MASTER DISTRIBUTION AND LICENSING AGREEMENT
This MASTER DISTRIBUTION AND LICENSING AGREEMENT ("Agreement") is made
and entered into as of July 1, 2003, JOE'S JEANS, INC., a California company,
with its principal place of business at 0000 Xxxx Xxxxxxx Xxxxxx, Xxxxxxxx,
Xxxxxxxxxx 00000, XXX, (hereinafter referred to as "JOE'S"), and ITOCHU
CORPORATION, a Japanese corporation, with its principal place of business at
5-1, Kita Xxxxxx 0-xxxxx, Xxxxxx-xx, Xxxxx 000-0000, Xxxxx, (hereinafter
referred to as "ITOCHU"), and JOE'S and ITOCHU shall hereinafter collectively be
referred to as the "Parties" and individually be referred to as a "Party".
WHEREAS, JOE'S is an internationally famous creator of men's and
women's apparel, designing and manufacturing certain products (the "Imported
Products" as further defined below);
AND WHEREAS, JOE'S holds all right, title and interest in and to
certain trademarks, trade names, registrations and applications, as may be used
in connection with the manufacture and sale of curtain products (the, "Licensed
Products" as more fully defined herein);
AND WHEREAS, ITOCHU desires to distribute and sell the Imported
Products and to manufacture and sell the licensed Products, in Japan;
NOW, THEREFORE, in consideration of the covenants and agreements
contained herein, and for other good and valuable consideration, the receipt and
sufficiency of which are acknowledged by the execution hereof, the parties agree
as follows:
1. DEFINITIONS. In addition to the terms defined at elsewhere in this Agreement,
the Parties agree that certain terms shall have the meanings as stated in
Exhibit A attached hereto. All personal pronouns used in this Agreement, whether
used in the masculine, feminine or neuter gender, shall include all other
genders; and the singular shall include the plural and vice versa. The words
"hereof", "herein", and "hereunder" and words of similar import when used in
this Agreement shall refer to this Agreement as a whole and not to any
particular provision of this Agreement, and the words "Section", "Exhibit" and
like references are to such portions of this Agreement unless otherwise
specified. All references to years, months, calendar months and days herein are
references to years, months, calendar months and days according to the Gregorian
calendar. Except as otherwise provided in this Agreement, all computations and
determinations as to accounting or financial matters and all statements to be
delivered pursuant to this Agreement shall be made and prepared in accordance
with the generally accepted accounting principles then currently prevailing in
the Territory, and all accounting or financial terms shall have the meanings
assigned thereto by such principles.
2. GRANT OF LICENSING RIGHTS.
2.1 Subject to the terms and conditions contained herein, JOE'S hereby grants to
ITOCHU, and ITOCHU hereby accepts (i) a non-assignable, non-transferable,
non-exclusive right, subject to the provisions of Section 3 below, to use the
JOE'S Intellectual Property in connection with the manufacture, anywhere in the
world, of the Licensed Products, and (ii) a non-assignable, non-transferable,
sole and exclusive right to use the JOE'S Intellectual Property in connection
with the wholesale distribution and sale, offering for wholesale distribution
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and sale, Advertising and promotion of the Products, within the Territory,
whether directly to Retail Locations or though distributors for ultimate sale to
Retail Locations. JOE'S shall neither use nor grant to any Person (other than
ITOCHU) any right to use the JOE'S Intellectual Property in connection with the
manufacture, distribution, sale, advertising or promotion of the Products or any
products identical or similar thereto in the Territory during die Term without
the prior express written consent of ITOCHU. Except for the sale of the Imported
Products to ITOCHU hereunder, JOE'S shall not, directly or indirectly (through
its other licensees or any Person), sell or supply any products identical or
similar in their function to the Products under the Trademarks or any other
trademark confusingly similar thereto to any Person located in the Territory or
any Person outside the Territory who JOE'S knows, should know or has reason to
believe intends or is likely to sell or supply such products in or to the
Territory during the Term without the prior express written consent of ITOCHU.
2.2 This Agreement does not authorize ITOCHU or any Approved Sublicensee or
Subdistributor to use, and consequently they shall not use or permit others to
use: (i) intellectual property of JOE'S other than the JOE'S Intellectual
Property; (ii) variations of the JOE'S Intellectual Property; (iii) the JOE'S
Intellectual Property on or in connection with products other than the Products;
or (iv) the word "JOB'S" or the Trademarks as part of a corporate name, trade
name or logo, or in such a way as to give the impression that they are the
property of ITOCHU or the Approved Sublicensee or Subdistributor, without the
prior express written approval of JOE'S in each instance.
2.3 ITOCHU acknowledges and agrees that the JOE'S Intellectual Property is owned
exclusively by JOE'S, may be used by JOE'S or its other licensees or
distributors (except in conjunction with the sale of the Products in the
Territory), and shall be subject to the provisions of this Agreement. JOE'S
reserves the right to use, and to grant to others the right to use the JOE'S
Intellectual Property in connection with any and all products outside the
Territory, and any and all products other than the Products and any products
identical or similar in their function thereto in the Territory.
2.4 JOE'S shall refer to ITOCHU any and all purchase orders or other inquiries
regarding the Products that JOE'S receives from any Person located in the
Territory, and JOE'S shall not, directly or indirectly, sell or supply the
Products to any Person (other than ITOCHU) who JOE'S knows, or has reason to
believe intends or is likely to resell or transship them in or to the Territory.
2.5 As long as this Agreement remains in effect and neither ITOCHU nor any
Approved Sublicensee or Subdistributor is in default hereunder, ITOCHU shall
have the right of first refusal to acquire the right to use the JOE'S
Intellectual Property on and in connection with the manufacturing, distribution
and sale, in the Territory, of products other than the Products. Upon JOE'S
negotiating a proposed agreement regarding such rights with any third party,
JOE'S shall notify ITOCHU of such proposed agreement, and ITOCHU shall
thereafter have a period of thirty (30) days within which to enter into an
agreement with JOE'S, upon terms and conditions no less favorable than those
agreed to between JOE'S and the third party. If ITOCHU fails to respond within
the thirty (30) day period, JOE'S shall have the right to enter into the
proposed agreement with the third party; provided, however, that the terms and
conditions of such proposed agreement with the third party shall not be more
favorable than those offered to ITOCHU.
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2.6 Special Condition. It is a special condition of the sale and distribution of
licensed Products hereunder, as envisaged in Section 2.1 above, that ITOCHU
agrees to ensure that the aggregate quantities of the Licensed Products
manufactured by it and/or its Approved Sublicensee or Subdistributor in any
Contract Year shall not exceed the aggregate quantities of the Imported Products
purchased from JOE'S by ITOCHU hereunder in such Contract Year.
3. APPOINTMENT OF ITOCHU AS EXCLUSIVE DISTRIBUTOR.
(a) JOE'S hereby appoints ITOCHU, and ITOCHU hereby accepts such appointment, as
JOE'S' sole and exclusive distributor of the Imported Products in the Territory
for the Term, as defined in Section 22.1. During the Term, JOE'S will not
appoint any Person other than ITOCHU to sell the Imported Products in the
Territory, provided that ITOCHU performs all of its obligations under this
Agreement, including, without limitation, fulfilling its obligations as to the
Minimum Net Purchases of Imported Products, set forth in Exhibit D.
(b) In the event that JOE'S manufactures any new or additional products similar
to or related to the Imported Products, JOE'S shall promptly give written notice
to ITOCHU of such effect in the form of the next scheduled line sheets of JOE'S
or any other form. If, within fifteen (15) days following ITOCHU's receipt of
such written notice, ITOCHU expresses in writing to JOE'S its intention to deal
with those new or additional products, those new products or additional products
shall be automatically and without any formality be added to the Imported
Products covered by this Agreement.
4. MARKETING AND SALE OF THE IMPORTED PRODUCTS.
(a) ITOCHU will use its commercially reasonable efforts to develop diligently
the retail sale of the Imported Products in the Territory, to develop and
maintain the potential for increased sales, and to obtain a market share for the
Imported Products. Without limiting the foregoing, ITOCHU's sales volumes of the
Imported Products in the Territory shall equal or exceed the Minimum Annual
Purchase Amounts as stated in Exhibit D.
(b) ITOCHU shall use its commercially reasonable efforts to build and increase
sales volumes of the Imported Products consistent with the Territory's
potential, to promote better customer relations, and to enhance the image and
further the reputation of JOE'S and the Imported Products, As a general matter,
ITOCHU will always act In JOE'S' best interest.
(c) ITOCHU shall, with due diligence, keep JOE'S informed about: (1) its
activities in connection with the distribution and sale of the Imported products
under this Agreement, including monthly written reports of its sale activities;
(ii) relevant. market conditions and other news and information regarding its
customers, potential customers, and competition for the Imported Products; (iii)
any observations, complaints, or notices received from customers or any
governmental or administrative agency with respect to the Imported Products;
(iv) all applicable laws, rules, regulations, ordinances, and procedures
concerning or related to the Imported Products, including without limitation
import regulations and requirements, labeling, technical specifications, health
and safety requirements and the like; (v) all applicable laws, rules,
regulations, ordinances, and procedures concerning or related to the
enforceability of any agreement related to the marketing and sale of the
Imported Products, including the exclusive arrangements provided in this
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Agreement; and (vi) all other applicable laws, rules, regulations, ordinances,
and procedures concerning or related to its activities in connection with the
distribution and sale of Imported Products under this Agreement. ITOCHU shall
obtain at its sole cost and expense all necessary import permits or licenses
relating to the Imported Products. JOE'S shall provide ITOCHU, free of charge
and in timely fashion and manner, any product samples and other requisite
documents (including, without limitation, certificates of origin) required in
connection with any application for such permits or licenses.
(d) ITOCHU shall not solicit orders for the Imported Products from outside the
Territory and shall not sell any Imported Products outside of the Territory
unless it has received the prior written consent of JOE'S, which may be withheld
in JOE'S' sole discretion. ITOCHU shall not, directly or indirectly, sell any
Imported Products to any Person who ITOCHU knows, should know or has reason to
believe intends or is likely to resell Imported Products outside the Territory.
ITOCHU acknowledges that because of the nature of markets and the retail
environments, disputes may arise among distributors of JOE'S. ITOCHU therefore
agrees, that in the event of a dispute between and among distributors arising
out of or based upon a claim that Imported Products distributed or sold by one
distributor infringes upon the territory granted by JOE'S to another
distributor, regardless of the legal grounds upon which the cause of action or
claim is based, JOE'S shall investigate the claim and ITOCHU shall cooperate in
all respects with this investigation. Notwithstanding the foregoing, JOE'S shall
take at its cost and responsibility, all reasonable measures to prevent any
Products manufactured or sold by any other licensee or distributor of JOE'S
outside the Territory, from being imported to or sold within the Territory.
(e) ITOCHU has no authority to make contracts, representations or warranties or
to create any obligations whatsoever on behalf of, or which may in any way bind
JOE'S. In the course of its performance of this Agreement, ITOCHU shall describe
the imported Products strictly in accordance with the terms and conditions of
sales, specifications, representations, warranties and disclaimers that JOE'S
has communicated to ITOCHU in writing, ITOCHU shall make no representations or
warranties of any kind that exceed the scope of these written terms,
specifications, representations, warranties and disclaimers, provided by JOE'S
to ITOCHU. ITOCHU shall communicate these terms, specifications,
representations, warranties and disclaimers in a manner and form as to be
enforceable to the maximum extent permitted under the applicable laws of the
Territory.
(f) All Advertising of the Trademarks, Products and JOE'S name in the Territory
shall be subject to the prior written consent and approval of JOE'S in its sole
discretion, which approval may not be unreasonably withheld or delayed by JOE'S.
These stipulations shall also apply to counter displays and packaging. In order
to assist the Advertising by ITOCHU, JOE'S shall at its cost, provide ITOCHU
with advertising materials such as transparencies, photographs, catalogues,
brochures, and such other information relating to the Products as JOE'S may
reasonably be available from time to time in its sole discretion.
(g) ITOCHU represents and warrants to JOE'S that it has the necessary resources
and experience to fulfill its obligations hereunder.
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(h) ITOCHU acknowledges and agrees that it is familiar with JOE'S' sales terms
for the Imported Products, including without limitation price terms, price
increases over time and price increases consistent with the cost of sourcing
various materials. JOE'S prices for the Imported Products cannot be determined
or predicted either now or in the future. The Imported Products shall be sold by
JOE'S to ITOCHU at the current wholesale line sheet price in the United State
available for any season or at any time, less a twenty-five percent (25%)
discount. JOE'S may increase the wholesale line sheet price in the United States
for the Imported Products by giving at least thirty (30) days prior written
notice to ITOCHU of any price increase provided, however, that the original
prices before such increase shall apply to all purchase orders for the Imported
Products placed by ITOCHU with JOB'S prior to the effective date of such price
increase. Without limiting the generality of the foregoing, ITOCHU may cancel or
modify, without any liability to JOE'S, the affected orders for the Imported
Products by delivering a written notice of cancellation or modification to JOE'S
within five (5) days of receipt of JOE'S' notice of the price increase.
5. QUALITY OF IMPORTED PRODUCTS AND SHADE SELECTION.
(a) All Imported Products supplied by JOE'S to ITOCHU shall be of the same
quality as any samples submitted by JOE'S to ITOCHU. JOE'S shall provide ITOCHU
at a price consistent with the wholesale line sheet price in the United States
for the Imported Products, less a twenty-five percent (25%) discount, two (2)
sets of samples both in size 26 inch waist, within two (2) weeks after JOE'S
sales exhibitions held in the United States.
(b) The color selection of the Imported Products shall be determined by the
mutual agreement between JOE'S and ITOCHU, and upon reasonable request by
ITOCHU. If the request meets the minimum production requirements of JOE'S, JOE'S
shall attempt to develop and supply shades of the Imported Products requested by
ITOCHU and which are specific to the Territory.
(c) Notwithstanding anything contained in this Agreement, JOE'S reserves the
right to discontinue the availability of, or change the design or specifications
of, any Imported Products, or of any particular finish or colors of any Imported
Products, at any time in its sole . and absolute discretion, without incurring
any obligation to ITOCHU; provided, however, JOE'S shall give notice to ITOCHU
of JOE'S' election to discontinue the availability of any Imported Products or
of any finish or colors of any Imported Products within a reasonable time after
this election. JOE'S may change any equipment or incorporate design features as
required by law, whether or not such items or features are included in ITOCHU's
order.
6. RETAIL PRICE OF IMPORTED PRODUCTS. JOE'S' Current Suggested Retail Price in
the United States for each unit of the Imported `Products shall be determined
from time to time at JOE'S discretion. ITOCHU may sell the Imported Products in
the Territory at these prices or at prices (the "Japanese Retail Price"), as
ITOCHU may determine in its sole discretion; provided, however, that the
"Japanese Retail Price" of the Imported Products for the purposes of this
Agreement shall not be lower than the Suggested Retail Price, ITOCHU will give
written notice to JOE'S of the Japanese Retail Price at least thirty (30) days
prior to the first use of said price, each time a price change occurs.
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7. PURCHASE OF IMPORTED PRODUCTS BY ITOCHU. JOE'S shall sell the Imported
Products to ITOCHU pursuant to written purchase orders submitted to JOE'S by
ITOCHU in the form attached hereto as Exhibit E, and in accordance with the
following terms and conditions:
(a) ITOCHU shall place a purchase order for the Imported Products with JOE'S.
The purchase order shall state unit quantities, unit descriptions, including
colors and shades of the Imported Products ordered, applicable prices, requested
delivery dates, and the common carrier selected by ITOCHU to deliver such
Imported Products pursuant to Section 7(c) below.
(b) Subject to the requirements of Sections 7(a) and 4(h) above, JOE'S shall
accept ITOCHU'S purchase orders as long as orders comply with the terms of this
Agreement. Each contract for sale and purchase of the imported Products between
JOE'S and ITOCHU shall be formed upon the acceptance (or deemed acceptance)
thereof by JOE'S pursuant to Section 9(b) below, and shall be governed by this
Agreement. If any conflict arises between the terms of this Agreement and those
of any individual contract of sale and purchase of the Imported Products, the
terms of this Agreement shall prevail and be conclusively binding upon the
Parties, except as otherwise specifically and expressly agreed upon in writing
by both Parties.
(c) The Purchase Price for the Imported Products shall be determined in
accordance with Section 4(h) above shall be payable by ITOCHU to JOE'S in United
States Dollars.
(d) JOE'S may manufacture the Imported Products at any location that it
determines, in its rule discretion. JOE'S may, from time to time and without
notice to ITOCHU, change the location of its manufacture of the Imported
Products, or engage other Persons to manufacture the Imported Products.
(e) All Imported Products shall be delivered by JOE'S to ITOCHU on a F.O.B. at
Los Angeles, California. All delivery charges incurred in the delivery of the
Imported Products from the shipment place in Los Angeles County to the Territory
shall be the sole responsibility of ITOCHU. Title to each or the Imported
Products, and risk of loss or damage thereto, including by theft or destruction,
shall pass from JOE'S to ITOCHU upon completion of delivery of the Imported
products at the shipment place in Los Angeles County of the common carrier
designated by ITOCHU in a particular purchase order for the Imported Products,
or the common carrier selected by JOE'S if no carrier shall have been designated
by ITOCHU in any particular purchase order. For the purpose of this Agreement
and for the purpose of all purchase orders arising out of this Agreement,
delivery of the Imported Goods from JOE'S to ITOCHU shall be regarded as
complete when the relevant Imported Products have been handed over to the truck
or trucking company of the common carrier or when delivered to the designated
warehouse of the common carrier, as the case may be.
(f) The Purchase Price of the Imported Products shall be paid by means of (i)
wire transfer to JOE'S bank account to be designated in writing by JOE'S to
ITOCHU within ten (10) days after the actual delivery date of the Imported
Products (as evidenced by the date of the shipping receipt issued by the common
carrier which picked up the Imported Products concerned) or (ii) an irrevocable
letter of credit payable at sight against presentment of an at sight draft,
accompanied by the other requisite shipping documents (including, without
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limitation, an original copy of the shipping receipt issued by the common
carrier which picked up the Imported Products concerned, JOE'S commercial
invoice and the packing list), that shall be opened by ITOCHU in favor of JOE'S
at least fifteen (15) days prior, to the requested delivery date specified in
the purchase order (with the other relevant terms mutually agreed upon by the
Parties), either of which means shall be selected by JOE'S and clearly
stipulated in the order acknowledgement to be issued by JOE'S in response to the
purchase order placed by ITOCHU with JOE'S. In the event that there is no
reference for the payment means of the Purchase Price in the order
acknowledgement issued by JOE'S, JOE'S shall be deemed to select the wire
transfer as the payment means of the Purchase Price. Notwithstanding the
provisions of this Section 7, in case of the payment of the Purchase Price by
means of a letter of credit, ITOCHU acknowledges that JOE'S shall be under no
obligation to fulfill any purchase order for the Imported Products placed by
ITOCHU, to deliver any Imported Products covered by such purchase order to a
common carrier for shipment, or otherwise to undertake any of its obligations
with reference to the purchase order, until ITOCHU has opened an irrevocable
letter of credit pertaining to the purchase order.
8. ITOCHU'S FURTHER OBLIGATIONS REGARDING IMPORTED PRODUCTS.
(a) Subject to its obligations as provided in Section 4 above, ITOCHU shall have
the right during the Term to enter into contracts or other marketing
arrangements, in its own name, including the appointment of the Approved
Subdistributors (subject to the terms of Section 11 below), sales
representatives and other Persons to properly promote the sale of the Imported
Products in the Territory.
(b) ITOCHU shall use its commercially reasonable efforts to promote the sale and
distribution of the Imported Products in the Territory and will maintain
adequate facilities and personnel to discharge its duties under this Agreement.
(c) ITOCHU shall consult with JOE'S concerning sales, marketing and distribution
strategies, as provided in Section 4 hereof. Without limiting the generality of
the foregoing, ITOCHU shall submit in writing (see Exhibit F) the name of any
proposed customers of ITOCHU and/or its Approved Subdistributor prior to or
without delay after a sale of the Imported Products to said customer, to JOE'S
for its review. JOB'S may request any additional information concerning the
proposed customer which shall be deemed as reasonably necessary or appropriate
for its review thereon.
(d) Without the prior written consent of JOE'S, which JOE'S may withhold in its
sole discretion, ITOCHU shall not use or sell the Imported Products as premiums,
or distribute the Imported Products to any party which ITOCHU has reason to
believe, intend to use or sell the Imported Products as premiums. For the
purpose of this Section 8(d), the use or sale of the imported Products as
premiums means the use or sale of the Imported Products in connection with
promotional programs designed to promote the sale of the Imported Products and
other goods or services of ITOCHU or any third party, including, without
limitation, joint merchandise programs, give aways, sales incentive programs,
and traffic builders.
9. OBLIGATIONS OF JOE'S. JOE'S covenants that during the Term it shall comply
with the following obligations:
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(a) Supply. JOE'S shall supply the Imported Products that conform to the
quantities and delivery dates stated in the purchase orders placed by ITOCHU and
accepted by JOE'S in accordance with Section 9(b) below. If JOE'S fails to
deliver the full quantity of the Imported Products by the requested delivery
date specified in the purchase order accepted by JOE'S, without limiting any
other remedies that ITOCHU may have hereunder, ITOCHU may have the right to
cancel or modify, without any liability to JOE'S, any or all of undelivered
portion of the affected purchase order for the Imported Products by giving
written notice to JOE'S within ten (10) days of the delivery date of the
said purchase order.
(b) Orders. As long as the purchase order for the Imported Products placed by
ITOCHU with JOE'S complies with the terms of this Agreement in every respect,
JOE'S shall accept the purchase order placed by ITOCHU by issuing a written
order acknowledgement within fifteen (15) days after receipt thereof. In the
event ITOCHU does not receive such order acknowledgment from JOE'S within such
fifteen (15) day period, the relevant purchase order shall be deemed to have
been accepted by JOE'S as of the last day of such fifteen (15) day period.
(c) Territory Exclusive. JOE'S shall not, directly or indirectly (through its
other licensees or any Person), sell or supply the Imported Products in or to
the Territory other than to ITOCHU
(d) Packing and Inspection. JOE'S shall inspect the quality, quantity and
packaging of the Imported Products before delivery. ITOCHU shall conduct
incoming inspection for the Imported Products within thirty (30) days after its
customs clearance in the Territory. In the event that any Imported Products are
found defective upon such incoming inspection, ITOCHU shall have the right to
require that such defective Imported Products be replaced with satisfactory
brand new Imported Products all at JOE'S' cost and expense including, without
limitation, all transportation charges.
(e) Warranty. JOE'S shall warrant further that: (i) all Imported Products sold
by JOE'S to ITOCHU hereunder shall be free from any and all liens, claims, and
merchantable and of generally commercially saleable quality, free from material
defects in material and workmanship and in conformity with JOE'S' standard
specifications in effect at the time such Imported Products were manufactured;
and (ii) the qualities of all Imported Products sold by JOE'S to ITOCHU
hereunder shall be equivalent to those of corresponding samples provided by
JOE'S to ITOCHU as set forth in Section 5(a) above. ITOCHU's exclusive remedy
for a breach of the foregoing warranty shall be, at JOE'S' option: (i) the
replacement of any Imported Product that fails to meet the standards of the
foregoing warranty due to circumstances within the control of JOE'S; or (ii) the
issuance.. of a credit to ITOCHU for the invoice price actually paid to .JOE'S
by ITOCHU for the defective Imported Product. Under no circumstances shall J
JOE'S be liable for any indirect, special or consequential damages (including
without limitation loss of anticipated profits) in connection with or arising
out of this Agreement or the Imported Products, whether arising out of contract
or negligence.
(f) Third Party Claims. To the extent allowed by applicable law, all claims,
whether based on JOE'S' negligence or otherwise, for any alleged damages
purportedly caused to third parties by the use of the Imported Products, shall
be deemed waived unless made in writing and received by JOE'S within thirty (30)
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days after ITOCHU learns of the alleged defect, claim or cause of action but in
no event later than six (6) months after the original shipping date (as
reflected on the hill of lading) of the Imported Products to which such claims
relate. Unless otherwise requested by JOE'S, any allegedly defective Imported
Products shall be stored at ITOCHU's place of business for a period of at least
six (6) months after JOE'S' receipt of ITOCHU's notice of the defect, and JOE'S
and its agents shall be permitted to inspect such defected Imported Products.
EXCEPT AS EXPRESSLY PROVIDED IN THIS AGREEMENT, ALL WARRANTIES,
CONDITIONS, REPRESENTATION, INDEMNITIES AND GUARANTEES WITH RESPECT TO THE USE
OF THE IMPORTED PRODUCTS, WHETHER EXPRESS OR IMPLIED, ARISING BY LAW, CUSTOM,
PRIOR ORAL OR WRITTEN STATEMENTS BY JOE'S OR OTHERWISE (INCLUDING, WITHOUT
LIMITATION ANY WARRANTY OF MERCHANBILITY OR FITNESS FOR PARTICULAR PURPOSE) ARE
HEREBY OVERRIDDEN, EXCLUDED AND DISCLAIMED.
10. JOE'S INTELLECTUAL PROPERTY.
(a) ITOCHU acknowledges and agrees that at all times before, during and after
the Term, JOE'S is and will be the sole and exclusive owner of any and all of
the Trademarks, Trade Dress and Design Rights incorporated into the Imported
Products, and ITOCHU will not attempt in any manner whatsoever, whether within
the Territory, to state any claim of ownership whatsoever to any of the
Trademarks, Trade Dress or Design Rights incorporated into the Imported
Products.
(b) During the Term, JOE'S shell take all actions necessary to insure that
JOE'S' ownership of any and all trademarks, copyrights, patents and other rights
in connection with the Imported Products remain exclusively the property of
JOE'S. in connection therewith, ITOCHU agrees to assist JOE'S, upon reasonable
request by JOE'S, with the registration and maintenance in the Territory of
JOE'S' rights in and to any and all trademarks, copyrights, patent and other
rights in connection with the Imported Products.
(c) ITOCHU may use the JOE'S Intellectual Properly iii connection with the
manufacture, distribution, sale, advertising or promotion of the Products in
strictly compliance with the terms and solely within the scope of this
Agreement, and in JOE'S' sole interest.
(d) ITOCHU hereby agrees neither to register, nor to have registered any of the
Trademarks or any trade names or symbols that are confusingly similar to the
Trademarks, in the Territory or elsewhere.
(e) Except as otherwise set forth herein, the right to use the Trade Dress, as
provided hereunder, shall cease immediately for ITOCHU, upon the expiration or
termination, for any reason, with or without cause, of this Agreement. Any use
of the Trade Dress by ITOCHU thereafter shall be considered a violation of
applicable intellectual property law.
(f) ITOCHU shall promptly notify JOE'S in writing of any potential, actual, or
apparent infringement of the Trademarks that actually comes to its attention.
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(g) Nothing contained herein shall in any way grant or convey to ITOCHU the
right to use any patent, know-how, copyright, or technical information or other,
intellectual property owned or used by JOE'S other than the right to use the
JOE'S Intellectual Property as provided herein.
11. APPROVED SUBLICENSEES AND SUBDISTRIBUTORS. ITOCHU may grant (i)
non-assignable and non-transferable limited sublicenses to any Approved
Sublicensee for any or all of the rights to use the JOE'S Intellectual Property
granted hereunder for the Licensed Products and/or (ii) non-assignable and
non-transferable limited distribution rights to any Approved Subdistributor for
the sale, distribution Advertising of the Imported Products to Retail Locations
in the Territory, subject to the following terms and conditions:
11.1 The name, ownership, background and experience of each proposed sublicensee
or subdistributor and a description of the Products to be handled by such
proposed Sublicensee or Subdistributor shall be submitted by ITOCHU to JOE'S, in
the form as set forth in Exhibit G attached hereto, for its prior written
approval, which approval shall not be unreasonably withheld or delayed.
11.2 During the Term, ITOCHU nay enter into with its Approved Sublicensee or
Subdistributor any relevant contract for the relevant Products in such terms and
conditions as ITOCHU determines to be necessary to fulfill its obligations under
this Agreement at its sole discretion; provided, however, that ITOCHU shall not
appoint as an Approved Sublicensee or Subdistributor any Person who does not
agree to abide by the applicable provisions of this Agreement. ITOCHU shall
indemnify and hold JOE'S harmless from and against any claim, liability or
obligation arising from ITOCHU's relationship with an Approved Sublicensee or
Subdistributor.
11.3 The Sublicense and/or subdistributor agreement to be entered into by ITOCHU
with each Approved Sublicensee and/or Subdistributor, shall include that:
(a) All uses of the JOE'S Intellectual Property by the Approved Sublicensee for
the Licensed Products, and all uses of the Trademarks, Trade Dress and Design
Rights by the Approved Subdistributor for the Imported Products, be submitted to
ITOCHU for its prior written approval;
(b) ITOCHU and/or JOE'S may inspect the Approved Sublicensee's or
Subdistributor's sales premises regularly to monitor the display or production
of the relevant Products and the use of the JOE'S Intellectual Property as well
as the service provided to customers by the Approved Sublicensee or
Subdistributor there;
(c) The Approved Sublicensee or Subdistributor shall cease the use of the JOE'S
Intellectual Property (i) within 180 days after its receipt of written notice
from ITOCHU that ITOCHU has withdrawn its appointment as the Approved
Sublicensee or Subdistributor upon JOE'S' request with legitimate cause; (ii)
within 180 days after the termination of this Agreement for cause by JOE'S or
ITOCHU or (iii) within 180 days after the expiration of the Term, unless
otherwise provided herein;
Page - 10
(d) The Approved Sublicensee or Subdistributor shall waive all right to
challenge or contest the interest or rights of JOE'S in the JOE'S Intellectual
Property;
(e) The Approved Sublicensee or Subdistributor shall waive all right to file a
cancellation action pertaining to the interest or rights of JOE'S in the JOE'S
Intellectual Property; and
(f) The Approved Sublicensee or Subdistributor shall use its best efforts to
prevent counterfeiting and diversion of the Products in the Territory.
11.4 An English language translation of any Sublicense or Subdistribution
Agreement entered into between ITOCHU and each Approved Sublicensee or
Subdistributor except any financial or economical condition relating thereto,
including but not limited to royalty payment shall be furnished to JOE'S
promptly after the execution thereof.
11.5 ITOCHU shall submit all proposed uses of the Trademarks, Trade Dress and/or
Design Rights by each Approved Sublicensee or Subdistributor to JOE'S for its
prior written approval, which approval shall not be unreasonably withheld or
delayed. Once a proposed use of the Trademarks, Trade Dress and/or Design Rights
by an Approved Sublicensee or Subdistributor has been submitted by ITOCHU and
approved by JOE'S, such approval shall not be revoked by JOE'S so long as ITOCHU
and the relevant Approved Sublicensee or Subdistributor are in full and complete
compliance with the terms and conditions of this Agreement.
11.6 ITOCHU shall cause each Approved Sublicensee or Subdistributor to fully and
timely comply with all other applicable requirements of this Agreement relating
to Approved Sublicensees or Subdistributors. ITOCHU shall give any Approved
Sublicensee or Subdistributor written notice of disapproval pursuant to Section
11.3(c)(i) above, in the event that either ITOCHU or JOE'S reasonably determines
that any Approved Sublicensee or Subdistributor has not fully and/or timely
complied with the applicable requirements of this Agreement relating to Approved
Sublicensees or Subdistributors.
11.7 ITOCHU is desirous of appointing Xxxxxx Co., Ltd., a Japanese corporation,
as an Approved Sublicensee and Subdistributor as envisaged in this Agreement,
and JOE'S hereby approves this appointment of Xxxxxx Co., Ltd. subject to the
general conditions of this Section 11.
11.8 Notwithstanding any sublicense or subdistribution agreement to be entered
into by ITOCHU with each Approved Sublicensee and/or Subdistributor, ITOCHU
shall be fully liable to JOE'S with respect to all obligations undertaken by
ITOCHU under this Agreement, and with respect to the actions and omissions of
any Approved Sublicensee or Subdistributor.
12. JOE'S REPRESENTATIONS AND WARRANTIES. JOE'S hereby represents and warrants
to ITOCHU that:
(a) JOE'S is the owner of the Trademarks in the Territory;
(b) The information regarding the Trademarks as listed in Exhibit B attached
hereto is true and correct in every respect;
Page - 11
(c) It has full corporate right, power and authority to enter into and perform
this Agreement;
(d) No event has occurred which would have a material impact on its business,
operations or condition (financial or otherwise); and
(e) It has the ability and capacity to perform its obligations hereunder.
12.2 Except as expressly set forth herein, JOE'S makes no representation or
warranty, either express or implied, as to any matter whatsoever, including,
without limitation, the design, merchantability, durability, suitability of any
Product or the fitness of any Product for a particular purpose and JOE'S hereby
specifically disclaims any such representation or Warranty. JOE'S undertakes
however, to supply Imported Products to ITOCHU that are of the same quality as
the products that it supplies to its customers in the United States.
13. ITOCHU'S REPRESENTATIONS AND WARRANTIES. ITOCHU hereby represents and
warrants to JOE'S that:
(a) It has full corporate right, power and authority to enter into and perform
this Agreement;
(b) No event has occurred which would have a material impact on its business,
operations or condition (financial or otherwise); and
(c) It has the ability and capacity to perform its obligations, hereunder, or to
cause such obligations to be performed hereunder.
14. SUBCONTRACTORS.
14.1 Subject to JOE'S' prior written approval, which approval shall not
unreasonably be withheld or delayed, ITOCHU and/or Approved Sublicensees may
employ Subcontractors to manufacture the Licensed Products on a non-exclusive
basis anywhere in the world.
14.2 ITOCHU shall commence distribution of the Licensed Products in the
Territory no later than January 31, 2004, unless otherwise agreed upon by the
Parties.
14.3 ITOCHU shall at all times maintain or have maintained, in its sole
discretion, an adequate stock of the Imported Products and Licensed Products
sufficient to satisfy without delay the reasonably expected sales volume in the
Territory.
14.4 ITOCHU shall purchase the Imported Products only from JOE'S and only for
sale in the Territory.
14.5 ITOCHU acknowledges that the manner and scope of distribution of the
Products and their availability, variety of selection, colors, and sizes, are
critical to the promotion and enhancement of JOE'S image and to the protection
of the Trademarks and their associated goodwill.
Page - 12
15. DESIGN STANDARDS AND PRESTIGE OF LICENSED PRODUCTS,
15.1 During the Term, JOE'S shall provide ITOCHU, free of charge, with design
concept, design sketches, material sketch, fabric swatches, thread samples,
color ideas in connection with the Licensed Products for every Season, together
with specific design and coordination instructions, and all such other
information, materials and services as may be reasonably required by ITOCHU to
realize the design, manufacture, sale, distribution and marketing of the
Licensed Products (collectively, the "Know-How"). The tinning and manner in
which the Know-How will be provided shall be separately established upon by
mutual agreement between the Parties; provided, however, that JOE'S shall
provide the Know-How in such timely fashion and manner as enable ITOCHU to start
the licensing operations and to develop such operations for the Licensed
Products efficiently and smoothly.
15.2 ITOCHU shall submit to JOE'S, for its prior written approval, all design
concepts of the Licensed products proposed to be manufactured or caused to be
manufactured by ITOCHU and/or any Approved Sublicensee (the "Design Concept"),
which approval shall not he unreasonably withheld or delayed by JOE'S. The
Design Concepts shall consists of (i) samples of the licensed Products, (b)
sample fabric materials thereof and (c) u packaging and trim board therefore.
Samples of each Licensed Product shall be submitted to JOE'S with the actual
fabric or other materials co be used fur such Licensed Product. The samples
shall be submitted together with a completed licensed Product Approval Form in
the form attached hereto as Exhibit H, and must be accompanied by additional
completed Fabric and/or Color Approval Form in the form attached hereto as
Exhibit H-1. Each Season, ITOCHU shall submit, or shall cause the Approved
Sublicensee to submit, a packaging and trim board with respect to each Licensed
Product. If ITOCHU or any Approved Sublicensee wishes to submit separately any
item of trim, it shall be submitted on the licensed Property Use Approval Form
in the form attached hereto as Exhibit H-2. The Design Concept of each Licensed
Product must be approved separately for each Season, regardless of whether it
was approved for a prior Season.
15.3 Once JOE'S has approved the Design Concept of the Licensed products
submitted by ITOCHU under Section 15.2 above, JOE'S shall not revoke such
approval so long as ITOCHU and the relevant Approved Sublicensee are in full and
complete compliance with the terms and conditions of this Agreement.
15.4 Subject to the terms and conditions of this Agreement, ITOCHU shall only
manufacture, sell and distribute, and shall cause each Approved Sublicensee to
only manufacture, sell and distribute, the Licensed Products based on the
approved Design Concept for which JOE'S' approval remains unrevoked.
15.5 ITOCHU acknowledges that the Trademarks have established prestige and
goodwill and are well recognized in the minds of the public, and that it is of
great importance to each Party that, in the manufacture and sale of the Licensed
Products, the high standards, reputation and image that JOE'S has established be
maintained. Accordingly, the Licensed Products manufactured or caused to be
manufactured by ITOCHU and/or the Approved Sublicensee shall be of high quality
workmanship and materials with strict adherence to all details and
characteristics embodied in the Design Concept approved by JOE'S in accordance
with Section 15.2 above.
Page - 13
15.6 The approvals envisaged in this Section 15.2 above, shall require a written
response from JOE'S within fourteen (14) days of receipt of the relevant Design
Concept; if JOE'S fails to respond within the said fourteen (14) day period, the
requested Design Concept shall be denied approved by JOE'S. If any Design
Concept is disapproved by XXXX, JOE'S shall give ITOCHU a written notice
identifying what part thereof JOE'S considers inappropriate and so as to enable
ITOCHU, where practical or possible, to correct or cure such inappropriate part
by alteration. ITOCHU may thereafter re-submit the Design Concept, if such
alteration can remedy the inappropriate part. Notwithstanding; what has been
stated in this Section, the Parties acknowledge that the review of Design
Concepts is by the very nature of design and creation, not a precise and
objective enunciation, and therefore disapprovals and opinions supporting such
disapprovals by JOE'S, shall be at the sole discretion or opinion of JOE'S.
16. QUALITY CONTROL AND APPROVALS.
16.1 The Licensed Products manufactured by and for ITOCHU and/or any Approved
Sublicensee and sold by ITOCHU and/or Approved Sublicensee shall strictly adhere
to the Design Concept and quality based thereon previously approved in writing
by JOE'S in accordance with Section 15 above. Each Licensed Product shall have a
style number permanently affixed to it.
16.2 Prior to the commencement of distribution, and within two (2) weeks of when
each Licensed Product is first manufactured, ITOCHU shall deliver, to JOE'S by
overnight courier at least one (1) representative of each finished Licensed
Product for approval by JOE'S, which approval shall not be unreasonably withheld
or delayed. if such Licensed Product is, in the reasonable judgment of JOE'S,
not manufactured in strict compliance with the Design Concept and quality based
thereon previously approved by JOE'S in accordance with Section 15 above, JOE'S
shall give ITOCHU written notice of any such non-compliance within fourteen (14)
days of receipt of the representative thereof, which notice shall specify what
part thereof JOE'S considers inappropriate and also expressly stating the
reasons therefore in reasonable details so as to enable ITOCHU to correct or
cure such inappropriate part. As soon as reasonably practicable after its
receipt of such notice, ITOCHU shall promptly correct or have corrected any
inappropriate part specified by JOE'S therein. If such Licensed Product as
corrected by ITOCHU, is still not approved by JOE'S due to the same
non-compliance, or if ITOCHU and/or" such Approved Sublicensee fails to correct
any such specified inappropriate part, the Trademarks shall be promptly removed
from such Licensed Products, without cost to JOE'S, in which event such Licensed
Products may be sold by ITOCHU and/or such Approved Sublicensee, provided that
they are in no way identified as a product originating with or originated by
JOE'S, or otherwise identified with JOY'S or any of the Trademarks.
Once the representative of each finished Licensed Product submitted by
ITOCHU to JOE'S has been approved by JOE'S, such approval shall exist and not
revoked by JOE'S so long as ITOCHU and the relevant Approved Sublicensee are in
full and complete compliance with the terms and conditions of this Agreement.
16.3 JOE'S shall have the right, upon reasonable prior (but always not less than
seven (7) business days) written notice, during normal business hours and at
JOE'S' oven cost, to inspect all facilities utilized by ITOCHU, any Approved
Page - 14
Sublicensee, and their respective Subcontractors and suppliers, in connection
with the manufacture, sale, storage or distribution of the Licensed Products,
and to examine the Licensed Products in the process of manufacture. In addition,
ITOCHU consents, and agrees to cause each Approved Sublicensee to consent, to
JOE'S' examination (to be performed by JOE'S at its own cost) of the Licensed
Products held by it and/or its Approved Sublicensee for resale, upon JOE'S'
reasonable prior (but always not less than seven (7) business days) written
notice and during normal business hours. Further, ITOCHU shall take, and shall
cause each Approved Sublicensee to take, all necessary steps, and any other
steps reasonably requested by JOE'S, to prevent or avoid any misuse of the JOE'S
Intellectual Property by any of its and/or the Approved Sublicensee's customers,
Subcontractors or other resources.
16.4 ITOCHU shall comply, and shall cause each Approved Sublicensee to comply,
with all laws, rules, regulations and requirements of any and all governmental
bodies that may be applicable to the manufacture, distribution, sale or
promotion of the Licensed Products. ITOCHU shall promptly advise, and shall
cause each Approved Sublicensee to promptly advise, JOE'S in writing if ITOCHU
or any Approved Sublicensee receives any notice of any violation of any such
law, rule, regulation or requirement or if ITOCHU or any Approved Sublicensee
has been notified or contacted by any governmental body regarding a possible
violation.
16.5 ITOCHU shall, upon JOE'S' reasonable prior (but always not less than
fourteen (14) business days) written request, make its personnel, and shall
cause the Approved Sublicensees to make their respective personnel available
during normal business hours for consultation with JOE'S and its agents or
representatives. ITOCHU shall make available, and shall cause each Approved
Sublicensee or Subdistributor to make available, to JOE'S, upon JOE'S reasonable
prior (but always not less than fourteen (14) business days) written notice,
marketing plans, reports and information which ITOCHU and the Approved
Sublicensees or Subdistributors may have with respect to the Licensed Products
and/or Imported Products, as the case may be.
16.6 Prior to the first shipment of any product hereunder, ITOCHU shall submit
to JOE'S, for its approval, the names of all intended customers of ITOCHU and
the Approved Sublicensees and Subdistributors for such Products on the Customer
Profile Form in the form attached hereto as Exhibit D. Prior to the sale of such
Product to any new customer of ITOCHU or any Approved Sublicensee or
Subdistributor, ITOCHU shall submit to JOE'S for its approval, the names of such
new intended customers prior to making sales to any such new intended customers.
Those approvals shall not be unreasonably withheld or delayed but shall be based
upon JOE'S' reasonable standards for high quality specialty shops and department
stores which deal in products similar in quality and prestige to the Products
and the Image associated therewith and the operations of which are consistent
with the quality and prestige of the Trademarks and the Image associated
therewith. In its reasonable discretion, JOE'S may revoke at any time its
approval with respect to a customer for the Products of either ITOCHU or any
Approved Sublicensee or Subdistributor if such customer fails to maintain the
above-referenced standards. From time to time during the Term, upon the request
of JOE'S, ITOCHU shall send to JOE'S via facsimile a list of all current
customers for all Products.
Page - 15
16.7 ITOCHU shall maintain, and ITOCHU shall cause the Approved Sublicensees or
Subdistributors to maintain, the high standards and consistency of the
Trademarks, Products and image associated therewith in all Advertising and
promotion of the Products. Neither ITOCHU nor any Approved Sublicensee or
Subdistributor shall use any Advertising or other business materials relating to
any Products or bearing any Trademarks, including, without limitation, use in
any business documents, invoices, stationery, Advertising, promotions, labels
and packaging, unless previously approval in writing by JOE'S, whose approval
shall not be unreasonably withheld or delayed by JOE'S.
Once any item of Advertising or other business materials submitted by
ITOCHU has been approved by JOE'S, such approval shall not be revoked by JOE'S
so long as ITOCHU and the relevant Approved Sublicensee or Subdistributor are
ii, full and complete compliance with the terms and conditions of this
Agreement; provided, however, that any approved Advertising or business
materials must be resubmitted for approval each Contract Year calendar year
during the Term hereof. JOE'S' approval thereon shall be effective until revoked
by JOE'S with legitimate cause. At the option of JOE'S, ITOCHU shall include,
and shall cause each Approved Sublicensee or Subdistributor to include, on their
respective Advertising or other business materials an indication of the
respective relationships of the parties in a form approved in writing by JOE'S.
17. DISTRIBUTION OF LICENSED PRODUCTS.
17.1 The manner and scope of the distribution of the Products, their
availability, variety, fabrication, colors and sizes, are critical to the
promotion and protection of the Trademarks, the Design Rights and their
associated goodwill. ITOCHU shall cause each Approved Sublicensee Of
Subdistributor to use, its best efforts to exploit the rights granted hereunder
throughout the Territory, including, without limitation, selling commercial
quantities of the relevant Products on a timely basis and maintaining a sales
force (consisting of employees whose full time responsibilities shall be the
sale exclusively of the relevant Products) sufficient to provide effective
distribution of the Products throughout the Territory, including, without
limitation. selling commercial quantities of a representative sampling of the
relevant Products of various styles, fabrications and colors; offering for sale
the relevant Products so that they may be sold to consumers on a timely basis;
maintaining a sales force sufficient to provide effective distribution
throughout the Territory; and cooperating with JOE'S' and ITOCHU's other
marketing, sales and anti-counterfeiting programs.
17.2 Except as otherwise provided herein, the distribution of the Products shall
be performed only by ITOCHU and/or Approved Sublicensees and/or Subdistributors
and only in the Territory, Neither ITOCHU nor any Approved Sublicensee or
Subdistributor shall market or promote or seek customers for the Products
outside of the Territory and neither ITOCHU nor any Approved Sublicensee or
Subdistributor shall establish or maintain inventories of the products outside
of the Territory.
17.3 ITOCHU shall exercise its best efforts, and shall cause each Approved
Sublicensee or Subdistributor to exercise its best efforts, to safeguard the
established prestige and goodwill of the Trademarks, and the Image associated
with the Trademarks, at the same level of prestige, goodwill and Image as
heretofore maintained by JOE'S.
Page - 16
17.4 ITOCHU will use its best efforts, and will cause each Approved Sublicensee
or Subdistributor to use its best efforts, to sell the Products directly only to
those Retail Locations or to wholesalers for ultimate sale only to those Retail
Locations which agree to abide by the following terms and conditions:
(a) Whenever possible, such Retail Location will use its best efforts to
establish a separate area in the store devoted exclusively to sale of the
relevant Products;
(b) Such Retail Location will agree not to ship any of the Products outside of
the Territory, and will only sell the Products in its own Retail Locations and
not to other retailers; and
(c) Such Retail Location will permit inspections by ITOCHU and/or JOE'S of its
facilities for the sale of the products during regular business hours.
17.5 Because the following practices are harmful to the Trademarks, the Design
Rights and the prestige, goodwill and Image associated therewith, ITOCHU agrees,
and agrees to cause each Approved Sublicensee not to: (a) Sell or distribute any
of the Licensed Products to wholesalers, distributors or any other persons or
entities which do not sell the Licensed Products solely for ultimate sale at
Retail Locations in the Territory;
(b) Use or permit the use of any of the Licensed Products as giveaways, prizes
or premiums, except for promotional prizes which have received the prior written
approval of JOE'S; and
(c) To sell any Licensed Products which are Seconds Without the prior written
approval of JOE'S.
18. ADVERTISING AND MARKETING.
18.1 All Advertising, promotion and marketing; of the products must be
consistent with the high quality, image and standards of JOE'S. Before
publication of any advertisement, ITOCHU shall submit to JOE'S the advertisement
for its approval using an Advertising; Approval Form in the form attached hereto
as Exhibit I. The approval shall not be unreasonably withheld or delayed by
JOE'S. The right of approval shall encompass media placement and scheduling,
creative execution, all advertising materials, fixtures, fittings, interior
presentations, shopping bags, all promotional literature and essentially
anything requiring the JOE'S name or logo.
18.2 Each Contract Year, ITOCHU, jointly and together with the Approved
Sublicensees and Subdistributors, shall expend, in the aggregate, at least three
percent (3%) of the Net Sales of all the products for Advertising of the
Products. Advertising expenditures shall be submitted to JOE'S on each January
15 and July 15 during the Term on the Advertising, Marketing and Promotion
Expenditure Form, attached hereto as Exhibit J-2. Each December 15 and June 15
during the Term, ITOCHU shall submit to JOE'S a non-binding Advertising budget
for the next six (6) months specifying the media, the date and time of
publication of each advertisement.
Page - 17
18.3 Upon two (2) weeks prior written notice to ITOCHU, but not more frequently
than twice in a calendar year, JOE'S may require ITOCHU to meet in the Los
Angeles offices of JOE'S concerning any matter which is a subject of this
Agreement. ITOCHU shall pay all of its own costs and expenses relating to its
attendance at such meetings. Any and all costs and expenses arising from
traveling to the Territory or elsewhere by any personnel of or for JOE'S in
connection with this Agreement shall be fully borne and paid by JOE'S.
19. PROTECTION OF TRADEMARKS AND DESIGN RIGHTS.
19.1 ITOCHU. shall cooperate, and shall cause each Approved Sublicensee or
Subdistributor to cooperate, at the cost and expense of JOE'S when such
cooperation results in the need for necessary expenditures approved by .TOE'S,
fully and in good faith with JOE'S for the purpose of securing and preserving
JOE'S' rights in and to the Trademarks and Design Rights as applicable,
including, without limitation, the execution, filing and prosecution of
trademark, copyright or patent applications. ITOCHU shall not, and shall cause
any Approved Sublicensee or Subdistributor not to, directly or indirectly, file
a trademark or service xxxx application or applications to register the
Trademarks for the Products or otherwise, whether within the Territory or
without, without the prior express written approval of JOE'S. In the event that
either ITOCHU or any Approved Sublicensee or Subdistributor files any such
trademark or service xxxx applications, ITOCHU shall assign, and shall cause
such Approved Sublicensee or Subdistributor to assign, promptly to JOE'S, at its
sole cost and expense, all right, title and interest of ITOCHU or such Approved
Sublicensee or Subdistributor in such applications or the resulting
registrations.
19.2 ITOCHU shall not, and shall cause any Approved Sublicensee or
Subdistributor not to (a) contest or challenge JOE'S' title or rights in and to
the Trademarks and Design Rights in any jurisdiction or attack the validity of
this Agreement, the Trademarks or Design Rights or (b) contest the fact that
ITOCHU's or any Approved Sublicensees' or Subdistributors' rights under this
Agreement (i) are solely those of ITOCHU or Approved Sublicensee or
Subdistributor, as the case may be, and (ii) subject to the provisions of
Section 25, cease upon termination or expiration of such rights under this
Agreement except otherwise provided at elsewhere herein. The provisions of this
Section 19.2 shall survive the termination or expiration of this Agreement.
19.3 ITOCHU shall assist, and shall cause the Approved Sublicensees or.
Subdistributors to assist, JOE'S in the protection of JOE'S' rights to the
Trademarks and Design Rights. The costs of such assistance shall be dealt with
in accordance with this Agreement. ITOCHU shall immediately give notice, and
shall cause each Approved Sublicensee or Subdistributor to immediately give
notice to JOE'S through ITOCHU, by telephone and in writing by facsimile, of any
infringement or misuse of the Trademark; or Design Right, by any third party in
the Territory of which ITOCHU or any Approved Sublicensee or Subdistributor
becomes actually aware. Upon receipt of notification from ITOCHU or any Approved
Sublicensee or Subdistributor of the occurrence of any such infringement or
misuse in the Territory, and if the infringement or misuse relates to
counterfeiting, parallel imports, or any illegal use of the Trademark, JOE'S
shall commence legal action regarding any such infringement or misuse at its own
expense, and shall also take, at its own expense such legal steps as it
determines to be reasonably necessary, to protect JOE'S' rights to the
Trademarks and Design flights.
Page - 18
19.4 JOE'S hereby represents and warrants to ITOCHU that XXXX is the owner of
the JOB'S Intellectual Property and that to the best knowledge of JOE'S, the
manufacture, sale, distribution, promotion and Advertising of the Products or
any use of JOE'S Intellectual Property dues not infringe, or violate any patent,
copyright or trademark in the Territory (the "Third Party Rights"). In the event
that any suit, proceeding or claim is brought against ITOCHU and/or any Approved
Sublicensees and/or Subdistributors (collectively "ITOCHU's Indemnified
Parties") by any third party or parties alleging the infringement or violation
of the Third Party's Right, in connection with the Products or the JOE'S
Intellectual Property, JOE'S shall be given prompt and immediate written notice
of such suits, proceedings or claims by ITOCHU. JOE'S, shall have the authority
to assume the sole defense on behalf of all of ITOCHU's Indemnified Parties
through its own counsel and to compromise or settle the matter as it deems fit.
ITOCHU shall nevertheless have the right to participate, or have any of the
other ITOCHU's Indemnified Parties participate, in the defense of any such suit,
proceeding or claim in which any of them is or are named a party defendant,
provided that in such case ITOCHU and Its Indemnified Parties shall bear their
own costs and expenses so to do, including all their attorneys fees.
19.5 ITOCHU shall have the right, at any time during the Term, to request that
JOE'S authorize ITOCHU to be registered as an exclusive user
("senyoshiyoken-sya") in Japan with respect to all or any of the Trademarks for
the Products under the Japanese Trademark Law (Law No. 127 of 1959, as amended),
and upon such request. JOE'S shall promptly and fully cooperate with ITOCHU to
accomplish such registration. ITOCHU shall promptly and fully cooperate with
JOE'S to effect a cancellation of such recordation of the user registration at
the expiry of the term of this Agreement, or upon the termination of this
Agreement for any reason whatsoever. The casts associated with the user
registration mentioned above shall be borne by ITOCHU. Similarly, the costs
associated with cancellation of such user registration upon termination of this
Agreement for whatever reason, shall be borne by ITOCHU.
20. PAYMENTS OF TRADEMARK ROYALTY AND REPORTS.
20.1 In full and complete consideration of the rights and licenses to use the
JOE'S intellectual Property granted by JOE'S to ITOCHU hereunder, ITOCHU shall
pay for each Contract Year to JOE'S a running royalty (the "Trademark Royalty")
equal to the aggregate amount of the following: (i) six percent (6%) of the Net
Sales of all bottoms for both men and women of the Licensed Products and (ii)
five percent (5%) of the Net Sales of all tops for both men and women of the
Licensed Products. The Trademark Royalty shall be paid by means of wire transfer
to JOE'S' bank account to be designated in writing by JOE'S to ITOCHU within
sixty (60) days after the end of each Quarter in each Contract Year.
20.2 Not later than thirty (30) days after the end of each Quarter, ITOCHU shall
send on a quarterly basis to JOE'S via facsimile, the Quarterly Royalty
Statement in the form attached hereto as Exhibit J with respect to (i) the
number, description and invoice price of each Licensed Product sold (by Style
Number), (ii) the Gross Sales, Returns actually received, Trade Discounts and
Allowances actually granted, the Net Sales (in dollars) of all Licensed Products
Page - 19
sold by ITOCHU and each Approved Sublicensee during such Quarter (iii) the
quantity of licensed Products sold to each customer and (iv) any other
information that may he required by JOE'S.
20.3 Receipt or acceptance by JOE'S of the Quarterly Royalty Statement pursuant
to Section 20.2 above, or of any sums paid by ITOCHU based thereon, shall not
preclude JOE'S from questioning. the completeness or accuracy of such Quarterly
Royalty Statement at any time within three (3) years of the date of such
Quarterly Royalty Statement,
20.4 If any payment of the Trademark Royalty on the Licensed Products is delayed
for any reason (except any cause beyond ITOCHU's reasonable control), interest
shall accrue on the unpaid principal amount of such Trademark Royalty from and
after the date on which the same became due at the rate of one percent (1%) per
month,
20.5 All references to "US$" or "Dollar" in this Agreement shall mean the lawful
currency of the United States of America. All payments by ITOCHU to JOE'S
hereunder shall be made in the U.S. Dollar. In the event that any amounts due
and payable by ITOCHU to JOE'S hereunder (including, without limitation, the
Trademark Royalty) is denominated in Japanese Yen or other foreign currency,
such due amounts shall be converted into the U.S. Dollar amount by using the
exchange rate for telegraphic transfer quoted by the Tokyo head office of The
Bank of Tokyo-Mitsubishi, Limited (or any other reputable international bank as
selected by ITOCHU) for the purchase of the U.S. Dollar with Japanese Yen or
other foreign currency at approximately 11:00 A.M. (Tokyo. Japan time) on (a)
such a date as mutually agreed upon by the both Parties from time to time for
each payment or (b) if not agreed upon by the both Parties, the date of actual
remittance of any, due amount.
20.6 Any and all taxes levied by the government of Japan upon any payments from
ITOCHU to JOE'S hereunder and required by any applicable law to be withheld by
ITOCHU from such payments shall be borne by JOE'S. ITOCHU shall withhold the
amount of such taxes from the payments and shall promptly pay the withheld taxes
to the appropriate tax authorities of Japan, and thereafter shall transmit to
JOE'S official tax receipts or other evidence issued by the, said authorities.
21. ACCOUNTING.
21.1 ITOCHU shall at all times keep and maintain, and shall cause each Approved
Sublicensee or Subdistributor to keep and maintain, an accurate account of all
operations within the scope of this Agreement for a period of at least three (3)
years after the termination or expiration hereof, including, without limitation,
separate and appropriate books of account and records sufficient to reconcile
the number of units manufactured with the number of units sold.
21.2 The books of account of ITOCHU and each Approved Sublicensee, with respect
to the sales of the Licensed Products, shall be available for inspection,
copying and audit by JOE'S, its agents and representatives during normal
business hours, upon not less than seven (7) business days advance notice, but
such audit shall not be made more than once in each year and shall be made by
JOE'S at its own expense, except as provided below. If there is an error in
favor of ITOCHU or any Approved Sublicensee in excess of three percent (3%) of
the amount actually paid by ITOCHU as the Trademark Royalty with respect to any
Page - 20
Contract Year in computing such Trademark Royalty, all cost and expense incurred
by JOB'S in connection with such inspection and audit shall be borne by ITOCHU
or such Approved Sublicensee, as the case may be.
22. DURATION OF AGREEMENT.
22.1 The "Term" of this Agreement shall be for a period of three (3) years and
six (6) months commencing on July 1, 2003 and expiring on December 31, 2006,
with no options to renew.
22.2 Neither Party shall be under any obligation to extend the Term; neither
Party shall incur any liability to the other Party for failure to do so, and
this shall not give rise to any right or cause of action with respect thereto.
In any event, if the Parties fail to enter into any new agreement or an
extension of this Agreement, for any reason whatsoever, it shall automatically
be deemed that no further relationship exists beyond the expiry of the present
Term except as otherwise provided herein. It is understood and agreed upon by
the Parties that the content of this Section 22.2 constitutes, under the laws of
Japan, adequate and reasonable opportunity for notification of non-renewal in
order to avoid any dispute in law as to the validity thereof. The Parties agree
now that in the event of no extension or renewal of this Agreement, the Term of
this Agreement is sufficient for the recovery of any investments anticipated,
alternatively the Parties make such decision knowing that a risk in this regard
may exist.
22.3 Notwithstanding anything to the contrary set forth herein, during the Term
and one (1) year thereafter, JOE'S may not enter into, directly or indirectly,
any discussion, negotiation or agreement with any Approved Sublicensee or
Subdistributor with respect to this Agreement, or any business or transaction
related to the Products or Trademarks ht the Territory, for any purpose or
intent identical, similar or related to those of this Agreement without the
prior written consent of ITOCHU.
23. TERMINATION.
23.1 Termination for Event of Default. JOES shall have the right to immediately
terminate this Agreement by giving a written notice to such effect to ITOCHU
upon the occurrence of any of the following events:
(a) Any payment required of ITOCHU or any Approved Sublicensee or Subdistributor
hereunder is not made within thirty (30) days of when it is due;
(b) ITOCHU or any Approved Sublicensee or Subdistributor fails to perform any of
the other material terms or conditions of this Agreement and such failure
continues for a period of twenty (20) days after receipt of written notice
thereof (unless such event of default cannot be cured within a twenty (2,0) day
period and ITOCHU or such Approved Sublicensee or Subdistributor shall have
commenced to cure such event of default and cures it within an additional twenty
(20) day period);
(c) ITOCHU or any Approved Sublicensee or Subdistributor fails within thirty
(30) days after written notice that payment is overdue to pay for any materials,
trim, fabrics, packaging or services relating to Products purchased by ITOCHU or
Page - 21
any Approved Sublicensee or Subdistributor from JOE'S or from any agent or from
licensee of JOE'S or any other JOE'S of such items;
(d) The Net Purchases of Imported Products for any Contract Year do not meet or
exceed Minimum Net Annual Purchases of Imported Products for such Contract Year
as stated in Exhibit F.
(e) The unit quantity of License Products manufactured in any Contract year,
exceeds the unit quantity of Imported Products purchased for such Contract Year.
23.2 Termination for Other Causes. Each party shall have the right to
immediately terminate this Agreement by giving a written notice to such effect
to the other Party upon the occurrence of any of the following events:
(a) When the other Party (i) becomes insolvent or unable to pay its debts
generally as they mature; (ii) makes an assignment for the benefit of creditors;
(iii) admits in writing its inability to pay its debts generally; (iv) consents
to the appointment of a trustee or receiver or similar officer for itself or for
a substantial part of the property thereof; (v) has an order, judgment or decree
entered appointing, without its consent, a trustee or receiver for itself or for
a substantial part of the property thereof; (vi) file a petition under
applicable laws relating to bankruptcy, insolvency, reorganization,
receivership, dissolution, liquidation or relief of debtors; (vii) be named as a
debtor in an involuntary petition under applicable laws relating to bankruptcy,
insolvency, reorganization, receivership, dissolution, liquidation or relief of
debtors and consent thereto or acquiesce therein or such petition shall remain
undismissed for a period of sixty (60) calendar days; (viii) have a final order,
judgment or decree relating to bankruptcy, insolvency, reorganization,
receivership, dissolution, liquidation or relief of debtors entered against
itself;
(b) When the other party sells, assigns, conveys, transfers, leases or otherwise
disposes of the whole or any substantial part of its business undertaking or
assets, or ceases to carry on its business;
(c) When any representation or warranty of the other party contained herein or
in any financial statement, certificate or addendum submitted by or on behalf of
such other Party shall be untrue in any material respect on the date as of which
it is made; or
(d) When any material suit, proceeding or claim is successfully brought in the
Territory against JOE'S, ITOCHU, or any ITOCHU's indemnified Party, and resulted
in a court or arbitration pronouncement that such suit, proceeding or claim is
successful, alternatively if JOE'S has in its solo and unilateral discretion
derided to compromise or settle such suit, proceeding or claim by relinquishing
or transferring its ownership of or rights to the JOE'S Intellectual Property to
the counter party in such compromise or settlement.
23.3 Remedies Cumulative. It is understood and agreed that in no event shall
termination by either Party on any ground exclude, limit or prejudice any other
rights or remedies which it may have hereunder or at applicable law, except as
otherwise expressly set forth herein.
Page - 22
23.4 No assignor for the benefit of creditors, receiver, liquidator,
sequestrator, trustee in bankruptcy, sheriff or any other officer of the court
or official charged with taking over custody of ITOCHU's assets or business
shall have any right to continue the performance of ITOCHU under this Agreement.
24. DISPOSAL OF STOCK UPON TERMINATION OR EXPIRATION_
24.1 Within fifteen (15) days after the termination or the expiration of this
Agreement, ITOCHU shall furnish JOE'S, its agents and/or representatives with a
certificate listing its and all Approved Sublicensees' or Subdistributors'
inventory of the finished Products (which shall include, without limitation, all
fabrics, trim and packaging which are used in the manufacture and marketing of
the Licensed Products) on hand or work in process. Thereafter, JOE'S or its
designee shall have the option (but not the obligation) to purchase from ITOCHU
and/or the Approved Sublicensees or Subdistributors all or any part of their
respective inventory of the products upon the following terms;
(a) JOE'S shall notify ITOCHU of its or its designee's intention, if any, to
exercise this option within thirty (30) days of .TOE'S' receipt of such
certificate and shall specify which of the Products we to be purchased;
(b) The price for Licensed Products shall be ITOCHU's or Approved Sublicensee's
actual manufacturing cost; and
(c) The price for Imported Products shall be ITOCHU's or Approved
Subdistributor's landed cost in Japan excluding duty; and
(d) ITOCHU shall deliver the products so purchased, within fifteen (15) days of
receipt of the notice referred to in Section 24.1(a) above. Payment shall be due
upon delivery; JOE'S may deduct from the purchase price for such Products any
amounts owed it by ITOCHU.
24.2 In the event that this Agreement has expired or been terminated for any
cause, ITOCHU or the relevant Approved Sublicensee or Subdistributor, as the
case may be, may sell any Products envisaged in Section 24.1 above and not
purchased by JOE'S or its designee, on a non-exclusive basis in accordance with
all the conditions of this Agreement, for a sell-off period of only one hundred
eighty (180) days from the date of expiration or termination hereof. Where the
Agreement has expired or been terminated, ITOCHU and the relevant Approved
Sublicensees shall not manufacture any additional Licensed Products, but may
continue to manufacture the semi-finished licensed Products at that time into
the finished licensed Products. The Products not sold by ITOCHU or any Approved
Sublicensee or Subdistributor in accordance with this Section 24.2 within the
sell-off period allotted, shall be destroyed, or may be sold only after the
Trademarks and all other JOE'S identifications have been removed therefrom prior
to sale (which removal may be inspected by JOE'S, its agents and/or
representatives).
24.3 In case of Section 24.2 hereof, ITOCHU shall send to JOE'S, by facsimile,
the information required on the Royalty Statement form attached hereto as
Exhibit J, within thirty (30) days of the end of such permitted sell-off period,
with respect to all sales of the Licensed Products by ITOCHU and any Approved
Sublicensee during the relevant sell-off periods, Within thirty (30) days of the
expiration of such permitted sell-off, period, ITOCHU shall pay JOE'S the
Page - 23
appropriate amount of the Trademark Royalty due with respect to sales of
Licensed Products by ITOCHU and any Approved Sublicensee during such sell-off
period.
24.4 In case of Section 24.2 hereof, ITOCHU may use the JOE'S Intellectual
Property on promotional items, advertising materials and samples in connection
with the sale of the Products as contemplated thereby and for any other uses
thereof reasonably intended to promote such sales.
25. EFFECT OF TERMINATION OR EXPIRATION.
25.1 Except as specifically provided in Section 24 above, upon the termination
or the expiration of this Agreement, all rights of ITOCHU and any Approved
Sublicensee or Subdistributor to use the JOE'S Intellectual Property, including,
without limitation, rights to manufacture, distribute, offer to sell, sell and
advertise the Licensed, Products shall terminate or, as appropriate, be assigned
to JOE'S. ITOCHU will execute, and will cause the Approved Sublicensees or
Subdistributors to execute, any instruments requested by JOE'S that are
necessary or desirable to accomplish or confirm the foregoing. Any such
assignment, transfer or conveyance Shall be without consideration other than the
mutual covenants contained in this Agreement. JOE'S may thereafter license the
right to use the Trademarks and/or Design Rights in connection with the
manufacture, wholesale, offer for sale at wholesale, distribution and
Advertising of the Products in the Territory. Prior to the expiration of this
Agreement, but no sooner than six (6) months before the expiry of the Term of
this Agreement, JOES may license the right to use the JOE'S Intellectual
Property as provided for in Section 2.1 to any other party, provided that any
such license agreement shall not commence before the first day after the last
day of the Term of this Agreement.
25.2 In the event of any expiration or termination of this Agreement, all
existing individual contracts for the Imported Products shall be fulfilled
pursuant to the terms of this Agreement even after the expiration or termination
hereof, and any rights and obligations of either Party accrued before the
expiration or termination hereof shall in no way be affected by the expiration
or termination hereof: provided, however, that if this Agreement is terminated
pursuant to Section 23.1 or 23.2 above, such terminating Party shall have the
right to terminate or rescind any individual contract or purchase orders for the
Imported Products.
25.3 Under no circumstances shall ITOCHU or any Approved Sublicensee or
Subdistributor be entitled, directly or indirectly, to any form of compensation
or indemnity from JOE'S, or its affiliates, licensees or distributors, as a
consequence of the expiration or termination of this Agreement, whether as a
result of the passage of time, or as a result of any other cause of
termination referenced in this Agreement. ITOCHU waives, and shall cause each
Approved Sublicensee or Subdistributor to waive, any claim which it has or which
it may have in the future against JOE'S or its affiliates, licensees or
distributors arising from any alleged goodwill created by ITOCHU or any Approved
Sublicensee or Subdistributor with respect to the Products, or from their
alleged creation or increase of a market for the Products in the Territory.
Page - 24
26. INDEMNITY.
26.1 JOE'S' Indemnification. JOE'S shall defend, indemnify and hold ITOCHU
harmless from and against any and all losses, damages, claims, actions,
liabilities, costs and expenses (including, without limitation, attorneys' fees)
of whatever nature incurred or suffered by ITOCHU arising out of or related to
any breach by JOE'S of any obligation, representation, warranty or covenant in
this Agreement.
26.2 ITOCHU's Indemnification. ITOCHU shall defend, indemnify and hold JOE'S
harmless from and against any and all losses, damages, claims, actions,
liabilities, costs and expenses (including, without limitation, attorneys' fees)
of whatever nature incurred or suffered by JOE'S arising out of or related to
any breach by ITOCHU of any obligation, representation, warranty or covenant in
this Agreement.
27. LIMITATION OF LIABILITY. EXCEPT FOR THE LIABILITIES OF JOE'S UNDER SECTIONS
9(f) AND 19.4 ABOVE, NEITHER JOE'S NOR ITOCHU SHALL BE RESPONSIBLE TO THE OTHER
NOR ANY SPECIAL, INDIRECT, CONSEQUENTIAL, INCIDENTAL OR PUNITIVE DAMAGES
(INCLUDING WITHOUT LIMITATION LOSS OF REVENUES, PROFITS, OPPORTUNITIES OR
SAVINGS) ARISING DIRECTLY OR INDIRECTLY OUT OF OR CONNECTED IN ANY WAY WITH THIS
AGREEMENT, REGARDLESS OF FORMS OF ACTION, WHETHER BY CONTRACT, TORT, STATUTORY
OR OTHERWISE, EXCEPT IF IT WAS OR SHOULD HAVE BEEN AWARE OR ADVISED OF THE
POSSIBILITY HEREOF.
28. TRANSFER OF INTEREST.
28.1 JOE'S shall have the right to transfer or assign all or any part of its
rights or obligations candor this Agreement to any person or legal entity, With
respect to any assignment which results in the subsequent performance by the
assignee of any of JOE'S' obligations under this Agreement, the assignee shall
expressly assume and agree to perform such obligations, and shall become solely
responsible for all such obligations of JOE'S under this Agreement from the date
of assignment. In addition, and without limitation to the foregoing, ITOCHU
expressly affirms and agrees that JOE'S may sell its assets, may sell its
securities in a public offering or in a private placement, may merge, acquire
other corporations, or be acquired by another corporation, and may undertake a
refinancing, recapitalization, leveraged buy-out or other economic or financial
restructuring.
28.2 ITOCHU understands that this Agreement is personal to ITOCHU, its
reputation and ITOCHU's key management, and acknowledges that JOE'S has granted
this license in reliance on the business skill, financial capacity, and personal
character of ITOCHU. Accordingly, except ac Set forth below, neither ITOCHU nor
any Approved Sublicensee or Subdistributor, without the prior written consent of
JOE'S, shall assign, transfer, pledge, or otherwise encumber ("Transfer"). (i)
this Agreement; (ii) any of the rights and obligations of ITOCHU under this
Agreement; (iii) any interest in this Agreement, of ITOCHU or any Approved
Sublicensee or Subdistributor. JOE'S may grant or withhold its consent to the
proposed Transfer, or impose conditions on the proposed Transfer, in its
discretion. Any purported Transfer, by operation of law or otherwise, not having
the prior written consent of JOE'S as required by this Section 27.2, shall be
Page - 25
null and void, and shall constitute a material breach of the terms of this
Agreement for which JOE'S, as a consequence, immediately may terminate this
Agreement pursuant to Section 23 without affording ITOCHU or any purported
transferee an opportunity to cure.
29. CONFIDENTIALITY. A confidential relationship is created by thin Agreement.
Except in connection with their respective rights and obligations under this
Agreement, JOE'S, ITOCHU, and their respective affiliates, employees, attorneys,
and accountants shall keep confidential and not take or use for its own purpose,
(i) Confidential Information of the other and (ii) the terms of this Agreement,
unless with the prior written consent of the other Party or pursuant to, or as
may be required by, law, or in connection with regulatory or administrative
proceedings, and only then with reasonable advance notice of such disclosure to
the other Party.
30. MISCELLANEOUS.
30.1 Notice. Any notice, communication or legal service of process is effective
when personally delivered in writing; or on the date when the, notice or
communication is telecopied (with a confirmation copy having been sent by
airmail); or three (3) days after the notice or communication is sent by
overnight air courier service (e.g., Federal Express). All notices shall be sent
to the parties at the notice addresses listed below or to such other persons and
notice addresses as may be designated in writing by the parties to each other:
TO: JOE'S JEANS, INC.
0000 Xxxx Xxxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxx 00000 XXX
Attention : ________________
Telephone : 323.725-5583
Facsimile : 323.728-1829
TO: ITOCHU CORPORATION
0-0, Xxxx Xxxxxx 0-xxxxx
Xxxxxx-xx, Xxxxx 000-0000 XXXXX
Attention : ________________
Telephone : 81.3.3497-2505
Facsimile : 81.3.3447-2518
30.2 Time is of Essence. Time is of essence in performing the obligations of
this Agreement.
30.3 Binding Effect. This Agreement shall be binding, upon and inure to the
benefit of the successors and permitted assigns of the parties.
30.4 Governing Law. All questions concerning this Agreement, the rights and
obligations of the parties, its enforcement, and its validity, effect,
interpretation and construction, which are governed by state law, shall be
determined under the laws of the State of California.
Page - 26
30.5 Severability. The provisions of this Agreement are severable, and if any
provision shall be held invalid or unenforceable, in whole or in part, in any
jurisdiction, then such invalidity or unenforceability shall affect only such
provision, curd shall not affect such provision in any other jurisdiction. To
the extent legally permissible, a provision that reflects the original intent of
the Parties shall be substituted for such invalid or unenforceable provision.
30.6 Headings. The headings contained herein are for reference purposes only and
shall not affect in any way the meaning or interpretation of this Agreement.
30.7 Exhibits. The Exhibits attached hereto are hereby incorporated by reference
and form integral parts hereof.
30.8 Non-waiver. The failure of a Party to insist upon strict adherence to any
term of this Agreement, or to object to any failure to comply with any provision
of this Agreement, shall not be a waiver of that term or provision, stop that
Party from enforcing that term or provision, or preclude that Party from
enforcing that term or provision by estoppel or by laches. The receipt by a
Party of any benefit from this Agreement shall not affect the right of that
Party to enforce any Section hereof. None of the terms of this Agreement shall
be deemed to be waived or modified, except by an express agreement in writing,
signed by an authorized officer of the Party against whom enforcement of the
waiver or modification is sought, supported by new consideration.
30.9 Entire Agreement. This Agreement, including all Exhibits, constitutes the
entire agreement between the parties, and supersedes all prior negotiations and
agreements between the parties concerning its subject matter. This writing is
intended as the final, complete and exclusive statement of the terms of the
agreement between the parties with respect to the subject matter hereof and may
only be amended or terminated orally.
30.10 This Agreement shall be interpreted to give JOE'S maximum control of the
usage of the Trademarks end Design Rights.
30.11 Independent Contractor: Nothing in this Agreement shall be construed to
constitute either party the agent of the other or to constitute the parties as
member of a joint venture of partners, nor shall any similar relationship be
deemed to exist between them.
30.12 Expenses and Taxes. Except as otherwise specifically provided herein,
whether or not the transactions herein contemplated are consummated, each Party
shall pay the fees, expenses and disbursements incurred by it and its agents,
representatives and legal advisors in connection. with this Agreement and any
amendments hereto as well as all other costs and expenses incurred in the
performance of and compliance with all conditions to be performed by it
hereunder.
30.13 Counterparts. This Agreement may be executed in multiple counterparts and
is effective when each or the Parties have executed a copy hereof. Each of the
counterparts shall be deemed an original, all counterparts taken together shall
comprise one and the same instrument.
Page - 27
31. ARBITRATION.
31.1 Except as provided herein, all disputes arising out of or relating to this
Agreement shall be settled and determined by binding, expedited arbitration in
accordance with the Rules of the International Chamber of Commerce. In the event
that the Rules of the International Chamber of Commerce do not cover a question
arising during the arbitration, then the Rules of the American Arbitration
Association shall apply. The arbitration proceedings shall be conducted in
London, United Kingdom. The arbitration shall be carried on by an Arbitration
panel selected in accordance with the Rules of the international Chamber of
Commerce, and all hearings shall be before and transcribed by a certified court
reporter. Until a determination hereunder, the parties shall share the payment
of the expenses of the arbitrator and the court reporter. The arbitrator's award
shall be rendered within sixty (60) days after the conclusion of the arbitration
proceedings (i.e., after the matter is deemed submitted to the arbitrator).
Judgment upon the arbitration award rendered by the arbitrator may be entered in
and enforced by any court or tribunal having jurisdiction thereof. The
arbitration award shall have the same force and effect as if the award and
decision were made and entered by a trial court or tribunal of competent
jurisdiction.
31.2 The Arbitration Panel shall have the power to award specific performance of
permanent injunctive relief and other rights or monies in accordance with the
provisions of this Agreement. All provisional remedies shall be the exclusive
jurisdiction of the courts located where such remedies are sought. ITOCHU
acknowledges and admits that the Trademarks possess a special, unique and
extraordinary character, which makes difficult the assessment of monetary
damages which JOE'S might sustain by any use which is inconsistent with this
Agreement, and that irreparable injury would be caused to JOE'S thereby, such
that injunctive and similar relief would be appropriate in the event of any such
uses. Without prejudice to any other right and/or remedy either party may have
under this Agreement or the law, if, after notice, the other party fails to take
any action which it is obligated to take under this Agreement, including without
limitation, providing any information and submitting required reports, products
or uses of the Trademarks, then the non-breaching party shall be entitled to an
award of specific performance to compel such action.
31.3 The parties reserve all of their respective rights to provisional remedies
that they would have at law or equity, including injunctive or similar relief.
JOE'S reserves the right to obtain injunctions and other declaratory relief to
protect the Trademarks, the Design Rights `and associated goodwill.
31.4 In any arbitration, action or other proceeding between the parties for
relief based in whole or in part on this Agreement (or the breach thereof), the
prevailing party shall be entitled to recover (in addition to any other relief
awarded or granted) its reasonable costs and expenses (including attorneys'
fees) incurred in the proceeding.
31.5 Any award of the arbitrator shall be final and binding upon the parties and
judgment may be entered in the courts of the State of California or any United
States federal court in California. ITOCHU waives any objection to (A) personal
jurisdiction; (b) venue; and (c) service of process of any United States Federal
Court or California State Court in Los Angeles County, California, United States
of America.
Page - 28
31.6 Any claim is barred and waived unless ,the claimant institutes arbitration
proceedings prior to the date when any action in court would be barred by the
statute of limitations. The failure to institute arbitration proceedings prior
to the expiration of the applicable statute of limitations constitutes an
absolute bar to the institution of any arbitration or other proceeding by either
party.
[Signature page to follow]
Page - 29
IN WITNESS WHEREOF, the Parties have caused their duly authorized
representative to execute this Agreement as of the date first above written.
For and on behalf of
ITOCHU CORPORATION ("ITOCHU")
a Japan corporation
By: /s/ Xxxxxxx Xxxxxxxx
-------------------------------------
Name: Xxxxxxx Xxxxxxxx
Title: Chief Operating Officer, Brand
Marketing Division
For and on behalf of
JOE'S JEANS INC. ("JOE'S")
a California corporation
By: /s/ Xxxxxx X. Xxxxxx, Xx.
-------------------------------------
Name: Xxxxxx X. Xxxxxx, Xx.
Title: CEO
Page - 30
EXHIBIT A
DEFINITIONS
1. "Advertising" shall mean any communication of ITOCHU and/or any Approved
Sublicensee or Subdistributor in any media directed to the trade or the public
with the exception of promotions.
2. "Allowances" shall mean any written credit given by ITOCHU or any Approved
Sublicensee or Subdistributor to their respective customers in the ordinary
course of their business upon the sale of the Products or either of the Licensed
Products and Imported Products, as the case may be, to any such customer and
which is customary in the trade.
3. "Approved Subdistributor" shall mean any subdistributor of the Imported
Products and as may be appointed by ITOCHU and approved by .TOE'S pursuant to
Section 11. hereof.
4. "Approved Sublicensee" shall mean any sublicensee of the rights granted by
JOE'S to ITOCHU hereunder as may be appointed by ITOCHU and approved by JOE'S
pursuant to Section 11 hereof; provided that such sublicensee remains in full
compliance with the terms and conditions hereof relating to Approved
Sublicensee.
5. "Average Wholesale Price" shall mean the weighted average of all wholesale
sales based on the Gross Sales price as defined below in this Exhibit A.
6. "Confidential Information" shall mean information, including a formula,
pattern, design, sample, compilation, program, device, method, technique or
process, that derives independent economic value, actual or potential, from not
being generally known to the public or to other persons who can obtain economic
value from its disclosure or use and is the subject of efforts that are
reasonable under circumstances to maintain its secrecy.
7. "Contract Year" shall mean each period during the Term as set forth in
Exhibit K attached to this Agreement.
8. "Design Concept" shall have the meaning assigned to it under Section 15.2.
9. "Design Rights" shall mean all rights, including copyrights, patterns, design
patents and Confidential Information in and to any designs of the Products and
to any prints, packaging designs, labels, Advertising or promotional material
and any utter designs using or used in conjunction with the Trademarks, Trade
Dress and Know-How, whether created by JOE'S or any third party engaged by JOE'S
to create any thereof.
10. "Gross Sales" shall mean the gross invoice amount in Japanese Yen charged by
any Approved Sublicensee or Subdistributor on the sale of the Licensed Products
to its customers hereunder. For the purpose of computing the Net Sales of
Licensed Products as the basis of the Trademark Royalty under Section 24.1
hereof, the Gross Sales of any Licensed Products sold by ITOCHU or its Approved
Sublicensee at the Retail Locations owned or operated by it or its affiliates
shall be deemed to be fifty percent (50%) of the actual retail price thereof.
Page - 31
11. "Image" shall mean primarily the quality and style of the Products which
represent the current image of JOE'S, its Trademarks and goodwill in the market,
packaging, advertising and promotion, creation and introduction of new products,
price levels and type of outlets with reference to quality of service provided
by retail outlets and quality of presentation of Products in retail outlets.
12. "Imported Products" shall mean any and all of only those items specified as
such in Exhibit C attached hereto, which are purchased by ITOCHU from JOE'S and
imported into the Territory under the terms and conditions specified in Section
20.3 of this Agreement, and bearing the Trademarks.
13. "JOE'S Intellectual Property" shall mean any and all of the Trademarks,
Trade Dress, Design Rights and Know-How pertaining to the Products and
specifically as intended in the rights granted in this Agreement.
14. "Japanese Retail Price" shall mean the price or prices (denominated in
Japanese Yen) at which Imported Products may be sold in the Territory and as may
be determined by ITOCHU at its sole discretion subject to Section G of this
Agreement.
15. "JOE'S' Current Suggested Retail Price" shall mean the price or prices at
which the Imparted Products are sold by JOE'S in the United States of America.
16. "Know-How" shall have the meaning assigned to it under Section 15.1 hereof.
17. "Licensed Products" shall mean any and all of only those items specified as
such in Exhibit C attached hereto, which are manufactured by ITOCHU under the
design or direction, and approval of JOE'S, and bearing the Trademarks.
18. "Minimum Net Purchases of Imported Products" shall mean the minimum net
purchase amount after discount of the Imported Products which ITOCHU shall be
required to purchase hereunder for each Contract Year, as set forth in Exhibit D
attached to this Agreement.
19. "Net Sales of Licensed Products" shall mean the Gross Sales of the Licensed
Products as the ease may be, less only (i) the applicable consumption tax
imposed by Japanese taxing authorities with respect to sales of the Licensed
Products and (ii) Trade Discounts, Allowances and Returns.
20. "Person" shall mean any natural person or entity, as well as any firm,
corporation, limited liability company, trust, partnership, joint venture,
association, or other business organization, under or subject to the laws of any
jurisdiction.
21. "Products" shall mean all Licensed Products and all Imported Products;
Products shall moan only those items specified in Exhibit P attached to this
Agreement and which are purchased from JOE'S or manufactured by ITOCHU or any
Approved Sublicensee.
22. "Purchase Price" shall mean the price at which JOE'S shall sell the Imported
Products to ITOCHU and as determined in Section 4(h) hereof.
Page - 32
23. "Quarter" shall mean each of the three-month periods during the "term (i)
from January through March, (ii) from April through June, (iii) from July
through September and (iv) from October through December.
24. "Retail Locations" shall mean all locations or places where the Products are
sold at retail, including without limitation, Department Stores, Specialty
Stores and Boutiques.
25. "Returns" shall mean the Gross Sales amount of those Licensed Products,
which are returned from Retail Locations at the end of a season or and are
subject to a consignment arrangement, or are returned during a season by
customers for valid reasons, and which transactions in the trade are customary
practices between customers and Approved Sublicensees.
26. "Season" shall mean any or each of Spring/Summer and Fall/Winter seasons
during the Term.
27. "Seconds" shall mean damaged, imperfect, non-first quality or defective
goods in the Products.
28. "Sublicense Agreement" shall mean a sublicense agreement, which has been.
approved by JOE'S, and which is entered into between ITOCHU and an Approved
Sublicensee.
29. "Subcontractor" shall mean any Person that is contracted by ITOCHU and/or
any Approved Sublicensee to manufacture the Licensed Products.
30. "Term" is defined in Section 22.1 of this Agreement.
31. "`Territory" shall mean Japan.
32. "Trade Discounts" shall mean all reductions in the sales price of the
Products or either of the Licensed Products and Imported Products, as the case
may be, in the ordinary course of its business by ITOCHU or an Approved
Sublicensee.
33. "Trademark Royalty" shall mean six percent (6%) of the Net Sales of Licensed
Products which are bottoms, and shall mean five percent (5%) of the Net Sales of
licensed Products which are tops. This represents the amount payable by ITOCHU
to JOE'S under this Agreement as the consideration for the grant by JOE'S to
ITOCHU of the right to use the Trademarks and Design Rights thereunder.
34. "Trade Dress" shall mean the use of the Trademarks, labels or distinctive
dress in the packaging of goods so as to identify and differentiate the
Products.
35. "Trademarks" shall mean only those trademarks specified in Exhibit B
attached to this Agreement; provided, however, from time to time hereafter JOE'S
may designate in writing additional trademarks to be included in Exhibit B
and/or otherwise modify the schedule of trademarks set forth therein.
[THE END OF EXHIBIT A]
Page - 33
EXHIBIT B
TRADEMARKS
1. TRADEMARKS.
JOE'S owns the following Trademarks in the Territory and, subject to
the terms and conditions of the Agreement, has granted certain rights in the
Trademarks to ITOCHU:
2. REGISTRATIONS AND APPLICATIONS.
JOE'S has registered or filed applications for registration of the
following Trademarks in the Territory:
Xxxx Class Application No. Registration No.
----------- --------- -------------------- ----------------------------
JOE'S 18, 25 4625446
----------- --------- -------------------- ----------------------------
JOE'S 18, 25 2002-27823
----------- --------- -------------------- ----------------------------
3. ADDITIONAL APPLICATIONS FOR TRADEMARK REGISTRATIONS.
JOE'S agrees to file such additional applications to register the
Trademarks in the Territory as may be reasonably requested by ITOCHU to protect
the Trademarks as they may be used on or in connection with the Products in
accordance with the terms and provisions of this Agreement.
[THE END OF EXHIBIT B]
Page - 34
EXHIBIT C
PRODUCTS
LICENSED PRODUCT
1. Men's casual apparel: tops and bottoms including jeans, other
denim products, twill pants, and lightweight cotton pants, knitted
and woven tops using the Trademark. This category excludes all
accessories and excludes activewear, cardigans, underwear,
jackets, suits, sweaters, swimwear, outerwear, underwear.
2. Women's casual apparel. tops and bottoms including jeans, other
denim products, twill pants, and lightweight cotton pants, knitted
and woven tops using the Trademarks. This category excludes all
accessories and excludes activewear, cardigans, innerwear,
jackets, suits, sweaters, swimwear, outerwear, underwear.
IMPORTED PRODUCTS
1. Men's apparel bottoms including jeans, other denim products, twill
pants, and lightweight cotton pants using the Trademarks.
2. Women's apparel bottoms including jeans, other denim products,
twill pants, and lightweight cotton pants using the Trademarks.
[THE END OF EXHIBIT C]
Page - 35
EXHIBIT D
MINIMUM NET PURCHASES OF IMPORTED PRODUCTS
The following contractual obligations represent the committed annual purchase
amounts of Imported Products to be purchased by ITOCHU from .JOE'S, calculated
can an FOB California basis after any discount ;
First Contract Year (From July 1. 2003 to December 31, 2004):
One Million and Five Hundred Thousand U.S. Dollars (US$ 1,500,000)
Second Contract Year (From January, 2005 to December 31, 2005):
Two Million U.S. Dollars (US$ 2,000,000)
Third Contract Year (From January 1, 2006 to December 31, 2006):
Two Million and Two Hundred Fifty Thousand U.S. Dollars (US$ 2,250,000)
[THE END OF EXHIBIT D]
Page - 36
EXHIBIT E
JOE'S STANDARD PURCHASE ORDER
FORMAT TO BE PROVIDED BY JOE'S FROM TIME TO TIME
Page - 37
EXHIBIT F
CUSTOMER PROFILE FORM
(RETAIL LOCATIONS)
----------------------------------------------------------------------------
Corporate Name DBA Name Date
----------------------------------------------------------------------------
Owner's Name Buyer's Name
----------------------------------------------------------------------------
Address
----------------------------------------------------------------------------
City State Zip
----------------------------------------------------------------------------
Phone Fax
----------------------------------------------------------------------------
Type of Store: _________________ Specialty Department Other: _________
Year Business Established:_______ At Present Location Since: _______
Are you currently doing business with ________? No Yes Division:__________
Key Manufacturers you are currently doing business with:
---------------------------- ---------------------------
---------------------------- ---------------------------
---------------------------- ---------------------------
Please check the merchandise you currently carry in your store.
___ Sportswear ___ Accessories ___ Handbags and small leather goods
___ Socks/ legwear ___ Jewelry ___ Sleepwear ___ Other
Number of stores you operate _________
List the store locations (attach sheet if necessary):
-----------------------------------------------------------------
-----------------------------------------------------------------
-----------------------------------------------------------------
-----------------------------------------------------------------
Page - 38
EXHIBIT G
SUBLICENSEE/SUBDISTRIBUTOR APPROVAL FORM
Date _____________________
Legal Name of Applicant __________________________________
Business Name (if different) __________________________________
Principal Address __________________________________
__________________________________
Telephone No.__________________ Fax No. ____________________
Name(s) of Affiliates (if any) __________________________________
Name of Principal Owner(s) __________________________________
Name(s) of Key Management __________________________________
Year Established________________ Capitalization _____________
Annual Sales (previous year) __________________________________
Nature of Business and Activities __________________________________
Other Brands dealt with __________________________________
Proposed Products __________________________________
Business Plan (please attach) __________________________________
Signature of Applicant/ Candidate __________________________________
Signature of ITOCHU __________________________________
Approved _____________________ Disapproved ________________
Page - 39
EXHIBIT H
LICENSED PRODUCT APPROVAL FORM
(FOR .STYLE APPROVAL ONLY. SEE FABRIC/COLOR APPROVAL FORM
FOR FABRIC: APPROVAL)
Name of Licensee _______________________________
Licensed Product(s) _______________________________
Licensee's Address _______________________________
--------------------------------------------------------------------------------
PLEASE ATTACH LINE SHEETS (WHICH SET OUT WHOLESALE PRICES) AND CONCEPT BOARDS/
SKETCHES (IF APPLICABLE)
--------------------------------------------------------------------------------
Season __________________
Start Taking Orders for this Line _______________________________
End Taking Orders for this Line _______________________________
Start Ship Date for this Line _______________________________
End Ship Date for this Line _______________________________
Expected Average Wholesale Price _______________________________
Retail Price _______________________________
-------------------------- -------------------------------
Signature of ITOCHU Signature of JOE'S
___ Approved ____________ ___ Disapproved _______________
Comments _______________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
Date Returned to ITOCHU _______________________
A letter detailing any changes, modifications or specific disapproval of styles
will accompany this form when it is returned to the ITOCHU.
Page - 40
EXHIBIT H-1
FABRIC AND/OR COLOR APPROVAL FORM
(FABRIC AND COLOR APPROVAL ONLY. SEE LICENSED PRODUCT
APPROVAL. FORM FOR STYLE)
Name of Licensee _______________________________
Licensed Product(s) _______________________________
Licensee's Address _______________________________
Season _______________________________
PLEASE ATTACH ONE (1) SET OF SWATCHES
Beside each swatch please provide the names of the colors of each fabric along
with what style or groups will be of each fabric.
___ Approved ______________ ___ Disapproved _________________
Comments _______________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
-------------------------- --------------------------------
Signature of ITOCHU Signature of JOE'S
Date Returned to ITOCHU _______________________
Page - 41
EXHIBIT H-2
LICENSED PROPERTY USE APPROVAL FORM
(ALL USES OT JOE'S TRADEMARKS THAT ARE NOT ADVERTISING E.G.,
TRIM, LABELS, STATIONERY, PACKAGING, DISPLAYS, ETC.)
Name of Licensee _______________________________
Licensed Product(s) _______________________________
Description of Use _____________________________________________________
----------------------------------------------------------------------
___ Concept Design ___ Color Indication ___ Finished Art
___ Production Sample ___ Final Sample
___ Approved ______________ ___ Disapproved __________________
Comments/Suggestions: _________________________________________________
----------------------------------------------------------------------
----------------------------------------------------------------------
If submission is a label or hangtag, Name and Address of supplier:
----------------------------------------------------------------------
----------------------------------------------------------------------
ATTACH A SAMPLE OF USE IN THIS SPACE OR AFFIX TO SEPARATE PAGE
-------------------------- ---------------------------------
Signature of ITOCHU Signature of JOE'S
Page - 42
EXHIBIT I
ADVERTISING APPROVAL FORM
(SUBMISSIONS MAY BE APPROVED ONLY IN WRITING AND
ONLY IF ALL CHANGES ARE MADE)
Name of Licensee _______________________________
Licensed Product(s) _______________________________
--------------------------------------------------------------------------------
ARTWORK SUBMISSION
--------------------------------------------------------------------------------
Please check the Media of Advertising:
___ Full Page Ad ___ Billboard ___ Other _________________
Name of Publication ____________________________________________________________
Country: ______________ Issue Date: ___________________________
Ad Position (as detailed as possible): _________________________________________
___ Left Hand Page ___ Right Hand Page ___ Full Page Spread
Please follow the applicable instructions: _____________________________________
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Special Instructions: _______________________________________________________
-------------------------------------------------------------------------
---------------------- ----------------------- --------------------
Approved Approved with Changes Disapproved
--------------------------------------------------------------------------------
PUBLICATION SUBMISSION
--------------------------------------------------------------------------------
Name of Publication:
(A copy of the magazine or newspaper must be included)
Frequency (check one): ___ Daily ___ Weekly ___ Monthly ___ Other _________
Comments/Suggestions: ____________________________________________________
---------------------- --------------------
Approved Disapproved
Page - 43
EXHIBIT J
QUARTERLY ROYALTY STATEMENT
[* ITOCHU will be provided with a format for this standard report]
Page - 44
EXHIBIT K
CONTRACT YEARS
First Contract Year: From July 1, 2003 to December 31, 2004
Second Contract Year: From January 1, 2005 to December 31, 2005
Third Contract Year: From January 1, 2006 to December 31, 2005
[THE END OF EXHIBIT K]
Page - 45
