Conformed Copy
--------------------------
U.S.A. DESIGN AND CONSULTING AGREEMENT
Dated as of January 1, 1985
--------------------------
-between-
RALPH LAUREN,
individually and d/b/a
RALPH LAUREN DESIGN STUDIO,
-and-
COSMAIR, INC.
--------------------------
TABLE OF CONTENTS
SECTION: Page
Recitals........................................................................ 1
1. Definitions............................................................ 4
2. Design................................................................. 7
3. Design Legends, Copyright Notice and Licensed Products................. 10
4. Lauren's Compensation.................................................. 13
5. Reports................................................................ 17
6. Operating Expenses..................................................... 17
7. Death or Incapacity of Lauren.......................................... 18
8. Termination............................................................ 18
9. Notices................................................................ 21
10. Binding Effect......................................................... 22
11. Assignment............................................................. 22
12. Arbitration and Equitable Remedies..................................... 23
13. Relationship of Parties................................................ 23
14. Governing Law.......................................................... 24
15. Entire Agreement....................................................... 24
16. Severability........................................................... 24
17. Counterparts........................................................... 24
18. Termination of Prior Agreement......................................... 25
i
U.S.A. DESIGN AND CONSULTING AGREEMENT dated as of January 1,
1985 by and between Ralph Lauren ('Lauren') individually and doing business
under the name Ralph Lauren Design Studio, with a place of business at 40 West
55th Street, New York, New York 10019, and Cosmair, Inc., a corporation
organized under the laws of Delaware ('Company'), with a place of business at
530 Fifth Avenue, New York, New York 10036.
A. Lauren is an internationally famous designer who has
received numerous awards for his design of men's and women's wear, has twice
been inducted into the Coty Hall of Fame for his design of men's and women's
fashions and is a creator of original designs for fragrances, jewelry and other
products.
B. Lauren has previously sold and transferred to certain
Trusts created under an agreement dated September 21, 1976 (the 'Trusts') all
his rights and interest in and to certain present and future trademarks and
trade names ('Names') in connection with the manufacture, sale, marketing, use
and other commercial exploitation of fragrances and scents, cosmetic
preparations, personal hygiene products and toiletries around the world. The
Trusts have previously transferred to The Polo/Lauren Company ('PLC'), a New
York limited partnership, all of their rights and interests in and to the Names
in connection with the manufacture, sale, marketing, use and other commercial
exploitation of fragrances and scents, cosmetic preparations, personal hygiene
products and toiletries outside of the U.S.A. (as hereinafter defined), and the
Trusts continue to own such rights in and for the U.S.A.
2
C. Pursuant to various agreements dated as of November 22,
1976 (executed on June 30, 1978) among Warner/Lauren Ltd. ('WLL') the trustees
of the Trusts, PLC and Lauren, WLL obtained (i) exclusive licenses to use the
Names worldwide in connection with the manufacture, marketing, use, sale and
other commercial exploitation of certain specified men's and women's fragrances,
scents, cosmetic preparations, personal hygiene products and toiletries,
referred to as 'Royalty Products' and (ii) the services of Lauren in the
creation of packaging designs for the Royalty Products and the exclusive
worldwide right to use said Lauren-created designs in conjunction with the
Royalty Products.
D. Pursuant to a stock purchase agreement dated January 13,
1984 and a subsequent series of corporate mergers and restructurings, the
Company assumed all the rights, duties and obligations of WLL under the
aforementioned agreements. On this date, the Company has assigned to L'Oreal
S.A. ('L'Oreal') all of its rights, duties and obligations under the
aforementioned agreements as they relate to the manufacture, marketing, use,
sale and other commercial exploitation of Royalty Products and said Lauren
created Packaging designs outside of the U.S.A. but has otherwise retained all
of such rights as they relate to the U.S.A.
E. Contemporaneously herewith, pursuant to a restated license
agreement (the 'Restated U.S.A. License Agreement') between the Company and the
Trusts, said parties have set forth their restated agreement concerning the
Company's exclusive license to use the Names in connection with the manufacture,
marketing,
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use, sale and other commercial exploitation in the U.S.A. of certain men's and
women's fragrances, scents, cosmetic preparations, personal hygiene products,
and toiletries, including, without limitation, those described in Schedule A
annexed to the Restated U.S.A. License Agreement (the 'Licensed Products'), and
which when sold or marketed under the Restated U.S.A. License Agreement by the
Company or its Affiliates (as such terms are hereinafter defined) are therein
and herein also referred to as the 'Royalty Products.' The Restated U.S.A.
License Agreement is herein, at times, referred to as the 'License Agreement'
and capitalized defined terms used herein shall have the same meaning as in the
License Agreement, unless otherwise herein indicated.
F. The value of the Name is largely attributable to the skill
and personal efforts of Lauren in designing. The Company and Lauren now wish to
amend and restate and to set forth in one document their understanding
concerning the services of Lauren in connection with the design of the Royalty
Products and the packaging thereof which will be sold under the Names, and with
respect to any patents of the designs and any copyrights thereon resulting from
Lauren's services. As used herein and in the License Agreement, 'Packaging'
refers to all caps, bottles, containers, boxes, wrappings, labels, tags and any
and all other receptacles and adornments used in connection with the marketing
of the Royalty Products.
IN CONSIDERATION of the foregoing premises and of the mutual
covenants herein contained, the parties hereto, intending legally to be bound,
do hereby agree as follows:
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1. Definitions.
Certain words and terms as used in this Agreement shall have
the meanings given to them by the definitions and descriptions in this
paragraph, and such definitions shall be equally applicable to both the singular
and plural forms of any of the words and terms herein defined.
'Affiliates' shall mean all persons or business entities,
whether corporations, partnerships, joint ventures or otherwise, which now or
hereafter own, or are owned or controlled, directly or indirectly by the
Company.
'the Company' shall have the meaning assigned to that term in
the preamble to this Agreement.
'Chaps Compensation' shall have the meaning assigned to that
term in paragraph 4(a)(iii) of this Agreement.
'Chaps Royalty Products' shall mean those Royalty Products
which are not Cosmetic Royalty Products and which are marketed as part of the
line which bears the Chaps name.
'Cosmetic Royalty Products' shall mean those Royalty Products
which are cosmetic preparations, including specifically the ones described under
the caption Cosmetic Preparations in Schedule A annexed to the License
Agreement.
'Cosmetics Compensation' shall have the meaning assigned to
that term in paragraph 4(a)(ii) of this Agreement.
'Design Concepts' shall have the meaning assigned to that term
in paragraph 2(b) of this Agreement.
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'Design Studio' shall have the meaning assigned to that term
in paragraph 2(d) of this Agreement.
'Final Prototype' shall have the meaning assigned to that term
in paragraph 3(d) of this Agreement.
'Full Priced Royalty Products' shall have the meaning assigned
to that term in paragraph 4(e) of this Agreement.
'Lauren' shall have the meaning assigned to that term in the
preamble to this Agreement.
'License' shall have the meaning assigned to that term in
paragraph 3(c) of this Agreement.
'License Agreement' shall mean the Restated U.S.A. License
Agreement dated the date hereof between the trustees of the Trusts and the
Company.
'Licensed Products' shall have the meaning assigned to that
term in recital E to this Agreement.
'Names' shall have the meaning assigned to that term in
recital B to this Agreement.
'Net Sales' shall have the meaning assigned to that term in
paragraph 4(d) of this Agreement.
'New Licensed Products' shall mean Licensed Products not
marketed as of the date hereof or, if then existing, for which Lauren develops
new Packaging thereafter.
6
'Packaging' shall have the meaning assigned to that term in
recital F to this Agreement.
'PFI' shall mean Polo Fashions, Inc., a New York corporation
controlled by Lauren.
'PLC' shall have the meaning assigned to that term in recital
B to this Agreement.
'Promotion Products' shall have the meaning assigned to that
term in paragraph 4(f) of this Agreement.
'Prototype' shall have the meaning assigned to that term in
paragraph 3(d) of this Agreement.
'Regular Compensation' shall have the meaning assigned to that
term in paragraph 4(a)(i) of this Agreement.
'Royalty Products' shall have the meaning assigned to that
term in recital E to this Agreement.
'Semi-Annual Accounting Period' shall have the meaning
assigned to that term in the License Agreement in paragraph 4(b) of this
Agreement.
'Territory' shall mean the U.S.A.
'Trusts' shall have the meaning assigned to that term in
recital B to this Agreement.
'U.S.A.' shall mean the United States of America, its
territories and possessions (including, without limitation, Puerto Rico) and any
military bases and duty free shops situated therein.
7
'WLL' shall have the meaning assigned to that term in recital
C to this Agreement.
2. Design.
(a) At any time or from time to time the Company shall provide
Lauren with a list or lists setting forth those New Licensed Products for which
the Company shall require Packaging. The Company acknowledges that it is
receiving valuable rights from Lauren by virtue of its right to use previously
designed packaging concepts for Licensed Products heretofore primarily marketed
in the U.S.A. It is the intention of each of the parties hereto that the
marketing programs established for Licensed Products will be applied throughout
the world, so as to project a consistent world-wide image. The Company shall
provide Lauren with all pertinent information concerning the desired New
Licensed Products, including proposed launch dates.
(b) At any time or from time to time within a reasonable
period (consistent with Lauren's and the Company's reasonable schedules),
following receipt by Lauren of the aforesaid list or lists, Lauren shall provide
the Company with a program of suggested, broad design themes and concepts with
respect to the Packaging for such New Licensed Products ('Design Concepts')
which shall be embodied in verbal and/or written descriptions of design themes
and concepts and such other detailed designs and sketches therefor, as Lauren
deems appropriate. Lauren shall have full discretion with respect to the manner
in which the Design Concepts shall be formulated and presented by Lauren to the
Company. The
8
Company and Lauren shall confer on Design Concepts and shall make such
modifications as are required to meet Lauren's approval.
(c) The Design Concepts, as finally agreed upon, shall be the
basis of the Packaging for any New Licensed Products subject to such changes as
the Company with the approval of Lauren may deem necessary to increase the sales
of said Products.
(d) Lauren may engage such employees, agents and consultants
operating under Lauren's supervision and control (such employees, agents and
consultants collectively, the 'Design Studio') as he may deem necessary and
appropriate.
(e) From time to time while this Agreement is in effect,
Lauren and/or the Design Studio may (i) develop or modify and implement designs
from the Design Concepts or other designs furnished by Lauren or (ii) develop
and implement new designs, which the Company may incorporate into the Packaging
for Royalty Products.
(f) If the Company wishes to prepare a design or designs for
New Licensed Products, it shall submit to Lauren for his approval the Company's
proposed Packaging designs therefor. Lauren may, with respect to all designs
intended to be incorporated into the Packaging of the New Licensed Products,
review and approve, with such modifications as he may deem necessary or
appropriate, or disapprove, in either event by notice to the Company, designs
prepared by the Company.
9
(g) The Company shall submit to Lauren for his review and
approval, which approval will not be unreasonably withheld or delayed by Lauren,
the Company's proposed media advertising (other than cooperative advertising)
relating to each Licensed Product or Licensed Product line, and the Company's
proposed selection of Promotion Products other than Promotion Products which are
also Licensed Products. All layouts proposed by the Company for cooperative
advertising shall similarly be subject to Lauren's review and approval;
provided, however, that in the event the Company is not as a matter of practice
given an opportunity to review the cooperative advertising due to time
constraints, then the Company shall notify Lauren of those customers with whom
it does cooperative advertising and/or promotions, and the Company shall notify
the same customers of the terms of this Agreement which pertain to said
advertising or promotional material used by any such customer. Lauren may, with
respect to such advertising and Promotion Products, make such suggestions as he
may deem necessary or appropriate, or disapprove, in either event by notice to
the Company. Notwithstanding the foregoing, if the Company makes minor,
non-material alterations in any advertising with respect to a Royalty Product or
Royalty Product line, which advertising has previously been approved by Lauren,
the Company need not resubmit such advertising to Lauren for his review or
approval.
(h) Lauren's right of approval under sub-paragraphs (b), (c),
(f) and (g) of this paragraph 2, sub-paragraphs (d) and (e) of paragraph 3 and
sub-paragraph (f) of paragraph 4 may be exercised personally by Lauren or by
the Design
10
Studio. If Lauren or the Design Studio fails or is unable to exercise such right
within thirty (30) days (fifteen (15) days with respect to sub-paragraph (g) of
this paragraph 2), Lauren shall be deemed to have given his approval to the
Company with respect to the matter as to which his approval was sought or
otherwise required.
(i) All patents and copyrights on designs of the Royalty
Products shall be applied for (where application is desired by the Company) by
Lauren, at the expense of the Company, and shall designate Lauren as the patent
or copyright owner, as the case may be, thereof. All patents, trade secrets or
formulas created by or for the Company for Licensed Products and technical
know-how and licenses (including technical assistance agreements) shall remain
the property of the Company. The Company shall issue such patent and other
licenses as may be necessary to enable the entity to which Lauren renders design
services for Licensed Products outside the Territory to market the same Licensed
Products as are marketed by the Company in the Territory.
3. Design Legends, Copyright Notice and Licensed Products.
(a) All designs of Royalty Products and Packaging created by
Lauren or the Design Studio, or created by or for the Company and reviewed and
approved by Lauren or reviewed by the Design Studio, or developed by or for the
Company from Design Concepts or subsequent design concepts furnished or approved
by Lauren or furnished or reviewed by the Design Studio, shall be subject to the
provisions of this paragraph 3.
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(b) The Company shall cause to be placed on all Packaging
appropriate notice designating Lauren as the copyright or design patent owner
thereof, as the case may be, except that the Company may, with respect to
bottles of 3 oz. or less, omit such notice if the placement thereof shall not be
esthetic in the Company's reasonable judgment (provided, however, that if such
notice is omitted from a bottle, a notice will be placed on the box or other
packaging thereof indicating: 'Packaging and bottle (C) Ralph Lauren' together
with a date and/or such other similar notice as may be required by law in order
to protect Lauren's proprietary rights). The manner of presentation of said
notices shall be within the discretion of the Company, consistent with good
taste and esthetics, it being understood that placement of said notice on the
bottom of a bottle or lip of a carton shall be acceptable.
(c) Lauren hereby grants to the Company the exclusive right,
license and privilege (the 'License') to use in the Territory the designs
furnished hereunder and all copyrights, if any, therein, and shall execute and
deliver to the Company all documents and instruments necessary to perfect or
evidence such license; provided, however, that all such right, title and
interest therein shall revert to Lauren upon termination of this Agreement and
the Company shall thereupon execute and deliver to Lauren all documents and
instruments necessary to perfect or evidence such reversion. The License shall
be exclusive even as to Lauren, and shall continue for a term of ninety-nine
(99) years, unless terminated in accordance with paragraph 8 hereof.
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(d) The Company shall obtain the written approval of Lauren,
acting through Mr. Ralph Lauren individually or a designee of Lauren, of all new
Licensed Products, by submitting a Prototype, of each different design or model
of a Licensed Product, including, but not limited to, the type and quality of
materials, colors and workmanship to be used in connection therewith, prior to
any commercial production thereof. In the event that Lauren rejects a particular
Prototype or Prototypes, Lauren shall notify the Company of his reasons for
rejection and may provide the Company with suggestions for modifying the
particular Prototype or Prototypes which Lauren is rejecting. The Company shall
promptly correct said Prototype or Prototypes, resubmit said Prototype or
Prototypes to Lauren and seek Lauren's approval under the same terms and
conditions as set forth herein with respect to the first submission of
Prototypes. As used herein, the term 'Prototype' shall mean any and all models,
or actual samples, of Licensed Products; and the term 'Final Prototype' shall
mean the actual final sample of a Licensed Product upon which the first
commercial production will be based and which has been approved by Lauren prior
to the first commercial production thereof pursuant to this paragraph.
(e) Approval of any and all Prototypes as Final Prototypes
shall be in the sole discretion of Mr. Ralph Lauren, individually, or a designee
of Lauren. The Licensed Products thereafter manufactured and sold by the Company
shall strictly adhere, in all respects, including, without limitation, with
respect to materials, color, workmanship, designs, decisions, styling, detail
and quality, to the Final Prototypes approved by Lauren.
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(f) The Company shall comply with all laws, rules, regulations
and requirements of any governmental body which may be applicable to the
manufacture, distribution, sale or promotion of Licensed Products,
notwithstanding the fact that Lauren may have previously approved a conflicting
item or conduct. The Company shall advise Lauren to the extent any Final
Prototype does not comply with any such law, rule, regulation or requirement.
(g) It is the intention of the parties that Lauren and/or
senior executive personnel of the Design Studio and senior executives of the
Company shall meet regularly at mutually convenient places and dates to review
all areas of product creation and promotional themes and to discuss and pursue
in good faith the resolution of problems encountered by either party in
connection with this Agreement.
4. Lauren's Compensation.
(a) As full compensation for the services and License, the
Company shall pay to Lauren sums equal to the following: the 'Regular
Compensation,' the 'Cosmetic Compensation' and the 'Chaps Compensation,' all of
which shall collectively be referred to as the 'Compensation.'
(i) The 'Regular Compensation' shall be equal to [***] percent
[***] of the 'Company's Net Sales' excluding that portion of Net Sales
attributable to (i) Cosmetic Royalty Products and (ii) sales of Chaps
Royalty Products.
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(ii) The Cosmetics Compensation shall be equal to the
following percentages of the Company's Net Sales of Cosmetic Royalty
Products for the calendar years indicated:
Cosmetics
Calendar Year Royalty Percentage
------------- ------------------
1985 [***]
1986 and 1987 [***]
1988 [***]
1989 and thereafter [***]
(iii) The Chaps Compensation shall be equal to [***]
percent [***] of the Company's Net Sales of Chaps Royalty
Products for calendar year 1985 and to [***] percent [***] of the
Company's Net Sales of Chaps Royalty Products for calendar year 1986
and each year thereafter.
(b) The Regular Compensation, the Cosmetic Compensation and
the Chaps Compensation shall be payable as follows: With respect to each
'Semi-Annual Accounting Period' (being the 6-month period ending June 30 and
December 31 of each year during the term of this Agreement, except that the
first Semi-Annual Accounting Period shall be the period from the date hereof
through June 30, 1985) the entire Regular Compensation, Cosmetics Compensation
and Chaps Compensation for such Semi-annual Accounting Period shall be paid on
or before the last day of the month next following the end of such Semi-Annual
Accounting Period.
(c) [Intentionally Omitted]
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(d) The term 'Net Sales' as used herein shall mean the gross
sales made by or through the Company and its Affiliates to retailers or to
ultimate consumers (as in the case of accommodation sales to their respective
employees and to others) of Full-Priced Royalty Products, excluding amounts
received for shipping charges and sales, excise or other taxes which are
collected by them, and less all allowances, discounts, returns and bad debts.
The term 'bad debts' as used in this sub-paragraph shall mean accounts
receivable of the Company and its Affiliates arising from the aforesaid sales of
Full-Priced Royalty Products which have not been paid within 120 days after the
due date; provided, however, that if any bad debt is subsequently collected,
then, and in such event, the amount thereafter collected on account of such bad
debt shall, upon collection, be included in the Company's Net Sales for the
period collected. Sales of Licensed Products between the Company and its
Affiliates (or persons, firms, corporations or businesses with rights to use the
Names on Licensed Products outside the Territory), or between said Affiliates,
shall not be included in the calculation of the Company's Net Sales, provided
such sales are made solely for the purpose of further re-sale.
(e) The term 'Full Priced Royalty Products' as used herein
shall mean all Royalty Products except (i) display materials, sales and dummies
and (ii) Promotion Products.
(f) The term 'Promotion Products' shall mean Royalty Products
which are sold to retailers (x) at a price yielding less than the mark-up or
profit margin generally realized by the Company or its Affiliates upon the sale
by
16
them to retailers of Royalty Products (y) to enable such retailers to re-sell
such products to ultimate consumers in conjunction with the sale by such
retailers to ultimate consumers of other Royalty Products (which are not
Promotion Products), and (z) for the purpose of promoting the sale of such other
Royalty Products; provided, however, that notwithstanding the foregoing if the
Cost of Goods (as hereinafter defined) to the Company or its Affiliates (as the
case may be) of a Royalty Product is not greater than [***] percent ([***]) of
the price at which such product is sold by them to retailers, then, and in such
event, such Royalty Product shall not be deemed a Promotion Product. The 'Cost
of Goods' of a Royalty Product shall include and consist of (i) the variable
costs of materials (including packaging, components, chemicals) and all other
manufacturing costs directly traceable to the production of units of the Royalty
Product, (ii) all direct labor costs, and (iii) an appropriate allocation of all
fixed costs consisting of all manufacturing costs and overhead not traceable to
specific units of production (such as rent, heat, plant manager, etc.), all in
conformity with normal industry practice. The Company shall sell or give away
products which are not Royalty Products in conjunction with Royalty Products
only with Lauren's prior approval (or with the approval of the Trusts under the
License Agreement given pursuant to paragraph 4.6(d) thereof), to be exercised
in his sole discretion. Sales of such products shall nevertheless be subject to
compensation payments pursuant to this paragraph 4 unless otherwise agreed by
Lauren and the Company or unless such promotional products are purchased from
licensees of Lauren and PFI or their Affiliates in transactions from
17
which Lauren and PFI or their Affiliates will derive their full compensation and
royalty (as the case may be) fees or unless the Cost of Goods of such products
to the Company or its Affiliates (as the case may be) is greater than [***]
percent [***] of the price at which such products are sold by them to retailers.
Upon Lauren's request, Lauren and the Company shall review periodically the
Company's promotional practices hereunder, and should said review reveal that
the Company is deriving excess profits on sales of non-Royalty Products, Lauren
and the Company shall negotiate in good faith an appropriate compensation to be
paid in connection with said sales.
5. Reports.
5.1 The Company shall prepare, maintain and furnish to Lauren
such records and reports as are required pursuant to Article 5 of the License
Agreement. Submission of the required records and reports to the Trusts pursuant
to the License Agreement shall be deemed to have been furnished to Lauren unless
Lauren requests separate submissions.
6. Operating Expenses.
The Company shall, provided its written consent shall have
been obtained in advance, reimburse, advance or pay directly any and all costs
and expenses for travel outside of New York City, reasonably incurred by Lauren,
the Design Studio or any authorized designee of Lauren, in connection with
performance
18
of the services and supplying of the designs rendered and created pursuant to
paragraph 2.
7. Death or Incapacity of Lauren.
In the event Lauren dies or becomes incapacitated, the Design
Studio, or if the Design Studio is not then in existence, Lauren's authorized
designee, or such entity or person as is responsible for the overall creation of
marketing and design philosophy of Ralph Lauren products, shall perform the
obligations of Lauren hereunder and the Company will accept the services of the
Design Studio or such designee, entity or person, and, accordingly, assume the
expenses of the Design Studio, designee, entity or person as provided in
paragraph 6. The Company shall pay all amounts required under paragraph 4 to
Lauren or his heirs, successors or assigns.
8. Termination.
This Agreement shall continue in full force and effect until
terminated in one of the following ways, but in any event shall terminate upon
termination of the License Agreement being executed simultaneously herewith:
(a) By Lauren, in the event that (i) any Compensation is not
paid by the Company when due, and such failure to pay is not cured within ten
(10) days following notice to the Company of such failure (unless such payment
is disputed by the Company in good faith, in which event the time to cure a
failure to make payment shall begin after the rendition of an unappealable final
judgment by an
19
arbitration panel or a court of competent jurisdiction), (ii) the License
Agreement is terminated pursuant to the provisions of paragraph 9.1(a) thereof,
(iii) there shall be a substantial breach by the Company of any other material
provision of this Agreement, including specifically its obligations under
paragraph 2(g), which breach shall not have been cured within ninety (90) days
after Lauren shall have given the Company notice of the same, then, and in any
of such events, at the option of Lauren or the Design Studio or Lauren's heirs,
successors or assigns, this Agreement shall immediately terminate, and, subject
to paragraph 8(c), all rights of the Company in and to the designs furnished
hereunder and all copyrights and design patents therein shall terminate.
(b) By the Company, in the event that (i) Lauren makes an
assignment for the benefit of creditors or is adjudged in any legal proceeding
to be voluntarily or involuntarily bankrupt, (ii) the License Agreement being
executed simultaneously herewith is terminated pursuant to the provisions of
paragraph 9.1(b) thereof, or (iii) there shall be a substantial breach by Lauren
of any other material provision of this Agreement, which breach shall not have
been cured within ninety (90) days after the Company shall have given Lauren
notice of the same.
(c) Subject to the provisions of paragraph 9.5 of the License
Agreement, for the Post-Termination Period referred to in paragraph 9.4 of the
License Agreement, the Company may continue to sell Royalty Products which were
in inventory, in process, or for which written orders had been received from
customers, as of the date of termination of this Agreement. Upon the conclusion
of
20
the Post-Termination Period all rights and interests in and to the designs
furnished hereunder and design patents therein and all copyrights licensed
hereby shall belong to and be the property of Lauren, and the Company shall have
no further or continuing right or interest therein.
(d) The Company acknowledges and admits that there would be no
adequate remedy at law for its failure to cease the manufacture or sale of
Royalty Products at the termination of the Post-Termination Period and the
Company agrees that in the event of such failure, Lauren shall be entitled to
relief by way of temporary or permanent injunction and such other and further
relief as any court with jurisdiction may deem proper.
(e) For the purposes of subparagraphs (a) and (b) of this
paragraph 8, a breach of this Agreement shall be deemed to be cured if the
course of conduct or omission comprising or causing such breach is timely
brought to an end whether or not the effects of such prior conduct or omission
continue thereafter.
(f) The exercise by either party hereto of any of the
foregoing rights of termination shall not constitute a waiver of other rights
and remedies available to such terminating party, including, unless otherwise
specifically provided herein, any right to damages; provided, however, that
neither Lauren nor the Company shall be entitled to damages in the event this
Agreement terminates as a result of the termination of the License Agreement due
to a default by the Company under paragraph 7.2(e) of the License Agreement or
by the Trusts under paragraph 7.1(f) of the License Agreement. The failure by
either party to insist upon
21
the strict performance of any provision hereof shall not constitute a waiver by
such party of its right to strict performance of such provision in the future
nor shall a waiver of any right hereunder on any occasion constitute a waiver of
such right on any other occasion.
9. Notices.
All notices or other communications required or contemplated
hereunder shall be in writing and shall be deemed given when transmitted by
telex (with confirmed answerback) or delivered in person or fifteen (15) days
after sent, postage prepaid, by registered mail, as follows:
(a) if to the Company, addressed as follows:
Cosmair, Inc.
530 Fifth Avenue
New York, New York 10036
Attention: President
Telex: 421973 COS UI
with a copy to:
John F. Flaherty, Esq.
Gibney Anthony & Flaherty
420 Lexington Avenue
New York, New York 10170
Telex: 649388
(b) if to Lauren or the Design Studio, addressed as follows:
Ralph Lauren Design Studio
1107 Fifth Avenue
New York, New York 10028
Telex: 420747 POLOFAS
22
with a copy to:
Mark N. Kaplan, Esq.
Skadden, Arps, Slate, Meagher & Flom
919 Third Avenue
New York, New York 10012
Telex: 645899
Anyone entitled to notice hereunder may change the address to which notices or
other communications are to be sent to it by notice given in the manner
contemplated hereby.
10. Binding Effect.
This Agreement shall be binding upon and inure to the benefit
of the successors and permitted assigns of the parties hereto.
11. Assignment.
(a) Lauren may assign his right to receive compensation under
this Agreement.
(b) The Company may assign its rights and obligations under
this Agreement only (i) to a transferee of substantially all of its business or
assets and upon the express assumption of all of the Company's obligations
hereunder by such transferee or to a successor to the Company's business by way
of merger, consolidation or other business combination or (ii) to an Affiliate,
in which case the Company shall remain liable hereunder.
23
12. Arbitration and Equitable Remedies.
12.1 Any controversy, claim or dispute arising out of or
relating to this Agreement or breach thereof, except with respect to an
application pursuant to paragraph 12.2 hereof, shall be settled by binding
arbitration in accordance with the rules of the International Chamber of
Commerce, by three arbitrators selected in accordance with such rules, and
judgment upon any award so rendered may be entered in any court having
jurisdiction thereof. The arbitration shall be held in New York, New York.
Notice of arbitration shall be sufficient if made or given in accordance with
the provisions of article 9 hereof.
12.2 In the event of a breach or threatened breach of this
Agreement, any party hereto shall have the right, without the necessity of
proving any actual damages, to obtain temporary or permanent injunctive or
mandatory relief, it being the intention of the parties that this Agreement be
specifically enforced to the maximum extent permitted by law.
13. Relationship of Parties.
This Agreement shall not create nor be considered to create
the relationship of master and servant, principal and agent, partnership or
joint venture between the parties hereto, and neither party shall be liable for
any obligation, liability, representation, negligent act or omission to act on
the part of the other except as expressly set forth herein.
24
14. Governing Law.
This Agreement shall be construed and governed in accordance
with the internal laws of the State of New York without regard to choice of law
provisions.
15. Entire Agreement.
This Agreement contains the entire agreement between the
parties hereto with respect to the transactions contemplated hereby and may not
be changed or terminated orally. No modification or waiver of any of the
provisions hereof shall be valid unless signed by a party to be charged
therewith.
16. Severability.
Provisions of this Agreement are severable, and if any
provision shall be held invalid or unenforceable in whole or in part in any
jurisdiction, then such invalidity or unenforceability shall affect only such
provision, or part thereof, in such jurisdiction and shall not in any manner
affect such provision in any other jurisdiction, or any other provision in this
Agreement in any jurisdiction.
17. Counterparts.
This Agreement may be executed in one or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
25
18. Termination of Prior Agreement.
This Agreement supersedes a prior design and consulting
agreement made and dated as of November 22, 1976 (executed on June 30, 1978)
between the Company (as successor to the rights of WLL) and Lauren, and the
rights, duties and obligations of the parties from this date forth shall be
governed by this Agreement; provided that the Company's obligations prior to
this date shall continue to be governed by the prior design and consulting
agreement and the Company shall remit compensation with respect to sales of
Licensed Products made prior to such date as required thereunder.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement or caused the same to be executed by a duly authorized officer as of
the 1st day of January, 1985.
COSMAIR, INC.
By: /s/ Jacques H. Correze
------------------------
Date: October 8, 1985
------------------------
/s/ Ralph Lauren
------------------------
Ralph Lauren, individually and doing
business as Ralph Lauren Design Studio
Date: October 8, 1985
------------------------
Conformed Copy
COSMAIR, INC.
530 Fifth Avenue
New York, New York 10036
As of January 1, 1985
Mr. Ralph Lauren
1107 Fifth Avenue
New York, New York 10028
and
Polo Fashions, Inc.
40 West 55th Street
New York, New York 10019
Gentlemen:
Reference is made (i) to a restated U.S.A. license agreement
(the 'License Agreement') dated as of January 1, 1985 between Cosmair, Inc., a
Delaware corporation (the 'Licensee'), and Ricky Lauren and Mark N. Kaplan as
trustees under an Agreement dated September 21, 1976 (the 'Licensor'), which
License Agreement is being executed simultaneously herewith, and (ii) to a
U.S.A. design and consulting agreement (the 'Design Agreement') dated as of
January 1, 1985 between Ralph Lauren ('Lauren') individually and doing business
under the name Ralph Lauren Design Studio, and Licensee, which Design Agreement
is being executed simultaneously herewith. The License Agreement and the Design
Agreement are hereinafter, at times, referred to collectively as the Agreements.
In order to induce the Licensee to enter into the Agreements
and to perform the obligations imposed on the Licensee thereunder, the Licensor
has requested Lauren and Polo Fashions, Inc., a New York corporation ('PFI'), to
confirm to the Licensee certain representations, warranties, covenants and
acknowledgments, which representations, warranties, covenants and
acknowledgments have previously been made to the Licensor by Lauren and PFI.
NOW, THEREFORE, the parties hereto agree as follows:
1. Lauren and PFI, jointly and severally, hereby make the
following representations and warranties to the Licensee, which are confirmatory
of the rights received by the Licensor under various agreements (the 'Transfer
2
Agreements') among the Licensor, The Polo/Lauren Company ('PLC'), Lauren and PFI
each of which shall be deemed to be independently material and relied upon by
the Licensee, regardless of any investigation made or information obtained by
the Licensee:
(a) By operation of the assignments and conveyances in the
Transfer Agreements, as of November 22, 1976 the Licensor became the sole owner
of the trademark 'Polo by Ralph Lauren,' United States Patent Office
Registration No. 1,021,368 covering certain products in U.S. Class 51 (as more
fully set forth on Schedule A-1 to the License Agreements).
As of November 22, 1976, PFI was the registered owner of, and
Lauren had consented to the use of his name in connection with the registration
of, the trademarks (i) 'Polo (with design) by Ralph Lauren,' United States
Patent Office Registration No. 978,166 covering certain products in U.S. Class
39, (ii) 'Ralph Lauren' (and Polo Player Design), United States Patent Office
Registration No. 984,005 covering certain products in U.S. Class 39, (iii)
'Chaps by Ralph Lauren,' United States Patent Office Registration No. 1,016,955
covering certain products in U.S. Class 39 and (iv) 'Polo by Ralph Lauren'
covering certain products in U.S. Class 26. PFI and Lauren, by written statement
duly executed by them in favor of Licensors, have given their consent and
agreement to interpose no objection to the registration, use and licensing of
the foregoing trademarks, the Names and all other names and marks, which either
or both (or any business entity which is now or hereafter owned or controlled,
directly or indirectly, by either or both of them), may hereafter develop or own
(except such other names and marks as are not used in connection with any
fashion related product) in connection with the manufacture and/or distribution
and sale of Licensed Products, as contemplated by the License Agreement;
(b) Licensor has the full right, power and authority to
execute and deliver, and perform the terms of, the License Agreement and the
consummation of the transactions contemplated by the License Agreement will not
violate any agreement to which Licensor, Lauren or PFI is a party or by which
they, it or he may be bound;
(c) Without limiting the generality of the last preceding
subparagraph, Licensor has the full right to grant the License and neither
Licensor, Lauren nor PFI is a party to or bound by any agreement in conflict
with the License Agreement or with any provision thereof. Except as may be
provided in the Agreements, neither Licensor, Lauren nor PFI has granted to any
other person, firm, corporation or business any right, license or privilege to
use the Names or associated crests, symbols, logos or identifying marks, or any
crest, symbol, logo or identifying marks which would be confusingly similar
thereto in connection with any Licensed
3
Product, or which would have the effect of infringing upon the exclusivity of
the License granted to Licensee under the License Agreement;
(d) Schedules A-1 and A-2 to the License Agreement contain a
full and complete list of all registrations existing as of November 22, 1976
covering the Current Names and associated crests, symbols, logos and identifying
marks in the class of use owned by or registered in the name of Licensor, Lauren
and/or PFI in any part of the world; and
(e) To the best of Lauren's and PFI's knowledge as of November
22, 1976 (without any representation of an investigation having been made) no
person other than Licensor, Lauren of PFI had as of November 22, 1976 any trade
name, trademark or similar right or interest in or to the 'Ralph Lauren,' 'Polo'
and 'Chaps' Names as applied to Licensed Products in the Territory.
2. In further confirmation of their prior transfer of rights
to Licensor, Lauren and PFI, jointly and severally, covenant and agree with
Licensee as follows:
(a) Lauren and PFI will not, and will not permit any business
entity owned or controlled by them to, grant any person, firm, corporation or
business (other than Licensee) any right, license or privilege to use in the
Territory the Names or associated crests, symbols, logos or identifying marks or
any name, crest, symbol, logo or identifying mark which would be confusingly
similar thereto in connection with any Licensed Product, or which would have the
effect of infringing upon the exclusivity of the License granted to Licensee
under the License Agreement;
(b) Lauren and PFI hereby confirm Licensor's authority to
appoint Licensee as its attorney-in-fact to apply for and register, in
accordance with the provisions of the Agreements, in the name of Licensor, in
the Territory all trade names and trademarks which make use of the Names or are
associated therewith as applied to Licensed Products. Lauren and PFI will
cooperate with Licensee in all manners and respects, but at Licensee's expense,
to enable Licensee to obtain the aforesaid registrations, and Lauren and PFI
will execute any further agreements, documents and instruments as may be
necessary to effect the same;
(c) Lauren and PFI will not at any time disclose to any
person, firm, corporation or business (other than to a person, firm, corporation
or business with rights to use the Names on Licensed Products outside the
Territory, if required in connection with a program for the Licensed Products
outside the Territory) any confidential information (including, without
limitation, customer lists) concerning the conduct of the business and affairs
of Licensee or of any subsidiary or affiliate of Licensee which they may acquire
except as may be required pursuant to law and then only upon advance notice to
Licensee;
4
(d) Lauren and PFI shall protect, indemnify and save harmless
Licensee and each of Licensee's officers, directors, employees and agents
against any and all liabilities, claims, damages, penalties, causes of action,
costs and expenses, including reasonable attorneys' fees, arising out of the
breach or material inaccuracy of any of the representations, warranties,
covenants and agreements of (x) Licensor contained in the License Agreement or
(y) Lauren or PFI, contained in this letter. Licensee shall have the right in
its discretion, and with counsel of its own choosing, to take any action, legal
or otherwise, in its own name and/or in the name of Lauren or PFI, at Licensee's
discretion to protect any trade name or trademark covered by the License from
infringement, counterfeiting or passing off. Prior to taking any such action,
Licensee shall advise Licensor of its intention to commence the proposed action
and thereafter, at Lauren or PFI's request, shall promptly furnish Lauren and/or
PFI with copies of relevant documents and Lauren and PFI advised of developments
relating to the action. Lauren and PFI shall cooperate with Licensee, and if
requested shall join in as a plaintiff in any such action with counsel
designated by Licensee. Any legal expenses incurred in the prosecution of such
action shall be borne by, and any money recoveries received in such action,
shall belong to, Licensee (subject only to the rights, if any, of Licensor to a
royalty on any such recovery as expressly provided in the License Agreement);
(e) Lauren and PFI acknowledge that the Current Names have
established prestige and good will in the field of fashion apparel and that it
is of major importance to Licensee that the high standards and reputation of the
Current Names be maintained. Neither Lauren nor PFI will take action which will
be likely to injure or damage the reputation for high quality which has come to
be associated with the Current Names. Licensee shall not be entitled to damages
by reason of Lauren's or PFI's breach or default of their obligations under this
subparagraph (e) and Licensee's sole remedy under the Agreements shall be to
terminate the Agreements pursuant to the provisions thereof.
(f) Lauren and PFI believe and intend that they have
transferred and assigned to Licensor all rights required by Licensor to enable
Licensor to fully perform its obligations under the License Agreement.
Nevertheless, in confirmation thereof, if Lauren or PFI or any entity owned or
controlled by them now has or may hereafter acquire any right or interest in or
to any of the Names and if such right or interest is required to or should
properly be owned by Licensor under the License Agreement or to otherwise fully
perform Licensor's obligations thereunder, then, and in such event, the
following provisions shall apply:
(i) Lauren and PFI shall promptly transfer and assign
such right and interest to Licensor, without cost or expense to
Licensee, and (ii) for the purpose of the License Agreement and
Licensee's rights thereunder, such rights and interests shall be deemed
to be the property of Licensor
5
(whether or not they are actually assigned or transferred to Licensor a
provided in clause (i) above);
(g) If Lauren or PFI hereafter registers any new Name in
any part of the world, they will promptly thereafter advise Licensee of the
same;
(h) Lauren will not permit his name to be used by any
Unaffiliated Third Person as the designer or creator of a line of clothing or
any other line of fashion related products owned, manufactured or distributed by
such Unaffiliated Third Person, unless such Unaffiliated Third Person agrees,
for the benefit of Licensee, that neither Ralph Lauren's name nor the name of
Ralph Lauren as part of a trade name or trademark used for or in connection with
such line of clothing or other line of fashion related products will be used in
the Territory by such Unaffiliated Third Person (or by any person licensed or
authorized by him) for a line of Licensed Products or in connection with the
sale, distribution or promotion thereof. The term 'Unaffiliated Third Person'
shall mean every person and business entity except Licensor, Lauren, PFI, PLC
and each business entity owned or controlled, directly or indirectly, by them;
and
(i) In further confirmation of their prior transfer of
rights to Licensor, (i) Lauren and PFI do hereby join in each of the covenants
and agreements of Licensor contained in the License Agreements (including,
without limitation, the covenants and agreements of the Licensor set forth in
paragraphs 2.2, 7, 9.4 and 13 of the License Agreement and (ii) Lauren and PFI
expressly consent to all of the other terms and conditions of the License
Agreement and will deliver such documents and take such action as may be
reasonably requested in order to enable Licensor to fully carry out the intent
and accomplish the purposes of the License Agreement.
3. Lauren and PFI hereby agree to indemnify and hold harmless
Licensee from and against any and all losses it may suffer and any and all
damages, liabilities, claims, costs or expenses (including, without limitation,
reasonable attorneys' fees and disbursements) paid or incurred, as the case may
be, which it would not have suffered or incurred if PFI (rather than Licensor)
had owned the Names and had applied for registration of the First Trademarks,
provided, however that any such loss, damage, liability, claim, cost or expense
is paid or incurred by Domestic Licensee before PFI has filed applications in
its own name for registration of the First Trademarks. The parties acknowledge
that the aforesaid indemnification provided by Lauren and PFI under this
paragraph 3 shall be the same as that provided to Licensee by the License
pursuant to the provisions of paragraph 7.1(b) of the License Agreement. In the
event any claim is made or accrued (to Licensees' knowledge) against Licensee
which comes within the indemnity set forth in this paragraph, Licensee will
promptly notify Lauren and PFI of such claim. Thereafter, Licensor shall have
the right, at its own expense and with counsel of its own choice, subject to the
approval of Licensee, which approval will not be unreasonably
6
withheld, to assume the defense of any such claim. Licensee agrees to cooperate
fully in the defense of any such claim and may, at its own expense and with
counsel of its own choice, participate in the defense of any such claim.
4. Licensee acknowledges that, except as set forth in
paragraph 1 hereof, Lauren and PFI have not represented to Licensee that
Licensor, Lauren or PFI have any trademarks, trade names or other rights or
interests in or to the Names or that persons other than Licensor, Lauren or PFI
have no such trademarks, trade names or other rights or interests. If Licensee
uses any Name as a trademark, trade name or product name for a Royalty Product
without registration of the same (except as may be necessary to establish its
use in commerce) Licensee will protect, defend and save harmless Lauren and PFI
from and against any claims of third persons for infringement, counterfeiting or
passing off against Lauren or PFI arising out of the use of such unregistered
Name provided that (x) neither Lauren, PFI nor Licensor shall have
misrepresented to Licensee their rights or interests in or to such Name whether
in this letter, in the License Agreement or any other instrument, and (y) such
claim shall not arise by reason of any action taken by Lauren, PFI or Licensor
in breach of any obligation they may have to Licensee whether arising under this
letter, the License Agreement or any other instrument.
5. In the event of a breach or threatened breach of any of the
covenants of Lauren or PFI contained in this letter, Licensee shall have the
right, without the necessity of proving any actual damages, to obtain temporary
or permanent injunctive or mandatory relief in a court of competent
jurisdiction, it being the intention of the parties to this Agreement that the
covenants and agreements of Lauren and PFI hereunder be specifically enforced to
the maximum extent permitted by law.
If the representations of Lauren herein contained are not true
and correct in any material respect or if there shall be a substantial breach by
Lauren of any of its covenants hereunder, which breach shall not have been cured
within ninety (90) days after Licensee shall have given Lauren notice of same,
such misrepresentation or breach shall be deemed and shall constitute a breach
of the Design Agreement, and Licensee shall have the right, in addition to any
and all rights and remedies that Licensee has against Lauren by reason of the
same, to (i) terminate the Design Agreement and/or (ii) set off any and all
damages, costs, expenses, losses, and other injuries sustained by Licensee by
reason of such misrepresentation or breach against any sums payable by Licensee
under the Design Agreement, except as otherwise provided in this letter or under
the Design Agreement.
6. In all instances where Lauren has a right of approval
herein, such right may be exercised personally by Lauren or by the Ralph Lauren
Design Studio. If Lauren or the Ralph Lauren Design Studio fails or is unable to
exercise such right within thirty (30) days (by informing Licensee whether
Lauren grants or
7
withholds his said approval) Lauren shall be deemed to have given his approval
to Licensee with respect to the matter as to which his approval was sought.
7. Licensee covenants and agrees with Lauren and PFI, as
follows:
(a) Licensee will not disclose to any person, firm,
corporation, or business any confidential information concerning the conduct of
the business and affairs of Lauren or PFI which Licensee may acquire; and
(b) It is understood that Licensor, Lauren and PFI assume
no liability to Licensee or third parties with respect to the performance
characteristics of the Royalty Products, and Licensee will protect, defend,
indemnify and save harmless, Licensor, Lauren and PFI, their officers, employees
and agents, against any and all liabilities, claims, damages, penalties, causes
of action, costs and expenses, including reasonable attorneys' fees and
disbursements, for product liability or breach of warranty claims of third
persons arising out of the use of such Products by such third persons.
8. All notices, approvals or other communications required
under or contemplated by this Letter shall be in writing and (x) if given to
Licensee, Licensor or Lauren shall be delivered in the manner provided in the
Agreements, and (y) if given to PFI shall be transmitted by telex (with
confirmed answerback) or delivered in person or sent, postage paid, by
registered or certified mail, return receipt requested, as follows:
Polo Fashions, Inc.
40 West 55th Street
New York, New York 10019
Attention: President
Telex: 420747 POLOFAS
with a copy to:
Mark N. Kaplan, Esq.
Skadden, Arps, Slate, Meagher & Flom
919 Third Avenue
New York, New York 10022
Telex: 645899
9. All terms used in this Letter Agreement shall be defined or
the purposes hereof as provided in the Agreements unless otherwise expressly
defined herein.
8
10. This Letter Agreement supersedes a prior letter agreement
made and dated November 22, 1976 (executed on June 30, 1978) among Licensee (as
successor to the rights of Warner/Lauren Ltd.) and Lauren and PFI and the
rights, duties and obligations of the parties from this date forth shall be
governed by this Letter Agreement.
Very truly yours,
COSMAIR, INC.
By: /s/ Jacques H. Correze
----------------------
READ AND AGREED TO:
/s/Ralph Lauren
-----------------
Ralph Lauren
POLO FASHIONS, INC.
By: /s/Peter Strom
-------------------
U.S.A. Design and Consulting Agreement - Ralph Lauren, Ralph Lauren Design Studio and Cosmair Inc.
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