EXHIBIT 10.36
CONFIDENTIAL TREATMENT REQUESTED
VERSATILE ENTERTAINMENT, INC.
150 West Jefferson Boulevard
Los
Angeles, California 90007
December 16, 2008
Charlotte Russe Merchandising, Inc.
4645 Morena Boulevard
San Diego, CA 92117
Attn: Emilia Fabricant
RE:
LETTER AGREEMENT
Ladies and Gentlemen:
Further to our
discussions, we are pleased to set forth below the terms
of our agreement for the exclusive sale by
Versatile Entertainment, Inc., a
California corporation, and its parent People's
Liberation, Inc., a Delaware
corporation (collectively, "VE"), to Charlotte
Russe Merchandising, Inc., a
California corporation, and its parent Charlotte Russe Holding,
Inc., a Delaware
corporation (collectively, "CR"), of apparel and apparel
accessories bearing the
trademark PEOPLE'S LIBERATION in all its forms
and variations (collectively,
"MARKS"), and the provision of services by VE in
connection therewith. When
signed by VE and CR, in the manner hereinafter
provided, this letter agreement
(this "AGREEMENT") shall constitute the
binding agreement of VE and CR with
respect to the matters described herein.
EXCLUSIVE
DISTRIBUTION:
During the Term (as defined below), VE shall
design, source, manufacture, purchase, import
or otherwise acquire each season (as such term
is understood in the clothing
and apparel
industries) such assortment of Products
(as
defined below) selected by VE and CR for sale
to CR, which VE shall offer to sell to CR at
such prices as determined by VE
and CR in
accordance with this Agreement. CR shall issue
its standard purchase order for such Products
that CR desires to purchase from VE.
During the Term, CR shall have the exclusive
right to market, distribute, and
sell the
Products purchased by CR from
VE in the
Territory solely through the Approved Stores.
Neither
VE nor any of its Affiliates, shall
sell, distribute or otherwise make available to
customers any Products in any
part of the
Territory or
authorize, assist, support,
directly or indirectly, any other party to do
so.
VE shall cease all distribution and sale
of
Products
to third parties in the Territory from
and after April 30, 2009, and shall not market
or authorize any third party to market Products
in
the Territory after April 30, 2009 except as
provided herein.
EXCLUSIVE
LICENSE:
VE licenses to CR on a wholly exclusive basis
throughout the Term, the right, but not
the
obligation (with the exception of the Primary
Products as defined hereafter), to
use the
Marks throughout the Territory
on and in
connection with the marketing, distribution and
sale (but not the sourcing or manufacturing) of
the Products solely in the Approved Stores.
<PAGE>
MARKS:
PEOPLE'S LIBERATION
[GRAPHICS OMITTED]
(ATTACHED HERETO AS EXHIBIT A IS A LISTING OF
ALL REGISTERED AND PENDING U.S.
TRADEMARK
REGISTRATIONS AND APPLICATIONS OF
VERSATILE
ENTERTAINMENT, INC. FOR THE MARKS, INCLUDING
THE
REGISTRATION/APPLICATION
NUMBER,
REGISTRATION/APPLICATION
FILING DATE,
CLASSIFICATION AND GOODS.)
TERRITORY:
North America and Central America, including
all its territories. VE expressly
reserves the
right to sell, or to grant licensees rights to
sell, Products outside the Territory.
PRODUCTS:
Finished goods for all markets (E.G., women's,
kids, juniors, etc.) bearing the Marks, either
alone or in connection with the
Charlotte
Russe(TM) trademarks (subject to VE's
prior
approval), in the following categories, which
finished goods have been produced by or at the
direction of VE for sale to CR:
Clothing,
Footwear, Headgear (INTERNATIONAL
CLASS 25) Bags, and Leather Goods in respect of
which the Marks are registered
or pending
registration
or are otherwise approved by VE to
be marketed, sold, or distributed under
the
Marks (INTERNATIONAL CLASS 18)
Cosmetics,
Fragrances (INTERNATIONAL CLASS 3)
Eyewear
(INTERNATIONAL CLASS 9)
Jewelry, Watches
(INTERNATIONAL CLASS 14)
Products in International Classes ***(1) are
referred to herein as "PRIMARY Products", and
Products in International Classes
*** are
referred to herein as "SECONDARY PRODUCTS".
PRODUCT
QUALITY
VE will ensure that
all Products are
AND
PRICING:
commensurate with the current
reputation,
image, styling and prestige of the Marks; of
high
quality and design as to workmanship,
construction, trim, appearance, fabrication,
design and materials used therein; and at least
equal in quality to the samples of
Products
submitted by VE to CR. CR acknowledges that its
current intention is to offer
the Primary
Products for sale at ***, and accordingly ***
for the Primary Products may reflect ***(2).
----------
(1) Terms represented by this
symbol are considered confidential.
These
confidential terms have been omitted
pursuant to a Confidential Treatment
Request filed with the Securities and
Exchange Commission ("SEC") and have
been filed separately with the SEC.
2
<PAGE>
VE and CR acknowledge and agree
that the
categories of Products identified on EXHIBIT B
shall have an initial retail price within the
ranges set forth on EXHIBIT B or as otherwise
agreed by the parties. Products
shall be
offered to CR at wholesale pricing which shall
be determined by the retail pricing set forth
in EXHIBIT B or, to the extent not identified
on EXHIBIT B, set by CR in its
reasonable
discretion after consultation with VE in order
to
allow for a retail price with an
initial
mark-up of ***%.
OWNERSHIP:
VE acknowledges that, to the
best of its
knowledge, (i) it is the sole and
exclusive
owner of the Marks in the United States for the
goods in the applications/registrations listed
in EXHIBIT A, and (ii) it is not aware of any
third party obstacle, or third party challenge
or claim to VE's use and/or registration of the
Marks or URL (defined below) in the Territory
for the Products. CR acknowledges that all use
of the Marks and all rights
and goodwill
attaching to or arising out of such use, shall
accrue
to the benefit of VE. VE has filed in
the U.S. the trademark applications for
the
Marks listed on EXHIBIT A. Within fourteen (14)
days
of the execution of this Agreement, VE
shall, at its expense and as is necessary, file
applications for the national registration of
the Marks in the United States (to the extent
not already filed), Canada, and Mexico for the
Products, and shall vigorously prosecute said
applications. CR acknowledges that any refusal
to register a Mark by a national
trademark
office in of itself shall not
constitute a
breach of this Agreement by VE.
VE acknowledges that it is
the sole and
exclusive
owner
of the
URL
WWW.PEOPLESLIBERATION.COM
(the "URL").
(ATTACHED
HERETO AS EXHIBIT A IS A LISTING OF
SUCH URL, INCLUDING THE "WHOIS" RECORD(S) AND
EXPIRATION DATE(S).)
APPROVED
DISTRIBUTION:
Charlotte Russe(TM) branded retail stores and
related Charlotte
Russe(TM) distribution
channels in the ordinary course of business in
effect on the date hereof, including
outlet
locations and direct-to-consumer sales (E.G.,
E-COMMERCE, MAILERS, CATALOG SALES), and any
other distribution channels as agreed between
the parties.
VE grants to CR the exclusive right to solely
utilize the URL for commercial and marketing
purposes with respect to the Products in the
Territory throughout the Term.
CLOSE-OUTS
AND
CR may sell Close-Outs and Off-Price Products
OFF-PRICE
SALES:
in the ordinary course of business, provided
that Close-Outs may not exceed ***% of total
Net Sales of Products in any Contract Year and
Off-Price sales may not exceed ***% percent of
total Net Sales of Products in any
Contract
Year. For the purposes hereof, Close-Outs are
first quality Products that cannot be sold or
are
not sold to regular customers (E.G., excess
inventory), and Off-Price sales are any sale at
a price that is more than *** (***%) percent
less than the listed
wholesale price.
----------
(2) Terms represented by this
symbol are considered confidential.
These
confidential terms have been omitted
pursuant to a Confidential Treatment
Request filed with the SEC and have been
filed separately with the SEC
3
<PAGE>
***(3), and any outlet
stores owned by,
operated by or affiliated
with Charlotte
Russe(TM)
are deemed to
be approved
distribution channels for such Close-Outs and
Off-Price sales.
TERM:
Commencing on the date hereof and continuing
until December 31, 2012 (the "INITIAL TERM"),
comprised of three Contract Years
with the
first Contract Year commencing on the
date
hereof and ending on June 30, 2010, the second
commencing July 1, 2010 and ending December 31,
2011, and the third commencing January 1, 2012
and ending December 31, 2012.
EXTENSION OF
TERM:
CR shall have two 1-year
renewal periods
(CONTRACT YEAR 4: JANUARY 1, 2013 - DECEMBER
31,
2013 AND CONTRACT YEAR 5: JANUARY 1, 2014 -
DECEMBER 31, 2014) provided
that: (a) CR
notifies VE of its intent to renew within nine
(9) months of the
expiration of the
then-current term; and (b) CR has not been in
material default during the then-current term
of this Agreement. The Initial Term and
any
extension term(s) are collectively referred to
herein as the "TERM."
NO
SUBLICENSE:
CR shall not sublicense, transfer or assign its
rights
to the Marks without the prior written
consent of VE, which consent may be withheld by
VE in its sole discretion. Notwithstanding the
foregoing,
CR may, upon notice
to VE,
sublicense, transfer or assign said rights to
an entity under the same direction, ownership
and control as CR, provided that
***.
QUALITY
STANDARDS:
CR agrees that the nature and quality of: (1)
all services and goods rendered
by CR in
connection with the Marks; (2)
all goods
produced, distributed or sold by CR under the
Marks; and (3) all
related advertising,
promotional, and other related uses
of the
Marks by CR shall conform to standards set by,
and be under the
control of, VE. CR
acknowledges and agrees that the presentation
and image of the Marks should be uniform and
consistent with respect to
all services,
activities and products associated with
the
Marks.
Accordingly, CR agrees to use the Marks
solely in the manner which VE shall
specify
from time to time in VE's sole discretion. Upon
VE's
request, CR shall
furnish to VE
representative samples of materials containing
the Marks that CR currently distributes
and
agrees to permit
reasonable, periodic
inspection of CR's operations, at reasonable
times and with reasonable
notice. If VE
believes that the Marks are being used in
a
manner that could diminish VE's rights in or
protection of the Marks, or the value of any of
the Marks, CR agrees
to make whatever
reasonable and commercially practicable changes
and/or corrections VE deems
necessary to
protect the Marks.
APPROVALS:
Unless
otherwise set forth in this Agreement,
submissions for approval by
either party
hereunder shall be deemed approved unless the
other party delivers a notice of disapproval
within fifteen (15) business days after receipt
of request. Approvals shall not be unreasonably
withheld or delayed.
----------
(3) Terms represented by this
symbol are considered confidential.
These
confidential terms have been omitted
pursuant to a Confidential Treatment
Request filed with the SEC and have been
filed separately with the SEC
4
<PAGE>
INFRINGEMENT
AND
CR shall notify VE promptly of any actual or
INDEMNIFICATION:
threatened infringements,
imitations, or
unauthorized use of the Marks by third parties
in the Territory of which CR becomes aware. VE
shall have the sole right, at its expense, to
bring in its discretion any action on account
of any such infringements,
imitations, or
unauthorized use, and CR shall cooperate with
VE, as VE may reasonably request, in connection
with any such action brought by VE. VE shall
retain any and all damages, settlement and/or
compensation paid in connection with any such
action brought by VE.
CR, at its expense, shall defend and indemnify,
and save and hold VE harmless from and against
any and all liabilities,
claims, causes of
action, suits, damages and expenses, including
reasonable attorneys' fees and expenses, for
which VE becomes liable, or may incur or
be
compelled to pay by reason of CR's activities
or breach of the terms of this
Agreement,
including but not limited to: (i) claims
of
infringement of any third party intellectual
property or proprietary right, except to the
extent such liability arose solely from CR's
use of the Marks as specified by
VE; (ii)
product liability suits by direct or indirect
customers of CR with respect
to products
designed
and sourced by CR (if permitted by
VE); (iii) failure to comply with any law, rule
or regulation in connection with CR directed
export,
import, sale, and/or distribution of
goods/services in the Territory bearing any of
the Marks; (iv) violations of applicable labor
laws and regulations with
respect to products
manufactured or sourced by CR (if permitted by
VE); and (v) CR's use of the
Marks in any
manner not expressly authorized herein.
VE, at its expense, shall defend and indemnify,
and save and hold CR harmless from and against
any and all liabilities, claims,
causes of
action, suits, damages and expenses, including
reasonable attorneys' fees and expenses, for
which CR becomes liable, or may incur or
be
compelled to pay by reason of VE's activities
or breach of the terms of this
Agreement,
including but not limited to: (i) claims that
the
Marks as used in connection
with the
Products and as specified by VE infringe any
third party
intellectual property or
proprietary
right in the United States, Canada,
or Mexico; (ii) product liability and suits by
direct or indirect customers of VE with respect
to products designed and sourced by
VE; and
(iii) any violations of applicable labor laws
and regulations with respect
to products
manufactured or sourced by VE.
MINIMUM
PURCHASE
In consideration for the exclusivity and rights
REQUIREMENTS:
granted, and the services to be provided, to CR
by VE herein, CR shall ensure the
following
minimum purchases of Products from
VE per
Contract Year:
DATE
AMOUNT
----
------
CONTRACT YEAR 1
DATE OF EXECUTION - JUNE 30,
2010
***(4)
CONTRACT YEAR 2
JULY 1, 2010 - DECEMBER 31,
2011
$***
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(4) *** Terms represented by this symbol are
considered confidential. These
confidential terms have been omitted
pursuant to a Confidential Treatment
Request filed with the SEC and have been
filed separately with the SEC.
5
<PAGE>
CONTRACT YEAR 3
JANUARY 1, 2012 - DECEMBER 31,
2012
***(5)
If Applicable:
CONTRACT YEAR 4
JANUARY 1, 2013 - DECEMBER 31,
2013
$***
CONTRACT YEAR 5 (AND THEREAFTER, IF APPLICABLE)
JANUARY 1, 2014 - DECEMBER 31,
2014
$***
Minimum Purchase payments for each
Contract
Year shall be made in ***, with
adjustments
made for actual purchase amounts already paid
for Products for said ***. Notwithstanding the
foregoing, with respect to Contract Years 1 and
2, Minimum Purchase payments shall be made as
follows:
PAYMENT DATE
PAYMENT
AMOUNT
------------
--------------
CONTRACT YEAR 1
Date of Execution (ADVANCE
PAYMENT)
$1,000,000
***
$***
***
$***
***
$***
***
$***
***
$***
***
$***
CONTRACT YEAR 2
***
$***
***
$***
***
$***
***
$***
***
$***
***
$***
Payments for Products shall be made within ***
of
receipt of invoice, except as follows:
o If a Minimum
Purchase payment is due
and paid at the end of a *** (i.e.,
actual payments for
Products during
the *** have not reduced the Minimum
Purchase payment for such ***
to
zero), such Minimum Purchase payment
shall be applied in
payment of
outstanding invoices.
o If the actual
payments for Products
during a *** have matched or exceeded
the Minimum Purchase payment amount
for such ***, no Minimum Purchase
payment
for said *** shall be due and
payable.
o If the actual
payments for Products
during a *** exceed the
Minimum
Purchase payment amount for such ***,
the excess amount of actual payment
shall be applied to the
Minimum
Purchase payment in the subsequent
***.
----------
(5) *** Terms represented by this symbol are
considered confidential. These
confidential terms have been omitted
pursuant to a Confidential Treatment
Request filed with the SEC and have been
filed separately with the SEC.
6
<PAGE>
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