License Agreement - Ralph Lauren Home Collection Inc. and WestPoint Stevens Inc.
THIS AGREEMENT made as of January 1, 1998 between RALPH LAUREN HOME
COLLECTION, INC., with offices at 103 Foulk Road, Wilmington, Delaware, 19899
("RLHC"), and WESTPOINT STEVENS, INC., with a principal place of business at
1185 Avenue of the Americas, New York, New York 10036 ("Company").
WITNESSETH:
WHEREAS, RLHC is a subsidiary of PRL USA Holdings, Inc., a Delaware
corporation ("Polo"); and
WHEREAS, Polo owns, and RLHC is the exclusive licensee of the rights to
use, the "Licensed Marks", hereinafter defined, in connection with the
manufacture and sale in the United States of certain items of home furnishings,
including the "Licensed Products", hereinafter defined; and
WHEREAS, Company desires to obtain, and RLHC is willing to grant, an
exclusive sublicense, to use the Licensed Marks in connection with the
manufacture and sale of Licensed Products in the United States;
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and undertakings hereinafter set forth, the parties hereto agree as
follows:
1. Definitions. As used in this Agreement, the term:
1.1. "Licensed Products" shall mean those items listed on Schedule A
attached hereto, all bearing the Licensed Marks, hereinafter defined.
1.2. "Licensed Marks" shall only the trademarks "Ralph Lauren Home
Collection", "Ralph Lauren", "Ralph (Polo Player Design) Lauren", and the
representation of the Polo Player Design, and unless the context indicates
otherwise, all of such trademarks, and only such other trademarks as RLHC may,
from time to time at its sole discretion, specifically authorize for use by
Company. Polo shall have the sole right to determine which trademark shall be
used in connection with each particular Licensed Product. From time to time RLHC
may authorize Company to manufacture and distribute products bearing the
Licensed Marks not expressly listed in Schedule A hereto. Absent an agreement
with respect to such products signed by RLHC and Company, all such products
shall be deemed Licensed Products for all purposes hereunder; provided, however,
that Company's rights with respect to such products (i) shall be non-exclusive
and (ii) may be terminated by Company upon 90 days written notice.
1.3. "Territory" shall mean the United States of America, Canada and
Mexico; provided, however, that (i) Company may sell Licensed Products in Mexico
solely through RLHC's exclusive distributor in Mexico or as otherwise
specifically authorized
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in advance by RLHC and (ii) Company shall have no right to sell any Licensed
Products directly, and RLHC shall be free to sell or authorize the sale of
Licensed Products, to hotels, motels and other lodging facilities for use in
such facilities (but not for retail sale at such facilities). From time to time
RLHC may authorize Company to sell certain Licensed Products to specific
purchasers outside the Territory. Absent an agreement with respect to such sales
signed by RLHC and Company, all such sales shall be made on all of the terms and
conditions set forth in this Agreement; provided, however, that Company's right
to make such sales shall be non-exclusive and may be terminated by RLHC
immediately upon written notice to Company. Any such termination shall not apply
to orders already taken by Company in accordance with RLHC's prior
authorization.
2. Grant of License.
2.1. Subject to the terms and provisions hereof, RLHC hereby grants
Company, and Company hereby accepts, the exclusive, non-assignable right to use
the Licensed Marks for the term of this Agreement, in connection with the
manufacture and sale to the trade of Licensed Products in the Territory.
2.2. The sublicense granted herein applies solely to the use of the
Licensed Marks in connection with the manufacture and sale to the trade of the
Licensed Products. No use of any other trademark of RLHC, Polo or of any of
their affiliates, and no use of the Licensed Marks in connection with the
manufacture and sale of any other products, shall be authorized or permitted
pursuant to this sublicense.
2.3. RLHC reserves all rights granted to it under its agreements with
Polo which are not expressly and exclusively granted to Company hereunder, and
RLHC may grant sublicenses to others in the Territory in connection with the
items of home furnishings designated in such agreements, except for the Licensed
Products specifically licensed hereunder.
2.4. It is understood and agreed that all right, title and interest in
and to the Licensed Marks are reserved by Polo for its own use or for the use of
any other licensee, whether within or outside the Territory, in connection with
any and all products and services other than the rights granted to Company
herein. Without limiting the generality of the foregoing, Company understands
and agrees that RLHC or Polo may manufacture or authorize third parties to
manufacture, in the Territory, Licensed Products for ultimate sale outside the
Territory.
2.5. Company shall not without RLHC's prior written approval sell any
Licensed Products bearing the Mark to any third party which, directly or
indirectly, sells or proposes to sell such Licensed Products outside the
Territory. Company shall use its best efforts to prevent any such resale outside
the Territory and shall,
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immediately upon learning or receiving notice from RLHC that a customer is
selling Licensed Products outside the Territory, cease all sales and deliveries
to such customer.
2.6. RLHC shall not, without Company's consent, grant to others the
right and license to use a trademark which bears the words "Polo" or "Ralph
Lauren" in connection with the Licensed Products within the Territory. To the
extent that it is legally possible to do so, no license is granted hereunder for
the manufacture, sale or distribution of Licensed Products to be used for
publicity purposes, other than publicity of Licensed Products, in combination
sales, as premiums or giveaways or to be disposed of under or in connection with
similar methods of merchandising, such rights being specifically reserved for
RLHC.
2.7. Company shall not purport to grant any right, permission or
sublicense hereunder to any third party, whether at common law or otherwise. In
the event of any attempted assignment or sublicense by Company without RLHC's
prior written consent, RLHC may at its option immediately terminate such
sublicense and this Agreement by written notice to Company to such effect; any
such attempted assignment or sublicense shall otherwise be null, void and of no
force or effect.
2.8. Company shall not use, or permit another person or entity in its
control to use, the words "Polo" or "Ralph Lauren" as part of a corporate name
or trade name and Company shall not otherwise permit use of the Licensed Marks
in such a way so as to give the impression that the names "Polo" or "Ralph
Lauren", or the Licensed Marks, or any modification thereof, is the property of
Company.
2.9. Company shall not have the right to use Company's name on the
Licensed Products, except with the prior approval by RLHC of the use and
placement of Company's name. Company shall, at the option of RLHC, include on
its business materials and/or the Licensed Products an indication of the
relationship of the parties hereto in a form approved by RLHC.
2.10. Notwithstanding anything to the contrary herein contained, RLHC
hereby reserves the right from time to time to authorize others to manufacture
and sell Licensed Products as part of a combination sale, or premium or giveaway
with certain products other than Licensed Products bearing the Ralph Lauren
name.
2.11. Company shall not without RLHC's prior written approval, directly
or indirectly, manufacture, distribute, sell or advertise, during the term of
this Agreement, any items which bear or are associated with any of the following
trademarks: [ * * * ], or any other fashion apparel or home furnishings designer
whose products are sold primarily through department store distribution. In the
event that during the term hereof Company shall desire, directly or indirectly,
to manufacture, distribute, sell
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or advertise any items which bear the name or are associated with the name of
any fashion apparel or home furnishings designer other than those specifically
named above in markets outside of department store distribution, Company shall
notify RLHC in writing of the identity of the designer and the nature of the
proposed transaction not less than sixty (60) days prior to concluding an
agreement with respect to such transaction, and during such period shall discuss
with RLHC in good faith any reasonable concerns RLHC may have with respect
thereto. The provisions of this paragraph 2.11 shall not be deemed to prohibit
Company from acquiring or merging with any other entity, or engaging in any
other transaction, which results in Company directly or indirectly acquiring
ownership of any trademark set forth in this paragraph 2.11 or acquiring the
right to use any such trademark in connection in connection with products in the
same categories as Licensed Products; provided, however, that Company shall
promptly notify RLHC in writing of any such transaction and RLHC shall, for
sixty (60) days after its receipt of such notice, have the right to terminate
this Agreement by written notice to Company, such termination to become
effective thirty (30) days after the date notice of termination is received by
Company.
2.12. RLHC represents and warrants to Company that it has full legal
right, power and authority to grant the sublicense hereby granted by RLHC to
Company, to enter into this Agreement, to perform all of its obligations
hereunder, and to consummate all of the transactions contemplated herein.
2.13. Company represents and warrants to RLHC that it has full legal
right, power and authority to enter into this Agreement, to perform all of its
obligations hereunder and to consummate all of the transactions contemplated
herein. Company further represents and covenants that it is now and at times
shall be adequately capitalized so as to be able to conduct its operations
contemplated hereunder and to meet the requirements of its suppliers in
connection therewith.
2.14. Company recognizes that there are many uncertainties in the
business contemplated by this Agreement. Company agrees and acknowledges that
other than those representations explicitly contained in this Agreement, if any,
no representations, warranties or guarantees of any kind have been made to
Company, either by RLHC, Polo or the "Design Company" (as hereinafter defined),
or by anyone acting on their behalf. Without limitation, no representations
concerning the value of the Licensed Products or the prospects for the level of
their sales or profits have been made and Company has made its own independent
business evaluation in deciding to manufacture and distribute the Licensed
Products on the terms set forth herein.
3. Design Standards and Prestige of Licensed Products.
3.1. Ralph Lauren ("Lauren") is an internationally famous designer who
has been twice inducted into the Coty Hall of Fame for his creation and design
of men's
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and women's fashions and is a creator of original designs for cosmetics, jewelry
and other products. The value of the Licensed Marks is largely derived from the
reputation, skill and design talents of Lauren, and Lauren, directly and through
his designees, provides design services through Polo Ralph Lauren Corporation
(the "Design Company").
3.2. RLHC agrees to provide Company with the benefit of the services of
PRLC in connection with the creation and design of Licensed Products, subject to
the terms and provisions hereof, in order to enable Company to exploit the
rights granted to it under this Sublicense Agreement and to manufacture Licensed
Products in conformity with the established prestige and good will of the
Licensed Marks. In the event Ralph Lauren dies or becomes incapacitated, RLHC
shall continue to provide the design services of PRLC and the Company shall
accept the services of PRLC. All Licensed Products manufactured or caused to be
manufactured and sold by Company shall be made in accordance with the design and
other information approved under this Agreement, and in all other respects in
conformity with the terms hereof. In addition, RLHC shall provide the services
of PRLC's sales force as set forth in paragraph 4.1 hereof.
3.3. Company acknowledges that the Licensed Marks has established
prestige and good will and is well recognized in the trade and the public, and
that it is of great importance to RLHC that in the manufacture and sale of the
various lines of products bearing the Licensed Marks, including the Licensed
Products, the high standards and reputation Polo and Lauren have established be
maintained. Accordingly, all items of Licensed Products manufactured by Company
hereunder shall be of high quality workmanship with adherence to all details and
characteristics embodied in the designs furnished pursuant to the provisions of
this Agreement. Company shall, upon RLHC's request, supply RLHC with samples of
Licensed Products (including samples of labeling and packaging used in
connection therewith) prior to production and from time to time during
production, and shall, at all times during the term hereof, upon RLHC's request,
make its manufacturing facilities available to RLHC, Polo and/or PRLC, and shall
use its best efforts to make available each subcontractor's manufacturing
facilities, for inspection by representatives of RLHC, Polo and/or PRLC during
usual working hours. No sales of Licensed Products as miscuts, damaged or
defective merchandise shall contain any labels or other identification bearing
the Licensed Marks without Polo's prior written approval.
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4. Marketing; Advertising.
4.1. Except as may otherwise be agreed by RLHC and Company in writing,
Licensed Products shall be marketed and sold only by RLHC or PRLC and the PRLC
home collection sales group. No commission or other compensation shall be due to
RLHC or PRLC in connection with such marketing and sales services, other than
the royalty payments set forth herein. Company shall not offer for sale or
promote the sale of Licensed Products in any manner without RLHC's prior
approval. Company shall have no marketing or selling responsibility for Licensed
Products, but shall be the manufacturer of all Licensed Products sold in the
Territory. At Company's request, RLHC will provide Company with a list of all
approved accounts it plans to sell for that season. RLHC will notify Company of
any additions or deletions to the list. Company shall reserve the right to
refuse to ship any customer if they do not meet Company's normal credit
criteria; provided however that Company shall first notify RLHC of its decision
and Company shall give RLHC the opportunity to assist in rectifying the credit
situation.
4.2. Company shall maintain the high standards of the Licensed Marks as
applied to Licensed Products, in all packaging and, to the extent permitted by
RLHC, promotion of the Licensed Products. Company shall not employ or otherwise
release any of such packaging or other business materials relating to any
Licensed Products and bearing the Licensed Marks unless and until Company shall
have made a request to RLHC in writing for approval. Approval or disapproval of
any such proposed use shall be given by RLHC as promptly as reasonably
practicable after receipt of Company's request in connection therewith, but in
all cases within twenty-one (21) business days after receipt by RLHC of
Company's request; if neither approval nor disapproval has been given within
such time, approval shall be deemed to have been given. Any such approval shall
be effective until revoked by RLHC; provided, however, to the extent RLHC's
approval relates only to a seasonal collection of Licensed Products, Company
shall not thereafter use said packaging or business materials without RLHC's
further approval.
4.3. Provided approval to use the Licensed Marks as part of a specific
piece of packaging or business material remains effective, it shall not be
necessary to obtain prior approval for each separate, substantially similar use
of the Licensed Marks containing immaterial changes from the use of the Licensed
Marks so approved. Notwithstanding the foregoing, Company shall, as soon as is
reasonably possible, either prior to publication, release or other public
showing or immediately thereafter, deliver to RLHC a tear sheet, proof or
"mock-up" of any such changed use of the Licensed Marks, which shall be subject
to disapproval by RLHC; if such disapproval shall be expressed, the same shall
not be used at any later time unless approval thereof shall be later obtained.
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4.4. Anything in this Agreement to the contrary notwithstanding, as
between RLHC and Company, RLHC shall have sole and exclusive right to prepare or
place any and all advertising of any nature with respect to the Licensed
Products. Any and all cooperative advertising campaigns supported or approved by
Company shall be subject to the prior approval of RLHC. In the event RLHC during
the term hereof authorizes Company to prepare and place any advertising with
respect to the Licensed Products, Company shall not place any such advertising
unless and until Company shall have made a request in writing to RLHC for
approval of such advertising detailing the use to be made of the advertising
material (e.g. TV, print, radio), and RLHC shall have approved the same in
writing. Any approval granted hereunder shall be limited to use during the
seasonal collection of Licensed Products to which such advertising relates and
shall be further limited to the use (e.g. TV, print, radio) for which approval
by RLHC was granted.
4.5. Company shall maintain the highest quality and standards of the
Licensed Products and shall exercise its best efforts to safeguard the
established prestige and good will of the name Ralph Lauren and the Lauren image
at least at the same level of prestige and good will as heretofore maintained.
"Image", as used herein, refers primarily to quality and style of packaging,
shipping, customer service, promotion, selling tools, creation and introduction
of new products and types of outlets (with reference to quality of service
provided by retail outlets and quality of presentation of Lauren merchandise in
retail outlets). Company shall take all necessary steps, and all steps
reasonably requested by RLHC, to prevent or avoid any misuse of the Licensed
Marks by any of its customers, contractors or other resources.
4.6. To the extent permitted by applicable law, RLHC may from time to
time, and in writing, promulgate uniform rules and regulations to Company
relating to the manner of use of the Licensed Marks. Company shall comply with
such rules and regulations.
4.7. Company agrees to make available for purchase, and to sell on its
customary price, credit and payment terms, all lines and styles of Licensed
Products to retail stores in the Territory bearing any trademark of Polo or its
affiliates pursuant to a license from Polo or any of its affiliates and to any
stores or facilities operated or owned by Polo and/or its affiliates, which are
authorized to sell Licensed Products within such retail stores. Notwithstanding
anything to the contrary contained herein, in the event that any such Licensed
Products are not so made available by Company to such stores or facilities, and
in addition to any other remedy available to RLHC hereunder, such Licensed
Products may be made available to such stores by RLHC (or its affiliates or
other licensees).
4.8. Company shall offer Licensed Products for sale to employees of
Polo and its licensees for the personal use of such employees at Company's
regular invoice
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price to unaffiliated retail accounts.
4.9. Company shall make a non-refundable contribution toward RLHC's
advertising expenses on the first day of each year during the term hereof, as
follows:
January 1, 1998 $ [ * * * ]
January 1, 1999 $ [ * * * ]
January 1, 2000 $ [ * * * ]
Except as otherwise agreed, Company's contributions shall be used for consumer
advertising which features Licensed Products, although such advertising may also
include products of other RLHC licensees in order to reflect RLHC design
concepts and lifestyles.
5. Trademark and Copyright Protection.
5.1. All uses of the Licensed Marks by Company, including, without
limitation, use in any business documents, invoices, stationery, advertising,
promotions, labels, packaging and otherwise, shall be subject to paragraph 4
hereof and shall require RLHC's prior written consent, and all uses of the
Licensed Marks by Company in advertising, promotions, labels and packaging shall
bear the notation, "Ralph (Polo Player design) Lauren", the representation of
the Polo Player Design, or "Ralph Lauren". Company acknowledges and agrees that
its use of the Licensed Marks shall at all times be as sublicensee of RLHC for
the account and benefit of RLHC, Polo and PRLC. All uses of the Licensed Marks
pursuant to this Agreement shall be for the sole benefit of Polo and shall not
vest in Company any title to or right or presumptive right to continue such use.
For the purposes of trademark registrations, sales by Company or RLHC shall be
deemed to have been made by Polo.
5.2. Company will cooperate fully and in good faith with RLHC for the
purpose of securing and preserving RLHC's and Polo's rights in and to the
Licensed Marks. Nothing contained in this Agreement shall be construed as an
assignment or grant to Company of any right, title or interest in or to the
Licensed Marks or any of RLHC's or Polo's other trademarks, and all rights
relating thereto are reserved by RLHC and Polo, relative to their respective
interests therein, except for the sublicense hereunder to Company of the right
to use the Licensed Marks only as specifically and expressly provided herein.
Company acknowledges that only Polo may file and prosecute a trademark
application or applications to register the Licensed Marks for Licensed
Products.
5.3. Company will not, during the term of this Agreement or thereafter,
(a) attack Polo's title or rights, or RLHC's rights, in and to the Licensed
Marks in any jurisdiction, or attack the validity of this Sublicense or of the
Licensed Marks, or (b)
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contest the fact that Company's rights under this Agreement (i) are solely those
of a manufacturer or distributor, and (ii) subject to the provisions of
paragraph 14 hereof, terminate upon termination of this Agreement. The
provisions of this paragraph 5.3 shall survive the termination or expiration of
this Agreement.
5.4. All right, title and interest in and to all samples, sketches,
designs, art work, logos and other materials furnished by or to PRLC or RLHC,
whether created by PRLC, RLHC or Company, are hereby assigned in perpetuity to,
and shall be the sole property of, Polo, RLHC and/or PRLC, as the case may be;
provided, however, that all rights (including copyrights and design patent
rights) in designs, and all sketches, artwork and other materials embodying such
designs, first proposed by the Company to RLHC which are rejected by RLHC and
which are not substantially similar to designs (i) first proposed by RLHC or
PRLC or (ii) proposed by Company and accepted by RLHC in whole or in part for
use in connection with Licensed Products, shall be owned exclusively by Company.
Company will assist RLHC, Polo and PRLC, at RLHC's, Polo's or PRLC's expense, as
the case may be, (provided that RLHC, Polo and/or PRLC shall not be responsible
for the cost of the time and effort expended by Company's officers and employees
in connection with furnishing such assistance) to the extent necessary in the
protection of or the procurement of any protection of the rights of Polo or
PRLC, as the case may be, to the Licensed Marks or the designs, design patents
or copyrights furnished hereunder, as well as to the rights of RLHC to the same.
RLHC, Polo and PRLC, as their interests may appear, may commence or prosecute
any claims or suits in their own names and may join Company as a party thereto.
Company shall promptly notify RLHC and Polo in writing of any uses which may be
infringements or imitations by others of the Licensed Marks on articles similar
to those covered by this Agreement, and of any uses which may be infringements
or imitations by others of the designs, design patents and copyrights furnished
hereunder, which may come to the attention of Company. As between Company and
RLHC, RLHC shall have the sole right with respect to the Licensed Marks,
designs, design patents and copyrights furnished hereunder, to determine whether
or not any action shall be taken on account of such infringements or imitations.
Company shall not institute any suit or take any action without first obtaining
RLHC's written consent to do so.
6. Designs.
6.1. At any time or from time to time Company shall provide RLHC with a
list or lists setting forth those Licensed Products for which Company shall
require designing by PRLC.
6.2. At any time or from time to time within a reasonable period
following receipt by RLHC of the aforesaid lists or lists, RLHC shall provide
Company, directly or through PRLC, with PRLC's program of suggested, broad
design themes and
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concepts with respect to the design of the Licensed Products ("Design Concepts")
which shall be embodied in verbal and/or written descriptions of design themes
and concepts and such other detailed designs and sketches therefor, as PRLC
deems appropriate. PRLC shall have full discretion with respect to the manner in
which the Design Concepts shall be formulated and presented to Company but may
undertake to prepare and provide finished artwork with respect to the design of
Licensed Products. RLHC shall make PRLC available for consultation with Company
on Design Concepts for the purpose of making such modifications to the Design
Concepts as are required to meet PRLC's approval.
6.3. PRLC may engage such employees, agents, and consultants operating
under PRLC's supervision and control as it may deem necessary and appropriate.
6.4. From time to time while this Agreement is in effect, PRLC may (a)
develop or modify and implement designs from PRLC, or (b) develop and implement
new designs.
6.5. If Company wishes to prepare a design for each of its lines of
Licensed Products, it shall submit to RLHC for PRLC's approval Company's
proposed design therefor. PRLC may, in its sole discretion, by written notice,
approve any of the designs so furnished, with such modifications as it shall
deem appropriate, or it may disapprove any or all of the designs.
6.6. All patents and copyrights on designs, and all art work, sketches,
logos and other materials depicting the designs or Design Concepts shall only be
applied for by PRLC, at its discretion and expense, and shall designate PRLC as
the patent or copyright owner, as the case may be, thereof.
6.7. Company shall include within its collection of Licensed Products
each design designated by PRLC for inclusion therein. The foregoing
notwithstanding, in the event Company is unable, in good faith and due only to
physical impossibility or economic impracticability, to include within a
collection of Licensed Products a particular Licensed Product which PRLC has
designed or designated for inclusion in such collection, RLHC shall be entitled
to authorize third parties to manufacture and sell such Licensed Products within
the Territory and Company shall display and present such Licensed Products in
its showroom for Licensed Products.
7. Design Legends: Copyright Notice and Grant.
7.1. All designs, and all art work, sketches, logos and other materials
depicting the designs or Design Concepts created by PRLC, or created by or for
Company and reviewed and approved by PRLC or developed by or for Company from
Design Concepts or subsequent design concepts furnished or approved by PRLC,
shall be
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subject to the provisions of this paragraph 7 and shall be owned exclusively by
PRLC.
7.2. Company shall cause to be placed on all Licensed Products, when
necessary, appropriate notices designating PRLC as the copyright or design
patent owner thereof, as the case may be. Prior to use thereof by Company, the
manner of presentation of said notices must be reviewed and approved in writing
by PRLC.
7.3. RLHC hereby grants to Company the exclusive right, sublicense and
privilege in connection with Licensed Products in the Territory to use the
designs furnished hereunder and all copyrights, if any, therein, and hereby
sublicenses to Company the right to use all patents on such designs, and shall
execute and deliver to Company all documents and instruments necessary to
perfect or evidence such sublicense; provided, however, that all such right,
title and interest therein shall revert to PRLC upon termination of this
Agreement for any reason whatsoever, and Company shall thereupon execute and
deliver to PRLC all documents and instruments necessary to perfect or evidence
such reversions and, provided, further, that such sublicense is limited to use
in connection with Licensed Products authorized to be manufactured and sold from
time to time pursuant to this Sublicense Agreement. Such sublicense shall
continue only during the term of this Agreement.
8. Licensed Products.
8.1. Company shall, through RLHC, obtain the written approval of PRLC
of all Licensed Products, by submitting a Prototype, as hereinafter defined, of
each different design or model of a Licensed Product, including, but not limited
to, the type and quality of materials, colors and workmanship to be used in
connection therewith, prior to any commercial production thereof. In the event
that PRLC rejects a particular Prototype or Prototypes, Company shall be
notified of the reasons for rejection and Company may be provided with
suggestions for modifying the particular Prototype or Prototypes which PRLC is
rejecting. Company shall promptly correct said Prototype or Prototypes and
resubmit said Prototype or Prototypes for PRLC's approval under the same terms
and conditions as set forth herein with respect to the first submission of
Prototypes. As used herein, the term "Prototype" shall mean any and all models,
or actual samples, of Licensed Products; and the term "Final Prototype" shall
mean the actual final sample of a Licensed Product from which the first
commercial production thereof will be made and which has been approved by PRLC
prior to the first commercial production thereof pursuant to paragraphs 8 and 9
hereof.
8.2. The written approval of PRLC of the Prototypes for each seasonal
collection shall be evidenced by a written list, signed on behalf of PRLC,
setting forth those Prototypes that have been approved for inclusion in such
collection. Prototypes so approved shall be deemed Final Prototypes in respect
of such collection. Approval
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of any and all Prototypes as Final Prototypes shall be in the sole discretion of
PRLC. Company shall present for sale, through the showing of each seasonal
collection to the trade, all Final Prototypes so approved in respect of such
collection.
8.3. The Licensed Products thereafter manufactured and sold by Company
shall strictly adhere, in all respects, including without limitation, with
respect to materials, colors, workmanship dimensions, styling, detail and
quality, to the Prototypes approved by PRLC.
8.4. Company shall comply with all laws, rules, regulations and
requirements of any governmental body which may be applicable to the
manufacture, distribution, sale or promotion of Licensed Products. Company shall
advise RLHC to the extent any Final Prototype does not comply with any such law,
rule, regulation or requirement.
8.5. Company shall make its personnel, and shall use its best efforts
to make the personnel of any of its contractors, suppliers and other resources,
available by appointment during normal business hours for consultation with
PRLC. Company shall make available to RLHC, upon reasonable notice, marketing
plans, reports and information which Company may have with respect to Licensed
Products. In addition, when requested by PRLC, Company shall arrange meetings
between PRLC and senior executive personnel of Company to discuss and pursue in
good faith the resolution of problems encountered by PRLC in connection with
this Agreement during the term hereof.
9. Quality of Licensed Products.
9.1. PRLC shall have the right of approval of the styles, designs,
colors, materials, workmanship and quality of all Licensed Products to insure
that all Licensed Products manufactured, sold or distributed are of the highest
quality and are consistent with the highest standards and reputation and
established prestige and good will connected with the name "Ralph Lauren". In
connection with the production of each item of Licensed Products, Company shall
use only such materials as PRLC shall have previously approved pursuant to the
Final Prototype with respect to such item of Licensed Products.
9.2. In the event that any Licensed Product is, in the judgment of
PRLC, not being manufactured or sold in adherence to the materials, colors,
workmanship, design, dimensions, styling, detail and quality embodied in the
Final Prototypes, or is otherwise not in accordance with the Final Prototypes,
RLHC shall notify Company thereof in writing and Company shall promptly repair
or change such Licensed Product to conform strictly thereto. If an item of
Licensed Product as repaired or changed does not strictly conform to the Final
Prototypes and such strict conformity
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cannot be obtained after at least one (1) resubmission, the Licensed Marks shall
be promptly removed from the item, at the option of PRLC, in which event the
item may be sold by Company, subject to the royalty provisions of Paragraph 10
hereof, provided it is in no way identified as a Licensed Product.
9.3. RLHC and PRLC and their duly authorized representatives shall have
the right, upon reasonable notice during normal business hours, to inspect all
facilities utilized by Company (and its contractors and suppliers) in connection
with the preparation of Prototypes and the manufacture, sale, storage or
distribution of Licensed Products pursuant hereto and to examine Licensed
Products in the process of manufacture and when offered for sale within
Company's operations. Company hereby consents to examination by RLHC and PRLC of
Licensed Products held by Company's customers for resale provided Company has
such right of examination. Company shall take all necessary steps, and all steps
reasonably requested by RLHC and PRLC, to prevent or avoid any misuse of the
licensed designs by any of its customers, contractors or other resources.
10. Royalties.
10.1. Company shall pay to RLHC minimum royalties each year during the
term of this Sublicense Agreement. The minimum royalty
a. for the first year (as hereinafter defined) shall be $
[ * * * ]; and
b. for the second year shall be $ [ * * * ]; and
c. for the third year shall be $ [ * * * ].
Minimum royalties for each year shall be paid on a quarterly basis, beginning
with the minimum royalty payment to be made for the first calendar quarter of
1998, in the manner set forth in paragraph 10.2 below. No credit shall be
permitted against minimum royalties payable in any year on account of earned or
minimum royalties paid in any other year and minimum royalties shall not be
returnable. For the purposes of this Agreement, a "year" shall mean a period of
twelve (12) months commencing on each January 1 during the term hereof.
10.2. Company shall pay to RLHC earned royalties based on the Net Sales
Price, as hereinafter defined, of all Licensed Products sold hereunder. Earned
royalties shall equal [ * * * ] percent ([***]%) of the Net Sales Price of all
Licensed Products sold under this Agreement, including without limitation any
sales made pursuant to the terms of paragraphs 3.3, 9.2 and 14 hereof; provided,
however, that no royalties shall be due with respect to sales of Licensed
Products sold at a price equal to or less than [ * * * ] percent ([***]%) off
the regular wholesale price (although
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all such discounted sales shall be separately reflected in Company's accounting
statements). Company shall prepare or cause to be prepared statements of
operations for each month during the term hereof, which statements shall be
furnished to RLHC together with the earned royalties due for each such month on
the last day of the following month. The statement and royalty payment provided
on the last day of each April (for the month of March), July (for the month of
June), October (for the month of September) and January (for the month of
December) during the term shall also include Licensee's minimum royalty
obligation for the preceding calendar quarter, less the aggregate earned
royalties paid for such calendar quarter; provided, however, that any payment of
minimum royalties required hereunder may be set off against any excess of earned
royalties over minimum royalties in any subsequent quarter of the same year, it
being the parties intent that at the end of each year during the term hereof
Company shall have paid RLHC an amount equal to the greater of (i) the aggregate
earned royalties for the year or (ii) the minimum royalty obligation set forth
in paragraph 10.1 above. The term "Net Sales Price" shall mean the gross sales
price to retailers or, with respect to Licensed Products that are not sold
directly or indirectly to retailers, other ultimate consumers (as in the case of
accommodation sales by Company to its employees), of all sales of Licensed
Products sold under this Agreement, less trade discounts actually taken and
merchandise returns. The Net Sales Price of any Licensed Products sold by
Company to affiliates of Company shall, for purposes of this Agreement, be
deemed to be the higher of (a) the actual gross sales price, or (b) Company's
regular selling price for such Licensed Products sold to unaffiliated parties
for sale at retail. Merchandise returns shall be credited in the quarterly
period in which the returns are actually made.
10.3. Company shall make a non-refundable contribution each year during
the term hereof toward RLHC's travel expenses incurred with respect to design
development and approval pursuant to this Agreement (including travel to mills
for strike off approvals), in the amount of $40,000, which amount shall be paid
together with Company's first royalty payment for each year during the term
hereof as set forth in paragraph 10.2 hereof.
10.4. If the payment of any installment of royalties is delayed for any
reason, interest shall accrue on the unpaid principal amount of such installment
from and after the date on which the same became due pursuant to paragraphs 10.1
and 10.2 hereof at the lower of the highest rate permitted by law in New York
and 2% per annum above the rate of interest published from time to time by
Chemical Bank, New York, New York (or any successor bank) as its reference rate,
or, if such rate is not published, then the nearest equivalent rate thereto then
published by Chemical Bank.
10.5. The obligation of Company to pay royalties hereunder shall be
absolute notwithstanding any claim Company may assert against RLHC, Polo, Lauren
or
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PRLC. Company shall not have the right to set off, compensate or make any
deduction from such royalty payments for any reason whatsoever.
10.6. In consideration of the rights granted herein, Company shall sell
and timely ship to "New Stores" (as hereinafter defined) such Licensed Products
as they may wish to purchase, at a discount of at least thirty-five percent
(35%) off the regular wholesale price with respect to all Bedroom Products other
than solid color sheets and bedding accessories with a 250 thread count ("250
sheets") and at least thirty percent (30%) off the regular wholesale price with
respect to 250 Sheets and all Bathroom Products. As used herein, the term "New
Stores", including the one in Oakbrook, Illinois, shall mean all full price
free-standing stores operating under any service mark or tradename associated
with Ralph Lauren which is opened or relocated on or after May 1, 1997,
regardless of the product mix, size, location or configuration of such stores
and "free-standing stores" shall mean stores which are operating as separate
units not a department or sub-unit of a larger store. No royalty shall be due
pursuant to paragraph 10.2 hereof with respect to any sales by Company to New
Stores pursuant to this paragraph 10.6, but Company shall separately report all
such sales in the accounting statements required hereunder. Also in
consideration of the rights granted herein, Company shall sell and timely ship
Licensed Products to "Polo Outlet Stores" (as each such term is hereinafter
defined), to the extent of their requirements on a priority basis in relation to
any other secondary distribution of Licensed Products, at a discount which,
unless otherwise agreed by Company and RLHC, shall be equal to 25% off the
regular wholesale price therefore based on a weighted average, it being
understood that (i) larger discounts may be negotiated on a case-by-case basis
in respect of excess and irregular inventory taking into account the age,
condition and quantity of merchandise to be disposed of and (ii) smaller
discounts may be negotiated in exceptional cases for products currently sold in
department stores which have been merchandised to hit critical price points. All
such sales shall be separately reported by Company in its accounting statements
pursuant to paragraph 10.2 hereof, and such sales shall be subject to the
royalty obligations set forth herein unless otherwise agreed by RLHC and
Company. "Polo Outlet Stores", as used herein, shall mean all "outlet" or
"factory" stores doing business under any Polo/Ralph Lauren service mark or
tradename.
11. Accounting; Records.
11.1. Company shall at all times keep an accurate account of all
operations within the scope of this Agreement and shall prepare and furnish to
RLHC full statements of operations with respect to each month in each year
during the term of this Agreement within thirty (30) days of the end of such
period. Such statements shall include, on a country-by-country basis, all
aggregate gross sales, trade discounts, merchandise returns and the Net Sales
Price of all sales of License Products for the previous month. Such statements
shall be in sufficient detail to be
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audited from the books of Company and shall be certified by a financial officer
of Company. Once each year, which may be in connection with the regular annual
audit of Company's books, Company shall furnish an annual statement of the
aggregate gross sales, trade discounts, merchandise returns and Net Sales Price
of all sales of Licensed Products made by Company certified by the independent
public accountant of Company.
11.2 RLHC and its duly authorized representatives, on reasonable
notice, shall have the right, no more than once in each year during regular
business hours, for the duration of the term of this Agreement and for three (3)
years thereafter, to examine the books of account and records and all other
documents, materials and inventory in the possession or under the control of
Company and its successors with respect to the subject matter of this Agreement.
All such books of account, records and documents shall be maintained and kept
available by Company for at least the duration of this Agreement and for three
(3) years thereafter. RLHC shall have free and full access thereto in the manner
set forth above and shall have the right to make copies and/or extracts
therefrom. If as a result of any examination of Company's books and records it
is shown that Company's payments to RLHC hereunder with respect to any twelve
(12) month period were less than or greater than the amount which should have
been paid to RLHC by an amount equal to two percent (2%) of the amount which
should have been paid during such twelve (12) month period, Company will, in
addition to reimbursement of any underpayment, with interest from the date on
which each payment was due at the rate set forth in paragraph 6.3 hereof,
promptly reimburse RLHC for the cost of such examination.
11.3. Company shall provide to RLHC in the form requested such
information as RLHC may reasonably request with respect to the manufacture,
distribution and sale of Licensed Products.
12. Term.
The initial term of this Agreement shall commence on the date hereof
and shall terminate on December 31, 2000, unless earlier terminated in
accordance with the terms hereof. It is expressly understood that only the
company (which may be Company) whose licensed term covers the period subsequent
to the expiration of this Agreement shall be entitled to receive designs for
Licensed Products intended to be sold after the expiration of this Agreement,
and to make presentations of such Licensed Products during the market
presentation weeks that relate to such subsequent period, even if such market
presentation occurs prior to the termination of this Agreement. Without limiting
the generality of the foregoing, in the event the term hereof is not renewed or
extended, the last season for which the Company shall be entitled to receive
designs and, during the term hereof, to manufacture and sell Licensed Products
shall be the [Fall 2000] season, and RLHC shall be entitled to
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undertake, directly or through a successor licensee, all activities associated
with the design, manufacture and sale Licensed Products commencing with the
[Spring 2001] season.
13. Default; Change of Business.
13.1. Each of the following shall constitute an event of default
("Event of Default") hereunder;
(i) Royalty payments are not paid when due and such default
continues for more than ten (10) days after notice thereof;
(ii) Company shall fail to timely present for sale to the trade a
broadly representative and fair collection of each seasonal
collection of Licensed Products designed by PRLC or Company
shall fail to timely ship to its customers a material portion
of the orders of Licensed Products it has accepted;
(iii) Company fails within ten (10) days after written notice from
RLHC that payment is overdue to pay for any Licensed Products
or materials, trim, fabrics, packaging or services relating to
Licensed Products purchased by Company from RLHC or Polo or
any agent or licensee of RLHC or Polo or any other supplier of
such items unless Company is in good faith contesting the
amount or liability for such payment;
(iv) If Company shall, after achieving distribution and sale of the
Licensed Products throughout the Territory, thereafter fail
for a consecutive period in excess of two (2) months to
continue the bona fide manufacture, distribution and sale of
the Licensed Product; or
(v) If a deliberate deficiency in reported Net Sales occurs or if
any other deliberate misstatements are made in reports
required or requested hereunder; or
(vi) If the quality of the Licensed Products should become lower
than that in the approved Prototypes referred to in paragraph
8 hereof; or
(vii) If Company shall use the Licensed Marks in an unauthorized or
improper manner and/or if Company shall make an unauthorized
disclosure of confidential information or materials given or
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loaned to Company by Polo, PRLC and or RLHC; or
(viii) Company defaults in performing any of the terms of this
Agreement and continue in default for a period of thirty (30)
days after notice thereof (unless the default cannot be
totally cured within the initial thirty (30) day period after
notice and Company diligently and continuously proceeds to
cure and does in fact cure such default, but within no later
than ninety (90) days following such initial period); or
(ix) Company institutes proceedings seeking relief under the
Bankruptcy Code or any similar law, or consents to entry of an
order for relief against it in any bankruptcy or insolvency
proceeding or similar proceeding, or files a petition or
answer or consents for reorganization or other relief under
any bankruptcy act or other similar law, or consents to the
filing against it of any petition for the appointment of a
receiver, liquidator, assignee, trustee, sequestrator (or
other similar official) of it or of any substantial part of
its property, or makes an assignment for the benefit of
creditors, or admits in writing its inability to pay its debts
as they become due, or takes any action in furtherance of the
foregoing; or
(x) Company transfers or agrees to transfer a substantial part of
its property (except as provided in paragraph 13.3 below); or
(xi) The calling of a meeting of creditors, appointment of a
committee of creditors or liquidating agents, or offering of a
composition or extension to creditors by, for, or of Company;
or
(xii) Company shall have failed to perform any material term,
covenant or agreement on its part to be performed under any
agreement or instrument (other than this Agreement) evidencing
or securing or relating to any indebtedness owing by Company,
if the effect of such failure is to accelerate the maturity of
such indebtedness, or to permit the holder or holders of such
indebtedness to cause such indebtedness to become due prior to
the stated maturity thereof, regardless of whether or not such
failure to perform will be waived by the holder or holders of
such indebtedness.
13.2. If any Event of Default shall occur, RLHC, Polo or PRLC, or any
of them, shall have the right, exercisable in its discretion, immediately to
terminate this
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Agreement and the sublicense upon ten (10) days written notice to Company of its
intention to do so, and upon the expiration of such ten (10) day period, this
Agreement and the sublicense, including, without limitation, all rights of
Company in and to the Licensed Marks, and in and to the designs furnished or
used hereunder and all copyrights therein and design patents thereon, shall
terminate and come to an end without prejudice to any remedy of RLHC for the
recovery of any monies (including attorneys' fees for collection) then due it
under this Agreement or in respect of any antecedent breach of this Agreement,
and without prejudice to any other right of RLHC, including without limitation,
damages for breach to the extent that the same may be recoverable. No assignee
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 Company's assets or business shall have any right to
continue the performance of this Agreement.
13.3. During the term of this Agreement, Company shall not dissolve,
liquidate or wind-up its business. In addition, Company shall not, without prior
written notice to RLHC, (i) merge or consolidate with or into any other
corporation, or (ii) directly or indirectly sell or otherwise dispose of all or
a substantial portion of its business or assets. In the event Company sells or
transfers, or suffers a sale or transfer of, by operation of law or otherwise,
directly or indirectly, control of either its Sheets & Bedroom Accessories
Division or its Terry Bath & Kitchen Products Division (or such other divisions
as may at any time be responsible for any Licensed Products) to a third party,
Company shall advise RLHC thereof in writing within ten (10) days of such sale
or transfer. Such notice shall identify the name and address of the third party.
Within sixty (60) days of its receipt of such notice, RLHC shall have the right
to terminate this Agreement, such termination to become effective thirty (30)
days after the date of notice of termination is received by Company. Subject to
the next following sentence, the transfer of both the aforementioned divisions
to a direct or indirect wholly-owned subsidiary of Company will not constitute a
sale or transfer to a "third party" under this subparagraph. The parties agree
that the acquisition of a controlling interest in Company or its direct or
indirect parents by a third party shall be deemed a transfer of control of the
aforesaid divisions pursuant to the first sentence of this paragraph 13.3. In
addition to, and not in substitution of, its right to terminate this Agreement
upon receipt of notice of any such sale or transfer of control, RLHC shall have
the option to require Company to offer to the landlord of the premises at 1185
Avenue of the Americas a five-year sublease of the ninth floor on the same terms
as contained in the lease therefor between the Company and the landlord, for the
purpose of permitting RLHC to sublease the space from the landlord for such
period and on such terms.
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14. Disposal of Stock upon Termination or Expiration.
14.1. Within ten (10) days following the termination of this Agreement
for any reason whatsoever including the expiration of the term hereof, and on
the last day of each month during the disposal period set forth in paragraph
14.2 hereof, Company shall furnish to RLHC a certificate of Company listing its
inventories of Licensed Products (which defined term for purposes of this
paragraph 14.1 shall include all materials, trim and packaging which are used in
the manufacture and marketing of Licensed Products) on hand or in process
wherever situated. RLHC shall have the right to conduct a physical inventory of
Licensed Products in Company's possession or under Company's control. RLHC or
RLHC's designee shall have the option (but not the obligation) to purchase from
Company all or any part of Company's then existing inventory of Licensed
Products upon the following terms and conditions:
(i) RLHC shall notify Company of its or its designee's intention
to exercise the foregoing option within thirty (30) days of
delivery of the certificate referred to above and shall
specify the items of Licensed Products to be purchased.
(ii) The price for Licensed Products manufactured by Company or its
affiliates on hand or in process shall be Company's standard
cost (the actual manufacturing cost) for each such Licensed
Product. The price for all other Licensed Products which are
not manufactured by Company or its affiliates shall be
Company's landed costs therefor. Landed costs for the purposes
hereof means the F.O.B. price of the Licensed Products
together with customs, duties, brokerage, freight and
insurance costs.
(iii) Company shall deliver the Licensed Products purchased within
fifteen (15) days of receipt of the notice referred to in
clause (i) above. Payment of the purchase price for the
Licensed Products so purchased by RLHC or its designee shall
be payable upon delivery thereof, provided, that RLHC shall be
entitled to deduct from such purchase price any amounts owed
it by Company (and/or to direct payment of any part of such
merchandise to any supplier of Licensed Products in order to
reduce an outstanding balance due to such supplier from
Company).
14.2. In the event RLHC chooses not to exercise the option referred to
in paragraph 14.1 hereof with respect to all or any portion of Licensed
Products, for a period of ninety (90) days after termination of this Agreement
for any reason
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whatsoever, except on account of breach of the provisions of paragraphs 3, 4 or
10 hereof, Company may dispose of Licensed Products which are on hand or in the
process of being manufactured at the time of termination of this Agreement,
provided Company fully complies with the provisions of this Agreement, including
specifically those contained in paragraphs 3, 4 or 10 hereof in connection with
such disposal. Such sales shall be subject to the payment of earned royalties
pursuant to paragraph 10.2. Failure by Company to timely submit the certificates
of inventory as set forth in paragraph 14.1 hereof shall deprive Company of its
right of disposal of stock pursuant to this paragraph 14.
14.3. Notwithstanding anything to the contrary contained herein, in the
event that upon the expiration or termination of the term hereof for any reason
Company has not rendered to RLHC all accounting statements then due, and paid
(i) all royalties and other amounts then due to RLHC and (ii) all amounts then
due to any affiliate of or supplier to RLHC or its affiliates (collectively,
"Payments"), Company shall have no right whatsoever to dispose of any inventory
of Licensed Products in any manner. In addition, if during any disposal period
Company fails timely to render any accounting statements or to make all Payments
when due, Company's disposal rights hereunder shall immediately terminate
without notice.
15. Effect of Termination.
15.1. Except for the sublicense to use the Licensed Marks and the
designs furnished hereunder only as specifically provided in this Agreement,
Company shall have no right, title or interest in or to the Licensed Marks, the
designs furnished hereunder and design patents thereon, and all copyrights
licensed hereby. Upon and after the termination of this sublicense, all rights
granted to Company hereunder, including without limitation all right, title and
interest in or with respect to all designs, art works, sketches and other
materials depicting or relating to the Licensed Products, together with any
interest in and to the Licensed Marks Company may acquire, shall forthwith
automatically and without further action or instrument be assigned to and revert
to Polo, PRLC and RLHC, as their interests may appear. Company will execute any
instruments requested by RLHC to accomplish or confirm the foregoing. Any such
assignment, transfer or conveyance shall be without consideration other than the
mutual agreements contained herein. RLHC shall thereafter be free to license to
others the use of the Licensed Marks in connection with the manufacture and sale
of the Licensed Products covered hereby, and Company will, except as
specifically provided in paragraph 14 hereof, (i) refrain from any further use
of the Licensed Marks or any reference to it, direct or indirect, or anything
deemed by RLHC or Polo to be similar to the Licensed Marks, (ii) refrain from
further use of any of the Design Concepts, and (iii) refrain from manufacturing,
selling or distributing any products (whether or not they bear the Licensed
Marks) which are confusingly similar to, or derived from, the Licensed Products
or Design Concepts, in connection with the
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manufacture, sale or distribution of Company's products. Upon termination of
this Agreement, Company shall forthwith cease the use of the words "Ralph
Lauren" and/or the Polo Player Design in any and all respects. It is expressly
understood that under no circumstances shall Company be entitled, directly or
indirectly, to any form of compensation or indemnity from RLHC, Lauren, Polo,
PRLC or their affiliates, as a consequence to the termination of this Agreement,
whether as a result of the passage of time, or as the result of any other cause
of termination referred to in this Agreement. Without limiting the generality of
the foregoing, by its execution of the present Agreement, Company hereby waives
any claim which it has or which it may have in the future against RLHC, Polo,
PRLC, Lauren or their affiliates, arising from any alleged goodwill created by
Company for the benefit of any or all of the said parties or from the alleged
creation or increase of a market for Licensed Products.
15.2. Notwithstanding any termination or expiration of this Agreement
(whether by reason of the expiration of the stated term of this Agreement, by
earlier termination of this Agreement pursuant to paragraph 13 hereof, or
otherwise) (a) RLHC shall have and hereby reserves all rights and remedies which
it may have, at law or in equity, with respect to the collection of royalties or
other funds payable by Company pursuant to this Agreement and the enforcement of
all rights relating to the establishment, maintenance or protection of the
Licensed Marks and the designs furnished hereunder, and (b) Company and RLHC
shall continue to have rights and remedies with respect to damages for breach of
this Agreement on the part of the other.
16. Remedies.
Company acknowledges and admits that there would be no adequate remedy
at law for its failure (except as otherwise provided in paragraph 14 hereof) to
cease the use of the Licensed Marks, or the designs, or the manufacture and sale
of the Licensed Products covered by this Agreement at the termination or
expiration hereof, and Company agrees that in the event of such failure RLHC,
Polo and PRLC, or any of them, shall be entitled to equitable relief by way of
temporary and permanent injunction and such other and further relief as any
court with jurisdiction may deem just and proper. Such relief shall be in
addition to and not in substitution of any other remedies available to RLHC,
Polo and PRLC, or any of them, pursuant to this Agreement or otherwise.
17. Certain Employees.
17.1 At all time during the term of this Agreement, Company shall
employ seven individuals, each of which shall be approved in advance by RLHC,
and who shall be subject to RLHC's continuing approval through the term hereof,
whose sole responsibility shall be for the following aspects of the business
contemplated
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hereunder:
a. Vice President -- oversees entire RLHC-related operation
b. Business Manager -- for Bedroom Products
c. Business Manager -- for Bathroom Products
d. Marketing Manager -- for all Licensed Products
e. Sourcing Manager -- for all Licensed Products
f. Planner -- for Bedroom Products
g. Planner -- for Bathroom Products
17.2. During at least the first year of the term hereof, Company shall
employ a CADCAM operator approved in advance by RLHC who shall be entirely
dedicated to the development of Licensed Products and shall be located in the
RLHC design department. Upon the expiration of the first year of the term
hereof, Company and RLHC shall consult with each other in good faith regarding
whether or not the position for such CADCAM operator should be continued.
18. Indemnity.
18.1. RLHC shall indemnify and hold harmless Company from and against
any and all liability, claims, causes of action, suits, damages and expenses
(including reasonable attorneys' fees and expenses in actions involving third
parties or between the parties hereto) which Company is or becomes liable for,
or may incur solely by reason of its use within the Territory, in strict
accordance with the terms and conditions of this Agreement, of the Licensed
Marks or the designs furnished to Company by RLHC or PRLC, to the extent that
such liability arises through infringement of another's design patent,
trademark, copyright or other proprietary rights; provided that Company gives
RLHC prompt notice of, and full cooperation in the defense against, such claim.
If any action or proceeding shall be brought or asserted against Company in
respect of which indemnity may be sought from RLHC under this paragraph 18.1,
Company shall promptly notify RLHC thereof in writing, and RLHC shall assume and
direct the defense thereof. Company may thereafter, at its own expense, be
represented by its own counsel in such action or proceeding. RLHC's liability
pursuant to this paragraph 18.1 shall be limited to and offset against the
aggregate of all royalties (whether minimum or earned) heretofore paid by
Company to RLHC hereunder.
18.2. To the extent not inconsistent with paragraph 18.1 hereof,
Company shall indemnify and save and hold RLHC, Polo, PRLC and Lauren,
individually, harmless from and against any and all liability, claims, causes of
action, suits, damages and expenses (including reasonable attorneys' fees and
expenses in actions involving third parties or between the parties hereto),
which they, or any of them, are or become liable for, or may incur, or be
compelled to pay by reason of any
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acts, whether of omission or commission, that may be committed or suffered by
Company or any of its servants, agents or employees in connection with Company's
performance of this Agreement, including Company's use of Company's own designs,
in connection with Licensed Products manufactured by or on behalf of Company or
otherwise in connection with Company's business.
18.3. Company shall carry product liability insurance with limits of
liability in the minimum amount, in addition to defense costs, of $3,000,000 per
occurrence and $3,000,000 per person and RLHC, Polo, PRLC and Ralph Lauren,
individually, shall be named therein as insureds, as their interests may appear.
Company shall, promptly after the signing of this Agreement, deliver to RLHC a
certificate of such insurance from the insurance carrier, setting forth the
scope of coverage and the limits of liability and providing that the policy may
not be canceled or amended without at least thirty (30) days prior written
notice to RLHC, Polo, PRLC and Lauren.
19. Disclosure.
RLHC and Company, and their affiliates, employees, attorneys and
accountants, shall hold in confidence and not use or disclose, except as
permitted by this Agreement, (i) confidential information of the other, or (ii)
the terms of this Agreement, except upon consent of the other 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. Company shall take all reasonable precautions to protect the secrecy
of the designs, art work, sketches and other materials used pursuant to this
Agreement prior to the commercial distribution or the showing of samples for
sale, and shall not sell any merchandise employing, or adapted from or resulting
from the use of any such designs, art work, sketches or other material, except
under the Licensed Marks. All press releases and other public announcements
shall be subject to the prior approval of RLHC. Every request for a statement,
release or other inquiry shall be sent in writing whenever practicable to the
advertising/publicity director of RLHC for handling.
20. Brokers.
Each of RLHC and Company hereby represents and warrants to the other
that it has not employed or dealt with any broker or finder in connection with
this Agreement or the transactions contemplated hereby, and agrees to indemnify
the other and hold it harmless from any and all liabilities (including, without
limitation, reasonable attorneys' fees and disbursements paid or incurred in
connection with any such liabilities) for any brokerage commissions or finders'
fees in connection with this Agreement or the transactions contemplated hereby,
insofar as such liabilities shall be based on the arrangements or agreements
made by it or on its behalf.
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21. Manufacture; Distribution; Sale.
Consistent with the high quality and prestige of the Licensed Marks and
products manufactured by, or under license from, Polo and its affiliates,
Company undertakes, during the term hereof, diligently to manufacture and sell
each and every Licensed Product listed in Schedule A, to use its best efforts to
create a demand therefor, supply such demand, and maintain adequate arrangements
and facilities for the distribution of Licensed Products throughout the
Territory. As an essential part of its distribution program, Company agrees to
maintain adequate inventories (consistent with good industry practice) of all
such Licensed Products at distribution points adequate to satisfy the
requirements of its customers for a full line of such Licensed Products and to
expedite the delivery thereof.
22. Showroom; Samples.
22.1 Company shall display its Licensed Products at the showroom to be
jointly operated and maintained by RLHC and Company on the ninth floor at 1185
Avenue of the Americas (hereinafter referred to as the "Home Collection
Showroom" or "Showroom"). Company shall also display at the Home Collection
Showroom products other than Licensed Products which comprise the Ralph Lauren
Home Collection and which are manufactured by other sublicensees of RLHC. The
parties acknowledge that it is of substantial benefit to the Company that the
"Collection" be displayed and sold as an entirety in order to create the
greatest demand for all Collection products, including Licensed Products, and to
promote the image of the Collection as a complete Ralph Lauren lifestyle of
products.
22.2 Notwithstanding the provisions of paragraph 10.5 of this
Agreement, Company shall be entitled to deduct from earned royalties due each
month pursuant to paragraph 10.2 hereof one-twelfth (1/12) of the annual
"Qualified Showroom Expenses" (as hereinafter defined) for providing space and
maintaining the Home Collection Showroom referred to in paragraph 22.1 hereof.
The term "Qualified Showroom Expenses" shall mean the proportionate share (based
on the square feet of space actually occupied by RLHC) for rent and leasehold
operating expenses (i.e. building, utilities, water, taxes and cleaning, etc.)
computed on a basis consistent with current practices as of the execution of
this Agreement with respect to such Showroom. The term "Qualified Showroom
Expenses" shall exclude, however, any allocable cost of 600 square feet of
storage space which Company shall make available without charge at 1185 Avenue
of the Americas for storage of samples and stock, and exclude all other basement
space which RLCH may occupy from time-to-time pursuant to a separate agreement
with Company. In addition to the foregoing, Company shall be entitled to deduct
from monthly earned royalties $2,000 for office services provided by WestPoint
Stevens Inc. to the Home Collection Showroom. Company shall, upon request, make
available for inspection by RLHC records
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substantiating the charges for rent, leasehold operating expenses and office
services.
22.3 Together with each quarterly royalty remittance, the Company shall
submit to RLHC a separate statement, certified by a financial officer of the
Company, setting forth the computation of the Qualified Showroom Expenses and
charges for office services for the then-ended quarter. Within sixty (60) days
of the end of each year, Company shall submit to RLHC a statement setting forth
in reasonable detail the total Qualified Showroom Expenses for the year then
ended. If during the year Company shall have deducted in excess of the actual
total Qualified Showroom Expenses, Company's statement shall be accompanied by a
check in the amount of such excess. If there shall have been a shortage of the
aggregate deductions in relation to the total Qualified Showroom Expenses and
office service charges, RLHC shall, within fifteen (15) days of its receipt of
Company's statement, remit a check in the amount of the shortage.
22.4 Upon the expiration of this Agreement, at RLHC's option,
exercisable by notice in writing to Company given no later than 90 days prior to
such expiration, Company shall, subject to the approval of, and under the terms
and conditions required by, Company's landlord, continue to maintain and operate
the Home Collection Showroom with RLHC for a period not to exceed three (3)
months following such expiration, during which time RLHC may show and sell the
Ralph Lauren Home Collection in such showroom. In the event this Agreement is
terminated by RLHC as a result of an Event of Default on the part of the
Company, RLHC shall be entitled to request in writing, given simultaneously with
its notice of termination to Company, that Company continue to maintain and
operate the Home Collection Showroom with RLHC for a period of up to twelve (12)
months after such termination. To the extent that RLHC requests an extension
hereunder, Company shall request approval therefor from its landlord. RLHC shall
on the first of each month of any such extension remit to Company one-twelfth of
the annual Qualified Showroom Expenses for maintaining and operating such
showroom, adjusted according to the terms and conditions required by the
landlord, if any, and the parties shall at the end of each three-month period
reconcile the aggregate amount actually paid by RLHC in relation to the total of
the actual Qualified Showroom Expenses, as adjusted.
22.5 Company shall provide, at no charge, samples for the Home
Collection Showroom and for advertising and editorials relating to Licensed
Products. All normal expenses with respect to shipping shall be the
responsibility of Company and Company may, at its option, insure the samples for
risk of damage or loss (including by theft) during shipment and while at the
RLHC showroom, but RLHC shall have no liability with respect thereto. All items
will be inventoried by RLHC and, at RLHC's discretion, (i) held in storage for
future use, (ii) sold at sample sales, or (iii) returned to Company at Company's
expense. In the event of a sale at a sample sale, RLHC shall remit to Company,
within forty-five (45) days thereof, fifty percent (50%) of the
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profits therefrom. In addition, Company shall supply at its own expense, such
samples as may be reasonably necessary for RLHC salesmen.
23. Miscellaneous.
23.1. All notices, requests, consents and other communications
hereunder shall be in writing and shall be deemed to have been properly given or
sent (i) on the date when such notice, request, consent or communication is
personally delivered and acknowledged, or (ii) five (5) days after the same was
sent, if sent by certified or registered mail, or (iii) one (1) day after the
same was sent, if sent by overnight courier delivery or confirmed telecopier as
follows:
(a) If to RLHC addressed as follows:
Ralph Lauren Home Collection, Inc.
103 Foulk Road
Wilmington, Delaware, 19899
Attention: President
Telecopier: 302.652.8667
(b) With a courtesy copy to:
Victor Cohen, Esq.
650 Madison Avenue
New York, New York 10022
Telecopier: 212.318.7183
(c) If to Company, addressed as follows:
WestPoint Stevens, Inc.
1185 Avenue of the Americas
New York, New York 10036
Attention: Mr. Thomas Ward
Telecopier: 212.930.3876
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(d) With a courtesy copy to:
WestPoint Stevens, Inc.
1185 Avenue of the Americas
New York, New York 10036
Attention: Assistant General Counsel
Telecopier: 212.930.3898
Anyone entitled to notice hereunder may change the address to which notices or
other communications are to be sent to it by notice given in the manner
contemplated hereby.
23.2. Nothing herein contained shall be construed to place Company,
RLHC, Polo and/or PRLC in the relationship of partners or joint venturers, and
neither Company, RLHC, Polo nor PRLC shall have the power to obligate or bind
any other party in any manner whatsoever, except as expressly provided herein.
23.3. None of the terms hereof can be waived or modified except by an
express agreement in writing signed by the party to be charged. The failure of
either party hereto to enforce, or the delay by either party in enforcing, any
of its rights hereunder shall not be deemed a continuing waiver, modification
hereof, or a waiver of any other right or remedy hereunder, and either party
may, within the time provided by applicable law, commence appropriate legal
proceedings to enforce any and all such rights. All rights and remedies provided
for herein shall be cumulative and in addition to any other rights or remedies
such parties may have at law or in equity. Either party hereto may employ any of
the remedies available to it with respect to any of its rights hereunder without
prejudice to the use by it in the future of any other remedy with respect to any
such rights. Except as provided herein, no person, firm or corporation, other
than the parties hereto, shall be deemed to have acquired any rights by reason
of anything contained in this Agreement.
23.4. RLHC may assign all or any portion of the royalties payable to it
hereunder, as designated by RLHC, and in addition, RLHC may assign all of its
rights, duties and obligations hereunder to any entity to which the Licensed
Marks, or the right to use the Licensed Marks, has been transferred, or to an
affiliate of any such entity. The rights granted to Company are personal in
nature, and neither this Agreement nor the sublicense may be assigned by Company
without the prior written consent of RLHC, Polo and PRLC. Company may employ
subcontractors for the manufacture of the Licensed Products with the prior
approval of RLHC, provided, however, that (i) Company shall not employ any
subcontractor for the manufacture of Licensed Products until such subcontractor
has executed a Trademark and Design Protection Agreement for the benefit of RLHC
in such form as RLHC may require, (ii) Company shall maintain appropriate
quality controls and such subcontractors shall
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comply with the quality requirements of this Agreement and (iii) Company shall
not itself sell or otherwise dispose of, and shall be responsible for preventing
all subcontractors from selling or otherwise disposing of, any seconds,
irregulars or rejected merchandise except with RLHC's prior written consent.
23.5. This Agreement shall be binding upon and inure to the benefit of
the successors and permitted assigns of the parties hereto.
23.6. Company shall comply with all laws, rules, regulations and
requirements of any governmental body which may be applicable to the operations
of Company contemplated hereby, including, without limitation, as they relate to
the manufacture, distribution, sale or promotion of Licensed Products,
notwithstanding the fact that RLHC may have approved such item or conduct.
23.7. This Agreement shall be construed in accordance with the laws of
the State of New York applicable to contracts made and performed therein without
regard to principles of conflict of laws.
23.8 The parties hereby consent to the jurisdiction of the United
States District Court for the Southern District of New York and of any of the
courts of the Southern District of New York and of any of the courts of the
State of New York located within the Southern District in any dispute arising
under this Agreement and agree further that service of process or notice in any
such action, suit or proceeding shall be effective if in writing and delivered
as provided in paragraph 23.1 hereof.
23.9. 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, or
part thereof, in such jurisdiction and shall not in any manner affect such
provision in this Agreement in any other jurisdiction.
23.10. The paragraph headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
23.11. This Agreement may be executed in one or more counterparts, each
of which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement or
caused the same to be executed by a duly authorized officer on the day and year
first set forth above.
RALPH LAUREN HOME COLLECTION, INC.
By: /s/ David C. Eppes
Title: Vice President
WESTPOINT STEVENS, INC.
By: /s/ Thomas J. Ward
Title: President
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SCHEDULE A
"LICENSED PRODUCTS"
(pursuant to paragraph 1.1)
1. Bathroom Products consisting of:
(a) bath towels (non-embellished)
(b) bath sheets (non-embellished)
(c) fingertip towels (non-embellished)
(d) hand towels (non-embellished)
(e) face cloths (non-embellished)
(f) tub mats
(g) men's and women's robes made from towels, it being
understood that Company's rights with respect to
robes shall be non-exclusive and shall be limited to
the sale of robes in the same departments of stores
in which other Licensed Products are sold.
2. Bedroom Products consisting of:
(a) sheets
(b) pillow cases (but not pillows)
(c) The following bedroom products to the extent they
match sheets that are made under license from Polo:
(1) shams
(2) ruffles
(3) comforters
(4) bedspreads
(5) bed skirts
(6) night spreads
(7) comforter and blanket covers
(8) European squares
(9) valances and draperies
(10) flocked blankets
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