LICENSE
AGREEMENT
BETWEEN
THIS LICENSE
AGREEMENT (this “Agreement”) made and entered into as
of the 24th day of January, 2005, by and between OSCAR DE LA RENTA,
LTD., a New York corporation having a place of business at 550
Seventh Avenue, New York, New York 10018 (“LICENSOR”),
and THE FASHION HOUSE INC., a Delaware corporation, having a place
of business located at 6310 San Vicente Blvd. #330, Los Angeles, CA
90048 (“LICENSEE”).
WHEREAS, LICENSOR
is authorized to grant licenses for the “LICENSED MARK”
(as hereinafter defined) and all variants thereof; and
WHEREAS, LICENSOR
and LICENSEE further recognize and acknowledge that
LICENSOR’s authority and discretions provided for in this
Agreement are crucial to LICENSOR’s effective management of
its trademarks and brands;
WHEREAS, the
LICENSOR and LICENSEE desire to enter into an agreement to
authorize LICENSEE to use the LICENSED MARK in connection with the
manufacturing, promotion, distribution and sale (in accordance with
the terms and conditions set forth in this Agreement) of the
“ARTICLES” in the “TERRITORY” as defined
herein.
NOW, THEREFORE, in
consideration of the mutual covenants herein contained, the parties
do agree as follows:
The
following capitalized terms when used in this Agreement shall have
the meaning set forth below:
a.
ADVERTISING MATERIALS: Shall mean designs, advertising copy and
layout, photographs, texts, fixtures, image catalogues, counter
cards, in-store and trade show displays, graphics, audiovisual,
logo (and LICENSED MARK) use and audio materials related to the
ARTICLES.
b.
ADVERTISING PLAN: Shall mean LICENSEE’s proposed advertising
budget and media plan for consumer, co-op and/or trade advertising,
including a list of planned expenditures, together with the dates,
publications, format and size of all co-op and trade advertisements
proposed by LICENSEE.
c.
ARTICLES: Shall mean the following items: women’s footwear of
all kinds.
d.
CLOSE-OUT: Shall mean ARTICLES offered for sale to the trade at
TWENTY FIVE (25%) PERCENT or more off of the full published
wholesale price.
e.
CONTRACT YEAR: A period of twelve calendar months comprising the
calendar year during which this Agreement is in effect, except that
the FIRST CONTRACT YEAR shall commence as of the date of this
Agreement and end June 30, 2006.
f.
DESIGN SPECIFICATIONS: Shall mean the following as it relates to
the ARTICLES or any materials relating to the ARTICLES: designs,
patterns, sketches, colors, materials, fabrics, quality and
packaging, and the construction/manufacturing standards embodied
therein.
g.
LICENSED MARK: Shall mean the “Oscar by Oscar de la
Renta l
’ and “0 OSCAR”
trademarks in the forms attached hereto as Exhibit A (as are
currently used in the United States for other womenswear products),
used as directed or approved by LICENSOR in accordance with the
terms of this Agreement, and all goodwill associated
therewith.
h.
LICENSEE: Shall mean THE FASHION HOUSE INC., a Delaware Corporation
having a place of business located at 6310 San Vicente Blvd. #330,
Los Angeles, CA 90048.
i.
LICENSOR: Shall mean OSCAR DE LA RENTA, LTD., a New York
Corporation having a place of business at 550 Seventh Avenue, New
York, New York 10018, the owner of the LICENSED MARK.
j.
NET SALES: Shall mean the gross invoice price of ARTICLES sold at
wholesale (or, with respect to CLOSE-OUTS, at the price at which
such CLOSE-OUTS are invoiced) less sales taxes, freight and
insurance, the amounts of credit normally allowed for returns,
normal trade discounts and volume rebates actually taken by
retailers and charge-backs, margin assistance and overbills.
Advertising and promotional expenditures shall not be deducted in
computing NET SALES. With respect to sales of ARTICLES to
affiliated persons or entities or to persons or entities with which
LICENSEE does not deal on an arm’s length basis (other than
to employees for personal use only for which royalties shall not be
payable), NET SALES shall be computed using the wholesale price
(subject to the deductions set forth above) actually charged to
unaffiliated third parties for resale. An ARTICLE shall be deemed
sold when shipped.
k.
QUARTERLY DATES: Shall mean each January 1, April 1, July
1 and October 1 of a given CONTRACT YEAR.
I.
ROYALTY SALES REPORTS: Reports showing LICENSEE NET SALES on the
basis of which royalty payments made by LICENSEE under
Section 8.1 are calculated.
m.
TERM: Shall have the meaning set forth in Section 3.1 of this
Agreement.
n.
TERRITORY: Shall mean the United States of America, and shall
exclude duty-free or tax-free shops, diplomatic or consular sales,
airline supplies, or ship’s stores.
2.1.1
Exclusive License. Subject to the terms and conditions of
this Agreement, LICENSOR hereby grants to LICENSEE the exclusive
non-assignable license to use (a) the DESIGN SPECIFICATIONS
either furnished or approved by
LICENSOR prior
to use as provided in this Agreement, bearing the LICENSED MARK and
(b) the LICENSED MARK for the manufacturing, sourcing,
advertising, promotion, sale and distribution of the ARTICLES as
approved by LICENSOR as provided herein, in the
TERRITORY.
2.1.2
Right of First Refusal for LICENSED MARK. Provided that
LICENSEE is not in default of any of the terms of this Agreement,
LICENSOR grants to LICENSEE a right of first refusal with regard to
the LICENSED MARK as follows: If a potential licensee other than
LICENSEE desires to license the LICENSED MARK with respect to the
ARTICLES in any area of the world outside of the TERRITORY, and the
proposed terms and conditions of such a proposed license are
acceptable to LICENSOR, LICENSOR shall notify LICENSEE of such
proposed terms and conditions (the “Offer Notice”). If
LICENSEE does not send written notice to LICENSOR within twenty
(20) days of receipt of the Offer Notice stating that LICENSEE
will match exactly the terms and conditions contained in the Offer
Notice, LICENSOR shall be free to license the LICENSED MARK to the
proposed licensee. If LICENSEE does accept the terms and conditions
of the Offer Notice within such period, LICENSEE shall be required
to enter into a license agreement with LICENSOR within five
(5) days of receiving a licensing agreement containing such
terms and conditions from LICENSOR. If, for any reason, LICENSEE
does not execute such license agreement in such five (5) day
period, LICENESE shall lose its right of first refusal with regard
to the area(s) of the world set forth in the Offer Notice. In
addition to the above, LICENSEE at any time may submit to LICENSOR
a proposal to license the LICENSED MARK with respect to the
ARTICLES in any area of the world outside of the TERRITORY, it
being understood and agreed that the decision to accept or reject
any such proposal from LICENSEE shall be left to the sole and
absolute discretion of LICENSOR.
2.1.3
Rights Concerning Licensor Signature Collection. Provided
that LICENSEE is not in default of any of the terms of this
Agreement, then in the event that LICENSOR ever determines, in its
sole and absolute discretion, to seek out license agreements for
ARTICLES bearing the Oscar de la Renta signature trademark (the
“Signature Collection”), LICENSOR will provide LICENSEE
with written notice of the same. LICENSEE will then have thirty
(30) days after receipt of such notice to submit a proposal to
LICENSOR for the licensing of the Signature Collection, provided,
however, that LICENSOR shall be under no obligation to accept any
proposal from LICENSEE and the decision to accept or reject any
proposal shall be left to the sole and absolute discretion of
LICENSOR. In the event that LICENSOR, in its sole and absolute
discretion, chooses to reject any such proposal from LICENSEE, then
LICENSOR will be free to enter into any licensing or other
arrangement with respect to the ARTICLES for the Signature
Collection that LICENSOR chooses in its sole and absolute
discretion without any further obligation to LICENSEE.
2.2
Limitations on Rights Granted.
2.2.1
LICENSEE shall not place the LICENSED MARK on, or use the LICENSED
MARK in connection with, any merchandise or goods of any kind,
nature or description other than the ARTICLES and labels, hangtags
and packaging used in connection therewith as approved hereunder.
LICENSOR may also grant to others the right or license to use the
LICENSED MARK on or in connection with goods of other types and
descriptions other than
the ARTICLES in
any area of the world including the TERRITORY; provided,
however, that LICENSOR shall not grant such rights to third parties
that LICENSOR knows will conduct their activities in such a way as
to interfere with the rights granted to LICENSEE under this
Agreement. It is expressly understood and agreed that LICENSEE will
use its best efforts not to sell ARTICLES bearing the LICENSED MARK
to customers who LICENSEE knows or should know will conduct their
activities with respect to the ARTICLES in a manner which, if
conducted by LICENSEE, would cause LICENSEE to be in violation of
this Agreement, and, except if prohibited by law, agrees to cease
selling to any such customer. In the event it is discovered that a
customer of LICENSEE conducts its business in such manner, or ships
or intends to ship or market ARTICLES in violation of this
Agreement, LICENSEE shall, at LICENSEE’s expense, cause such
customer to cease such shipments.
2.2.2
LICENSEE shall not sublicense any of the rights or license herein
granted.
2.2.3
LICENSEE shall not use and is not licensed to use any variation of
the LICENSED MARK other than as (and in the manner) specifically
directed in writing by LICENSOR; provided, however, that if
LICENSOR changes the manner in which the LICENSED MARK is to be
used, LICENSEE shall not be required to revise and/or recall any
previously approved ARTICLES, CLOSE-OUTS and/or ADVERTISING
MATERIALS.
2.3
Other Duties of LICENSEE. In addition to the duties of
LICENSEE provided for elsewhere in this Agreement, LICENSEE
shall:
2.3.1
Develop and accomplish a line development, marketing and
distribution plan as set forth in Exhibit B for each CONTRACT
YEAR (including the first CONTRACT YEAR ) for prior review and
approval by LICENSOR which, following such approval, shall be
executed by LICENSEE; and
2.3.2
Develop and accomplish an initial collection of ARTICLES bearing
the 0 OSCAR LICENSED MARK as set forth in Exhibit B;
and
2.3.3
Develop and accomplish an initial collection of ARTICLES bearing
the Oscar by Oscar de la Renta LICENSED MARK as set forth in
Exhibit B; and
2.3.4
Develop, subject to LICENSOR’s written approval, and execute
an ADVERTISING PLAN, with media budgets sufficient to advertise and
promote in accordance with Section 7.1 the ARTICLES bearing
the LICENSED MARK throughout the TERRITORY in a manner consistent
with a prestigious and important designer branded business;
and
2.3.5
Assure that the ARTICLES and their packaging shall be subject to
LICENSOR’s prior written approval and of the highest
standards and of such style, appearance, distinctiveness and
quality as to protect the prestige of LICENSOR
and of the
LICENSED MARK and the goodwill pertaining thereto, that the
ARTICLES will be manufactured, packaged, sold and distributed in
accordance with all applicable laws and regulations (including but
not limited to all laws relating to fair labor practices), that the
ARTICLES will be manufactured in a quality consistent with
LICENSEE’s highest quality collection, and that the policy of
sale, distribution and/or exploitation by LICENSEE shall be subject
to LICENSEE’s highest standards ( which standards shall be no
less than those which exist as of the date first above written) and
which will enhance and maintain the goodwill and prestigious name
of the LICENSOR; and
2.3.6
Produce numbers of ARTICLES and make timely and coordinated
delivery thereof to customers consistent with LICENSEE’s
highest standards/practices as described in the subparagraph above
; and
2.3.7
Place the LICENSED MARK on all ARTICLES prior to delivery, except
as otherwise set forth herein; and
2.3.8
Promote and maximize sales of the ARTICLES throughout the TERRITORY
and in accordance with the terms of this Agreement and use best
efforts to minimize trade discounts and allowances pertaining
thereto; and
2.3.9
Establish and maintain an infrastructure necessary and adequate to
establish and maintain on a first-class basis the activities
arising out of this Agreement including but not limited to having
personnel who can coordinate with, and provide vendor services to,
LICENSEE’s larger customers on a regular basis and others
from time to time and who will promote and sell the ARTICLES, and a
merchandise, marketing and brand manager or managers, as
appropriate. LICENSEE shall also maintain separate sales teams,
account managers and dedicated designer(s) for each of the 0 OSCAR
and Oscar by Oscar de la Renta LICENSED MARKS. LICENSEE may use its
existing facilities for accounting, order processing, production
and other back office functions; and
2.3.10
Maintain a devoted area, consisting of a separate designated
selling space, dedicated to displays of complete collections of the
ARTICLES in its company owned designer show rooms located at 6310
San Vicente Blvd. Suite 330, Los Angeles, CA 90048 by no later
than September 30, 2005 and a New York showroom located in the
County of New York by no later than September 30, 2006 and a
representative offering of the ARTICLES in its other showroom
facilities, if any; and
2.3.11
Recognizing that excessive or indiscriminate disposals of CLOSE-OUT
ARTICLES may adversely affect the importance and prestige
associated with the LICENSED MARK, LICENSEE shall use its best
efforts to minimize CLOSE-OUT sales and, without limiting the
foregoing, in no event shall the total amount of NET SALES of
CLOSE-OUT ARTICLES exceed FIFTEEN (15%) PERCENT of NET SALES
(computed without including the NET SALES of CLOSE-OUT ARTICLES).
CLOSE-OUT SALES shall be subject to payment of royalties as
provided in Article 8. All sales of CLOSE-OUT ARTICLES shall
be fully and separately recorded and accounted for in a manner that
will enable LICENSOR to determine LICENSEE’s compliance with
the above provisions. The sale and distribution of CLOSE-OUT
ARTICLES shall be subject to Article 6 below.
2.3.12
Provide and pay for first-class travel, food expense and hotel
accommodations for travel by Mr. Oscar de la Renta and his
designee, at LICENSEE’s request, outside of New York City for
personal appearances, other promotional events in connection with
the promotion of the ARTICLES, product reviews and/or showroom
reviews further to subsection 4.1.2 , and promotional purposes
where such promotional purposes are jointly determined by LICENSOR
and LICENSEE, or other purposes incidental to this Agreement.
LICENSEE shall also pay for business class round trip travel, in
addition to food expense and hotel accommodations for other persons
reasonably requested by LICENSOR to travel with or on behalf of
Mr. Oscar de la Renta as the case may be, in connection with
the promotion or in connection with the development of the
ARTICLES.
3.1
Term. The TERM of this Agreement shall be for a period of
FIVE (5) CONTRACT YEARS commencing effective upon the date
hereof and terminating on June 30, 2010, the last day of the
FIFTH CONTRACT YEAR.
3.2.1
First Renewal Term. If prior to the end of the Term, the
following conditions have been satisfied:
a).
LICENSEE is not then in default of any of the terms of this
Agreement; and
(b).
Aggregate NET SALES of the ARTICLES for the FOURTH CONTRACT YEAR
shall be at least EIGHT MILLION FIVE HUNDRED THOUSAND ($8,500,000)
DOLLARS ;
then
LICENSEE shall have the option to renew this Agreement for three
(3) further CONTRACT YEARS. Such option shall be exercisable
by notice received by LICENSOR in writing no later than
December 31, 2009. In the event such option is so exercised by
LICENSEE, this Agreement shall be deemed renewed for a first
renewal TERM ending June 30, 2013.
3.2.2
Second Renewal Term. If prior to the end of the first
Renewal Term, the following conditions have been
satisfied:
(a).
LICENSEE is not then in default of any of the terms of this
Agreement, and
(b).
Aggregate NET SALES of the ARTICLES for the SECOND CONTRACT YEAR of
the first renewal Term shall be at least TWELVE MILLION FIVE
HUNDRED THOUSAND ($12,500,00) DOLLARS ;
then LICENSEE
shall have the option to renew this Agreement for three
(3) further CONTRACT YEARS. Such option shall be exercisable
by notice received by LICENSOR
in writing no
later than December 31, 2012. In the event such option is so
exercised by LICENSEE, this Agreement shall be deemed renewed for a
second renewal TERM ending June 30, 2016.
4.
Designs/Product Development.
4.1
Designs/Design Approval.
4.1.1
LICENSEE will advise LICENSOR in writing of its product development
calendar and, prior to sample development, will coordinate with
LICENSOR in New York to receive design direction offered by
LICENSOR. LICENSEE shall present all ideas, concepts, proposed
DESIGN SPECIFICATIONS, sketches and designs, and samples of types
of fabric, materials, and colors for the ARTICLES to
LICENSOR’s styling representative at LICENSOR’s New
York office for examination, comment and approval as soon as
sketches (including, as available, fabric and material samples and
color choices) are available, and as soon as final samples are
available, all in a timely manner in advance of each season. Except
as expressly provided in this subsection 4.1.1 to the contrary, all
ideas, sketches, designs, fabrics, materials, models and colors
will be mutually agreed upon by LICENSOR and LICENSEE before each
collection is finalized for presentation to the market and/or
production and LICENSOR reserves the right to eliminate or to
modify any of the ideas, sketches, designs, fabrics, materials,
models or colors submitted by LICENSEE pursuant to subsection
4.1.2; provided, however, that no changes can be made to any
of the foregoing once LICENSEE has finalized the collection for
presentation to the market and/or production. LICENSEE will present
all of a proposed sample line to LICENSOR for review, comment,
editing and further work prior to LICENSEE commitments to
production. The presentation of market samples will be in New York,
New York. LICENSEE will incorporate DESIGN SPECIFICATIONS furnished
or otherwise approved by LICENSOR, and LICENSEE understands and
agrees that the showing and/or production and/or sale of ARTICLES
that are not either approved by LICENSOR or do not conform to
LICENSOR direction shall hereby be prohibited.
4.1.2
Any material or item under this Agreement that is subject to
LICENSOR approval must be submitted to LICENSOR by LICENSEE.
Approval by LICENSOR of any DESIGN SPECIFICATION with respect to
any design or item shall not be deemed an approval of the use
thereof for any other design or item or for that particular item
for any other collection. DESIGN SPECIFICATIONS (including but not
limited to any copyrights related thereto) furnished or approved by
LICENSOR shall be and forever remain LICENSOR’s sole and
exclusive property.
4.1.3
At LICENSOR’s request, LICENSEE, at its expense from time to
time, will submit a reasonable number of production samples of each
ARTICLE manufactured hereunder so that LICENSOR may confirm that
the ARTICLES offered for distribution conform to the DESIGN
SPECIFICATIONS approved by LICENSOR.
4.1.4
LICENSOR’s right of approval hereunder shall include the
right to determine what ARTICLES should bear a particular LICENSED
MARK (or any variation or derivative thereof).
5.
Manufacture of Articles.
5.1
Quality of Articles. LICENSEE covenants and agrees that the
materials and construction of all ARTICLES manufactured hereunder
shall be of superior quality.
5.2
Inspection. LICENSOR will have the right, at any time during
normal business hours, with five (5) days prior notice to
LICENSEE, to inspect the process of manufacturing for any and all
ARTICLES produced hereunder and LICENSEE shall at all times during
the TERM (including renewals, if any) hereof use its diligent
efforts to make its manufacturing, warehouse and distribution
facilities available to LICENSOR for inspection by LICENSOR or its
representatives at LICENSOR’s cost and expense during normal
working hours.
6.1
Authorization of Sales Points. LICENSEE recognizes that the
prestige and image of the LICENSED MARK depends upon, among several
factors, the selection of top-ranked retail sales outlets of the
highest caliber and excellent reputation which project an image of
high fashion and prestige consistent with the reputation of
Mr. Oscar de la Renta and that retail comparable prestigious
designer name goods. LICENSEE further recognizes that LICENSOR as
the grantor of licenses of the LICENSED MARK for the manufacture
and sale of other articles under the LICENSED MARK must participate
in the designation of retail outlets to which LICENSEE may offer to
sell ARTICLES to assure a consistent quality of image of retail
sales points under this and other licenses. Except as otherwise set
forth herein or required by law, the ARTICLES shall not be sold to
sales points objected to by LICENSOR as not in accordance with a
plan of distribution approved in advance by LICENSOR. Additionally,
LICENSEE shall sell ARTICLES on a wholesale basis only. If
requested by LICENSOR and if permitted by law, LICENSOR shall have
the right to cause LICENSEE, immediately upon notice, to cease
selling the ARTICLES to any such retail sales outlet (including any
catalog(s) and internet portals) designated by LICENSOR and to use
its best efforts to sell ARTICLES to such retail sales points as
LICENSOR may request in writing. Further, the ARTICLES bearing the
LICENSED MARK shall not be sold to mass merchandisers, or
off-price, or discount stores (such as Walmart, K-mart, and Sears),
or through telemarketing, television, internet, or mail order
catalogue sales (except with regard to the catalogs and internet
portals set forth on Exhibit C.) Notwithstanding the
foregoing, subject to the restrictions otherwise set forth in this
Agreement, LICENSEE may sell CLOSE-OUTS to off-price stores which
do not advertise or display brand names or trademarks of the goods
they sell and further, that the selection of such stores shall be
approved by LICENSOR in the manner set forth in Section 4.1.2
above. Any arrangements between LICENSEE and any of its
distributors shall be subject to LICENSEE’S duties and
LICENSOR’s rights under this Agreement the breach of which
will be deemed a breach of this License by LICENSEE. LICENSEE shall
enforce LICENSOR’s rights under this Agreement with respect
to third parties with which LICENSEE does business relating to this
Agreement. Notwithstanding the foregoing, LICENSEE’s plan of
distribution consisting of those stores, catalogs and Internet
portals set forth in Exhibit C attached hereto (as may be
amended from time to time in writing signed by LICENSOR and
LICENSEE) is hereby approved by LICENSOR subject to the conditions
set out above.
6.2
Plan of Distribution. LICENSEE’s plan of distribution
for the sale of ARTICLES bearing the LICENSED MARK shall be subject
to LICENSOR’s prior approval. The method of approval shall be
as set forth under Section 4.1.2 above.
6.3
Minimum Retail Pricinq. Except as provided herein, or unless
otherwise required or prohibited by law, LICENSEE shall be required
to provide all approved retailers under Section 6.1 with a list of
suggested minimum retail prices for the ARTICLES that contains a
suggested retail price of not less than $140 nor greater than $225
for each ARTICLE bearing the Oscar by Oscar de la Renta LICENSED
MARK and not less than $69.99 nor greater than $109.99 for each
ARTICLE bearing the 0 OSCAR LICENSED MARK.
6.4
Sales Minimums. In the event that NET SALES of the ARTICLES
do not meet the following mimimum amounts, then LICENSOR shall have
the right to terminate this Agreement immediately upon written
notice to LICENSEE: (i) for ARTICLES bearing the 0 OSCAR
LICENSED MARK, TWO MILLION ($2,000,000) DOLLARS for each CONTRACT
YEAR, including each CONTRACT YEAR of any renewal term; and
(ii) for ARTICLES bearing the Oscar by Oscar de la Renta
LICENSED MARK, ONE MILLION FIVE HUNDRED THOUSAND ($1,500,000)
DOLLARS for each of the SECOND, THIRD, FOURTH AND FIFTH CONTRACT
YEARS as well as each CONTRACT YEAR of any renewal term.
Notwithstanding anything else contained in this Agreement, a
failure to meet the sales minimum amounts in this Section with
respect to a LICENSED MARK will be deemed a failure to meet the
sales minimum amounts in this Section for the other LICENSED
MARK,
regardless of
the actual sales amounts for the other LICENSED MARK, entitling
LICENSOR to terminate this Agreement with respect to both
LICENSED MARKS pursuant to this Section.
7.1
General. Any initial advertising will be planned and
accomplished as mutually agreed between LICENSOR and LICENSEE but
shall, in any event, conform with any other trade advertising
applicable to products bearing the LICENSED MARK, as may be
communicated, planned and/or coordinated by LICENSOR. During the
TERM, LICENSEE shall promote the availability of the ARTICLES
throughout the TERRITORY both in print and in trade shows
appropriate for the importance of the ARTICLES bearing the LICENSED
MARK in accordance with an ADVERTISING PLAN, ADVERTISING MATERIALS,
and budget approved in advance by LICENSOR.
7.2
Advertising Plan. Within a reasonable time before the end of
each CONTRACT YEAR, LICENSEE shall submit to LICENSOR for approval
LICENSEE’s proposed ADVERTISING PLAN for the ensuing CONTRACT
YEAR. The ADVERTISING PLAN approved by LICENSOR may be amended or
modified by LICENSOR and LICENSEE (subject to LICENSOR approval)
from time to time during the CONTRACT YEAR to reflect changes in
strategies and promotional activities. LICENSEE will incorporate
into its ADVERTISING PLAN otherwise approved by LICENSOR materials,
graphics and directions, if any, submitted by LICENSOR. LICENSEE
will cooperate with LICENSOR to coordinate LICENSEE’s
advertising
program with
those of LICENSOR’s other licensees so that a comprehensive
and coordinated look and approach to placement can be
accomplished.
7.3
Corporate and Image Advertisinq. In addition to all other
amounts payable to LICENSOR or otherwise payable by LICENSEE
hereunder, LICENSEE will pay to LICENSOR amounts equal to TWO
(2.0%) PERCENT of NET SALES of the ARTICLES (including CLOSE-OUT
ARTICLES) for LICENSOR’s use in its sole and absolute
discretion in connection with its corporate and/or image
advertising program as LICENSOR may have in effect from time to
time. Such amounts shall be reported and paid to LICENSOR within
THIRTY (30) days following each QUARTERLY DATE as and when
reporting under Article 9 is accomplished.
7.4
Advertising Materials. All ADVERTISING MATERIALS for
advertising placed by the LICENSEE will use only those designs,
photographs, catalogues, in-store displays, texts, graphics,
audiovisual and audio materials in form and in content furnished or
approved in writing by LICENSOR. LICENSEE may source creative and
placement services subject, however, to LICENSOR’s prior
written approval. LICENSEE shall submit to LICENSOR the ADVERTISING
MATERIALS for its written approval prior to use. Any ADVERTISING
MATERIALS approved by LICENSOR shall be used by LICENSEE only in
the manner, form and presentation directed or approved by LICENSOR.
Approval by LICENSOR of any ADVERTISING PLAN or ADVERTISING
MATERIALS shall not be deemed an approval of the use thereof for
any other season, use or purpose other than the one for which such
approval is sought.
7.5
Reimbursement of Costs. In addition to the amounts required
to be expended by LICENSEE in this Agreement, LICENSEE shall
reimburse LICENSOR for the out-of-pocket cost of ADVERTISING
MATERIALS furnished by LICENSOR to LICENSEE including production
costs incurred by LICENSOR. In the event LICENSOR directs the
preparation of or prepares ADVERTISING MATERIALS, it must have
received prior written approval from LICENSEE (not to be delayed,
conditioned or withheld unreasonably) as to the plan LICENSOR
intends to accomplish which shall include those items reasonably
requested by LICENSEE, including but not limited to, budget,
objectives and specific deliverables. Such costs include model fees
(except for Mr. de la Renta who, if used by LICENSOR in connection
with ADVERTISING MATERIALS hereunder, shall be provided without
additional charge to LICENSEE except for reimbursement of travel
expenses as set out in Section 2.3.12 above), photography fees
and expenses and artwork.
7.6
Accounting for Advertising. Within 30 days following
the end of each CONTRACT YEAR, LICENSEE shall present to LICENSOR a
detailed substantiation (together with tear sheets and lists of
publications with dates) of all co-op, media and trade advertising
performed by LICENSEE during such calendar year specifying the
amounts spent on advertising with categorical breakdown among
media, co-op, trade, and consumer.
7.7
Samples. At LICENSOR’s request, LICENSEE will furnish
a reasonable number of samples of ARTICLES to LICENSOR for purposes
of preparing photographs, designs, and illustrations for
ADVERTISING MATERIALS or for other promotional or informational
purposes. ARTICLES otherwise requested by LICENSOR for any other
use or purpose will be furnished to LICENSOR at LICENSEE’s
FOB factory cost for same.
7.8
Sales to LICENSOR. LICENSEE shall sell directly to LICENSOR,
for the benefit of LICENSOR’s employees and as may be
requested by LICENSOR from time to time, ARTICLES at a price equal
to twenty-five (25%) percent below LICENSEE’s wholesale cost,
it being agreed and understood that all sales made pursuant to this
Section shall be excluded from the calculation of NET
SALES.
7.9
Sales to LICENSOR-Owned Stores. LICENSEE shall sell ARTICLES
to LICENSOR-owned stores in the United States at a price equal to
twenty percent (20%) below the wholesale price being charged by
LICENSEE. LICENSOR shall not sell any ARTICLES bought pursuant to
the price structure set forth in this section below the suggested
retail price then in existence in the territory in which the
LICENSOR-owned store is located.
8.1.1
LICENSEE will pay royalties to LICENSOR at a rate equal to EIGHT
(8.0%) PERCENT of NET SALES of the ARTICLES. Such amounts shall be
paid at the time, and on the conditions, set forth in
Section 8.3 below. LICENSEE will not pay any royalties on
sales made pursuant to Sections 7.8 and/or 7.9,
above.
8.2.1.
LICENSEE shall pay to LICENSOR TWO HUNDRED TEN ($210,000) DOLLARS
for and during the the FIRST CONTRACT YEAR (beginning effective
January 1, 2005 and ending June 30, 2006) as guaranteed,
non-refundabl
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