Sample Business Contracts

Sourcing Rights Letter - Footwear Acquisition Inc. and Union Overseas Holdings Ltd.

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                           FOOTWEAR ACQUISITION, INC.
                         591 Redwood Highway, Suite 2180
                          Mill Valley, California 94941

                                                                   April 5, 2001


            Re: Sourcing Rights with Union Overseas Holdings Limited

Dear Sirs:

      We refer to the Stock and Note Purchase Agreement between Footwear
Acquisition Inc. ("Footwear"), yourselves ("UOHL") and certain other
stockholders identified therein dated April 5, 2001 (the "SPA") and the related
Investors Rights Agreement between the same parties dated the same date (the

      In connection with our purchase of the assets of Converse, Inc. and your
purchase of certain of our capital stock pursuant to the SPA, we have agreed to
provide certain footwear product sourcing rights as set forth below, and
accordingly, the parties acknowledge and agree as follows:

      1. All capitalized terms used but not otherwise defined herein shall have
the same meanings as are ascribed thereto in the SPA or the IRA, as indicated

      2. The terms of this Letter Agreement shall become effective immediately
prior to the closing under the APA.

      3. If UOHL meets Footwear's good faith requirements as to price, quality
and delivery, Footwear will purchase its good faith footwear requirements from
UOHL, or any direct or indirect subsidiary of Symphony Holdings Ltd.
("Symphony") or any other corporate Affiliate of Symphony (collectively, the
"Manufacturer"). Footwear products for which Manufacturer meets Footwear's good
faith requirements as to price, quality and delivery are referred to as
"Qualified Products."

      4. With respect to Footwear's requirements for footwear products that are
not Qualified Products ("Non-Qualified Products"), Footwear shall in good faith
provide (i) to the extent practicable or permitted (based on trade secret and
patent limitations) the requirements and specifications for such Non-Qualified
Products and (ii) Manufacturer a commercially reasonable opportunity to
manufacture a portion of such requirements. To the extent Footwear does not
purchase its requirement for Non-Qualified Products from Manufacturer after
Manufacturer has requested an opportunity to do so, Footwear shall deliver a
good faith written notification to Manufacturer of the basis for such decision.
      5. The price and other terms for Footwear's purchase of products shall be
commercially reasonable, taking into account price, other market terms then
prevailing and Footwear's good faith requirements.

      6. In respect of Qualified Products, the parties recognize that Footwear
may secure alternative second source suppliers on a commercially prudent basis.
For example, Footwear may protect against natural disaster and political risks
and over-concentration in manufacturing activities with Manufacturer in respect
to a specific footwear style. In no event, however, shall Footwear purchase 50%
or more of its footwear requirements for Qualified Products from any such second

      7. Footwear shall form a research and development operating committee
(which shall be maintained to consider Footwear's research and development needs
and direction) and Manufacturer shall have the right to designate a
representative to serve on such committee.

      8. Within 30 days of the date hereof, the parties shall negotiate in good
faith the terms and methods for the (i) placement of orders, (ii) payment for
orders, (iii) determination of purchase prices, (iv) shipping methods and (v)
such other details as are necessary to carry out the terms of this Letter

      9. Each party agrees to carry out in good faith its obligations with
respect to this Letter Agreement.

      10. Unless sooner terminated pursuant to the provisions of the second
sentence of this paragraph 10, this letter agreement shall continue for seven
years from date of the closing under the APA, and shall automatically renew for
successive one year terms (each such one year term, a "Renewal Term"), unless
one party delivers to the other party notice of nonrenewal at least 180 days
prior to the expiration any Renewal Term. Notwithstanding the foregoing, this
Letter Agreement shall immediately terminate and be of no further force and
effect (i) if UOHL holds less than 50% of the shares of Common Stock it owned
immediately following the closing under the SPA, (ii) upon the occurrence of a
Change in Control of Footwear (as defined in the IRA), (iii) upon the
commencement of a Qualified Initial Public Offering (as defined in the IRA) if
such Qualified Initial Public Offering occurs after 42 months after the closing
under the APA; or (iv) 42 months after the closing under the APA if such
Qualified Initial Public Offering occurs prior to the 42nd month after the
closing under the APA.

      11. Miscellaneous

            (a) Any term of this Letter Agreement may be amended or waived only
with the written consent of the parties to this Letter Agreement.

            (b) This Letter Agreement shall be governed by the laws of the State
of New York.

            (c) All notices, requests and other communications hereunder shall
be in writing and shall be delivered in accordance with the SPA.

            (d) This Letter Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
This Agreement, the agreements referred to herein, and each other agreement or
instrument entered into in connection herewith or therewith or contemplated
hereby or thereby, and any amendments hereto or thereto, to the extent signed
and delivered by means of a facsimile machine, shall be treated in all manners
and respects as an original agreement or instrument and shall be considered to
have the same binding legal effect as if it were the original signed version
thereof delivered in person. At the request of any party hereto or to any such
agreement or instrument, each other party hereto or thereto shall re-execute
original forms thereof and deliver them to all other parties. No party hereto or
to any such agreement or instrument shall raise the use of a facsimile machine
to deliver a signature or the fact that any signature or agreement or instrument
was transmitted or communicated through the use of a facsimile machine as a
defense to the formation or enforceability of a contract and each such party
forever waives any such defense.

                                                   FOOTWEAR ACQUISITION, INC.

                                                   By: /s/ William N. Simon
                                                       Name: William N. Simon
                                                       Title: Executive Director



By: /s/ Edward D. Sy
    Name: Edward D. Sy
    Title: Director