EXHIBIT 10.4
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LICENSE AGREEMENT
LAURA ASHLEY MANUFACTURING B.V.
AND
USA OPTICAL DISTRIBUTORS, INC.
Certain portions of this agreement and the amendments thereto
marked by
[***]have been omitted pursuant to previously granted Orders
Granting
Confidential Treatment Under the Securities Exchange Act of 1934
and were filed
separately with the Securities and Exchange Commission pursuant to
the initial
requests for confidential treatment.
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LICENSE AGREEMENT
THIS AGREEMENT is made the 28th day of May, 1991.
BETWEEN
1. LAURA ASHLEY
MANUFACTURING B.V., a company incorporated in the Netherlands
and
having its principal place of business at Luchthavenweg 24, 5507
SK
Veldhoven, The
Netherlands (hereinafter called "the Licensor") of the one
part; and
2. USA OPTICAL
DISTRIBUTORS, INC., a company incorporated in the State of
California having its principal office at 419A South Hindry
Avenue,
Inglewood, CA 90301, U.S.A. (hereinafter called "the Licensee") of
the
other part
WHEREAS:
1. The Licensor
is a member of the Laura Ashley group of companies which
designs, manufactures and retails home furnishing products and
garments,
marketed and sold in many countries of the world, including North
America.
2. The Licensor
is the registered proprietor of the trademarks LAURA ASHLEY
and
a distinctive oval device.
3. The Licensor
is the proprietor of a wide range of distinctive textile
designs and patterns
featured on Laura Ashley home furniture products and
garments.
4. The Licensee
is an established designer, importer and wholesaler of
fashionable eyeglass frames, including in its range of eyewear
styles a
portfolio of recognized brand names.
5. The Licensee
now wishes to design, import and sell in North America certain
styles of eyeglass frames under the LAURA ASHLEY brand name.
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IT IS THEREFORE AGREED AND DECLARED AS FOLLOWS:
1.
DEFINITIONS
As used in this Agreement:
1.1 "Affiliate" of a
party means a company which is affiliated to such party by
one
or more shareholdings such that, directly or indirectly, one of
them is
subject to the control of the other or both are subject to the
common
control of a third party;
1.2 "Approved Outlets"
means first class retail outlets of a quality and
standing consistent both with the high reputation of the Licensor
for
design, merchandising excellence and service and having the image
and
market positioning of the LAURA ASHLEY brand;
1.3 "Commencement
Date" means September 1, 1991, or such later date prior to
October 1, 1991 when the Licensor notifies the Licensee of its
approval of
the
Marketing Plan for the First Contract Year.
1.4 "Contract Term"
means the term of this Agreement as provided in Clause 13;
1.5 "Contract Year"
means a period of twelve consecutive months from 1st
February to 31st January during the Contract Term save that the
first
Contract Year shall be deemed to commence on the Commencement Date
and to
end
on 31st January 1993 and the last Contract Year shall be deemed
to
commence on 1st February of the Year during which the Contract
Term
terminates and to end on the date of actual termination;
1.6 "Laura Ashley
Designs" means surface prints originated or developed by the
Licensor or its Affiliates;
1.7 "Laura Ashley
Group" means the Licensor and its Affiliates referred to
collectively;
1.8 "Laura Ashley
Outlets" means outlets operated by a member of the Laura
Ashley Group in the Territory under the LAURA ASHLEY name with the
consent
of
the Licensor;
1.9 "Licensee" means
USA Optical Distributors, Inc., and any of its Affiliates;
1.10 "Licensor" means Laura Ashley Manufacturing B.V.;
1.11 "Marketing Plan" means a plan for marketing Products prepared
by the
Licensee and agreed with the Licensor for each Contract Year as
provided in
Clause 6;
1.12 "Minimum Royalty" means the minimum sum payable to the
Licensor by the
Licensee by way of Royalty in respect of each Contract Year as
provided in
sub-clause 9.3;
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1.13 "Net Sales" means the gross amount of wholesale sales of
Products invoiced
by
the Licensee less any deductions for returns, discounts or
allowances
granted to customers, all of which are reasonable and customary in
the
eyewear industry in the Territory, and less any bad debts, as that
term is
recognized under generally accepted accounting principles in the
Territory;
1.14 "Parties" means the Licensor and the Licensee;
1.15 "Products" means ophthalmic frames for prescription
eyeglasses, eyeglass
cases and other accessories and related items, all of which are
agreed as
Products intended for sale bearing the Trademarks, and which are
listed in
Schedule I to this Agreement;
1.16 "Royalty" means the Royalty payable by the Licensee to the
Licensor and
described in Clause 9;
1.17 "Selected Designs" means Laura Ashley Designs selected from
time to time by
agreement between the Parties for application to the Products or
packaging
or
promotional materials therefor;
1.18 "Territory" means the United States of America, its
territories and
possessions and Canada;
1.19 "Trademarks" means the trademarks of the Licensor listed in
Schedule II,
together with such additional trademarks (if any) as may be
included in
this
Agreement from time to time by agreement between the parties;
2. CONDITION
PRECEDENT
The
Licensor's approval of the Marketing Plan for the first Contract
Year
under sub-clause 6.4 is a condition precedent to the Licensor's
grant of
the
license under clause 3, and to all other rights, duties and
obligations
under this Agreement which are unrelated to the Licensor's approval
of the
Licensee's first Marketing Plan or to the Parties'
confidentiality
obligations under clause 10. If the Licensor does not approve
the
Licensee's first Marketing Plan by October 1, 1991, then this
Agreement
shall (unless the Parties otherwise agree in writing) terminate on
that
date. Upon such a termination, the parties shall have no further
rights,
duties or obligations under this Agreement, except the
confidentially
obligations under clause 10.
3. GRANT OF
LICENSE
3.1 With effect from
the Commencement Date the Licensor hereby grants to the
Licensee exclusive rights throughout the Contract Term
(a)
to use the Trademarks
on or in connection with the importation,
distribution, marketing and sale of Products, and
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(b)
to apply Selected
Designs to packaging or promotional materials for
the Products in the Territory upon the terms and conditions of
this
Agreement.
3.2 Whilst the
Licensor shall not, throughout the Contract Term, grant to any
third party the right to use the Trademarks for the sale of
Products within
the
Territory, nothing herein shall restrict the use, licensing,
manufacture or sale (as the case may be) by the Licensor or any
Licensor
Affiliate either in the Territory or elsewhere of any goods other
than
Products.
4. PRODUCT
QUALITY AND APPROVAL
4.1 The type and
quality of each item to be imported, marketed, distributed or
sold
as a Product by the Licensee shall be the subject of discussion
and
agreement with the Licensor prior to its adoption as a Product.
4.2 The Licensee may
propose new styles to the Licensor at two possible times:
either at the same time as it is proposing a new Marketing Plan
pursuant to
sub-clause 6.5, or at other times during the course of any Contract
Year.
Styles proposed by the Licensee at the same time as the Marketing
Plan
shall fall within categories of Products approved in that Marketing
Plan.
Styles proposed at any other time during the Contract Year must
fall within
categories of Products previously approved by the Licensor as part
of the
most
recently approved Marketing Plan.
4.3 Each style
approved by the Licensor as a Product shall be included in
Schedule I.
4.4 Approval of a
Product shall be evidenced by the authorized officers of the
Licensor and Licensee initialing that item when it is newly
included
therein; PROVIDED THAT, without prejudice to the Licensor's
absolute right
to
approve the quality of any Product sold by the Licensee as
elsewhere
herein provided, the Licensor's approval of any style as a Product
shall be
deemed to have been granted if the Licensor fails to respond to
the
Licensee's request therefor:
(a)
in the case of styles
submitted with the Marketing Plan, within TWENTY
(20) business days of receiving that request;
(b)
in the case of styles
submitted at other times during the Contract
Year, within FIFTEEN (15) business days of receiving that
request.
4.5 Products shall be
of the best quality materials and consistent both with
the
highest standards of craft and skill associated with the reputation
of
the
Licensor as designer, manufacturer and retailer of high quality
fashion
goods.
4.6 Prior to
commissioning production in commercial quantities of any
Product
the
Licensee shall:
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(a)
procure that the
Licensor shall, if it so chooses, have the right to
inspect the places of proposed manufacture of such Product for
the
purpose of ascertaining that the Licensor's quality standards
are
being met, and
(b)
submit free of charge
at least three samples of each such Product to
the Licensor for approval. No Product shall be sold by the Licensee
in
the absence of such approval. All Products thereafter offered for
sale
shall correspond with the approved sample.
4.7 No item which
fails to meet the quality standards set forth in sub-clause
4.2 shall be sold as a
Product. The Licensee shall procure that its
suppliers are held to the same requirement.
4.8 The Licensee shall
ensure that all Products shall conform with all laws and
regulations applicable thereto in the Territory.
5. SALES AND
PROMOTION
5.1 The Licensee shall
use its best efforts to promote and extend the sale of
Products throughout the Territory to all potential Approved
Outlets.
5.2 The Licensee shall
secure and maintain the distribution of adequate stocks
of
Products to (and only to) Approved Outlets such that the Products
may be
made
readily and continuously available to customers.
5.3 The Licensor
hereby places the Licensee on notice that it may inspect such
Approved Outlets at any time throughout the Contract Term to assure
itself
that
the provisions of this Clause are being complied with. If the
Licensor
notifies the Licensee that an outlet at which Products are sold
does not
(in
the absolute discretion of the Licensor) meet the standards of
an
Approved Outlet, the Licensee shall procure that sales of Products
at such
outlets be discontinued at the earliest possible opportunity.
5.4 Products shall not
be exported or sold by the Licensee for re-sale outside
the Territory.
5.5 All advertising
and promotional materials and activities relating to the
Products shall require the Licensor's prior approval and all
advertising
and
promotional proposals for the Products shall accordingly be
submitted
by the Licensee to the
Licensor for prior approval. In respect of proposals
by
the Licensee for promotional materials and activities which have
been
contemplated by the Marketing Plan for the period to which they
relate, the
Licensor shall respond as quickly as practicable and in any event
within
FIFTEEN (15) business days from receipt of the same, in default of
which
response the Licensor's approval shall be deemed to have been
granted.
5.6 The Licensor and
its Affiliates in the Territory may purchase Products from
the
Licensee at the lower of
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(a)
Licensee's standard
wholesale price, including customary trade
discounts and advertising allowances, or
(b) the lowest wholesale price at
which the Licensee sells equivalent
quantities of Products to its customers in the Territory, on at
least
net THIRTY (30) day terms.
6. MARKETING
Marketing Plans
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6.1 The Licensee
shall, in consultation with the Licensor, prepare and propose
to
the Licensor a Marketing Plan in respect of each Contract Year.
6.2 The Marketing Plan
shall summarize all market information relevant to the
period to which it relates including (without limitation):
(a)
a description of the
Products to be sold, together with proposals for
categories and for designs of Products, and including proposed
sources
of supply;
(b)
the number and
identity of prospective customer accounts;
(c)
suggested wholesale
price points for the Products;
(d)
the anticipated volume
expected to be sold of each of the Products;
(e)
an analysis of
competitors' Products by price band;
(f)
proposals for the
interpretation of the Laura Ashley brand image in
terms of advertising concepts and point of sale and other
promotional
materials;
(g)
proposed advertising
and promotional activities and expenditures for
the Products; and
(h)
proposed methods of
sales and distribution.
6.3 To the extent
practicable, the Licensee shall, upon submission of the
Marketing Plan, provide the Licensor with three (3) samples of each
Product
which is described in the Marketing Plan and which is being
submitted for
approval.
6.4 The Marketing Plan
for the First Contract Year shall be proposed to the
Licensor by the Licensee no later than 31st July 1991. The Licensor
shall
respond to such proposal no later than 31st August 1991.
Subsequent
Marketing Plans shall be submitted to the Licensor for
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approval no later than SIX (6) months in advance of the
commencement of the
Contract Year to which they relate.
Approval by Licensor
--------------------
6.5 No Marketing Plan
shall be implemented unless and until the written
approval of the Licensor has been obtained, provided that if the
Licensor
fails to respond to the proposal for a Marketing Plan referred to
in
sub-clause 6.4 within TWENTY (20) business days after receipt
thereof, the
Plan
shall be deemed approved as submitted.
6.6 The Licensee shall
spend no less than THREE PER CENT (3%) of its annual Net
Sales of Products on advertising and promotional activities for
the
Products in the Territory.
Additional Products
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6.7 The Parties
recognize a request by the Licensee to sell sunglasses bearing
the
Trademarks, either under this Agreement or a separate
agreement.
Accordingly the Licensor agrees to enter into good faith
discussions with
the
Licensee within ONE HUNDRED AND EIGHTY (180) days from the
Commencement
Date, with a view to accommodating the Licensee's proposal. The
Licensor
further agrees that, until such period has expired, it will not
approach
other potential distributors for sunglasses in the Territory,
provided that
such
restriction shall not in any event endure beyond a period of
ONE
HUNDRED AND EIGHTY (180) days from the Commencement Date. If the
Licensor
and
the Licensee do not enter into an agreement for the Licensee to
sell
sunglasses bearing the Trademarks, whether pursuant to this or
another
agreement, and the Licensor enters into an agreement with a third
party to
sell
sunglasses bearing the Trademarks in the Territory, the Licensor
shall
hold
that third party to the same standards as the Licensee under
this
Agreement with respect to quality, styling and Approved
Outlets.
7. MARKET
REPORT
Within two months of the end of each Contract Year the Licensee
shall
submit to the Licensor a written report giving a full resume of
sales and
promotional activities and expenditures during the Year.
8. TRADEMARKS
AND COPYRIGHT
8.1 The Licensee
acknowledges that the Trademarks and the goodwill attaching
thereto are and shall remain the property of the Licensor.
8.2 The Licensee shall
not promote or sell Products except in conjunction with
Trademarks and shall not use Trademarks or Selected Designs except
in
relation to Products in a manner approved by the Licensor.
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8.3 All labels,
packaging, display, and promotional and advertising materials
relating to the Products and their promotion and sale shall bear
an
acknowledgement as to the proprietorship of the Trademarks and the
license
granted to the Licensee as follows:
"Sold by USA Optical under license from Laura Ashley"
8.4 Wherever Selected
Designs are used on packaging (and elsewhere as the
Licensor may require or approve) the Licensee shall affix or apply
a notice
acknowledging the Licensor's copyright ownership as follows:
"(C) Laura Ashley 19 [date* of design]"
8.5 Save as provided
in sub-clause 8.3 and except as otherwise agreed in
writing, there shall be no use of the Licensee's name or trademarks
on the
Products or on any labels, packaging, display or advertising
materials
related to the Products.
8.6 All rights arising
from the use by the Licensee of the Trademarks shall
enure to the benefit of the Licensor. This license shall operate
solely as
a
permission for the Licensee to use the Trademarks and Selected
Designs in
the
manner herein specified and shall not be deemed to confer on
the
Licensee any proprietary right in the Trademarks or Selected
Designs, nor
shall the Licensee acquire any registered design, registered
trademark or
other industrial property rights relating thereto.
8.7 If the Licensee
becomes aware of any infringements of the Trademarks or
copyrights in the Selected Designs, or any act of unfair
competition or any
trademark application in the Territory which in any way may impair
the
value or validity of the Trademarks, or the other rights
granted
by
the Licensor hereunder, the Licensee will promptly notify the
Licensor
of
that event. The Licensor undertakes that it will respond to
such
notification by taking such steps as it may deem reasonably
necessary to
protect the Licensee's rights hereunder, it being understood that
the
institution and conduct of any litigation which ensues, the
selection of
counsel and the
settlement of the litigation and claims affecting the
Trademarks or Selected Designs shall be entirely within the
discretion of
the
Licensor, under the Licensor's control and at the Licensor's
expense.
Should legal action against a third party be deemed necessary or
desirable
by
the Licensor, the Licensee will, if requested by the Licensor,
cooperate
with
the Licensor in rendering appropriate assistance in instituting
and
prosecuting such legal action, provided that the reasonable
expenses which
the
Licensee thereby incurs and the other costs and expenses of such
legal
action, including legal fees, shall be borne by the Licensor.
8.8 During the
Contract Term, or upon the termination of this Agreement for
any
reason, the Licensee shall, upon request of the Licensor, execute
such
documents as the Licensor may reasonably require, including
registered user
agreements, to reflect the Licensor's ownership of the Trademarks.
The
Licensee hereby grants to the Licensor a power of attorney coupled
with an
interest to execute such agreements as Licensee's attorney-in-fact.
The
Licensor shall promptly provide the Licensee with copies of any
such
agreements.
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8.9 The
Licensor represents to the Licensee:
(a)
that it is
the owner of the Trademarks and of the copyrights in
all the Selected Designs;
(b)
that it
has the sole and exclusive right to deal with the same and
to enter into license agreements therefor;
(c)
that none
of the Trademarks or the Selected Designs infringes any
trademark, service mark, trade name, copyright design or work
of
any other
party.
9.
ROYALTY
9.1 In
consideration for the rights herein granted (and subject to the
payments of Minimum Royalty herein contained), the Licensee shall
pay to
the
Licensor a royalty at such rate as, after deduction of any
withholding or other taxes (if any) imposed within the Territory
and
required to be deducted by the Licensee, shall amount to *** of the
Net
Sales of all Products sold by the Licensee.
9.2 The
Royalty shall be determined and paid in respect of each Contract
Year
quarter ending on 30th April, 31st July, 31st October and 31st
January
during the Contract Term.
9.3 In
respect of each Contract Year, the amount of Royalty payable to
the
Licensor shall in no event be less than the Minimum Royalty quoted
below:
Contract Year
US $
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----
1991/93
***
1993/94
***
1994/95
***
1995/96
***
Minimum Royalty shall be appropriately pro-rated for any period
during
the
Contract Term that is less than a full Contract Year.
9.4 the
Minimum Royalty shall be payable as follows:
9.4.1 with respect to
the Contract Year 1991/93
(a) on the
***, a first ***
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installment of ***;
(b) within
*** of the end of each of the last ***, further
installments each of ***;
9.4.2 with respect to
each subsequent Contract Year, within *** of the
end of each ***, a sum equivalent to *** attributable to such
***;
provided that, in each Contract Year, any excess of actual Royalty
paid
per
quarter over the applicable installment of Minimum Royalty shall
be
carried forward and credited against subsequent installments of
Minimum
Royalty payable in respect of such Contract Year.
9.5 Except
as provided in subclauses 13.4 and 13.5, failure to pay the
Minimum Royalty as provided in sub-clause 9.4 shall constitute a
material
breach of this Agreement within the meaning of sub-clause
13.2(a).
9.6
Royalty payments pursuant to sub-clause 9.7 shall credit the
Licensee
with
amounts of Minimum Royalty, and Minimum Royalty payments pursuant
to
sub-clause 9.4.2 shall credit the Licensee with amounts of Royalty
paid
during the Contract Year in excess of the Minimum Royalty.
9.7
Payment of Royalty in respect of each quarter shall be effected
within
***
of the end thereof, and payment shall be accompanied by a report
from
the
Licensee showing the names of customers to whom the Licensee
sold
Products during the period, and a precise computation of Net Sales
upon
which the Royalty payment was based, including the quantity,
description
and
value of Products sold by the Licensee during the quarter, and
any
deductions for returns, discounts, allowances granted to customers,
or
bad
debts.
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9.8 The
Licensee shall keep adequate and accurate records in sufficient
detail to enable the Royalty to be readily determined and shall,
upon the
Licensor's request, permit such records to be examined by the
Licensor's
representative at any time during normal business hours to verify
Royalty
reports and payments. In the event that such examination reveals
an
understatement of Royalty due to the Licensor in excess of FOUR PER
CENT
(4%), the Licensee shall be liable for costs of the Licensor's
audit and
the
incidental expenses incurred in connection with the audit.
Those
costs and expenses shall be separate from and in addition to
the
Royalties owed to the Licensor.
9.9 Unless
otherwise specified by the Licensor, all payments due by the
Licensee to the Licensor hereunder shall be computed and paid in
US
dollars.
9.10 All overdue
amounts shall bear interest at the rate of ONE PER CENT (1%)
per
month.
9.11 Until
further notice from Licensor, all sums due to the Licensor
hereunder shall be paid in US dollars by international wire
transfer to
the
following account:
ABN
Bank
Vijzelstraat 68-78
Amsterdam 1000 AK
The
Netherlands
Account Name: Laura Ashley Manufacturing B.V.
Account No.:54 02 74 348
Swift Code: ABN ANL 2A
10.
CONFIDENTIALITY
Any
information acquired by one Party (the "First Party") in the
course
of
this Agreement regarding the affairs and business of the other
Party
(the
"Second Party") and its Affiliates shall, during the Contract
Term
and
for TEN (10) years thereafter, be treated by it as confidential
and
shall not be disclosed without the prior consent of the Second
Party,
whether such information is disclosed to the Second Party by the
First
Party or otherwise obtained by the First Party as a result of
its
association with Second Party except to the extent either required
to be
divulged in the performance of this Agreement or that such
information
falls within the public domain. Information to be treated as
confidential
under this Agreement shall include, without limitation, the
Parties'
customer lists, unpublished designs, marketing and business
plans,
telemarketing and other unique sales techniques, and sources of
supply.
11.
LIABILITY, INDEMNITY AND INSURANCE
11.1 The
Licensor and the Licensee each acknowledges and represents to
the
other that it is not a joint venturer, partner or co-venturer with
the
other and that neither party shall incur any liability on behalf of
the
other party or purport to pledge the credit of the other party or
accept
any
order or obligation to be binding upon the other party.
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11.2 The
Licensee shall indemnify and hold the Licensor, its Affiliates
and
their respective officers and directors, harmless from all claims,
suits,
demands, actions, losses, damages and costs, including reasonable
legal
fees
and court costs, which the Licensor may incur or suffer by reason
of
any
acts or omissions of the Licensee in connection with the
importation,
distribution, marketing or sale of the Products, including, but
not
limited to
(a)
any
manufacturing defect in a Product;
(b)
the
