Initial Public Offering (IPO): Registration Statement (General Form) — Form S-1
Filing Table of Contents
Document/Exhibit Description Pages Size
1: S-1 Gerber Childrenswear, Inc. 131 744K
2: EX-4.2 Credit Agreement 108 427K
3: EX-10.1 Stock Purchase Agreement 51 215K
11: EX-10.10 Subordination and Interceditor Agreement 17 68K
12: EX-10.11 Junior Subordinated Note 25 100K
13: EX-10.13 License Agreement 28 91K
14: EX-10.14 License Agreement 31 73K
15: EX-10.15 Trademark License Agreement 33 127K
16: EX-10.16 Lease Agreement 7 31K
17: EX-10.17 Lease Agreement 6 28K
18: EX-10.18 Lease Agreement 6 28K
19: EX-10.19 Lease Agreement 11 37K
4: EX-10.2 Form of Executive Stock Purchase Agreement 21 90K
20: EX-10.20 Lease Agreement 40 120K
21: EX-10.21 Severance Agreement 2 14K
5: EX-10.3 Form of Manager Securities Purchase Agreement 17 69K
6: EX-10.4 Securities Purchase Agreement 13 60K
7: EX-10.5 Form of Director Stock Purchase Agreement 12 44K
8: EX-10.7 Stock Purchase Agreement 54 224K
9: EX-10.8 Share Purchase Agreement 52 242K
10: EX-10.9 Amended and Restated Credit Agreement 54 238K
22: EX-21.1 Subsidiaries of the Registrant 1 8K
23: EX-23.1 Consent of Ernst & Young LLP 1 10K
24: EX-23.2 Consent of Jc Holland & Co Psc 1 8K
25: EX-23.3 Consent Price Waterhouse 1 8K
26: EX-27.1 Financial Data Schedule 1 10K
EX-10.15 — Trademark License Agreement
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Exhibit 10.15
SUPPLEMENT TO
TRADEMARK LICENSE AGREEMENT
STANDARD TERMS
A. Licensee: Auburn Hosiery Mills, Inc.
124 East 38th Street
New York, New York 10016-2693
Attn: Mr. Kevin Angliss
Phone: 212-532-0404
Fax: 212-689-3874
B. Wilson: Wilson Sporting Goods Co.
8700 W. Bryn Mawr Ave.
Chicago, IL 60631
Attn: GM, Team Sports
Phone: 773-714-6868
Fax: 773-714-4590
C. Trademarks: Wilson (script), "W" (script) (see
Exhibit A)
D. Authorized Goods: Sport socks
E. Territory - Countries: In North America ---- the fifty United
States (specifically excluding
territories and possessions);
In Europe ---- Austria, Belgium,
Denmark, Finland,
France, Germany,
Greece, Ireland,
Italy, Luxembourg,
Netherlands, Norway,
Portugal, Spain,
Sweden, Switzerland,
and the United
Kingdom (See Part
T.3 below)
Territory - Trade Channels: All, except the golf and tennis pro
and specialty markets
F. Term: January 1, 1998 - December 31, 2002
Option to Renew: If Licensee's Net
Sales over the first 4 years of the
Term meet or exceed 110% of the
aggregate Target Sales for such 4
years, and if Licensee is in
compliance with the remaining Terms of
this Agreement, then Licensee shall
have the right
to extend the Term for an additional 5
years by giving Wilson written notice
of Licensee's election to renew by
January 1, 2002 (along with the
evidence which demonstrates that
Licensee has met the renewal
conditions).
G. Exclusivity/Non-Exclusivity: This license is exclusive in the
Territory.
H. Contract Years: Calendar Years; See Paragraph 4
I. Percentage Royalty: In each Contract Year, the Percentage
Royalty shall be:
[Download Table]
Annual Sales Percentage
------------ ----------
$0 - $15,000,000: 6.0%, plus
$15,000,001 - $20,000,000: 5.5%, plus
$20,000,001 - $25,000,000: 5.0%, plus
$25,000,001 and up: 4.0%
For example: If Licensee's Net Sales of Authorized Goods in a Contract Year are
$50,000,000, then the royalty due Wilson on such $50,000,000 of sales shall be
$2,425,000. Each royalty percentage applies only to the increment of sales as
indicated.
J. Target Sales and Target Royalty:
[Download Table]
Target Sales Target Royalty
------------ --------------
Contract Year 1998 $48,000,000 $2,345,000
Contract Year 1999 $50,000,000 $2,425,000
Contract Year 2000 $52,000,000 $2,505,000
Contract Year 2001 $54,000,000 $2,585,000
Contract Year 2002 $56,000,000 $2,665,000
Extension Years (if applicable):
Contract Year 2003 $60,000,000 $2,825,000
Contract Year 2004 $62,000,000 $2,905,000
Contract Year 2005 $64,000,000 $2,985,000
Contract Year 2006 $66,000,000 $3,065,000
Contract Year 2007 $68,000,000 $3,145,000
K. Guaranteed Royalty: The Guaranteed Royalty shall be 60% of
the Target Royalty for a Contract
Year:
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[Download Table]
Guaranteed Royalty
------------------
Contract Year 1998 $1,407,000
Contract Year 1999 $1,455,000
Contract Year 2000 $1,503,000
Contract Year 2001 $1,551,000
Contract Year 2002 $1,559,000
Extension Years (if applicable):
Contract Year 2003 $1,695,000
Contract Year 2004 $1,743,000
Contract Year 2005 $1,791,000
Contract Year 2006 $1,839,000
Contract Year 2007 $1,887,000
L. Quarters (for payments and reports): Calendar Quarters
M. Key-Man (Par. 9[c]): Mr. Kevin Angliss and Mr.
Donald J. Murphy
N. Advertising Percentage (Par. 12[b]): N/A
O. Sales Meeting Participation (Par. 12[e]): N/A
P. Trade Show Booth Space (Par. 12[f]): Applicable
Q. Non-Compete Restrictions (Par. 19): The non-competition
restrictions stated in Paragraph 19 of the Standard Terms shall apply to
Licensee and any of Licensee's affiliated who utilize in their operations
any of the resources (e.g., manufacturing facilities, management
personnel, sales personnel, service personnel or functions, etc.) which
Licensee utilized under this license. In other words, Licensee and Wilson
have agreed that Wilson shall have a right of termination if Licensee's
operation under this license is not wholly separate and distinct (as if it
were a non-affiliate) from the operation of any affiliated entity which
makes or distributes socks or other sporting goods under a sports brand
name. The sole exceptions to this non-competition clause are: [1]
Licensee's ability to continue to make and distribute sport socks under
the Converse(R)name; [2] Licensee's ability to sell, in Europe only,
Dunlop(R)sport socks at price points and in trade channels which are not
competitive with Licensee's current Wilson-brand socks business in Europe.
This non-competition between the Wilson and Dunlop sock lines shall be a
material condition of Licensee's ability to maintain the right to
distribute Wilson-branded socks in Europe under this license; and [3]
Licensee's ability to supply private label sport socks to retailers, so
long as the private label line is not offered, sold or positioned by
Licensee in a way which competes against the offer, sale and positioning
the Wilson-brand sock line.
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R. Copies of Notices (Par. 20[b]):
If to Wilson: Addressed to Wilson (as above)
Attention: General Counsel
Fax: 312-714-4557
If to Licensee: Same as above address
S. Jurisdiction (Par. 20[d]): State of Illinois
T. Other Supplemental Provisions:
1. Rights of Termination for Failure to Meet Certain Sales Levels.
This paragraph amends Paragraph 9[d] of the Standard Terms. Wilson and Licensee
acknowledge that the Guaranteed Royalty figure has been set at a significantly
discounted percentage of the Target Royalty set forth above, in light of the
current level of Licensee's business with Wilson-brand product. The parties also
acknowledge that if actual annual sales of Authorized Goods were significantly
below the Target Sales, then Wilson should have an option to terminate this
relationship. Therefore, Wilson shall have the right to terminate this Agreement
within 60 days after receiving an annual report of sales from Licensee, which
reports that Licensee's sales for that Contract Year were less than 60% of the
Target Sales figure set forth in Part J above. In addition, Wilson shall have
the right to terminate the Agreement within 60 days after receiving an annual
report of sales from Licensee, which ---- when combined with Licensee's two
immediately preceding annual reports of sales ---- reports that Licensee's
aggregate sales of the three-year period are less than 75% of the aggregate
Target Sales for that three-year period. Nothing in this paragraph shall
restrict Wilson's right to receive full payments of Guaranteed and Percentage
Royalties under Paragraph 6 of the Standard Terms and the other provisions of
this Agreement; Provided, that if Wilson exercises its right of termination
under this Part T.1, then in this case only Licensee's obligation for Guaranteed
Royalties under this Agreement shall extend for a period of 9 months following
termination and the amount owed shall be pro-rated over such 9-month period.
Licensee's failure to provide accurate and timely reports of sales under this
paragraph shall create for Wilson a right of termination under Paragraph 7 of
the Standard Terms.
2. Territorial Allocation of Licensee's Sales. Licensee has been
granted United States and European territories under this Agreement. The parties
have agreed not to assign minimum royalties by country, but have agreed instead
to a percentage allocation of sales. Wilson shall have the right to terminate
this Agreement, within 60 days after receiving an annual report of sales from
Licensee, which reports that less than 65% of Licensee's sales of Authorized
Goods for that Contract Year were for distribution in the United States.
Alternatively, Wilson shall have the right to terminate Licensee's ability to
distribute and sell the Authorized Goods in the countries of Europe listed in
Part E above in this Supplement as part of the Territory (the "European
countries"), within 60 days after receiving an annual report of sales from
Licensee, which reports that less than 15% of Licensee's sales of Authorized
Goods for that Contract Year were for distribution in the European countries.
Licensee's failure to provide accurate and timely reports of sales under this
paragraph shall create for Wilson a right of termination under Paragraph 7 of
the Standard Terms.
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3. European Distributor Issues. Licensee agrees to work in good
faith with Wilson's distributors in the European countries listed in Part E
above, as follows: If the Wilson distributor calls on accounts within the
Territory not called on by Licensee (the "Incremental Accounts"), and if such
distributor would like to offer Licensee's Authorized Goods to such Incremental
Accounts, then Licensee shall sell Authorized Goods to the distributor for
distribution. Licensee's price to the distributor shall be competitive with
Licensee's prices to its other accounts in the European countries. Wilson and
Licensee shall work in good faith towards an agreement on a minimum order figure
which accommodates the distributors' needs without unreasonably interfering with
Licensee's business operations. If Licensee shall fail to uphold its obligations
in this paragraph, or if the particular Incremental Account is in a country
where Licensee made no sales in the prior Contract Year, then such distributors
may offer and sell a sports sock bearing the Wilson name, made by a party other
than Licensee, to the Incremental Accounts. To the extent that Wilson might
replace its distributor network with a sales force, or another distribution
system, this paragraph shall apply to such any sales force or other distribution
system.
4. Branding Issues. Licensee agrees to cooperate reasonably with
Wilson on Wilson's branding strategies in the markets where Licensee distributes
the Authorized Goods. To the extent that Licensee is permitted to use any
sub-brands of Wilson on the Authorized Goods, Licensee agrees that its use will
be consistent with Wilson's strategies for such sub-brands.
5. Trade Channel Development Issues. Licensee agrees to use
reasonable efforts to develop sales of Authorized Goods in the sporting goods
store trade channel. In 1996, Licensee reported that its sales of Authorized
Goods in "quality" outlets amounted to 12.3% of its aggregate sales of
Authorized Goods. Licensee agrees that it must increase sales of Authorized
Goods to quality outlets in the U.S. to 20% of its U.S. sales of Authorized
Goods within the next 3 years, and to reasonably maintain such level of sales
thereafter during the Term.
6. Special Market Sport Socks. Licensee agrees to cooperate
reasonably with Wilson to develop sport sock products which are suitable and
salable in the golf and tennis pro and specialty markets. Wilson acknowledges
that Licensee's recent efforts in this area are reasonable efforts. Wilson
agrees to use best efforts to use Licensee as its first-choice supplier of socks
to the golf and tennis specialty market.
7. Issues Related to Foreign Sales Reports. Currency Translations.
In preparing and filing its sales reports, Licensee agrees to list sales
separately for each country so that Wilson can properly allocate the royalties
to the applicable Wilson market centers. All royalties shall be payable in US
dollars. Foreign sales shall be converted into US dollars at the exchange rate
in effect (from a mutually acceptable bank) on the last day of the quarter to
which the report and payment pertain.
8. Specific Disclaimer of Rights to the Wilson Sports Socks Name.
Licensee has from time to time utilized a d/b/a name of Wilson Sports Socks.
Licensee expressly disclaims any ownership of such name, and agrees to
discontinue all use of such name upon Wilson's direction or upon termination of
this agreement. Licensee agrees to secure similar disclaimers and agreements
from Licensee's foreign distributors. The costs related to any steps which must
be taken by Wilson to enforce the terms of this provision against Licensee or
its foreign distributors shall be subject to indemnification by Licensee.
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9. Continuity of Operations under the Licensee. In addition to the
provisions of the Standard Terms regarding a change in control of licensee,
Wilson and Licensee specifically agree that Wilson shall have the right of
approval of any proposed successor to the ownership of Licensee. Without
limiting Wilson's rights of approval, it is agreed that Wilson shall be entitled
to reject any proposed successor which markets a line of socks or sporting goods
which is competitive with Wilson, or which maintains a material interest in any
such competitor ---- whether as a manufacturer, distributor or retailer of
sporting goods. Wilson has previously listed Mr. Kevin Angliss as a "key man."
In addition, any approved successor must agree to maintain Wilson as a key
sporting goods brand in its sock business, and a key brand overall in its
business, and to create a seamless transition in the change in ownership
respecting the Wilson sock business in the eyes and minds of the trade.
10. Representation regarding Lack of any Default Upon Execution.
Licensee represents that it has read the terms of the agreement, including the
Standard Terms, and that there shall be no condition which exists upon execution
which would constitute a violation of the agreement. Licensee agrees that, as of
the date of execution, Wilson is in full compliance with all obligations owed to
Licensee and its affiliated Sales and Marketing Hosiery corporation under the
predecessor license dated October 12, 1987, as amended.
11. Conditions of Effectiveness. This Agreement shall not become
effective until: (a) it is executed by all parties; and (b) the agreement has
been approved by the Wilson Board of Directors. Licensee acknowledges that
Wilson has not, cannot, and does not make any representations as to whether or
not the Wilson Board of Directors will approve this Agreement, as executed. If
the Agreement is not approved, then neither party shall have any obligation to
the other, except under the existing agreement described in the following
sentence. Wilson shall have the unilateral right to terminate this Agreement if,
as of December 31, 1997, Licensee is not in full compliance with its obligations
under the agreement between Wilson and Sales and Marketing Hosiery Corporation
dated October 12, 1987, as amended.
12. Licensee's Status. Licensee represents that it is a duly
incorporated organization in good standing in the state of its incorporation.
The signatory for Licensee and Wilson each represent that he/she is authorized
to bind Licensee and Wilson, respectively, to the terms of this Agreement.
Licensee represents that it is capable of fully performing its obligations under
this Agreement.
13. Licensee's European Distributor. Wilson acknowledges that
Licensee may distribute Authorized Goods in Europe (as defined) through its
affiliate, Sport Socks Co. (Ireland) Ltd., Cahirciveen, Co. Kerry, Ireland, on
the conditions that: (a) Licensee provides Wilson with a copy of the sub-license
agreement with such affiliate and Wilson approves the same (not to be
unreasonably withheld or delayed), (b) the royalty paid by Licensee on sales by
the affiliate is based upon the sales prices by the affiliate to the trade (or
the distributors approved by Wilson) and not upon the sales prices between
Licensee and its affiliate (if any), and (c) Licensee agrees to provide access
to affiliate's books and records as if such were Licensee's, as required by the
Standard Terms of this license agreement.
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U. Signatures: This Agreement between Wilson Sporting Goods Co. and Licensee,
consists of the following incorporated parts ---- this
Supplement, Exhibit A, and the Standard Terms ---- and is
executed this 29th day of April, 1997.
WILSON SPORTING GOODS CO. AUBURN HOSIERY MILLS INC.
By: /s/ Chris Carradine [sic] By: /s/ James P. Manning
--------------------------- -------------------------------
Title: 05/28/97 Title: Chief-Executive Officer
--------------------------- -------------------------------
and Chairman of the Board
-------------------------------
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Exhibit A
TRADEMARK LICENSE AGREEMENT
STANDARD TERMS
All capitalized terms not defined in these Trademark License Agreement
Standard Terms are defined in the Supplement (and its Exhibit(s)), into which
these terms are incorporated.
1. Grant. Wilson hereby grants to Licensee a license to use the
Trademarks, in the forms set forth in Exhibit A (as may be updated) for the
manufacture, purchase for resale, and distribution of the Authorized Goods
bearing the Trademarks in the Territory, subject to the terms and conditions of
this Agreement. The licensee granted hereby shall be non-transferable,
non-assignable and indivisible. The Supplement or the Exhibits shall specify
whether, or the extent to which, this license is exclusive in the Territory.
2. Territorial Restrictions on Grant. Licensee shall not utilize the
Trademarks on goods other than the Authorized Goods. Licensee shall make no
sales of Authorized Goods outside of the geographic (and, if applicable, the
trade channel) limits of the Territory. Licensee shall not export, and shall use
best efforts to restrict any authorized independent sales agents or distributors
from exporting, Authorized Goods outside the Territory. All independent sales
agents and distributors of Licensee must be approved by Wilson, which approval
may be withheld in Wilson's discretion. Licensee shall not continue to sell
Authorized Goods to accounts in the Territory which then distribute such goods
outside of the Territory.
3. Reservation of Rights not Granted. All rights in the Trademarks other
than those specifically granted herein are reserved by Wilson for its own
exclusive use and benefit, including but not limited to, the right to use the
Trademarks: (a) on all goods except the Authorized Goods and (b) on Authorized
Goods, to the extent the license granted hereby is non-exclusive within the
Territory, and to the extent sales of Authorized Goods are made by Wilson or a
licensee or distributor outside the Territory.
4. Term and Contract Years. The Term of this Agreement shall be as
indicated in the Supplement. The Term may be terminated prior to its scheduled
conclusion pursuant to the provisions of paragraph 9 of this Agreement. The Term
may be extended through one or more Option Contract Years if: (a) the Supplement
provides for any such Option Contract Years and (b) Licensee is in full
compliance with all of the terms of this Agreement, including the terms of the
option, at the time such option is exercised. Any such dates of conclusion of
the Term shall hereafter be referred to as the "expiration of the Term." The use
of the term "Contract Year" shall refer also to "Option Contract Years," if any
are applicable. Unless otherwise indicated in the Supplement, Contract Year One
shall be the first 12 months of the Term, and all subsequent Contract Years
shall be the succeeding 12-month periods during the Term.
5. Royalties.
(a) Percentage Royalty. In consideration of and for the grant of the
License, Licensee shall pay to Wilson the Percentage Royalty indicated in the
Supplement on Net Sales of
A - 1
Authorized Goods during the Term. Such royalties may be referred to in this
Agreement as "Percentage Royalties."
(b) Guaranteed Royalty. Licensee guarantees to Wilson that it will
pay Wilson during the Term royalties in amounts not less than the Guaranteed
Royalty indicated in the Supplement for each Contract Year.
(c) "Net Sales" and "Sales," defined. "Net Sales" shall mean the
aggregate invoice price of all Authorized Goods sold by Licensee, its agents, or
distributors, bearing one or more of the Trademarks (including close-outs), less
freight, sales taxes and returns actually credited. Authorized Goods which are
distributed, but not sold, by Licensee for purposes other than the promotion of
sales of Authorized Goods (e.g., as premiums or barters) shall be deemed for
royalty purposes to have been sold at the normal dealer price of such goods.
Authorized Goods shall be deemed "sold" when title transfers to a purchaser not
directly or indirectly affiliated with Licensee in any way.
6. Payments. Licensee shall pay royalties on a quarterly basis. The
quarterly payment schedule is designed so that, at the end of each Quarter's
payment, Licensee will have paid to Wilson the greater of: Licensee's
year-to-date Percentage Royalties, or a sum equal to one-fourth of the
Guaranteed Royalty multiplied by the number of Quarters which have elapsed in
the Contract Year. The procedure shall be as follows: Within thirty (30) days
following the end of each Quarter of a Contract Year, Licensee shall conduct an
accounting, showing the Percentage Royalties payable for the Quarter and paid or
payable year-to-date. Within the 30-day period, Licensee shall pay to Wilson the
greater of:
(a) the cumulative total of the Percentage Royalties payable
year-to-date for the Contract Year, less any Percentage Royalties and Guaranteed
Royalties paid for prior Quarters in the same Contract Year; or
(b) one-fourth of the Guaranteed Royalty for the Contract Year,
multiplied by the number of completed Quarters in the Contract Year, less any
Percentage Royalties and Guaranteed Royalties paid for prior Quarters in the
same Contract Year.
As of the final payment for a Contract Year, Licensee shall have
paid to Wilson the greater of the Percentage Royalties or the Guaranteed Royalty
due for that Contract Year.
All payments of Percentage Royalties or Guaranteed Royalties shall
accompany the Reports which Licensee shall submit pursuant to Paragraph 7.
Unless otherwise indicated in the Supplement, all late payments shall bear
interest at the prime rate of the Chase Manhattan Bank of New York City as of
the date of default, as published in the Wall Street Journal in its section
which regularly contains this information.
7. Reports and Records.
(a) Quarterly Reporting. Licensee shall render Reports to Wilson for
each Quarter throughout the Term and any additional period thereafter during
which Authorized Goods are sold by Licensee. Unless otherwise indicated in the
Supplement, "Quarter" shall be defined as
A - 2
the calendar quarters ending March 31, June 30, September 30 and December 31.
Each Quarter's Report shall be delivered to Wilson no later than thirty (30)
days after the end of the Quarter. A "Report" shall be defined to include the
following information, and in a form reasonably satisfactory to Wilson:
(i) The total number of units of each type of Authorized Goods
sold or distributed by Licensee during the Quarter;
(ii) The Net Sales of each type of Authorized Goods during the
Quarter;
(iii) A computation of the royalties earned by Wilson for the
Quarter;
(iv) The Net Sales of all Authorized Goods sold or distributed
by Licensee during the Quarter, by the top twenty accounts;
(v) The dollar volume of Authorized Goods on order by
customers at the end of the calendar year by the tope twenty account;
(vi) The quantity of defective Authorized Goods returned
during the Quarter by stock number;
(vii) Such other information as may be reasonably requested by
Wilson.
(b) Annual Reporting. Licensee shall also render annual Reports to
Wilson throughout the Term, no later than thirty (30) days following the end of
each Contract Year, showing the dollar volume of Authorized Goods purchased by
each customer of Licensee.
(c) Audits. Licensee shall keep its books of account and business
records in a manner to sufficiently establish inventory of the Authorized Goods,
royalty computations, and Reports related to this Agreement. Licensee's books of
account and business records, which in any way relate to the verification of the
transactions covered by this Agreement, shall be open for audit or inspection by
Wilson's authorized representatives at Wilson's expense during Licensee's
regular business hours for a period of three years after receipt of the Report
such information was drawn from. Upon request, Licensee shall also make
available to Wilson's representatives can determine and verify the production
inventory and factory commitments of the Authorized Goods. If Wilson should
conduct such an audit for any Contract Year, and the Net Sales or Royalties
computed shown by Licensee's statement for any such Contract Year should be
found to be understated by more than six percent (6%) of the amount so stated,
then Licensee shall pay to Wilson the cos of such audit, plus the amount of the
understatement and applicable interest. Wilson will keep such audit information
confidential.
(d) Forecasting. Licensee shall reasonably and promptly comply with
Wilson's requests for forecasts regarding Licensee's sales and royalties. Wilson
may request that such forecasts be updated on a quarterly basis.
8. QUALITY OF AUTHORIZED GOODS. Licensee shall be responsible for the
quality of all Authorized Goods and shall guarantee that all Authorized Goods
sold are free of
A - 3
defects and in conformity with the samples of Authorized Goods submitted to
Wilson, except as provided in this Paragraph 8.
If defective Authorized Goods are produced, they shall be dealt with
as follows:
(a) All Authorized Goods that are functionally defective shall not
be sold, but will be destroyed.
(b) Authorized Goods that are cosmetically defective but of an
industry recognized second quality shall be treated as follows: (i) if the
amount of seconds is less than 2% of the total annual production amount during
the Contract Year, Licensee may sell such seconds in the Territory provided all
Wilson identification is removed and the items cannot be identified as Wilson
product; (ii) if the amount of seconds is 2% or greater of the total annual
production amount during the Contract Year, then Licensee shall only dispose of
such seconds over the 2% figure with Wilson's prior approval of the mutually
agreed method of disposal.
9. Termination.
(a) Defaults. In the event either party defaults on its obligations
provided herein, the non-defaulting party may give the other party written
Notice (as defined in Paragraph 20(b)) specifying the default. If the defaulting
party does not cure said default and notify the other party in writing of such
cure within thirty (30) days after receipt of said Notice, the party giving
Notice of default may terminate this Agreement; provided, however, that if the
default relates to the non-payment of royalties, the cure period shall be ten
(10) days.
(b) Insolvency. Either party may terminate this Agreement effective
upon written Notice in the event of the other's insolvency, commission of an
acto of bankruptcy, adjudication of bankruptcy or the filing of a petition for
voluntary or involuntary bankruptcy of or by the other, or the other's making of
an arrangement with or assignment for the benefit of creditors or the
appointment of a receiver or trustee for the assets of the other. In the event
that Wilson shall be prevented by law or otherwise from terminating this
Agreement under this subparagraph, then this license, to the extent that it is
exclusive in any respect, shall automatically convert to a non-exclusive license
in all respects.
(c) Change in Control; Loss of Principal. Wilson may terminate this
Agreement in the event of a material change in the overall management or
ownership of Licensee, whether by organizational changes, or by a sale by
Licensee of all or substantially all of its stock or operating assets. Without
in any way limiting the foregoing. Wilson may indicate in the Supplement the
name of a particular person, whose ongoing and active role as a principal of
Licensee is material to Wilson and was relied upon by Wilson in entering into
this Agreement. The cessation of such "key-man's" ongoing and active role with
Licensee shall create a right of termination for Wilson under this subparagraph.
The decision of Wilson not to include the name of a particular person affiliated
with Licensee in the Supplement shall not be deemed to be a waiver of Wilson's
rights of termination under the first sentence of this subparagraph.
(d) Minimum Sales Goals. Wilson may terminate this Agreement if
Licensee fails to meet its annual minimum sales goal in any given Contract Year.
For purposes of this
A - 4
Agreement, the annual minimum sales goal is the Net Sales figure for a Contract
Year necessary to generate the Guaranteed Royalty for that Contract Year when
applying the Percentage Royalty rate set forth in the Supplement.
(e) Required Notice. In order to terminate this Agreement, according
to the events of termination of subparagraphs (b) through and including (d) of
the paragraph 9, Wilson or Licensee, as applicable, must send written Notice (as
defined in paragraph 20(b)) to the other, and the receipt of such Notice shall
act as an immediate termination of the Agreement.
10. Rights After Term.
(a) Sell-Off Period. Following the expiration of the Term or earlier
termination of this Agreement, and on the conditions that Licensee is (and
remains) current in all payments due Wilson, and is (and remains) in compliance
with the other material terms of this Agreement, Licensee may continue to sell,
distribute, advertise and promote for nine months after the expiration of the
Term, subject to all the terms and conditions of this Agreement, as if such
terms and conditions are still in full force and effect, any finished goods or
work-in-process inventories of Authorized Goods in existence at the date of
expiration of the Term. Licensee shall continue to make Reports and pay
Percentage Royalties for all Authorized Goods sold after the Term. The
obligations of Licensee under paragraphs 3, 4, 5, 6, 8, 10, 11, 12, 14, 15, 16,
17, 18 and 19 shall survive the expiration of the Term, or earlier termination
of this Agreement. "Material terms" which, if breached by Licensee, shall not
entitle Licensee to any sell-off rights shall include but not be limited to: the
obligation to timely pay all royalties, the obligation to comply with the
indemnification provisions of paragraph 16, and the obligation to refrain from
selling damaged or defective product under paragraph 8.
(b) Sell-Off Period Initial Report. Within thirty (30) days after
the expiration of the Term, Licensee will provide a Report in a form reasonably
satisfactory to Wilson, containing the following information as of such
termination or expiration date: (i) the quantity of Authorized Goods of each
type in Licensee's finished goods and work-in-process inventories; (ii) the
quantity of Authorized Goods on order from suppliers; and (iii) the quantity of
Authorized Goods on order by customers.
(c) Interim and Final Reports. Within thirty (30) days following the
expiration of each 3-month period within the sell-off period provided in
Paragraph 10(a), Licensee shall file Reports consistent with the terms of
Paragraph 5. In addition, Licensee will make available for review by Wilson all
invoices for sales of Authorized Goods during such period, along with
reconciliation against the Report of finished goods and work-in-process
inventories of Authorized Goods pursuant to 10(b)(i) above. Wilson will keep all
such information confidential. Any inventory of Authorized Goods which exists at
the expiration of such nine-month period shall be destroyed, unless otherwise
agreed in writing by both parties.
11. Use of Trademarks.
(a) Guidelines. Wilson may provide materials and guidelines to
Licensee as to all the artwork and reproductions of the Trademarks, and
Licensee's display of the Trademarks on Authorized Goods. Licensee's uses of
such artwork and reproductions shall absolutely conform with
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precision to the designs approved in advance by Wilson. All artwork or other
materials furnished to Licensee by Wilson for this purpose shall remain the
property of Wilson, and all artwork or other material delivered to Licensee
shall be returned to Wilson upon Wilson's request. Licensee shall follow
Wilson's instructions with regard to proper Trademark usage, including display
of trademark registration symbols and notices. Licensee acknowledges that Wilson
may impose color restrictions on the Trademarks. Wilson and Licensee agree at
the outset that the Trademarks will be used in red, black and white solid
colors. The Trademarks shall not be used in purple or green colors without
Wilson's express written consent.
(b) Approvals. Licensee recognizes that the manner in which Licensee
uses the Trademarks licensed herein could have a significant effect on Wilson's
image and customer goodwill and business reputation; therefore, Licensee shall,
as a condition to the grant of the license, submit at Licensee's expense, for
Wilson's prior written approval, in advance of any dissemination or use by
Licensee:
(i) All prototypes of the artwork which Licensee proposes to
use on the Authorized Goods to be merchandised, including actual samples of the
Trademarks as produced on the Authorized Goods.
(ii) All prototypes of all packaging, labels, advertising and
promotional material or literature which Licensee intends to use in the
merchandising, sale and distribution of the Authorized Goods.
(c) Timing. Licensee warrants that prototype materials submitted
hereunder will accurately represent the usage of the Trademarks by Licensee.
Wilson will use its best efforts to notify Licensee, within fourteen (14)
business days of receipt, of its approval or disapproval of prototype artwork,
actual samples, packaging labels, advertising and promotional literature and
materials. Such approval shall not be unreasonably withheld or delayed. If
Wilson does not notify Licensee within said fourteen (14) business days of its
approval of such artwork, actual samples, packaging labels, advertising and
promotional literature and material submitted to Wilson pursuant to (b) above,
Wilson will be deemed to have disapproved such items unless said request is
resubmitted by Licensee in the form of a written Notice, in which event failure
by Wilson to issue approval or disapproval within an additional seven (7) day
period shall be considered approval unless Wilson notifies Licensee that Wilson
requires a reasonable amount of additional time.
12. Promotion and Sale.
(a) Best Efforts and Focus. Wilson requires that Licensee attempt to
market to all authorized channels, with a particular new focus on developing
sales to sporting goods accounts. Licensee shall use its best efforts, and at
its sole cost and expense, to advertise, promote and support its sale of
Authorized Goods to all appropriate accounts within the Territory. Licensee's
failure to adequately call on or service any particular account within the
Territory shall give Wilson the right to notify licensee of Wilson's desire to
have Licensee provide more effort and attention to such account to maximize
sales opportunities. If Licensee does not reasonably act upon such a request,
and sales opportunities are at risk which if pursued, would not unreasonably
impair existing sales opportunities or relationships, then Wilson shall have the
right to act upon the sales opportunity and fill orders with such account(s),
and to withdraw such account from Licensee's Territory until
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Licensee displays the commitment necessary to prevent the loss of future sales
opportunities with such account. If Licensee fails to use its best efforts to
promote, market or distribute any of the Authorized Goods within six months from
commencement of this license, then such Authorized Goods shall be deemed
stricken from this Agreement and Licensee shall thereafter have no rights, in
perpetuity, to market such goods according to the terms of this Agreement.
Licensee also agrees to maintain the Wilson line of licensed products as a major
focus in its business.
(b) Spending. Licensee hereby guarantees to spend a percentage, as
specified in the Supplement (the "Advertising Percentage"), of Net Sales per
Contract Year to advertise and promote the sale of Authorized Goods. Licensee
shall provide Wilson with quarterly Reports at the same time as the Reports
required in Paragraph 5 hereof, detailing the expenditure of these advertising
funds and providing proof of performance including information such as the media
used, the number of times published or broadcast and the geographic territory
covered.
(c) Sales Staff. Licensee shall maintain a sales staff adequate to
promote and execute the sale of Authorized Goods.
(d) Sales to Wilson. Wilson has the right to tie-in Authorized Goods
with other Wilson products for advertising purposes, and Licensee hereby agrees
to sell to Wilson a reasonable quantity of such Authorized Goods for such
promotional purposes at cost. Such sales will not be included in the definition
of Net Sales.
(e) Sales Meeting Participation. This section shall apply only if so
indicated in the Supplement. Wilson requires that Licensee participate in
Wilson's major sales meetings, currently held 2 times per year. Licensee may
elect, with Wilson's permission, to attend other sales meetings during the year.
Licensee shall bear the costs of its own travel, room, board and other expenses,
including its expenses of presentation at such meetings.
(f) Trade Show Booth Space. This section shall apply only if so
indicated in the Supplement. If Licensee desires to exhibit at any trade show at
which the applicable Wilson division is exhibiting, Wilson requires that
Licensee promote uniformity and cohesiveness by sharing booth space with Wilson.
Upon such sharing, Licensee shall share a portion of Wilson's booth costs, on a
pro rata basis according to the square footage shared. The allocation and
approximate costs to Licensee shall be communicated by Wilson prior to the
sharing arrangement.
(g) Licensee's Evaluation of License. Licensee agrees and
acknowledges that it has not been induced to enter into this Agreement by any
statements made by Wilson, that Licensee has independently evaluated its
business and its ability to utilize this license in its business and to achieve
the goals set by Licensee for its business, and that Wilson is in no way
responsible or liable to Licensee, except for Wilson's obligations as
specifically set forth in this Agreement, for any failure of the Licensee to
fully and properly exploit this license in accordance with Licensee's own
expectations.
13. Samples and Approvals. No Authorized Goods of any type, style, model
or description shall be purchased for resale, sold or distributed prior to
Wilson's approval of samples of each such type, style, model or description and
the packaging and accompanying materials therefor. Samples shall be submitted
far enough in advance of their intended use to that there is
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sufficient time for the samples to be revised in the event Wilson disapproves of
such. Wilson will use its best efforts to notify Licensee within fourteen (14)
business days of receipt of such of its approval or disapproval of samples. Such
approval shall not be unreasonably withheld or delayed. If Wilson does not
notify Licensee of its approval within said fourteen (14) days then such samples
shall be considered disapproved, unless said request is resubmitted by Licensee
in the form of a written Notice, in which event failure by Wilson to issue
approval or disapproval within an additional seven (7) day period shall be
considered approval unless Wilson notifies Licensee that Wilson requires a
reasonable amount of additional time. Licensee shall, upon Wilson's reasonable
request, submit samples of Authorized Goods, purchasing and accompanying
materials from time to time for comparison with approved samples. Submission of
samples shall be at the expense of Licensee. Samples shall be submitted in
quantities requested by Wilson reasonable for evaluation by Wilson. Licensee
shall also provide Wilson with a reasonable quantity of production line samples
of Authorized Goods. All Authorized Goods shall conform to the approved samples
thereof. Wilson's review and approval of samples shall not b in derogation of
Wilson's right to indemnification pursuant to Paragraph 16.
14. Business and Market Practices.
(a) Proper Conduct. Licensee and Wilson each warrant to the other
that their actions and practices and the conduct of their business pursuant to
this Agreement shall not adversely affect the other's name, business reputation
or relationships with their own customers, suppliers, or the public.
(b) Coordination. Licensee and Wilson acknowledge the importance of
coordinating their marketing and sales strategies, plans, policies and practices
with each other so as not to negatively affect the image of the Wilson name and
the goodwill associated therewith. Wilson and Licensee shall meet regularly ,
currently expected to be twice per year, to discuss and agree on plans and
strategies for the promotion and sale of Authorized Goods under this Agreement.
(c) Legality. Licensee shall at all times conduct its business with
respect to the Authorized Goods in an ethical manner and in a manner free of
misconduct and illegality.
15. Protection of Trademarks.
(a) Recognition. Licensee acknowledges that Wilson is the owner of
the Trademarks and that all of Licensee's uses of the Trademarks under this
Agreement shall inure to the benefit of Wilson. Licensee acknowledges that it is
not acquiring any interests or rights in the Trademarks apart from the license
set forth in this Agreement. Licensee will not contest or deny the validity of
the Trademarks or the title of Wilson thereto, register or attempt to register
the Trademarks or in any way assist others in so doing. Upon termination of this
Agreement or expiration of the Term Licensee shall forthwith discontinue
entirely all use of the Trademarks (subject to the provisions of paragraph 10
herein) and all rights granted according to the terms of this Agreement shall
revert to Wilson.
(b) Confusion. Licensee agrees not to use at any time during the
Term of this Agreement any other work, trademark, brand name, trade name,
symbol, design or the like which is similar to or possibly may be confused with
the Trademarks licensed hereunder. Licensee will
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not take any action which will harm or prejudice the Trademarks or Wilson's
rights therein in any way during the Term of this Agreement or any allowed
period of use thereafter. Licensee will take care to identify itself in all
transactions as a licensee of, and separate legal entity from, Wilson, as
opposed to an integrated, divisional or consolidated part of Wilson's sporting
goods business.
(c) Corporate Use. Licensee shall not use the Trademarks in
Licensee's name or in the name of any operating entity formed by Licensee,
without the prior consent of Wilson.
(d) Infringement and Indemnity. Licensee shall at Wilson's request
and Wilson's expense assist Wilson in conforming or registering its rights in
the Trademarks, including as enumerated in this Agreement, with any government
or person and shall execute any required documents in this regard. Licensee will
promptly advise Wilson of any potentially infringing uses by others. Licensee
will promptly advise Wilson in writing of all claims and potential claims of
which it has notice or knowledge and all suits threatened or brought against
Licensee involving the Trademarks themselves. Wilson will indemnify and hold
Licensee harmless (which indemnification shall also extent to Licensee's
insurer(s)) from and against any and all losses, claims, damages, expenses,
judgments, awards, petitions, demands or liabilities of any type, joint or
several, to which Licensee may become subject directly or indirectly on account
of a legal action related to Licensee's use of the Trademarks initially listed
on Exhibit A in a way strictly conforming to this Agreement; provided, Licensee
uses all efforts and corrective action to mitigate the exposure to Wilson.
Wilson reserves the right to settle or compromise any and all such suits on
Wilson's behalf and on behalf of Licensee, provided that Licensee shall not
thereby be obligated to make any payment or be bound by any injunctive decree or
order, without its prior written consent. This undertaking by Wilson shall
survive the expiration of the Term or the termination thereof by either party.
The party receiving notification of any event which may be indemnifiable
according to the terms of this Paragraph 15(d) shall as soon as reasonably
possible notify the other party upon receipt of Notice of any such claim.
Decisions regarding action involving the protection and defense of the
Trademarks shall be solely in the discretion of Wilson and Licensee may not take
any such action without the express written consent of Wilson. At Wilson's
request, Licensee shall cooperate with Wilson with respect to actions described
in this Paragraph 15(d) which are defended by Wilson. The expenses of such
cooperation (including reasonable attorney's fees to the extent Licensee
reasonably requires independent counsel) shall be reimbursed to Licensee. If
Wilson fails, after proper notice from Licensee, to investigate, defend, settle
or compromise actions to which the indemnity in this Paragraph 15(d) relates,
then Licensee may incur such expenses, including attorneys fees, as may be
reasonably necessary or advisable for the investigation, defense, or payment of
any claims, and such amounts shall be included as expenses, as such term is
utilized in this Paragraph 15(d). Licensee shall have the right to set-off
against any financial obligation of Licensee to Wilson, any amount due under
this Paragraph 15(d) to Licensee.
(e) Use of Sub-Brand Names. Licensee agrees that should Licensee
desire to feature on the Authorized Goods additional trademarks, other than
those listed in Exhibit A and other than Licensee's tradename, Licensee will
notify Wilson of those trademarks. If Wilson agrees to the use of those
trademarks on the Authorized Goods (which agreement may be withheld in Wilson's
discretion) and if such trademarks are not already the property of Licensee (as
evidenced by Licensee's prior use of such trademarks apart from the Authorized
Goods), then Wilson shall have the right either to register those trademarks in
Wilson's own name, or to permit Licensee to register those trademarks in
Wilson's name.
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(f) Wilson's Rights. Wilson represents that it owns the sole rights
to the Trademarks for sporting goods products sold by Wilson and has the full
power to license the Trademarks in the United States to Licensee. To the best of
Wilson's knowledge, such license will not infringe the rights of others.
(g) Notification. On the Authorized Goods, packaging and on all
promotional materials of any description, including, but not limited to,
catalogues, brochures, and advertisements, containing the Trademarks, Licensee
shall place the following notice (or such other suitable trademark notice as
applicable):
W(R) and WILSON(R) are registered Trademarks of Wilson Sporting Goods Co.
(h) No Use in Public or Private Offerings. Licensee shall not refer
to this license or Wilson's association with Licensee in any public or private
offering, or other securities or financing documents, without Wilson's prior
review. Wilson may require that no such references be printed or distributed.
16. Indemnification and Insurance Coverage by Licensee. Licensee covenants
and agrees to indemnify and hold Wilson harmless (which indemnification shall
also extend to Wilson's insurer(s)), from and against any and all losses,
claims, damages, expenses, judgments, awards, petitions, demands or liabilities
of any type, joint or several, to which Wilson may become subject directly or
indirectly on account of the purchase for resale, sale, distribution,
advertising or promotion or similar activity related to the Authorized Goods,
this Agreement, or activities related to any of the foregoing by Licensee or out
of any other facts or actions except for the use of the Trademarks themselves in
conformity with this Agreement. The party receiving notification of any event
which may be indemnifiable according to the terms of this Section 16 shall so
soon as reasonably possible notify the other party upon receipt of notice of any
such claim, and Wilson and Licensee shall cooperate in the decision to engage
reputable counsel with experience in the matter to be defended. Wilson shall
have the right, if reasonably necessary or advisable, to separately defend any
action relating to this Agreement in its own name and determine in good faith
whether any claim or suit, on the basis of liability, expediency or otherwise,
shall be paid, compromised, defended or appealed. Wilson may incur such costs,
including attorneys fees, as it may be reasonably necessary or advisable for the
investigation, defense, or payment of any claims, and such amounts shall be
included as expenses, as such term is utilized in the first sentence of this
Paragraph 16. Wilson shall cooperate with Licensee with respect to actions
described in this Paragraph 16 which are defended solely by Licensee. The costs
of Wilson's cooperation shall also be treated as expenses, as described in the
second preceding sentence. Wilson shall have the right to set-off against any
financial obligation of Wilson to Licensee, any amount due under this Paragraph
16 to Wilson.
Licensee shall maintain Broad Form Comprehensive General Liability
Insurance, including Products Liability and Contractual Liability for the
Authorized Goods, naming Wilson as an additional insured in an amount not less
than $5,000,000 (US) on a combined single limit basis for Bodily Injury and
Property Damage Liability.
Licensee shall maintain such coverage through the Term and during
any additional period as indicated herein. The aforesaid insurance shall be from
companies and in form reasonably
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satisfactory to Wilson. The insurance policy shall provide that it is not
subject to cancellation or non-renewal without at least 30 days' prior written
notice to Wilson. The policy shall be written on an "occurrence" and not a
"claims made" basis, and shall be maintained for a period of at least two years
following termination. Wilson shall have the right of subrogation against any
insurance company or guarantor of Licensee with respect to obligations owed to
Wilson pursuant to this Paragraph 16. Licensee shall, upon execution hereof,
provide Wilson with a Certificate of Insurance evidencing this coverage, and
Licensee and/or its representative will mail written notice of any material
change and/or cancellation of coverage within seven (7) days of receipt of same,
and will provide replacement coverage evidenced by a Certificate of Insurance
within thirty (30) days of Licensee's receipt of Notice of insurance
cancellation, non-renewal or material change of coverage. Licensee's obligations
pursuant to this paragraph shall survive termination or expiration of this
Agreement.
In addition, in the event of any actual or seriously threatened
litigation against or involving the Authorized Goods or Licensee's operations
under this license, to which Wilson is made or is seriously threatened to be
made a party, and which poses a realistic and material financial risk to Wilson
that is covered by the foregoing indemnity but not covered (or fully covered) by
Licensee's insurance, Wilson may at its reasonable discretion require Licensee
to put reasonable funds in an escrow account designed to cover any potential
liability of Wilson which is indemnified by Licensee. Licensee shall own all
interest generated on such escrow funds. If Licensee does not comply with
Wilson's request to have Licensee financially support its indemnity of Wilson,
then Wilson shall have the right to notify Licensee that this Agreement shall
terminate in 60 days unless, during the 60-day period, Licensee can
satisfactorily resolve the issue or claim and eliminate Wilson's financial risk
regarding the indemnified liability.
17. Legal Duties of Licensee.
(a) Regulatory Compliance and Non-Infringement. Licensee warrants to
Wilson that (i) the Authorized Goods will be manufactured, purchased for resale,
packaged, advertised, sold and distributed in compliance with all applicable
legal requirements, standards, laws and ordinances in the Territory; and (ii) to
the best of the Licensee's knowledge, the Authorized Goods will not infringe the
patent or intellectual property rights of others, except for those rights
granted to Licensee hereunder.
(b) Quality. Licensee warrants to Wilson that all Authorized Goods
not subject to the defective or damaged goods provisions set forth in Paragraph
8 will be of merchantable quality.
18. Non-Transferability. The Licensee granted hereunder is personal and
each party agrees and undertakes that it cannot and will not sublicense or
assign, directly or indirectly, and of the rights herein granted, and Licensee
agrees that it will not authorize any other person, firm or corporation to use
the Trademarks without the express written consent of Wilson.
19. Covenant Not to Compete. Unless otherwise specified in the Supplement,
Licensee agrees that throughout the Term and within the Territory it will not
manufacture, have manufactured, purchase for resale, sell or distribute goods
which are the same as or substantially similar to the Authorized Goods and other
sporting goods marketed by Wilson, whether under Licensee's own
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brand names or as a distributor for or licensee of a third party's brand
name(s). Licensee, and its officers and directors shall not have an Agreement
with, or own greater than a 5% interest in, directly or indirectly, during the
Term of this Agreement, a company or entity which makes or sells sporting goods
competitive with Wilson, or any major dealer in sporting goods products.
20. Miscellaneous.
(a) Non-Waiver. Failure of Wilson to complain of any act or omission
on the party of Licensee, or failure of Licensee to complain of any act or
omission on the part of Wilson, no matter how long the same may continue or how
many times such shall occur, shall not be deemed to be a waiver of rights, or of
any similar future act or omission under this Agreement.
(b) Notices. All Notices, Reports, payments, prior approvals of
artwork and samples and the like ("Notices") required by this Agreement, or
voluntary requests, shall be sent by U.S. mail or other customary means,
including telex, overnight courier, facsimile, or registered or certified mail.
If Notice is by registered or certified mail then Notice shall be deemed
received upon placement of such Notice with the governmental mail agency,
postage prepaid. If Notice is by other than registered or certified mail, then
Notice shall be deemed received upon confirmation to the sending party that such
Notice has been received by the receiver of such Notice, or the receiver's
actual receipt of the Notice. The addresses for Notices shall be the addresses
of the parties as specified in the Supplement, unless an address is later
changed in writing by the appropriate party. Copies of Notices shall be sent to
the person indicated in the Supplement.
(c) Relationship. This Agreement shall not continue or be considered
as constituting a partnership, employer-employee relationship, joint venture, or
agency between the parties hereto. Neither of the parties hereto nor any of
their employees or agents shall have the power or authority to bind or obligate
the other party, except as agrees to in this Agreement.
(d) Governing Law. This Agreement shall be deemed to have been
executed in the jurisdiction specified in the Supplement (the "Jurisdiction ")
and governed, construed and the legal relations of the parties shall be
determined in accordance with the laws of the Jurisdiction. The parties hereby
agree, for purposes of judicial resolution of disputes concerning this
Agreement, to submit the matter and themselves to the jurisdiction and courts of
the Jurisdiction.
(e) Severability, Entire Agreement and Headings. If any Term,
covenant, condition or provision of this Agreement or the application thereof to
any person or circumstance, shall to any extent be invalid or unenforceable, the
remainder of this Agreement or application of such Term, or provision to any
person or circumstance other than those as to which it is held invalid or
unenforceable shall not be affected thereby, and each Tem, covenant, condition
or provision of this Agreement shall be valid and shall be enforced to the
fullest extent provided by law. This instrument contains the entire and only
Agreement between the parties hereto relating to the subject matter hereof and
no oral statements or representations or prior written material not herein
contained shall have any force or effect. The headings to the paragraphs and
subparagraphs hereof shall not be construed to contravene the language of such
paragraphs.
(f) Confidentiality. This Agreement and information related to its
execution and consent shall be kept confidential by the parties to the
Agreement.
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(g) No Franchise. This Agreement is a license of a trademark only,
and is not a franchise. The parties intend and acknowledge that their
relationship created by this Agreement or otherwise is not subject to the
franchise laws of any state.
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TRADEMARK SUBLICENSE AGREEMENT
This Trademark Sublicense Agreement (the "Agreement") is entered into as
of November 14, 1997 by Auburn Hosiery Mills, Inc., a company incorporated under
the laws of Kentucky (hereinafter referred to alternatively as "Sublicensor" or
"Auburn") and Sports Socks Co. (Ireland), Ltd., a company organized under the
laws of Ireland (hereinafter referred to as "Sublicensee").
WHEREAS, Sublicensor possesses certain rights by virtue of a Trademark
License Agreement dated May 28, 1997 (the "Auburn/Wilson" Agreement) between
Auburn and Wilson Sporting Goods Co. ("Wilson") for the use of certain Wilson
trademarks (the "Trademarks") in connection with the sale and distribution of
sports socks affixed or emblazoned with said Trademarks;
WHEREAS, Sublicensee desires to acquire rights from Sublicensor for the
use of the Trademarks in connection with the sale and distribution of sports
socks affixed or emblazoned with said Trademarks (the "Authorized Goods") in the
Territory or hereinafter defined;
NOW, THEREFORE, in consideration of the mutual covenants contained herein
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree as follows:
1. GRANT. Sublicensor hereby grants to Sublicensee a license to use the
Trademarks, in the forms set forth in Exhibit A (as may be updated) for the
manufacture, purchase for resale, and distribution of the "Authorized Goods"
bearing the Trademarks in the Territory, subject to the terms and conditions of
this Agreement. The Sublicense granted hereby shall be non-exclusive,
non-transferable, non-assignable and indivisible.
2. TERRITORY. The Territory for this Agreement shall mean Austria, Belgium,
Denmark, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg,
Netherlands, Norway, Portugal, Spain, Sweden, Switzerland, and the United
Kingdom. Trade Channels shall mean all, except the golf and tennis pro and
specialty markets.
3. TERRITORIAL RESTRICTIONS ON GRANT. Sublicensee shall not utilize the
Trademarks on goods other than the Authorized Goods. Sublicensee shall make no
sales of Authorized Goods outside of the Territory. Sublicensee shall not
export, and shall use best efforts to restrict any authorized independent sales
agents or distributors from exporting, Authorized Goods outside the Territory.
All independent sales agents and distributors of Sublicensee must be approved by
Sublicensor, which approval may be withheld at Sublicensor's discretion.
Sublicensee shall not continue to sell Authorized Goods to accounts in the
Territory which then distribute such goods outside of the Territory.
4. RESERVATION OF RIGHTS NOT GRANTED. All rights in the Trademarks other than
those specifically granted herein are reserved either by Wilson or by
Sublicensor as the case may be for their own exclusive use and benefit.
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5. TERM. The term of this Agreement shall be January 1, 1998 to December 31,
2002. The term may be terminated prior to December 31, 2002 pursuant to the
provisions of paragraph 8 of this Agreement or upon termination of the
Auburn/Wilson Agreement.
6. ROYALTIES. (a) Sublicensee shall pay royalties to Sublicensor in accordance
with the royalty rates, terms and conditions of the Auburn/Wilson Agreement.
(b) Sublicensee shall maintain a complete and accurate account of all
sales of Authorized Goods bearing the Trademarks and shall provide such
information to Sublicensor or Wilson, as the case may be, upon request so that
Sublicensor can accurately calculate the royalties which Sublicensor is
obligated to pay to Wilson in accordance with the Auburn/Wilson Agreement.
7. QUALITY OF AUTHORIZED GOODS. Sublicensee shall be responsible for the quality
of all Authorized Goods and shall guarantee that all Authorized Goods sold are
free of defects and in conformity with the samples of Authorized Goods submitted
to Sublicensor and/or Wilson.
8. TERMINATION. (a) Defaults. In the event either party defaults on its
obligations provided herein, the nondefaulting party and/or Wilson may give the
other party written Notice (as defined in Paragraph 16[b]) specifying the
default. If the defaulting party does not cure said default and notify Wilson or
the other party in writing of such cure within thirty (30) days after receipt of
said Notice the party giving Notice of default may terminate this Agreement.
(b) Insolvency. Either party may terminate this Agreement effective upon
written Notice in the event of the other's insolvency, commission of an act of
bankruptcy, adjudication of bankruptcy or the filing of a petition for voluntary
or involuntary bankruptcy of or by the other, or the other's making of an
arrangement with or assignment for the benefit of creditors or the appointment
of a receiver or trustee for the assets of the other.
(c) Change in Control. Sublicensor may terminate this Agreement in the
event of a material change in the overall management or ownership of
Sublicensee, whether by organizational changes, or by a sale by Sublicensee of
all or substantially all of its stock or operating assets.
(d) Required Notice. In order to terminate this Agreement according to the
events of termination of subparagraphs [b] or [c] of this paragraph 8,
Sublicensor or Sublicensee, as applicable, must send written Notice (as defined
in paragraph 16[b]) to the other, and the receipt of such Notice shall act as an
immediate termination of the Agreement.
9. USE OF TRADEMARKS. (a) Guidelines. Sublicensor may provide materials and
guidelines to Sublicensee as to all the artwork and reproductions of the
Trademarks, and Sublicensee's display of the Trademarks on Authorized Goods.
Sublicensee's uses of such artwork and reproductions shall absolutely conform
with precision to the designs approved in advance by Wilson pursuant to the
Auburn/Wilson Agreement. All artwork or other materials furnished to Sublicensee
by Sublicensor for this purpose shall remain the property of Sublicensor and all
artwork or other material delivered to Sublicensee shall be returned to
Sublicensor upon Sublicensor's request. Sublicensee shall follow Sublicensor's
instructions with regard to proper Trademark usage, including display of
trademark registration symbols and notices. Sublicensee acknowledges that
Sublicensor may impose color
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restrictions on the Trademarks. Sublicensee agrees at the outset that the
Trademarks will be used in red, black and white solid colors. The Trademarks
shall not be used in purple or green colors without Sublicensor's express
written consent.
(b) Approvals. Sublicensee recognizes that the manner in which Sublicensee
uses the Trademarks licensed herein could have a significant effect on Wilson's
and Sublicensor's image and customer goodwill and business reputation; therefore
Sublicensee shall, as a condition to the grant of the Sublicense, submit at
Sublicensee's expense; for Sublicensor's prior written approval, in advance of
any dissection or use by Sublicensee:
(i) All prototypes of the artwork which Sublicensee proposes to
use on the Authorized Goods to be merchandised, including
actual samples of the Trademarks as produced on the Authorized
Goods.
(ii) All prototypes of all packaging, labels, advertising and
promotional material or literature which Sublicensee intends
to use in the merchandising, sale and distribution of the
Authorized Goods.
(c) Timing. Sublicensee warrants that prototype materials submitted
hereunder will accurately represent the usage of the Trademarks by Sublicensee.
Sublicensor will use its best efforts to notify Sublicensee, within fourteen
(14) business days of receipt, of its approval or disapproval of prototype
artwork, actual samples, packaging labels, advertising and promotional
literature and materials. Such approval shall not be unreasonably withheld or
delayed. If Sublicensor does not notify Sublicensee within said fourteen (14)
business days of its approval of such artwork, actual samples, packaging labels,
advertising and promotional literature and material submitted to Sublicensor
pursuant to [b] above, Sublicensor will be deemed to have disapproved such items
unless said request is resubmitted by Sublicensee in the form of a written
Notice, in which event failure by Sublicensor to issue approval or disapproval
within an additional seven (7) day period shall be considered approval unless
Sublicensor notifies Sublicensee that Sublicensor requires a reasonable amount
of additional time.
10. SAMPLES AND APPROVALS. No Authorized Goods of any type, style, model or
description shall be purchased for resale, sold or distributed prior to
Sublicensor's approval of samples of each such type, style, model or description
and the packaging and accompanying materials therefor. Samples shall be
submitted far enough in advance of their intended use so that there is
sufficient time for the samples to be revised in the event Sublicensor
disapproves of such. Sublicensor will use its best efforts to notify Sublicensee
within fourteen (14) business days of receipt of such of its approval or
disapproval of samples. Such approval shall not be unreasonably withheld or
delayed. If Sublicensor does not notify Sublicensee of its approval within said
fourteen (14) days then such samples shall be considered disapproved, unless
said request is resubmitted by Sublicensee in the form of a written Notice, in
which event failure by Sublicensor to issue approval or disapproval within an
additional seven (7) day period shall be considered approval unless Sublicensor
notifies Sublicensee that Sublicensor requires a reasonable amount of additional
time. Sublicensee shall, upon Sublicensor's reasonable request, submit samples
of Authorized Goods, purchasing and accompanying materials from time to time for
comparison with approved samples. Submission of samples shall be at the expense
of Sublicensee. Samples shall be submitted in quantities requested by
Sublicensor reasonable for evaluation by Sublicensor. Sublicensee shall also
provide Sublicensor
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with a reasonable quantity of production line samples of Authorized Goods. All
Authorized Goods shall conform to the approved samples thereof. Sublicensor's
review and approval of samples shall not be in derogation of Sublicensor's right
to indemnification pursuant to Paragraph 12.
11. BUSINESS AND MARKET PRACTICES. (a) Proper Conduct. Sublicensee and
Sublicensor each warrant to the other that their actions and practices and the
conduct of their business pursuant to this Agreement shall not adversely affect
the other parties or Wilson's name, business reputation or relationships with
their own customers, suppliers, or the public.
(b) Coordination. Sublicensee and Sublicensor acknowledge the importance
of coordinating their marketing and sales strategies, plans, policies and
practices with each other so as not to negatively affect the image of the Wilson
Trademarks and the goodwill associated therewith. Sublicensor and Sublicensee
shall meet regularly, currently expected to be twice per year, to discuss and
agree on plans and strategies for the promotion and sale of Authorized Goods
under this Agreement.
(c) Legality. Sublicensee shall at all times conduct its business with
respect to the Authorized Goods in an ethical manner and in a manner free of
misconduct and illegality.
12. PROTECTION OF TRADEMARKS. (a) Recognition. Sublicensee acknowledges that
Wilson is the owner of the Trademarks and that all of Sublicensee's uses of the
Trademarks under this Agreement shall inure to the benefit of Wilson.
Sublicensee acknowledges that it is not acquiring any interests or rights in the
Trademarks apart from the Sublicense set forth in this Agreement. Sublicensee
will not contest or deny the validity of the Trademarks or the title of Wilson
thereto, register or attempt to register the Trademarks or in any way assist
others in so doing. Upon termination of this Agreement or expiration of the Term
Sublicensee shall forthwith discontinue entirely all use of the Trademarks and
all rights granted according to the terms of this Agreement shall revert to
Sublicensor.
(b) Confusion. Sublicensee agrees not to use at any time during the Term
of this Agreement any other word, trademark, brand name, trade name, symbol,
design or the like which is similar to or possibly may be confused with the
Trademarks sublicensed hereunder. Sublicensee will not take any action which
will harm or prejudice the Trademarks or Wilson's or Sublicensor's rights
therein in any way during the Term of this Agreement or any allowed period of
use thereafter. Sublicensee will take care to identify itself in all
transactions as a Sublicensee of, and separate legal entity from, Sublicensor
and Wilson, as opposed to an integrated, divisional or consolidated part of
either Wilson's or Sublicensor's sporting goods business.
(c) Corporate Use. Sublicensee shall not use the Trademarks in
Sublicensee's name or in the name of any operating entity formed by Sublicensee
without the prior consent of Sublicensor and Wilson.
(d) Infringement and Indemnity. Sublicensee shall at Sublicensor's request
and Sublicensor's expense assist Sublicensor or Wilson in confirming or
registering Wilson's rights in the Trademarks, including as enumerated in this
Agreement, with any government or person and shall execute any required
documents in this regard. Sublicensee will promptly advise Sublicensor of any
potentially infringing uses by others. Sublicensee will promptly advise
Sublicensor and Wilson in writing of
-4-
all claims and potential claims of which it has notice or knowledge and all
suits threatened or brought against Sublicensee involving the Trademarks
themselves. Sublicensor will indemnify and hold Sublicensee harmless (which
indemnification shall also extend to Sublicensee's insurer(s)) from and against
any and all losses, claims, damages, expenses, judgments, awards, petitions,
demands or liabilities of any type, joint or several, to which Sublicensee may
become subject directly or indirectly on account of a legal action related to
Sublicensee's use of the Trademarks initially listed on Exhibit A in a way
strictly conforming to this Agreement; provided, Sublicensee uses all efforts
and corrective action to mitigate the exposure to Sublicensor and Wilson. This
undertaking by Sublicensor shall survive the expiration of the Term or the
termination thereof by either party. The party receiving notification of any
event which may be indemnifiable according to the terms of this Paragraph 12[d]
shall as soon as reasonably possible notify the other party upon receipt of
Notice of any such claim. Decisions regarding action involving the protection
and defense of the Trademarks shall be solely in the discretion of Wilson and/or
Sublicensor and Sublicensee may not take any such action without the express
written consent of Wilson and/or Sublicensor. At Sublicensor's request,
Sublicensee shall cooperate with Sublicensor and Wilson with respect to actions
described in this Paragraph 12[d] which are defended by Sublicensor or Wilson.
The expenses of such cooperation (including reasonable attorney's fees to the
extent Sublicensee reasonably requires independent counsel) shall be reimbursed
to Sublicensee by Sublicensor. If Sublicensor fails, after proper notice from
Sublicensee to investigate, defend, settle or compromise actions to which the
indemnity in this Paragraph 12[d] relates, then Sublicensee may incur such
expenses, including attorneys fees, as may be reasonably necessary or advisable
for the investigation, defense, or payment of any claims, and such amounts shall
be included as expenses, as such term is utilized in this Paragraph 12[d].
(e) Use of Sub-Brand Names. Sublicensee agrees that should Sublicensee
desire to feature on the Authorized Goods additional trademarks, other than
those listed in Exhibit A and other than Sublicensee's tradename, Sublicensee
will notify Sublicensor and Wilson of those trademarks. If Sublicensor and
Wilson agree to the use of those trademarks on the Authorized Goods (which
agreement may be withheld in either Wilson's or Sublicensor's discretion) and if
such trademarks are not already the property of Sublicensee (as evidenced by
Sublicensee's prior use of such trademarks apart from the Authorized Goods),
then Wilson shall have the right either to register those trademarks in Wilson's
own name, or to permit Sublicensee to register those trademarks in Wilson's
name.
(f) Sublicensor's Right. Sublicensor represents that it has rights to the
Trademarks for use in connection with the sale of Authorized Goods and has, with
Wilson's consent, the power to sublicense the Trademarks in the Territory to
Sublicensee. To the best of Sublicensor's knowledge, such sublicense will not
infringe the rights of others.
(g) Notification. On the Authorized Goods packaging and on all promotional
materials of any description, including but not limited to, catalogues,
brochures, and advertisements, containing the Trademarks, Sublicensee shall
place the following notice (or such other suitable trademark notice as
applicable):
W(TM) and WILSON(TM) are registered Trademarks of Wilson Sporting Goods Co.
-5-
13. LEGAL DUTIES OF LICENSEE. (a) Quality. Sublicensee warrants to Sublicensor
that all Authorized Goods sold pursuant to this Agreement will be of
merchantable quality and shall conform to the quality requirements established
by Wilson in the Auburn/Wilson Agreement.
14. NON-TRANSFERABILITY. The Sublicense granted hereunder is personal and each
party agrees and undertakes that it cannot and will not further sublicense or
assign, directly or indirectly, any of the rights herein granted, and
Sublicensee agrees that it will not authorize any other person, firm or
corporation to use the Trademarks without the express written consent of
Sublicensor.
15. MISCELLANEOUS. (a) Non-Waiver. Failure of Sublicensor to complain of any act
or omission on the part of Sublicensee, or failure of Sublicensee to complain of
any act or omission on the part of Sublicensor, no matter how long the same may
continue or how many times such shall occur, shall not be deemed to be a waiver
of rights, or of any similar future act or omission under this Agreement.
(b) Notices. All Notices and prior approvals of artwork and samples and
the like ("Notices") required by this Agreement, or voluntary requests, shall be
sent by U.S. mail or other customary means, including telex, overnight courier,
facsimile, or registered or certified mail. If Notice is by registered or
certified mail then Notice shall be deemed received upon placement of such
Notice with the governmental mail agency, postage prepaid. If Notice is by other
than registered or certified mail, then Notice shall be deemed received upon
confirmation to the sending party that such Notice has been received by the
receiver of such Notice, or the receiver's actual receipt of the Notice. The
addresses for Notices shall be:
(i) If to Wilson Sporting Goods Co.:
Wilson Sporting Goods Co.
8700 W. Bryn Mawr Avenue
Chicago, Illinois 60631
Attention: Team Sports
Phone: (773) 714-6868
Fax: (773) 714-4590
(ii) If to Auburn Hosiery Mills, Inc.:
Auburn Hosiery Mills, Inc.
P. O. Box 95
Auburn, Kentucky 42206
Phone: (212) 532-0404
Fax: (212) 689-3874
-6-
(iii) If to Sports Socks Co. (Ireland) Ltd.:
Sports Socks Co. (Ireland) Ltd.
IDA Industrial Estate
County Kerry
Cahirciveen, Ireland
Phone: 011-353-667-2676
Fax: 011-353-667-2679
(c) Relationship. This Agreement shall not constitute or be considered as
constituting a partnership, employer-employee relationship, joint venture, or
agency between the parties hereto. Neither of the parties hereto nor any of
their employees or agents shall have the power or authority to bind or obligate
the other party, except as agreed to in this Agreement.
(d) Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the State of New York. The parties hereby agree, for
purposes of judicial resolution of disputes concerning this Agreement, to submit
the matter and themselves to the jurisdiction and courts of the State of New
York or to the Federal District Court for the Southern District of New York.
(e) Severability, Entire Agreement and Headings. If any Term, covenant,
condition or provision of this Agreement or the application thereof to any
person or circumstance, shall to any extent be invalid or unenforceable, the
remainder of this Agreement or application of such Term or provision to any
person or circumstance other than those as to which it is held invalid or
unenforceable shall not be affected thereby, and each Term, covenant, condition
or provision of this Agreement shall be valid and shall be enforced to the
fullest extent provided by law. This instrument contains the entire and only
Agreement between the parties hereto relating to the subject matter hereof and
no oral statements or representations or prior written material not herein
contained shall have any force or effect. The headings to the paragraphs and
subparagraphs hereof shall not be construed to contravene the language of such
paragraphs.
(f) Confidentiality. This Agreement and information related to its
execution and content shall be kept confidential by the parties to the
Agreement.
(g) No Franchise. This Agreement is a Sublicense of a trademark only, and
is not a franchise. The parties intend and acknowledge that their relationship
created by this Agreement or otherwise is not subject to the franchise laws of
any state.
(h) Third-Party Beneficiary. Sublicensee acknowledges that, as the
Trademark owner, Wilson is a third-party beneficiary of this Sublicense
Agreement.
-7-
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
date and year first above written.
AUBURN HOSIERY MILLS, INC.
By: /s/ Kew K. Glenn [sic]
--------------------------------------
SPORTS SOCKS CO. (IRELAND) LTD.
By: /s/ James P. Manning
--------------------------------------
-8-
AUBURN HOSIERY MILLS, INC.
December 5, 1997
Mr. Wally Craig
Wilson Sporting Goods Co.
8700 Bryn Mawr Avenue
Chicago, IL 60631
Dear Wally:
As you are aware, Sales and Marketing Hosiery Corp. ("Sales and
Marketing") is affiliated with Auburn Hosiery Mills, Inc. ("Auburn") through
mutual ownership. Sales and Marketing is currently licensed through December 31,
1997 to use certain trademarks owned by Wilson Sporting Goods Co. ("Wilson") in
connection with the sale and distribution of hosiery by virtue of a Trademark
License Agreement between Sales and Marketing and Wilson dated October 12, 1987,
as amended May 11, 1988 and June 28, 1989 (the "Sales and Marketing Licenses").
Wilson also entered into a license agreement with Auburn on May 28, 1997 and
effective January 1, 1998 (the "Auburn License") and Auburn has entered into a
sub-license agreement with Sport Socks Company (Ireland) Ltd. ("Sport Socks
(Ireland)") dated November 14, 1997, and effective January 1, 1998. The
foregoing are collectively referred to hereafter as the Licenses.
As the principal owner of Sales and Marketing as well as both Auburn
and Sport Socks (Ireland), I am currently planning to enter into agreements with
GCIH, Inc./Gerber Childrenswear, Inc. ("GCIH") for the sale of all the shares of
outstanding capital stock of Auburn and Sport Socks (Ireland). In order to
enable a smooth transaction under the Licenses, it is requested that Wilson:
(a) consent to the assignment of the Sales and Marketing Licenses to
Auburn pursuant to the Assignment of Trademark License between Sales and
Marketing and Auburn dated October 1, 1997 (attached hereto as Exhibit 1);
(b) consent to the sublicense of the Sales and Marketing Licenses to
Sport Socks (Ireland) pursuant to a Sublicense Agreement between Auburn
and Sport Socks (Ireland) dated October 1, 1997 (attached hereto as
Exhibit 2) and also the similar agreement entered into as of February 1,
1990 (attached hereto as Exhibit 3). It is acknowledged that the terms of
Exhibit 2 supersede those of Exhibit 3;
(c) consent to the sublicense of the Auburn License to Sport Socks
(Ireland) pursuant to a Sublicense Agreement between Auburn and Sport
Socks (Ireland) dated November 14, 1997 and to be effective as of January
1, 1998 (attached hereto as Exhibit 4); and
Mr. Wally Craig
December 5, 1997
Page 2
(d) consent to the change in ownership of Auburn and Sport Socks
(Ireland) to GCIH, Inc. upon the condition that GCIH, Inc. agrees to
accept all obligations, terms and conditions of the Licenses, including
the following amendments to the Auburn License, to become operative on the
date of the change of ownership to GCIH and not otherwise, as follows:
1. GCIH shall become the owners of "Licenses" under the
Licenses and for purposes of this Item 1, Auburn shall refer to the
current business of auburn Hosiery Mills, Inc., as purchased by
GCIH. Auburn shall remain exclusively focused on the sock business
(as currently is the case); i.e., there will be no consolidation of
the following functions or commingling of product lines with GCIH so
that Auburn can maintain its focus on socks:
o Top Management Team
o Sales Forces/Distributors/Agents
o Customer Service
o Manufacturing
2. The provisions of paragraph K of the Supplement to
Trademark License Agreement Standard Terms entered into by Wilson
and Auburn on May 28, 1997 shall be amended to be, as follows:
K-1. Guaranteed Royalty:
Subject to the provisions of sub-paragraph K-2, the Guaranteed
Royalty shall be for a Contract Year:
[Download Table]
Guaranteed Royalty
------------------
Contract Year 1998 $2,000,000
Contract Year 1999 $2,000,000
Contract Year 2000 $2,000,000
Contract Year 2001 $2,000,000
Contract Year 2002 $2,000,000
Mr. Wally Craig
December 5, 1997
Page 3
Expansion Years (if applicable)
[Download Table]
Guaranteed Royalty
------------------
Contract Year 2003 $2,300,000
Contract Year 2004 $2,300,000
Contract Year 2005 $2,300,000
Contract Year 2006 $2,300,000
Contract Year 2007 $2,300,000
K-2 Special Conditions:
(a) The Guaranteed Royalty for Contract Year 1998 and
Contract Year 1999 shall be as specified above.
The Guaranteed Royalties for the Contract Years
2000 through 2002, and, if applicable, Contract
Years 2003 through 2007, shall be subject to
renegotiation to good faith between Licensor and
Licensee under the following conditions: (1)
Licensee's actual sales of Authorized Goods for a
Contract Year will not generate the minimum
Guaranteed Royalty due for a Contract Year will
not generate the minimum Guaranteed Royalty due
for such Contract Year; (2) Licensee notifies
Wilson of such fact no later than October 1 of
that Contract Year; (3) Licensee pays the minimum
Guaranteed Royalty for that Contract Year; and (4)
then, good faith negotiations shall commence
regarding: (i) the causes of such occurrence, (ii)
the likely reoccurrence of such causes, and (iii)
the amount of Guaranteed Royalty payments to be
made in future Contract Years. Such negotiations
in good faith shall take place between Licensor
and Licensee within ninety days of notification of
such occurrence to Licensor and any reduction in
Guaranteed Royalties shall become effective for
the Contract Years following the then current
Contract Year during which such occurrences shall
take place, provided, however, that in no event
will the minimum Guaranteed Royalty for any
subsequent Contract Year be less than the amount
originally specified for any Contract Year in
paragraph K of the Supplement to Trademark License
Agreement Standard Terms of the Auburn License and
nothing herein shall create an obligation on
Wilson to accept such originally specified minimum
Guaranteed Royalty amounts.
(b) During each Calendar Quarter of Contract Year 1998
and Contract Year 1999, Licensee shall pay to
Licensor the greater of the year-to-date
cumulative royalties due on the sales of
Authorized Goods
Mr. Wally Craig
December 5, 1997
Page 4
through Calendar Quarter or the cumulative amount
of $375,000 for each of the first three Calendar
Quarters. (For example: if the amount of Earned
royalties paid in the first Calendar Quarter was
$500,000, the minimum amount to be paid for the
second Calendar Quarter would be $250,000 so that
the cumulative amount to be paid to Wilson would
be $750,000. The balance remaining of the
Guaranteed Royalty due for such Contract Year
shall be paid at the end of the fourth Calendar
Quarter of such Contract Year.
(c) If the royalty payments are modified pursuant to
paragraph K-2(a), the minimum quarterly payments
shall be the cumulative amount of $375,000 or
one-quarter cumulatively of the re-negotiated
annual minimum Guaranteed Royalty, whichever is
less.
It is understood and agreed that the non-transferability clauses of
the license shall remain operative after the change of current ownership of
Auburn and Sport Socks (Ireland) to GCIH as Licensee.
Nothing in the foregoing comments shall modify or restrict the terms
of the Auburn License. Only the amendments listed herein to the Auburn License
are effective to change the terms of such License.
The provisions of Part T.1. of the Supplement to Trademark License
Agreement Standard Terms shall be subject to the foregoing amendments to the
Auburn License as listed herein, and shall be deemed to have been modified
accordingly by the foregoing amendments as listed herein. Paragraph 9(d) of the
Standard Terms of the Auburn License shall be effective. All other terms of the
Auburn License, other than as modified herein, shall remain in full force and
effect.
This letter agreement supersedes my memorandum of November 20, 1997
and constitutes the entire understanding and agreements relating to amendments
to the Auburn License and the consents set forth herein.
* * * * *
Mr. Wally Craig
December 5, 1997
Page 5
If Wilson agrees to the above, kindly so acknowledge by signing
where indicated below, and returning the duplicate of this letter agreement to
us. We greatly appreciate your continuing courtesy and cooperation.
Very truly yours,
SALES AND MARKETING HOSIERY CORP.,
AUBURN HOSIERY MILLS, INC. and SPORT
SOCKS COMPANY (IRELAND) LTD.
By: /s/ James P. Manning
-----------------------------------------
James P. Manning
Dated: December 8, 1997
Acknowledged and Agreed:
WILSON SPORTING GOODS CO.
By:
----------------------------
Dated: December 8, 1997
GCIH hereby acknowledges and agrees to the foregoing and
guarantees the payment obligations of the Auburn License (as
amended) but not the performance obligations under the Auburn
License (as amended).
GCIH, Inc.
By:
----------------------------
Dates Referenced Herein
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