise of its reasonable
judgment, provided any such addition to, modification or deletion of such
standard or specification will be consistent with UMBRO's global Standards
generally in effect in all territories where Products are marketed and no change
to the Standards will be primarily applicable only in the Territory so that it
adversely impacts the rights and obligations of Licensee under this Agreement as
of the date of the change in the Standards.
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"Strategic Planning System" means an UMBRO created format of Business
Planning which analyzes the market place and UMBRO's position in relation to
mainstream competitors, and sets initiatives with associated costs to develop
the business in the short, medium and long term.
"Trademarks" means the registered and unregistered trademarks, service
marks, tradenames, domain names, logos and designs UMBRO notifies Licensee that
Licensee is authorized to use and display on the Products and in related
packaging and advertising, including the trademarks shown in Appendix E. UMBRO
reserves the right to add to or modify the Trademarks in the ordinary course of
its business and to delete any Trademark not used by Licensee for any
consecutive twenty-four month period during the Term of this Agreement, provided
any such addition to or modification or deletion of the Trademarks will be
consistent with UMBRO's global trademark portfolio and no change to the
Trademarks will be primarily applicable only in the Territory so that it
adversely impacts the rights and obligations of Licensee under this Agreement as
of the date of the change in the Trademarks.
"Team Channel of Distribution" means all sporting goods stores which
are approved by UMBRO in accordance with Section 2.1(d)(i) as well as soccer
specialty shops, team dealers, sporting goods stores already listed on Appendix
L and, on a direct basis, all schools, teams, leagues and other institutions
devoted to servicing soccer teams, including without limitation, all accounts
listed on Appendix L.
"Term" means the Initial Term plus any renewal term.
"Territory" means the United States, Puerto Rico and the U.S. Virgin
Islands.
"USISL" means U.S.I.S.L., Inc.
"USISL Contract" has the meaning set forth in Section 1.4(d).
"USISL Stock Purchase Agreement" means that asset and stock purchase
agreement entered into by and between Licensee and UMBRO as of the Effective
Date.
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