AMENDMENT NO. 2 (RENEWAL) TO TRADEMARK LICENSE AGREEMENT
Exhibit 10.1
AMENDMENT NO. 2 (RENEWAL)
TO TRADEMARK LICENSE AGREEMENT
TO TRADEMARK LICENSE AGREEMENT
This Amendment No. 2 dated November 1, 2006 amends that certain Trademark License Agreement
dated August 9, 2000 (the “Agreement”) and as amended on October 18, 2004 by and between LEVI
XXXXXXX & CO., a Delaware corporation, (“LS&CO.”) and GENESCO INC. (“Licensee”), a Tennessee
corporation located at 0000 Xxxxxxxxxxxx Xxxx, Xxxxxxxxx, XX 00000.
Whereas, LS&CO. and Licensee wish to amend the Agreement as set forth below:
1. | Section 1, “Grant of License” is hereby amended by replacing Exhibit A (Trademarks) in its entirety with the new Exhibit A attached hereto and by replacing Exhibit B (Products) in its entirety with the new Exhibit B attached hereto. | |
2. | Section 2.1, “Initial Term” shall be amended to reflect that the Agreement is renewed for one additional three (3) year period commencing on January 1, 2007 and ending on December 31, 2009. | |
3. | Section 2.2, “Renewal Term” shall be deleted in its entirety and substituted with the following: | |
“This Agreement may be renewed upon written request of Licensee delivered to LS&CO. not earlier than February 1, 2009 and not later than March 1, 2009, for one (1) additional three (3) year term, commencing on January 1, 2010 and ending on December 31, 2012 (if renewed then, the “Renewal Term”; the Initial Term and the Renewal Term may be referred to interchangeably as “Term”). The Agreement shall be eligible for renewal only if: (i) Licensee’s Net Sales of Products for the Annual Period beginning January 1, 2008 exceed $65,000,000 (ii) Licensee’s projected Net Sales for the Renewal Term submitted pursuant to this Section 2.2 and used to calculate the Guaranteed Minimum Royalties for the Renewal Term are equal to or greater than the projected Net Sales for the final Annual Period of the Initial Term (or 2009), and (iii) Licensee is in compliance with all terms and conditions contained in this Agreement and there is no outstanding Event of Default existing on the date Licensee delivers its notice of renewal or at any time during the balance of the Term. Licensee shall include with its renewal notice data demonstrating that the renewal condition set out in clause (i) is satisfied, a written certification by the president, a vice president or the chief financial officer to the effect that the condition set out in clause (iii) is met and Licensee’s projected Net Sales of Products during the contemplated Renewal Term. Within thirty (30) days after receipt of Licensee’s renewal notice, LS&CO. shall notify Licensee whether or not the conditions are met and the Agreement is, in fact, renewed. If the Agreement is not renewed, it shall expire and terminate at the end of the relevant Term. Licensee’s failure to timely deliver |
its notice of renewal shall be treated as a final decision by Licensee that it has elected not to renew.” | ||
4. | Section 3.1, “Guaranteed Minimum Royalty” shall be deleted in its entirety and substituted with the following: |
“3.1 Guaranteed Minimum Royalty. Licensee shall pay to LS&CO. a non-recoupable
guaranteed minimum royalty (the “Guaranteed Minimum Royalty”) in respect of each Annual Period.
The guaranteed Minimum Royalty shall be as follows:
Annual Period | Guaranteed Minimum Royalty | |||
2007 |
$ | 3,205,000 | ||
2008 |
$ | 3,444,000 | ||
2009 |
$ | 3,274,000 |
Licensee shall pay to LS&CO. no later than thirty (30) days after the end of each quarterly
period an amount equal to one-quarter (1/4) of the Guaranteed Minimum Royalty payment for
that Annual Period plus the excess, if any, of Earned Royalties in a quarter over the
Guaranteed Minimum Royalty for that quarter. The parties understand and acknowledge that,
at the end of any Annual Period, Licensee’s royalty obligations shall be no more than the
greater of the Guaranteed Minimum Royalty payment or the cumulative Earned Royalties for
that Annual Period.
5. | Section 3.2, Earned Royalty shall be deleted in its entirety and substituted with the following: |
“3.2 Earned Royalty.
(a) Licensee shall pay to LS&CO. an earned royalty rate on First Quality Products
equal to (redacted) of Net Sales. However, during any Annual Period, should total Product
sales exceed $71,000,000, provided that First Quality sales make up at least $68,500,000 of
the $71,000,000 Net Sales amount (together, the “Net Sales Target”), Licensee shall receive
a reduction in the royalty rate owed on First Quality Products equal to one-half a percent,
such that a royalty rate of (redacted) shall apply to all Net Sales of First Quality
Products during that Annual Period (either rate, the “Earned Royalty Rate”).
(b) Licensee’s projected Earned Royalty Rate for each Annual Period shall be determined
based on the Sales Plan submitted pursuant to Section 4 of this Agreement; Licensee will
then make royalty payments for the upcoming Annual Period based on the Earned Royalty Rate
dictated by projected Net Sales vis-à-vis the Net Sales Target. If, at any time during the
year, Licensee exceeds
the Net Sales Target and therefore Licensee’s actual Earned Royalty Rate is less than
the projected Earned Royalty Rate, Licensee shall receive a credit towards its next
quarterly payment due equal to the difference between the actual Earned Royalties owed and
the Earned Royalty amounts paid to date. If, at the end of the year, it turns out that
Licensee’s actual Earned Royalty Rate is greater than the projected Earned Royalty Rate
because Licensee has not met the Net Sales Target as anticipated in the Sales Plan, Licensee
shall pay LS&CO., at the time it delivers the annual statement for that Annual Period as
described in Section 9.2, the difference between the actual Earned Royalties owed and the
Earned Royalty amounts paid to date with its next quarterly payment.
(c) During each Annual Period, Licensee shall pay to LS&CO. an earned royalty rate on
items produced that are merchantable but not suitable for sale at list price because they
contain minor production or material flaws not affecting proper usage of the Trademarks
(“Seconds”) or First Quality Products sold at a discount off of published wholesale price of
no less than twenty-five percent (25%) (“Closeouts”; Seconds and Closeouts together, “Second
Quality Products”), equal to (redacted). Licensee shall pay First Quality Earned Royalty
Rate on Second Quality Products for any Annual Period to the extent that sales of Second
Quality Products (other than Involuntary Discontinuations as defined below) are greater than
(redacted) of total Product sales (in terms of dollars) (the “Second Quality Cap”). For any
such Annual Period, Licensee shall pay LS&CO., at the time it delivers the annual statement
for that Annual Period as described in Section 9.2, an amount equal to the difference
between the First Quality Earned Royalty Rate and the Second Quality Earned Royalty Rate on
all Net Sales of Second Quality Products above the Second Quality Cap.
(d) In the event that LS&CO. notifies licensee in writing that one or more of the
Trademarks will be removed form Exhibit A in one hundred fifty (150) days or less, Licensee
may sell Products bearing the formerly approved Trademarks as Closeouts only to those
Approved Retailers approved under Section 8.3 for a period of one hundred twenty (120) days
after Licensee receives written notice from LS&CO. of the removal of said Trademarks from
Exhibit A (“Involuntary Discontinuations”). Licensee shall pay to LS&CO. the Second Quality
Royalty Rate on any Involuntary Discontinuations.
(e) “Net Sales” shall mean the gross invoice price billed to Approved Retailers or
other customers, if any, less actual and customary returns, separately listed applicable
taxes and separately listed merchandising allowances actually applied to Approved Retailers
in an amount up to one percent (1%) of Net Sales per Annual Period. No other deduction or
recoupment shall be allowed of any kind, including, without limitation and by way of
example, cash discounts, early payment discounts, year end rebates, costs incurred in
manufacturing, selling, distributing, shipping and handling costs, advertising (including
cooperative and promotional allowances, fixturing, merchandising guides, displays, or the
like), uncollectible accounts,
commissions, or any other amounts, nor shall such deductions or recoupment be netted
against the sales price to arrive at the gross invoice price or any reduced gross invoice
price. A Product shall be considered “sold” on the earlier of the date when the Product is
billed or invoiced, shipped, consigned or paid for. The terms of payment or credit
concerns relating to Approved Retailers or otherwise shall not affect Licensee’s royalty
payment obligations.
6. | Section 4.2 Consumer Advertising shall be deleted in its entirety and substituted with the following: | |
“During each Annual Period, Licensee shall pay to LS&CO., or to such other person or entity as LS&CO. may designate, an amount equal to (redacted) of the projected aggregate Net Sales for that Annual Period (the “Marketing Contribution”) based on the Sales Plan described in Section 4.1. Licensee shall pay these amounts to LS&CO. within thirty (30) days after receipt of invoices from LS&CO., it being understood that LS&CO. anticipates issuing these invoices at the time of the underlying expenditure for marketing activities. If actual aggregate Net Sales exceed projected Net Sales for any Annual Period, then Licensee shall pay to LS&CO. an additional amount equal to (redacted) of the excess, with that amount payable in, and for use during, the next Annual Period, in addition to the Marketing Contribution otherwise due for that Annual Period. Marketing Contributions shall be separate from and shall not be subject to credit for expenditures by Licensee for cooperative advertising, trade advertising, fixture programs, trade shows, sampling or any other promotional or sales material. LS&CO. shall use these funds for consumer marketing of the brand and branded products through vehicles and at the times and in the manner as LS&CO. may determine, Licensee acknowledging that it may not receive any direct or pro rata benefit from its Marketing Contributions.” | ||
7. | Section 10, Global Sourcing and Operating Guidelines shall be deleted in its entirety and substituted with the following: |
10. Global Sourcing and Operating Guidelines
10.1 LS&CO. Reputation. LS&CO. has and is determined to maintain a worldwide
reputation for ethical business conduct. To that end, LS&CO. adopted Global Sourcing and
Operating Guidelines (“GSOG”) setting forth standards of conduct it requires from, among
others, its licensees, including Licensee. Licensee acknowledges that its conduct, and the
conduct of any subcontractor, must reflect positively on LS&CO.’s reputation and accordingly
agrees to the provisions of this Section 10. Additionally, Licensee understands and agrees
that LS&CO. may, from time to time, disclose Licensees’ customers and suppliers, along with
LS&CO.’s customers and suppliers, in governmental or public filings, on LS&CO.’s corporate
website or otherwise in line with the goal of maintaining transparency and high standards of
ethical business conduct.
10.2 Ethical Responsibility. Licensee agrees that it shall, and shall cause
its subcontractors to follow the highest standards of business ethics in conducting all
aspects of its operations under this Agreement.
10.3 Global Sourcing and Operating Guidelines.
(a) Licensee represents and warrants that its key officers and managers have read and
understand the GSOG, including but not limited to its Business Partner Terms of Engagement
(“TOE”) and the Country Assessment Guidelines attached to this Agreement as Exhibit
H.
(b) Licensee agrees that it shall, and shall cause its permitted subcontractors to,
comply with the requirements of the GSOG at all times.
10.4 Effect on Compliance with Laws. Licensee shall be fully responsible for
compliance with all local laws and regulations applicable to Licensee’s operations. If the
requirements of the GSOG are stricter than the requirements of applicable law, the
requirements of the GSOG shall control.
10.5 TOE Assessment. Licensee acknowledges that LS&CO. requires official,
approved TOE assessments (“TOE Assessments”) to be performed from time to time to ensure TOE
compliance on all manufacturing facilities or subcontractors used by Licensee to produce any
Products, including branded samples. Licensee shall, at Licensee’s sole expense, conduct
all TOE Assessments required by LS&CO. through Verité Inc. or another LS&CO. approved
third-party monitoring company.
(a) For the purposes of monitoring compliance with this Section Licensee shall provide
LS&CO. with a complete list of all the manufacturing facilities, subcontractors and
suppliers it intends to use, including details of the purposes of the proposed use of such
manufacturing facilities, subcontractors and suppliers. Licensee represents that it is
presently using the third-parties listed on Exhibit J to manufacture Products, and
that it is not subcontracting with a third party beyond those listed on Exhibit J.
Licensee shall, within thirty (30) days after completion of a manufacturing facility TOE
Assessment, deliver a copy of the assessment to LS&CO. Licensee shall not begin production
at any manufacturing facility until LS&CO. reviews and approves, as specified under Section
19, the TOE Assessment. Licensee acknowledges that LS&CO.’s goal is to provide visibility
with respect to all of the contractors and suppliers producing products bearing LS&CO.
brands. To that end, LS&CO. may, from time to time, disclose Licensee’s contractors and
suppliers in governmental or public filings, on LS&CO.’s corporate website or otherwise.
(b) It is understood and agreed that LS&CO. makes no representations or warranties with
respect to the GSOG, including the TOE and the TOE Assessments, and that LS&CO. shall not be
liable to Licensee or its
subcontractors or its suppliers for any failure to comply with the GSOG, the TOE or the
LS&CO. Restricted Substances List. Any verification or monitoring shall not relieve
Licensee from its obligation to strictly comply with the GSOG, the TOE, the LS&CO.
Restricted Substances List and all applicable laws and regulations.
10.6 Effect of Breach. This Section 10 is of the essence of this Agreement.
Any failure by Licensee or any of its subcontractors to comply with the GSOG shall be
grounds for declaration of an Event of Default by LS&CO. under Section 13.
10.7 Effluent Guidelines. Licensee agrees to follow LS&CO.’s Worldwide
Effluent Guidelines set out on Exhibit K-1. Licensee shall submit a quarterly
report in the form set out on Exhibit K-2 attesting to its compliance with those
guidelines and an annual report in the form set out on Exhibit K-3 attesting to its
compliance with guidelines relating to metal discharge, and deliver copies of each report to
LS&CO. as specified on Exhibit K-2 and Exhibit K-3.
8. | Section 24. “Notices” shall be amended by substituting LS&CO.’s contacts as follows: |
If to LS&CO.:
Xxx Xxxxx
Xx. VP Men’s Merchandising & Design and Brand Licensing, Dockers®
Levi Xxxxxxx & Co.
0000 Xxxxxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Xx. VP Men’s Merchandising & Design and Brand Licensing, Dockers®
Levi Xxxxxxx & Co.
0000 Xxxxxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
With a copy to:
Xxxxxx X. Xxxxxx
Assistant General Counsel
Levi Xxxxxxx & Co.
0000 Xxxxxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Assistant General Counsel
Levi Xxxxxxx & Co.
0000 Xxxxxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
9. | Except as set forth above, all other terms and conditions contained in the Agreement shall remain in full force and effect. |
IN WITNESS WHEREOF, the parties have executed this Amendment No. 3 by their respective
officers hereunto duly authorized as of the day and year first written above.
LEVI XXXXXXX & CO. | GENESCO, INC. | |||||||||
By:
|
/s/ Xxxx Xxxxxxx
President and Commercial General Manager, Dockersâ |
By: Name: Title: |
/s/ Xxxxxxxx Xxxxxx
CEO — Brand Group |