This LICENSE AGREEMENT ("Agreement") made as of the 15th day of May
1997 ("Effective Date"), by and between ST. XXXX KNITS, INC., a California
corporation with offices at 00000 Xxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxx 00000
("St. Xxxx"), and SWISS ARMY BRANDS, INC., a Delaware corporation
("Licensee") with offices at Xxx Xxxxxxxx Xxxxx, Xxxxxxx, Xxxxxxxxxxx 00000
("Licensee Location").
WITNESSETH:
In consideration of the mutual covenants hereinafter set forth, St.
Xxxx and Licensee do hereby respectively grant, covenant and agree as
follows:
1. Grant of License
----------------
1.1 Subject to the terms and conditions set forth in this Agreement,
St. Xxxx hereby grants to Licensee, and Licensee hereby accepts, a
non-transferable (except as set forth herein) exclusive license, for the
Term (as defined below), to use the trademark(s) set forth in Schedule A
hereto ("Licensed Trademarks") in connection with the manufacture,
distribution and sale solely of the products described in Schedule A hereto
("Licensed Products") within the territory described in Schedule A hereto
("Territory") and not elsewhere. During the Term, St. Xxxx agrees that it
shall not itself (except as specifically provided herein) nor shall it
license any party other than Licensee to sell Licensed Products bearing the
Licensed Trademarks in the Territory. Nothing herein contained shall
prevent or restrict St.Xxxx or Licensee or parties licensed by either of
them from manufacturing, marketing or selling products bearing or under any
marks other than Licensed Trademarks (or marks confusingly similar
thereto), it being understood that the license herein granted extends only
to the Licensed Trademarks and no other marks and further it being
understood and agreed that Licensee does not have any right to grant any
sublicense relating to the Licensed Trademarks or Licensed Products.
Licensee acknowledges and agrees St. Xxxx xxx enter into license agreements
with others covering the Licensed Trademarks as applied to goods other than
the Licensed Products. St. Xxxx shall, at St. John's expense, register the
Licensed Trademarks for use in connection with the Licensed Products in
those jurisdictions included within the Territory. During the Term, St.
Xxxx agrees that it shall not license any party other than Licensee to sell
Licensed Products bearing the Licensed Trademarks in any territory
throughout the world.
1.2 Licensee shall use all reasonable efforts to sell the Licensed
Products and to exploit the rights herein granted throughout the Territory
consistent with the high standards and prestige represented by the Licensed
Trademarks.
1.3 Licensee shall not export Licensed Products from the Territory or
sell Licensed Products to any entity which it knows or has reason to
believe intends to export Licensed Products from the Territory. Licensee
acknowledges and agrees that the sale or marketing of the Licensed Products
by it or by persons authorized by it to manufacture the Licensed Products
for Licensee outside of the Territory will materially damage St. Xxxx and
its relationships with other licensees, and that, accordingly, such sales
shall be deemed a material breach of this Agreement.
1.4 Any dispute between Licensee and any other licensee of St. Xxxx
with respect to the scope of the license rights covered by their respective
license agreements shall be resolved by St. Xxxx and St. John's resolution
of such dispute shall be final and binding; provided that nothing in this
Agreement shall detract from Licensee's exclusive rights granted hereunder.
1.5 Licensee shall not sell any Licensed Products to any person or
company it knows or has reason to know will sell, market or advertise the
Licensed Products as part of or in combination with any items other than
other Licensed Products.
2. Term and Term Renewal
---------------------
"Term" means the Initial Term (as defined in Schedule A hereto),
subject to extensions as set forth herein. This Agreement shall continually
renew for additional terms of such duration as is set forth in Schedule A
hereto under the Duration of Additional Terms ("Additional Terms") provided
that (a) Licensee is in compliance with all material terms of this
Agreement on the last day of the then current Annual Period (subject to
Licensee's right to notice of default and right to cure in accordance with
Section 14 hereof and unless such failure is waived by St. Xxxx), and (b)
Net Sales (as hereinafter defined) for the then current Annual Period are
not less than as set forth in the Table of Minimum Net Sales for Licensed
Products as set forth in Schedule A hereto ("Minimum Net Sales Table")
unless such failure is waived by St. Xxxx. The First Annual Period shall
commence on the Effective Date and end on the date set forth on Schedule A
hereto. The First Annual Period and each twelve (12) month period
commencing on the first day after the end of the First Annual Period shall
constitute and shall be referred to herein as an "Annual Period." It is
understood and agreed that if in any Annual Period Licensee's total Net
Sales for the Licensed Product exceed the Minimum Net Sales for such Annual
Period ("Minimum Net Sales Surplus") then for purposes of this Section 2
and Section 14.3 hereof any Minimum Net Sales Surplus shall be offset
against the Minimum Net Sales for the next two (2) Annual Periods
immediately following the Annual Period in which the Minimum Net Sales
Surplus occurred. In the event this Agreement is renewed beyond the number
of years set forth in the Minimum Net Sales Table, then the Minimum Net
Sales for each such succeeding year shall be equal to the Minimum Net Sales
for the immediately prior Annual Period. In the event that for two
consecutive years "Net Sales" (as defined in Section 4.2) shall be less
than Minimum Net Sales for the respective years and Licensee shall not
otherwise be in material default hereunder, Licensee may, at its option,
terminate this Agreement on 90 days written notice effective on the later
to occur of: (a) the beginning of business on the last business day of the
second of such years; or (b) 90 days after the sending of such notice. In
the event of such termination, Licensee shall remain responsible for all
Sales Royalties and also for Guaranteed Minimum Royalties for all periods
through the Quarterly Period in which such termination is effective. In
such event, the rights of the parties shall be as set forth in Section 14
hereof relating to the expiration of this Agreement.
3. Guaranteed Minimum Royalty
--------------------------
3.1 (a) In consideration of the license granted by St. Xxxx hereunder,
and as a condition to the use of the Licensed Trademarks, Licensee shall
pay to St. Xxxx a guaranteed minimum royalty ("Guaranteed Minimum Royalty")
for each Annual Period as set forth in Schedule A hereto in the Guaranteed
Minimum Royalty Table.
(b) In the event this Agreement is renewed beyond the number of years
set forth in the Guaranteed Minimum Royalty Table, Licensee shall pay to
St. Xxxx a Guaranteed Minimum Royalty equal to the Guaranteed Minimum
Royalty for the immediately prior Annual Period.
3.2 Unless otherwise provided in Schedule A hereto, the Guaranteed
Minimum Royalty payable for each Annual Period shall be paid to St. Xxxx in
four (4) equal quarter-annual installments within thirty (30) days after
the close of each three (3) month period during each such Annual Period
("Quarterly Period").
3.3 All payments of the Guaranteed Minimum Royalty are nonrefundable.
Guaranteed Minimum Royalty payments actually paid to St. Xxxx shall be
credited against the Sales Royalty (as hereinafter defined) payable on
sales made during the Annual Period for which such Guaranteed Minimum
Royalty payments were due (and no other Annual Period) except as set forth
in Section 4.1.
3.4 Subject to Section 4.1 below, in the event the Sales Royalty (as
defined below) paid by Licensee for any Annual Period is less than the
Guaranteed Minimum Royalty for such Annual Period, Licensee shall pay such
deficit to St. Xxxx within thirty (30) days after the close of each
Quarterly Period.
4. Sales Royalty
-------------
4.1 In consideration of the license granted by St. Xxxx hereunder, and
as a condition to the use of the Licensed Trademarks, Licensee shall pay to
St. Xxxx an amount equal to ten percent (10%) of any and all Net Sales
("Sales Royalty"); provided that to the extent that Net Sales of Close-outs
(as defined below) do not exceed fifteen percent (15%) of Licensee Net
Sales of Licensed Products, Sales Royalty with respect to such Close-outs
shall be five percent (5%) of the Close-out Net Sales; provided further
that for purposes of this section Close-outs shall mean Licensed Products
sold at a discount greater than twenty-five percent (25%) off manufacturers
initial list wholesale price for such Licensed Product. It is understood
and agreed that for purposes of calculating the Sales Royalty, except as
set forth herein each Annual Period shall be treated separately and sales
made in one Annual Period shall not be added to or included in Net Sales
for any other Annual Period or credited against the Guaranteed Minimum
Royalty due for any other Annual Period. It is also understood and agreed
that if in any Quarterly Period the total Sales Royalty paid by Licensee to
St. Xxxx exceeds the Guaranteed Minimum Royalty for such Quarterly Period
("Minimum Royalty Surplus") then the Minimum Royalty Surplus shall be
offset against the Guaranteed Minimum Royalty for subsequent Quarterly
Periods within the same Annual Period and within the next two (2) Annual
Periods immediately following the Annual Period in which the Minimum
Royalty Surplus occurred.
4.2 For purposes hereof, the term "Net Sales" shall mean the invoiced
amount of Licensed Products sold by Licensee or any of its affiliates, less
returns and allowances evidenced by credit memoranda, and, if separately
stated on sales invoices to Licensee's customers, customary trade discounts
actually earned and taken by customers, shipping charges, insurance and
sales taxes (or any use, value-added or similar taxes, but in no event to
include any income or franchise taxes). In determining Net Sales, no
deduction may be made for early payments, bad debts, advertising allowances
or special promotions of any kind or for costs incurred in manufacture,
sale, advertising or promotion. For purposes of calculating Net Sales, the
price of Licensed Products sold by Licensee to persons or companies related
to Licensee by ownership, control, or affiliation shall be deemed to be
Licensee's then current list price for such Licensed Products or the price
then charged to unrelated parties in arms length transactions for such
products in similar quantities and under similar terms of sale, whichever
is lower. Net Sales shall not include sales to St. Xxxx, St. Xxxx boutiques
or St. Xxxx outlets pursuant to Section 10.7 and no Sales Royalty shall be
paid in respect of such sales. A sale of Licensed Products shall be deemed
made when the Licensed Products are invoiced, shipped or paid for,
whichever is first to occur.
4.3 Except as provided in Schedule A hereto, the Sales Royalty
hereunder shall be due and paid quarterly within thirty (30) days after the
last day of each Quarterly Period during the term of this Agreement (or
portion thereof in the event of prior termination for any reason) in which
the sales on which they are based are made. The Sales Royalty payable for
each Quarterly Period during each shall be computed on the basis of Net
Sales during such Quarterly Period, with a credit for any Guaranteed
Minimum Royalty and any Sales Royalty payments theretofore made to St. Xxxx
for said Quarterly Period.
4.4 Except as specifically set forth in Section 4.1, no payment of
Sales Royalty or Guaranteed Minimum Royalty for any Annual Period shall be
credited against the Sales Royalty or Guaranteed Minimum Royalty due to St.
Xxxx for any other Annual Period.
4.5 If Licensee shall fail to make any of the payments due St. Xxxx
hereunder as and when due, in addition to any other rights or remedies St.
Xxxx xxx have under this Agreement or otherwise at law or in equity, St.
Xxxx shall have the right to give Licensee written notice specifying the
default, and if Licensee shall fail to make the overdue payments to St.
Xxxx within ten (10) days after the giving of such notice, unless Licensee
shall contest such payments in good faith in which event such disputed
amount shall be placed in an interest bearing escrow account pending
resolution of such disputes and such ten day period shall commence at the
conclusion of such contest, then (a) all payments of the Guaranteed Minimum
Royalty for the entire then current Quarterly Period, to the extent not
theretofore paid, shall immediately become due and payable to St. Xxxx and
(b) the Licensee's right to use the Licensed Trademarks shall be
immediately terminated.
4.6 In addition to any other rights or remedies St. Xxxx xxx have
under this Agreement or otherwise at law or in equity, if Licensee fails to
make any payment due hereunder, Licensee shall pay interest on the unpaid
balance thereof from and including the date such payment becomes due until
the date the entire amount is paid in full at a rate equal to the lesser
of: (i) the per annum rate equal to the prime rate being charged in Los
Angeles, California by Union Bank as of the close of business on the date
the payment first becomes due plus three percent (3%), or (ii) the maximum
rate permitted by applicable law.
5. Sales Statement
---------------
5.1 Licensee shall deliver to St. Xxxx at the time each Sales Royalty
payment is due, a statement certified by a duly authorized officer of
Licensee as accurate, indicating, by month and by outlet or customer, the
number and invoice price of all Licensed Products shipped or sold
(whichever occurs first) during the period covered by such Sales Royalty
payment, the amount of discounts and credits from gross sales which may be
deducted therefrom, a computation of the amount of Sales Royalty payable
hereunder for said period, and such other information as St. Xxxx xxx
reasonably request from time to time. Such statement shall be furnished to
St. Xxxx whether or not any Licensed Products have been sold during the
period for which such statement is due. Together with each such statement,
Licensee shall deliver to St. Xxxx a copy of Licensee's then current
customer list for Licensed Products.
5.2 Licensee shall deliver to St. Xxxx, not later than forty-five (45)
days after the close of each Annual Period (or portion thereof in the event
of prior termination for any reason), a statement certified by its chief
executive or financial officer relating to said entire Annual Period,
setting forth the same information required to be submitted by Licensee in
accordance with Section 5.1 above and also setting forth, with respect to
the advertising and promotion of Licensed Products, the total amount
expended by Licensee therefor during such Annual Period, including and
stating separately those amounts paid for cooperative, trade and national
consumer media advertisements. Receipt, negotiation or acceptance by St.
Xxxx of any of the statements furnished, or of any sums paid to St. Xxxx,
pursuant to this Agreement will not preclude St. Xxxx from questioning
their correctness.
6. Books and Records; Audits; Financial Statements
-----------------------------------------------
6.1 Licensee shall prepare and maintain, in accordance with generally
accepted accounting practices consistently applied, separate complete true
and accurate books of account and records (specifically including, without
limitation, the originals or copies of documents supporting entries in the
books of account) covering all transactions relating to this Agreement,
which books and records shall be kept and maintained so as to enable and
facilitate verification of the payments due St. Xxxx under this Agreement
and shall reflect all sales and shipments of Licensed Products, all
deducted amounts that are authorized hereunder, all advertising related to
the Licensed Products, and the amount of the Sales Royalty payable to St.
Xxxx hereunder ("Licensee Records").
6.2 St. Xxxx and its duly authorized representatives shall have the
right, during regular business hours, for the duration of this Agreement
and for three (3) years thereafter, to audit the Licensee Records and
examine all other documents and material in the possession or under the
control of Licensee with respect to the subject matter and the terms of
this Agreement, including, without limitation, invoices, credits and
shipping documents. All such books of account, records and documents shall
be kept available by Licensee for at least three (3) years after the end of
the Annual Period to which they relate. If, as a result of any audit of
Licensee's books and records, it is shown that Licensee's payments to St.
Xxxx were less than the amount which should have been paid pursuant to the
terms of this Agreement ("Discrepancy"), then Licensee shall pay St. Xxxx,
within five (5) days of St. John's notice to Licensee of such Discrepancy,
any and all payments required to be made to eliminate any Discrepancy
revealed by said audit. If the Discrepancy is in an amount equal to or
greater than seven and one-half percent (7.5%) of the amount actually paid
with respect to sales occurring during the quarterly period in question,
Licensee shall promptly reimburse St. Xxxx for the reasonable cost of such
audit. Except as reasonably required to enforce its rights and remedies
under this Agreement, St. Xxxx will not disclose to a third party the
Licensee Records obtained by St. Xxxx pursuant hereto; provided, however,
that St. Xxxx will have no such obligation with respect to information
which: (i) is in the public domain or otherwise publicly disclosed by
Licensee, (ii) St. Xxxx obtained from a third party that St. Xxxx
reasonably believed was not under an obligation of confidentiality with
respect to such information, (iii) is disclosed by Licensee to a third
party without confidentiality obligations, or (iv) is otherwise
independently derived by St. Xxxx.
6.3 Provided that an audited financial statements are prepared for any
fiscal year of Licensee during the Term hereof, Licensee shall deliver to
St. Xxxx such audited financial statements of Licensee within 12 weeks of
the end of each fiscal year of Licensee, otherwise Licensee shall deliver
to St. Xxxx un-audited financial statements of Licensee within 12 weeks of
the end of each fiscal year of Licensee.
7. Design Services
---------------
7.1 From time to time during each Annual Period, St. Xxxx xxx prepare
and deliver to Licensee ideas, sketches and other materials for Licensed
Products ("St. Xxxx Product Ideas"). St. Xxxx Product Ideas may, in
Licensee's sole discretion, be used by Licensee on a non-exclusive basis,
solely in connection with the manufacture, distribution and sale of
Licensed Products in the Territory and pursuant to this Agreement. If
Licensee does not notify St. Xxxx of Licensee's intent to use such St. Xxxx
Product Ideas within forty-five (45) days of Licensee's receipt thereof,
thereafter immediately commence and continue to take commercially
reasonable steps toward the manufacture of Licensed Products based on such
St. Xxxx Product Ideas and actually commence use of such St. Xxxx Product
Ideas (by manufacturing Licensed Products based thereon) within eighteen
(18) months of Licensee's receipt thereof, then Licensee shall return the
St. Xxxx Product Ideas to St. Xxxx, at Licensee's expense, and may not use
them or permit their use thereafter. Whether or not Licensee chooses to use
any St. Xxxx Product Ideas, subject to the rights of Licensee as set forth
in this Agreement, St. Xxxx xxx use and permit others to use them in any
manner it desires. St. Xxxx shall at all times retain ownership of any and
all intellectual property rights related to St. Xxxx Product Ideas and
Licensee shall keep all information related to the St. Xxxx Product Ideas
confidential and shall not disclose such information to any party without
the prior written consent of St. Xxxx in each instance; provided, however,
that Licensee shall have no such obligation with respect to information
which (i) is in the public domain or otherwise publicly disclosed by St.
Xxxx, (ii) Licensee obtained from a third party that was not under an
obligation of confidentiality with respect to such information, (iii) is
disclosed by St. Xxxx to a third party without confidentiality obligations,
or (iv) is otherwise independently derived by Licensee and provided further
that Licensee may disclose to the manufacturer of Licensed Products based
upon the St. Xxxx Product Ideas ("SJI Licensed Product Manufacturer") that
portion of the information related to the St. Xxxx Product Ideas that the
SJI Licensed Product Manufacturer has a need to know in connection with
such manufacture, provided that such manufacturer is obligated in writing
to keep such information confidential.
7.2 During each Annual Period, Licensee shall submit to St. Xxxx
materials, designs, sketches, colors, tags, labels and packaging from which
St. Xxxx xxx select those, if any, which St. Xxxx approves for use in
connection with Licensed Products. St. Xxxx xxx, in its sole discretion,
approve or disapprove the materials, designs, sketches, colors, tags,
labels and packaging submitted as aforesaid and shall discuss with Licensee
any modifications or alterations thereof. Licensee shall not use any such
materials, designs, sketches, colors, tags, labels or packaging in
connection with Licensed Products without first obtaining the prior express
written consent of St. Xxxx. Licensee shall, at all times, retain ownership
of any intellectual property to its ideas and designs (excluding the
Licensed Trademarks) provided that such ideas and designs have not been
embodied in a Licensed Product sold in commercial quantities.
7.3 Licensee shall be responsible for making all samples, as well as
for the production of Licensed Products, and Licensee shall bear all costs
in connection therewith.
8. Manufacture of Licensed Products; Quality Control
-------------------------------------------------
In order to protect the goodwill and reputation associated with the
Licensed Trademarks, Licensee covenants and agrees as follows:
8.1 Subject to the other provisions of this Agreement including
Section 14.1, the contents and workmanship of Licensed Products shall be at
all times of quality subject to St. John's approval as set forth herein and
the Licensed Products shall be distributed and sold with packaging and
sales promotion materials appropriate for Licensed Products and subject to
St. John's approval and shall meet all reasonable specifications and
standards therefor which St. Xxxx xxx provide Licensee from time to time.
The Licensed Products shall conform to samples submitted by Licensee and
approved by St. John's. The Licensee shall use all reasonable efforts
expeditiously to submit such samples and St. Xxxx shall use all reasonable
efforts expeditiously to approve or disapprove such samples. Until the
submission and approval of such samples, the contents and workmanship of
Licensed Products shall be commensurate with the quality of other products
being sold under the Licensed Trademark. In the event Licensee and St. Xxxx
do not agree on Design Samples for the initial collection within a
reasonable period following the Effective Date, either party shall have the
option of terminating this Agreement.
8.2 The styles, designs, packaging, contents, workmanship and quality
of all Licensed Products must be approved by St. Xxxx in writing prior to
the distribution or sale thereof.
8.3 Prior to any commercial production, sale or distribution, Licensee
shall submit to St. Xxxx Design Samples of the proposed Licensed Products
and obtain St. John's written approval therefor in accordance herewith.
"Design Samples" shall mean either a sample of a proposed Licensed Product
or a drawing thereof together with manufacturing specifications. "Approved
Design Samples" shall mean Design Samples for which written approval has
been given by a duly authorized officer or employee of St. Xxxx, setting
forth those Design Samples approved by St. Xxxx for inclusion in the
collection as Licensed Products. In the event that St. Xxxx rejects any
particular Design Sample, Licensee shall either modify the rejected Design
Sample and obtain St. John's written approval therefor in accordance
herewith, or abandon commercial production, sale or distribution, of such
Design Sample as Licensed Product hereunder ("Abandoned Design Samples").
St. Xxxx will not disclose to a third party any information identified in
writing by Licensee as confidential trade secret information related to the
Abandoned Design Samples obtained by St. Xxxx pursuant hereto; provided,
however, that St. Xxxx will have no such obligation with respect to any
such information which: (i) is in the public domain or otherwise publicly
disclosed by Licensee, (ii) St. Xxxx obtained from a third party that was
not under an obligation of confidentiality with respect to such
information, (iii) is disclosed by Licensee to a third party without
confidentiality obligations, or (iv) is otherwise independently derived by
St. Xxxx.
8.4 Before selling or distributing any Licensed Product, Licensee
shall promptly submit to St. Xxxx, without cost to St. Xxxx, for St. John's
inspection, samples of each of the Licensed Products from the first
production run which shall conform in all material respects with the
Approved Design Samples previously approved (including all color samples,
tags, labeling and packaging therefor) ("Production Sample(s)"). If St.
Xxxx notifies Licensee that such Production Sample(s) do not conform in all
material respects to the Approved Design Sample(s), Licensee will cease to
sell, offer to sell, use or show the Licensed Products represented by such
sample(s) to the trade or public.
8.5 In addition, upon St. John's request, Licensee shall furnish to
St. Xxxx, without cost to St. Xxxx, samples of Licensed Products (including
all tags, labeling and packaging therefor) from Licensee's then current
regular production runs of Licensed Products so that St. Xxxx xxx assure
itself of the maintenance of the quality standards set forth herein.
8.6 The Licensed Products manufactured and sold pursuant to this
Agreement shall adhere strictly to the Approved Design Samples in all
material respects, including without limitation, materials, color,
workmanship, designs, dimensions, styling, detail and quality. In no event
shall any change thereto be made without the prior written consent of St.
Xxxx, subject to the constraints of normal manufacturing processes.
8.7 Subject to the provisions of this Agreement including Section
14.1, the quality, construction, workmanship, styling and materials of the
Licensed Products shown, offered for sale or sold to the trade or public
shall conform in all material respects to the quality, construction,
workmanship, styling and materials of Production Sample(s) thereof approved
by St. Xxxx, and in no event may such quality, construction, workmanship,
styling or materials be materially inferior to the originally submitted
samples of the Licensed Products.
8.8 Without limiting any other provision of this Agreement, all
Licensed Products shall comply with and be manufactured, sold, labeled,
packaged, distributed and advertised in accordance with, all applicable
laws and regulations and shall be at least equal in quality to the samples
approved by St. Xxxx.
8.9 St. Xxxx and its duly authorized representatives shall have the
right, at St. John's expense, upon reasonable advance notice and during
normal business hours, to examine Licensed Products in the process of being
manufactured and to inspect all facilities utilized by Licensee in
connection therewith.
8.10 In order to maintain the reputation, image and prestige of the
Licensed Trademarks, Licensee's distribution patterns shall consist of
those retail outlets whose location, merchandising and overall operations
are consistent with the high quality of Licensed Products and the
reputation, image and prestige of the Licensed Trademarks.
8.11 Licensee may not use a personality or celebrity to endorse or
promote any Licensed Products unless and until St. Xxxx has given Licensee
its specific written approval for such personality or celebrity to endorse
or promote Licensed Products.
8.12 Licensee's policy of sale, distribution and exploitation of the
Licensed Products shall be of high standard and shall in no manner reflect
adversely upon the good name of St. Xxxx or its other licensees or upon the
goodwill and reputation associated with the Licensed Trademarks.
9. Approvals
---------
It is specifically understood and agreed that St. Xxxx=s approval
pursuant to Sections 7 and 8 of this Agreement shall not be unreasonably
withheld. Any sample Licensed Product or other material submitted to St.
Xxxx for its approval which is not disapproved within twenty (20) business
days after St. John's receipt thereof shall be deemed approved for use
hereunder, but only for the use for which approval was sought.
10. Marketing; Promotion; Advertising; Trade shows
----------------------------------------------
10.1 Licensee shall exercise all reasonable efforts to promote,
develop, manufacture, advertise, sell and ship the Licensed Products in
appropriate media throughout the Territory as may be approved by St. Xxxx
and shall continuously and diligently seek to fill all accepted purchase
orders for Licensed Products and procure and maintain facilities and
trained personnel sufficient and adequate to accomplish the foregoing. A
cessation of the foregoing efforts for a continuous period of ninety (90)
days shall be grounds for immediate termination of this Agreement at St.
John's option effective upon written notice to Licensee.
10.2 During each Annual Period throughout the Term of this Agreement,
Licensee shall, at such trade shows related to products similar to the
Licensed Products (as reasonably determined by Licensee), maintain a
separate section in Licensee's trade show booth exclusively for the display
of finished Licensed Products. Said trade show booth shall be staffed and
maintained in a manner commensurate with the reputation and prestige of the
Licensed Trademarks as a designation for highest quality Licensed Products.
In fulfilling its obligations hereunder, Licensee shall engage such sales
representatives and other personnel as will, in a commercially reasonable
manner, maximize sales of Licensed Products and where appropriate shall
display the Licensed Products at merchandise marts and trade shows.
10.3 During each Annual Period during the Term, Licensee shall expend
(including expenditures in connection with cooperative advertising
programs), for advertising of the Licensed Products featuring the Licensed
Trademarks, a sum equal to or greater than ten percent (10%) of the Net
Sales of all Licensed Products during that Annual Period ("Annual
Advertising Minimum"); provided, however, that if Licensee expends less
than the Annual Advertising Minimum in any given Annual Period, Licensee
may must make up such shortfall in the immediately following Annual Period.
The advertising may be in the form of consumer, cooperative or trade
advertising. St. Xxxx has the right to pre-approve all of the advertising
materials in order to verify proper use and attribution regarding the
Licensed Trademarks. Licensee will submit to St. Xxxx a quarterly statement
of advertising expenditures together with the quarterly sales statement
required by Section 5.1 hereof. St. Xxxx has the right to audit all
advertising expenditure records.
10.4 Licensee agrees to provide St. Xxxx with written descriptions of
its marketing and distribution programs in such detail as may be reasonably
requested from time to time by St. Xxxx xxxxx to their implementation and
as they may be modified from time to time. Licensee shall not proceed with
such marketing and distribution programs without the prior written approval
of St. Xxxx, which approval shall not be unreasonably withheld.
10.5 Nothing in this Agreement shall be deemed to obligate Licensee to
control the price at which its customers may sell the Licensed Products.
10.6 Subject to the following terms and conditions, Licensee shall
have the right, in its sole discretion, to utilize the modeling services of
Xx.Xxxxx Xxxx in advertising of the Licensed Products up to a maximum of
two (2) days per Annual Period at such times and places as are mutually
agreeable to Licensee and Xx.Xxxx. Licensee shall pay to St. Xxxx a fee of
$12,500 for each day it utilizes Xx. Xxxx'x services pursuant hereto.
Licensee shall have the right to utilize the modeling services of Xx. Xxxx,
her name and likeness and the materials related thereto, including without
limitation the photographs and related advertising copy ("Xx. Xxxx
Campaign") only if: (a) Licensee uses the advertising agency selected by
St. Xxxx, in its sole discretion, including, without limitation, St. John's
own in-house advertising agency ("Designated Agency"), (b) Licensee uses
the Designated Agency for any and all services related to the Xx. Xxxx
Campaign including, without limitation, selection and control of, the
photographer, staff, photographs used (and the manner of such use) and the
associated advertising copy, and (c) Xx. Xxxx is given complete control and
discretion with regard to all aspects of the use of her name and likeness
including, without limitation, with regard to selection and control of, the
photographer, staff, photographs used (and the manner of such use), and the
associated advertising copy. Any use of the name or likeness of Xx. Xxxx
other than as specifically set forth in this Section 10.6 shall constitute
a material breach of this Agreement and, in addition to any other remedies
available to St. Xxxx or Xx. Xxxx at law or in equity, this Agreement shall
be subject to immediate termination by St. Xxxx in its sole discretion,
effective upon written notice to Licensee of such termination.
10.7 Licensee agrees to sell to St. Xxxx such reasonable quantity of
Licensed Products as St. Xxxx shall request at such prices and upon such
terms as are mutually agreed between the parties.
11. The Licensed Trademarks
-----------------------
11.1 Licensee acknowledges and agrees that Licensee shall acquire no
ownership rights to any of the Licensed Trademarks by virtue of this
Agreement or otherwise and that all uses by Licensee of the Licensed
Trademarks and any and all goodwill related thereto shall inure to the
benefit of St. Xxxx. Licensee shall not, at any time, do or suffer to be
done any act or thing which may in any way adversely affect the validity of
any Licensed Trademark, any rights of St. Xxxx in and to any Licensed
Trademark or any registrations thereof or which, directly or indirectly,
may reduce the value of the Licensed Trademark or detract from its
reputation.
11.2 Licensee shall not use the Licensed Trademarks, in whole or in
part, as a corporate name or trade name. Licensee shall not join any name
or names with the Licensed Trademarks so as to form a new xxxx or for any
other purpose or use. Licensee shall not use any name or names in
connection with the Licensed Trademarks in advertising, publicity,
labeling, packaging or printed matter of any kind utilized by Licensee in
connection with Licensed Products, unless and until St. Xxxx consents
thereto in writing.
11.3 At St. John's request, Licensee shall execute any and all
documents reasonably required by St. Xxxx to confirm St. John's ownership
of all rights in and to the Licensed Trademarks and the respective rights
of St. Xxxx and Licensee pursuant to this Agreement. Licensee shall
cooperate with St. Xxxx in connection with the filing and prosecution by
St. Xxxx of applications in St. John's name to register the Licensed
Trademarks for Licensed Products and the maintenance and renewal of such
registrations as may issue.
11.4 Licensee shall use the Licensed Trademarks in the Territory
strictly in compliance with the legal requirements obtaining therein and
shall use such markings in connection therewith as may be required by
applicable legal provisions. Licensee shall use and display the Licensed
Trademarks only in such form and manner as are specifically approved in
writing by St. Xxxx. Licensee shall cause to appear such legends, markings
and notices as St. Xxxx xxx request, including, without limitation, the
appropriate trademark or service xxxx notice, either "TM", "SM", or (R) as
may be reasonably necessary in order to give appropriate notice of any
trademark, service xxxx or other rights therein or pertaining thereto, on
all Licensed Products produced hereunder, and on their tags, packaging and
the like, and on all advertising, promotional and publicity material used
by Licensee in connection therewith including, without limitation,
point-of-sale displays and similar materials, and on any printed matter of
any kind on which Licensee elects to have the Licensed Trademarks appear,
including, but not limited to, business cards, invoices, order forms and
stationery. Before using or releasing any such material, Licensee shall
submit to St. Xxxx, and obtain St. John's prior written approval for, any
and all proposed advertising, promotional and publicity copy, finished
artwork for tags, labels, packaging and the like and all materials or
formats of any kind on which the Licensed Trademarks appear. After any
sample, copy, artwork or other material has been approved, Licensee shall
not depart therefrom in any substantial respect without the prior written
approval of St. Xxxx. If St. Xxxx should disapprove any sample Licensed
Product or any sample tag, label, packaging or the like, or any
advertising, promotional or publicity material, Licensee shall neither use
nor permit the same to be used in any manner in connection with Licensed
Products.
11.5 Licensee shall not, during the Term or at any time thereafter,
directly or indirectly, contest or aid others in contesting the ownership
of the Licensed Trademarks or the validity of said trademarks.
11.6 In the event that Licensee learns of any infringement, act of
unfair competition by third parties or imitation of the Licensed Trademarks
or of any use by any person of a trademark similar to any Licensed
Trademark, it shall promptly notify St. Xxxx thereof. St. Xxxx thereupon
may take such action as it deems advisable for the protection of its rights
in and to the Licensed Trademarks and, if requested to do so by St. Xxxx,
Licensee shall cooperate with St. Xxxx in all respects at St. John's sole
expense, including without limitation by being a plaintiff or co-plaintiff
and by causing its officers to execute pleadings and other necessary
documents and to causing its officers and employees to devote appropriate
time to litigation and/or disposition of all matters within the purview of
this Section 11.6; it is understood that Licensee's officers and employees
will not be compensated for their time and effort. St. Xxxx shall take such
action but only such action as is commercially reasonable to protect its
and Licensee's rights in and to the Licensed Trademarks. Licensee shall
have no right to take any action with respect to the Licensed Trademarks
without St. John's prior written approval. St. Xxxx shall have full control
over any action taken, including without limitation, the right to select
counsel, to settle on any terms it deems advisable in its discretion, to
appeal any adverse decision rendered in any court, to discontinue any
action taken by it, and otherwise to make any decision in respect thereto
as it in its discretion deems advisable. If Licensee desires to retain its
own counsel, it shall do so at its own expense. Any recovery as a result of
such action shall belong solely to St. Xxxx.
11.7 Licensee agrees that it shall not, during the Term or thereafter,
register or apply to register any of the Licensed Trademarks or any
trademarks or logos similar thereto anywhere in the world. Without limiting
the foregoing, upon and after the expiration or termination of this
Agreement, Licensee, upon St. John's request, shall execute such documents
as may be necessary to further confirm St. John's rights in the Licensed
Trademarks.
11.8 Licensee shall use in connection with the Licensed Trademarks and
their packaging and advertising such trademark and copyright notices as
shall be required by St. Xxxx. Insofar as any packaging and advertising
material is not created by Licensee, Licensee shall execute such
assignments of copyright as St. Xxxx shall reasonably require.
Notwithstanding the foregoing sentence, Licensee's existing copyrights,
trademarks and other proprietary rights incorporated into such artwork
shall remain the property of Licensee and shall not be assigned to St. Xxxx
and shall not be subject to St. John's use, without Licensee's prior
written consent.
11.9 Other than the Licensed Products, Licensee shall not, during the
Term or at any time thereafter, directly or indirectly, market or sell any
product which is of such a design as to be associated by consumers with St.
Xxxx.
12. Copyright
---------
Any copyright which may be created in any materials provided by St.
Xxxx hereunder including, without limitation, any sketch, design,
packaging, label, tag or the like designed or approved by St. Xxxx shall be
the property of St. Xxxx. Licensee shall not, at any time, do or suffer to
be done any act or thing which may adversely affect any rights of St. Xxxx
in such sketches, designs, packaging, labels, tags and the like, including,
without limitation, disclosing such information or filing any application
in Licensee's name to record any claims to copyrights in Licensed Products,
and Licensee shall do all things reasonably required by St. Xxxx to
preserve and protect said rights, including, without limitation, placing
the copyright notice on all Licensed Products and the packaging, labels and
tags therefor.
13. Indemnity; Insurance
--------------------
13.1 Licensee hereby indemnifies, saves and holds St. Xxxx harmless
from and against any and all liabilities, losses, damages and expenses
(including reasonable attorneys' fees and expenses) arising out of or
resulting from: (i) any act or omission that may be committed or suffered
by Licensee or any of its servants, agents or employees in connection with
Licensee's performance of this Agreement, (ii) any actual or alleged
defects in any of the Licensed Products or other claim related to any of
the Licensed Products, (iii) any actual or alleged infringement or
violation of any patents, copyrights, trademarks (other than those arising
from the use of the Licensed Trademarks as permitted hereunder) or other
rights, including trade secrets and rights of privacy and publicity, in
connection with the manufacture, distribution, sale, use, advertisement or
promotion of any of the Licensed Products, (iv) Licensee's false or
misleading advertising in connection with any of the Licensed Products, (v)
any violation of any applicable law or regulation in connection with the
manufacture, marketing, distribution, sale, advertisement or promotion of
any of the Licensed Products, (vi) any use of any of the Licensed
Trademarks in a manner not authorized by this Agreement, or (vii) any
breach of this Agreement by Licensee. Subject to the provisions of this
Agreement, St. Xxxx will promptly notify Licensee of any claim covered by
indemnification contained in this Section 13.1. Upon receipt of such
notification, Licensee shall notify St. Xxxx whether Licensee deems such
claim to be within the ambit of this Section 13.1. If Licensee replies in
the affirmative, Licensee shall defend such claim at its expense by counsel
reasonably selected by Licensee. If Licensee shall fail to respond to such
notice within 10 days or if Licensee shall respond to such notice by
denying that such claim is within the ambit of this Section 13.1, St. Xxxx
xxx defend such claim by counsel reasonably selected by St. Xxxx without
waiving St. John's rights to indemnification, if any, pursuant to this
Section 13.1. Notwithstanding anything to the contrary herein contained,
the indemnification provided by this Section 13.1 shall not apply to claims
related to the use of Licensed Trademarks as permitted hereunder nor to
claims by St. Xxxx against Licensee for violation of this Agreement.
Notwithstanding any provision hereof, Licensee shall not be liable for
damages to St. Xxxx hereunder to the extent that such damages result from
St. John's failure to promptly notify Licensee of claims or actions.
Notwithstanding any provision hereof, regarding any claim under Section
13.1(iii) involving actual or alleged infringement or violation of the
Licensed Trademarks (other than claims between the parties hereto), the
parties shall jointly control the defense of such claim, both parties shall
cooperate in good faith in connection with such defense and each pay one
half of the legal fees incurred in connection with the defense of such
claims; provided, however, that at any time St. Xxxx xxx take control of
the defense of such claim provided that St. Xxxx waives Licensees
obligation to indemnify it under Section 13.1(iii). In the event that a
recall of any Licensed Products is required, ordered or recommended by any
court or government agency or any applicable law or regulation, for any
reason, Licensee shall comply with such requirement, order or
recommendation and shall bear all the expenses thereof. Licensee shall
promptly notify St. Xxxx of any claim which may be made against Licensee
arising out of Licensee's use of the Licensed Trademarks. The provisions of
this Section and Licensee's obligations hereunder shall survive the
expiration or termination of this Agreement.
13.2 Before selling or shipping any Licensed Products, Licensee shall
procure and maintain at its own expense in full force and effect at all
times during which Licensed Products are being sold, with a reputable
insurance carrier reasonably acceptable to St. Xxxx, a public liability
insurance policy to protect and insure St. Xxxx and Licensee against any
claims or liabilities with which it or they may be charged because of
personal or property damage or injuries suffered by any person or entity,
resulting from the Licensed Products or the manufacture, use or sale
thereof, whether during the Term or thereafter including, without
limitation, product liability coverage with respect to Licensed Products,
as well as contractual liability coverage with respect to this Agreement,
with a limit of liability of not less than $2,000,000 (U.S.) (combined
single limit) ("Insurance Minimum"); provided, however, that such Insurance
Minimum shall be increased at the end of each Annual Period throughout the
Term to an amount equal to the Insurance Minimum for the immediately
preceding Annual Period ("Previous Year Insurance Minimum") plus an amount
equal to the CPI Index Factor (as defined below) times the Previous Year
Insurance Minimum. For purposes of this Agreement the "CPI Index Factor"
shall be equal to the percentage difference between and the Consumer Price
Index for All Urban Consumers -- All Items for the immediately preceding
Annual Period and the Consumer Price Index for All Urban Consumers -- All
Items for the next most recent Annual Period. Such insurance policy shall
be written for the benefit of both Licensee and St. Xxxx (St. Xxxx shall be
named in the policy as a named insured) and shall provide for at least
thirty (30) days prior written notice to said parties of the cancellation
or substantial modification thereof. Such insurance may be obtained by
Licensee in conjunction with a policy of product liability insurance which
covers products other than Licensed Products. Licensee shall maintain such
insurance in full force and effect throughout the Term and for at least two
(2) years after the latter of, the termination of this Agreement, or
Licensee's last sale of product bearing the Licensed Trademark. Within ten
(10) days after the date this Agreement is executed and on the first day of
each Annual Period thereafter, Licensee shall deliver to St. Xxxx a
certificate of insurance evidencing that such insurance is in full force
and effect and that it cannot be canceled or substantially modified without
the insurer giving St. Xxxx written notice thereof at least thirty (30)
days prior to the effective date of the cancellation or modification. The
insurance described in this Section 13.2 is understood to be primary and is
not subject to contribution by any other insurance which may be available
to St. Xxxx. Nothing contained in this Section 13.2 shall be deemed to
limit in any way the indemnification provisions of Section 13.1 above.
13.3 Subject to any other provision of this Agreement including
Sections 20.10 and 20.11, St. Xxxx hereby indemnifies, saves and holds
Licensee harmless from and against any and all liabilities, losses, damages
and expenses (including reasonable attorneys' fees and expenses) arising
out of or resulting from any actual or alleged infringement or violation of
any trademarks or any patents or copyrights provided by St. Xxxx under this
Agreement arising out of Licensee's use of the Licensed Trademarks as
permitted hereunder. Licensee will promptly notify St. Xxxx of any claim
covered by indemnification contained in this Section 13.3. Upon receipt of
such notification, St. Xxxx shall notify Licensee whether St. Xxxx xxxxx
such claim to be within the ambit of this Section 13.3. If St. Xxxx replies
in the affirmative, St. Xxxx shall defend such claim at its expense by
counsel reasonably selected by St. Xxxx. If St. Xxxx shall fail to respond
to such notice within 10 days or if St. Xxxx shall respond to such notice
by denying that such claim is within the ambit of this Section 13.3,
Licensee may defend such claim by counsel reasonably selected by Licensee
without waiving Licensee's rights to indemnification, if any, pursuant to
this Section 13.3. Notwithstanding any provision hereof, St. Xxxx shall not
be liable for damages to Licensee hereunder to the extent that such damages
result from Licensee's failure to promptly notify St. Xxxx of claims or
actions. Should the Licensed Trademarks become the subject of a trademark
infringement claim or action ("Trademark Infringement Claim") then St. Xxxx
xxx, at St. John's option, terminate Licensee's right to use the Licensed
Trademarks in the manner alleged in the Trademark Infringement Claim;
provided, however, that only if (i) Licensee no longer has the exclusive
right to use the Licensed Trademarks or the Licensed Products within the
United States, (ii) Licensee is enjoined from using the Licensed Trademarks
or the Licensed Products in the United States, or (iii) St. Xxxx terminates
Licensee's right to use the Licensed Trademarks in the United States
pursuant to this section, Licensee shall have the option to terminate this
Agreement by written notice to St. Xxxx, effective upon receipt and St.
Xxxx will purchase inventory of Licensed Products allocated to such market
at Licensee's cost ("Market Inventory Purchase") and such Market Inventory
Purchase constitutes the parties best estimate of the total damages to
Licensee and shall constitute liquidated damages and Licensee waives any
other claim at law or in equity related thereto. In the event of the
purchase of inventory by St. Xxxx from Licensee pursuant to this or any
other section of this Agreement, Licensee hereby consents to the
advertising, distribution and sale of such inventory by St. Xxxx.
14. Default and Termination
-----------------------
14.1 If Licensee shall at any time breach or be in default of any of
the assignment provisions, insurance provisions, indemnification
provisions, royalty payment provisions or the royalty reporting provisions
of this Agreement and such breach or default is not remedied within fifteen
(15) days after St. Xxxx has given Licensee written notice of such breach
or default, St. Xxxx xxx, at its sole election and in addition to and
without prejudice to any other rights or remedies it may have at law or in
equity, terminate this Agreement by giving written notice of termination to
Licensee, and such termination shall be effective upon giving of such
notice of termination. If Licensee shall at any time materially breach or
be in material default of any other provision of this Agreement (including
the quality control provisions), and such breach or default is not remedied
by Licensee to St. John's satisfaction within thirty (30) days after St.
Xxxx has given Licensee written notice of such breach or default or,
Licensee has not taken commercially reasonable steps to remedy such breach
or default within twenty (20) days after St. Xxxx has given Licensee
written notice of such breach or default and such efforts to remedy such
breach or default to St. John's satisfaction are not completed within forty
(40) days of the commencement of such commercially reasonable steps then,
St. Xxxx xxx, at its sole election and in addition to and without prejudice
to any rights or remedies it may have at law or in equity, terminate this
Agreement by giving written notice of termination to Licensee, and such
termination shall be effective upon giving such notice of termination;
provided, however, that Licensee shall not be deemed in breach of this
Agreement if the majority of a particular Licensed Product model ("Epidemic
Product") experiences an identical defect ("Epidemic Defect") provided that
Licensee: (i) immediately notifies St. Xxxx of such Epidemic Defect in
writing ("Epidemic Defect Notice"), (ii) immediately stops shipping such
Epidemic Product, (iii) within three (3) months of the Epidemic Defect
Notice, institutes a recall program covering all Epidemic Product wherein
Licensee offers to Defective Product purchasers at least one of the
following (at Licensee's option) to repair the Defective Product, to
replace the Defective Product or to provide a refund of the purchase price
of the Defective Product, and provided further that no more than one
Epidemic Defect occurs within any five (5) year period during the Term.
14.2 (a) In the event that Licensee files a petition in bankruptcy, is
adjudicated a bankrupt or files a petition or otherwise seeks relief under
or pursuant to any bankruptcy, insolvency or reorganization statute or
proceeding, or if a petition in bankruptcy is filed against it or it
becomes insolvent or makes an assignment for the benefit of its creditors
or a custodian, receiver or trustee is appointed for it or a substantial
portion of its business or assets and such petition is not dismissed within
forty-five (45) days of the filing of such petition, this Agreement shall
terminate automatically and forthwith.
(b) No assignee for the benefit of creditors, custodian, receiver,
trustee in bankruptcy, sheriff or any other officer of the court or
official charged with taking over custody of Licensee's assets or business
shall have any right to continue this Agreement or to exploit or in any way
use the Licensed Trademarks.
(c) As provided in Section 18 hereof, the Licensee's performance under
this contract is personal in nature and St. Xxxx is excused from accepting
the performance of a party other than the Licensee. The parties agree that
this Agreement is a nonassignable contract under section 365(c) of the
Bankruptcy Code, or any amendment or successor thereto (the "Bankruptcy
Code"). Further, in the event the Licensee is a debtor under the Bankruptcy
Code and this Agreement has not been terminated, the parties agree that
adequate protection of St. John's interest in this Agreement and any use of
the Licensed Trademarks by Licensee requires that Licensee comply with all
of the terms of this Agreement, including, without limitation, timely
making the royalty payments under Section 4 and maintaining the quality of
the Licensed Products as required under Section 8.
14.3 If Net Sales for any Annual Period do not equal or exceed the
Minimum Net Sales specified for such Annual Period in the Minimum Net Sales
Table (or as otherwise determined pursuant to Section 2 hereof), St. Xxxx
xxx, at its option, terminate this Agreement by giving Licensee written
notice and such termination shall be effective upon the giving of such
notice of termination.
14.4 No failure or delay on the part of either party to exercise its
right of termination hereunder for any one or more causes shall be
considered to prejudice its rights of termination for such or for any other
or subsequent cause. Termination or expiration of this Agreement for any
reason whatsoever shall not relieve the parties from their respective
obligations arising hereunder prior to such termination or expiration. The
termination rights set forth in this Section 14 are in addition to and
without prejudice to any other rights or remedies St. Xxxx xxx have at law
or in equity.
14.5 In the event the representation and warranty of St. Xxxx set
forth in Section 17.1 hereof shall be in any material respect untrue in the
Territory, Licensee shall have the right and option upon written notice to
St. Xxxx to terminate this Agreement.
15. Rights on Expiration or Termination
-----------------------------------
15.1 In the event of termination in accordance with Section 14 above,
in addition to any other rights or remedies St. Xxxx xxx have under this
Agreement or otherwise at law or in equity, Licensee shall pay to St. Xxxx:
(i) any Sales Royalty then owed to it pursuant to Section 4 above or
otherwise, (ii) any Guaranteed Minimum Royalty then owed to it pursuant to
Section 3 above, and (iii) an amount equal to any other actual damages St.
Xxxx xxx have suffered on account of such termination or the acts or
omissions from which it resulted.
15.2 Notwithstanding any termination in accordance with Section 14
above, St. Xxxx shall have and hereby reserves all rights and remedies
which it has, or which are granted to it by operation of law or in equity,
to enjoin the unlawful or unauthorized use of the Licensed Trademarks (any
of which injunctive relief may be sought in the courts, and also may be
sought, prior to or in lieu of termination), to collect royalties payable
by Licensee pursuant to this Agreement and to be compensated for damages
for breach of this Agreement. In addition, nothing herein shall be deemed
to prevent a party from bringing an action for damages either prior to or
in lieu of termination if a default in performance by the other party
occurs and is not cured timely in accordance with the provisions of Section
14 above. The parties acknowledge that Licensee's unauthorized use of the
Licensed Trademarks will give rise to irreparable injury to St. Xxxx,
inadequately compensable in damages. Accordingly, in addition to any other
remedies which may be available to St. Xxxx at law or in equity, St. Xxxx
shall be entitled to preliminary and permanent injunctive relief against
such breach or threatened breach without the necessity of proving actual
damages or that monetary damages would be inadequate.
15.3 Upon the expiration or termination of this Agreement, Licensee
shall immediately deliver to St. Xxxx a complete and accurate schedule of
Licensee's inventory of Licensed Products and of related work in process
then on hand ("Inventory"). Such schedule shall be prepared as of the close
of business on the date of such expiration or termination and shall reflect
Licensee's cost of each such item. St. Xxxx thereupon shall have the
option, exercisable by notice in writing delivered to Licensee within
thirty (30) days after its receipt of the complete Inventory schedule, to
purchase any or all of the Inventory for an amount equal to the cost to
Licensee of the Inventory (less any discounts, rebates or other incentives)
being purchased. In the event such notice is sent by St. Xxxx, Licensee
shall deliver to St. Xxxx or its designee all of the Inventory referred to
therein within ten (10) days after St. John's said notice against payment
of the purchase price therefore. St. Xxxx shall pay Licensee for such
Inventory as is in marketable condition within sixty (60) days after its
receipt thereof. Notwithstanding anything to the contrary herein, in the
event that St. Xxxx notifies Licensee of its desire to purchase any of the
Inventory pursuant to this Section, such notice shall apply only to that
portion of the Inventory remaining on the date said notice is received by
Licensee.
15.4 If this Agreement expires or is terminated other than pursuant to
Section 14.2(a) then, subject to Section 13.3 hereof, (except in case of
termination resulting from Licensed Products or related promotional
materials in violation of Section 8 or Section 11.4) to the extent St. Xxxx
has not exercised its option to purchase Inventory pursuant to Section
15.3, License shall be entitled, for an additional period of twelve (12)
months only, on a non-exclusive basis, to sell and dispose of its
Inventory. Such sales shall be made subject to all of the provisions of
this Agreement (which shall survive the termination of the Agreement)
including, without limitation, the provisions related to the payment of
Sales Royalty and to an accounting for the payment of Sales Royalty
thereon. Such final accounting shall be due within thirty (30) days after
the close of the said twelve (12) month period.
15.5 Except as specifically provided in Section 15.4 above, on the
expiration or termination of this Agreement, all of the rights of Licensee
under this Agreement shall terminate forthwith and shall revert immediately
to St. Xxxx, all Sales Royalties on sales theretofore made shall become
immediately due and payable and Licensee shall discontinue forthwith all
use of the Licensed Trademarks, no longer shall have the right to use the
Licensed Trademarks or any variation or simulation thereof and promptly
shall transfer to St. Xxxx, free of charge, all registrations, filings and
rights with regard to the Licensed Trademarks which it may have possessed
at any time. In addition, Licensee thereupon shall deliver to St. Xxxx,
free of charge, all samples of Licensed Products and all sketches and other
material in its possession which were designed or approved by St. Xxxx and
all labels, tags and other material in its possession with any Licensed
Trademark thereon. After the expiration or termination of this Agreement,
Licensee shall not use, or permit others to use, any of said sketches and
other material used in connection with the Licensed Products without first
obtaining the express written consent of St. Xxxx in each instance.
16. Brokerage Indemnity
-------------------
Each party hereby indemnifies the other against and holds it harmless
from any and all liabilities (including, without limitation, reasonable
attorneys' fees and disbursements paid or incurred in connection with any
such liabilities) for any brokerage commissions or finders' fees in
connection with this Agreement or the transactions contemplated hereby with
respect to any broker retained or allegedly retained by such party.
17. Representations and Warranties
------------------------------
17.1 St. Xxxx represents and warrants that it has full right, power
and authority to enter into this Agreement and to the best of its knowledge
it has full right, power and authority to perform all of its obligations
hereunder. St. Xxxx further represents and warrants that it has granted no
other existing license to use any Licensed Trademark on Licensed Products
in the Territory and to the best of its knowledge no other party is using
the Licensed Trademark on products substantially similar to the Licensed
Products. St. Xxxx represents and warrants that to the best of its
knowledge, no third party has the right to use the Licensed Trademarks on
the Licensed Products in the Territory. St. Xxxx represents and warrants
that to the best of its knowledge no proceedings have been instituted are
pending or threatened which challenge St. John's right to grant Licensee's
the right to use the Licensed Trademarks or the Licensed Products in the
Territory. The foregoing warranties are the entire warranties of St. Xxxx
and St. Xxxx makes no other warranty of any kind, either express or
implied.
17.2 Licensee represents and warrants that it has full right, power
and authority to enter into this Agreement and to perform all of its
obligations hereunder.
18. Assignability; Binding Effect
-----------------------------
18.1 (a) The parties hereto recognize that (i) this Agreement and the
performance of the Licensee hereunder is personal in nature and (ii) St.
Xxxx is relying on the Licensee's reputation and standards for quality and
workmanship and Licensee's creative and design skills in entering into this
Agreement. Therefore, neither this Agreement nor the license or other
rights granted hereunder may be assigned, sublicensed or transferred by
Licensee or by operation of law without the express written consent of St.
Xxxx (which consent may be withheld in the sole and absolute discretion of
St. Xxxx), and any such attempted assignment, sublicense or transfer,
whether by Licensee or by operation of law, directly or indirectly, shall
be void and of no force or effect and shall constitute a material breach of
this Agreement. A "Change in Control" (as defined below) of Licensee is a
prohibited assignment and material breach of this Agreement and all rights
granted hereunder except as otherwise expressly stated in this Section
18.1.
In the event of a "Change in Control" as defined below in
Section 18(b), Licensee shall give St. Xxxx written notice of such "Change
in Control" in accordance with the notice provisions of this Agreement and
addressed to the Chief Executive Officer of St. Xxxx (the "Change in
Control Request"). Within 20 business days of the receipt of such notice,
St. Xxxx shall do one of the following:
(i) Notify Licensee that St. Xxxx consents to the Change in Control
Request;
(ii) Notify Licensee that St. Xxxx does not consent to the Change in
Control Request, provided, however, that St. Xxxx shall not
unreasonably withhold its consent under this Section 18(a)(ii). Any
Change in Control of Licensee without consent under this Section
18(a)(ii) shall be deemed a violative assignment in material breach of
this Agreement; or
(iii)Notify Licensee that St. Xxxx consents to the Change in Control
Request provided, however, that for a period of one year following the
effective date of the Control in Control, St. Xxxx xxx, at its sole
and absolute discretion, terminate this Agreement by giving notice in
accordance with the notice provisions of this Agreement (the
"Termination Notice"). The effective date of any such termination
shall be one year from the date of the Termination Notice.
(b) A "Change in Control" means any of the following:
(i) The acquisition, after the date hereof, by any person, entity, or
group, within the meaning of Section 13(d) or Section 14(d) of the
Securities Exchange Act of 1934 and the rules promulgated thereunder,
of beneficial ownership of 25% or more of the outstanding shares of
the Licensee's common stock or other voting stock; or
(ii) A merger, reorganization, consolidation or other business
combination or similar transaction whereby the stockholders of the
Licensee immediately prior to such approval do not, immediately after
consummation of such merger, reorganization, consolidation or other
business combination or similar transactions own more than 50% percent
of the voting stock of the surviving entity; or
(iii) A liquidation or dissolution of the Licensee or the sale of all
or substantially all of the assets of the Licensee related to its
timepiece business.
(c) Notwithstanding any other provision of this Section 18,
St. Xxxx xxx, at its sole and absolute discretion, terminate this
Agreement in the event that a Change in Control results in a new
licensee under this Agreement which is a competitor of St. Xxxx.
18.2 Except as otherwise provided herein, this Agreement shall inure
to the benefit of and shall be binding upon the parties, their respective
successors, St. John's transferees and assigns and Licensee's permitted
transferees and assigns.
19. Jurisdiction; Attorney's Fees
-----------------------------
19.1 (a) The sole jurisdiction and venue for any Court Action arising
out of this Agreement shall be an appropriate federal or state court in
Orange County, California. Each of St. Xxxx and Licensee hereby irrevocably
submits to the jurisdiction of any of said courts in any Court Action and
hereby waives any claim or defense of inconvenient forum.
(b) Each of St. Xxxx and Licensee represents and warrants that it is
not entitled to immunity from judicial proceedings and agrees that, should
the other bring any Court Action, it will not claim any immunity from such
proceedings for itself or with respect to its property.
19.2 In the event of any action for the breach of this Agreement by
any party, the prevailing party shall be entitled to reasonable attorney's
fees, costs and expenses incurred in such action.
20. Miscellaneous
-------------
20.1 Licensee shall not give away Licensed Products or sell Licensed
Products in connection with any tie-in or promotional campaign primarily
relating to products other than Licensed Products without the prior written
consent of St. Xxxx.
20.2 Notwithstanding anything to the contrary contained in this
Agreement, St. Xxxx shall have the right, exercisable at any time, to
negotiate and enter into agreements with third parties pursuant to which it
may grant a license to use the Licensed Trademarks in connection with the
manufacture, distribution and sale of Licensed Products in the Territory or
provide consultation and design services with respect to Licensed Products
in the Territory, but only if, pursuant to such third party agreements, the
Licensed Products are not shipped prior to the termination of this
Agreement. St. Xxxx shall take reasonable steps to keep confidential any
discussions with third parties pursuant to this section and to obtain
similar agreements from such third parties.
20.3 This Agreement shall be construed and interpreted in accordance
with the laws of the State of California, excluding its choice of law
provisions.
20.4 This Agreement along with all Schedules attached hereto, which
are incorporated herein by this reference, contain the entire understanding
and agreement between the parties hereto with respect to the subject matter
hereof and supersedes all prior oral or written understandings and
agreements relating thereto and no provision hereof may be waived,
modified, discharged or terminated, except in a writing executed by a duly
authorized officer of both parties.
20.5 Nothing herein contained shall be construed to constitute the
parties hereto as partners or as joint venturers, or either as agent of the
other, and neither party shall have the power to obligate or bind the other
party in any manner whatsoever.
20.6 A failure of either party to exercise any right provided for
herein shall not be deemed to be a waiver of any right hereunder. No waiver
by either party, whether express or implied, of any provision of this
Agreement, or of any breach or default thereof, shall constitute a
continuing waiver of such provision or of any other provision of this
Agreement. Acceptance of payments by St. Xxxx shall not be deemed a waiver
by St. Xxxx of any violation of or default under any of the provisions of
this Agreement by Licensee.
20.7 If any provision or any portion of any provision of this
Agreement shall be held to be void or unenforceable, the remaining
provisions of this Agreement and the remaining portion of any provision
held void or unenforceable in part shall continue in full force and effect.
20.8 All reports, approvals, requests, demands and notices required or
permitted by this Agreement to be given to a party shall be in writing and
shall be deemed to be duly given if personally delivered, if mailed (by
certified or registered mail, return receipt requested) or if sent by
overnight mail or courier service, such as Express Mail or Federal Express,
which requires the addressee to acknowledge receipt thereof, to the party
concerned at its address set forth on page 1 above (or at such other
address as a party may specify by notice to the other) and shall be deemed
given (i) if by hand or overnight delivery, upon receipt thereof; or (ii)
if mailed, three (3) days after deposit in the U.S. mail, postage prepaid,
certified mail, return receipt requested.
20.9 This Agreement shall be construed without regard to any
presumption or other rule requiring construction against the party causing
this Agreement to be drafted. If any words or phrases in this Agreement
shall have been stricken out or otherwise eliminated, whether or not any
other words or phrases have been added, this Agreement shall be construed
as if those words or phrases were never included in this Agreement, and no
implication or inference shall be drawn from the fact that the words or
phrases were so stricken out or otherwise eliminated.
20.10 EXCEPT FOR THOSE CLAIMS SET FORTH IN SECTION 13.3 HEREOF, UNDER
NO CIRCUMSTANCES SHALL ST. XXXX, ITS EMPLOYEES, AFFILIATES OR AGENTS BE
LIABLE FOR ANY DAMAGES, INCLUDING ANY INDIRECT, INCIDENTAL, SPECIAL OR
CONSEQUENTIAL DAMAGES THAT RESULT FROM LICENSEE'S USE OF OR INABILITY TO
USE THE LICENSED TRADEMARKS, AND LICENSEE HEREBY WAIVES ANY CLAIMS WITH
RESPECT THERETO, WHETHER BASED ON CONTRACT, TORT OR OTHER GROUNDS, EVEN IF
ST. XXXX HAS BEEN ADVISED OF THE POSSIBILITY OF DAMAGES.
20.11 NOTWITHSTANDING THE FOREGOING, EXCEPT FOR ST. JOHN'S
REIMBURSEMENT OBLIGATION AS SET FORTH IN SECTION 13.3 HEREOF, IN NO EVENT
SHALL THE TOTAL AGGREGATE LIABILITY OF ST. XXXX, ITS EMPLOYEES, AFFILIATES
AND AGENTS FOR ALL DAMAGES, LOSSES AND CAUSES OF ACTION WHETHER IN
CONTRACT, TORT, INCLUDING NEGLIGENCE, OR OTHERWISE, EITHER JOINTLY OR
SEVERALLY, EXCEED THE AGGREGATE DOLLAR AMOUNT PAID BY LICENSEE TO ST. XXXX
FOR THE LICENSED PRODUCTS AT ISSUE IN THE TWELVE (12) MONTHS PRIOR TO THE
CLAIMED INJURY OR DAMAGE. LICENSEE HEREBY RELEASES ST. XXXX FROM ANY AND
ALL OBLIGATIONS, LIABILITIES AND CLAIMS IN EXCESS OF THIS LIMITATION.
20.12 This Agreement may be executed in any number of counterparts,
each of which shall be an original and all of which shall constitute one
and the same instrument. This Agreement may be executed and delivered via
facsimile and such execution and delivery by facsimile shall have the same
force and effect as a hand delivered executed original.
IN WITNESS WHEREOF, the parties hereto each acting under due and
proper authority, have duly executed this Agreement as of the day and year
first above written.
ST. XXXX KNITS, INC. SWISS ARMY BRANDS, INC.
By: XXX XXXX By: J. Xxxxxxx Xxxxxxx
Its:C.E.O. Its:President
Schedule A
1. Licensed Trademark: "St. Xxxx", a trademark of St. Xxxx Knits, Inc. Current
Applications:
2. Licensed Products: Wrist watches, travel alarm clocks and
watches that bear the Licensed Trademark.
3. Territory: Throughout the following jurisdictions provided that additional
jurisdictions may be added from time to time by mutual written consent of
the parties:
United States Australia
Canada United Kingdom
Japan Germany
Hong Kong BENELUX
Korea Switzerland
Indonesia Any Caribbean nations requested
by Licensee
Any other country requested by Licensee in which St. Xxxx
xxxxx in commercial quantities, goods bearing the Licensed
Trademark provided that the representations and warranties
contained in this Agreement shall apply only to the
jurisdictions where St. Xxxx registers the Licensed
Trademark
4. Initial Term: The period commencing on the earlier of (a) the date on which
Licensee first delivers Licensed Products in commercial quantities or (b)
September 1, 1998, and expiring December 31, 1999.
5. Duration of Additional Terms: 2 years
6. Guaranteed Minimum Royalty Table:
Annual Period Guaranteed Minimum Royalty
First Annual Period (Initial Term) $ 154,000 (U.S.)
Second Annual Period $ 284,000 (U.S.)
(IF THE TERM IS EXTENDED)
Third Annual Period $ 419,000 (U.S.)
Fourth Annual Period $ 575,000 (U.S.)
(IF THE TERM IS EXTENDED)
Fifth Annual Period $ 603,000 (U.S.)
Sixth Annual Period $ 634,000 (U.S.)
(IF THE TERM IS EXTENDED)
Seventh Annual Period $ 665,000 (U.S.)
Eighth Annual Period $ 699,000 (U.S.)
(IF THE TERM IS EXTENDED)
Ninth Annual Period $ 734,000 (U.S.)
Tenth Annual Period $ 770,000 (U.S.)
(IF THE TERM IS EXTENDED)
Eleventh Annual Period $ 809,000 (U.S.)
Twelfth Annual Period $ 849,000 (U.S.)
(IF THE TERM IS EXTENDED)
Thirteenth Annual Period $ 892,000 (U.S.)
Fourteenth Annual Period $ 936,000 (U.S.)
The Term shall be extended indefinitely subject to the requirements of
Section 2, Section 18 and the termination provisions of the Agreement.
7. Guaranteed Minimum Royalty Payment Schedule:
--------------------------------------------
The Guaranteed Minimum Royalty shall be paid in accordance with
Section 3.2 of the Agreement.
8. Sales Royalty Payment Schedule:
-------------------------------
The Sales Royalty shall be paid in accordance with Section 4.3 of the
Agreement.
10. Minimum Net Sales for Licensed Products:
----------------------------------------
Annual Period Minimum Net Sales
First Annual Period $ 617,000 (U.S.)
Second Annual Period $1,535,000 (U.S.)
(IF THE TERM IS EXTENDED)
Third Annual Period $2,264,000 (U.S.)
Fourth Annual Period $3,107,000 (U.S.)
(IF THE TERM IS EXTENDED)
Fifth Annual Period $3,262,000 (U.S.)
Sixth Annual Period $3,425,000 (U.S.)
(IF THE TERM IS EXTENDED)
Seventh Annual Period $3,596,000 (U.S.)
Eighth Annual Period $3,776,000 (U.S.)
(IF THE TERM IS EXTENDED)
Ninth Annual Period $3,965,000 (U.S.)
Tenth Annual Period $4,163,000 (U.S.)
(IF THE TERM IS EXTENDED)
Eleventh Annual Period $4,372,000 (U.S.)
Twelfth Annual Period $4,590,000 (U.S.)
(IF THE TERM IS EXTENDED)
Thirteenth Annual Period $4,820,000 (U.S.)
Fourteenth Annual Period $5,061,000 (U.S.)
LICENSE AGREEMENT
between
St. Xxxx Knits, Inc.
and
Swiss Army Brands, Inc.
(Licensee)
LICENSE AGREEMENT
TABLE OF CONTENTS
Section Page No
1. Grant of License.................................................. 1
2. Term and Term Renewal............................................. 2
3. Guaranteed Minimum Royalty........................................ 2
4. Sales Royalty..................................................... 3
5. Sales Statement................................................... 5
6. Books and Records; Audits; Financial Statements................... 5
7. Design Services................................................... 6
8. Manufacture of Licensed Products; Quality Control................. 7
9. Approvals......................................................... 9
10. Marketing; Promotion; Advertising; Trade shows.................... 9
11. The Licensed Trademark............................................ 11
12. Copyright......................................................... 13
13. Indemnity; Insurance.............................................. 13
14. Default and Termination........................................... 15
15. Rights on Expiration or Termination............................... 17
16. Brokerage Indemnity............................................... 18
17. Representations and Warranties.................................... 19
18. Assignability; Binding Effect..................................... 19
19. Jurisdiction; Attorney's Fees..................................... 20
20. Miscellaneous..................................................... 21
