<PAGE>
EXHIBIT 10.3
Confidential treatment has been requested
for portions of this Exhibit. The copy
filed herewith omits the information
subject to the confidentiality request.
Omissions are designated as (******). A
complete version of this Exhibit has
been filed separately with the Securities
and Exchange Commission.
----------
TRADEMARK LICENSE AGREEMENT
BETWEEN
TOMMY BAHAMA GROUP, INC.
AND
PHOENIX DELAWARE ACQUISITION, INC.
----------
<PAGE>
INDEX
<TABLE>
<S>
<C>
Section 1. Definitions
Section 2. Grant of License
SECTION 3. Sale of Licensed
Products
Section 4. Approval of Licensed
Products
Section 5. Licensor's Use of
Licensed Product
Section 6. Minimum Net Sales
Section 7. Guaranteed Royalty
& Earned Royalty
Section 8. Sales & Royalty
Reports
Section 9. National Advertising
& Marketing Support
Section 10. Advertising, Marketing,
Promotions & Packaging Approval
Section 11. Media Approval
Section 12. Duration of Approvals
Section 13. Tommy Bahama Marks
Section 14. Confidential &
Proprietary Information
Section 15. Payments
Section 16. Notices & Other
Communications
Section 17. Records & Inspection
Section 18. Manufacturing, Compliance
& Code of Conduct
Section 19. Assignment, Changes of
Control
Section 20. Termination
Section 21. Indemnity &
Disclaimer
Section 22. Insurance & Loss
Section 23. Joint Venture
Section 24. Force Majeure
Section 25. Choice of Law &
Forum
Section 26. Compliance With Laws
Section 27. Waiver
Section 28. Validity
Section 29. Entire Agreement
Section 30. Reservation of Rights
Section 31. Exhibits
Section 32. Survival
Section 33. Interpretation
</TABLE>
<PAGE>
EXHIBITS
A. Authorized Licensed Trademarks
B. Authorized Licensed Products And
Territories
C. Contract Term
D. Sales of Licensed Products to TB Retail
Stores
E. Minimum Net Sales
F. Guaranteed Royalty
G. Earned Royalty
H. Branded Marketing Materials
I. Approved Additional Licensors, Brands
and Logos of Licensee
J. Approved Retailers
K. Quarterly Royalty Statements
L. Statement of Estimated Monthly Net
Sales
M. Advertising Policy
N. Notice to Third Parties
O. Supplier Agreement and Certification
<PAGE>
LICENSE AGREEMENT
This License Agreement ("Agreement") made and entered into this
3rd
day of August, 2005 ("Effective Date"), by
and between the Tommy Bahama Group,
Inc., with its principal place of business
at 1071 Avenue of the Americas, 11th
Floor, New York, New York 10018
("Licensor"), and Phoenix Delaware Acquisition,
Inc., a Delaware corporation with its
principal place of business at 5759 Fleet
Street, Suite 220, Carlsbad, California
92008 ("Licensee").
RECITALS
A. Licensor is the owner of the well-known TOMMY BAHAMA(R)
trademark
and related intellectual-property rights
which prior to the date hereof it
licensed to Paradise Shoe Company LLC
("Paradise") for the manufacture,
advertising, promotion, sale, offering for
sale, and distribution of Licensed
Products (defined below) and related
promotional and packaging which constituted
Paradise's sole business.
B. Concurrently herewith Paradise, Paradise' members and Licensee
have
executed and delivered to one another an
Asset Purchase Agreement pursuant to
which Licensee has purchased from Paradise
all of Paradise's assets and
business. Licensor is a 50% member of
Paradise and is receiving a portion of the
proceeds from such sale.
C. Pursuant to and as contemplated by the Asset Purchase
Agreement,
concurrently herewith, Licensor and
Paradise have terminated the license
agreement between them with respect to the
TOMMY BAHAMA(R) trademark and related
intellectual-property rights and Licensor
and Licensee have executed and
delivered this Agreement so that Licensee
shall have the right to use the
trademark TOMMY BAHAMA, and other
trademarks and service marks attached to this
Agreement as "Exhibit A" and related rights
pertaining to each of them (the
"TOMMY BAHAMA Marks"), within the Territory
(as defined in "Exhibit B") on the
terms and conditions herein.
In consideration of the mutual promises and conditions contained
in
this Agreement, and for other good and
valuable consideration, the receipt and
sufficiency of which are hereby
acknowledged, the parties agree as follows:
1. DEFINITIONS
1.1. "Affiliate"
shall mean, for any party, its officers, directors,
parents, corporations, subsidiary corporations, partnerships,
joint
ventures or other entities (whether incorporated or not)
substantially
under the control or direction of the party and with respect to
Licensor only, its shareholders.
<PAGE>
1.2.
"Close-Outs" shall mean second quality, irregular, out of season
or
damaged Licensed Products that remain merchantable, or Licensed
Products which are sold for more than ****** percent (******%)
below the suggested wholesale price.
1.3. "Code of
Conduct" shall mean Licensor's written policy governing
issues related to employment, working conditions, the environment
and
human dignity and other issues. The Code of Conduct is attached
hereto
as "Addendum 1 to Exhibit O" and by this reference incorporated
herein.
1.4. "Competing
Event" shall mean any event by which Licensee shall become
a competitor in the Normal Channels of Distribution with an
"island
lifestyle" product or category of products included in the
Licensed
Products, whether by acquisition, internal development or
otherwise.
1.5.
"Confidential Information" shall mean secret or proprietary
information of, or data maintained as confidential by either party.
It
shall include, without limitation, the terms and conditions of
this
Agreement (except to the extent that such terms and conditions must
be
disclosed pursuant to U.S. Securities and Exchange Commission
requirements, and if so, the parties will use best efforts to
forgo
disclosing sensitive financial information), Licensor Designs,
information concerning products, techniques, developments,
product
plans, equipment, inventions, patent applications, ideas,
designs,
processes, methods, research, sales, licensing, customers,
operations
and work product of Licensor or its Affiliates. Nothing shall
be
considered Confidential Information which (i) either party learns
from
other sources which have a right to that information free from
confidentiality restrictions; (ii) is available to the public
or
readily discernible from information available to the public;
(iii)
enters the public domain other than through the actions or
inactions
of either party; or (iv) is independently developed by either
party
without reference to, or reliance on, the Confidential Information.
In
the event any item of Confidential Information is subject to
required
disclosure pursuant to any order, judgment, ruling or degree,
despite
the terms of this Agreement, the involved party shall
immediately
notify the other party, which shall have the right to seek a
protective order or similar relief.
1.6. "Contract
Term" shall mean the term of this Agreement, as set forth on
Exhibit C, unless sooner terminated in accordance with the terms
of
this Agreement. Any renewal or extension that may be granted in
the
future deemed included in the Contract Term.
1.7. "Contract
Year" shall mean a period of twelve (12) successive months
commencing on any first day of June during the Contract Term,
except
that the first Contract Year shall commence on the Effective Date
and
shall continue until May 31, 2007.
1.8. "Designated
Agency" shall mean an advertising agency selected by
Licensor for the creation and development of advertising and
marketing
themes, concepts and ideas,
****** Certain information on this page has
been omitted and filed separately
with the
Securities and Exchange Commission. Confidential treatment has
been requested
with respect to the omitted portions.
<PAGE>
including, without limitation, creative content for Licensed
Product
designs, color combinations and styles relating to the TOMMY
BAHAMA
Marks.
1.9. "Design
Documentation" shall mean color strike-offs, photographs or
drawings of sample Licensed Products, together with line plans,
all
other artwork, specifications, sketches, renderings, samples,
marketing and pricing information, cost analyses and similar
materials
relating to the proposed Licensed Products.
1.10. "Design
Rights" shall mean any Licensee-developed trademarks, logos,
copyrights, sketches, schematics, technical drawings, or
technical
properties that are specifically developed for the Licensed
Products
and are incorporated into, or used in connection with, Licensed
Products. Design Rights do not include Licensee-owned
trademarks,
technical or design patents, trade-names, service marks or
logos
existing as of the Effective Date and used in connection with
Licensed
Products in a manner permitted under the terms of this Agreement,
nor
do they include trademarks, logos, technical properties or
patents
that were developed for parties other than the Licensor but are
still
used in connection with the Licensed Products as permitted under
the
terms of this Agreement.
1.11.
"Distributor" shall mean a party that may reasonably be expected
to
sell merchandise of the kind and character of the Licensed Products
to
persons or entities other than consumers.
1.12. "Earned
Royalty" shall mean, for each Contract Year, the amount of
money Licensee shall pay to Licensor in consideration for the grant
of
this license. Such amount is calculated as a percentage of Net
Sales,
specified in "Exhibit G."
1.13.
"Expiration Date" shall mean the date upon which the Agreement
ends
because of the end of the Contract Term.
1.14.
"Guaranteed Royalty" shall mean, for each Contract Year, the
minimum
royalty payment to be made to Licensor by Licensee, as specified
in
"Exhibit F," regardless of actual Net Sales.
1.15. "Licensed
Product" shall mean any Product, as specified in "Exhibit
B," for which rights are granted to Licensee under this Agreement,
and
bear the TOMMY BAHAMA Marks, or incorporate Licensor Designs or
Design
Rights. Regardless of the extent to which a Licensed Product
incorporates any Licensor Design or Design Rights, it shall be
a
unique, exclusive design.
1.16. "Licensor
Designs" shall mean styles, designs, patterns, color
combinations, design and marketing directions, and seasonal
concepts,
supplied by Licensor.
1.17. "Marketing
Support" shall mean costs of showroom displays and all
other branded marketing and promotional materials created and
developed by or on behalf of Licensee to be used to promote the
distribution and sale of Licensed Products to the trade.
Notwithstanding the foregoing, Marketing Support does not
include
costs associated with in-store seminars.
<PAGE>
1.18. "Minimum
Net Sales" shall mean, for any Contract Year, the amount of
Net Sales which would produce the applicable Guaranteed Royalty
for
such Contract Year as a percentage of such amount.
1.19. "National
Advertising" shall mean advertisements, brochures, catalogs
and similar marketing materials published and distributed to
consumers; included in publications intended for consumers; or
broadcast through television, the Internet, radio or other media;
that
are designed and intended to promote the sale of Licensed
Products,
including point-of-purchase displays for use by retailers and
marketing and promotional pieces provided to retailers for use
in
sales promotions to consumers.
1.20. "Net
Sales" shall mean the invoiced billing price of all Licensed
Products sold and shipped by Licensee to its customers, excluding
only
federal and state taxes, tariffs, freight, returns evidenced by
credit
memoranda, normal trade discounts, and sales allowances. For
purposes
of determining the Earned Royalty and meeting Minimum Nets
Sales,
regardless of how much the foregoing deductions amount to,
Licensee
shall not deduct from Net Sales an amount that would exceed
******
percent (******%) of annual gross sales of Licensed Products.
Notwithstanding the previous sentence, if the deduction percentage
is
materially skewed by a larger than average return volume by
Licensor
of Licensed Products in any given Contract Year, which is outside
the
normal course of business, a greater percentage of allowed
deductions
will be mutually agreed upon between the parties. No deduction may
be
made for early payments, bad debts, advertising allowances or
special
promotions of any kind or for costs incurred in manufacture,
sales,
advertising or promotion.
1.21. "Prime
Rate" shall mean the prime rate of interest charged by
SunTrust Bank, Atlanta, Georgia or any successor institution,
as
published in the Wall Street Journal for the applicable period.
1.22. "Monthly
Statement" shall mean a combination sales and royalty
statement issued by Licensee to Licensor with respect to each
calendar
month during the Contract Term. If the initial or last Monthly
Statement shall be for a period less than a calendar month, it
shall
be issued with respect to that shorter period.
1.23. "Regular
Price" shall mean Licensed Products sold for the suggested
wholesale price, or for a price which is no more than a ******
percent (******%) discount from the suggested wholesale price.
1.24. A "Sale"
shall occur when Licensed Products are invoiced by Licensee
to its customers.
1.25. "Sell-Off
Period" shall mean the first six (6) months following the
expiration or termination of this Agreement.
****** Certain information on this page has
been omitted and filed separately
with the
Securities and Exchange Commission. Confidential treatment has
been requested
with respect to the omitted portions.
<PAGE>
1.26.
"Termination Date" shall mean the date upon which the Agreement
ends
due to any other cause except expiration of the Term.
2. GRANT OF LICENSE
2.1. Licensor
hereby grants to Licensee a nontransferable, non-assignable
(except as permitted hereby), non-divisible, and exclusive (as
limited
by Section 2.2) license, without the right to grant sublicenses,
to
use the TOMMY BAHAMA Marks, solely in the Territory and solely on
or
in connection with the manufacture, advertising, promotion,
sale,
offering for sale, and distribution of Licensed Products and
related
promotional and packaging material during the Contract Term of
this
Agreement or until this Agreement is sooner terminated as
hereinafter
set forth. Notwithstanding the previous sentence, the license shall
be
non-exclusive for the last one hundred and twenty (120) days of
the
Contract Term for which no extension is available under the terms
of
this Agreement. Nothing in the foregoing shall limit the rights
of
Licensor or Licensor's Affiliates with respect to the TOMMY
BAHAMA
Marks outside of the Territory.
2.2.
Notwithstanding Section 2.1, Licensor shall have the right to
manufacture and sell Licensed Products ("Special Make-Up
Products")
and other products containing the TOMMY BAHAMA Marks in the
Territory,
through stores and websites owned, controlled, or operated by
Licensor
("TB Store(s)"). The foregoing is subject to Licensee's first right
of
refusal to present a proposal to manufacture and sell Special
Make-Up
Products to Licensor. Such proposal must be submitted within
twenty
(20) days of request from Licensor, and shall include a general
business plan, manufacturing minimums and pricing. Licensor has
five
(5) days to review such proposal and notify Licensee of its
decision.
If Licensor elects to source the Special Make-Up Products
itself,
Licensor agrees to give Licensee the reasonable right to "match"
a
proposal made by another potential manufacturer of the Special
Make-Up
Products, and if Licensee matches the proposal, then Licensor
shall
purchase the Special Make-Up Products from Licensee, pursuant to
the
terms of the matched proposal. The parties acknowledge that the
production of Special Make-Up Products is an activity that is
anticipated to occur on an occasional basis, and not with great
frequency throughout the Term of the Agreement. The parties agree
that
all TB Store Licensed Products sold Licensor shall be
non-returnable.
For avoidance of doubt, neither the foregoing nor anything else
permits Licensor nor any Licensor Affiliate to manufacture or
sell
Licensed Product to Distributors or the wholesale market within
the
Territory.
2.3. All
Licensed Products shall bear at least one of the TOMMY BAHAMA
Marks and no Licensed Products shall be sold or otherwise
distributed
under any marks other than the TOMMY BAHAMA Marks. Licensor
reserves
all rights to the TOMMY BAHAMA Marks except as specifically
granted
herein to Licensee, and Licensor may exercise such reserved rights
at
any time.
2.4. Licensee
shall use reasonable efforts to sell and promote the Licensed
Products in the Territory while maintaining the high standard,
quality, image and prestige represented by the TOMMY BAHAMA Marks
and
consistent with the channels of distribution specified in "Exhibit
J."
<PAGE>
2.5. Licensee
agrees to exercise reasonable efforts to present the Licensed
Products Territory-wide to the trade in the number of styles or
designs reasonably anticipated under this Agreement.
2.6. The parties
acknowledge that it is in their mutual best interest to
maintain inventory and periodically refresh attractive displays
of
Licensed Products at each of the TB Stores. The terms and
conditions
for sales of Licensed Products to TB Stores are set forth on
Exhibit
D.
2.7. Licensee
shall also make available to Licensor and its retail accounts
(other than TB Stores), the opportunity to purchase reasonable
quantities of Licensed Products for ultimate retail sale to
consumers
and for marketing, promotional, and sales-incentive purposes.
Licensee
agrees that such Licensed Products will be made available
throughout
the Contract Term and the Sell-Off Period for purchase by Licensor
and
its retail accounts at Licensee's lowest then-applicable
wholesale
sales price, in accordance with Licensee's standard dealer terms
and
conditions, the terms of which shall not be inconsistent with
this
Agreement.
2.8. During the
Contract Term, Licensee or any Licensee Affiliate may not
engage in any Competing Event without the prior written approval
of
Licensor. Attached to this Agreement as "Exhibit I" is a list
of
current licensors, brands and logos, of Licensee or its
Affiliates;
each of those licensors is deemed approved by Licensor regardless
of
any existing Competing Event. During the Contract Term,
however,
Licensee shall provide notice, pursuant to the notice provisions
in
this Agreement, to Licensor seeking written approval of any
proposed
Competing Event. If Licensor should fail to respond, in
writing,
within the first fifteen (15) business days after Licensee's
notice,
Licensee shall provide a second notice of the proposed
Competing
Event, pursuant to the notice provisions in this Agreement.
Licensor
shall then have five (5) additional business days to approve or
disapprove, in writing, the potential Competing Event. Failure of
the
Licensor to respond to a request for approval under this Section
2.8
within the combined thirty (30) business day period shall be
deemed
approval by Licensor of the request. Licensor may require that
Licensee provide Licensor with such additional documentation as
shall
be reasonably necessary to facilitate Licensor's analysis of
the
proposed Competing Event. Delay by Licensee in providing the
additional documentation shall toll the time for Licensor to
respond
to the notice.
2.9. Licensee
shall at all times employ one full-time National Sales/Brand
Manager who shall be dedicated to the sale of Type C (specified
on
"Exhibit B") Licensed Product. Said National Sales/Brand Manager
must
be approved by Licensor and have significant experience in
selling
products similar to the Licensed Products. Additionally,
Licensee
shall at all times employ at least one full-time
Designer/Merchandiser
(plus as many other designers / merchandisers as needed) who is
dedicated to the design and merchandising of Type C Licensed
Product.
Said Designer/Merchandiser must be approved by Licensor and
have
significant experience in designing and merchandising products
similar
to the Licensed Products. Licensee shall at all times employ
one
full-time National Sales/Brand Manager who shall be dedicated to
the
sale of Type D (specified on "Exhibit B") Licensed Product, and
who
has significant experience in
<PAGE>
selling products similar to the Licensed Products. Said
National
Sales/Brand Manager must be approved by Licensor, which approval
may
be granted upon request pursuant to the notice provisions in
this
Agreement. In the process of reviewing such a request, Licensee
shall
allow Licensor the opportunity to meet with the candidate and
review
credentials. If Licensor should fail to respond in writing to a
request for any such approval within the first five (5) business
days
after the request is first submitted, Licensee shall provide a
second
notice of the request, pursuant to the notice provisions in
this
Agreement and Licensor shall have ten (10) additional business days
to
approve or disapprove, of the candidate in writing.
Additionally,
Licensee shall at all times employ at least one full-time
Designer/Merchandiser (plus as many other designers / merchandisers
as
needed) who is dedicated to the design and merchandising of Type
D
Licensed Products, and has significant experience in designing
and
merchandising products similar to the Licensed Products. Said
Designer/Merchandiser must be approved by Licensor in accordance
with
the same request, notice and approval procedures set forth above
for
the National Sales / Brand Manager. If at any time Licensee decides
to
appoint a "President" (or similar responsibility level) of its
"Tommy
Bahama" division (overseeing all of the Licensed Products),
such
individual must be approved by Licensor in accordance with the
same
request, notice and approval procedures set forth above for the
National Sales / Brand Manager and Designer / Merchandiser.
2.10. Licensor
and its Affiliates may, but shall not be obligated to,
supply Licensee with
Licensor Designs. Licensee agrees that Licensor
Designs shall be utilized by Licensee only in the production,
advertisement, marketing, promotion, distribution and sale of
Licensed
Products. If Licensee shall retain or employ any subcontract
manufacturer other than an Affiliate of Licensee, each such
manufacturer shall be provided with a written notice in the form
set
forth in "Exhibit N," notifying that manufacturer that Licensor
Designs may be used only in compliance with the requirements of
this
agreement, and that any violation by the manufacturer of these
restrictions shall be grounds for immediate termination of the
manufacturer's services for Licensee relating to Licensed Products,
in
addition to Licensor's right to seek damages from each
subcontract
manufacturer for the use of Licensor's Designs not in conformance
with
the terms of this agreement. Licensee shall monitor the completion
of,
and be accountable to Licensor for, the subcontract
manufacturers'
notices; copies of each shall be supplied to Licensor within ten
(10)
days of its receipt by Licensee.
3. SALE OF LICENSED
PRODUCTS
3.1. Licensee
agrees that Licensed Products, including Close-outs, shall be
distributed for retail sale only through better specialty
stores,
national buying groups, department stores and mail-order
catalogs
which are
appropriate for the superior reputation, quality-control
standards and public image of the TOMMY BAHAMA Marks ("Normal
Channels
of Distribution"). Licensee agrees to distribute Licensed
Products,
including Close-Outs, only to those retailers that are listed
on
"Exhibit J" and any other customer approved hereafter by
Licensor.
Before any order from any other prospective customer is
accepted,
including, but not limited to, internet retailers, Licensee
shall
submit an Additional Authorized Retailer Request Form (set forth
on
Addendum 1 to Exhibit J), to
<PAGE>
notify Licensor of the identity of the customer and provide
sufficient
information to enable Licensor to determine whether it is
acceptable.
Approval or disapproval of additional authorized retailers shall
be
determined on a case-by-case basis and provided by Licensor in
writing. Approval of any retail account may be withdrawn by
Licensor,
on sixty (60) days advance written notice to Licensee pursuant to
the
notice requirements set forth in this Agreement, at any time if
Licensor determines that advertising, marketing, promotion or sales
by
that retail account shall have been, or shall have become,
inconsistent with the reputation, quality-control standards and
public
image of the TOMMY BAHAMA Marks. In the event that Licensor
withdraws
any such approval, Licensee may continue to sell to such
customer
until all pending orders have been filled. However, Licensee may
not
accept any new orders from the customer whose approval has been
withdrawn after written notice of the withdrawal has been provided
by
Licensor in accordance with the foregoing.
3.2. Licensee
expressly agrees that Licensee shall not distribute or sell
Licensed Products, including Close-Outs, to any Distributor
(other
than its own contract sales affiliates), and Licensee shall
distribute
and sell Licensed Products, including Close-Outs, only through
its
Normal Channels of Distribution and only for accounts directly
reselling to consumers.
3.3. Except with Licensor's prior
written approval, all Close-Outs may be
disposed of by Licensee through its Normal Channels of
Distribution
for Close-Outs, as described in "Exhibit J" and hereafter approved
in
accordance with Section 3.1. However, damaged and / or
irregular
Close-outs must be clearly marked as such, and remain of a quality
not
inconsistent with the quality-control standards of Licensor.
All
royalties due with respect to Close-outs shall be paid as
required
under this Agreement.
3.4. Licensor
shall use commercially reasonable efforts to provide to
Licensee contacts, make introductions and provide addresses of
anyone
who is selling TOMMY BAHAMA apparel or other products.
4. APPROVAL OF LICENSED
PRODUCTS
4.1. Licensor
shall have the right to approve or disapprove in advance of
sale the general design, quality, style, colors, appearance,
material
and workmanship of all Licensed Products, and to approve or
disapprove
in advance any brands, endorsements, trademarks, service marks,
trade
names, designs and logotypes, (whether included in the TOMMY
BAHAMA
Marks or not) used in connection with Licensed Products.
Licensee
shall not show, distribute or sell any Licensed Product which has
not
been approved in advance by Licensor in accordance with the terms
of
this Agreement. Licensor reserves the right to revoke approval
of
Licensed Products that were approved in previous seasons,
however,
Licensor agrees to that it will not do so unless Licensor
reasonably
concludes that such Licensed Products no longer reflect the
taste,
style, or quality associated with the TOMMY BAHAMA Marks. If
Licensor
revokes approval in accordance with the previous sentence,
Licensee
shall still be allowed to close out open
<PAGE>
orders of such Licensed Products, and to sell them off for a period
of
one (1) year from the date which such approval was revoked.
4.2. The parties
acknowledge that it may not be practical for Licensee to
submit actual samples of Licensed Products to Licensor for
Licensor's
examination and approval or disapproval. Licensee shall submit
Design
Documentation to Licensor at its New York address set forth below,
at
no cost or expense to Licensor. Licensee's submissions shall
include,
in addition, evidence or notations of the use of labels, tags or
other
form of identification proposed to be used on Licensed
Products.
Licensee shall submit Design Documentation to Licensor at least
ninety
(90) days prior to production of the applicable Licensed Products.
If
Licensor should fail to respond, in writing, within the first
twenty
(20) business days after Licensee's submission of the Design
Documentation, Licensee shall resubmit the Design Documentation
pursuant to the notice provisions in this Agreement. Licensor
shall
then have ten (10) additional business days to approve or
disapprove,
in writing, the Design Documentation. Failure of the Licensor
to
respond to a request for approval, in writing, under Section
4.2
within the combined thirty (30) business day period shall be
deemed
approval by Licensor of the Design Documentation. If Licensor
reasonably desires additional information with respect to the
design,
fabrication or manufacture of any affected Licensed Product,
Licensee
agrees to provide that additional information. Delay by Licensee
in
providing the additional information shall toll the period for
Licensor to provide a written response to the request to approve
the
Design Documentation. If any item is disapproved, in each case,
Licensee will be advised of the specific reasons. Upon request,
Licensee shall reimburse Licensor for any import duties,
shipping
charges or other costs or expenses incurred by Licensor in
connection
with delivery of samples to Licensor.
4.3. In the
event any Licensed Product is disapproved, Licensee agrees to
consult with Licensor regarding Licensor's objections and any
changes
or modifications proposed by Licensor, and will, within thirty
(30)
days following receipt of Licensor's disapproval, use
good-faith
efforts to make mutually agreeable modifications or adjustments.
In
the event of a dispute between Licensor and Licensee regarding
any
Licensed Product, Licensor will have final control and approval
with
respect to the style, overall design, decorative details,
engineering,
structural integrity, production capabilities, manufacturing
efficiencies, materials sourcing, product safety and similar
matters.
4.4. Licensee
assigns to Licensor all of Licensee's right, title, and
interest in each design developed and used by Licensee (excluding
such
design elements that are excluded by the definition of Design
Rights)
in connection with any of the Licensed Products, and all rights
associated with them, including, without limitation, all Design
Rights. Licensee shall promptly execute and deliver all forms
of
assignment and other documents as may be reasonably required to
transfer to Licensor any of Licensee's rights of ownership in
the
Design Rights.
4.5. Licensor
shall not unreasonably withhold or delay any approval
required hereunder and all requests by Licensee shall be considered
by
Licensor in good faith.
5. LICENSOR'S USE OF LICENSED
PRODUCT
<PAGE>
For each style, model or variation of each Licensed Product,
during
the Contract Term, Licensee shall supply Licensor, at no charge and
at
no cost or expense, with up to five (5) Licensed Products per
Contract
Year, as Licensor may reasonably request for the marketing or
promotional use of Licensor (not for resale), including, but
not
limited to, use in Licensor's showrooms and trade-show exhibits.
In
addition, Licensor may purchase Licensed Products from Licensee
(at
Licensee's manufacturer's cost) for the marketing or promotional
use
of Licensor (not for resale), including, but not limited to, use
in
Licensor's showrooms and trade-show exhibits. Upon request by
Licensor, Licensee shall promptly provide one sample of all
finished
products, including hangtags using the TOMMY BAHAMA Marks for
intellectual property purposes.
6. MINIMUM NET SALES
6.1. With
respect to each Contract Year during the Contract Term,
Licensee
must generate the Minimum Net Sales as set forth on "Exhibit
E."
7. GUARANTEED ROYALTY AND
EARNED ROYALTY
7.1. In
consideration for the license granted by the Licensor
hereunder,
Licensee shall pay to Licensor the Guaranteed Royalty set forth
on
"Exhibit F" hereto if and to the extent that the Earned Royalty
during
any calendar quarter (starting June 1 of each Calendar Year) is
less
than one quarter (1/4th) of the Guaranteed Royalty for the
applicable
Calendar Year. To the extent that a Guaranteed Royalty payment is
due
for any calendar quarter, such amount shall be paid following
the
thirtieth day after the end of such calendar quarter (September
30,
December 30, March 30 and June 30). And to the extent that the
Earned
Royalty exceeds the Guaranteed Royalty for other quarters (before
or
after) a quarter in which a Guaranteed Royalty payment is due,
such
Earned Royalty may be applied toward the calculation of
Guaranteed
Royalty for such quarter.
7.2. Licensee
shall pay to Licensor an Earned Royalty on Net Sales for all
Sales of all Licensed Products by Licensee during each Contract
Year
based on the rates set forth on "Exhibit G" hereto. Earned
Royalty
payments shall be payable within thirty (30) days following the
conclusion of each calendar month. Within each Contract Year,
the
Earned Royalty is paid as a non-refundable advance towards amount
due
as Guaranteed Royalty for Licensed Products. No part of any
Earned
Royalty may be carried forward or backward as a credit from one
Contract Year to any other (though it may be carried forward or
backward as a credit from one quarter to another within a
specific
Contract Year, as set forth in Section 7.1), or to any
applicable
Sell-Off Period. Past-due payments shall bear interest at a per
annum
rate of interest equal to (a) the Prime Rate plus ******
percent
(******%) per annum, or (b) the maximum interest rate
permissible
under law, whichever is less.
7.3. All
royalties due Licensor shall accrue upon the Sale of the
Licensed
Products regardless of time of collection by Licensee (subject
to
credits for returned Licensed Products).
8. SALES & ROYALTY
REPORTS
****** Certain information on this page has
been omitted and filed separately
with the
Securities and Exchange Commission. Confidential treatment has
been requested
with respect to the omitted portions.
<PAGE>
8.1. Promptly
following the execution of this Agreement and within twelve
(12) months prior to the beginning of every subsequent Contract
Year
during the Contract Term, Licensee will send Licensor its sales
projection for that next Contract Year, broken out by month,
along
with a detailed list of all media placements for Marketing
Support.
8.2. Licensee
shall supply Licensor with a Monthly Statement, as shown on
"Exhibit K," with respect to all sales of Licensed Products
sold
during each calendar month. Each Monthly Statement shall be
delivered
to Licensor within thirty (30) days following the conclusion of
the
applicable month.
8.3. In
addition, Monthly Statements for the final month of each
Contract
Year
shall include, without limitation, an annual report of the
foregoing for the entire Contract Year. The Licensee's Chief
Financial
Officer shall indicate by signature that s/he has reviewed and
agrees
with such annual report. On request by Licensor, Licensee shall
provide backup and support materials with respect to any item
contained in any Quarterly Statement so that Licensor shall
have
sufficient information to evaluate the sources for any item
contained
in the Quarterly Statement and to track Licensee's performance
under
this Agreement.
8.4. Within
thirty (30) days following the end of each calendar quarter,
Licensee shall fax to Licensor an Estimated Net Sales Report as
detailed on "Exhibit L". This report is:
A) A
re-forecasted estimate of the monthly Net Sales of Regular
Price Licensed Products for the remainder of the Licensor's
"Fiscal Year" (currently June 1 through May 31).
B) A
re-forecasted estimate of the monthly Net Sales of Close-Out
Licensed Products for the remainder of the Licensor's Fiscal
Year
8.5. It is the
responsibility of the Licensee to submit the information
required by this Agreement on a timely basis as required herein,
and
in a businesslike manner. It shall not be the responsibility of
the
Licensor to call, fax, write or otherwise attempt to obtain the
required information from Licensee.
9. NATIONAL ADVERTISING AND
MARKETING SUPPORT
9.1. Licensee
shall use good-faith reasonable efforts to provide National
Advertising to promote the sale of Licensed Products to
consumers
throughout the Territory in a manner consistent with the goals
and
aspirations of the Tommy Bahama brand, and the terms set forth
on
Exhibits H and M. During each Contract Year, Licensee shall spend
no
less than ****** percent (******%) of Net Sales of Type C and Type
D
Licensed Products toward such National Advertising, and must
comply
with the Marketing Materials approval standards provided in
Sections
10, 11 and 12 of this Agreement.
****** Certain information on this page has
been omitted and filed separately
with the
Securities and Exchange Commission. Confidential treatment has
been requested
with respect to the omitted portions.
<PAGE>
9.2. Licensee
shall use good-faith reasonable efforts to provide Marketing
Support for the Licensed Products throughout the Territory and
conform
to the Branded Marketing Materials as set forth on "Exhibit H."
Licensee may use a portion of the Licensor's New York showroom
(at
Licensee's expense to be determined based on a percentage of
space
required and the current rent paid by Licensor) to display and
market
the Licensed Products, such displays having been approved in
advance,
in writing by Licensor. During the Contract Term, if Licensee
participates in the M.A.G.I.C. Trade Show in connection with
the
Licensed Products, Licensee agrees to do so only in conjunction
with
the Tommy Bahama Booth, and to reimburse Licensor for
Licensee's
pro-rata share of trade show expenses based upon Licensee's
square
foot usage of the Tommy Bahama Booth, as allocated by Licensor in
its
sole discretion. The invoice setting forth such expenses shall be
paid
within thirty (30) days of the date of receipt. Licensee may
show
Licensed Products at the FFANY and WSA trade shows (and any
successor
trade shows) and, subject to Licensor's prior written approval,
any
other industry trade
shows. All signage and decor of Licensee's
display space at any such trade show is subject to Licensor's
prior
written approval.
9.3. Promptly
following the execution of this Agreement, and within twelve
months prior to the beginning of every subsequent Contract
Year,
Licensee shall submit for approval by Licensor a written
production,
sales and marketing plan for the forthcoming Contract Year. Such
plan
shall be sent in accordance with the notice provisions provided
under
this Agreement. If Licensor should fail to respond, in writing,
within
the first twenty (20) days after Licensee's submission, Licensee
shall
resubmit the production, sales, and marketing plan pursuant to
the
notice provisions in this Agreement. Licensor shall then have ten
(10)
additional days to approve or disapprove, in writing, the
production,
sales, and marketing plan. Failure by the Licensor to respond to
a
request for approval, in writing, under Section 9.3 within the
combined thirty (30) business day period shall be deemed approval
by
Licensor of the production, sales, and marketing plan. If
Licensor
reasonably
desires additional information with respect to the
production, sales, and marketing plan, Licensee agrees to provide
that
additional information. Delay by Licensee in providing the
additional
information shall toll the period for Licensor to provide a
written
response to the request to approve the production, sales, and
marketing plan. In the event that Licensor shall disapprove any
plan
so submitted, Licensee shall have ten (10) days in which to submit
a
revised written plan. At the written request of Licensee,
however,
Licensor and Licensee shall discuss in good faith the reasons for
that
disapproval. The failure to submit a revised written plan in a
form
satisfactory to Licensor within the above period shall constitute
a
default under this Agreement, subject to the cure provisions set
forth
in this Agreement.
10. ADVERTISING, MARKETING, PROMOTIONS
& PACKAGING APPROVAL
10.1. Before producing, publishing
or distributing any National
Advertising, market advertising, packaging, or press releases
("Marketing Materials") related to the transactions contemplated
by
this Agreement or Licensed Products, Licensee shall submit to
Licensor
for its examination and approval or disapproval, a sample of
the
Marketing Materials, including text, coloring and a copy of any
photograph proposed to be used. If Licensor should fail to respond,
in
writing, within the first fifteen (15) days after Licensee's
submission, Licensee shall resubmit the Marketing Materials
pursuant
to
<PAGE>
the notice provisions in this Agreement. Licensor shall then have
ten
(10) additional days to approve or disapprove, in writing, the
Marketing Materials. Failure by the Licensor to respond to a
request
for approval, in writing, under Section 10.1 within the
combined
thirty (30) business day period shall be deemed approval by
Licensor
of the Marketing Materials. If Licensor reasonably desires
additional
information with respect to the Marketing Materials, Licensee
agrees
to provide that additional information. Delay by Licensee in
providing
the additional information shall toll the period for Licensor
to
provide a written response to the request to approve the
Marketing
Materials. If Licensor objects to any Marketing Materials and
delivers
written notice of that objection to Licensee within ten (10)
days
following receipt of the applicable Marketing Materials,
Licensee
agrees to consult with Licensor regarding its objections and
any
changes or
modifications proposed by Licensor. Licensee shall then
make mutually agreeable modifications or adjustments. Licensee
shall
not make material changes to any approved piece of Marketing
Material
bearing the TOMMY BAHAMA Marks without consulting with
Licensor;
however, once approval is obtained for any particular piece of
Marketing Material, it shall not be necessary to obtain approval
for
each separate, substantially similar use of the TOMMY BAHAMA Marks
in
substantially similar Marketing Materials.
10.2. All
Marketing Materials, and all packaging, labels, and other
materials used in connection with the advertising, marketing and
sale
of Licensed Products, or otherwise used in connection with the
transactions under this Agreement, shall make reference only to
the
TOMMY BAHAMA Marks and shall not include any brands,
endorsements,
trademarks, service marks, trade names or logotypes other than
Licensee's own corporate identifiers, as reasonably appropriate
to
identify Licensee as either manufacturer or distributor, as the
case
may be. For the avoidance of doubt, co-branding is not
permitted
without Licensor's prior written approval.
10.3. Throughout
the Contract Term, Licensor shall continue to designate
one advertising agency (currently Foundation of Seattle,
Washington)
as Licensor's Designated Agency. Licensee shall employ the
Designated
Agency for the development and sourcing of similar creative
content
for use by Licensee in the production of Marketing Material and
Licensed Products pursuant to this Agreement. Applicable costs
and
expenses shall be for the account of Licensee. However, Licensee
shall
have the right to retain any other reputable advertising agency
for
the placement of advertising for which the creative content shall
have
been developed by the Designated Agency.
10.4. Licensed
Products shall not be sold or given away by Licensee free of
charge or sold or exchanged for nominal value, or authorized by
Licensee to be so given away, sold or exchanged, so as to promote
the
products, services or business of any individual or entity other
than
Licensee. If Licensee desires to give away or sell for nominal
value
Licensed Products for the promotion of the products, services
or
business
of any individual or entity other than Licensee, Licensee
shall obtain Licensor's written approval prior to any such
arrangement, and such approval shall not be unreasonably
withheld.
Licensee may submit such a request to Licensor in writing,
setting
forth all of the details of such proposed commercial tie-in or
premium
use, and Licensor shall have complete discretion in deciding
whether
or not to waive the foregoing prohibition. If Licensor should fail
to
respond, in writing, within the first twenty (20) business days
after
Licensee's
<PAGE>
submission, Licensee shall resubmit the request pursuant to the
notice
provisions in this Agreement. Licensor shall then have ten (10)
additional business days to approve or disapprove the request
in
writing. Failure by the Licensor to respond to a request for
approval,
in writing, under Section 10.4 within the combined thirty (30)
business day period shall be deemed approval. by Licensor of
the
request. If Licensor reasonably desires additional information
with
respect to the request, Licensee agrees to provide that
additional
information. Delay by Licensee in providing the additional
information
shall toll the period for Licensor to provide a written response
to
the request.
10.5. Licensee
shall adhere to the Advertising Policy as specified in
"Exhibit M."
11. MEDIA APPROVAL
11.1. Licensee
agrees that Licensor shall have the right to approve or
disapprove, in advance, each medium of advertising through
which
Licensee may desire to advertise and promote Licensed Products, and
to
approve or disapprove, in advance, each individual media
vehicle
through which Licensee proposes to publish or distribute
Marketing
Materials relating to Licensed Products. If Licensor should fail
to
respond, in writing, within the first fifteen (15) days after
Licensee's request, Licensee shall resubmit the request to use
the
proposed medium of advertising pursuant to the notice provisions
in
this Agreement. Licensor shall then have ten (10) additional days
to
approve or disapprove, in writing, the request. Failure by the
Licensor to respond to a request for approval, in writing,
under
Section 11.1 within the combined thirty (30) business day period
shall
be deemed approval by Licensor of the use of the proposed medium
of
advertising. If Licensor reasonably desires additional
information
with respect to the request to use the proposed medium of
advertising,
Licensee agrees to provide that additional information. Delay
by
Licensee in providing the additional information shall toll the
period
for Licensor to provide a written response to the request. All
advertising media and advertising placements shall be consistent
with
the high quality and prestige of the TOMMY BAHAMA Marks and no
less
than consistent with the manner in which Licensee markets its
own
products.
11.2. Licensee
shall submit to Licensor, in advance, written notification
of the particular media vehicle in which the Marketing Material
would
be placed. If Licensor should fail to respond, in writing, within
the
first fifteen (15) days after Licensee's request, Licensee
shall
resubmit the request to use the media vehicle pursuant to the
notice
provisions in this Agreement. Licensor shall then have ten (10)
additional days to approve or disapprove, in writing, the
request.
Failure by the Licensor to respond to a request for approval,
in
writing, under Section 11.2 within the combined thirty (30)
business
day period shall be deemed approval by Licensor of the use of
the
media vehicle. If Licensor reasonably desires additional
information
with respect to the request, Licensee agrees to provide that
additional information. Delay by Licensee in providing the
additional
information shall toll the period for Licensor to provide a
written
response to the request to use the media vehicle. If any media
vehicle
is disapproved, Licensee will be advised of the specific reasons
in
each case. Once a particular media vehicle has been approved in
accordance with this provision, it shall not be necessary to
obtain
approval for each separate but substantially similar use of that
media
vehicle. However, if any previously approved media vehicle
undergoes a
significant change following the date it shall have
<PAGE>
been approved by Licensor, Licensee shall resubmit that media
vehicle
to Licensor for its approval pursuant to the approval procedures
set
forth in this provision.
12. DURATION OF APPROVALS
All approvals by
Licensor of Marketing Materials and all packaging, labels
and materials
used in connection with the advertising, marketing and sale
of Licensed
Products under this Agreement shall have a duration of twelve
(12) months
unless sooner withdrawn pursuant to the terms of any other
section of this
Agreement. Any continuation of any approval for such
materials beyond
that period must be requested in writing within thirty
(30) days prior
to the expiration of that period.
13. TOMMY BAHAMA MARKS
13.1. During the
Contract Term, Licensor shall not grant or sanction any
other party to use any mark identical with, or substantially
similar
to, the TOMMY BAHAMA Marks in a manner which is in conflict with
the
rights granted to Licensee under this Agreement.
13.2. Licensee
shall have no right, title or interest in the TOMMY BAHAMA
Marks except the licensed rights in accordance with this
Agreement.
Each and every part of the TOMMY BAHAMA Marks is, and shall
remain,
the sole property of Licensor. Any use by Licensee of any part of
the
TOMMY BAHAMA Marks, and the goodwill arising from them, shall inure
to
the benefit of Licensor.
13.3. During the
Contract Term, and at any time thereafter, Licensee shall
not contest, raise any objections to the validity of, or attack
Licensor's title to, or rights in, the TOMMY BAHAMA Marks.
13.4. During the
Contract Term, and at any time thereafter, Licensee shall
not file any application for any mark, or obtain or attempt to
obtain
ownership of any mark or trade name, in any country of the
world,
which refers to, or is substantially similar to, any of the
TOMMY
BAHAMA Marks, and shall promptly notify Licensor if Licensee
becomes
aware of any attempts to do so by third parties.
13.5. Licensee
shall, at its own expense, take such anti-counterfeiting
measures as may be reasonably requested by Licensor from time to
time
to protect the TOMMY BAHAMA Marks with respect to Licensed
Products.
In order to monitor and trace the source of any diversion
activities,
Licensee shall code Licensed Products using state-of-the-art
computer
or other indelible codes or markings (such as bar codes)
consistent
with industry standards and acceptable to Licensor.
13.6. In the
event a third party asserts that the TOMMY BAHAMAS Marks, or
the sale of Licensed Products (collectively, the "Rights")
infringe
upon such third party's rights in the Territory, the Licensor, at
its
sole expense, shall take commercially reasonable actions to
protect
and
validate the Rights including, without limitation, arbitration,
mediation and litigation. Licensor shall have the right at any
time,
and in its sole discretion, to reach a settlement in any action
to
protect and validate the Rights. If a settlement is reached, or it
is
determined that the Rights do infringe on such third party's
<PAGE>
rights, then Licensor shall procure for the Licensee, at the
Licensor's expense, the right to continue the manufacturing,
marketing, sale and distribution of the Licensed Products in
the
Territory as contemplated by this Agreement.
13.7. The
parties shall promptly notify the other party in writing of any
learned use that may be an infringement or imitation of the
TOMMY
BAHAMA Marks on articles similar to the Licensed Products, and of
any
use which may be an infringement or imitation of the related
designs,
design patents and copyrights in the Territory. In the event a
third
party is allegedly infringing or threatens to infringe the Rights
in
the Territory, as determined by the Licensor or the Licensee,
the
Licensor shall have the first right, but not the obligation to
bring
an infringement action against any actual or alleged infringer
with
respect to the TOMMY BAHAMA Marks. Licensor may, in its sole
judgment
and at its own expense, institute, control, settle, and defend
such
action and recover any damages, awards, or settlements
resulting
therefrom. Licensee shall reasonably cooperate and use
commercially
reasonable efforts to assist Licensor in any such litigation.
Licensor
shall reimburse Licensee for its out-of-pocket expenses incurred as
a
result of such cooperation. Any damages, award, or settlement
recovered by Licensor shall first be used to reimburse Licensor
and
Licensee for all reasonable expenses incurred during said
litigation.
After reimbursement of the aforesaid expenses and costs, all
damages
representing lost profits shall be allocated to Licensee, and
Licensee
shall pay the Earned Royalty amount on such profits to Licensor to
the
extent that equivalent royalties are not specifically allotted in
the
damage award. Any damages representing royalties shall be
allocated
solely to Licensor. The remainder of the damages, award or
settlement
that is attributable to any infringement or alleged infringement
in
the Territory shall be divided equally between Licensor and
Licensee.
All other damages, awards, or settlement amount shall be paid
to
Licensor.
13.8. If
Licensor declines to pursue any action against an actual or
alleged infringer for infringement in the Territory, Licensee
shall
have the right, but not the obligation, to bring an
infringement
action with respect to the TOMMY BAHAMA Marks against such actual
or
alleged infringer, either in its own name or in the name of the
Licensor. Licensee may, in its sole judgment, and at its own
expense,
institute, control, settle, and defend such action and recover
any
damages, awards, or settlements resulting therefrom. Licensor
shall
reasonably cooperate and use commercially reasonable efforts to
assist
Licensee in any such litigation. Any damages, award, or
settlement
recovered by Licensee shall first be used to reimburse Licensee
and
Licensor for all reasonable expenses incurred during said
litigation.
The remainder of the damages, award or settlement that is
attributable
to any infringement or alleged infringement in the Territory shall
be
divided equally between Licensor and Licensee. All other
damages,
awards, or settlement amount shall be paid to Licensor.
13.9. Licensee
shall take commercially reasonable action and all actions
reasonably requested by Licensor, at Licensor's expense, to prevent
or
avoid any misuse of the TOMMY BAHAMA Marks or Licensed Products by
any
of its customers, contractors, sublicensees, suppliers, or
other
resources. Licensor shall take all actions reasonably requested
by
Licensee, at Licensee's expense, to prevent any misuse of the
TOMMY
BAHAMA Marks or Licensed Products.
<PAGE>
13.10. Licensee
shall reasonably assist and cooperate with Licensor, at
Licensor's expense, in any other efforts to obtain, perfect and
protect its rights to the TOMMY BAHAMA Marks in the Territory
with
respect to the Licensed Products. Licensee shall execute any
documents
reasonably required by Licensor in connection with the
foregoing.
13.11. Licensee
shall cause to be imprinted legibly on each Licensed
Product manufactured, distributed or sold under this Agreement, and
on
all Marketing Materials, labels and tags used in connection
with
Licensed Products, and any other such materials in which the
TOMMY
BAHAMA Marks appear, the designation(R)or(TM)as Licensor shall
advise
as being appropriate and approved by Licensor. The tag or label
accompanying each Licensed Product shall contain one of the
following
notices, as reasonably modified by Licensor from time to time:
"Manufactured by Tommy Bahama Footwear under license from the
Tommy
Bahama Group, Inc. TOMMY BAHAMA is a trademark of the Tommy
Bahama
Group, Inc."; "Manufactured by Tommy Bahama Footwear under
license
from the Tommy Bahama Group, Inc. TOMMY BAHAMA is a registered
trademark of the Tommy Bahama Group, Inc."; or "The TOMMY
BAHAMA
trademark is used under license from the Tommy Bahama Group, Inc."
In
addition, Licensee shall file a fictitious business name statement
(or
"d/b/a") for "Tommy Bahama Footwear" and shall cause "Tommy
Bahama
Footwear" to be listed in the telephone and business directories
along
with Licensee's address.
13.12. Following
the termination of the rights granted under this Agreement
with respect to the TOMMY BAHAMA Marks, Licensee shall, except
as
provided in Section 20.2, cease absolutely, and Licensee shall
not
thereafter manufacture or sell, or have manufactured or sold, any
item
branded under, or making reference to, the TOMMY BAHAMA Marks,
nor
shall Licensee publish or display, or authorize or permit the
publication or display of, further or additional quantities of
any
advertising or marketing materials which incorporate the TOMMY
BAHAMA
Marks
13.13. Licensor
represents and warrants to Licensee as follows:
(a) Licensor has the
corporate power and authority to enter into and
perform this agreement. Licensor 's execution and delivery of,
and its performance of all of its obligations under, this
Agreement have been duly and validly authorized by all
necessary
corporate action on the part of Licensor. This Agreement is a
valid and binding agreement of Licensor enforceable against
Licensor in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium and other similar laws and equitable
principles relating to or limiting creditors rights generally.
(b) Licensor's
execution, delivery and performance of this Agreement
does not and will not violate, breach or constitute a default
under, or require the
consent of any third party under, (i) any
provision of any contract, understanding or court order to
which
Licensor is a party or by which it is or the TOMMY BAHAMA Marks
are bound or (ii) any law, rule, regulation or other provision
or
restriction of any kind or character to which Licensor or the
TOMMY BAHAMA Marks are subject.
<PAGE>
(c) Licensor is the
exclusive equitable and record owner of the
trademark registrations of, and the registration applications
for, the TOMMY BAHAMA Marks in the Territory. Licensor owns the
TOMMY BAHAMA Marks for the Licensed Products in all
jurisdictions
in which a registration for the TOMMY BAHAMA Marks has issued
in
the applicable class. To the knowledge of Licensor, the TOMMY
BAHAMA Marks are properly registered in each jurisdiction in
the
Territory. Licensor does not use the TOMMY BAHAMA Marks by
consent of any other person and is not required to and does not
make any payments to others with respect thereto. To the
knowledge of Licensor, there are no liens, claims, or
encumbrances on the TOMMY BAHAMA Marks. To the knowledge of
Licensor, there are no prior users of any of the TOMMY BAHAMA
Marks in any of such jurisdictions such that the use of the
TOMMY
BAHAMA Marks by Licensee as contemplated by this Agreement
would
give rise to a likelihood of confusion. To the best knowledge
of
Licensor, the TOMMY BAHAMA Marks have not been registered by
any
person in any jurisdiction within the Territory.
(d) To the knowledge
of Licensor, the use of the TOMMY BAHAMA Marks
as contemplated by this Agreement will not infringe upon or
violate the copyright, trademark rights, or any other
intellectual property rights, of any person or entity within
the
Territory. No complaint or claim alleging any infringement with
respect to the TOMMY BAHAMA Marks, is currently pending or, to
the best knowledge of Licensor, threatened or asserted by any
governmental body or third party in the Territory, and to the
best knowledge of Licensor, there exists no valid basis for
such
a claim. To the best knowledge of Licensor, no third party has
interfered with, infringed upon, misappropriated, or violated
any
of the TOMMY BAHAMA Marks in any material respect.
14. CONFIDENTIAL & PROPRIETARY
INFORMATION
14.1. During the
Contract Term, either party may provide the other with
access to and/or allow them to become familiar with various aspects
of
their Confidential Information. Both parties shall hold all
revealed
Confidential Information which has been provided in strict
confidence,
shall not use in any way or disclose any Confidential
Information
directly or indirectly to any other party and such information
shall
be used by Licensee only in those facilities where Licensed
Products
are manufactured and only in connection with the manufacture, use
and
sale of Licensed Products. All records, files, documents,
information,
data and other similar items relating to either party's
business
operations, regardless of who prepared them and which are not
otherwise in the public domain, shall remain the exclusive property
of
the owning party.
14.2. Apart from
the license granted herein to use the TOMMY BAHAMA Marks
in
connection with the manufacture, advertising, promotion, sale,
offering for sale and distribution of Licensed Products, this
Agreement does not grant Licensee any rights whatsoever in the
Confidential Information of Licensor under any of Licensor's
patent(s), patent application(s), trademark(s), trademark
applications(s), copyrights, copyright application(s), service
mark(s)
or proprietary technology or any other rights in the TOMMY
BAHAMA
Marks not granted herein. THE LICENSEE SHALL NOT USE ANY
PROPRIETARY
INFORMATION OUTSIDE THE SCOPE OF THIS
<PAGE>
GRANT OF LICENSE. THE LICENSEE DOES NOT GRANT LICENSOR ANY
RIGHTS
WHATSOEVER IN THE CONFIDENTIAL INFORMATION OF LICENSEE BY VIRTUE
OF
THIS AGREEMENT OR OTHERWISE.
14.3. In
addition to obligations set forth in Section 18 of this
Agreement,
Licensee shall cause every third party manufacturer,
subcontractor,
supplier, distributor, transporter, or other similar
relationship,
that has access to any Confidential Information, or the
Licensed
Products themselves, to acknowledge by signature the statements
set
forth upon "Exhibit N." Within thirty (30) days of establishing a
new
relationship with such a third party, Licensee shall provide
Licensor
this properly executed document along with any agreements, such as
a
Supplier Agreement, that may be necessary at that time.
15. PAYMENTS
All royalty payments required under the provisions of this
Agreement
are payable by wire transfer as follows:
SunTrust Bank
25 Park Place
Atlanta Georgia
Telex: 542210
Swift: SNTRUS3A
ABA number: 061000104
Account Name: Oxford Industries, Inc
Account Number: 8800828975
16. NOTICES & OTHER
COMMUNICATIONS
16.1. All
reports, approvals, requests, demands, notices and other
communications required or permitted by this Agreement shall be
in
writing and signed by a duly authorized officer of or such
other
individual designated in writing by a party. Communications shall
be
duly given if delivered personally, if mailed (by certified or
registered mail, return receipt requested) or if delivered by
nationally-recognized overnight courier or mail service that
requires
the addressee to acknowledge, in writing, the receipt thereof, to
the
party concerned. Notice may be sent by facsimile transmission,
with
prompt hard-copy follow-up in the manner described above (for
which
the date of delivery shall be deemed to be the date of
facsimile
transmission).
16.2. All
Communications to Licensor shall be sent to:
Tommy Bahama Group, Inc.
Attn: Director of Licensing
1071 Avenue of the Americas
10th Floor
New York, NY 10018
Facsimile: (212) 391-4663
With a copy to:
<PAGE>
Tommy Bahama Group, Inc.
a/d/o Oxford Industries, Inc.
Attn:
Legal Department
222 Piedmont Avenue, NE
Atlanta, Georgia 30308
Facsimile: 404-653-1545
(Copies are not necessary for standard reports, approvals or
requests, but are required for all demands, notices or other
communications).
All communications to Licensee shall be sent to:
Phoenix Delaware Acquisition, Inc. d/b/a Tommy Bahama Footwear
5759 Fleet Street
Carlsbad, California 92008
Attention: Richard White, CEO & President
And Tommy Bahama Footwear National Brand Manager
17. RECORDS & INSPECTION
17.1. Licensee
shall maintain invoices and books of account for the sale of
Licensed Products relating to this Agreement during the Contract
Term
for a period of three years following the Contract Term. Such books
of
account shall be complete and accurate in accordance with
generally
accepted
accounting practices. Licensor, through its representatives
including its internal and external auditors, shall have the
right
upon reasonable prior notice to reasonable inspection of books
and
records of Licensee relating to the sales of all Licensed
Products
subject to this Agreement. Licensor hereby agrees that any
financial
information regarding sales furnished by Licensee is to be held
in
confidence. Acceptance by Licensor of any statement furnished
or
royalty paid shall not preclude the Licensor from questioning
its
correctness and, in the event such mistakes are discovered, they
shall
be immediately rectified.
17.2. If, upon
any examination of Licensee's books and records pursuant to
Section 17.1 hereof, Licensor shall discover any royalty
underpayment
by Licensee, Licensee will make all payments required to be made
to
correct and eliminate such underpayment within ten (10) business
days
of Licensor's demand. In addition, if said examination reveals
a
royalty underpayment of ****** percent (******%) or more for
any
royalty period, Licensee will reimburse Licensor for the cost of
said
examination within ten (10) business days of Licensor's demand.
17.3. In
addition to any other remedy available to Licensor, if any
payment
due under this Agreement is delayed for any reason, Licensor may
make
a written request to Licensee to pay the delayed payment
immediately.
Licensee shall have seven (7) days after the
****** Certain information on this page has
been omitted and filed separately
with
the Securities and Exchange Commission. Confidential treatment
has
been
requested with respect to the omitted portions.
<PAGE>
written request of Licensor to cure its delay by making full
payment
of the amount due. If Licensee fails to pay the amount due within
the
seven (7) day cure period, interest shall accrue and be payable,
to
the extent legally enforceable, on such unpaid principle amounts
from
and after the last day of the cure period, at a per annum amount
equal
to ****** (******%) percent.
18. MANUFACTURING, COMPLIANCE AND CODE
OF CONDUCT
18.1. Licensee
shall not, in any manner, authorize or purport to authorize
another to use the TOMMY BAHAMA Marks, except to the extent
specifically provided herein. Notwithstanding the foregoing,
Licensee
may have the TOMMY BAHAMA Marks affixed to Licensed Products
wherever
being manufactured, provided Licensee takes all necessary
precautions
to prevent labels, tags and other indicia of the TOMMY BAHAMA
Marks
from being used otherwise than in connection with the Licensed
Products. Licensee may manufacture, or have manufactured, the
Licensed
Products outside of the Territory, however, under no circumstances
may
Licensee manufacture or have manufactured Licensed Products in
Myanmar
and such countries as Licensor shall advise Licensee are
prohibited
based on their noncompliance with applicable labor laws and
Licensor's
Code of Conduct, as required in the manufacturing agreement
("Supplier
Agreement"), attached hereto as "Exhibit O", and made a part of
this
Agreement or such other reasons as Licensor shall in its sole
discretion determine.
18.2. Code of
Conduct. Licensor's Code of Conduct applies to any entity
manufacturing, or otherwise in the line of production of
Licensed
Products (including the components thereof) and it is attached
hereto
as "Addendum 1 to Exhibit O". Licensee must exercise
commercially
reasonable efforts to have all third party manufacturers,
subcontractors and suppliers ("Supplier") comply with the terms of
the
Code of Conduct and will evidence such efforts by:
(a) Prior to the
commencement of the manufacturing of Licensed
Products, Licensee executing, and having all Suppliers
execute, the Code of Conduct in the form attached hereto,
retaining such documents in a safe place and providing such
documents immediately to Licensor at its request; and
(b) Displaying and
having all Suppliers display the Code of
Conduct in the language of the applicable country, in a
clearly visible location in Licensee's manufacturing
facilities (if applicable) and in the manufacturing
facilities of Licensee's Suppliers, at all times during the
Contract Term.
In the event Licensor provides Licensee with written notice
that
Licensee or a Supplier is not complying with the Code of
Conduct,
Licensee shall have ten (10) business days to comply or attempt
to
cause the violating Supplier to comply with the Code of
Conduct.
Licensee shall move its business immediately from any Supplier
failing
to comply with the Code of Conduct within the ten (10) business
day
period to an approved Supplier who does comply with the Code of
Conduct.
****** Certain information on this page has
been omitted and filed separately
with
the Securities and Exchange Commission. Confidential treatment
has
been
requested with respect to the omitted portions.
<PAGE>
18.3. Monitoring
Program. Licensee agrees that prior to the commencement of
the manufacturing of Licensed Products, it will have in effect, to
the
satisfaction of Licensor, a program of monitoring manufacturing
facilities, whether operated by Licensee or by Suppliers, that
is
sufficient to ensure their compliance with the Code of Conduct and
all
applicable laws and regulations pertaining to wages, overtime
compensation, benefits, hours, hiring and employment, workplace
conditions and safety, the environment, collective bargaining,
and
freedom of association, and that the other products manufactured
by
Supplier and the components thereof are made without the use of
child
(persons under the age of 15 or younger than the age for
completing
compulsory education, if that age is younger than 15), prison,
indentured, exploited, bonded, forced or slave labor. Such
compliance
will be evidenced by Licensee, upon execution of this Agreement,
by
executing and abiding by the Certification in the form presented
on
"Addendum 2 to Exhibit O" to the Supplier Agreement, as may be
amended
from time to time, and executing and abiding by any such other form
as
may be provided by Licensor from time to time. If Licensee uses
an
agent for monitoring Suppliers, then such agent(s) shall be
approved
in writing by Licensor. If Licensee already has in place such
agent(s)
pursuant to a preexisting contract, then Licensor shall be
authorized
to engage its own agent to monitor Licensee's Suppliers on an
as
needed basis, but at least once quarterly, at Licensee's
expense.
Additionally, without notice, Licensor, or its authorized
agents,
shall have the right to audit all manufacturing facilities.
18.4. Third
Party Manufacturing Agreement. All of Licensee's third party
manufacturing agreements must conform with the Supplier
Agreement,
attached hereto as "Exhibit O" and made a part hereof, as may
be
amended from time to time by Licensor. Within thirty (30) days
after
establishing a new arrangement with a Supplier, Licensee must
inspect
each Supplier and provide approval, signed by an authorized
employee
or agent of Licensee that such Supplier is in compliance with
this
Section 18.1, and will obtain and immediately provide to Licensor,
the
properly executed Supplier Agreement from each Supplier, and/or
such
other forms as may be provided by Licensor from time to time.
Within
thirty (30) days after establishing a new arrangement with a
Supplier,
Licensee must obtain and provide to Licensor, the signature of
an
authorized representative from each Supplier on a Certification in
the
form set forth in "Addendum 2 to Exhibit O" or such other form as
may
be provided by Licensor from time to time. In the event Licensee
has
knowledge of, has reason to believe, or should have reason to
know
that any Supplier is in breach of the Supplier Agreement and/or
Certification, as the case may be, Licensee must immediately
notify
Licensor and Licensee shall, at its sole expense, take
immediate
action to rectify such breach, including, where Licensor deems
it
necessary, immediate termination of its relationship with such
Supplier. If Licensee fails to take immediate action or such action
is
not successful, Licensee will assign its
