CABLE & CO. AND XXXXX ACCESSORIES, INC.
LICENSE AGREEMENT
This Agreement is made effective this 1st day of July, 1997,
between CABLE & COMPANY WORLDWIDE, INC., a Delaware corporation with offices
located at 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 ("Licensor") and XXXXX
ACCESSORIES, INC., a New York corporation with offices located at 000 Xxxxx
Xxxxxx, Xxxxx 0000, Xxx Xxxx, Xxx Xxxx 00000 ("Licensee").
WHEREAS the Licensor is the proprietor of the trademark CABLE
& CO., a graphic design representing two columns and an arch which is often,
although not always, used in conjunction with same and which also is
copyrighted, and the promotional phrase "The art of Movement" (hereinafter
referred to as the "Trademarks"), and related proprietary designs;
WHEREAS this Agreement pertains to the use by Licensee of the
Licensor's trademarks as set forth in Schedule A attached hereto and no other
trademarks owned by Licensor;
WHEREAS the Licensee is a leading manufacturer of high quality
silk neckwear for men;
WHEREAS the products utilizing the trademarks that are
authorized for production by Licensee under this Agreement are listed on
Schedule B attached hereto (hereinafter referred to as "Licensed Products") and
no other products, unless express written consent is obtained from the Licensor
prior to production of such new product, which consent shall not be unreasonably
withheld.
WHEREAS the Licensee desires to use the Designs and Trademarks
in the Territory of North America (hereinafter referred to as the "Territory")
for distribution through Licensee's traditional channels of department stores
and specialty store outlets and not for distribution by Licensee to those
outlets described as national mass merchant chains or discount distribution
outlets, in relation to the goods, and only those goods, listed in attached
Schedules B as Licensed Products.
NOW THEREFORE, IT IS HEREBY AGREED as follows:
1. AUTHORITY TO USE
(a) The Licensor hereby authorized the Licensee to
use the Trademarks in the Territory upon or in relation to the Licensed Products
subject to the terms and conditions of this Agreement.
(b) Licensee recognizes the Trademarks to be valid
and the exclusive intellectual property rights of Licensor.
(c) The Licensee will permanently xxxx or label all
Licensed Products sold as first quality goods with the Trademarks in a manner
approved by Licensor. The Licensee may also prominently display the Trademarks
on packaging and advertising material associated with or sold in connection with
the Licensed Products. Within fourteen days of the Effective Date of this
Agreement, Licensor will provide Licensee with artwork for the Licensor's label
or xxxx to be used, in the form of a reprostats and/or drawings or sketches
illustrating such label or xxxx. The Licensee will, from this artwork, develop
and produce the Licensor's label or xxxx for use with the Licensed Products, and
Licensor will approve such label or xxxx before me on the Licensed Products.
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(d) The authority granted herein shall be exclusive
for the Licensed Products in the Territory.
2. DESIGNS
(a) The Licensee will use commercially reasonable
efforts, commensurate with efforts used in producing Licensee's own designs and
other products, to produce a group of original Designs for the Licensed Products
(hereinafter "the Designs"). Within four to ten weeks after the Effective Date
hereof, Licensee will provide Licensor with sketches or artwork to be approved
for the Licensed Products as stated in paragraphs 2(d), and further sketches
will be provided to Licensor thereafter at such regular times as the parties
agree to. At a minimum, the Licensee will produce annually Designs to allow for
representation at major men's fashion markets with which Licensee has in the
past participated and/or of which Licensee is aware, which fashion markets are
described on the annexed Schedule D.
(b) The Licensee agrees that all Designs (including
coloration) used in relation to the Licensed Products are to be used exclusively
for the Licensor's products for a period of 8 weeks after the Designs have been
approved under Section 3 hereof.
(c) Other than as provided in paragraph 1(c),
prototypes or other forms of sample of any Designs, as well as additional
artwork that may be required in order to place such Designs in form for
production, shall be prepared and produced by Licensee at its sole cost and
expense.
(d) Licensee shall prepare Design sketches for the
Licensed Products and provide such sketches to Licensor for approval. Such
approval shall be deemed granted
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by Licensor if within fourteen days after the sketches are submitted to
Licensor, no written approval or written disapproval has been received by
Licensee. Any approvals given shall extend to all aspects of the Designs,
including layout, graphics, lines, and coloration
(e) Licensee shall own all copyrights and other
rights to the Designs that are developed solely or jointly with Licensor
pursuant to this Agreement. To the extent Licensor may assist in developing
Designs hereunder, Licensor assigns to Licensee all rights to all such ideas or
designs. Nothing herein shall be construed as granting Licensee any rights in or
to Licensor's Trademarks.
3. STANDARD OF QUALITY
(a) The Licensee undertakes to use the Trademarks
only in relation to the Licensed Products manufactured in accordance with the
specifications agreed upon by the Licensor and Licensee from time to time, and
described as a minimum standard in Schedule C.
(b) Upon reasonable notice, the Licensee will permit
the Licensor or his authorized representative at normal business hours, to enter
the Licensee's premises where the Licensed Products are fabricated, processed,
or stored for purposes of inspection thereof; and the Licensee shall at the
request of the Licensor be required to promptly produce no more than three
random samples to the Licensor for purposes of inspection only while at the
Licensee's premises.
(c) The Licensee will submit prototypes of Licensed
Products for Licensor's approval before use, incorporating Designs approved
under paragraph 2(d). Such prototypes should be submitted within a timeframe and
in such form that, if necessary,
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changes to the Licensed Products (other than to the Designs), may be made prior
to production. Submissions or prototypes will be dated as to the actual date of
submission. No advertising or sales may occur prior to approval. Such approval
shall be deemed granted by Licensor to Licensee if within fourteen (14) days
after the actual date of submission of such prototypes, no written approval or
written disapproval has been received by Licensee.
(d) Licensee agrees to comply with all standards by
Federal and State Statutes and Regulations concerning the nature and quality of
goods.
(e) Before sale, Distribution and Advertising,
Licensee agrees to submit, at its own expense, a representative production
sample of each product to Licensor for written approval and showroom display.
Such approval shall be deemed granted by Licensor of such samples, if no written
approval or written disapproval has been received by Licensee within fourteen
(14) days of Licensor's receipt. After approving the prototype sample, the
Licensor will approve the production sample if it is an accurate reproduction of
the prototype sample on which it is based and meets the quality level
established herein and for the balance of the Licensor's products of similar
quality.
(f) Licensee agrees to submit before actual use,
labeling, packaging and advertising materials showing representative use of the
Trademark(s) to Licensor for approval. Such approval shall be deemed granted, if
within fourteen (14) days after receipt by Licensor of such materials, no
written approval or written disapproval is received by Licensee.
(g) The Licensor and Licensee mutually undertake to
keep and procure to be kept confidential all information and material which is
designated confidential
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concerning specifications, directions and teachings regarding the design,
production, and sale of the Licensed Products. Confidential information shall
include without limitation all marketing information provided under Section 5
hereof.
(h) The Licensee will not use the Licensor's
Trademark(s) on any merchandise identified as "Seconds" ("Seconds" are defined
as merchandise below first quality standard(s)), and Licensee will inform
Licensor if it intends to do so. This paragraph shall apply with regard to the
use of the Trademark(s) on any part of the tie, including the lining.
(i) Licensor's approval or disapproval of Designs
presented under this Section will have no effect upon Licensee's rights to such
Designs under Section 2 hereof.
4. DURATION AND TERMINATION
(a) This Agreement shall operate as from the date
hereof and shall continue subject to the provisions for termination hereinafter
contained, for a period of three (3) years, at which time it will automatically
renew itself yearly unless Licensee or Licensor terminates the contract. The
termination shall be done by written notice, in the manner hereafter described,
at least thirty (30) days in advance of the termination.
(b) The License herein granted shall be forthwith
terminated upon the happening of one or more of the following events:
(1) If Licensee or Licensor shall, for any
reason, fail to carry on the terms and intent of this Agreement and such failure
or refusal shall continue for a
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period of thirty (30) days after one party has served written notice with
detailed reasons upon the other of such failure or refusal.
(2) If Licensee or Licensor shall fail to
make any payment, furnish any statement and/or permit any inspection as herein
provided, and such failure shall continue for a period of thirty (30) days after
the other party has given written notice thereof to the party allegedly in
breach.
(3) If Licensee shall breach any of the
material terms of this Agreement and fail to cure same within thirty (30) days
after the date of Licensor's written demands to do so.
(4) On the date of the filing of the
petition in bankruptcy by Licensee, or the date Licensee is adjudged bankrupt or
make any assignment for the benefit or creditors or becomes insolvent, or is
placed in the hands of a trustee or receiver, whichever is sooner. Licensee, its
receiver, representative, trustees, agents, administrator, successors and
assigns shall have no further rights hereunder, excepting with and under the
special consent and instructions of Licensor, in writing.
(5) If Licensor shall breach any material
terms of the Agreement to be performed and fails to cure same within thirty (30)
days after the date of the Licensee's written demand to do so.
(6) On the date of the filing of a petition
in bankruptcy by Licensor or the date Licensor is adjudged bankrupt or makes any
assignment of the benefit of creditors becomes insolvent, or is placed in the
hands of a trustee or receiver, whichever is sooner. Licensor, its receiver,
representative, trustees, agents, administrator, successors and
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assigns shall have no further rights hereunder, excepting with and under the
special consent and instructions of Licensee, in writing.
(7) During the first contract year, the
parties' rights to terminate this Agreement are limited to those events
specified in paragraphs 4(b) (1)-(6). After the first contract year, either
party shall have the right to terminate this Agreement upon thirty days' advance
notice to the other, provided however, that Licensor's right to terminate herein
is subject to paragraph 4(d) hereof.
(c) If this Agreement is terminated for any of the
reasons set forth in the prior subdivisions of this section, then upon such
termination Licensee shall have 180 days to dispose of any inventory on hand or
work in progress of Licensed Products. Sales made during such period will be
subject to the Fee provisions provided for herein. In any event, the Licensee
shall offer the Licensor the right of first refusal to purchase such inventory,
net of any fee provisions, on a most favored basis.
(d) Notwithstanding paragraph 4(b)(7), a two year
renewal of this Agreement will be automatic at Licensor's & Licensee option in
the event that Licensee achieves sales of at least the minimum amount required
by this Agreement during any one of the contract years specified in paragraph 9.
5. MARKETING
On a semi-annual basis beginning with six months
following the Effective Date hereof, Licensee and Licensor shall discuss, either
orally or through writings, a "marketing plan" for the succeeding six-month
period. Each marketing plan shall include a summary of
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market information relevant to the period to which it relates and may include
but need not be limited to the following:
(a) a description of the Products to be sold and
developed, together with proposals for categories and designs of new proposed
Licensed Products,
(b) a list of customer accounts, see Schedule E & F
attached
(c) a review of the Licensee's market including any
trends and/or sales competitive developments which affect the sale of the
Products,
(d) estimated wholesale and retail price points for
the Licensed Products,
(e) proposals for the interpretation of the
Licensor's brand image in terms of advertising concepts, points of sale, and
promotional and sale materials,
(f) proposed advertising insertion schedules and
placements and promotional activities and expenditures for Licensed Products,
and
(g) a calendar, or market schedule, which specifies
the dates of which annual markets in which Licensed Products are shown to the
trade.
Licensee agrees that it will sell or distribute the Licensed
Products only to Approved Outlets. Licensee has no responsibility hereunder as
to inventory in stock at such Outlets or sales to such Outlets by third parties
not subject to its control. An Approved Outlet includes Federated Department
Stores and Dillards and such retail shops and department stores that sell Cable
& Co. brand products or brand products that are comparable in quality to Cable &
Co. brand products or otherwise in competition with the Cable & Co. brand.
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6. PROTECTION OF COPYRIGHTS & TRADEMARK
Licensee agrees to assist in the protection of Licensor's
copyrights and marks against infringement or usurpation by others as per the
following terms:
(a) Licensee shall give Licensor written notice of
any conduct, which in Licensee's opinion, appears to infringe upon Licensor's
marks or copyrights, or to interfere with or usurp any other rights of Licensor.
(b) The ultimate determination of whether or not
legal action shall be taken in any case shall lie with Licensor.
(c) When requested, Licensee shall in every way
cooperate with and assist Licensor at Licensor's expense, in its efforts to stop
such infringement and usurpation.
(d) No legal action for the protection of Licensor's
marks or other rights may be taken by Licensee without the consent of Licensor,
which consent shall not be unreasonably withheld.
(e) Licensee shall be afforded an opportunity to join
as party plaintiff, at its expense, in any action instituted by Licensor
pursuant to this paragraph. In the event such actions result in an award of
money damages to Licensor and Licensee, such moneys shall be divided between
them proportionate with the respective expenses relating to the action incurred
by them.
(f) This Section (6) pertains only to Trademarks
licensed to Licensee hereunder (as set forth on Schedule A), and has no
applicability with regard to Designs developed by Licensee hereunder.
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7. COVENANTS OF LICENSEE
In addition to agreements and obligations herein contained,
Licensee covenants and agrees:
(a) To use commercially reasonable efforts consistent
with its efforts in selling or producing other products, to:
(1) Advance the sale of Licensed Products;
(2) Meet, enhance, develop and expand the
popularity of and demand for the Licensed Products; and
(3) Secure distribution of Licensed
Products.
(b) To assure the production of the Licensed Products
in accordance with the Standard of Quality agreed upon by the Licensor and
Licensee.
(c) To maintain such manufacturing facilities,
financial capability and sales and distribution organization and personnel for
the manufacture and marketing of the Licensed Products as will accomplish the
responsibilities, covenants and agreements undertaken by Licensee hereunder.
(d) To comply with the standards of quality, service
and production of the Licensed Products established from time to time by
Licensee.
8. ROYALTIES
(a) In consideration for the Licensee to use the
Licensor's Trademark(s), Licensor's public relations and marketing support, and
for inclusion in Licensor's trade and consumer advertising programs, Licensee
agrees to pay Licensor a
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TOTAL FEE on all sales of Licensed Products in the amount of 7 or 8 percent of
gross sales, to be determined as per paragraphs 8(b) and 8(c).
(b) A fee of 5 percent of gross sales shall be
payable on all sales up to the initial $500,000. Thereafter, a six percent (6%)
fee will be applied to all sales in excess of $500,000.
(c) Two percent (2%) of the TOTAL FEE percentage is
designated for Advertising, including the placement of trade and/or consumer
advertising of the Licensee's Licensed Products in conjunction with others of
the Licensor's Licensed Products. With respect to this amount, Licensor is
authorized to act as agent for and in behalf of Licensee in the placement of
consumer and/or trade advertising featuring the Licensed Products manufactured
by Licensee. This amount is to be used for no other purpose than the advertising
of the Licensed Products. It is agreed that the Licensor will maintain and
provide for inspection by Licensor upon reasonable notice, records of
collections and disbursements made for such agreed-upon purpose.
(d) Gross sales are defined as Licensee's selling
prices to its customer less authorized returns (which in no case shall comprise
more than 5% of the total), and actual costs incurred in advertising dedicated
exclusively to the Licensed Products and allocated in the selling price but
which shall not include coop advertising expenditures. The actual cost of
advertising must be proven by ad media invoice, the allocated portion of which
may not exceed 10% of the selling price. Licensor's trademark(s) must be used in
such advertising to qualify for allowance. Gross sales adjustments for returns
and advertising will be allowed only for actual expenditure or allocation in the
quarter.
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(e) "Gross Sales" shall include sales of
"close-outs". "Close-outs" for this purpose is defined as merchandise sold 20%
or more below list price.
(f) Fees will be paid quarterly, within thirty (30)
days following the end of each quarter. Licensee will furnish Licensor with the
written statement, certified to be true and accurate by an officer of the
company, setting forth the relevant data pertaining to sales of Licensed
Products and the computation of the amount due to Licensor. The relevant data to
be provided with each such statement shall include the number of units and
dollar sales volume for each style of Licensed Products sold during such period.
Total sales amounts by account within the reported period shall also be provided
separately. Both parties presently, for accounting purposes, are on a calendar
year and hence, quarterly intervals shall be considered on a calendar year. If
either party decides to change its accounting procedures, it may do so upon
written notice to the other party.
(g) Licensee shall keep or cause to be kept accurate
and regular accounts of each Licensed Product subject to the provisions of the
Agreement, so long as it receives or is entitled to receive payment with respect
to sales of Licensed Products or within five years of such sales, whichever is
earlier. Said books of accounts and all other documents of Licensee relating
thereto, shall be kept at its place of business and shall, at any time during
normal business hours and from time to time, be produced for the inspection by
Licensor or Licensor's representatives at Licensee's place of business who shall
be at liberty to inspect the same and make copies of or extract therefrom, in
whole or in part. Such rights of Licensor shall be exercised, if at all, upon
reasonable notice to the Licensee and in a manner so as not to interfere with
the normal operations of Licensee. Any claim by Licensor that a report is
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inaccurate shall be raised no later than eighteen (18) months after preparation
of such report as per paragraph 8(f); otherwise such report shall be binding on
Licensor.
(h) Timely payment by Licensee to Licensor of the
fees provided herein is an essential element of this Agreement and failure to
report and pay fees as described above shall afford Licensor the option to
terminate Licensee's rights under this Agreement, unless the failure is cured
within fourteen (14) days after written notice from Licensor has been received
by Licensee; provided, however, the if Licensee has complied with its reporting
obligations under paragraph 8(f) and paid royalties conforming with its written
statement(s), but a dispute arises as to the accuracy of a report under
paragraph 8(g) and the parties in good faith dispute whether additional sums are
due, such additional disputed sums may be paid to an escrow account pending the
conclusion of the dispute, and payment of such additional sums into the escrow
account shall be considered a cure hereunder with regard to Licensor's option to
terminate.
9. MINIMUM ROYALTIES
Licensee agrees that in the event it does not in any Contract
year set forth below (i) make Gross Sales of Licensed Products in the Licensed
Territory in at least the relevant amount specified below and (ii) pay to
Licensor royalties in the amount specified, the Licensor shall have the option
exercisable on written notice to Licensee within sixty (60) days after such
calendar year to terminate this Agreement. The amounts are as follows:
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Contract Year Sales Minimums Minimum Royalties
1997/1998 $400K $20K
1998/1999 $600K $31K
1999/2000 $1100K $61K
Notwithstanding the foregoing, it is agreed by both parties
that for the purposes of determining the first contract year, it is understood
that this period shall encompass the first eighteen (18) months after the
signing date of this contract and will extend to no later than ___________.
Subsequent years are successive twelve month periods after such date.
10. ADVANCE PAYMENT
Upon the signing of this Agreement by both parties, Licensee
agrees to provide Licensor with a non-refundable advance payment of $20,000,
which shall be payable in two installments. The first payment of $10,000 shall
be due upon the signing of this Agreement; the second payment shall be paid in
installments as follows: $2,500 on or before August 30, 1997; $2,500 on or
before October 30, 1997; and $5,000 on or before December 30, 1997. The $20,000
fee shall be applied as a credit against royalties earned and to be paid by
Licensee against 1st years royalties and may be deducted from such payments.
11. SAMPLES
Licensee will provide one single finished sample for each
Design produced under this Agreement, free of charge to Licensor, for display in
Licensor's showroom. Such finished samples will be provided to Licensor by
Licensee for use in publicity and advertising of Licensee's products bearing the
Licensor's Trademark. Licensee agrees to pay for such sample transportation
costs. No fees shall accrue on the free samples. However, if Licensor
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desires greater than one sample for each Design, such samples up to a total of
ten samples shall be provided to Licensor once production has begun at cost plus
a xxxx-up of ten percent. All other samples greater than ten shall be subject to
charges and/or fees.
12. NOTICE
All notices required or permitted herein shall be sent by
certified or registered mail, return receipt requested, postage prepaid, or by
telegram, the toll prepaid or charged to the sender. Notice shall be deemed to
have been given at the time of mailing or deposit with the telegraph company, as
the case may be.
The notices are to be sent to the below address of Licensor
and Licensee, unless written notice of change of address is sent in the manner
herein required. As to Licensor, notice shall be deemed effective as of the
mailing or deposit with respect to either the organization or its agent, or
alternatively, to Licensor's attorney.
LICENSOR:
Organization: Xxxxx Xxxxxxxx and Xxxx Xxxxxxx; CABLE & CO; 000 Xxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000
Agent: Xxxxxxx X. Xxxxxxx or Xxxxxxxx Xxxxx of Xxxxx Xxxxxxx Company,
000 Xxxx Xxx Xxxxxx, 00X, Xxx Xxxx, Xxx Xxxx 00000
OR;
Attorney: Xxxxxx Xxxxx, Lane & Xxxxxxxxxx, LLP, 000 Xxxx Xxxxxx, 00xx
Xxxxx, Xxx Xxxx, XX 00000.
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LICENSEE: Xxxxxx Xxxxx, Xxxxx Accessories Inc., 000 Xxxxx Xxxxxx, Xxxxx
0000, Xxx Xxxx, Xxx Xxxx 00000
13. CONSTRUCTION
(a) This Agreement has been made in and shall be
construed in accordance with the laws of the State of New York. None of the
terms of this Agreement shall be deemed to be waived or modified, nor may this
Agreement be terminated or discharged other than pursuant to the express terms
hereof, except by an express agreement in writing signed by the party against
whom such waiver or modification is sought to be enforced. There are no
representations, promises, warranties, covenants or undertakings other than
those expressly set forth herein and this writing represents the entire
understanding of the parties. No omission or delay by either party in requiring
due and punctual fulfillment by the other in its obligations hereunder shall be
deemed to constitute a waiver and no express waiver shall be deemed to
constitute a waiver of similar rights or future performance unless expressly set
forth in such written waiver. If any term of this Agreement is held to be
illegal or unenforceable, such determination shall not affect the legality or
enforceability of any other term.
(b) Nothing herein contained shall be construed to
place the parties in the relationship of partner, joint venture or employee of
one another and, except as provided in this Agreement, neither party shall have
the power to bind or obligate the other in any manner whatsoever.
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14. INDEMNIFICATION
(a) The Licensor and Licensee each acknowledge and
represent to the other that it is not a joint venture, partner or co-venture
with the other and that neither Party shall incur any liability on behalf of the
other Party or purport to pledge the credit of the Party or accept any order or
obligation to be binding upon the other Party.
(b) The Licensee shall indemnify and hold the
Licensor and its respective officers and directors harmless from all claims,
suits, damages and costs, including reasonable legal fees and court costs, which
the Licensor may incur or suffer by reason of any acts or omissions of the
Licensee in connection with the importations, distribution, marketing or sale of
the Products, including but not limited to:
(1) any defect in the Licensed Products;
(2) the Licensee's manufacture, distribution
or sale of the Products; or
(3) the labeling, packaging or advertising
of the Products in violation of any applicable federal, state or local law or
regulation, other than as stated in paragraph 14(c) below.
(c) Licensor shall defend, indemnify and hold
Licensee harmless from any loss, liability or expense, arising out of claims by
third parties for trademark infringement, unfair competition, or other violation
of the law, to the extent such claims are based on Licensee's use of the
Licensed Trademarks as licensed under and in accordance with the provisions of
this Agreement.
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15. NON-ASSIGNMENT
This Agreement is personal to the Parties and may not be
assigned by either Party without the prior written consent of the other,
provided, however, that either Party shall have the right to assign this
contract to a wholly-owned subsidiary, provided further that prior notice is
given to the other Party within sixty days of any such assignment.
IN WITNESS WHEREOF the parties hereto have signified their
entry into this Agreement by procuring this Agreement to be signed by authorized
persons (or by personal signature).
COMPANY Xxxxx Accessories, Inc.
NAME Xxxxxx Xxxxx
TITLE President
DATE _____________________
COMPANY Cable & Co.
NAME Xxxx Xxxxxxx
TITLE President
DATE June 23, 1997
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SCHEDULE A
TRADEMARKS
1. Cable & Co.
2. [LOGO], a graphic device representing two columns and an arch
3. Promotional phrase "The Art of Movement"
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SCHEDULE B
LICENSED PRODUCTS
Men's Neckwear made with silk
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SCHEDULE C
STANDARD OF QUALITY
1. Full margin in 100% silk
2. 100% silk printed or woven
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SCHEDULE D
-- Fashion markets:
week after Father's Day
2nd week of January
-- Trade shows
two each year -- Spring and Fall
-- MAGIC conventions
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SCHEDULE E
Intentionally Omitted
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