<PAGE>
EXHIBIT 10.1*
LICENSE AGREEMENT
By and between :
LACOSTE S.A., a French corporation organized and existing under the
laws of
France whose registered office and principal place of business is
located at 8,
rue de Castiglione, 75001 Paris (France), represented by its
President Directeur
General, Monsieur Michel LACOSTE.
hereinafter referred to as "LACOSTE",
SPORLOISIRS S.A., a Swiss corporation organized and existing under
the laws of
Switzerland whose registered office and principal place of business
is located
at 8, rue Muzy, 1207 Geneva (Switzerland), represented by its
Directors,
Monsieur Michel LACOSTE and Monsieur Daniel VOLLENWEIDER.
hereinafter referred
to as "SPL",
LACOSTE ALLIGATOR S.A., a Swiss corporation organized and existing
under the
laws of Switzerland whose registered office and principal place of
business is
located at 8, rue Muzy, 1207 Geneva (Switzerland), represented by
its Directors,
Monsieur Michel LACOSTE and Monsieur Daniel VOLLENWEIDER.
hereinafter referred to as "LCA",
all three together hereinafter referred to as the "LICENSOR",
and :
MGI LUXURY GROUP, S.A., a company organized and existing under the
laws of
Switzerland whose registered office and principal place of business
is located
at 35 rue de Nidau, CH-2501 Bienne (Switzerland), acting on its
behalf and on
behalf of the entities controlling, controlled by MGI LUXURY GROUP,
S.A. or
under common control with MGI LUXURY GROUP, S.A., represented by
its Directors,
Mr. Kurt BURKI and Mr. Richard COTE
hereinafter referred to as the "MASTER LICENSEE".
*
CONFIDENTIAL PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED FROM PAGES
8, 37,
38,
41, 42, 45, 49 - 51, 54, 55, 61, 63, 66, SCHEDULE XI (PAGES 7 - 39,
41
-
57, 61), AND SCHEDULES XIV AND XV AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION ("SEC") PURSUANT TO RULE 24b-2
OF THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED ("1934 ACT").
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WITNESSETH :
WHEREAS, the LICENSOR has created and developed over a period of
many years a
well known and distinctive line of articles of sports and leisure
apparel for
men, women and children for sport and leisure (the "LACOSTE APPAREL
PRODUCTS",
as such term is hereinafter defined); and
WHEREAS, in addition to the LACOSTE APPAREL PRODUCTS, the LICENSOR
has created
and developed other lines of products such as toiletries,
sunglasses and frames
for optical glasses, leisure and sports bags, leathergoods
products, shoes,
terry towels, bath towels, bath robes, household linen, umbrellas,
belts (the
"OTHER LACOSTE PRODUCTS", as such term is hereinafter defined);
and
WHEREAS, the LICENSOR has also contributed to the creation and the
development
of a line of watches and time-keeping devices (the "LACOSTE
WATCHES", as such
term is hereinafter defined. And whereas the LICENSOR is actively
researching
and developing other new products; and
WHEREAS, the LACOSTE APPAREL PRODUCTS, the OTHER LACOSTE PRODUCTS,
as well as
the LACOSTE WATCHES, which are characterized by an emblem
consisting of the
pictorial representation of an alligator or a crocodile (the
"CROCODILE", as
such term is hereinafter defined), are renowned and sold world-wide
under the
trade names of "LA CHEMISE LACOSTE", "CHEMISE LACOSTE" or
"LACOSTE", the word
"LACOSTE" recalling the name of Rene Lacoste the famous tennis
champion who
invented the original shirt, and the CROCODILE recalling his
nickname on the
tennis courts; and
WHEREAS, the LACOSTE APPAREL PRODUCTS, the OTHER LACOSTE PRODUCTS
and the
LACOSTE WATCHES are manufactured and/or distributed by partners
selected by the
LICENSOR; and
WHEREAS, the MODELS (as such term is hereinafter defined) making up
the lines of
the LACOSTE WATCHES together with their specifications shall be the
property of
the LICENSOR to be used exclusively by the MASTER LICENSEE within
the scope of
this MASTER AGREEMENT (as such term is hereinafter defined), it
being understood
however that certain elements of the MODELS may, in certain
circumstances,
belong either to third parties or, in the case of elements
previously used by
MASTER LICENSEE, to MASTER LICENSEE; and
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WHEREAS, in order to protect its rights, the LICENSOR has
registered, directly
or indirectly, its trademarks (the "LACOSTE TRADEMARKS", as such
term is
hereinafter defined) world-wide, the principal representations of
which are
appended hereto as Schedule I; and
WHEREAS, the ownership of such registrations ensures the LICENSOR a
clear
exclusive right to use or license the right to use the LACOSTE
TRADEMARKS for
many different classes of products (including class 14 of the
international
classification, for watches and watches' accessories) in most
countries around
the world; and
WHEREAS, despite its ownership of the LACOSTE TRADEMARKS, the
LICENSOR is not
however in a position to warrant without limitation unimpeded use
of all the
LACOSTE TRADEMARKS in certain countries, due (a) to the existence
of conflicting
registrations (in particular in various far-east Asian
jurisdictions, amongst
which the People's Republic of China), or (b) to the lack of
registration of
certain of the LACOSTE TRADEMARKS, or (c) to the specificities and
uncertainties
generally associated with trademark law in certain jurisdictions;
and
WHEREAS, the LACOSTE TRADEMARKS in the countries listed in Schedule
IV.a are the
property of LACOSTE; and
WHEREAS, the LACOSTE TRADEMARKS in the countries listed in Schedule
IV.b are the
property of SPL; and
WHEREAS, the LACOSTE TRADEMARKS in the countries listed in Schedule
IV.c are the
property of LCA; and
WHEREAS, through the development of the different lines of the
LACOSTE APPAREL
PRODUCTS, OTHER LACOSTE PRODUCTS and LACOSTE WATCHES, the LICENSOR
has acquired
a significant know-how in the fields of their styling, marketing
and
merchandising, advertising and promotion (the "STYLING KNOW-HOW",
the "MARKETING
AND MERCHANDISING KNOW-HOW", and the "ADVERTISING AND PROMOTION
KNOW-HOW", as
such terms are hereinafter defined); and
WHEREAS, the MASTER LICENSEE is a company specialized in the
creation,
development, manufacture, distribution, marketing, merchandising,
advertising,
promotion and sale of watches and time-keeping devices, and has
acquired a
significant know-how in such fields (the "WATCHES KNOW-HOW", as
such term is
hereinafter defined); and
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WHEREAS, in view of the world-wide development of the sales of the
LACOSTE
APPAREL PRODUCTS, OTHER LACOSTE PRODUCTS and LACOSTE WATCHES, it is
more than
ever necessary, in the best interest of all the licensees of the
LACOSTE
TRADEMARKS, that without interfering in the running of their
day-to-day
business, the LICENSOR be able to maintain the standards and
quality of the
LACOSTE TRADEMARKS IMAGE (as such term is hereinafter defined),
particularly in
coordinating the styling, the marketing and the merchandising, the
advertising
and the promotion of all LACOSTE APPAREL PRODUCTS, OTHER LACOSTE
PRODUCTS and
LACOSTE WATCHES; and
WHEREAS, in order to guarantee the authenticity of its creations
and to ensure
the homogeneity of their distribution at an international level,
the LICENSOR
has implemented selective distribution systems wherever and
whenever
practicable, so as to allow all its licensees and distributors to
select and
approve their retailers on the basis of objective criteria both
with respect to
quality and sales techniques; and
WHEREAS, the selective distribution systems implemented by the
LICENSOR in
connection with the LACOSTE APPAREL PRODUCTS consist of the
"APPROVED APPAREL
RETAILERS" SELECTIVE DISTRIBUTION SYSTEM (as such term is
hereinafter defined)
and of the "LACOSTE BOUTIQUES AND LACOSTE CORNERS" SELECTIVE
DISTRIBUTION SYSTEM
(as such term is hereinafter defined); and
WHEREAS, the selective distribution systems implemented by the
LICENSOR in
connection with each of the OTHER LACOSTE PRODUCTS incorporate, in
addition to
approved retailers, and for certain categories of OTHER LACOSTE
PRODUCTS, a
certain number of shops and special locations in shops dedicated to
the sale of
such OTHER LACOSTE PRODUCTS; and
WHEREAS, the selective distribution system implemented by the
LICENSOR in
connection with the LACOSTE WATCHES incorporates APPROVED WATCHES
RETAILERS; and
WHEREAS, pursuant to an agreement as amended and presently in force
which shall
terminate on December 31, 2006, (such agreements being the "PRIOR
AGREEMENT", as
such term is hereinafter defined), the LICENSOR has granted to
VIMONT S.A., a
Swiss corporation organized and existing under the laws of
Switzerland whose
registered office and principal place of business is located at
40,
Karlneuhausstrasse, 2502 Bienne (Switzerland) ("VIMONT", as such
term is
hereinafter defined)
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certain rights in connection with the creation, development,
manufacture,
distribution, marketing, merchandising, advertising, promotion and
sale of the
LACOSTE WATCHES; and
WHEREAS, the LICENSOR wishes to develop world-wide the manufacture
and the
distribution of the LACOSTE WATCHES; and
WHEREAS, the MASTER LICENSEE wishes to obtain from the LICENSOR in
the TERRITORY
(as such term is hereinafter defined) a license allowing it to
create,
manufacture, promote, market, sell and distribute the LACOSTE
WATCHES through
its LACOSTE WATCHES SELECTIVE DISTRIBUTION SYSTEM (as such term is
hereinafter
defined), and to use also the STYLING KNOW-HOW, the MARKETING AND
MERCHANDISING
KNOW-HOW and the ADVERTISING AND PROMOTION KNOW-HOW of the
LICENSOR; and
WHEREAS, the MASTER LICENSEE is willing to commit the resources and
make the
necessary investments to create, develop, manufacture, promote,
market, sell and
distribute the LACOSTE WATCHES; and
WHEREAS, the LICENSOR is willing to grant to the MASTER LICENSEE
the necessary
rights in connection with the creation, development, manufacture,
distribution,
marketing, merchandising, advertising, promotion and sale of the
LACOSTE WATCHES
under the terms and conditions of this MASTER AGREEMENT (as such
term is
hereinafter defined).
THE PARTIES HEREBY AGREE AS FOLLOWS :
ARTICLE 1 - DEFINITIONS
As used herein, the following terms shall be defined as set forth
below :
1.1 "LACOSTE" shall
mean LACOSTE S.A., a French corporation organized and
existing under the laws of France whose registered office and
principal
place of business is located at 8, rue de Castiglione, 75001
Paris
(France), acting on its behalf and on behalf of the companies
controlled by
LACOSTE S.A. with the exception of SPL and LCA.
1.2 "SPL" shall mean
SPORLOISIRS S.A., a Swiss corporation organized and
existing under the laws of Switzerland whose registered office
and
principal place of business
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is
located at 8, rue Muzy, 1207 Geneva (Switzerland), acting on its
behalf
and
on behalf of the companies controlled by SPORLOISIRS S.A. with
the
exception of LACOSTE and LCA.
1.3 "LCA" shall mean
LACOSTE ALLIGATOR S.A., a Swiss corporation organized and
existing under the laws of Switzerland whose registered office
and
principal place of business is located at 8, rue Muzy, 1207
Geneva
(Switzerland), acting on its behalf and on behalf of the
companies
controlled by LACOSTE ALLIGATOR S.A. with the exception of LACOSTE
and SPL.
1.4 "LICENSOR" shall
mean LACOSTE, SPL and LCA taken all three together or (as
the
case may be) any one of them.
1.5 "MASTER LICENSEE"
shall mean MGI LUXURY GROUP, S.A., a company organized
and
existing under the laws of Switzerland whose registered office
and
principal place of business is located at 35 rue de Nidau, CH-2501,
Bienne
(Switzerland), acting on its behalf and on behalf of the
entities
controlling, controlled by MGI LUXURY GROUP, S.A. or under common
control
with
MGI LUXURY GROUP, S.A.
1.6 "VIMONT" shall
mean VIMONT S.A., a Swiss corporation organized and existing
under the laws of Switzerland whose registered office and principal
place
of
business is located at 40, Karlneuhausstrasse, 2502 Bienne
(Switzerland), acting on its behalf and on behalf of the
companies
controlled by VIMONT S.A. or under common control with VIMONT
S.A.
1.7 "MASTER AGREEMENT"
shall mean the present LICENSE AGREEMENT.
1.8 "PRIOR AGREEMENT"
shall mean the agreement as amended and presently in
force and which will terminate on December 31, 2006, as
applicable,
pursuant to which the LICENSOR has granted to VIMONT certain rights
in
connection with the creation, development, manufacture,
distribution,
marketing, merchandising, advertising, promotion and sale of the
LACOSTE
WATCHES.
1.9 "DEVANLAY" shall
mean the worldwide exclusive licensee of the LICENSOR for
LACOSTE APPAREL PRODUCTS.
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1.10 "LACOSTE APPAREL PRODUCTS DISTRIBUTOR" shall mean those
parties in certain
countries to which the distribution of the LACOSTE APPAREL PRODUCTS
in such
countries has been granted by DEVANLAY.
1.11 "CROCODILE" shall mean the pictorial representation of an
alligator or a
crocodile as depicted Schedule II.
1.12 "LACOSTE TRADEMARKS" shall mean any or all trademarks relating
to the name
"Lacoste" and/or the CROCODILE owned by the LICENSOR depicted in
Schedule
I,
as listed in Schedule III.
1.13 "LACOSTE TRADEMARKS IMAGE" shall mean the presently existing
identification
in
the principal markets where the LACOSTE APPAREL PRODUCTS, the
OTHER
LACOSTE PRODUCTS and the LACOSTE WATCHES are distributed, between
the
LACOSTE TRADEMARKS and good taste, authenticity, quality,
functionality,
modernity, elegance, high-end sports and leisure, however at
competitive
quality/price ratios. The LACOSTE TRADEMARKS IMAGE shall be judged
in
relation to all the elements making up the perception by the
consumer of
the
LACOSTE WATCHES as to their style, quality, price, marketing
and
merchandising, advertising and promotion.
1.14 "LICENSED TRADEMARKS" shall mean the trademark Lacoste, the
Crocodile and
such
of the other LACOSTE TRADEMARKS, if any, which are to be used by
the
MASTER LICENSEE in the TERRITORY as will be specified by the
LICENSOR on a
country by country basis according to the provision of Article
12.1
hereinafter in connection with the creation, development,
manufacture,
distribution, marketing, merchandising, advertising, promotion and
sale of
the
LACOSTE WATCHES.
1.15 "LACOSTE WATCHES" shall mean the watches and time-keeping
devices belonging
to
class 14 of the Classification Internationale des Produits et
des
Services (as listed in Schedule V) as well as any accessory
thereto
(straps, cases, etc.), packaging and wrapping bearing the
LICENSED
TRADEMARK manufactured and marketed by the MASTER LICENSEE itself
and/or
under its control and responsibility under the terms of this
MASTER
AGREEMENT, or marketed prior to this MASTER AGREEMENT under the
terms of
the
PRIOR AGREEMENT.
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1.16 "SECONDS" shall consist of LACOSTE WATCHES containing only
minor defects
that
do not affect the appearance or operation of the watches.
1.17 "LACOSTE APPAREL PRODUCTS" shall mean those articles of
clothing (the
categories of which are listed in Schedule VI) bearing the
LACOSTE
TRADEMARKS.
1.18 "OTHER LACOSTE PRODUCTS" shall mean the products listed in
Schedule VII
bearing the LACOSTE TRADEMARKS. For the avoidance of doubt, the
OTHER
LACOSTE PRODUCTS shall include neither the LACOSTE APPAREL PRODUCTS
nor the
LACOSTE WATCHES.
1.19 "MODELS" shall mean any and all creations specific to the
LACOSTE WATCHES,
or
part thereof, already in existence at the time of execution of
this
MASTER AGREEMENT or which shall be developed during its life by
the
LICENSOR and/or the MASTER LICENSEE and/or any SUB-LICENSEE alone
or in
co-operation with one another, it being understood however that
certain
elements of the MODELS may, in certain circumstances, belong either
to
third parties, or, in the case of elements previously used by
MASTER
LICENSEE, to MASTER LICENSEE.
1.20 The countries listed in Schedule VIII.a constituting Europe,
Africa and
Middle-East shall together form "SUB-TERRITORY A".
1.21 The countries listed in Schedule VIII.b constituting the
Far-East shall
together form "SUB-TERRITORY B".
1.22 The countries listed in Schedule VIII.c constituting
North-America shall
together form "SUB-TERRITORY C".
1.23 The countries listed in Schedule VIII.d constituting Central
America and
South-America shall together form "SUB-TERRITORY D".
1.24 The "TERRITORY" shall mean the whole world, i.e. the reunion
of
SUB-TERRITORY A, SUB-TERRITORY B, SUB-TERRITORY C.
1.25 "MAIN COUNTRIES" shall mean the * NET SALES in the
Territory.
*
CONFIDENTIAL PORTION OF THIS EXHIBIT OMITTED AND FILED SEPARATELY
WITH THE
SEC
PURSUANT TO RULE 24b-2 OF THE 1934 ACT.
<PAGE>
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1.26 "SUB-LICENSEE" shall mean any entity selected by the MASTER
LICENSEE and
approved by the LICENSOR for the manufacture and distribution of
certain
LACOSTE WATCHES in certain countries.
1.27 "SUB-LICENSE AGREEMENT" shall mean an agreement entered into
by and between
the
MASTER LICENSEE and a SUB-LICENSEE in execution of the undertakings
of
the
MASTER LICENSEE under the terms of Article 2.2.3 hereinafter.
1.28 "DISTRIBUTOR" shall mean any entity (not including any entity
controlling,
controlled by or under common control with the MASTER LICENSEE)
selected by
the
MASTER LICENSEE and approved by the LICENSOR for the wholesale
distribution of LACOSTE WATCHES in one or more countries.
1.29 "DISTRIBUTION AGREEMENT" shall mean an agreement entered into
by and
between the MASTER LICENSEE and a DISTRIBUTOR in execution of
the
undertakings of the MASTER LICENSEE under the terms of Article
2.3.3
hereinafter.
1.30 "SUPPLEMENTAL AGREEMENT" shall mean an agreement entered into
by and
between the LICENSOR, the MASTER LICENSEE and a SUB-LICENSEE or
a
DISTRIBUTOR in execution of the undertakings of the MASTER LICENSEE
under
the
terms of Articles 2.2.4 and 2.3.4 hereinafter.
1.31 "SUB-CONTRACTOR" shall mean any entity selected by the MASTER
LICENSEE for
the
manufacture (but not the distribution) of certain LACOSTE
WATCHES.
1.32 "SUB-CONTRACTING AGREEMENT" shall mean an agreement entered
into by and
between the MASTER LICENSEE and a SUB-CONTRACTOR in execution of
the
undertakings of the MASTER LICENSEE under the terms of Article
5.2.1
hereinafter.
1.33 "SUPPLIER" shall mean any entity selected by the MASTER
LICENSEE or a
SUB-LICENSEE or a SUB-CONTRACTOR for the manufacture of
components,
packaging, merchandising, advertising or promotional items,
furniture
and/or any element of any kind bearing or representing the
LICENSED
TRADEMARKS to be used for or in connection with the LACOSTE
WATCHES.
1.34 "SUPPLY AGREEMENT" shall mean an agreement entered into by and
between the
MASTER LICENSEE or a SUB-LICENSEE or a
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SUB-CONTRACTOR and a SUPPLIER in execution of the undertakings of
the
MASTER LICENSEE under the terms of Article 5.3.1 hereinafter.
1.35 "STYLING KNOW-HOW" shall mean all accumulated elements of
product research
implemented by the LICENSOR for the LACOSTE APPAREL PRODUCTS, the
LACOSTE
OTHER PRODUCTS and the LACOSTE WATCHES, according to the LACOSTE
TRADEMARKS
IMAGE and more precisely materials, colors, designs and
specifications, all
of
which know-how is regularly updated and improved as a result of
the
LICENSOR's research, and which know-how is owned by or originated
from the
LICENSOR and is made available to the MASTER LICENSEE and to
other
LICENSOR's licensees through the LICENSOR and which the LICENSOR is
not
otherwise obliged to hold in confidence.
1.36 "MARKETING AND MERCHANDISING KNOW-HOW" shall mean all
accumulated
expertise, which is implemented world-wide by the LICENSOR,
concerning the
distribution of the LACOSTE APPAREL PRODUCTS, the LACOSTE OTHER
PRODUCTS
and
the LACOSTE WATCHES according to the LACOSTE TRADEMARKS IMAGE
including
the
level of quality and the techniques of such distribution (i.e.,
the
selection, training, supervision, etc. of the retailers), all of
which
know-how is regularly updated and improved as a result of the
LICENSOR's
research, and which know-how is owned by or originated from the
LICENSOR
and
is made available to the MASTER LICENSEE and to other
LICENSOR's
licensees through the LICENSOR and which the LICENSOR is not
otherwise
obliged to hold in confidence.
1.37 "PROMOTION AND ADVERTISING KNOW-HOW" shall mean all
accumulated expertise
which is implemented world-wide by the LICENSOR in maintaining a
high
quality promotion and advertising policy for the LACOSTE TRADEMARKS
IMAGE,
the
LACOSTE APPAREL PRODUCTS, the OTHER LACOSTE PRODUCTS and the
LACOSTE
WATCHES through selected and controlled channels, all of which
know-how is
regularly updated and improved as a result of the LICENSOR's
research, and
which know-how is owned by or originated from the LICENSOR and is
made
available to the MASTER LICENSEE and to other LICENSOR's licensees
through
the
LICENSOR and which the LICENSOR is not otherwise obliged to hold
in
confidence.
1.38 "WATCHES KNOW-HOW" shall mean all accumulated world-wide
expertise of the
MASTER LICENSEE concerning the creation,
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development, manufacture, distribution, marketing,
merchandising,
advertising, promotion
and sale of watches and time-keeping devices at a
high
quality level and according to selected and controlled techniques
and
fixtures designed to facilitate the distribution of watches
(including, but
not
limited to, the design of display materials and showcases),
which
know-how is regularly updated and improved by the MASTER LICENSEE
and is
owned by or originated from the MASTER LICENSEE and is made
available to
the
LICENSOR and to other LICENSOR's licensees through the LICENSOR
and
which the MASTER LICENSEE is not otherwise obliged to hold in
confidence.
1.39 "APPROVED WATCHES RETAILERS" shall mean the selected retailers
(the
categories of which are listed in Schedule IX.a) which have entered
with
the
MASTER LICENSEE, its SUB-LICENSEES or its DISTRIBUTORS,
whenever
possible, into specific agreements defining the conditions which
need to be
fulfilled and applied for the sale of the LACOSTE WATCHES through
the
LACOSTE WATCHES SELECTIVE DISTRIBUTION SYSTEM.
1.40 "LACOSTE CORNERS" shall mean the locations in certain shops of
high
standing which are devoted exclusively to the sale of the LACOSTE
APPAREL
PRODUCTS and, subject to the provisions of Article 7.2 hereinafter,
of
certain LACOSTE WATCHES and/or OTHER LACOSTE PRODUCTS, using
various
fittings, displays, appliances, original furniture and equipment
specially
designed or approved by the LICENSOR and are authorized to use the
name
"Lacoste" and the CROCODILE as signboards and as service marks for
retail
services.
1.41 "LACOSTE BOUTIQUES" shall mean the stand alone shops belonging
to
independent retailers or to DEVANLAY or to LACOSTE APPAREL
PRODUCTS
DISTRIBUTORS and devoted exclusively to the sale of the LACOSTE
APPAREL
PRODUCTS and, subject to the provisions of Article 7.2 hereinafter,
of
certain LACOSTE WATCHES and/or OTHER LACOSTE PRODUCTS, using
various
fittings, displays, appliances, original furniture and equipment
specially
designed or approved by the LICENSOR and are authorized to use the
name
"Lacoste" and the CROCODILE as signboards and as service marks for
retail
services. Among the LACOSTE BOUTIQUES shall be included, if the
economic
conditions of the markets in question so permit, certain LACOSTE
BOUTIQUES
known as "global stores", of a sufficient size to be organized for
the sale
on a
large
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scale not only of the LACOSTE APPAREL PRODUCTS but also of certain
OTHER
LACOSTE PRODUCTS and/or LACOSTE WATCHES.
1.42 "COMMERCIAL SURFACE" shall mean the total surface of a LACOSTE
BOUTIQUE or
a
LACOSTE CORNER, excluding the stock premises.
1.43 "SALES SURFACE" shall mean, within the COMMERCIAL SURFACE of
each LACOSTE
BOUTIQUE or LACOSTE CORNER, that surface of the floor used for
the
presentation and the sale of products on the furniture (fixed to
the walls
or
free-standing) or displays, excluding any area used for
customers
traffic in the point of sale and excluding the shop-windows.
1.44 "PRESENTATION SURFACE" shall mean, within the SALES SURFACE of
each LACOSTE
BOUTIQUE or LACOSTE CORNER, the total surface actually dedicated to
the
presentation and the sale of products on the furniture (fixed to
the walls
or
free-standing) or displays, determined according to the rules
specified
in
Schedule XVI.
1.45 "LACOSTE WATCHES SELECTIVE DISTRIBUTION SYSTEM" shall mean the
group of
APPROVED WATCHES RETAILERS organized by the MASTER LICENSEE in
the
TERRITORY in accordance with the specific guidelines of the
LICENSOR to
sell
the LACOSTE WATCHES while respecting the specific criteria in the
area
of
client service, merchandising, presentation, advertising, promotion
and
respect of the LACOSTE TRADEMARKS IMAGE.
1.46 ""LACOSTE BOUTIQUES AND LACOSTE CORNERS" SELECTIVE
DISTRIBUTION SYSTEM"
shall mean the group of LACOSTE BOUTIQUES and LACOSTE CORNERS
organized by
DEVANLAY in accordance
with the specific guidelines of the LICENSOR and
which comply with specific criteria with respect to client
service,
merchandising, presentation, advertising, promotion and respect of
the
LACOSTE TRADEMARKS IMAGE. The "LACOSTE BOUTIQUES AND LACOSTE
CORNERS"
SELECTIVE DISTRIBUTION SYSTEM is distinct from the LACOSTE
WATCHES
SELECTIVE DISTRIBUTION SYSTEM and from the ""APPROVED APPAREL
RETAILERS"
SELECTIVE DISTRIBUTION SYSTEM" (as such term is hereinafter
defined), as
well
as from each of the selective distribution systems existing for
each
of
the OTHER LACOSTE PRODUCTS.
1.47 ""APPROVED APPAREL RETAILERS" SELECTIVE DISTRIBUTION SYSTEM"
shall mean the
group of approved retailers which
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has
been organized by DEVANLAY in accordance with the specific
guidelines
of
the LICENSOR with the purpose of selling the LACOSTE APPAREL
PRODUCTS
and
which comply with specific criteria with respect to client
service,
merchandising, presentation, advertising, promotion and respect of
the
LACOSTE TRADEMARKS IMAGE.
1.48 "NET SALES" shall mean the actual invoiced price for sales in
the TERRITORY
of
all LACOSTE WATCHES (whether sold at regular prices or at
reduced
prices, such as end-of-season prices) by the MASTER LICENSEE,
its
SUB-LICENSEES or its DISTRIBUTORS to APPROVED WATCHES RETAILERS and
members
of
the "LACOSTE BOUTIQUES AND LACOSTE CORNERS" SELECTIVE
DISTRIBUTION
SYSTEM, less returns, rebates, bad debts, trade discounts,
shipping
charges, insurance, and such sales taxes as are imposed on the
MASTER
LICENSEE, its SUB-LICENSEES or its DISTRIBUTORS by any
governmental
authority.
Whenever NET SALES cannot be determined by the MASTER LICENSEE for
any
reason, or if the MASTER LICENSEE at its sole discretion decides
that it
prefers to refer to SALES TO DISTRIBUTORS (as such term is
hereinafter
defined), and whenever the determination of NET SALES is necessary
for the
application of any of the terms of this MASTER AGREEMENT, NET SALES
shall
then
be calculated on the basis of the corresponding SALES TO
DISTRIBUTORS
multiplied by one point five (1.5).
With
regard to direct sales by the MASTER LICENSEE, its SUB-LICENSEES
or
its
DISTRIBUTORS to consumers through their own retail outlets, NET
SALES,
for
each reference of the LACOSTE WATCHES shall be calculated on the
basis
of
the unit volume of such reference of the LACOSTE WATCHES sold
through
such
outlets multiplied by the appropriate arms length, average
wholesale
prices of such products charged in such country by the MASTER
LICENSEE, its
SUB-LICENSEES or its DISTRIBUTORS to their APPROVED WATCHES
RETAILERS, less
returns, rebates, bad debts, trade discounts, shipping charges,
shipping
insurance and such sales taxes as are imposed on the MASTER
LICENSEE, its
SUB-LICENSEES or its DISTRIBUTORS by any governmental
authority.
1.49 "SALES TO DISTRIBUTORS" shall mean the actual invoiced price
in the
TERRITORY of all LACOSTE WATCHES (whether made at regular prices or
at
reduced prices, such as end-of-season prices) sold by the MASTER
LICENSEE,
its
SUB-
<PAGE>
-14-
LICENSEES or its SUB-CONTRACTORS to DISTRIBUTORS to be resold to
APPROVED
WATCHES RETAILERS and members of the "LACOSTE BOUTIQUES AND
LACOSTE
CORNERS" SELECTIVE DISTRIBUTION SYSTEM, less returns, rebates, bad
debts,
trade discounts, shipping charges, shipping insurance and such
sales taxes
as
are imposed on the MASTER LICENSEE, its SUB-LICENSEES or its
SUB-CONTRACTORS by any governmental authority.
1.50 "QUARTER" shall mean any three-month period ending on March
31, June 30,
September 30 or December 31 of each year.
1.51 "DATE OF TERMINATION" shall mean the date on which the MASTER
AGREEMENT
terminates or is not renewed for any reason after the required
notice
period(s) if any.
ARTICLE 2 - RIGHTS GRANTED
2.1 The LICENSOR
hereby grants to the MASTER LICENSEE, and the MASTER LICENSEE
hereby accepts such grant, the exclusive right and license to use
the
LICENSED TRADEMARKS, including in particular the name "Lacoste" and
the
CROCODILE, the MODELS, the STYLING KNOW-HOW, the MARKETING AND
MERCHANDISING KNOW-HOW and the PROMOTION AND ADVERTISING KNOW-HOW
in
connection with the creation, development, manufacture,
distribution,
marketing, merchandising, advertising, promotion and sale of the
LACOSTE
WATCHES in the TERRITORY.
2.2 The MASTER
LICENSEE may sub-license the rights granted to it pursuant to
Article 2.1 hereinabove to SUB-LICENSEES designated by it under
the
following conditions :
2.2.1 The SUB-LICENSEES selected by the MASTER LICENSEE shall have
to
comply with the following criteria :
a) a proposed
SUB-LICENSEE shall have to prove to MASTER LICENSEE
and, if requested, LICENSOR, an adequate and appropriate
technical, commercial ability; and
b) a proposed
SUB-LICENSEE shall have to demonstrate to MASTER
LICENSEE and, if requested, LICENSOR a healthy financial
situation in proportion with its forecasted
<PAGE>
-15-
activities with respect to the LACOSTE WATCHES; and
c) a proposed
SUB-LICENSEE shall have to clearly establish the
identity of its financing sources, which must be in line with
the
LACOSTE TRADEMARKS IMAGE; and
d) a proposed
SUB-LICENSEE or any of its shareholders holding in
excess of ten percent of the voting power in such proposed
SUB-LICENSEE, senior managers or executives shall not be in any
way involved in the creation, development, manufacture,
distribution, marketing, merchandising, advertising, promotion
and sale of products in competition with the LACOSTE APPAREL
PRODUCTS, the OTHER LACOSTE PRODUCTS or the LACOSTE WATCHES
except if the SUB-LICENSEE can justify an independent structure
exclusively dedicated to the LACOSTE WATCHES; and
e) a proposed
SUB-LICENSEE, any of its shareholders holding in
excess of ten percent of the voting power in such proposed
SUB-LICENSEE or senior managers or executives are not or never
have been involved in any way in acts of counterfeiting,
imitation or unfair competition nor convicted of any other type
of criminal activity (excluding misdemeanors).
2.2.2 The MASTER LICENSEE shall submit to the LICENSOR a detailed
file
concerning each of the proposed SUB-LICENSEES including inter alia
the
necessary information allowing the LICENSOR to check the
SUB-LICENSEE's conformity with the criteria defined in Article
2.2.1
hereinabove. The LICENSOR shall have a thirty day (30) period to
agree
to or refuse in writing the proposed SUB-LICENSEE on the grounds
of
the criteria defined in Article 2.2.1 hereinabove. The LICENSOR
shall
not unreasonably withhold its approval, and shall be deemed to
have
given its approval if it has not notified MASTER LICENSEE of
any
objection within thirty (30) days of receipt of the MASTER
LICENSEE's
proposals.
<PAGE>
-16-
2.2.3 The MASTER LICENSEE shall enter with its SUB-LICENSEES into
written
SUB-LICENSE AGREEMENTS which shall conform to a general model
previously approved in writing by the LICENSOR, and shall include
the
main provisions relating to the LICENSOR's intellectual
property
rights and to the LACOSTE TRADEMARKS IMAGE and, in addition to
the
rights and obligations which the MASTER LICENSEE wishes to
sub-license, all obligations that the MASTER LICENSEE would
otherwise
have had to fulfill with respect to the rights sub-licensed to
the
SUB-LICENSEE and that the SUB-LICENSEE shall have to undertake
to
carry out (inter alia the obligation imposed on under Articles 3 to
8,
12 and 14 hereinafter). The MASTER LICENSEE shall deliver to
the
LICENSOR a copy of each SUB-LICENSE AGREEMENT as soon as
practicable
after it has been signed. The MASTER LICENSEE agrees that LICENSOR
may
request from MASTER LICENSEE that it takes action against a
SUB-LICENSEE (including claims for damages in favour of
LICENSOR,
injunctions and any other appropriate remedies) and/or
terminates
forthwith a SUB-LICENSE AGREEMENT in case of breach by such
SUB-LICENSEE of any of its essential obligations under such
SUB-LICENSE AGREEMENT which also constitutes a breach of the
MASTER
LICENSEE's obligations hereunder that is not cured by such
SUB-LICENSEE within thirty (30) days after receiving notice of
such
breach; and
2.2.4 In each case where the MASTER LICENSEE desires to enter into
a
SUB-LICENSE AGREEMENT with any SUB-LICENSEE, the MASTER LICENSEE
shall
enter with the LICENSOR, owner of the LICENSED TRADEMARKS, and
with
such SUB-LICENSEE into a written SUPPLEMENTAL AGREEMENT which
shall
define, for each country covered by such sub-license, those
LICENSED
TRADEMARKS licensed to SUB-LICENSEES, and include all
appropriate
terms and conditions concerning the protection of the LICENSED
TRADEMARKS, and, if agreed upon by and between the LICENSOR and
the
MASTER LICENSEE, the sales minima as well as all appropriate terms
and
conditions concerning the payment of the royalties due by the
MASTER
LICENSEE to the LICENSOR. Subject to the provisions of Article
2.2.3
hereinabove, the MASTER LICENSEE
<PAGE>
-17-
agrees that any breach by a SUB-LICENSEE of any of its
essential
obligations under a SUPPLEMENTAL AGREEMENT shall not be the
responsibility of or considered as a breach by the MASTER LICENSEE
of
any of its essential obligations under this MASTER AGREEMENT,
except
that the MASTER LICENSEE hereby undertakes to remain responsible
to
the LICENSOR for the payment in full and without delay of all
amounts
due to the LICENSOR by the MASTER LICENSEE's SUB-LICENSEES under
the
terms of Articles 16 and 17 hereinafter.
2.3 The MASTER
LICENSEE may sub-license the right to distribute the LACOSTE
WATCHES granted to it pursuant to Article 2.1 hereinabove to
DISTRIBUTORS
designated by it under the
following conditions :
2.3.1 The DISTRIBUTORS selected by the MASTER LICENSEE shall have
to comply
with the following criteria :
a) a proposed
DISTRIBUTOR shall have to prove to MASTER LICENSEE
and, if requested by LICENSOR, to LICENSOR an adequate and
appropriate technical, commercial ability; and
b) a proposed
DISTRIBUTOR shall have to demonstrate to MASTER
LICENSEE and, if requested by LICENSOR, to LICENSOR, a healthy
financial situation in proportion with its forecasted
activities
with respect to the LACOSTE WATCHES; and
c) a proposed
DISTRIBUTOR shall have to clearly establish the
identity of its financing sources, which must be in line with
the
LACOSTE TRADEMARKS IMAGE; and
d) a proposed
DISTRIBUTOR or any of its shareholders holding in
excess of ten percent of the voting power in such proposed
DISTRIBUTOR, senior managers or executives shall not be in any
way involved in the creation, development, manufacture,
distribution, marketing, merchandising, advertising, promotion
and sale of products in competition with the LACOSTE APPAREL
PRODUCTS or the OTHER LACOSTE PRODUCTS. Whenever
<PAGE>
-18-
possible, the DISTRIBUTOR shall put in place an independent
structure exclusively dedicated to the LACOSTE WATCHES; and
e) a proposed
DISTRIBUTOR, any of its shareholders holding in excess
of ten percent of the voting power in such proposed DISTRIBUTOR
or senior managers or executives are not or never have been
involved in any way in acts of counterfeiting, imitation or
unfair competition nor convicted of any other type of criminal
activity (excluding misdemeanors).
2.3.2 The MASTER LICENSEE shall submit to the LICENSOR a detailed
file
concerning each of the proposed DISTRIBUTORS including inter alia
the
necessary information allowing the LICENSOR to check the
DISTRIBUTOR's
conformity with the criteria defined in Article 2.3.1 hereinabove.
The
LICENSOR shall have a thirty day (30) period to agree to or refuse
in
writing the proposed DISTRIBUTOR on the grounds of the criteria
defined in Article 2.3.1 hereinabove. The LICENSOR shall not
unreasonably withhold its approval, and shall be deemed to have
given
its approval if it has not notified MASTER LICENSEE of any
objection
within thirty (30) days of receipt of the MASTER LICENSEE's
proposals.
2.3.3 The MASTER LICENSEE shall enter with its DISTRIBUTORS into
written
DISTRIBUTION AGREEMENTS which shall conform in all material
respects
to a general model previously approved in writing by the LICENSOR,
and
shall include the main provisions relating to the LICENSOR's
intellectual property rights and to the LACOSTE TRADEMARKS IMAGE
and,
in addition to the rights and obligations which the MASTER
LICENSEE
wishes to sub-license, all obligations that the MASTER LICENSEE
would
otherwise have had to fulfill with respect to the rights
sub-licensed
to the DISTRIBUTOR and that the DISTRIBUTOR shall have to undertake
to
carry out (inter alia the obligation imposed on under Articles 3, 6
to
8, 12 and 14 hereinafter). The MASTER LICENSEE shall deliver to
the
LICENSOR a copy of each DISTRIBUTION AGREEMENT as soon as
practicable
after it has been signed. The MASTER LICENSEE
<PAGE>
-19-
agrees that LICENSOR may request from MASTER LICENSEE that it
takes
action against a DISTRIBUTOR (including claims for damages in
favour
of LICENSOR, injunctions and any other appropriate remedies)
and/or
terminates forthwith a DISTRIBUTION AGREEMENT in case of breach
by
such DISTRIBUTOR of any of its essential obligations under such
DISTRIBUTION AGREEMENT which also constitutes a breach of the
MASTER
LICENSEE's obligations hereunder that is not cured by such
DISTRIBUTOR
within thirty (30) days after receiving notice of such breach. In
all
circumstances, the MASTER LICENSEE hereby undertakes to remain
responsible to the LICENSOR for the payment in full and without
delay
of all amounts due to the LICENSOR by the MASTER LICENSEE's
DISTRIBUTORS under the terms of Articles 16 and 17 hereinafter.
2.3.4 In each case where the MASTER LICENSEE desires to enter into
a
DISTRIBUTION AGREEMENT with a DISTRIBUTOR, the MASTER LICENSEE
shall
enter with the LICENSOR, owner of the LICENSED TRADEMARKS, and
with
such DISTRIBUTOR into a written SUPPLEMENTAL AGREEMENT which
shall
define,
for each country covered by such DISTRIBUTION AGREEMENT, those
LICENSED TRADEMARKS licensed to DISTRIBUTORS, and include all
appropriate terms and conditions concerning the protection of
the
LICENSED TRADEMARKS, which SUPPLEMENTAL AGREEMENT shall be in the
form
attached hereto as Schedule X. Subject to the provisions of
Article
2.3.3 hereinabove, the LICENSOR agrees that any breach by a
DISTRIBUTOR of any of its essential obligations under a
SUPPLEMENTAL
AGREEMENT shall not be the responsibility of or considered as a
breach
by the MASTER LICENSEE of its essential obligations under this
MASTER
AGREEMENT.
2.4 No rights or
licenses are granted by the LICENSOR to the MASTER LICENSEE,
expressly or by implication, except as herein provided.
2.4.1 The LICENSOR does not give the MASTER LICENSEE any
guarantee
whatsoever with respect to the extent of the rights it holds or
will
acquire or lose during the entire term of this MASTER
<PAGE>
-20-
AGREEMENT concerning the LICENSED TRADEMARKS, the MODELS, the
STYLING
KNOW-HOW, the MARKETING AND MERCHANDISING KNOW-HOW and the
PROMOTION
AND ADVERTISING KNOW-HOW.
2.4.2 Notwithstanding the above, the LICENSOR undertakes to, at
its
exclusive expense, (i) take all necessary steps during the entire
term
of this MASTER AGREEMENT for the registration and renewal of
the
LICENSED TRADEMARKS, (ii) set up and/or maintain the adequate
structures for the watch and defense of the LICENSED
TRADEMARKS.
2.4.3 The LICENSOR undertakes to vigorously defend the LICENSED
TRADEMARKS
and to take all appropriate and necessary anti-counterfeiting
actions,
subject to the provisions of Article 14.3.5 hereinafter. The
LICENSOR
shall in this regard only be held to an obligation of means, and
not
to an obligation of results.
ARTICLE 3 - GENERAL BUSINESS POLICIES
3.1 The MASTER
LICENSEE shall use its best efforts to develop its activities
as
manufacturer and distributor of the LACOSTE WATCHES and shall use
the
MODELS, the STYLING KNOW-HOW, the MARKETING AND MERCHANDISING
KNOW-HOW and
the
PROMOTION AND ADVERTISING KNOW-HOW in conjunction with its
WATCHES
KNOW-HOW in order to promote the image, sales and distribution of
the
LACOSTE WATCHES in the TERRITORY, in conformity with such policies
as are
prescribed and coordinated world-wide by the LICENSOR for the
LACOSTE
TRADEMARKS IMAGE.
3.2 The MASTER
LICENSEE shall cooperate closely in each market with the
LICENSOR and with LICENSOR's other licensees and/or distributors
for
LACOSTE APPAREL PRODUCTS and OTHER LACOSTE PRODUCTS so as to
give
world-wide and in each market an identical and homogeneous image of
the
LACOSTE TRADEMARKS and of all the families of products bearing the
LACOSTE
TRADEMARKS and shall see to it to keep the LICENSOR informed of its
direct
contacts with said LICENSOR's other licensees and/or
distributors.
3.3 The MASTER
LICENSEE shall take all necessary steps to ensure that the
LACOSTE WATCHES manufactured and
<PAGE>
-21-
distributed by it or by its SUB-LICENSEES or DISTRIBUTORS pursuant
to this
MASTER AGREEMENT are of high quality, and suitable for a clientele
that
demands the highest standard of merchandise.
3.4 The MASTER
LICENSEE shall take all measures necessary so that the LACOSTE
WATCHES are sold exclusively through the LACOSTE WATCHES
SELECTIVE
DISTRIBUTION SYSTEM and through the "LACOSTE BOUTIQUES AND LACOSTE
CORNERS"
SELECTIVE DISTRIBUTION SYSTEM.
3.5 The LICENSOR
undertakes to obtain from and to have respected by its
licensees for the LACOSTE APPAREL PRODUCTS and the OTHER LACOSTE
PRODUCTS
the
same commitments.
ARTICLE 4 - CREATION, STYLING AND TECHNICAL CO-OPERATION
The MASTER LICENSEE shall bear the sole responsibility for the
creation and the
development of the LACOSTE WATCHES and shall assume all the
corresponding costs
and expenses. However, in the scope of the contribution by the
LICENSOR of its
STYLING KNOW-HOW and by the MASTER LICENSEE of its WATCHES
KNOW-HOW, the MASTER
LICENSEE and the LICENSOR shall co-operate closely in the creation
and the
development of the LACOSTE WATCHES in order, more particularly, to
strengthen
the LACOSTE TRADEMARKS IMAGE.
The MASTER LICENSEE undertakes to study and implement with
diligence any
evolution of the collections proposed by the LICENSOR and intended
to better
adapt the LACOSTE WATCHES to the evolution of the markets and to
consumers'
expectations; provided that similar evolutions, to the extent
applicable, are
required of LICENSOR's other licensees.
4.1 Obligations of the
LICENSOR
The
LICENSOR shall provide the MASTER LICENSEE with those components of
the
STYLING KNOW-HOW that the LICENSOR, in its best opinion, shall
consider to
be
beneficial to the MASTER LICENSEE in the fulfillment of the purpose
of
this
MASTER AGREEMENT, and shall assist the MASTER LICENSEE in the
use
thereof.
<PAGE>
-22-
4.2 Approval of
product designs
4.2.1 The MASTER LICENSEE shall submit design proposals for LACOSTE
WATCHES
to the LICENSOR in the following manner:
MASTER LICENSEE shall submit to the LICENSOR design drawings
for
approval. After approval according to this Article 4.2, MASTER
LICENSEE shall submit to the LICENSOR a pre-production prototype
for
approval together with the suggested retail price of the MODEL.
The
MASTER LICENSEE warrants that final production will conform to
approved
pre-production prototypes.
Each collection of LACOSTE WATCHES shall consist of a
sufficient
selection of MODELS so as to constitute a well balanced line of
watches. The LICENSOR shall, with respect to each submission made
by
the MASTER LICENSEE for approval, notify the MASTER LICENSEE in
writing without undue delay, and in any event within ten (10)
business
days, as to whether the LICENSOR approves the submission. Unless
the
LICENSOR notifies Master Licensee within the specified time
period
that it disapproves any submission, such submission shall be
deemed
approved.
4.2.2 In the event the LICENSOR disapproves any submission, the
LICENSOR
shall furnish the MASTER LICENSEE with the reasons for rejection
and
provide the MASTER LICENSEE with suggestions for modifying the
rejected submission. MASTER LICENSEE shall, as promptly as
practicable, correct the rejected submission, resubmit the
relevant
material to LICENSOR and seek LICENSOR's approval under the same
terms
and conditions as set forth above.
4.3 Obligations of the
MASTER LICENSEE
4.3.1 The MASTER LICENSEE shall inform the LICENSOR of the head of
product
development who shall have primary responsibility for the creation
of
the LACOSTE WATCHES whom the MASTER LICENSEE plans to use. The
LICENSOR shall have thirty (30) days to notify MASTER LICENSEE that
it
objects to such individual, but may only do so for serious
<PAGE>
\
-23-
reasons necessary for the protection of the LACOSTE TRADEMARKS
IMAGE.
4.3.2 In order to enforce the cooperation between the LICENSOR and
the
MASTER LICENSEE and/or its SUB-LICENSEES for the creation, the
development and the manufacture of the LACOSTE WATCHES and to
allow
the LICENSOR to give the approval provided for in Article 4.2
hereinabove as
quickly as possible, coordination meetings shall be
organized between the LICENSOR, the MASTER LICENSEE and/or its
SUB-LICENSEES for each collection at the following stages :
a) definition of
the product range after analysis of the sales
results and of the needs of the different markets; and
b) definition of
the models contemplated for the different lines of
the LACOSTE WATCHES; and
c) study of the
prototypes of the models for the different lines of
the LACOSTE WATCHES as well as of their packaging, displays and
point-of-sale equipment, the development and manufacture of
which
shall be at MASTER LICENSEE's exclusive expense.
4.3.3 The MASTER LICENSEE shall not manufacture, distribute,
advertise,
promote or offer for sale any model of the LACOSTE WATCHES, nor
any
display or point-of-sale equipment which has not been presented to
the
LICENSOR and approved in writing by the LICENSOR under the same
conditions as those provided in Article 4.2 hereinabove.
4.4 Ownership of the
MODELS
4.4.1 The MODELS shall be and remain in all circumstances during
the entire
term
of this MASTER AGREEMENT the sole property of the LICENSOR.
4.4.2 The MASTER LICENSEE undertakes to use the MODELS exclusively
within
the scope of this MASTER AGREEMENT.
<PAGE>
-24-
4.4.3 The MASTER LICENSEE undertakes to use its best efforts to
ensure that
the MODELS do not infringe any intellectual property rights of
any
third party in the fields of authors' rights, copyrights,
models,
designs and/or patents.
4.4.4 The LICENSOR undertakes to take all necessary steps during
the entire
term of this MASTER AGREEMENT to register in the sole name of
the
LICENSOR any MODELS which shall be reasonably necessary, as may
be
determined solely by the LICENSOR, taking into account the
commercial
potential of such MODELS, to protect such MODELS, as well as to
all
renewals of such MODELS at their due dates.
4.4.5 The LICENSOR shall pay all expenses incurred in connection
with the
registration and/or the renewal of the MODELS.
ARTICLE 5 - MANUFACTURE, QUALITY
5.1 Obligations of
MASTER LICENSEE
5.1.1 The MASTER LICENSEE undertakes to use its WATCHES KNOW-HOW
and to
make all reasonable investments necessary in order to organize
an
international manufacture and supply network with the capacity
of
meeting the needs for the LACOSTE WATCHES in the TERRITORY, and
to
develop the sales of such in a timely fashion.
5.1.2 The MASTER LICENSEE undertakes that the LACOSTE WATCHES as
well as
their packaging shall always be manufactured with reliable
materials,
carefully constructed, and clean in detail, and undertakes to take
all
necessary dispositions to that effect.
5.1.3 The MASTER LICENSEE shall adhere to the highest standards of
quality
and design, (including, without limitation, materials, design
and
workmanship) which standards shall be at least equal to the
General
acceptance requirements attached hereto as Schedule XI and
including
quality-control measures designed to prevent the production of
defective goods.
<PAGE>
-25-
In all cases, the MASTER LICENSEE shall be solely responsible
toward
the LICENSOR for the quality of the LACOSTE WATCHES produced by
the
MASTER LICENSEE (or under the control of the MASTER LICENSEE) by
the
SUB-LICENSEES or by the SUB-CONTRACTORS of the MASTER LICENSEE.
On the other hand, the MASTER LICENSEE shall bear no
responsibility
whatsoever for the quality of the LACOSTE WATCHES produced by
VIMONT
under the terms of the PRIOR AGREEMENT.
5.1.4 Whenever
practicable, the MASTER LICENSEE shall cause either (a) each
LACOSTE WATCH manufactured under this MASTER AGREEMENT or (b)
each
package unit of LACOSTE WATCHES distributed under this MASTER
AGREEMENT, as determined by MASTER LICENSEE in its sole discretion,
to
be serialized thereby allowing tracking by MASTER LICENSEE if
necessary, as such necessity is mutually agreed upon by LICENSOR
and
MASTER LICENSEE.
5.1.5 The MASTER LICENSEE undertakes to cause its SUB-LICENSEES to
make
such investments as are required to create and/or maintain the
organization for the manufacture of the LACOSTE WATCHES in a
manner
that allows such SUB-LICENSEES to fulfill the undertakings of
Articles
5.1.1 to 5.1.4 hereinabove.
5.2
SUB-CONTRACTORS
5.2.1 The MASTER LICENSEE (and its SUB-LICENSEES) shall have the
right to
have LACOSTE WATCHES entirely manufactured by SUB-CONTRACTORS
designated by it, provided however the MASTER LICENSEE i) has
previously informed the LICENSOR of their name and precise
location
ii) has entered with its SUB-CONTRACTORS into written
SUB-CONTRACTING
AGREEMENTS which shall conform in all material respects to a
general
model previously approved in writing by the LICENSOR, and shall
include, in addition to the rights and obligations which the
MASTER
LICENSEE wishes to grant, all obligations the MASTER LICENSEE
would
otherwise have had to fulfill with respect to the rights granted
to
the SUB-CONTRACTOR as well as the undertaking by the
<PAGE>
-26-
SUB-CONTRACTORS not to manufacture for third parties any
watches
substantially identical to the LACOSTE WATCHES manufactured by
the
SUB-CONTRACTOR.
The SUB-CONTRACTORS shall have to undertake to sell the LACOSTE
WATCHES they have manufactured exclusively to the MASTER LICENSEE,
its
SUB-LICENSEES or its DISTRIBUTORS, and the MASTER LICENSEE, its
SUB-LICENSEES and its DISTRIBUTORS undertake irrevocably before
the
LICENSOR to buy from the SUB-CONTRACTORS all the LACOSTE
WATCHES
manufactured by the SUB-CONTRACTORS, and to have destroyed at
their
expense any and all defective LACOSTE WATCHES manufactured by
the
SUB-CONTRACTORS.
5.2.2 The MASTER LICENSEE shall deliver to the LICENSOR a copy of
each
SUB-CONTRACTING AGREEMENT as soon as practicable after it has
been
signed. The MASTER LICENSEE agrees that LICENSOR may request
from
MASTER LICENSEE that it takes action against a SUB-CONTRACTOR
(including claims for damages in favour of LICENSOR, injunctions
and
any other appropriate remedies) and/or terminates forthwith a
SUB-CONTRACTING AGREEMENT in case of breach by such SUB-CONTRACTOR
of
any of its essential obligations under such SUB-CONTRACTING
AGREEMENT
which also constitutes a breach of the MASTER LICENSEE's
obligations
hereunder that is not cured by such SUB-CONTRACTOR within thirty
(30)
days after receiving notice of such breach.
5.3 SUPPLIERS
5.3.1 The MASTER
LICENSEE, its SUB-LICENSEES and the SUB-CONTRACTORS shall
have the right to have certain components, packaging, advertising
and
promotional items, furniture and/or any element of any kind bearing
or
representing the LICENSED TRADEMARKS to be used for or in
connection
with the LACOSTE WATCHES manufactured by SUPPLIERS designated by
it,
provided however the MASTER LICENSEE, its SUB-LICENSEES and/or
the
SUB-CONTRACTORS have entered with their SUPPLIERS into written
SUPPLY
AGREEMENTS which shall conform in all material respects to a
general
model previously approved in writing by the
<PAGE>
-27-
LICENSOR, and shall include, in addition to the rights and
obligations
which the MASTER LICENSEE or the SUB-LICENSEES and/or the
SUB-CONTRACTORS wish to grant, all obligations the MASTER LICENSEE
or
the SUB-LICENSEES and/or the SUB-CONTRACTORS would otherwise have
had
to fulfill with respect to the rights granted to the SUPPLIERS.
5.3.2 The MASTER LICENSEE shall deliver to the LICENSOR a copy of
each
SUPPLY AGREEMENT as soon as practicable after it has been signed.
The
MASTER LICENSEE agrees that LICENSOR may request from MASTER
LICENSEE
that it takes action or that it causes the appropriate
SUB-CONTRACTOR
to take action against a SUPPLIER (including claims for damages
in
favour of LICENSOR, injunctions and any other appropriate
remedies)
and/or terminates forthwith a SUPPLY AGREEMENT in case of breach
by
such SUPPLIER of any of its essential obligations under such
SUPPLY
AGREEMENT which also constitutes a breach of the MASTER
LICENSEE's
obligations hereunder that is not cured by such SUPPLIER within
thirty
(30) days after receiving notice of such breach.
5.4 Visits and
control
5.4.1 The MASTER LICENSEE, upon request of the LICENSOR, shall
authorize or
have the LICENSOR authorized to visit, in the presence of
representatives designated by the MASTER LICENSEE, any premises
in
which the LACOSTE WATCHES or parts thereof or any items bearing
or
representing the LICENSED TRADEMARKS are manufactured by the
MASTER
LICENSEE, or by any one of its SUB-LICENSEES and/or
SUB-CONTRACTORS
and/or SUPPLIERS.
5.4.2 The MASTER LICENSEE undertakes to authorize or have the
LICENSOR
authorized to make or have made any necessary and/or
appropriate
control at any stage of the manufacture of the LACOSTE WATCHES or
part
thereof or of any item bearing or representing the LICENSED
TRADEMARKS
by the MASTER LICENSEE, or by any of its SUB-LICENSEES and/or
SUB-CONTRACTORS and/or SUPPLIERS in order to ascertain that the
quality of the LACOSTE
<PAGE>
-28-
WATCHES and of their components and of the items bearing or
representing the LICENSED TRADEMARKS conforms to the provisions
of
this MASTER AGREEMENT and inter alia with the provisions of
Articles
3.3 and 5.1.2 hereinabove.
5.5 Ethical
Charter
The
MASTER LICENSEE undertakes (a) to comply with and to ensure that
its
SUB-LICENSEES, DISTRIBUTORS, SUB-CONTRACTORS and SUPPLIERS comply
at all
times with the relevant provisions of any treaty, law or regulation
in
relation to the protection of human rights and in particular
childhood,
salaries, duration and condition of workmanship, and with the
relevant
provisions of any treaty, law or regulation in relation to the
protection
of
the environment, (b) to take all necessary and appropriate measures
to
immediately bring an end to any violation of such provisions, and
(c) to
guarantee and indemnify the LICENSOR and its assignees and
successors from
any
claims, known or unknown, liabilities, demands, damages, causes
of
action, costs,
expenses, dues, covenants, suits, indemnities, judgments
which any third party hereafter can, shall or may have in
connection with
or
arising out of any alleged violation by MASTER LICENSEE, any
SUB-LICENSEE, DISTRIBUTOR, SUB-CONTRACTOR or SUPPLIER of any
such
provision. The MASTER LICENSEE shall ensure that a similar
provision to
this
Article 5.5 is included in each SUB-LICENSING AGREEMENT,
DISTRIBUTION
AGREEMENT, SUB-CONTRACTING AGREEMENT and SUPPLY AGREEMENT.
ARTICLE 6 - MARKETING AND MERCHANDISING
6.1 Obligations of the
LICENSOR
The
LICENSOR shall assist the MASTER LICENSEE in the marketing,
merchandising, the distribution and sale of the LACOSTE WATCHES in
the
TERRITORY by providing the MASTER LICENSEE with its MARKETING
AND
MERCHANDISING KNOW-HOW and through frequent visits and contacts
among their
respective personnel. To this effect, and in particular to maintain
the
homogeneity of the LACOSTE TRADEMARKS IMAGE, the LICENSOR shall
:
6.1.1 regularly advise the MASTER LICENSEE of its requirements
within the
field of marketing and
<PAGE>
-29-
merchandising, such as specifications concerning the presentation
of
the LACOSTE WATCHES in the shop-windows or inside shops, the
point-of-sales advertising materials, etc., that the MASTER
LICENSEE
shall have to implement within the TERRITORY; and
6.1.2 proceed, in cooperation with the MASTER LICENSEE, with
all
appropriate studies relating to the fitting, decoration and
architecture of the points-of-sale and to the creation of the
furniture and other elements to be used in connection with the sale
of
the LACOSTE
WATCHES in the APPROVED WATCHES RETAILERS.
The costs related to such studies shall be equally shared between
the
MASTER LICENSEE and the LICENSOR; and
6.1.3 authorize the MASTER LICENSEE to have manufactured by
SUPPLIERS,
under the terms provided in Article 5.3 hereinabove, the furniture
and
related elements intended to be used in connection with the sale
of
the LACOSTE WATCHES. Said SUPPLIERS shall have to strictly conform
to
the blueprints and recommendations of the LICENSOR with respect to
the
shapes, designs, quality and specifications imposed on by the
LICENSOR
for said furniture and other elements; and
6.1.4 give the MASTER LICENSEE complete access to any and all
market
surveys, statistics, reports and information it may have (which it
is
not obliged, vis-a-vis third parties, to hold in confidence)
regarding
the LACOSTE TRADEMARKS IMAGE and the market position of the
LACOSTE
WATCHES among competitors, retail customers and consumers; and
6.1.5 at MASTER LICENSEE's request, assist the MASTER LICENSEE in
the
selection of any outside consultant as may be necessary and help
the
MASTER LICENSEE with the interpretation of the reports prepared
by
such consultants; and
<PAGE>
-30-
6.2 Obligations of the
MASTER LICENSEE
The
MASTER LICENSEE shall take all necessary measures to promote
the
distribution and sale of the LACOSTE WATCHES within the TERRITORY
by
conforming to such policies as are prescribed and coordinated
world-wide by
the
LICENSOR for the LACOSTE TRADEMARKS and by using the MARKETING
AND
MERCHANDISING KNOW-HOW provided by the LICENSOR together with its
own
resources. To this effect, in each of the MAIN COUNTRIES of the
TERRITORY,
the
MASTER LICENSEE shall (or shall procure that its SUB-LICENSEES or
its
DISTRIBUTORS shall) :
6.2.1 make such investments as are reasonably necessary to create
and/or to
maintain the organization necessary for the distribution,
marketing,
merchandising, promotion and advertising of the LACOSTE WATCHES in
a
manner that may be reasonably deemed satisfactory by the
parties
hereto. Such organization shall either be dedicated exclusively to
the
LACOSTE WATCHES, or, wherever an exclusive organization cannot be
set
up or appointed, the MASTER LICENSEE shall see to it that the
distribution, marketing and merchandising, promotion and
advertising
of the LACOSTE WATCHES be done so as to avoid any risk of confusion
by
the retail trade or the consumers with other brands offered by
the
MASTER LICENSEE, its SUB-LICENSEES or its DISTRIBUTORS; and
6.2.2 designate one of its senior managers as the principal
correspondent
with the MASTER LICENSEE on all business matters pertaining to
this
MASTER AGREEMENT; and
6.2.3 participate in the Watches Committees which the LICENSOR
will
organize from time to time to allow a regular and organized review
of
the activities of the MASTER LICENSEE pertaining to the LACOSTE
WATCHES; and
6.2.4 consult with the
LICENSOR at least three (3) months before the
beginning of the sale of each season's collection with respect to
the
MASTER LICENSEE's marketing and merchandising policy at the
occasion
of the Watches Committees, and at the occasion of the
coordination
meetings organized by the LICENSOR between the LICENSOR
<PAGE>
-31-
and the different licensees of the LICENSOR. This consultation
shall
be done
with the purpose of reaching an agreement on the objectives
and the means to use in order to achieve the best possible
sales
results within the TERRITORY as well as the best possible
coordination
with the marketing and merchandising policy of the LACOSTE
APPAREL
PRODUCTS and OTHER LACOSTE PRODUCTS; and
6.2.5 provide the LICENSOR :
- three
months after the start of the sales of each collection of
LACOSTE WATCHES (a collection report. Such report shall include
the comments on the quality and the styling for each category
(as
defined in Schedule V) of the LACOSTE WATCHES for each of the
first five (5) markets by turnover in the world and for each of
the countries in which a SUB-LICENSEE has received a
sub-license
from the MASTER LICENSEE. Such report shall also include any
requests for future collections, and
- at the
end of each season, the sales of each of the collections
of the LACOSTE WATCHES by style and by color; and
6.2.6 provide the LICENSOR on a regular basis at the time of the
Watches
Committees organized by the LICENSOR to examine the commercial
situation of the LACOSTE WATCHES an estimate of the sales (i) in
units
of the collection presently being delivered as well as of the
immediately following collection itemized, for each of the lines
of
LACOSTE WATCHES, by category of LACOSTE WATCHES (as defined in
Schedule V), and (ii) by country, with a comparison with the sales
of
the comparable collections during the two (2) prior years; and
6.2.7 provide the LICENSOR once a year, at the beginning of the
month of
October, with its estimated NET SALES and SALES TO DISTRIBUTORS
by
country in units and in turnover for the following three (3)
calendar
years itemized, for each of the lines of LACOSTE WATCHES, by
category
of LACOSTE WATCHES (as defined in Schedule V); and shall update
these
estimates for the first year of this three year period, a first
time
six (6) months later (in April), and a second time twelve (12)
months
later (in October); and
<PAGE>
-32-
6.2.8 provide the LICENSOR twice a year in January and July with a
list of
all the points of sale of the LACOSTE WATCHES and deliver
simultaneously to the LICENSOR a report giving the quantities, the
NET
SALES and the SALES TO DISTRIBUTORS of the LACOSTE WATCHES sold
during
the preceding six-month period in each country of the TERRITORY
itemized, for each of the lines of LACOSTE WATCHES, by category
of
LACOSTE WATCHES (as defined in Schedule V) and by type of
points-of-sale (as defined in Schedule IX); and
6.2.9 in a general manner :
a) invite the
LICENSOR's personnel to attend (at LICENSOR's expense)
all commercial meetings and to participate in all commercial
trips concerning LACOSTE WATCHES that the LICENSOR may wish in
order to enable the LICENSOR to fulfill its role in particular
with respect to the co-ordination of the marketing,
merchandising, advertising and promotion of the LACOSTE
TRADEMARKS IMAGE; and
b) give the
LICENSOR complete access to any and all market surveys,
reports and information it may have (which it is not obliged to
third parties to hold in confidence) regarding the market
position of the LACOSTE WATCHES among competitors, retail
customers and consumers in the TERRITORY; and
c) use
reasonable efforts to reply to any request from the LICENSOR
concerning additional details or statistics regarding LACOSTE
WATCHES based on sales; and
d) in the
interests of both parties, enable LICENSOR's personnel (at
LICENSOR's expense) to carry out their role of assistance to
and
consultation with the MASTER LICENSEE and supply them with such
help and information as may be reasonably available for the
accomplishment of their role and, in particular, provide all
available information and surveys reasonably necessary for the
analysis of the retail outlets sales activity
<PAGE>
-33-
so as to permit the LICENSOR to better define the conditions
and
the trends of the market; and
e) shall ensure
that the APPROVED WATCHES RETAILERS implement and
conform to the marketing and merchandising policy defined in
Article 6.2.4 hereinabove; and
f) shall ensure
that the APPROVED WATCHES RETAILERS conform to the
specifications concerning the fittings, the decoration and
architecture of the points-of-sale and use the furniture and
other elements developed jointly by the LICENSOR and the MASTER
LICENSEE according to the provisions of Article 6.1.2
hereinabove
to be used in connection with the sale of the LACOSTE WATCHES;
and
g) in the best
interest of the LACOSTE TRADEMARKS IMAGE shall use
its best efforts so that the members of the "LACOSTE BOUTIQUES
AND LACOSTE CORNERS" SELECTIVE DISTRIBUTION SYSTEM (and in
particular the "global stores") which meet the criteria set out
in Article 7.1.1 hereinafter be supplied whenever possible with
the LACOSTE WATCHES.
ARTICLE 7 - DISTRIBUTION AND SALES
The MASTER LICENSEE shall carry out the distribution of the LACOSTE
WATCHES in
the TERRITORY exclusively through :
a) the members
of the LACOSTE WATCHES SELECTIVE DISTRIBUTION SYSTEM, through
APPROVED WATCHES RETAILERS previously selected in each country of
the
TERRITORY and to which, whenever possible, it shall be
contractually
linked; and
b) the members
of the "LACOSTE BOUTIQUES AND LACOSTE CORNERS" SELECTIVE
DISTRIBUTION SYSTEM, subject to the terms and conditions set forth
in
Article 7.2 hereinafter.
7.1 APPROVED WATCHES
RETAILERS
So
as to provide the consumer with the best service, to ensure the
homogeneity of the high quality of the
<PAGE>
-34-
distribution of the LACOSTE WATCHES throughout the world and to
guarantee
their authenticity, the MASTER LICENSEE shall select, and require
its
SUB-LICENSEES and DISTRIBUTORS to select APPROVED WATCHES RETAILERS
on the
basis of the following
objective criteria as regards both quality and
techniques, and shall use reasonable commercial efforts to
establish with
them, and require its SUB-LICENSEES and DISTRIBUTORS to establish
with
them, whenever possible, a contractual relationship including the
terms and
conditions set forth in the form of Lacoste Watches Approved
Retailer
Contract annexed hereto as Schedule XII.
7.1.1 Conditions of Approval
The MASTER LICENSEE shall select, and shall cause its
SUB-LICENSEES
and DISTRIBUTORS to select, as APPROVED WATCHES RETAILERS
exclusively
those which meet the standards of performance as set forth in
the
Lacoste Watches General Conditions of Distribution annexed hereto
as
Schedule XIII for the following criteria :
a) the location
and environment of the point-of-sale (type and
category of the building, location in the town in question,
type
of shops in the neighborhood, sales area of the shop, quality
of
the frontage, length of the shop window); and
b) its fittings
(quality of the shop sign, window-dressing, quality
of the furnishings and lighting); and
c) the type,
brand and nature of the products sold in the outlet;
and
d) the
qualification of the personnel; and
e) the financial
capabilities and solvency guarantees.
7.1.2 Approval of the APPROVED WATCHES RETAILERS
The LICENSOR reserves the right to verify that every point of
sale
selected by the MASTER LICENSEE as an APPROVED WATCHES RETAILER
conforms to the objective criteria set forth in
<PAGE>
-35-
Article 7.1.1 hereinabove (except for the points of sales listed
in
Schedule XIV, which, as LICENSOR and MASTER LICENSEE have
agreed,
conform to the objective criteria set forth in Article 7.1.1
hereinabove). Except for such points of sale, the MASTER
LICENSEE
shall submit or cause to be submitted to the LICENSOR a copy of
the
completed application for every potential point of sale for
approval.
The LICENSOR shall have ten (10) business days to approve in
writing a
potential point of sale based upon the objective criteria set
forth
under Article 7.1.1 hereinabove and the LICENSOR shall not
unreasonably withhold, delay or condition its approval, and shall
be
deemed to have given its approval if LICENSOR does not notify
MASTER
LICENSEE that it disapproves of such proposed point of sale with
ten
(10) business days of receipt of the completed application.
7.1.3 Duties of the APPROVED WATCHES RETAILERS
In addition to the obligations usually undertaken by retailers,
the
MASTER LICENSEE shall ensure that the agreements between itself
and
the APPROVED WATCHES RETAILERS expressly provide that the
APPROVED
WATCHES RETAILERS agree that :
a) the standing
of the point-of-sale and its environment remain at
all times compatible with the LACOSTE TRADEMARKS IMAGE, as
established and coordinated by the LICENSOR; and
b) the sales
area in the store is always sufficient to permit the
presentation of the LACOSTE WATCHES in a sufficient shopping
space without disproportion with the other brands offered for
sale and allowing to distinguish them; and
c) each
point-of-sale always contains an adequate range of the
LACOSTE WATCHES; and
d) the sales
personnel of each point-of-sale is always well
qualified and trained in presenting and selling the LACOSTE
WATCHES; and
<PAGE>
-36-
e) unless
prohibited by applicable law, e.g., in the United States
of America, no generalized discount sales policy is applied;
and
f) no misleading
advertising is made; and
g) the counters,
posters, demonstration and other advertising
material are displayed in a prominent position in each store
and
set up with the MASTER LICENSEE's approval; and
h) a notice
stating "Approved Watches Lacoste Retailer" is displayed
in a prominent position in the window or near the LACOSTE
WATCHES
display area.
7.1.4 The MASTER LICENSEE shall ensure that all elements bearing
or
representing the LICENSED TRADEMARKS (such as awnings, pennants,
etc.)
used by the APPROVED WATCHES RETAILERS on the facade, in the window
or
inside their shops are exclusively those supplied by the MASTER
LICENSEE or, exceptionally those which have received the prior
and
express written approval of the MASTER LICENSEE.
In this respect, a specific provision shall be included in the
written
confirmations issued to the APPROVED WATCHES RETAILERS.
The MASTER LICENSEE shall inform the LICENSOR of any new kind
of
material that the APPROVED WATCHES RETAILERS would like to use.
7.1.5 The MASTER LICENSEE shall offer an appropriate warranty on
the
LACOSTE WATCHES of at least one (1) year starting from the date
of
purchase of such LACOSTE WATCHES, and shall put in place and
organize
an after-sale service of the level appropriate with the LACOSTE
TRADEMARKS IMAGE.
7.2 Special provisions
applicable to the members of the "LACOSTE BOUTIQUES AND
LACOSTE CORNERS" SELECTIVE DISTRIBUTION SYSTEM
Nothing contained in this MASTER AGREEMENT, and in particular this
Article
7.2
and Articles 1.40 or 1.41,
<PAGE>
-37-
shall be construed as meaning that LACOSTE WATCHES shall be offered
for
sale
in each and every LACOSTE BOUTIQUE and LACOSTE CORNER fulfilling
the
requirements of Article 7.2.1 hereinafter.
7.2.1 PRESENTATION SURFACE of the LACOSTE WATCHES and/or of the
OTHER
LACOSTE PRODUCTS in the LACOSTE BOUTIQUES and LACOSTE CORNERS
a)
So as to make
sure that at the same time the LACOSTE BOUTIQUES and
LACOSTE CORNERS remain principally devoted to the sale of
LACOSTE
APPAREL PRODUCTS and only on a subordinate basis of the LACOSTE
WATCHES and/or of the OTHER LACOSTE PRODUCTS and to allow the
development of the LACOSTE WATCHES together with the OTHER
LACOSTE
PRODUCTS, the LACOSTE BOUTIQUES with a COMMERCIAL SURFACE exceeding
*
and the LACOSTE CORNERS with a COMMERCIAL SURFACE exceeding * shall
be
authorized to sell the LACOSTE WATCHES and all the categories of
the
OTHER LACOSTE PRODUCTS that they wish to sell. DEVANLAY shall
reserve
for the LACOSTE WATCHES together with the OTHER LACOSTE PRODUCTS
in
each of these LACOSTE BOUTIQUES and in each of these LACOSTE
CORNERS
at least * of the PRESENTATION SURFACE of such LACOSTE BOUTIQUE
or
LACOSTE CORNER.
For the LACOSTE BOUTIQUES with a COMMERCIAL SURFACE exceeding *,
the
PRESENTATION SURFACE reserved for the LACOSTE WATCHES together
with
the OTHER LACOSTE PRODUCTS shall be at least * of the
PRESENTATION
SURFACE of such LACOSTE BOUTIQUE.
DEVANLAY or the relevant LACOSTE APPAREL PRODUCTS DISTRIBUTOR
shall
decide with the owner of each LACOSTE BOUTIQUE and of each
LACOSTE
CORNER, within the limits fixed above, the percentage of the
PRESENTATION SURFACE reserved for the LACOSTE WATCHES and for
the
OTHER LACOSTE PRODUCTS.
DEVANLAY, or the relevant LACOSTE APPAREL PRODUCTS DISTRIBUTOR,
shall
decide with the owner of each LACOSTE BOUTIQUE and of each
LACOSTE
CORNER the manner in which the space reserved for
*
CONFIDENTIAL PORTION OF THIS EXHIBIT OMITTED AND FILED SEPARATELY
WITH THE
SEC
PURSUANT TO RULE 24b-2 OF THE 1934 ACT.
<PAGE>
-38-
the LACOSTE WATCHES and for the OTHER LACOSTE PRODUCTS shall be
allocated.
The owner of each LACOSTE BOUTIQUE and of each LACOSTE CORNER
shall
comply scrupulously and in all respects with the instructions
of
DEVANLAY, or of the relevant LACOSTE APPAREL PRODUCTS
DISTRIBUTOR,
concerning the merchandising of the LACOSTE WATCHES and of the
OTHER
LACOSTE PRODUCTS in the LACOSTE BOUTIQUES and in the LACOSTE
CORNERS.
Within this framework, the owners of the LACOSTE BOUTIQUES and of
the
LACOSTE CORNERS are free to decide if they want to present
LACOSTE
WATCHES in their
points of sale and to choose the categories of OTHER
LACOSTE PRODUCTS which they wish to present in their points of
sale.
b)
Provided that
they have been authorized beforehand and in writing by
DEVANLAY, the LACOSTE BOUTIQUES with a COMMERCIAL SURFACE smaller
than
or equal to * and the LACOSTE CORNERS with a COMMERCIAL SURFACE
smaller than or equal to * may sell certain LACOSTE WATCHES
and/or
OTHER LACOSTE PRODUCTS in the same conditions as those provided for
by
the present AGREEMENT. Given the size of these points of sale,
the
parties agree that no reservation of a minimum PRESENTATION
SURFACE
shall apply to them.
7.2.2 Selection of the collections of the LACOSTE WATCHES for the
"LACOSTE
BOUTIQUES AND LACOSTE CORNERS" SELECTIVE DISTRIBUTION SYSTEM
The presence of the LACOSTE WATCHES together with the OTHER
LACOSTE
PRODUCTS alongside the LACOSTE APPAREL PRODUCTS in the LACOSTE
BOUTIQUES and in the LACOSTE CORNERS is desirable in the interest
of
the LACOSTE TRADEMARKS IMAGE and of the development of the
"lifestyle"
image of the Lacoste brand. The purpose is to define for each
LACOSTE
BOUTIQUE and for each LACOSTE CORNER a well-balanced solution,
preserving both the LACOSTE TRADEMARKS IMAGE and the interests of
the
LACOSTE APPAREL PRODUCTS, the OTHER LACOSTE PRODUCTS and the
LACOSTE
WATCHES.
*
CONFIDENTIAL PORTION OF THIS EXHIBIT OMITTED AND FILED SEPARATELY
WITH THE
SEC
PURSUANT TO RULE 24b-2 OF THE 1934 ACT.
<PAGE>
-39-
a)
The collections
of the LACOSTE WATCHES for the "LACOSTE BOUTIQUES AND
LACOSTE CORNERS" SELECTIVE DISTRIBUTION SYSTEM shall be selected
in
each country among the worldwide collections approved by the
LICENSOR,
by mutual agreement between each of the distributors of the
LACOSTE
WATCHES and the LACOSTE APPAREL PRODUCTS DISTRIBUTOR in such
country.
The selection of the collections of the LACOSTE WATCHES means
the
determination, by territory, on the one hand, of the product
ranges
(choice of models among those existing) of the LACOSTE WATCHES
collections, among which the owner of the point of sale shall be
free
to choose when placing his orders and, on the other hand, of the
total
number of references/color of LACOSTE WATCHES and of OTHER
LACOSTE
PRODUCTS which may be commercialized during a season in each
category
of point of sale according to its size and its lay-out. The
determination of the product ranges shall be such as to offer
the
owners of the points of sale the opportunity to exercise their
choice
among collections having, for the LACOSTE WATCHES and for each
category of OTHER LACOSTE PRODUCTS, a reasonable
representativeness.
b)
Subject to the
terms of paragraph a) hereinabove, such selection shall
be made taking into account :
- the
availability of the collections of the LACOSTE WATCHES in
such country, and
- the
commercial interest that the LACOSTE WATCHES may offer to the
LACOSTE BOUTIQUES and the LACOSTE CORNERS, and
- the
purchasing behavior and habits of such country, and
- the
periodicity appropriate to the LACOSTE WATCHES.
c)
The collections
of the LACOSTE WATCHES chosen for the "LACOSTE
BOUTIQUES AND LACOSTE CORNERS" SELECTIVE DISTRIBUTION SYSTEM in
each
country shall be updated with the appropriate periodicity
(season,
year) following the rules specified in paragraphs a) and b)
hereinabove.
<PAGE>
-40-
d)
In the event of
a disagreement between a distributor of LACOSTE
WATCHES and a LACOSTE APPAREL PRODUCTS DISTRIBUTOR about the
selection
of collections of LACOSTE WATCHES for the "LACOSTE BOUTIQUES
AND
LACOSTE CORNERS" SELECTIVE DISTRIBUTION SYSTEM in a given country,
the
LICENSOR and DEVANLAY shall make their best efforts to find
together a
well-balanced solution which preserves together the LACOSTE
TRADEMARKS
IMAGE, the development of the "lifestyle" image of the Lacoste
brand
and the interests of the LACOSTE APPAREL PRODUCTS and of the
LACOSTE
WATCHES. The final decision shall rest with DEVANLAY.
e)
Once the ranges
of the LACOSTE WATCHES and of the OTHER LACOSTE
PRODUCTS and the total number of references/color of the
LACOSTE
WATCHES and/or of the OTHER LACOSTE PRODUCTS have been selected,
the
owners of the LACOSTE BOUTIQUES and of the LACOSTE CORNERS will
be
free to decide, within this framework, the quantities of
LACOSTE
WATCHES and/or of OTHER LACOSTE PRODUCTS to be ordered.
7.2.3 Supply of the "LACOSTE BOUTIQUES AND LACOSTE CORNERS"
SELECTIVE
DISTRIBUTION SYSTEM by the distributors of the LACOSTE WATCHES
a)
The distributors
of the LACOSTE WATCHES shall present the collections
selected by country directly to the LACOSTE BOUTIQUES and to
the
LACOSTE
CORNERS, which shall place their orders and repeat orders
directly with them according to their specificities (size,
location,
customers). In each territory, the distributors of the LACOSTE
WATCHES
shall transmit electronically to the LACOSTE APPAREL PRODUCTS
DISTRIBUTOR concerned a copy of each order placed by the
LACOSTE
BOUTIQUES and the LACOSTE CORNERS located in such territory.
These
orders shall be sent to the LACOSTE APPAREL PRODUCTS DISTRIBUTOR
upon
receipt by the distributors of the LACOSTE WATCHES, and shall
specify
the anticipated delivery dates. Upon receipt of the copies of
the
orders and within 10 days at most, the LACOSTE APPAREL PRODUCTS
DISTRIBUTORS may contact the concerned distributor(s) of the
LACOSTE
WATCHES if, after examining the orders, it appears that
<PAGE>
-41-
the selection of the collection for a specific point of sale does
not
comply with the terms of Article 7.2.2 hereinabove. In such an
event,
the LACOSTE APPAREL PRODUCTS DISTRIBUTOR shall have the right
to
request the distributor(s) of the LACOSTE WATCHES concerned not
to
accept
these orders insofar as they do not conform with the pre-agreed
terms relating to the selection of ranges of LACOSTE WATCHES set
forth
in Article 7.2.2 hereinabove. The distributors of the LACOSTE
WATCHES
undertake to act in accordance with the request of the LACOSTE
APPAREL
PRODUCTS DISTRIBUTOR. In the absence of reaction from the
LACOSTE
APPAREL PRODUCTS DISTRIBUTOR within 10 days following the receipt
of
the copies of the orders for the beginning of the season, such
orders
may be implemented as such. Notwithstanding the foregoing,
repeat
orders may be delivered by the distributor of the LACOSTE WATCHES
as
soon as they are received.
b)
The LACOSTE
BOUTIQUES and the LACOSTE CORNERS shall be supplied and
invoiced directly by the distributors of the LACOSTE WATCHES.
c)
The distributors
of the LACOSTE WATCHES for each country shall send
each semester to the LACOSTE APPAREL PRODUCTS DISTRIBUTOR a
detailed
recapitulative statement of the invoices of LACOSTE WATCHES sent
to
each LACOSTE BOUTIQUES and LACOSTE CORNER. Copies of these
statements
shall be sent simultaneously to the LICENSOR, to DEVANLAY and to
the
MASTER LICENSEE.
d)
In the event of
a violation by a LACOSTE BOUTIQUE or a LACOSTE CORNER
of the limits of the PRESENTATION SURFACE established for the
LACOSTE
WATCHES together with the OTHER LACOSTE PRODUCTS in the point of
sale
or of the selection of the collections of the LACOSTE WATCHES and
of
the OTHER LACOSTE PRODUCTS intended to be commercialized in this
point
of sale, or of the maximum number of references/color of
LACOSTE
WATCHES and/or of OTHER LACOSTE PRODUCTS which may be
commercialized
in such LACOSTE BOUTIQUE or LACOSTE CORNER, or in the event that
the
purchasing turnover of LACOSTE APPAREL PRODUCTS during a semester
is
less than *
*
CONFIDENTIAL PORTION OF THIS EXHIBIT OMITTED AND FILED SEPARATELY
WITH THE
SEC
PURSUANT TO RULE 24b-2 OF THE 1934 ACT.
<PAGE>
-42-
* of the
total purchasing turnover of the relevant LACOSTE BOUTIQUE or
LACOSTE CORNER during the same period, DEVANLAY, or the LACOSTE
APPAREL
PRODUCTS DISTRIBUTOR concerned, shall be entitled on a first
instance to
issue a warning to the relevant LACOSTE BOUTIQUE or LACOSTE CORNER
and, if
any
of these occurrences should be repeated, to forbid such point of
sale
to
commercialize LACOSTE WATCHES and OTHER LACOSTE PRODUCTS during at
least
one
season.
The LICENSOR and the MASTER LICENSEE shall be informed of such
measures taken by DEVANLAY. The MASTER LICENSEE undertakes to
comply
with these measures by suspending all orders and deliveries to
such
point of sale.
7.2.4 Selective Distribution Systems
a)
The MASTER
LICENSEE acknowledges that the LACOSTE BOUTIQUES and the
LACOSTE CORNERS are points of sale with specific
characteristics
resulting inter alia from the fact that all the products sold in
these
premises bear the LACOSTE TRADEMARKS, as well as from the fact
that
these points of sale are principally devoted to the sale of
LACOSTE
APPAREL PRODUCTS and only on a subordinate basis of LACOSTE
WATCHES
together with OTHER LACOSTE PRODUCTS, contrary to the members of
the
"APPROVED APPAREL
RETAILERS" SELECTIVE DISTRIBUTION SYSTEM who can
sell products of different brands and who are devoted to the sale
of
the LACOSTE APPAREL PRODUCTS, unless they are selected as
approved
retailers for LACOSTE WATCHES and/or OTHER LACOSTE PRODUCTS.
Therefore, the LACOSTE BOUTIQUES and the LACOSTE CORNERS
constitute
together the "LACOSTE BOUTIQUES AND LACOSTE CORNERS" SELECTIVE
DISTRIBUTION SYSTEM organized by DEVANLAY which is distinct from
the
"APPROVED APPAREL RETAILERS" SELECTIVE DISTRIBUTION SYSTEM
comprising
the approved retailers for the LACOSTE APPAREL PRODUCTS.
The "LACOSTE BOUTIQUES AND LACOSTE CORNERS" SELECTIVE
DISTRIBUTION
SYSTEM is also distinct
*
CONFIDENTIAL PORTION OF THIS EXHIBIT OMITTED AND FILED SEPARATELY
WITH THE
SEC
PURSUANT TO RULE 24b-2 OF THE 1934 ACT.
<PAGE>
-43-
from the LACOSTE WATCHES SELECTIVE DISTRIBUTION SYSTEM organized
by
the MASTER LICENSEE.
b)
The MASTER
LICENSEE therefore undertakes, in its own name and in the
name of its SUB-LICENSEES and its DISTRIBUTORS, to take all
appropriate measures to ensure the integrity of the LACOSTE
WATCHES
SELECTIVE DISTRIBUTION SYSTEM, the "LACOSTE BOUTIQUES AND
LACOSTE
CORNERS" SELECTIVE DISTRIBUTION SYSTEM and the "APPROVED
APPAREL
RETAILERS" SELECTIVE DISTRIBUTION SYSTEM.
7.2.5 Assistance of DEVANLAY and/or of the LACOSTE APPAREL
PRODUCTS
DISTRIBUTORS to the "LACOSTE BOUTIQUES AND LACOSTE CORNERS"
SELECTIVE
DISTRIBUTION SYSTEM in connection with the LACOSTE WATCHES and/or
the
OTHER LACOSTE PRODUCTS
In connection with the LACOSTE WATCHES and/or the OTHER LACOSTE
PRODUCTS that will be offered in the "LACOSTE BOUTIQUES AND
LACOSTE
CORNERS" SELECTIVE DISTRIBUTION SYSTEM under the terms of this
Article
7.2, DEVANLAY and/or the LACOSTE APPAREL PRODUCTS DISTRIBUTORS
have
agreed that :
a)
in the field of
merchandising, they shall :
- ensure
the coherence of the merchandising for the LACOSTE APPAREL
PRODUCTS, the LACOSTE WATCHES and/or the OTHER LACOSTE
PRODUCTS,
and
- present
in a suitable fashion the LACOSTE WATCHES following the
rules contained in the merchandising guide (called the "Green
Book") and its seasonal editions developed by DEVANLAY, which
shall be updated by the LICENSOR and DEVANLAY and approved by
the
LICENSOR, and
- present
completely, in particular in the shop-windows, the lines
of LACOSTE APPAREL PRODUCTS, LACOSTE WATCHES together with
OTHER
LACOSTE PRODUCTS, so as to express fully the Lacoste
"way-of-life", and
- use
their best efforts to include the LACOSTE WATCHES together
with the OTHER LACOSTE PRODUCTS in their local or national
advertising and promotion campaigns.
b)
in the field of
reporting, they shall :
- do their
best efforts to ensure that the LACOSTE BOUTIQUES
progressively put in place IT
<PAGE>
-44-
systems allowing a detailed reporting of their sales of LACOSTE
APPAREL PRODUCTS, LACOSTE WATCHES and OTHER LACOSTE PRODUCTS,
and
- for
those LACOSTE BOUTIQUES who have not yet put in place, and as
long as they have not done so, continue providing the LICENSOR
and the MASTER LICENSEE with reports similar to those available
as of March 1, 2004, and
- supply
the LACOSTE BOUTIQUES with such elements as may be
necessary for the IT treatment and the reporting of their sales
of LACOSTE WATCHES, subject to having received the basic data
about the LACOSTE WATCHES necessary to the operation of such a
system from the LICENSOR, who shall have obtained it himself
from
the MASTER LICENSEE, and
- prepare
and submit to the LICENSOR and to the MASTER LICENSEE,
for the LACOSTE BOUTIQUES which have put in place the necessary
IT systems and have received the necessary basic data about the
LACOSTE WATCHES :
(i) on a monthly basis
and under the same conditions and terms as for
the sales of the LACOSTE APPAREL PRODUCTS by the LACOSTE
BOUTIQUES, the information relating to the sales of the LACOSTE
WATCHES in each LACOSTE BOUTIQUE. This information shall
include
for each LACOSTE BOUTIQUE the detail of the sales to the
consumer
of the LACOSTE WATCHES, and
(ii) on a semi-annual basis the information relating to the sales
by
reference of the LACOSTE WATCHES in each of the LACOSTE
BOUTIQUES.
7.2.6 Contribution of the MASTER LICENSEE
a)
In consideration
of the merchandising and reporting services and of
the reservation of the PRESENTATION SURFACES made for the
LACOSTE
WATCHES by the LACOSTE APPAREL PRODUCTS DISTRIBUTORS, the
MASTER
LICENSEE shall pay, or shall ensure that its SUB-LICENSEES and
its
DISTRIBUTORS pay, each six (6) months, in each country to
DEVANLAY,
or, if the distribution of the LACOSTE APPAREL PRODUCTS in this
country has been granted to a LACOSTE APPAREL PRODUCTS DISTRIBUTOR,
to
such LACOSTE APPAREL PRODUCTS DISTRIBUTOR, a contribution
representing
a fixed
<PAGE>
-45-
percentage of * of the purchases of the LACOSTE WATCHES made by
the
"LACOSTE BOUTIQUES AND LACOSTE CORNERS" SELECTIVE DISTRIBUTION
SYSTEM
in such country.
In view of the importance of the LACOSTE BOUTIQUES having a
COMMERCIAL
SURFACE larger than * due to their role as showcases on prime
locations and due to their high operations cost, the MASTER
LICENSEE
shall pay, or shall ensure that its SUB-LICENSEES and its
DISTRIBUTORS
pay, to DEVANLAY, or, if the distribution of the LACOSTE
APPAREL
PRODUCTS in this country has been granted to a LACOSTE APPAREL
PRODUCTS DISTRIBUTOR, to such LACOSTE APPAREL PRODUCTS DISTRIBUTOR,
a
contribution representing a fixed percentage of * mentioned
hereinabove, of the purchases of the LACOSTE WATCHES by the
LACOSTE
BOUTIQUES having a COMMERCIAL SURFACE larger than *.
b)
The amount of
the contribution of the MASTER LICENSEE (or of the
SUB-LICENSEES or DISTRIBUTORS, as the case may be) shall be
determined
on the basis of their NET SALES to the LACOSTE BOUTIQUES and
the
LACOSTE CORNERS.
c)
These amounts
shall be calculated on June 30 and December 31 of each
year and the corresponding contribution shall be paid no later
than
August 31 and February 28 of each year, by the MASTER LICENSEE or
the
SUB-LICENSEES or DISTRIBUTORS to DEVANLAY, or if in such country
the
distribution of the LACOSTE APPAREL PRODUCTS has been granted to
a
LACOSTE APPAREL PRODUCTS DISTRIBUTOR, to such LACOSTE APPAREL
PRODUCTS
DISTRIBUTOR.
d)
If the
contribution due by the MASTER LICENSEE has not been fully paid
at the dates specified in paragraph c) hereinabove to DEVANLAY (or
to
the appropriate LACOSTE APPAREL PRODUCTS DISTRIBUTORS), the
LACOSTE
GROUP shall have the right, thirty (30) days after a notice given
by
registered mail with certified receipt which will not have been
followed by complete payment of all and any due and unpaid
contributions, to instruct
*
CONFIDENTIAL PORTION OF THIS EXHIBIT OMITTED AND FILED SEPARATELY
WITH THE
SEC
PURSUANT TO RULE 24b-2 OF THE 1934 ACT.
<PAGE>
-46-
forthwith the MASTER LICENSEE to stop any further deliveries of
the
LACOSTE WATCHES to the members of the "LACOSTE BOUTIQUES AND
LACOSTE
CORNERS" SELECTIVE DISTRIBUTION SYSTEM anywhere in the world, and
the
MASTER LICENSEE agrees to forthwith comply with such
instructions.
7.2.7 Furniture and sales equipment used for the LACOSTE
WATCHES
The furniture and other sales equipment used for the LACOSTE
WATCHES
in the "LACOSTE BOUTIQUES AND LACOSTE CORNERS" SELECTIVE
DISTRIBUTION
SYSTEM shall exclusively be those developed by the LICENSOR in
cooperation with DEVANLAY and/or the MASTER LICENSEE.
DEVANLAY and the LACOSTE APPAREL PRODUCTS DISTRIBUTOR shall be
the
sole entities responsible for the lay-out of the LACOSTE BOUTIQUES
and
the LACOSTE CORNERS, subject to the terms of this Article 7.2.
7.2.8 End-of-season goods
The rules applied by the LACOSTE BOUTIQUES and the LACOSTE CORNERS
for
the sale end-of-season goods shall be those applicable to the
LACOSTE
APPAREL PRODUCTS, but, to the extent possible, shall also have
to
follow those applicable to the LACOSTE WATCHES.
7.2.9 Specific agreements
In the event that specific agreements, departing from the
provisions
set forth hereinabove in Articles 7.2.1 to 7.2.8 are concluded
either
between DEVANLAY and the MASTER LICENSEE, or between a distributor
of
LACOSTE WATCHES and the LACOSTE APPAREL PRODUCTS DISTRIBUTOR in
a
given territory, the terms of such specific agreements shall
prevail
over the provisions set forth hereinabove in Articles 7.2.1 to
7.2.8.
The MASTER LICENSEE shall promptly inform the LICENSOR of any
such
specific agreement.
<PAGE>
-47-
7.2.10 Breach of the obligations of the MASTER LICENSEE under
the
provisions set forth in Articles 7.2.1 to 7.2.9
The MASTER LICENSEE acknowledges that in the event of a breach in
one
or several countries in the TERRITORY by the MASTER LICENSEE or by
a
SUB-LICENSEE or a DISTRIBUTOR of their obligations under the
provisions set forth hereinabove in Articles 7.2.1 to 7.2.9,
the
LICENSOR has undertaken towards DEVANLAY and the LACOSTE
APPAREL
PRODUCTS DISTRIBUTORS to use its best efforts to obtain from
the
MASTER LICENSEE or from its SUB-LICENSEE or DISTRIBUTOR that it
remedies such breach. The MASTER LICENSEE further acknowledges that
in
the event such efforts remain unsuccessful, the LICENSOR has
agreed
that DEVANLAY and the LACOSTE APPAREL PRODUCTS DISTRIBUTORS shall
no
longer be bound by any of their commitments concerning the presence
or
the sale of the LACOSTE WATCHES in the "LACOSTE BOUTIQUES AND
LACOSTE
CORNERS" SELECTIVE DISTRIBUTION SYSTEM in such country(ies), which
the
MASTER LICENSEE and its SUB-LICENSEE or DISTRIBUTOR accept.
7.3 INTERNET - MAIL
ORDER
The
LICENSOR is desirous to protect in the TERRITORY the LACOSTE
TRADEMARKS
IMAGE, the MODELS, the LACOSTE WATCHES as well as the LACOSTE
APPAREL
PRODUCTS and the OTHER LACOSTE PRODUCTS sold under the LICENSED
TRADEMARKS.
The
LICENSOR also desires to protect the consumer from the
counterfeiting
of
the above and desires to offer the consumer an appropriate
environment
and
a high quality service. For all these reasons, the LACOSTE WATCHES
must
be
exclusively sold through the LACOSTE WATCHES SELECTIVE
DISTRIBUTION
SYSTEM and the "LACOSTE BOUTIQUES AND LACOSTE CORNERS"
SELECTIVE
DISTRIBUTION SYSTEM.
In
consequence, the advertising and/or the sale of the LACOSTE WATCHES
on
the
Internet are authorized provided that the following conditions are
met
:
7.3.1 the advertising and/or the sale of the LACOSTE WATCHES on
the
Internet or by Mail Order may only be made by APPROVED WATCHES
RETAILERS and members
<PAGE>
-48-
of the "LACOSTE BOUTIQUES AND LACOSTE CORNERS" SELECTIVE
DISTRIBUTION
SYSTEM; and
7.3.2 the web site or the Mail Order catalogues on which the
LACOSTE
WATCHES shall be advertised and/or sold shall be submitted to
LICENSOR
for LICENSOR's written approval. Such approval shall be granted if
the
following conditions
are met :
a) the name, the
environment, the presentation and the general
standing of the web site or the Mail Order catalogues as well
as
the way it functions shall be compatible with the LACOSTE
TRADEMARKS IMAGE; and
b) the web site
or the Mail Order catalogues shall offer to
consumers a high quality service for the LACOSTE WATCHES; and
c) the manner in
which the MODELS and the LICENSED TRADEMARKS are
presented on the web site or in the Mail Order catalogues in
connection with the advertising and/or the sale of the LACOSTE
WATCHES shall be submitted to LICENSOR for LICENSOR's written
approval.
The APPROVED WATCHES RETAILERS and the members of the
"LACOSTE BOUTIQUES AND LACOSTE CORNERS" SELECTIVE DISTRIBUTION
SYSTEM may not include or use any of the LICENSED TRADEMARKS in
the workings (as they exist as of this day or in the future) of
the web, and in particular no LICENSED TRADEMARK may be
included
or used in a domain name, an URL address or an e-mail address.
7.4 MARKETING
POLICY
7.4.1 The MASTER LICENSEE undertakes to apply a marketing policy
which
takes into account the characteristics of the main markets of
the
TERRITORY and the policies practiced on each of these markets
for
products of comparable quality and commercial standard, so as
to
preserve the LACOSTE TRADEMARKS IMAGE.
7.4.2 The MASTER LICENSEE shall be free to fix its wholesale prices
to the
members of the LACOSTE WATCHES SELECTIVE DISTRIBUTION SYSTEM and
the
<PAGE>
-49-
"LACOSTE BOUTIQUES AND LACOSTE CORNERS" SELECTIVE DISTRIBUTION
SYSTEM
so as to facilitate the diffusion of the LACOSTE WATCHES and
the
development of sales within the TERRITORY. The MASTER LICENSEE
shall
keep the LICENSOR informed on a regular basis of its pricing
policy.
More specifically, the MASTER LICENSEE shall inform the LICENSOR
of
any modification in its price structure as soon as practicable
after
such modification.
Unless prohibited by applicable law, e.g., in the United States
of
America, reduction of price points by MASTER LICENSEE for the
LACOSTE
WATCHES if not justified by normal business reasons, such as
technical
ones or currency exchange fluctuations, may not be implemented if
such
a move risks in any way to have negative consequences on the
LACOSTE
TRADEMARKS IMAGE.
Unless prohibited by applicable law, e.g., in the United States
of
America, it is agreed that the prices invoiced to the members of
the
LACOSTE WATCHES SELECTIVE DISTRIBUTION SYSTEM and the "LACOSTE
BOUTIQUES AND LACOSTE CORNERS" SELECTIVE DISTRIBUTION SYSTEM
during
the notice period provided for in Articles 18.3 and 20.4
hereinafter
may not be lower than *.
ARTICLE 8 - PROMOTION AND ADVERTISING
8.1 In order to allow
the LICENSOR to coordinate in the TERRITORY a promotional
and
advertising policy for the sale of the LACOSTE WATCHES compatible
with
the
prestige of the LACOSTE TRADEMARKS and of the name Lacoste and
which
support a satisfactory development of sales, the LICENSOR and the
MASTER
LICENSEE agree that :
8.1.1 the development of the advertising of the LACOSTE TRADEMARKS
IMAGE
shall be made by the LICENSOR at the LICENSOR's costs. The
LICENSOR
shall draw up twice a year at the latest before November 30 and May
31
of each year the strategy defining the policy to be implemented
for
the advertising of
*
CONFIDENTIAL PORTION OF THIS EXHIBIT OMITTED AND FILED SEPARATELY
WITH THE
SEC
PURSUANT TO RULE 24b-2 OF THE 1934 ACT.
<PAGE>
-50-
the LACOSTE TRADEMARKS IMAGE as well by the MASTER LICENSEE as by
the
LICENSOR's other licensees (briefings) and recalling the basic
permanent or semi-permanent rules to be followed for said
advertising,
more particularly with respect to the use of the LACOSTE
TRADEMARKS
(Charter); and
8.1.2 the development of the advertising for the LACOSTE WATCHES
shall be
made by the MASTER LICENSEE at the MASTER LICENSEE's costs,
respecting
as closely as possible the PROMOTION AND ADVERTISING KNOW-HOW put
at
the MASTER LICENSEE's disposal by the LICENSOR including the
LACOSTE
TRADEMARKS IMAGE advertising policy defined by the LICENSOR
according
to the provisions of Article 8.1.1 hereinabove. The costs relating
to
the exploitation of the advertising of the LACOSTE WATCHES
(media
buying etc...) shall be borne by the MASTER LICENSEE, its
SUB-LICENSEES and its DISTRIBUTORS and shall be deemed as
constituting
an integral part of the promotion and advertising budgets defined
in
Article 8.2.2 hereinafter; and
8.1.3 the LACOSTE TRADEMARKS IMAGE's promotional programs
(professional
sportsmen, product placement in motion pictures, etc.) shall be
:
a) when they
have an international impact, developed by the LICENSOR
after having consulted the MASTER LICENSEE. The costs related
to
these promotional programs shall be equally shared (according
to
the provisions of and within the ceiling * provided in Article
8.4.1 hereinafter) between, on one side, the MASTER LICENSEE
(and, as the case may be, if said programs concern the LACOSTE
APPAREL PRODUCTS and/or the OTHER LACOSTE PRODUCTS, the
LICENSOR's licensees and/or distributors for such products) and
on the other side, the LICENSOR. The MASTER LICENSEE share of
costs shall be deemed as constituting an integral part of the
promotion and advertising budgets defined in Article 8.2.2
hereinafter; and
*
CONFIDENTIAL PORTION OF THIS EXHIBIT OMITTED AND FILED SEPARATELY
WITH THE
SEC
PURSUANT TO RULE 24b-2 OF THE 1934 ACT.
<PAGE>
-51-
b) when they
have essentially a national impact, developed by the
MASTER LICENSEE after having consulted the LICENSOR respecting
as
closely as possible the PROMOTION AND ADVERTISING KNOW-HOW put
at
the MASTER LICENSEE's disposal by the LICENSOR including the
policy defined by the LICENSOR for the promotion of the image
of
the LACOSTE TRADEMARKS according to the provisions of Article
8.1.3a) hereinabove. The costs relating to these promotional
programs shall be borne exclusively by the MASTER LICENSEE, its
SUB-LICENSEES and its DISTRIBUTORS and shall be deemed as
constituting an integral part of the promotion and advertising
budgets defined in Article 8.2.2 hereinafter.
8.2 To this effect,
the MASTER LICENSEE :
8.2.1 shall participate (or shall ensure that its SUB-LICENSEES and
its
DISTRIBUTORS participate) in the coordination meetings organized
at
least twice a year in each of the MAIN COUNTRIES within the
TERRITORY
by the LICENSOR with the other main licensees and/or distributors
for
the LACOSTE APPAREL PRODUCTS and OTHER LACOSTE PRODUCTS in order
to
ensure the consistency of the different promotional and
advertising
campaigns; and
8.2.2 shall allocate (or procure that its SUB-LICENSEES and its
DISTRIBUTORS allocate) for the promotional and advertising
actions
listed in Schedule XVII an annual advertising and promotional
budget
representing no less than * of its estimated NET SALES determined
in
conformity with the provisions of Article 6.2.7 hereinabove. At
the
last of the Watches Committees of each year, the MASTER LICENSEE
shall
submit to the LICENSOR its advertising and promotion budget
detailed
by country and itemized as given in Schedule XVII, according to
its
forecasts of NET SALES for the concerned year, as well as a
description of its main promotional and advertising actions or
campaigns; and
8.2.3 provide the LICENSOR once a year at the beginning of the
month of
March with a report on the
*
CONFIDENTIAL PORTION OF THIS EXHIBIT OMITTED AND FILED SEPARATELY
WITH THE
SEC
PURSUANT TO RULE 24b-2 OF THE 1934 ACT.
<PAGE>
-52-
amounts spent on advertising and promotion during the previous
calendar year by country itemized as given in Schedule XVII;
and
8.2.4 shall take all reasonable steps to ensure in particular that
not only
the LACOSTE TRADEMARKS IMAGE, but also the personal reputation of
Mr.
Rene Lacoste and his family are safeguarded; and
8.2.5 shall use exclusively the lettering, labels and logos created
by the
LICENSOR when advertising or promoting the "Lacoste" image and
the
LACOSTE WATCHES; and
8.2.6 if any apparel or other products of the type comprising the
LACOSTE
APPAREL PRODUCTS or the OTHER LACOSTE PRODUCTS are to be depicted
in
any advertising or promotional material for LACOSTE WATCHES, shall
use
in such advertising and promotional material for the LACOSTE
WATCHES
exclusively the LACOSTE APPAREL PRODUCTS and/or OTHER LACOSTE
PRODUCTS
or accessories bearing the LACOSTE TRADEMARKS whenever such exist
and
are available; and
8.2.7 shall consult with the LICENSOR before retaining any
promotion,
communication or advertising agency for work in relation with
the
LACOSTE WATCHES; and
8.2.8 shall in a general manner, consult the LICENSOR when planning
its
advertising and promotional programs and inform the LICENSOR of
the
particulars of such programs before they are finalized by its
advertising agents, in particular with the purpose of allowing
the
coordination of these programs with those of the other licensees
of
the LICENSOR (media plans); and
8.2.9 prior to the first use thereof, shall submit to the LICENSOR
a copy
or a photograph of its advertising or promotional projects (press
and
TV advertising, catalogues, posters, circulars and in general
all
publi-promotional material) and/or sales aids such as, in
particular,
the furniture, the booths for trade shows and the private or
public
salesrooms
intended to facilitate or
<PAGE>
-53-
promote the distribution and sale of the LACOSTE WATCHES. The
LICENSOR
shall have a fifteen (15) day period to notify in writing
MASTER
LICENSEE that it approves or disapproves the content, the form
and/or
the media used for these projects. Should the LICENSOR not
respond
within said fifteen (15) days period, it will be deemed to have
given
its approval; and
8.2.10 shall allow the LICENSOR and the LICENSOR's other licensees
to use
free of charge for their activities, subject only to the payment
of
the creative and authors' rights, such advertising and
promotional
creations and ideas; and
8.2.11 shall ensure that the APPROVED WATCHES RETAILERS comply with
the
conditions mentioned in Articles 8.2.4 to 8.2.10 hereinabove and
8.3
hereinafter, should they themselves elect to advertise and promote
the
sale of the LACOSTE WATCHES and in particular, include a
special
clause in its general sales conditions and/or agreements with
such
APPROVED WATCHES RETAILERS to this effect; and
8.3 The MASTER
LICENSEE, its SUB-LICENSEES and its DISTRIBUTORS shall not,
except after having obtained the previous written agreement of
the
LICENSOR, and in such event according to the LICENSOR's
prescriptions,
register a domain name including the name Lacoste or Crocodile.
The
MASTER LICENSEE, its SUB-LICENSEES and its DISTRIBUTORS may use
web
pages in the sites created by or for the LICENSOR in certain
countries of
the
TERRITORY, provided such sites are to be shared among the
different
LICENSOR's licensees and/or distributors and the content of which
shall be
provided by the MASTER LICENSEE, its SUB-LICENSEES and its
DISTRIBUTORS to
the
LICENSOR.
The
MASTER LICENSEE, its SUB-LICENSEES and its DISTRIBUTORS shall
provide
the
LICENSOR with the necessary information to update said web
pages,
whenever requested by the LICENSOR.
Should the MASTER LICENSEE, its SUB-LICENSEES or its DISTRIBUTORS
wish to
include a web page in their own institutional web sites in relation
with
the
LICENSED TRADEMARKS and the LACOSTE WATCHES, or links with the
<PAGE>
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sites of the LACOSTE GROUP, the MASTER LICENSEE, its SUB-LICENSEES
and its
DISTRIBUTORS shall have to submit their plans to the LICENSOR and
obtain
its
prior written approval before going on line. The same procedure
shall
apply for the updating of said web page.
8.4 The LICENSOR
shall, for its part :
8.4.1 continue the promotional and advertising activities that it
has
carried out for many years throughout the world. It is specified
that,
should the LICENSOR undertake operations which are in the
world-wide
interest of the LACOSTE TRADEMARKS and which may be used or
have
direct or indirect repercussions with respect to the distribution
of
the LACOSTE WATCHES or the promotion and advertising of the
LACOSTE
TRADEMARKS IMAGE (and in particular either the promotional
actions
described in Article 8.1.3a) hereinabove, or the expenses for
the
advertising of the LACOSTE TRADEMARKS IMAGE as provided in
Article
8.1.1 hereinabove), the MASTER LICENSEE shall have to
contribute
financially to such operations for such share as the LICENSOR
shall
decide, but only up to a maximum amount not exceeding for each year
*
NET SALES forecasts defined in Article 6.2.7 hereinabove for
such
year. The amount spent by the MASTER LICENSEE for such
operations
shall be deemed as constituting an integral part of the
advertising
and promotion budget provided for in Article 8.2.2 hereinabove. If
the
LICENSOR does not use up such right during any one (1) year, then
the
amount not used up during such year may not be carried forward in
the
following year.
The LICENSOR shall invoice the MASTER LICENSEE for its share of
such
expenses regularly during the course of the year, and the
MASTER
LICENSEE shall settle such invoices within thirty (30) days;
and
8.4.2 supply the MASTER LICENSEE from time to time, at cost price,
with any
advertising material used by the LICENSOR that the MASTER LICENSEE
may
wish to purchase; and
*
CONFIDENTIAL PORTION OF THIS EXHIBIT OMITTED AND FILED SEPARATELY
WITH THE
SEC
PURSUANT TO RULE 24b-2 OF THE 1934 ACT.
<PAGE>
-55-
8.4.3 use reasonable efforts to keep the MASTER LICENSEE informed
of the
actions of its other licensees and distributors in the field of
their
marketing, merchandising, promotion and advertising programs,
for
instance at the time of the coordination meetings regularly
organized
by the LICENSOR, to which the MASTER LICENSEE shall attend as
provided
by Article 6.2.4 hereinabove; and
8.4.4 ensure that its licensees and distributors for the LACOSTE
APPAREL
PRODUCTS and the OTHER LACOSTE PRODUCTS fulfill the same
obligations
in respect of advertising and promotion as are binding upon the
MASTER
LICENSEE as regards to the LACOSTE WATCHES pursuant to Article
8.2
hereinabove.
ARTICLE 9 - COLLECTIONS AND LACOSTE CLUB
The MASTER LICENSEE shall supply the LICENSOR free of charge two
complete lines
of LACOSTE WATCHES each year during the term of this MASTER
AGREEMENT.
The LACOSTE WATCHES purchased by the LICENSOR from the MASTER
LICENSEE to be
sold or given as gifts through the Lacoste Club as well as the
other LACOSTE
WATCHES the LICENSOR may need for its own use shall be invoiced by
the MASTER
LICENSEE to LICENSOR *.
ARTICLE 10 - END-OF-SEASON GOODS AND SECONDS
10.1 SECONDS and end-of-season close-outs of LACOSTE WATCHES
(LACOSTE WATCHES no
longer included in the collection of the LACOSTE WATCHES) may be
sold with
the
LICENSED TRADEMARKS by the MASTER LICENSEE, its SUB-LICENSEES and
its
DISTRIBUTORS exclusively through the normal channels of
distribution for
the
LACOSTE WATCHES, outlet stores operated by MASTER LICENSEE, its
SUB-LICENSEES or its affiliates and off-price customers that are
approved
in
advance by LICENSOR (which approval shall not be unreasonably
withheld,
delayed or conditioned). LICENSOR agrees that the off-price
customers
listed on Schedule XV attached hereto are approved off-price
customers as
of
*
CONFIDENTIAL PORTION OF THIS EXHIBIT OMITTED AND FILED SEPARATELY
WITH THE
SEC
PURSUANT TO RULE 24b-2 OF THE 1934 ACT.
<PAGE>
-56-
the
date of this MASTER AGREEMENT for sales of SECONDS and
end-of-season
close-outs of LACOSTE WATCHES..
10.2 Damaged or defective LACOSTE WATCHES which cannot be repaired
may in no
circumstances be sold in any manner whatsoever, and shall be
destroyed at
their expense by the MASTER LICENSEE, its SUB-LICENSEES or its
DISTRIBUTORS.
ARTICLE 11 - UNFAIR COMPETITION
In consideration of the rights hereby granted to the MASTER
LICENSEE under this
MASTER AGREEMENT, the MASTER LICENSEE undertakes :
11.1 not to reproduce, manufacture, distribute or sell during the
term of this
MASTER AGREEMENT for its own account or for the account of third
parties,
directly or indirectly, any product identical with or confusingly
similar
to
the LACOSTE WATCHES or likely to create confusion in the mind of
the
public, or having certain characteristics unique to any MODEL of
the
LACOSTE WATCHES, such undertaking to remain in full force and
effect for
five
(5) years after the DATE OF TERMINATIO
