September 11, 1996
Signal Apparel Company, Inc.
Manufacturer's Road
Chattanooga, Tennessee
Gentlemen:
This will serve to modify the letter agreement
dated March 29, 1996 ("Interim Extension Agreement")
between Xxxx Xxxx Inc. ("Xxxx") and you ("Signal")
pursuant to which the June 1, 1992 License Agreement
("License Agreement") between Xxxx and Signal was
agreed to be extended beyond its May 31, 1996
termination date, as follows:
1. Subject to the provision of Paragraph 6
hereof, the notice of termination of the License
Agreement dated August 8, 1996 served by Rose & Boxer,
Esqs. on behalf of Xxxx is hereby rescinded effective
August 8, 1996 ("Notice of Termination") and Xxxx
hereby waives the claims, if any, which it may
otherwise have sought to have asserted against Signal
by reason of the breaches of the License Agreement
alleged in the Notice of Termination.
2. Paragraph 2 of the Interim Extension
Agreement is modified so that the Term of the License
Agreement shall be deemed extended to May 30, 1997 and
shall be applicable to the following Collections:
Spring 1997 and Summer 1997 (the "Extended
Collections").
3. Subparagraph a of Paragraph 2 of the Interim
Extension Agreement is amended by adding the following
payment obligations to said paragraph in addition to
those set forth therein:
DATE OF PAYMENT OBLIGATION TO BE PAID
No later than the due Payment of third party
dates reflected on the expenses (as determined
invoices. and approved by Xxxx) for
Xxxx' Spring 1997 Fashion
Show to be held on
October 31, 1997, up to a
maximum of $70,000
("Fashion Show
Expenses"). (Signal
hereby indemnifies Xxxx
from liability for non-
payment of such Fashion
Show Expenses).
December 1, 1996 Payment of the sum of
$62,500, less the amount
expended by Signal as
Fashion Show Expenses in
excess of $60,000 but not
in excess of $65,000
December 30, 1996 Payment of Royalty on Net
Sales of u.s.a. garments
between September 1, 1996
and November 30, 1996, in
excess of the payments
scheduled to be made
October 30, 1996 and
November 30, 1996
January 30, 1997 Payment of Royalty on Net
Sales of u.s.a. garments
in the month of December
1996
February 28, 1997 Payment of Royalty on Net
Sales of u.s.a. garments
in the month of January,
1997
March 1, 1997 Payment of the sum of
$62,500, less the amount
expended by Signal as
Fashion Show Expenses in
excess of $65,000 but not
in excess of $70,000
March 30, 1997 Payments of Royalty on
Net Sales of u.s.a.
garments between December
1, 1997 and February 28,
1997, in excess of the
payments scheduled to be
made January 30, 1997 and
February 28, 1997
DATE OF PAYMENT OBLIGATION TO BE PAID
April 30, 1997 Payment of Royalty on Net
Sales of u.s.a. garments
in the month of March
1997
May 30, 1997 Payment of Royalty on Net
Sales of u.s.a. garments
in the month of April
1997.
June 30, 1997 Payments of Royalty on
Net Sales of u.s.a.
garments between March 1,
1997 and May 30, 1997, in
excess of the payments
scheduled to be made
April 30, 1997 and May
30, 1997
July 30, 1997 Payment of Royalty on Net
Sales during the
"Disposal Period" (as
defined in the License
Agreement) of u.s.a.
garments in the month of
June 1997
August 30, 1997 Payment of Royalty on Net
Sales during the Disposal
Period of u.s.a. garments
in the month of July 1997
September 30, 1997 Payments of Royalty on
Net Sales during the
Disposal Period of u.s.a.
garments between June 1,
1997 and August 30, 1997,
in excess of the payments
scheduled to be made July
30, 1997 and August 30,
1997
4. Paragraph 3 of the Interim Extension
Agreement is hereby revised to read as follows:
"3. The parties recognize that in order that
prototypes of Xxxx Xxxx u.s.a. garments for the
Extended Collections be available to permit Signal to
manufacture sales samples for selling in a timely
fashion, it is necessary that Xxxx periodically work on
the development of the Extended Collections prototypes
at Signal's Heritage facility in Xxxxxx, South
Carolina. Xxxx agrees to undertake the development of
the prototypes subject to this letter agreement upon
the following conditions:
-3-
"a. Signal acknowledges that Xxxx'
designs for each of the seasons of the Extended
Collections are and at all times shall be and remain
the property of Xxxx.
"b. All prototypes, patterns and
specification sheets for garments for the Extended
Collections developed by Xxxx and Signal (Heritage)
shall at all times be and remain the property of Xxxx.
Upon the termination of the License Agreement, the same
shall be delivered to Xxxx at its offices in New York
within five (5) days of Xxxx' written demand therefore.
Xxxx shall be responsible for the expense of shipping
and shall have the option to credit Signal for such
shipping expense and the direct expense of preparation
of prototypes, patterns and specification sheets
against the amounts due and to come due to it as
Royalties under the License Agreement, which direct
expense shall be the responsibility of Xxxx if the
above option is exercised by Xxxx.
"c. The provisions of Section 4.5(a)
and (o) shall not be applicable during the period
covered by this Agreement except that Signal shall
continue the program of cooperative advertising of
u.s.a. garments for Fall 1996, Holiday 1996 and the
Extended Collections customarily offered by it during
the Term of the License Agreement to Signal customers.
"d. So long as Signal is in compliance
with the License Agreement and the terms of this letter
agreement, Signal shall be entitled to offer for sale
and accept any orders for Fall or Holiday 1996 and the
Extended Collections garments without further approval
of Xxxx.
"e. Upon termination of the License
Agreement, (i) Xxxx shall have the option to purchase
all samples manufactured by Signal for the Extended
Collections, or any one or more of them, at Signal's
(Heritage's) direct cost; (ii) Xxxx shall have the
option to purchase at Signal's (Heritage's) cost all
inventoried yarns and other materials and accessories,
allocated to u.s.a. garments and (iii) Xxxx shall also
have the option to assume any yarn contracts held by
Signal (Heritage) allocated to u.s.a. garments.
"Such options shall be exercised by Xxxx by
written notice following the termination of the License
Agreement given within twenty days (20) after receipt
of notice from Signal (Heritage) of the (a) inventory
of samples available for Xxxx' purchase and Signal's
(Heritage's) cost, (b) inventory of yarn, other
materials and accessories available for Xxxx' purchase
and Signal's (Heritage's) cost and (c) a description of
the yarn contracts held by Heritage which Xxxx may
assume. Xxxx shall also have the option to make any
payment required to be made by credit against the
amounts due and to come due to it as Royalties under
the License Agreement."
5. The first sentence of Paragraph 4 of the
Interim Extension Agreement as modified to read as
follows:
"The applicability of the provisions of
Section 9 of the License Agreement are conditioned upon
timely compliance by Signal with the provisions of
Section 4.2 of the License Agreement governing the
payment of Royalties during the Disposal Period."
6. The rescission of the Notice of Termination
of the License Agreement, as extended, as provided in
Paragraph 5 hereof is conditioned upon the following:
a. Signal shall indemnify, save and hold
Xxxx harmless, and hereby agrees to indemnify, save and
hold Xxxx harmless, from and against any and all
claims, liabilities, damages and expenses (including
reasonable attorney's fees) which may be asserted
against it by reason of the cessation of manufacture by
Signal of garments for Xxxxxxx Xxxx Apparel, Inc.
("Xxxxxxx Xxxx") or any related entity (the "Grounds"),
provided, however this indemnification for expenses
shall not apply to expenses (including reasonably
attorney's fees) (i) incurred by Xxxx in defending a
counterclaim brought by Xxxxxxx Xxxx asserting the
Grounds should Xxxx initiate litigation against Xxxxxxx
Xxxx or any related entity on any ground or (ii)
incurred by Xxxx prior to the date hereof.
b. Signal agrees that on and after October
15, 1996 it shall permanently cease the manufacture and
distribution of garments for Xxxxxxx Xxxx or any other
entity which are derived, in whole or in any part, from
fabrications and/or designs contained in garments
designed by Xxxx for one or more Collections previously
(or hereafter) submitted by Xxxx to Signal and not
rejected by Signal. Xxxx agrees to and does hereby
waive and release Signal from any claims it may have
asserted or sought to have asserted against Signal by
reason of the manufacture by Signal of any garment for
Xxxxxxx Xxxx prior to October 15, 1996.
c. Signal agrees that it shall not
manufacture garments for Xxxxxxx Xxxx in the absence of
Xxxx' prior approval and verification that the garment
so proposed to be manufactured by Signal is not derived
in whole or in part from fabrications and/or designs
contained in garments designed by Xxxx for one or more
Collections previously (or hereafter) submitted by Xxxx
to Signal and not rejected by Signal, which approval
shall not unreasonably be withheld and shall be given
or denied within 5 business days of the request to
Xxxx' for such approval; otherwise such garments shall
be approved.
7. The terms and provisions of the License
Agreement as modified by the Interim Extension
Agreement and as further modified by the provisions of
this Agreement are hereby ratified, affirmed and
approved.
-6-
Please signify your consent to and approval of the
foregoing by signing at the foot hereof.
Very truly yours,
XXXX XXXX, INC.
By /s/ Xxxx Xxxx
---------------------
Xxxx Xxxx, President
Consented to and Agreed
SIGNAL APPAREL COMPANY, INC.
By /s/ Xxxxx Xxxxx
--------------------------
Xxxxx Xxxxx, President
