EXHIBIT 10.22
LICENSE AGREEMENT
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THIS AGREEMENT made this 8th day of January, 1997 by and among Xxxxxxx Shoe
Company Inc., a Delaware corporation ("Xxxxxxx Shoe Company") and Xxxxxxx
Company, a Delaware corporation and a wholly-owned subsidiary of Xxxxxxx Shoe
Company (together with Xxxxxxx Shoe Company, "Xxxxxxx Shoe"), on the one hand,
and Inter-Pacific Trading Corporation d/b/a Inter-Pacific Corporation
("Licensee"), a California corporation, on the other hand.
W I T N E S S E T H:
Xxxxxxx Shoe is the owner and registrant of certain trademarks and
subsisting registrations for the xxxx "Xxx & Xxxxx", registered in the United
States Patent and Trademark Office (the "Xxxx").
Licensee is engaged in the sale and distribution of men's, women's and
children's footwear, and Licensee desires to obtain from Xxxxxxx Shoe a license
to use the Xxxx in connection with certain goods under and subject to all of the
terms and conditions set forth in this Agreement.
NOW, THEREFORE, the parties hereto, in consideration of the foregoing and
of the mutual covenants contained herein, and intending to be legally bound
hereby, agree as follows:
I. Definitions
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As used in this Agreement, the following terms and phrases shall have the
following meanings:
1.1 Annual Period. The period from commencement of the Term through May
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31, 1998, and each consecutive twelve (12) month period thereafter during the
Term.
1.2 Approval or Approved. The approval by Xxxxxxx Shoe of one or more
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designs, samples, items of Packaging, advertising or promotional materials or
other items for which approval is required under this Agreement, in writing in a
document which identifies the item or items approved and is signed by an
authorized representative of Xxxxxxx Shoe. Xxxxxxx Shoe shall be deemed to have
Approved any item submitted to it by Licensee for Approval under the terms of
this Agreement, if Xxxxxxx Shoe fails to approve, disapprove or otherwise
definitively respond to the submission in writing within seven (7) days after
receipt of the items submitted.
1.3 Guaranteed Minimums. The guaranteed minimum Royalties payable by
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Licensee under Paragraph 3.2.
1.4 Xxxx. Xxxxxxx Shoe's trademark "Xxx & Xxxxx".
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1.5 Xxxxxxx Shoe Merchandise. Any and all items of Merchandise which in
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any manner bear, incorporate or embody the Xxxx or any design, pattern, sketch
or written idea supplied by Xxxxxxx Shoe.
1.6 Merchandise. The items of merchandise covered by the license granted
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under this Agreement include only (i) men's, women's and children's slippers
intended for indoor and outdoor use ("Slippers"), and (ii) jellies, aqua socks,
injection molded slides and style 1892A and EVA sandals for beach and street
wear ("Sandals").
1.7 Net Sales. The invoiced amount of Xxxxxxx Shoe Merchandise billed or
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shipped by Licensee, less actual trade discounts, returns and allowances and
sales tax, if any, with no deduction made for other discounts or uncollectible
accounts or for any cost incurred by Licensee in the manufacture, sale,
distribution, or exploitation of the Xxxxxxx Shoe Merchandise. In the event of
sales by Licensee of Xxxxxxx Shoe Merchandise to outlet stores or other
purchasers under Licensee's direct or indirect control, Net Sales shall be
calculated on the basis of a sales price and invoiced amount that Licensee would
charge to an unrelated third party in an arms-length transaction, regardless of
the price actually charged or invoiced.
1.8 Packaging. All tags, labels, cartons or containers and packing or
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wrapping material used or to be used by Licensee in connection with Xxxxxxx Shoe
Merchandise.
1.9 Royalties. The royalties to be paid by Licensee to Xxxxxxx Shoe for
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or in connection with the license to use the Xxxx granted under this Agreement,
provided for in Article III and all other applicable portions of this Agreement.
1.10 Term. The Initial and Renewal Term, if any, of this Agreement,
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provided for and defined in Article VIII, taken collectively.
1.11 Termination Inventory. The inventory provided for in Paragraph 8.5
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of Xxxxxxx Shoe Merchandise finished products and work in process and of
Packaging and advertising and promotional material on hand at the time of the
termination of this Agreement.
1.12 Territory. The geographical area consisting of the United States,
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its territories and possessions (the "Territory").
II. License
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2.1 Grant of License. Xxxxxxx Shoe hereby grants to Licensee an exclusive
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license throughout the Territory to use the Xxxx in connection with the
manufacture, advertising, merchandising, promotion, sale and distribution of
Xxxxxxx Shoe Merchandise approved by Xxxxxxx Shoe, in accordance with the terms
of this Agreement. The license granted herein extends only to the Merchandise,
Territory and uses expressly provided for in this Agreement, and Licensee shall
not use or attempt to use the Xxxx on any other products or goods in any other
area or any other manner whatsoever.
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2.2 Distribution Channels. Licensee acknowledges that Xxxxxxx Shoe has
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established a reputation for unique high quality fashionable merchandise sold in
high quality and high fashion stores, and that Xxxxxxx Shoe maintains a
marketing strategy of retaining and projecting to consumers that reputation and
ambiance for its products. Accordingly, in order to protect Xxxxxxx Shoe's
marketing strategy, goodwill and prestige and reputation, Xxxxxxx Shoe
Merchandise shall be sold only in those department stores, specialty stores and
other stores which are consistent with Xxxxxxx Shoe's marketing strategy for
sales of "Xxx & Xxxxx" product; therefore, the license granted under this
Agreement extends only to the use of the Xxxx in connection with the
manufacture, advertising, merchandising, promotion, sale and distribution of
Xxxxxxx Shoe merchandise for sale to customers in those department stores,
specialty stores and other stores as Xxxxxxx Shoe, in its sole and absolute
discretion, shall approve in writing. Notwithstanding the previous sentence,
Licensee acknowledges and agrees that injection molded slides and style 1892A
shall be sold only to T.J. Maxx, Marshall's and Xxxx Stores.
2.3 Prohibition on Exports. Licensee shall not export Xxxxxxx Shoe
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Merchandise from the Territory to any area outside of the Territory and shall
not sell or distribute Xxxxxxx Shoe Merchandise to any person or entity that
Licensee knows or has reason to know intends so to export Xxxxxxx Shoe
Merchandise.
2.4 Resolution of Conflicts. Licensee recognizes that Xxxxxxx Shoe has
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granted, and may in the future grant, licenses to other parties to use the Xxxx
or one or more of Xxxxxxx Shoe's other trademarks in connection with the
manufacture, promotion and distribution of footwear, wearing apparel,
accessories or related items. If Licensee or the licensee under any other such
license notifies Xxxxxxx Shoe of an existing or potential conflict in the
definition of the merchandise covered by, or the rights of the licensee under,
their respective licenses and license agreements, Xxxxxxx Shoe shall endeavor to
deal with the issue by discussions with authorized representatives of the
affected parties, and Licensee shall fully cooperate in any such efforts.
Xxxxxxx Shoe may at any time determine finally to resolve any such conflict by
written notice of its determination and resolution to the affected licensees.
2.5 Reservation of Rights. Xxxxxxx Shoe reserves all rights to the Xxxx
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including, without limitation, all rights to use the Xxxx and to grant others
the right to use the Xxxx in any area and with regard to any product, except for
the right to use the Xxxx in the Territory for Slippers to be sold at any price
or for Sandals to be sold at a net price of $10.00 (wholesale) or less per pair.
In addition to those rights specified in the previous sentence, the parties
acknowledge and agree that Xxxxxxx Shoe has the right to sell EVA sandals which
bear, embody or incorporate the Xxxx at a net price above $10.00 (wholesale) per
pair to any retail establishment in which Xxxxxxx Shoe has an economic interest.
2.6 Maximum Net Price At Wholesale. In no event shall Licensee sell any
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Xxxxxxx Shoe Merchandise, except Slippers, at a net price exceeding $10.00
(wholesale) per pair of such Merchandise.
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III. Royalties
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3.1 Percentage Royalty.
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3.1.1 In consideration of the license granted and the services to be
performed by Xxxxxxx Shoe under this Agreement and subject to Guaranteed
Minimums, Licensee shall pay to Xxxxxxx Shoe Royalties equal to five and one-
half (5 1/2%) percent of the Net Sales of all Xxxxxxx Shoe Merchandise, in
accordance with all the terms and conditions of this Agreement; provided,
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however, that if Net Sales of Xxxxxxx Shoe Merchandise by Licensee pursuant to
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this Agreement exceed $9,000,000 in the aggregate, Licensee shall pay to Xxxxxxx
Shoe Royalties equal to five (5%) percent of Net Sales exceeding $9,000,000, if
any.
3.1.2 Licensee shall be obligated to pay and account for Royalties
for all Xxxxxxx Shoe Merchandise billed or shipped, even if the Merchandise
improperly bears the Xxxx or the applicable transaction is otherwise in breach
or violation of the terms of this Agreement; provided that this subparagraph
3.1.2 shall not be considered to authorize such transactions and that the
payment or obligation to pay Royalties for such transactions shall not in any
manner limit Xxxxxxx Shoe's right to terminate this Agreement or to exercise any
other right or remedy that Xxxxxxx Shoe may have as a result of the breach of
this Agreement by such transactions.
3.2 Guaranteed Minimum Royalties.
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3.2.1 Notwithstanding the amount of Royalties computed and payable
under Paragraph 3.1, the Guaranteed Minimum Royalties to be paid from Licensee
to Xxxxxxx Shoe for each Annual Period during the Term shall be as follows:
First Annual Period: $ 110,000
Second Annual Period: $ 165,000
Third Annual Period: $ 220,000
Fourth Annual Period: $ 250,000
Fifth Annual Period: $ 250,000
Sixth Annual Period: $ 250,000
3.2.2 Guaranteed Minimums for each Annual Period shall be paid as
follows:
$50,000 contemporaneously with the execution of this Agreement;
$50,000 on or before January 1, 1998;
$50,000 on or before May 31, 1998; and
equal installments on the first day of each quarter thereafter
during the Term.
The aggregate payments of $150,000 set for above for the First Annual Period
include a payment of $40,000 against advertising payment obligations pursuant to
Paragraph 4.6.
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For purposes of computation of Royalties, Guaranteed Minimum payments shall
be considered as advances against Royalties otherwise payable in the same Annual
Period, but Guaranteed Minimums shall not be carried forward to any subsequent
Annual Period and shall not, under any circumstances, be repayable or refundable
to Licensee.
In addition, payment of Royalties pursuant to Paragraph 3.3 (or for the
First Annual Period, payment of Royalties pursuant to Paragraph 3.3 and
advertising pursuant to Paragraph 4.6) shall be credited against the Guaranteed
Minimums otherwise then due.
3.3 Payment and Periodic Reports. Royalties shall be paid, without set-
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off or deduction for any reason, and accounted for quarterly, commencing with a
report for the quarter ending March 31, 1997, within thirty (30) days after the
end of each quarter, provided however, that after the calendar quarter ending
March 31, 1998, Royalties shall be paid, without set off or deduction for any
reason, and accounted for, for the two months ending May 31, 1998 on or before
June 30, 1998; and thereafter, Royalties shall be paid, without set off or
deduction for any reason, and accounted for quarterly, commencing with a report
for the three months ending August 31, 1998, within thirty (30) days after the
end of each three month period. At the time each Royalty payment is due,
Licensee shall deliver to Xxxxxxx Shoe a statement signed and certified as
accurate by Licensee's chief financial officer or by another responsible officer
of Licensee, accounting for the Net Sales and Royalties for the applicable
quarter. Such statement shall show the total amount of gross sales of all
Merchandise billed or shipped during the quarter; an itemized list of any
amounts which may, under this Agreement, be deducted from gross sales for
computing Net Sales; a computation of the amount of Royalties payable on account
of the Net Sales for the quarter; a computation of the amount payable by
Licensee to Xxxxxxx Shoe under Paragraph 4.6 (advertising) during the quarter;
and such other information including, without limitation, Net Sales for each
item of Merchandise and/or Xxxx on a customer-by-customer basis, and customer
and financial information and reports as Xxxxxxx Shoe may reasonably require.
Xxxxxxx Shoe may, at any time, provide Licensee with a standardized form for
accounting for Royalties and Licensee shall use any such form for the statements
under this paragraph. The statements provided for in this paragraph shall be
furnished to Xxxxxxx Shoe whether or not Licensee has sold, shipped or billed
any Xxxxxxx Shoe Merchandise during the quarter for which the statement is due.
3.4 Annual Reports. Not later than forty-five (45) days after the end of
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each Annual Period, Licensee shall deliver to Xxxxxxx Shoe a statement, signed
and certified by Licensee's then regularly engaged independent certified public
accountant (or, if Licensee has no such regular engagement, by a reputable
independent certified public accountant) stating for the Annual Period the
information required in the quarterly statement under Paragraph 3.3 and such
other information as Xxxxxxx Shoe may reasonably request within a reasonable
time prior to the date on which the statement is due.
3.5 Books and Records and Audit.
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3.5.1 Licensee shall prepare and maintain, in accordance with
generally accepted accounting principles consistently applied, complete and
accurate books of accounts and records covering all transactions arising out of
or relating to this Agreement, which books and records
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shall at least be in sufficient detail to permit Xxxxxxx Shoe to monitor
compliance by Licensee with all of its obligations under this Agreement. Xxxxxxx
Shoe and its duly authorized representatives shall have the right, upon five (5)
days prior written or oral notice, during regular business hours, throughout the
Term and for two (2) years thereafter (the "Audit Period"), to audit such books
of account and records and to examine all other documents and materials in
Licensee's possession or control relating to this Agreement and Licensee's
performance hereunder not more than one time each year for the duration of the
Audit Period. Licensee shall maintain such books of account, records and
documents and material available for Licensee for at least two (2) years after
the termination of this Agreement. Except as provided in subparagraph 3.5.2, any
audit under this paragraph shall be at Xxxxxxx Shoe's expense.
3.5.2 If any audit of Licensee's books and records by Xxxxxxx Shoe
under subparagraph 3.5.1 discloses that the payments made by Licensee to Xxxxxxx
Shoe during the period covered by the audit were up to four (4%) percent less
than the payments that should have been made under this Agreement, Licensee
shall pay the deficiency, plus interest at a rate equal to two (2%) percent
above the rate announced by Citibank as its "Prime Rate", within fourteen (14)
days after demand therefor by Xxxxxxx Shoe. If an audit shows that the amount
paid by Licensee was more than four (4%) percent less than the amount which
should have been paid, the interest payable shall be at a rate of five (5%)
percent above such Prime Rate and Licensee shall, in addition, reimburse Xxxxxxx
Shoe for all reasonable costs of the audit within thirty (30) days after demand
by Xxxxxxx Shoe.
IV. Performance
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4.1 Performance Standards.
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4.1.1 Throughout the Term, Licensee shall use all reasonable effort
and cause its officers, employees, agents and contractors to use their
reasonable efforts to sell Xxxxxxx Shoe Merchandise, promote business for
Xxxxxxx Shoe Merchandise and enhance the value and reputation of the Xxxx,
consistent with good business practices and the high standards and prestige
represented by the Xxxx.
4.1.2 In the use of the Xxxx and all other aspects of the performance
of this Agreement, Licensee shall at all times comply in all material respects
with all applicable laws and regulations including, without limitation, all laws
and regulations related to the manufacture, sale, labeling, packaging,
distribution and advertising of Xxxxxxx Shoe Merchandise sold within the
Territory.
4.2 Abandonment. If Licensee shall fail to use the Xxxx in the
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manufacture, sale or distribution of Xxxxxxx Shoe Merchandise within any period
of six (6) months or if Licensee shall determine or state its intention to cease
so to use the Xxxx, Licensee shall be deemed to have abandoned the use of the
Xxxx, and Xxxxxxx Shoe may at any time thereafter terminate this Agreement by
written notice under Paragraph 8.3.1. The parties acknowledge that the
abandonment of the use of the Xxxx by Licensee will irreparably damage
Licensee's capacity to use the Xxxx under the terms of this Agreement and, for
purposes of termination under Article
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VIII, abandonment of the use of the Xxxx under this paragraph shall be
considered a breach or violation of this Agreement which is not curable.
4.3 Restriction on Other Marks. During the Term, Licensee shall not
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manufacture, sell, distribute or promote or enter into any license or other
agreement to manufacture, sell, distribute or promote any product or category of
products included in the Merchandise bearing any trademark, trade name or other
xxxx, except the Xxxx in accordance with this Agreement, if such merchandise
would be, in price range and style, in direct competition with Xxxxxxx Shoe
Merchandise; provided, however, whether or not such merchandise is similar in
price range and style to Xxxxxxx Shoe Merchandise it shall not be considered to
be in direct competition with Xxxxxxx Shoe Merchandise, if it bears as a
trademark, trade name or other xxxx only Licensee's private or house brands
(which include, without limitation, Laguna, Barely Legal, Rio Sunwear, Meadow
Brook, Footwarmers, Sunsurfer, Sweet Steps and Torlisi) or any other trademark,
trade name or other xxxx which is not considered by Xxxxxxx Shoe to be a
national brand.
4.4 Restrictions on Promotionals. Licensee shall not, without the prior
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written consent of Xxxxxxx Shoe (which consent shall not be unreasonably
withheld), give away any Xxxxxxx Shoe Merchandise or market, sell or distribute
any Xxxxxxx Shoe Merchandise as a premium or in connection with any tie-in or
promotional campaign for any product or products (except Xxxxxxx Shoe
Merchandise).
4.5. Quality.
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4.5.1 The materials and workmanship of, and Packaging and sales and
promotional materials for, the Xxxxxxx Shoe Merchandise shall at all times be of
high quality, and the Xxxxxxx Shoe Merchandise shall at all times be designed,
manufactured, distributed and promoted in a manner appropriate for the high
quality of such Xxxxxxx Shoe Merchandise.
4.5.2 Xxxxxxx Shoe and its duly authorized representative shall have
the right, during normal business hours upon reasonable advance notice, to
inspect any facility used by Licensee in connection with the manufacture of
Xxxxxxx Shoe Merchandise or the manufacture or production of Packaging or
advertising or promotional material in order for Xxxxxxx Shoe to monitor the
quality of the Xxxxxxx Shoe Merchandise and Packaging and promotional materials
and Licensee's compliance with all other terms of this Agreement which relate to
such manufacture and production.
4.6 Advertising. Licensee shall on a quarterly basis (and subject to the
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same payment and other requirements of Paragraphs 3.3, 3.4 and 3.5), during each
Annual Period, pay directly to Xxxxxxx Shoe two (2%) percent of the amount of
the aggregate Net Sales for the Annual Period for Xxxxxxx Shoe advertising and
promoting Xxxxxxx Shoe Merchandise in communications media, national consumer
publications, trade press and store promotional mailings or advertising
campaigns. Notwithstanding the prior sentence, Xxxxxxx Shoe shall be under no
obligation to provide specific advertising or expend any sums advertising or
promoting the Xxxxxxx Shoe Merchandise during any Annual Period. In the event
Xxxxxxx Shoe does not expend any sums on advertising or promoting the Xxxxxxx
Shoe Merchandise during any Annual Period, then the amounts set forth in the
first sentence of this Paragraph 4.6 shall nevertheless be
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paid in full and on a timely basis by Licensee to Xxxxxxx Shoe and such amount
shall be considered additional Royalties payable under Paragraph 3.1. In
addition, Licensee shall comply with any reasonable guidelines established by
Xxxxxxx Shoe for Licensee conducting its own advertising activities and
expenditures in promoting Xxxxxxx Shoe Merchandise.
4.7 Approvals. Licensee shall not in any aspect of its performance under
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this Agreement use any materials, designs, styles, fits or workmanship for
Xxxxxxx Shoe Merchandise or use any items of Packaging or advertising or
promotional materials for Xxxxxxx Shoe Merchandise which Xxxxxxx Shoe has not
Approved under the terms of this Agreement. Xxxxxxx Shoe's Approval or
disapproval of any item or matter for purposes of this Agreement may be based
solely on Xxxxxxx Shoe's subjective standards and Approval may be given or
withheld in Xxxxxxx Shoe's sole discretion, provided that Xxxxxxx Shoe shall act
in good faith.
V. Designs, Samples and Packaging
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5.1 Designs. Xxxxxxx Shoe and Licensee shall cooperate in such manner as
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Xxxxxxx Shoe may reasonably approve in the development and creation of designs,
styles and design and style ideas for each collection of Xxxxxxx Shoe
Merchandise. All designs, styles, patterns, photographs or written ideas for
Xxxxxxx Shoe Merchandise provided by Xxxxxxx Shoe to Licensee for purposes of
this Agreement shall be the exclusive property of Xxxxxxx Shoe, and Licensee
shall not use any of the foregoing except for the manufacture, distribution and
sale and advertising and promotion of Xxxxxxx Shoe Merchandise in accordance
with the terms of this Agreement.
All designs, styles, patterns, photographs or written ideas for Xxxxxxx
Shoe Merchandise provided by Licensee for purposes of this Agreement shall be
the exclusive property of Licensee.
5.2 Samples. Licensee shall submit to Xxxxxxx Shoe, free of charge,
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samples of each item of Xxxxxxx Shoe Merchandise within a reasonable time prior
to the commencement of production of the item for sale and distribution, but not
later than ten (10) days prior to the scheduled first showing of the collection
of Xxxxxxx Shoe Merchandise which includes the item. Licensee may, after the
production and distribution of the first collection of Xxxxxxx Shoe Merchandise
under this Agreement, suggest procedures for submitting representative samples,
subject to continuing inspections under Paragraph 5.4, and Xxxxxxx Shoe shall
consider and respond to any such request in good faith but shall not be required
to approve any such procedures. Licensee may not sell or distribute any item of
Xxxxxxx Shoe Merchandise unless Xxxxxxx Shoe has Approved the sample for the
item in advance. In furtherance of the foregoing, Licensee shall provide to
Xxxxxxx Shoe, on an annual basis, a schedule reflecting the dates of collection
showings with an indication as to when the Xxxxxxx Shoe Merchandise scheduled to
be shown will be available for inspection by Xxxxxxx Shoe prior thereto.
5.3 Packaging. To the extent reasonably feasible, the samples provided
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under Paragraph 5.2 shall include all tags, labels and other items of Packaging
that relate to, or that Licensee intends to use with, the item submitted as a
sample. Licensee shall submit to Xxxxxxx Shoe for Approval samples of all other
items of Packaging within a reasonable time prior to the
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commencement of the production of such items for use with Xxxxxxx Shoe
Merchandise. Xxxxxxx Shoe shall not unreasonably require Licensee materially to
change labels, tags or other significant items or Packaging from collection to
collection.
5.4 Continuing Inspection. Upon Xxxxxxx Shoe's request at any time and
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from time to time, Licensee shall submit to Xxxxxxx Shoe a reasonable number of
production samples of items of Xxxxxxx Shoe Merchandise or Packaging material in
order for Xxxxxxx Shoe to monitor production in accordance with Xxxxxxx Shoe's
Approvals, quality standards and other requirements of this Agreement. If
Xxxxxxx Shoe notifies Licensee in writing of the disapproval of any production
sample, Licensee shall immediately take such action as may be necessary for the
item to meet Xxxxxxx Shoe's Approval and cease production and distribution and
sale of the item pending Approval. Xxxxxxx Shoe shall not unreasonably
disapprove any production sample under this paragraph.
VI. Trademark and Trademark Protection
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6.1 Ownership.
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6.1.1 Licensee acknowledges that as between Xxxxxxx Shoe and
Licensee, and Xxxxxxx Shoe represents and warrants to Licensee that, Xxxxxxx
Shoe is the owner of all right, title and interest in and to the Xxxx in any
form or embodiment and is also the owner of the good will attached or which
shall become attached to the Xxxx in connection with the business and goods in
relation to which the same has, is or shall be used. Sales by Licensee shall be
deemed to have been made for purposes of trademark registration, and all uses of
the Xxxx by Licensee shall inure to the benefit of Xxxxxxx Shoe.
6.1.2 At Xxxxxxx Shoe's request, Licensee shall execute any
documents, including registered users agreements, reasonably required by Xxxxxxx
Shoe to confirm Xxxxxxx Shoe's ownership of all rights in and to the Xxxx in the
Territory and the respective rights of Xxxxxxx Shoe and Licensee under this
Agreement. Licensee shall cooperate with Xxxxxxx Shoe at Xxxxxxx Shoe's expense
in connection with the filing and prosecution by Xxxxxxx Shoe of applications in
Xxxxxxx Shoe's name relating to the use of the Xxxx for Merchandise in the
Territory.
6.1.3 Licensee shall never challenge or encourage anyone to challenge
Xxxxxxx Shoe's ownership or the validity of the Xxxx or any application for
registration thereof or any trademark, copyright or other registration thereof
or any rights of Xxxxxxx Shoe therein.
6.2 No Adverse Acts. Licensee shall not, at any time or in any manner,
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engage in any activity or do or permit any act which may in any way adversely
affect any rights of Xxxxxxx Shoe to the Xxxx or any registrations or
applications for registration thereof or which may directly or indirectly reduce
the value of the Xxxx or derogate or detract from their repute.
6.3 No Secondary Xxxx. Licensee shall not use any other trade names,
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trademarks or other designations (including, without limitation, Licensee's own
corporate name or trade name) in connection with the Xxxx in any advertising,
publicity, labeling, Packaging or printed matter
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(except invoices) utilized by Licensee in connection with Xxxxxxx Shoe
Merchandise. Licensee shall not join the Xxxx with any other names or marks to
form a new xxxx and shall not itself use the Xxxx as a corporate name or trade
name or in any other manner other than in connection with the manufacture,
distribution, sale and promotion of Xxxxxxx Shoe Merchandise under this
Agreement. Notwithstanding the foregoing, Licensee may, subject to the
provisions of Paragraph 1.2, place the words "Marketed by Inter-Pacific
Corporation" on any trade advertisement regarding the Xxxxxxx Shoe Merchandise
and on business cards and stationery of Licensee.
6.4 Trademark Notices. Licensee shall cause the designation "R" to appear
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immediately after, on the upper right, of the Xxxx on all Packaging and
advertising and promotional material and shall, in addition, cause to appear on
all Packaging and advertising and promotional materials and on all forms,
invoices, stationery, business cards and other documents and materials of any
kind bearing the Xxxx such designations, legend, or markings or notices as may
be necessary, or as Xxxxxxx Shoe may require, to give notice of the status of
the Xxxx and Xxxxxxx Shoe's rights and interests therein.
6.5 Copyrights. Any copyright relating to Xxxxxxx Shoe Merchandise that
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may be created by statute, common law or otherwise in any design, sketch, print,
Packaging or similar matter created by Xxxxxxx Shoe shall be the sole property
of Xxxxxxx Shoe. Licensee shall take such action as may be necessary or as
Xxxxxxx Shoe may require, at Xxxxxxx Shoe's expense, to confirm, preserve or
protect such copyright, including placing of copyright notices on the
appropriate items. Licensee shall not claim for itself or for any party other
than Xxxxxxx Shoe's copyrights in any such items and shall not file or attempt
to file any copyright registrations therefor.
VII. Warranties, Indemnification and Infringement
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7.1 Warranties.
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7.1.1 Xxxxxxx Shoe represents and warrants to Licensee that Xxxxxxx
Shoe has the full right, power and authority to enter into this Agreement and to
grant the rights, licenses and privileges granted by Xxxxxxx Shoe hereunder to
Licensee and to perform all of Xxxxxxx Shoe's obligations hereunder.
7.1.2 Licensee represents to Xxxxxxx Shoe that Licensee has the full
right, power and authority to enter into this Agreement and to perform all of
its obligations hereunder.
7.2 Indemnification by Xxxxxxx Shoe. Xxxxxxx Shoe shall indemnify, defend
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and hold harmless Licensee from and against any and all claims, causes of
actions, suits, damages and expenses (including reasonable attorneys' fees and
expenses) arising out of any claim (i) that Licensee's use of the Xxxx in
accordance with the terms of this Agreement constitutes an infringement of any
trademark rights of any third party within the Territory or (ii) relating to
defects attributable to designs or patterns supplied or created by Xxxxxxx Shoe,
upon Licensee giving Xxxxxxx Shoe prompt written notice and authority and an
opportunity to undertake and
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fully conduct the defense thereof, with counsel reasonably satisfactory to
Licensee, and out of the breach by Xxxxxxx Shoe of any provision of this
Agreement or of any of Xxxxxxx Shoe's duties hereunder or the acts or omissions
of Xxxxxxx Shoe or any of its servants, agents, employees or contractors in
connection with the performance of this Agreement.
7.3 Indemnification by Licensee and Insurance.
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7.3.1 Licensee shall indemnify, defend and hold harmless Xxxxxxx Shoe
from and against any and all claims, causes of action, suits, damages and
expenses (including reasonable attorneys' fees) which Xxxxxxx Shoe may incur or
for which it may become liable or required to pay by reason of any defect or
alleged defect in any Xxxxxxx Shoe Merchandise, except for defects attributable
to designs or patterns supplied or created by Xxxxxxx Shoe; the breach by
Licensee of any provision of this Agreement or of any of Licensee's duties
hereunder; or the acts or omissions of Licensee or of any of its servants,
agents, employees or contractors in connection with the performance of this
Agreement (excluding matters specifically covered by Paragraph 7.2).
7.3.2 Licensee shall, at its own expense, obtain and maintain
throughout the Term in full force and effect with an insurance carrier
reasonably acceptable to Xxxxxxx Shoe, products liability insurance with a limit
of liability of not less than $1,000,000 insuring against, without limitation,
all damages, profits, interest, attorneys' fees, costs and expenses arising out
of any suit or legal proceeding, claim or demand resulting from a defect or
alleged defect in any item of Xxxxxxx Shoe Merchandise or out of the use or
condition of an item of Xxxxxxx Shoe Merchandise. Such insurance policy shall
name Xxxxxxx Shoe as an additional insured and shall provide for at least thirty
(30) days advance written notice to Xxxxxxx Shoe before cancellation or
substantial modification. Licensee shall promptly deliver a certificate of such
insurance to Xxxxxxx Shoe and, if Xxxxxxx Shoe so requests, a copy of the policy
for such insurance. The obligation of this subparagraph with respect to
insurance shall not be deemed to limit in any manner the indemnification
obligations of Licensee under subparagraph 7.3.1.
7.4 Infringements. Licensee shall promptly notify Xxxxxxx Shoe in writing
-------------
of any known or suspected infringements of the Xxxx or of any copyright or other
rights or property of Xxxxxxx Shoe, promptly after the same comes to Licensee's
attention. Xxxxxxx Shoe shall have the sole and exclusive right to take action
or institute proceedings with respect to such infringement, and shall proceed as
it may, in its sole discretion, deem appropriate or desirable. Licensee shall
cooperate in any action or proceeding by Xxxxxxx Shoe at Xxxxxxx Shoe's expense
with respect to an infringement or suspected infringement in such manner as
Xxxxxxx Shoe may reasonably request.
VIII. Term and Termination
--------------------
8.1 Initial Term. The initial term of this Agreement ("the Initial Term")
------------
shall begin on January 8, 1997 and end on May 31, 2000, subject to earlier
termination as provided in this Agreement and to renewal as provided in
Paragraph 8.2.
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8.2 Renewal of License.
------------------
8.2.1 Renewal Term. If Licensee is not in default of any of the
------------
terms of this Agreement, has complied with its obligations under this Agreement
in all material respects (without regard to whether Xxxxxxx Shoe has given any
notices of default or failure to comply) and if it reasonably appears that Net
Sales for the last Annual Period of the Initial Term will exceed $4,000,000,
Licensee shall have the option, exercisable by written notice given to Xxxxxxx
Shoe not later than six (6) months prior to the expiration of the Initial Term,
to renew this Agreement in accordance with the terms set forth herein for a
renewal term ("Renewal Term") of three (3) years, beginning on June 1, 2000 and
ending on May 31, 2003, subject to earlier termination as provided in this
Agreement.
8.3 Termination.
-----------
8.3.1 Xxxxxxx Shoe may terminate this Agreement, effective
immediately upon giving Licensee written notice of termination, if (i) Licensee
fails to make any payment due to Xxxxxxx Shoe under this Agreement when such
payment is due and continues such failure uncured for fifteen (15) days after
written notice thereof from Xxxxxxx Shoe to Licensee, (ii) Licensee fails two
(2) or more times during any Annual Period during the Term to make any payment
due to Xxxxxxx Shoe within fifteen (15) days after such payment is due, without
regard to any notice of such failure from Xxxxxxx Shoe, (iii) Licensee abandons
the Xxxx, as provided in Paragraph 4.2, (iv) the beneficial ownership of
Licensee changes in a manner so as to change the actual control of Licensee,
except that a change resulting in actual control of Licensee by Xxxxx Xxxxxxxx,
Chief Executive Officer of Licensee, shall not result in the termination of this
Agreement under this paragraph 8.3.1, or (v) Licensee defaults on any
obligations secured by a security interest in or other lien or encumbrance on
Xxxxxxx Shoe Merchandise.
8.3.2 Either Xxxxxxx Shoe or Licensee may terminate this Agreement,
effective immediately upon giving the other party written notice of termination,
if (i) the other party breaches or fails to perform any of the material terms or
provisions of this Agreement in a manner not provided for in subparagraph 8.3.1,
in any material respect and such breach or failure is not curable or, if
curable, is not cured within thirty (30) days after written notice thereof from
the non-breaching party, or (ii) the other party files a voluntary petition or
proceeding in bankruptcy or under any federal or state bankruptcy or insolvency
or other law for the relief of debtors; consent to the appointment of a
receiver, custodian or liquidator for a portion of its business or property; has
filed against it and not dismissed within forty-five (45) days an involuntary
proceeding under any federal or state bankruptcy or insolvency or other law for
the relief of debtors or for the appointment of a receiver, custodian or
liquidator; makes an assignment for the benefit of its creditors; or ceases, or
admits its intention to cease, the manufacture, sale or distribution of Xxxxxxx
Shoe Merchandise or the conduct of its business in the ordinary course.
8.4 Termination of Rights.
---------------------
8.4.1 Upon the expiration or termination of this Agreement for any
reason whatever, all rights of Licensee under this Agreement shall terminate and
automatically revert to Xxxxxxx Shoe. Licensee shall immediately discontinue
all use of the Xxxx and shall no longer
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have any right to use the Xxxx or any variation or simulation thereof in any
manner or for any purpose whatsoever, except as provided in Paragraph 8.6
hereof. Licensee shall transfer to Xxxxxxx Shoe by such documentation as Xxxxxxx
Shoe may require all registrations, filings, trademarks, copyrights and other
rights with regard to the Xxxx which Licensee may have possessed at any time.
Subject to the provisions of Paragraph 8.6 concerning the sale of Termination
Inventory and further subject to Licensee's ownership rights as set forth in
Paragraph 5.1 hereof, Licensee shall deliver to Xxxxxxx Shoe, without charge,
all sketches, samples, designs or other matters relating to Xxxxxxx Shoe
Merchandise and all Merchandise, Packaging materials and advertising and
promotional materials bearing the Xxxx in any form.
8.4.2 Upon termination or expiration of this Agreement for any
reason, including termination under Paragraph 8.3.2(ii), no trustee in
bankruptcy, assignee for the benefit of creditors, custodian, receiver, sheriff
or court officer or other successors to Licensee or its assets or business shall
have any right to continue this Agreement or to use or exploit the Xxxx in any
manner whatever.
8.4.3 Notwithstanding the provisions of subparagraph 8.4.2, in the
event that under the United States Bankruptcy Code or any amendment or successor
thereto (collectively the "Bankruptcy Code"), the trustee in bankruptcy of
Licensee or Licensee, as bankruptcy debtor, is permitted to and does assume this
Agreement and thereafter proposes to assign this Agreement by an assignment
which fulfills the applicable requirements of the Bankruptcy Code, the trustee
or Licensee shall notify Xxxxxxx Shoe of the proposed assignment in advance, in
writing, setting forth the name and address of the proposed assignee, the
proposed consideration for the assignment and all other material terms and
details of the proposal. Such notice shall be considered an offer to Xxxxxxx
Shoe to have this Agreement assigned to Xxxxxxx Shoe or to its designee for the
consideration (or its reasonable equivalent in money) and under the other
material terms in the notice. Xxxxxxx Shoe may exercise the option and accept
the offer by giving the trustee or Licensee, as appropriate, written notice of
exercise and acceptance within twenty (20) days after Xxxxxxx Shoe receives the
notice from the trustee or Licensee. If Xxxxxxx Shoe fails to give notice and
exercise the option within such twenty (20) day period, the trustee or Licensee
may complete the proposed assignment, but only to the party and for the
consideration and under the terms described in the notice.
8.5 Termination Inventory. Within thirty (30) days after the expiration
---------------------
or termination of this Agreement, Licensee shall prepare and deliver to Xxxxxxx
Shoe a written Termination Inventory, including a complete and accurate schedule
as of the date of expiration or termination of all completed Xxxxxxx Shoe
Merchandise on hand; work in process relating to Xxxxxxx Shoe Merchandise on
hand, including uncut piece goods and products and materials in the process of
manufacture; and all Packaging materials, advertising and promotional materials
and other documents or items that bear the Xxxx or Xxxxxxx Shoe's name in any
form in Licensee's possession or control or in the process of manufacture for
Licensee. Xxxxxxx Shoe shall have the option, exercisable within ten (10) days
after receipt of the Termination Inventory, to purchase all or any portion of
the items in the Termination Inventory, except for that inventory necessary for
Licensee to fill existing orders, which inventory shall be identified as such on
the written Termination Inventory provided by Licensee to Xxxxxxx Shoe pursuant
to this paragraph, for a purchase price equal to Licensee's cost. Licensee
shall deliver to Xxxxxxx Shoe the items in the
13
Termination Inventory to be purchased, within five (5) days after receipt of
Xxxxxxx Shoe's notice exercising its option to purchase, and Xxxxxxx Shoe shall
pay the purchase price within thirty (30) days after receipt of all items of the
Termination Inventory purchased.
8.6 Termination Inventory Sales. For a period of six (6) months after the
---------------------------
expiration of Xxxxxxx Shoe's option to purchase Termination Inventory under
Paragraph 8.5, Licensee may sell finished Xxxxxxx Shoe Merchandise in the
remaining Termination Inventory or finished Xxxxxxx Shoe Merchandise completed
from work in process in the remaining Termination Inventory, on a non-exclusive
basis, in accordance with all of the terms of this Agreement. Royalties for all
such sales shall be paid and accounted for by Licensee within thirty (30) days
after the end of such six (6) month period. Any items in the Termination
Inventory not sold and remaining after the selling period provided for in this
paragraph shall be delivered to Xxxxxxx Shoe, disposed of or destroyed in
accordance with Xxxxxxx Shoe's instructions.
8.7 Subsequent License. Immediately upon the expiration or termination of
------------------
this Agreement for any reason, Xxxxxxx Shoe shall have the free and unrestricted
right to grant other parties one or more licenses to use the Xxxx in connection
with the manufacture, sale and distribution or advertising and promotion of
Merchandise in the Territory or to enter into such other transactions as it
desires for the use of the Xxxx with Merchandise or in any other manner, without
any obligation of any kind to Licensee. The right of Licensee to sell items of
Termination Inventory under Paragraph 8.6 is non-exclusive only and shall not in
any manner limit Xxxxxxx Shoe's rights to enter into other licenses or
transactions.
8.8 Reservation of Rights. Notwithstanding any termination of this
---------------------
Agreement, Xxxxxxx Shoe shall have and hereby reserves all rights and remedies
which are granted or available to it under this Agreement or applicable law, and
termination shall not be deemed to be an exclusive remedy or to limit Xxxxxxx
Shoe in any manner from enforcing any other rights or remedies.
IX. General Terms
-------------
9.1 Confidentiality. The parties acknowledge that all information and
---------------
data which the parties have learned or will learn in connection with this
License Agreement and activities and transactions hereunder concerning the
business and operation of the parties and all tangible manifestations of such
information and data including, without limitation, designs, patterns, sketches,
business and marketing plans, customer lists, and financial and operating
reports constitute valuable proprietary confidential information and trade
secrets of the parties, and the parties shall not disclose any such data or
information or use any such data or information for themselves or any other
person or entity, except for the proper and authorized performance of this
Agreement in accordance with all of the terms hereof.
9.2 Arbitration.
-----------
9.2.1 Subject to the provisions of subparagraph 9.2.2, all disputes
arising under this Agreement or the obligations of the parties hereunder shall
be submitted to arbitration in
14
Boston, Massachusetts before a panel of three arbitrators, in accordance with
the then prevailing Rules for Commercial Arbitration of the American Arbitration
Association. The arbitrators in any such arbitration shall award costs to the
prevailing party and may, but shall not be required to, award reasonable
attorneys' fees. The decision of the arbitrators shall be final and binding on
all parties, except that the arbitrators shall have no power to vary the terms
of this Agreement. Judgment on the arbitrators' award may be entered in any
court in the States of Massachusetts, California or in any other court of
competent jurisdiction.
9.2.2 The parties acknowledge that a breach of this Agreement
involving the improper or unauthorized use of the Xxxx or other matters may give
rise to irreparable harm pending the outcome of arbitration under subparagraph
9.2.1. Accordingly and notwithstanding the provisions of subparagraph 9.2.1,
either party may, upon a breach or threatened breach of this Agreement, bring an
action in a court of competent jurisdiction and apply therein for temporary or
preliminary injunctive or other equitable relief, pending resort to, and a
decision in, arbitration under subparagraph 9.2.1. If otherwise appropriate
under applicable law, a court may entertain any such action and grant injunctive
or equitable relief, and the provisions of subparagraph 9.2.1 providing for
arbitration shall not be construed to prevent the action or relief.
9.3 Assignability.
-------------
9.3.1 Xxxxxxx Shoe may assign this Agreement to a successor to all or
substantially all of its business or the portion of its business which utilizes
the Xxxx, if the successor assumes all of Xxxxxxx Shoe's responsibilities,
obligations and liabilities hereunder. Xxxxxxx Shoe may, in addition, assign
the right to receive payments, but not any obligations, under this Agreement to
a financial or similar institution for purposes of financing, so long as Xxxxxxx
Shoe remains responsible for all of its obligations hereunder.
9.3.2 (a) This Agreement is personal to Licensee, and Licensee may
not, without the prior written consent of Xxxxxxx Shoe, assign, sublicense or
otherwise transfer all or any portion of this Agreement or any rights or
obligations hereunder, whether voluntarily, involuntarily, by operation of law
or otherwise, and any such attempted assignment or other transfer shall be null
and void and of no effect. Notwithstanding the foregoing, Licensee may assign
this Agreement and the rights hereunder to another corporation provided that
such assignee corporation is controlled by the same parties which controlled
Licensee before such assignment and provided that Licensee and its
successor/assignee remain liable for all of its obligations under this
Agreement.
(b) Licensee shall have the right to have Xxxxxxx Shoe
Merchandise, or any portion thereof, manufactured anywhere in or outside the
Territory by a third party for Licensee's account provided that the manufacture
of such Xxxxxxx Shoe Merchandise complies with all provisions of this Agreement.
9.4 Applicable Law. Delaware law shall govern the validity, construction,
--------------
interpretation and effect of this Agreement.
15
9.5 No Agency. Nothing contained in this Agreement shall be deemed or
---------
construed as constituting the parties hereto as partners or joint venturers or
either party as an agent of the other and, without limiting the foregoing,
Licensee shall have no authority to bind or obligate or to incur any
indebtedness for Xxxxxxx Shoe, and no such authority shall be implied.
9.6 Finder's and Broker's Fees. The parties hereby represent and warrant
--------------------------
to each other that each owes no finder's or broker's fees in connection with
this Agreement and that neither has procured same for that purpose.
9.7 Failure to Exercise Rights. The failure of either party to act or
--------------------------
exercise any right under this Agreement, upon the breach of any of the terms
hereof, or otherwise, shall not be construed as a waiver of such breach or as
preventing either party from thereafter enforcing strict compliance with any and
all of the terms hereof.
9.8 Severability. If any provision of this Agreement shall be held to be
------------
invalid or unenforceable, such provision shall be considered severable, and the
remaining provisions of this Agreement shall continue in full force and effect
and shall be valid and enforceable to the fullest extent permitted by law.
9.9 Entire Agreement. This Agreement contains the entire understanding
----------------
between the parties, no other representations or covenants having induced either
party to execute this Agreement. This Agreement and obligations and duties
under this Agreement may not be amended or modified in any manner, in whole or
in part, except by a written agreement or amendment or modification duly
executed by the party to be charged.
9.10 Headings. The Article and paragraph headings of this Agreement are
--------
for convenience of reference only and do not form a part of the covenants, terms
or conditions of this Agreement or give full notice thereof.
9.11 Notices. All notices, reports, statements, exercises of options or
-------
other communications required or permitted under this Agreement shall be in
writing and shall be sufficiently given only if personally delivered; mailed by
registered or certified mail, return receipt requested; sent by overnight
express courier, with written receipt of delivery; or transmitted by telecopier
and confirmed by first class mail within twenty-four (24) hours. All notices
shall be sent or delivered to the following addresses or to such other addresses
as either party may, by notice direct:
If to Xxxxxxx Shoe: Xxxxxxx Shoe Company Inc.
X.X. Xxx 00
Xxxxxxxxx, Xxxxxxxxxxxxx 00000-0000
Attn: Xxxxxxx X. Xxxx, Chairman
with a copy to: Xxxxxx, Xxxx & Xxxxxxxx LLP
000 Xxxxx Xxxxx Xxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxxxxx X. Xxxxx
16
If to Licensee: Inter-Pacific Corporation
0000 Xxxxx Xxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxxx Xxxxxx, National Director of Sales
with a copy to: Xxxxxxxxx Glusker Fields Claman & Machtinger LLP
1900 Avenue of the Stars, Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxxxx Xxxxxxx
Notices given by mail shall be deemed given on the second business day after the
date on which they are mailed. All other notices shall be deemed as given on
receipt.
9.12 Counterpart; Fax. This Agreement may be executed by fax and
----------------
simultaneously in one or more counterparts, each of which shall be deemed an
original, but all of which shall constitute but one and the same instrument.
17
IN WITNESS WHEREOF, the parties, each by their duly authorized
representative, have executed this License Agreement as of the date first above
written.
XXXXXXX SHOE COMPANY INC.
By: /s/ Xxxxxxx X. Xxxx
---------------------
Xxxxxxx X. Xxxx
Chairman and Chief Executive Officer
XXXXXXX COMPANY
By: /s/ Xxxxxxx X. Xxxx
---------------------
Xxxxxxx X. Xxxx
Chairman
INTER-PACIFIC TRADING CORPORATION
By: /s/ Xxxxx Xxxxxxxx
---------------------
Name: Xxxxx Xxxxxxxx
Title: Pres.
18
