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EXHIBIT 10.16
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TRADEMARK LICENSE AGREEMENT
AGREEMENT made as of the 12th day of October 2005, (the
"Agreement") by
and between Kobra International, Ltd. d/b/a Nicole Miller, a New
York
corporation ("Licensor"), and Signature Eyewear, Inc. a California
corporation
("Licensee") (collectively, the "Parties" and each individually a
"Party").
WHEREAS, Licensor is the owner of the Trademarks as defined herein
and
as set forth in Schedule 1 attached hereto; and
WHEREAS, the Trademarks are unique, extraordinary, valuable and
have
acquired and established outstanding reputation and goodwill;
and
WHEREAS, Licensee recognizes the great value and goodwill
associated
with the Trademarks and that all rights to the Trademarks and the
associated
goodwill belong exclusively to the Licensor and that the Trademarks
have
acquired a secondary meaning to the public; and
WHEREAS, Parties and various predecessors in interest have
operated
under a license agreement dated April 1, 1993 and various
amendments thereto,
which shall expire on March 31, 2006; and
WHEREAS,
Parties desire to enter into this new Agreement which, upon
expiration of the prior license agreement and pursuant to Section
27 herein,
shall supersede the prior license agreement; and
WHEREAS, Licensee desires to obtain an exclusive license to use one
or
more of the Trademarks, on and in connection with the manufacture,
sale and
distribution of Licensed Products (as defined herein and as set
forth in
Schedule 2) bearing, incorporating or otherwise utilizing said
Trademarks
Worldwide excluding Japan (the "Territory"); and
WHEREAS, Licensor has agreed to grant to Licensee such license
under
and subject to the terms and conditions set forth herein;
NOW, THEREFORE, the Parties hereto, in consideration of the
mutual
agreements herein contained and promises herein expressed, and for
other good
consideration acknowledged by each of them to be satisfactory and
adequate, do
hereby agree as follows:
1. Definitions:
The following words are defined for this Agreement in
the section indicated:
DEFINITION
SECTION
----------
-------
"Advertising Approval Form"
Section 6.2
"Advertising Royalty"
Section 5.4
"Agreement"
First Clause
Portions marked with {***} have been omitted pursuant to a Request
for
Confidential Treatment and were filed separately with the
Commission.
<PAGE>
DEFINITION
SECTION
----------
-------
"Approvals"
Section 8
"Certification"
Section 4.3
"Closeouts"
Section 3.5
"Competing Products"
Section 12.1
"Confidential Information"
Section 7
"Counterfeit Product"
Section 12.2
"Distribution Level(s)"
Section 4.1
"Events of Default"
Section 10
"Guaranteed Minimum Royalties"
Section 5.2
"Indemnitees"
Section 16
"Label Level(s)"
Section 4.1
"Laws"
Section 8
"License"
Section 2.1
"Licensee"
First Clause
"Licensed Products"
Section 2.1
"Licensor"
First Clause
"Licensor Sales"
Section 4.6
"Minimum Sales Volume"
Section 4.2.1
"Net Sales"
Section
4.2.1
"Parties"
First Clause
"Production Sample(s)"
Section 3.1
"Prototype Sample(s)"
Section 3.1
"Royalty Down Payment"
Section 5.3
"Royalty" or Royalties"
Section 5.1
"Sales Period"
Section 4.2.1
"Seconds" or "Irregular"
Section 3.4
"Sell Off Period"
Section 11.2
"Term"
Section 2.3
"Territory"
Fifth Clause
"Trademarks"
Section 2.1
2
<PAGE>
2. Grant of
Rights.
2.1 Use of the
Trademarks by Licensee. Subject to the terms and
provisions of this Agreement, Licensor hereby grants to Licensee an
exclusive
license (the "License") during the Term to use those certain
trademarks, service
marks, logos and tradenames owned by the Licensor set forth in
Schedule 1 (the
"Trademarks") in connection with the manufacture, distribution and
sale of the
products set forth in Schedule 2 (the "Licensed Products") in the
Territory.
Licensee may only use the Trademarks in the exact manner set forth
in Schedule
1. Any other use must be approved in advance in writing by
Licensor. All rights
with respect to the Trademarks and all other trademarks, service
marks and trade
names used by Licensor not specifically granted to Licensee in this
Agreement
are reserved to Licensor.
2.2 Ownership.
Licensee acknowledges that (a) Licensor owns the
Trademarks and all goodwill associated with or symbolized thereby,
(b) Licensee
has no ownership right in or to any of the Trademarks, and (c)
Licensee shall
acquire no ownership interest in or to any of the Trademarks, any
other
trademarks, service marks or trade names used by Licensor by virtue
of this
Agreement. Licensee shall do nothing inconsistent with Licensor's
ownership of
the Trademarks and related goodwill and agrees that all use of the
Trademarks by
Licensee shall inure to the benefit of Licensor. Licensee shall not
use any of
the Trademarks or any other trademark, service marks or trade names
used by
Licensor in any manner as a part of its business, corporate or
trade name or
otherwise, except and unless expressly permitted hereunder.
2.3 Term. This
Agreement shall commence as of April 1, 2006 (the
"Effective Date") and shall end on March 31, 2009 unless the
License is renewed
in accordance with his Section 2.3 (the "Term"). If Licensee wishes
to renew the
Term then between three (3) and (6) months of the expiration of the
Term,
Licensee shall send Licensor written notice of its desire to renew
this
Agreement for an additional three (3) year period pursuant the
terms set forth
in Sections 4.2 and 5.2 herein. Such renewal shall be automatic if
Licensee
meets the Minimum Sales Volume for the Sales Period ending on March
31, 2009 and
if Licensee is not otherwise in default, and Licensor shall send
acknowledgement
of renewal within thirty (30) days of receipt. Otherwise, Licensor
may in its
sole discretion accept or reject this proposal by written notice
within thirty
(30) days of receipt.
2.4 Identification. On
backing cards of each Licensed Product,
Licensee shall include the following language:
Manufactured by Signature Eyewear, Inc. under license from
Kobra International, Ltd. [Insert specific Trademark] is a
registered trademarks of Kobra International, Ltd. All
rights reserved.
Licensee shall place any other notices, reflecting ownership as
required by
Licensor, on all Licensed Products, samples, packaging, backing
cards,
advertising, public relations and promotional materials.
3
<PAGE>
2.5 Registration.
Licensor shall have the sole right to take such
action as it deems appropriate to obtain trademark registration in
the Territory
for any of the Trademarks. If it shall be necessary for Licensee to
be the
applicant to effect any such registrations, Licensee shall
cooperate with
Licensor and execute all necessary documents to effect the
registration of the
Trademarks as Licensor may request to effect any such
registrations, all at
Licensor's sole expense. Licensee hereby assigns all of its right,
title and
interest in and to each such application, and any resulting
registration, to
Licensor. Licensee shall execute all papers and documents necessary
to
effectuate or confirm any such assignment. Licensee shall perform
all reasonable
and necessary acts and execute all necessary documents to effect
the
registration of the Trademarks as Licensor may request, all at
Licensor's sole
expense. Licensee shall not obtain or attempt to obtain in the
Territory, or
elsewhere, any right, title, interest, registration, or otherwise,
in or to the
Trademarks, or any of them. In the event that any such right, title
or interest
should be obtained by Licensee in contravention hereof, Licensee
shall hold the
same on behalf of Licensor and shall transfer the same to Licensor
upon request
at the sole expense of Licensee and without expense to
Licensor.
2.6 No Export. The
License is granted for the Territory only.
Subject to applicable law, Licensee shall not export Licensed
Products from the
Territory or sell Licensed Products to any entity or individual
which it knows
or has any reason to believe intends to export Licensed Products
from the
Territory. Subject to applicable law, Licensee will use its best
efforts to
prohibit the export of Licensed Products from the Territory.
2.7 Exclusivity. The
License granted to Licensee hereby entitles
Licensee the exclusive right to market, distribute and sell the
Licensed
Products set forth in Schedule 2 bearing the Trademarks set forth
on Schedule 1
in the Territory under the terms and conditions hereof.
Licensor reserves the right: (i) to use and to grant others the
right to use the
Trademarks in the Territory on and in connection with all products
not included
in Licensed Products and (ii) to manufacture, and to grant to
others the right
to manufacture, Licensed Products outside the Territory and within
the Territory
solely for export. In the event any of the Licensee's rights to use
Trademarks
in a particular Distribution Level are terminated pursuant to
Section 4.2.3
hereunder, Licensor shall thereinafter have the right grant others
the right to
use such the Trademark in connection with the Licensed Products
marketed and
sold in such Distribution Level.
Except under the circumstances set forth in the prior paragraph,
Licensor shall
not grant to any person the right during the Term to manufacture,
market, sell
and/or distribute Licensed Products bearing the Trademarks or
variation of the
Trademarks (including without limitation any variation or
derivation of the name
"Nicole Miller").
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<PAGE>
3. Product
Design, Quality and Standards, Manufacture, Irregulars.
3.1 Design Process.
The process for the design of each of the
Licensed Products shall be in accordance with the following
steps:
Step 1: DESIGN DIRECTION: Licensor shall provide to Licensee
design direction as determined by Licensor in its discretion.
Licensee shall
acknowledge in writing that it has been provided with Licensor's
design
direction.
Step 2: SKETCHES: Based on the design direction provided in
Step
1, Licensee, when requested by Licensor and in consultation with
Licensor and/or
Licensor's designee (such as, for example, a merchandiser or retail
store
operator) shall prepare sketches of the design for each Licensed
Product which
shall include specifications of, including, but not limited to,
material(s),
color(s), size(s) and shape(s). Licensee shall provide such
sketches, and if
required by Licensor, revisions thereto, to Licensor until Licensor
provides
written approval of such sketches. In conjunction with its
submission of such
sketches, Licensee shall provide to Licensor a completed "Product
Approval
Sheet," in the form annexed hereto as Schedule 4, and if required
by Licensor,
revisions thereto, until Licensor provides written approval of such
Product
Approval Sheet. Licensor shall provide Licensee with written
approval(s) or
disapproval(s) of such sketches, revisions and Product Approval
Sheet, or
revisions thereto, within three (3) business days of receipt.
Step 3: PROTOTYPE SAMPLES: - Based on the sketches approved
pursuant to Step 2, Licensee, in consultation with Licensor and/or
Licensor's
designee, shall produce prototype sample(s) of each of the Licensed
Products
("Prototype Sample(s)"). Licensee shall provide to Licensor such
Prototype
Sample(s), and if required by Licensor, revisions thereto, until
Licensor
provides written approval of such Prototype Sample(s). At
Licensor's request,
Licensee shall provide Licensor with a reasonable number of each of
the
Prototype Sample(s). In conjunction with its submission of such
Prototype
Sample(s), Licensee shall provide Licensor with a completed Product
Approval
Sheet, in the form annexed hereto as Schedule 4, along with a
photograph of each
Prototype Sample and if required by Licensor, revisions thereto
until Licensor
provides written approval of such Product Approval Sheet and of
such
photographs. Licensor shall provide Licensee with written
approval(s) or
disapproval(s) of such Prototype Sample(s), Product Approval Sheet,
or revisions
thereto, and of such photographs within three (3) business days of
receipt.
Step 4: PRODUCTION SAMPLES: Based on the Prototype Sample(s)
approved pursuant to Step 3, Licensee, in consultation with
Licensor and/or
Licensor's designee, shall produce production sample(s) of each of
the Licensed
Products ("Production Sample(s)"). Licensee shall provide such
Production
Sample(s), and if required by Licensor, revisions thereto, to
Licensor until
Licensor provides written approval of such Production Sample(s). At
Licensor's
request, Licensee shall provide Licensor with a reasonable number
of each of the
Production Sample(s). In conjunction with its submission of such
Production
Samples, Licensee shall provide to Licensor a completed Product
Approval Sheet,
in the form annexed hereto as Schedule 4, along with a photograph
of each
Production Sample and if required by Licensor, revisions thereto,
until Licensor
provides written approval of such Product Approval Sheet and such
photographs.
Licensor shall provide Licensee with written approval(s) or
disapproval(s) of
5
<PAGE>
such Product Sample(s), Product Approval Sheet, or revisions
thereto, and of
such photographs within three (3) business days of receipt.
Step 5: FINAL MANUFACTURE: In conformity with the Production
Sample(s) approved pursuant to Step 4, Licensee shall manufacture
each Licensed
Product. Licensed Products shall be subject to Licensor's approval
and
satisfaction. Once Licensor has approved the Production Sample(s),
Licensee will
manufacture Licensed Products only in accordance with such approved
Production
Sample(s) and will not make any changes without Licensor's prior
written
approval. At Licensor's request, Licensee shall provide Licensor
with a
reasonable number of each Licensed Product.
3.2 Ownership/ Costs
of Samples, Etc.
The costs of the steps in Section 3.1 above shall be apportioned as
follows:
3.2.1 Step 1 of the
design process above shall be at the
sole cost and expense of Licensor. Steps 2, 3, 4 and 5 shall be at
the
sole cost and expense of Licensee.
3.2.2 The right, title
and interest in and to samples
(Prototype, Production, or otherwise), sketches, designs, photos,
and
other materials including any modifications or improvements
thereto,
shall be the sole property of the Party which created such work.
The
Party which created such work may use and permit others to use
said
designs and other materials in any manner it desires, provided
that
such use does not conflict with any rights of the other Party
granted
hereunder. The Party which created such work may in its
discretion
affix a statutory copyright notice on or to any of the designs,
sketches, samples, products or other materials it created in
connection
with this Agreement.
3.3 Non-Conforming
Products. In the event that any Licensed
Product is, in Licensor's reasonable discretion, not being
manufactured,
distributed or sold in conformity with Licensor's approval in Step
5 of Section
3.1, upon written notice from Licensor and until such Licensed
Product is
brought into conformity acceptable to the Licensor, Licensee must
immediately
cease and desist from the use of the Trademarks in connection with
such
non-conforming Licensed Product and the promotion, advertising,
sale,
manufacture and distribution thereof. Licensor may require Licensee
to recall
promptly any Licensed Product not in conformity. If at the end of
the thirty
(30) day period from the written notice, the Licensed Product is
still not in
conformity acceptable to Licensor or if such Licensed Product
ceases to be in
conformity thereafter, in Licensor's sole discretion, Licensor may
immediately
terminate upon written notice the License with respect to such
Licensed Product.
Licensor may purchase at Licensee's expense any Licensed Product
found in the
marketplace which, in Licensor's discretion, are not in conformity
hereunder,
and bill such costs to Licensee. Licensee must pay all royalties
due on sales of
non-conforming goods occurring prior to the issuance of the notice
of
nonconformity hereunder.
3.4 Seconds. If in the
sole discretion of Licensor, any Licensed
Product is not in conformity with Licensor's approval as set forth
in Section
3.1, but is suitable for sale as a non-first quality product
("Seconds"), then
Licensee may sell such Seconds in a way which shall
6
<PAGE>
not reduce the value of the Trademarks or detract from Licensor's
reputation and
shall obtain the approval of Licensor with respect to the terms and
method of
such disposal. All Seconds approved for sale by Licensor shall be
clearly marked
"Seconds" or "Irregular." Additionally, Licensee shall remove all
labels and
hang tags bearing the Trademarks in accordance with Licensor's
specifications.
The percentage of Seconds of any Licensed Product which may be
disposed of in
any given year pursuant to this section shall not, in any event,
exceed five
(5%) percent of the total number of units of that particular
Licensed Product
distributed or sold by Licensee in that year.
3.5 Closeouts. Sales
of first-quality Sunglasses for less than
75% of their regular wholesale prices ("Closeouts") may be made
only to the
retailers in Distribution Level #4 as defined in Section 4 and
approved by
Licensor in Schedule 3.
3.6 Inspection.
Licensor or its designee shall be entitled, upon
reasonable written notice and during normal business hours, to
enter the
premises of the Licensee, including all facilities where Licensed
Products are
stored or warehoused, to inspect Licensed Products.
3.7 Third Party
Manufacturers . Licensee shall advise Licensor of
specific Licensed Products to be manufactured by third parties and
shall provide
Licensor with the names and addresses of all third party
manufacturers. Licensor
may demand that Licensee impose restrictions on such third party
manufacturers,
including but not limited to having such third party manufacturers
execute
confidentiality, Trademarks acknowledgement and anti-pirating
and
anti-infringement agreements and/or letter agreements guaranteeing
the third
party manufacturer's compliance with the provisions of this
Agreement. Licensor
may demand that each third party manufacturer also covenant in the
letter
agreement that it will not subcontract any of its obligations to
manufacture
Licensed Products without prior written approval by the
Licensor.
3.7.1 Representatives
of Licensor shall have the right to
inspect, evaluate and approve such third party manufacturers.
Licensee
further covenants to obtain in writing from any such
manufacturers,
undertakings in a form satisfactory to Licensor, regarding the
transfer
of unused
materials containing the Trademarks and defective finished
products to Licensee.
3.7.2 Such third party
manufacture notwithstanding, Licensee
shall remain primarily and completely responsible to Licensor for
the
acts of such third party manufacturers under all of the provisions
of
this Agreement and the acts of such third party manufacturers shall
be
deemed the acts of Licensee. Licensee shall promptly provide
Licensor
with written notice of
any changes in third party manufacturers.
3.8 Monitoring. Licensee shall actively monitor Licensee's and
its
customers' use of the Trademarks so that the Trademarks' and
Licensor's image or
reputation is not impaired.
3.9 Notice of
Infringement. Licensee shall immediately notify
Licensor of any infringement or imitation, threatened or actual, of
the
Trademarks or the use by any person of any trademark(s), service
mark(s), or
tradename(s) that Licensee reasonably believes poses a
7
<PAGE>
threat to the Trademarks. In such event, Licensor will act in its
sole
discretion to protect the Trademarks. Licensee will have no right
to take any
action with respect to the Trademarks without the prior written
approval of
Licensor. Licensee shall execute and deliver to Licensor any and
all documents
and do all other acts and things which Licensor deems necessary or
appropriate
to protect the Trademarks.
4. Sales.
4.1 Exploitation.
Licensee shall exploit the License in the
Territory by selling Licensed Products to the customer venue
categories
("Distribution Level(s)"), specifically set forth in Schedule 3
comprising the
Nicole Miller customer base and profile. In accordance with the
terms hereof,
Licensee shall manufacture, distribute and sell Licensed Products
under
different tiers of labels ("Label Level(s)") bearing the specific
Trademarks
comprising that Label Level as set forth in Schedule 1 to the
appropriate
Distribution Level shown in Schedule 3 as follows:
o Licensee
shall only distribute and sell Licensed Products
bearing the Trademarks in Label Level #1 to Distribution
Level #1.
o Licensee
shall only distribute and sell Licensed Products
bearing the Trademarks in Label Level #2 to Distribution
Level #2.
o Licensee
shall only distribute and sell Licensed Products
bearing the Trademarks in Label Level #3 to Distribution
Level #3.
o Licensee
shall only distribute and sell Closeouts and Seconds
(as defined herein) to Distribution Level #4.
8
<PAGE>
4.2 Minimum Sales
4.2.1 During each
Sales Period, Licensee shall meet the
following "Minimum Sales Volume" of Licensed Products:
Minimum Sales
Sales Period(s)
Volume
--------------------------
-------------
4/1/06 - 3/31/07
{***}
4/1/07 - 3/31/08
{***}
4/1/08 - 3/31/09
{***}
4/1/09 - 3/31/10
{***}
4/1/10 - 3/31/11
{***}
4/1/11 - 3/31/12
{***}
Minimum Sales Volume shall be based on sales of Licensed Products
less returns,
normal trade discounts and allowances ("Net Sales"). In no event
shall returns,
normal trade discounts and allowances exceed {***} of Licensed
Products sold.
Deductions in excess of {***} shall be disallowed when computing
royalties due
as specified in Section 5.1. Closeouts and Seconds shall not be
counted in
determining Minimum Sales Volume
4.2.2 Minimum Sales
for Particular Licensed Products. If
Licensee's Net Sales of ophthalmic eyewear in any Sales Period are
less
than {***} of the Minimum Sales Volume for such Sales Period
Licensor
may terminate the License by written notice within sixty (60)
days
following the end of such Sales Period. If Licensee's Net Sales
of
sunglasses in any Sales Period are less than {***} of the Minimum
Sales
Volume for such Sales Period, Licensor may terminate the License
for
sunglasses by written
notice within sixty (60) days following the end
of such Sales Period. In the event of termination of the License
for
sunglasses: (i) the existing stock of sunglasses shall remain
in
circulation for sale and continue to be subject to the License Fees
set
forth in Section 5; and (ii) the Minimum Sales Volume and
Guaranteed
Minimum Royalty shall be reduced by {***} for all Sales
Periods.
4.2.3 Minimum Sales for Each Distribution Level. In the event
that Licensee's Net Sales within Distribution Level #1 or #3
falls
below the percentage of the Minimum Sales Volume shown below during
any
Sales Period, Licensor may terminate the License for that
particular
Distribution Level by written notice to Licensee delivered within
sixty
(60) days following the date Licensee fails to meet such
requirement.
In the event of such termination for a particular Distribution
Level:
(a) the existing stock of Licensed Products within that
particular
Distribution Level shall remain in circulation for sale and
continue to
be subject to the License Fees set forth in Section 5; and (b)
the
Minimum Sales Volume and Guaranteed Minimum Royalties shall be
reduced
by the percentages shown below, as applicable.
9
<PAGE>
Percent of Minimum Sales Volume
-------------------------------
Distribution Level #1 {***}
Distribution Level #2 {***}
Distribution Level #3 {***}
4.2.4 Minimum Sales
for Each Country Within the Territory.
During the Term, if Licensee's Net Sales to any "Country" within
the
Territory for the prior Sales Period were less than {***}, Licensor
may
enter into negotiations with a prospective licensee(s) to sell
Licensed
Products in that Country provided that proposed license
includes
Minimum Sales Volumes of not less than {***} per year (calculated
no
less favorably to the licensee than Net Sales under this Agreement)
and
Guaranteed Minimum Royalties of not less than {***} per year
(payable
at times and on terms not less favorable to the licensee than the
terms
of payment under this Agreement) for that Country. Licensor will
advise
Licensee in writing if it enters into negotiations with a
prospective
licensee(s) for such a proposed license so that Licensee may
present a
proposal for that Country.
Licensee will have twenty (20) business days from the date of
such notice to present a proposal to Licensor. Licensor may accept
or
reject that proposal; if it rejects that proposal, it may enter
into a
license no less favorable to the licensee than described in the
prior
paragraph. Upon entering into such a license, Licensor shall
give
written notice to Licensee that it terminates the Licensee for
that
Country, which notice shall contain a certification from an
executive
officer of Licensor to the effect that the Minimum Sales Volumes
and
Guaranteed Minimum Royalties under the new license meet the
requirements of this Section 4.2.4. Upon receipt of such
notice,
Licensee will be given an opportunity for a period of three (3)
months
after any such termination for that particular Country to dispose
of
any then existing inventories (including work in progress) of
Licensed
Products bearing the Trademarks. Such sales shall be made subject
to
the provisions of this Agreement; and to an accounting for and
the
payment of the Royalty thereon pursuant to Section 5 herein.
During
this sell-off period, the License for that Country shall be
nonexclusive.
10
<PAGE>
4.3 Certification.
Within thirty (30) days of the end of each
Sales Period, Licensee shall send to Licensor a certification by a
duly
authorized officer of Licensee approved by Licensor of the Net
Sales of Licensed
Products during such Sales Period (the "Certification").
4.4 Distribution and
Sale of Licensed Products. Licensee shall be
required to (a) distribute Licensed Products so that they may be
sold to
consumers on a timely basis; (b) maintain a sales force, which
shall include
Licensee's authorized distributors, sufficient to provide effective
distribution
of Licensed Products throughout the North America, Europe and
Australia; and (c)
participate in such of Licensor's marketing, merchandising, sales
and other
programs and activities, including, but not limited to, scheduling
personal
appearances by Nicole Miller, and special design work by Licensor
for Licensee,
in the manner and at the extra charge(s) to Licensee, as set forth
in Schedule
5. No license is granted hereby for the manufacture, sale or
distribution of
Licensed Products in combination sales, premiums or giveaways, such
license
being specifically reserved for Licensor.
4.5 Sale of Licensed
Products by Licensor. Licensor (or its
designee), in its sole discretion, may purchase any number of
Licensed Products
from Licensee, which Licensee shall sell to Licensor at a twenty
(20%) percent
discount from Licensee's published prices for such Licensed
Products ("Licensor
Sales"). Licensor or its designees may sell Licensed Products
outside of the
Territory. Royalties shall not be paid on Licensor Sales and
Licensor Sales
shall not count toward Licensee's Minimum Sales Volume. Licensor
shall have no
obligation to purchase Licensed Products from Licensee.
Licensee shall, whenever reasonably possible and subject to credit
constraints,
give priority of delivery of Licensed Products to "Nicole Miller"
licensed
boutiques.
5. Royalties;
Other Fees and Payments.
5.1 Royalties.
Licensee shall pay to Licensor royalties based on
a percent of Net Sales as shown below. All license fees referred to
herein are
"Royalty" or "Royalties."
Distribution Level # 1 - {***}
Distribution Level # 2 - {***}
Distribution Level # 3 - {***}
Distribution Level # 4 - {***}
5.2 Guaranteed Minimum
Royalties. Licensee shall, during each
Sales Period or portion thereof of the Term calculated on a pro
rata basis, pay
to Licensor "Guaranteed Minimum Royalties" as shown below whether
or not the
minimum sales levels comprising the Minimum Sales Volume are
actually achieved.
All such payments shall be credited towards Royalties due in
Section 5.1 above.
Guaranteed
Minimum
Sales Period(s)
Royalties
--------------------------
-------------
4/1/06 - 3/3/ /07
{***}
4/1/07 - 3/31//08
{***}
4/1/08 - 3/31/09
{***}
4/1/09 - 3/31/10
{***}
4/1/10 - 3/31/11
{***}
4/1/11 - 3/31/12
{***}
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<PAGE>
Guaranteed Minimum Royalties are payable monthly and are due by the
25th of the
month with the first payment due on April 25, 2006.
In the event Licensor files a petition for relief under any chapter
of the
United States Bankruptcy Code 11 U.S.C. ss. 101 et seq., or if such
a petition
is filed against it and is not dismissed within ninety (90) days
from the date
of filing, or if Licensor makes an assignment for the benefit of
its creditors,
or files a petition, or otherwise seeks relief under, or pursuant
to any
bankruptcy, liquidation, insolvency, or reorganization statute or
proceedings,
or if a custodian, receiver, or trustee is appointed for it, or a
substantial
portion of its business or assets, the Minimum Sales Volume and the
Guaranteed
Minimum Royalties shall thereinafter be reduced by {***}.
5.3 Royalty Payment
Schedule. Guaranteed Minimum Royalties shall
be due and payable by Licensee to Licensor in installments as shown
above. All
other Royalties set forth above, including percentage royalties in
excess of
minimum royalties, shall be due and payable by Licensee to Licensor
in quarterly
installments on the twentieth (20th) day after the close of each
contract
quarter (on a pro rata basis for any period less than twelve (12)
months).
5.4 Late Payment.
Payments not received within ten (10) days of
the date due shall accrue interest at the prime rate according to
the Wall
Street Journal or another reputable business publication plus two
(2%) percent.
5.5 Royalty
Statements. Licensee shall, by the twentieth (20th)
day after the close of each contract quarter, send to Licensor,
together with
payment of Royalties, complete and accurate statements, in a form
approved by
Licensor, signed by a duly authorized officer of Licensee
acceptable to Licensor
and certified by said officer as accurate. Such statements must be
sufficiently
detailed to enable Licensor to determine whether the exploitation
provisions of
Sections 4.2.2, 4.2.3 and 4.2.4 have been met and indicate, without
limitation,
the following: (a) the total invoice price of all Licensed Products
by style in
each Distribution Level sold during the period covered by such
Royalty
payment(s); (b) a breakdown, by unit(s) and dollar amount(s), and
identifying
each customer (by name and address), to whom Licensee sold and/or
distributed
each such Licensed Product in each Distribution Level during the
period covered
by such Royalty Payment(s); and (c) the amount of returns,
discount, and
allowances by style and by customer within each Distribution Level
which have
been deducted to compute Net Sales during said period. Receipt or
acceptance by
Licensor of any Royalty statement furnis
