Master License Agreement between The Procter & Gamble Company and Helen of Troy Limited (Vidal Sassoon Trademarks)
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This agreement, effective January 1, 2003, is between The Procter & Gamble Company (P&G) and Helen of Troy Limited. P&G grants Helen of Troy an exclusive worldwide license (excluding certain Asian countries) to use the "VIDAL SASSOON" and "VS SASSOON" trademarks for manufacturing, selling, and distributing specified products. The agreement replaces previous licenses, sets a term through December 31, 2012, and requires Helen of Troy to pay a non-refundable fee and ongoing royalties. Both parties have specific rights and obligations regarding new products and trademark management.
EX-10.24 3 d06369exv10w24.txt MASTER LICENSE AGREEMENT EXHIBIT 10.24 [CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE CONFIDENTIAL PORTIONS HAVE BEEN REDACTED AND ARE DENOTED BY A TRIPLE ASTERISK (***). THE CONFIDENTIAL PORTIONS HAVE BEEN SEPARATELY FILED WITH THE COMMISSION.] MASTER LICENSE AGREEMENT THIS AGREEMENT is made and entered into as of January 1, 2003 by and between The Procter & Gamble Company, a corporation duly organized and existing under the laws of Ohio, having a principal place of business at 1 Procter & Gamble Plaza, Cincinnati, Ohio 45201, as successor-in-interest to Richardson-Vicks Inc. (hereinafter referred to as "P&G") and Helen of Troy Limited, a corporation duly organized and existing under the laws of Barbados, having its principal place of business at Whitepark House, White Park Road, P.O. Box 836E, Bridgetown, Barbados, as successor-in-interest to Helen of Troy Corporation, now known as Helen of Troy Texas Corporation (hereinafter referred to as "LICENSEE"). WITNESSETH WHEREAS, P&G is the owner of the tradenames and trademarks "VIDAL SASSOON" and "VS SASSOON" (hereinafter referred to as "Trade Name," as more particularly defined in Section 1(d) below), which is known to the public and enjoys an excellent reputation; and WHEREAS, the parties are operating under an Appliance/License Agreement dated December 22, 1982, as amended, Brush License Agreement dated December 18, 1985, as amended, License Agreement (Canada) dated December 22, 1982, as amended, European Appliance Agreement dated January 1, 1990, as amended, and a Mexico Appliance License Agreement dated July 1, 1991, as amended (the foregoing are collectively the "Existing Licenses"), with respect to the Trade Name; and WHEREAS, inasmuch as the Existing Licenses are soon to expire, the parties desire to enter into one new License Agreement which will take the place of all Existing Licenses. 1 NOW, THEREFORE, in consideration of the foregoing and of the mutual promises herein contained, the parties hereto agree as follows: SECTION 1 - GRANT OF LICENSE (a) Upon the terms and conditions hereinafter set forth, P&G hereby grants to LICENSEE, and LICENSEE hereby accepts the sole right, license and privilege of utilizing the Trade Name, solely and only upon and in connection with the manufacture, sale and distribution of the "Designated Merchandise" (as defined in Section 1(e) below). This License Agreement is independent of any other agreement between the parties and applies only to the Licensed Territory as hereinafter defined. (b) The license hereby granted extends worldwide (hereinafter referred to as "Licensed Territory") except for the following countries (collectively "Asia"): Australia, China, Hong Kong, India, Indonesia, Japan, Korea, Malaysia, New Zealand, Philippines, Singapore, Taiwan, Thailand. LICENSEE shall not make or authorize any use, direct or indirect, of the Trade Name in any area, other than the Licensed Territory and any other geographical areas which may be covered from time to time during the Term hereof by amendment or by separate license agreements, if any, between the parties hereto, relating to the manufacture, sale and distribution of Designated Merchandise, as defined below, and shall not knowingly sell Designated Merchandise to persons who intend to resell it in any other area. It is understood and agreed, however, that some part or all of the Designated Merchandise may be manufactured outside of the Licensed Territory. (c) The initial term of this license shall begin January 1, 2003 and extend through December 31, 2012 (the "Initial Term"), subject to any extension or extensions thereafter, as provided in Section 3 hereof (the "Term"). 2 (d) For the purpose hereof, the Trade Name shall mean the names "VIDAL SASSOON" and "VS SASSOON" and all rights, registrations and entitlements thereto, as well as any portions, simulations or variations thereof, together with all applications, registrations and filings with respect to the Trade Name, and any renewals and extensions of any such applications, registrations and filings. LICENSEE acknowledges that P&G may not have the exclusive right to some variations or portions of the Trade Name, including the initials "VS," and for such variations or portions, LICENSEE is only acquiring the right to use such variations or portions in the same manner as P&G may be permitted to use said variations or portions. (e) For the purposes hereof, "Designated Merchandise" shall mean those items listed on Exhibit "A" attached hereto. By January 31 of each year, LICENSEE shall furnish P&G with a list of items it is manufacturing, selling and distributing into the Licensed Territory at that time. In the event LICENSEE wishes to so manufacture, sell or distribute any product outside the scope of the Designated Merchandise, it shall so notify P&G in writing, and P&G, in its sole and absolute discretion, shall have thirty (30) days to accept or reject such product. P&G must so specifically state the reason or reasons for its disapproval in its written notice of rejection. (f) In the event P&G desires to manufacture, sell or distribute in Licensed Territory products bearing the Trade Name which are not within the scope of the Designated Merchandise, P&G shall notify LICENSEE in writing of such fact, and LICENSEE shall have ninety (90) days within which to notify P&G either that it desires to manufacture, sell or distribute such product in the Licensed Territory under the terms contained herein, or that it does not so desire to manufacture, sell and distribute such product. In the event LICENSEE does not respond within said ninety (90) day period, or notifies P&G that it does not desire to manufacture, sell and distribute such product under the terms contained herein, P&G shall have the right to itself 3 manufacture, sell and distribute such product, or to offer to another party or parties, on any terms, the right to manufacture, sell and distribute such product. (g) In the event that LICENSEE notifies P&G that it desires to so market a proposed product by P&G as provided in Paragraph 1(f) above, then LICENSEE shall have the right to manufacture, sell and distribute such product in the Licensed Territory under the terms and conditions contained herein; provided however, that in the event LICENSEE has not, within a reasonable period of time from the date LICENSEE notified P&G of its desire to so market such product, made a good faith effort to manufacture, sell and distribute substantial quantities of such product in the Licensed Territory, then P&G shall have the right to itself manufacture, sell and distribute, or to appoint another entity to manufacture, sell and distribute such product. (h) LICENSEE will cooperate with P&G in the execution, filing and prosecution of any trademark applications and registered user agreements that P&G may desire to file at its own expense and for that purpose LICENSEE will supply to P&G from time to time such samples, containers, labels and similar material as may reasonably be required. In the event this Agreement is terminated, LICENSEE agrees to execute whatever documents are necessary to terminate the registered user agreements and this obligation shall survive the termination of this Agreement. SECTION 2 - TERMS OF PAYMENT (a) LICENSEE shall pay LICENSOR a non-refundable licensing fee of two million dollars ($2,000,000.00) within ten (10) days of signing this Agreement. (b) Subject to adjustment as provided below, LICENSEE shall pay to P&G a royalty equal to *** of the Net Sales of all Designated Merchandise for each License Year of the Term - ------------------------ *** Confidential material redacted and filed separately with the Commission. 4 specified herein, or the Minimum Annual Royalty, as hereinafter defined, whichever is greater. The term Net Sales shall mean the Gross Sales (as defined below) of the Designated Merchandise by LICENSEE, its affiliated, associated or subsidiary companies, less Allowable Adjustments (as defined below) not to collectively exceed *** of Gross Sales. "Gross Sales" shall mean the consolidated gross dollar value of sales to third persons obtained by multiplying the number of items of Designated Merchandise shipped (net of returns credited and/or received), by LICENSEE's assigned price for each such item exclusive of, and before allowance for or deduction of, any Allowable Adjustments. The term "Minimum Annual Royalty," as used herein, shall be *** per year, subject to adjustment as provided below. Royalties payable hereunder shall be reduced by an amount equal to all expenditures made by LICENSEE for advertising; provided, however, that such reduction shall not exceed *** of the amount actually payable in such year. Amounts paid for advertising may be carried forward and reduce royalties for a period of 12 months after the date of expenditure. In addition, Royalties payable hereunder shall be reduced by an additional ***, and redirected into advertising as set forth above, if and when: (i) VIDAL SASSOON shampoo dollar share falls below *** for *** as measured by Information Resources, Inc., A. C. Nielsen, or another nationally-recognized market share data provider; or (ii) VIDAL SASSOON hair care products cease to be sold in the United States of America to ***, or (iii) P&G decides to discontinue or suspend sale of VIDAL SASSON hair care products in the retail channel of distribution in the United States of America. - -------------------- *** Confidential material redacted and filed separately with the Commission. 5 Such reduction shall continue until dollar share meets or exceeds *** for ***, if applicable, or so long as either of items (ii) or (iii) is still occurring in the United States of America. In no event, however, shall Royalty payable to P&G be less than *** per year. Minimum Annual Royalty shall be prorated for any partial year(s) at the beginning or end of the Initial or any renewal Term. "Allowable Adjustments" shall be deemed to include but not be necessarily limited to: ***. For the purpose of calculating Net Sales, it is understood, without limitation, that no deduction shall be made for cash discounts, uncollectible accounts and freight costs or freight allowances in the manufacture, sale or distribution of Designated Merchandise. Net sales shall not include sales by LICENSEE to P&G or any related or affiliated company thereof. (c) *** For purposes hereof, a Newly Developed Item of Designated Merchandise shall mean a new item of Designated Merchandise different in design, overall appearance and componentry from any currently existing item of Designated Merchandise, and which requires the development and production of new designs, tooling and molds, and the expenditure of significant monies in engineering, development and/or testing. LICENSEE shall submit a new design proposal to P&G for P& G's written determination that such new design shall be considered a Newly Developed Item of Designated Merchandise before such new design is in the manufacturing stage. Such determination by P&G shall be final. *** P&G's determination under this provision is not a Merchandise Dispute subject to arbitration pursuant to Section 3(e) hereof. (d) Royalty payments shall be based on U.S. dollar calculations and paid in U.S. - ------------- *** Confidential material redacted and filed separately with the Commission. 6 dollars. Exchange rates used to convert local currency sales to U.S. dollars shall be the actual average monthly rates of New York banks as published in the Wall Street Journal. (e) Royalty payments shall be due and payable by LICENSEE sixty (60) days after completion of each calendar quarter year of each License Year during the Term hereof. For purposes of this Agreement, the first License Year shall be defined as the period ending December 31, 2003, and each subsequent License Year shall be defined as the twelve (12) month period commencing January 1 of each year and ending December 31 of the same year. The first royalty payment due under this License Agreement shall be for the quarter ending March 31, 2003. No less than twenty-five percent (25%) of the Minimum Annual Royalty applicable to each License Year shall be payable each calendar quarter under this Agreement, except that payments within each License Year shall be determined based on cumulative Net Sales within the year. (f) In this regard, all moneys due as royalty payments under this Agreement shall be payable in United States Dollars by bank wire transfer of immediately available funds to the following account: *** Please reference "Royalty: Vidal Sassoon/Helen of Troy." Confirmation via fax should be sent to: The Procter & Gamble Company General Accounting TE-11 GO One Procter & Gamble Plaza P.O. Box 599 Cincinnati, OH 45202 ###-###-#### - --------------- *** Confidential material redacted and filed separately with the Commission. 7 with copy to: The Procter & Gamble Company Attention: Contact Administration P.O. Box 330176 West Hartford, CT 06133-0176 Telephone: (860) 236-8002 Fax: (860) 236-5515 (g) Within sixty (60) days after the end of each quarter, LICENSEE shall prepare and issue to LICENSOR verified reports for each Quarter in the English language in a form mutually acceptable to LICENSEE and LICENSOR, and showing separately: A) Total number or amount of Designated Merchandise by items sold, delivered, provided, or otherwise disposed of by LICENSEE, B) Gross Sales, C) Itemized deductions and returns by Designated Merchandise, used to calculate Net Sales, D) The royalties accrued during the quarter and payable to LICENSOR by LICENSEE. If no sales, deliveries, or dispositions of Designated Merchandise were made during the reporting period, a report to that effect shall be prepared and issued to LICENSOR within sixty (60) days after the end of each quarter. LICENSEE shall transmit the aforementioned reports to the following address The Procter & Gamble Company Attention: Contract Administration P.O. Box 330176 West Hartford, CT 06133-0176 Telephone: (860) 236-8002 Fax: (860) 236-5515 SECTION 3 - TERMINATION; OPTION TO EXTEND (a) Unless sooner terminated by reason of the application of subsections (d), (e), (f) or (g) of this Section 3, this Agreement shall terminate at the end of the Initial Term hereof; provided however, that LICENSEE shall have the option to extend this Agreement and all of the terms and conditions hereof, for an additional ten (10) year period (the "Extension") from 8 January 1, 2013 to December 31, 2022, if LICENSEE has Net Sales in the last License Year of the Initial Term equal to or exceeding the "Adjusted Sales Amount" (as defined below) at actual exchange rates. In addition, LICENSEE shall have one further option to extend this Agreement and all of the terms and conditions hereof, for an additional ten (10) year period from January 1, 2123 to December 31, 2032, if LICENSEE has the Net Sales in the last License Year of the Extension term equal to or exceeding the "Adjusted Sales Amount" at actual exchange rates. In the event that LICENSEE is qualified to exercise, and elects to so exercise, its option to extend this Agreement, it shall do so by giving written notice of its intention to P&G no later than six months prior to the expiration of the Initial Term or Extension term, as applicable; provided however, that if the subsequent accounting furnished by LICENSEE to P&G for such last License year shall reflect that LICENSEE is not qualified to so exercise such option, then this Agreement shall terminate as of the last day of the next calendar month following the month in which written notice is given by P&G to LICENSEE of its failure to so qualify to extend the term hereof. In the event of the occurrence of any act beyond the control of LICENSEE specified in Section 15(k) which continues for a period of one (1) month or more during the final License Year of the Initial Term, then the Net Sales for that License Year required to entitle LICENSEE to exercise its option to extend shall be prorated based on the actual portion of such License Year not so disrupted. For purposes of this Section 3, the "Adjusted Sales Amount" for any License Year shall be an amount equal to the lesser of; (i) *** multiplied by a fraction, the numerator of which shall be the "Consumer Price Index" as announced by the Bureaus of Labor Statistics, United States Department of Labor, for the month of January of such year, and the denominator of which shall be the "Consumer Price Index" for the month of January 2003 - ------------------- *** Confidential material redacted and filed separately with the Commission. 9 (provided, however, in no event will the annualized increase in the numerator be more than ***); (ii) the average of LICENSEE'S Net Sales in the prior three License years. (b) Notwithstanding the provisions of Section 3(a) above, LICENSEE shall nonetheless have the option to extend this Agreement through the Extension Period, if; (i) LICENSEE shall have Net Sales in the last License Year of the Initial Term or Extension term, as applicable, in an amount equal to or exceeding *** of the Adjusted Sales Amount; and (ii) LICENSEE pays to P&G additional royalties at the rate specified in Section 2(a) of this Agreement sufficient to provide P&G with that amount it would have been paid had LICENSEE had the Net Sales in such License Year equal to the Adjusted Sales Amount. (c) If LICENSEE exercises any option to renew, it shall pay to P&G a renewal fee in an amount equal to *** of the Net Sales for a year in which the option to renew is exercised. Such renewal fee shall be payable as follows: one-third (1/3) on the 90th day after the first day of the applicable renewal term, one-third (1/3) on the first anniversary of the first day of the renewal term, and one-third (1/3) on the second anniversary of the first day of the renewal term. (d) The failure of either party to pay any sum due hereunder within fifteen (15) days of the date specified herein shall constitute a default hereunder. Thereafter, the non-defaulting party may give written notice of such non-payment. All payments made during the fifteen (15) day period commencing with the date such notice is received by the defaulting party shall bear interest at the annual interest rate identified as the "Prime Rate" in the Money Rates column published each day in the Wall Street Journal, and defined therein as the Base Rate on corporate loans posted by at least 75% of the nation's 30 largest banks, as of the date of receipt of such notice, plus one and one-half percent (1-1/2%), or the maximum rate allowed by applicable law, - ---------------------- *** Confidential material redacted and filed separately with the Commission. 10 whichever amount is less. In the event full payment is not received by the end of this fifteen (15) day period, then for the next thirty (30) days commencing upon the expiration of this fifteen (15) day period the defaulting party shall, in addition to paying interest on all unpaid amounts at the interest rate specified above, pay as liquidated damages and not as a penalty, the sum of One Thousand Dollars ($1,000) per day for each day during this thirty (30) day period that payment is not received, which sum represents a reasonable endeavor by the parties hereto to estimate a fair compensation for the foreseeable losses that might result from such default. If full payment is not received by the end of this thirty (30) day period, this Agreement may be terminated in writing at the option of the non-defaulting party. Acceptance by the non-defaulting party of payment in full after the aforementioned period shall act as a waiver by the non-defaulting party of its right to terminate this agreement by reason of such default. It is understood and agreed that the defaulting party shall have the right to continue to make payments on amounts owed as provided herein until the expiration of the above-stated final thirty (30) day period. (e) LICENSEE or P&G may terminate this Agreement upon the other party's breach or default of the terms hereof (except the failure to pay money when due), which shall continue for a period of thirty (30) days after written notice specifying such default. Notwithstanding the above, in the event said breach or default is cured within, said thirty (30) day period, said notice of default shall be deemed cancelled and rescinded. In the event of a breach or default which cannot reasonably be cured within said thirty (30) day period, the date for termination shall be extended to that date upon which said breach or default could reasonably be cured; provided, that LICENSEE or P&G has promptly and in good faith commenced to cure the default within said thirty (30) day period and continues expeditiously thereafter its efforts to cure the same until such default has been remedied. Merchandise Disputes, as defined below, shall not be considered breaches or defaults and shall be resolved by binding arbitration upon the election of 11 either party, which, it is understood, shall be the exclusive method of resolving such Merchandise Disputes. Merchandise Disputes shall be defined to include only claimed breaches relating to the Designated Merchandise and its specifications, designs, standards and advertising, but shall in no event include any disputes over the use of the Trade Name or trademarks licensed hereunder or any dispute regarding the payment of money. Such arbitration shall be held in Cincinnati, Ohio, in the offices of a neutral third party. Each party hereto may appoint one arbitrator from a panel of names supplied for that purpose by the American Arbitration Association. The two (2) arbitrators so selected shall agree upon a third arbitrator from such panel of names. The decision of two arbitrators shall be controlling and the judgment based on the award may be entered in the Superior Court of the State of Ohio or any other court having jurisdiction thereover. The losing party shall pay all costs. The Rules of the American Arbitration Association and the Arbitration laws of the State of Ohio shall apply. (f) P&G shall have the sole option to terminate this Agreement if LICENSEE is acquired by another entity which competes in the hair care category, such option to be exercised within thirty (30) days after the event giving rise to such option. If P&G is given a comprehensive written description of a proposed acquisition, P&G will inform LICENSEE in writing as to whether it will or will not exercise its option to terminate, within 30 days of P&G's receipt of the proposed acquisition description. (g) Upon the termination of this Agreement, for any reason whatsoever, LICENSEE shall immediately discontinue its use of the Trade Name in connection with the manufacture, marketing and distribution of Designated Merchandise, and thereafter will no longer use or have the right to use the Trade Name in any form or manner whatsoever; provided however, that 12 LICENSEE shall have a period of up to *** after termination of this Agreement (hereinafter the "Disposal Period") in which to use the Trade Name in making orderly disposition of inventory in accordance with the terms of this Agreement, of Designated Merchandise manufactured or actually ordered and in production by LICENSEE prior to the termination date. Within fifteen (15) days after termination, LICENSEE shall submit to P&G a schedule of the inventory, including all of LICENSEE's purchase commitments, of Designated Merchandise bearing the Trade Name then on hand, in production or on order for production. Within five (5) days after receipt of the aforementioned schedule of inventory, P&G shall be required to advise LICENSEE in writing of P&G's decision to either: (i) permit LICENSEE to dispose of the Designated Merchandise then on hand during the Disposal Period, as set forth above, or (ii) buy all previously unsold Designated Merchandise for a price, payable in cash within ninety (90) days after P&G's election, equal to LICENSEE's landed cost (subject to audit by P&G auditors), including any outstanding letters of credit or purchase commitments for inventory to be landed in the United States within six (6) months of the date P&G notifies LICENSEE of its intent to buy said inventory. (h) Royalties shall be due P&G for all sales made during the Disposal Period and shall be paid no later than sixty (60) days after the end of said period; provided however, that in the event P&G elects to purchase the inventory then on hand, no royalty payment shall be payable with respect thereto. SECTION 4 - EXCLUSIVITY (a) Nothing in this Agreement shall be construed to prevent P&G from granting any other licenses for the use of the Trade Name or from utilizing the Trade Name in any manner - ------------------------ *** Confidential material redacted and filed separately with the Commission. 13 whatsoever, except that P&G will neither itself use the Trade Name in connection with the sale of Designated Merchandise in the Licensed Territory during the Term hereof, other than in connection with the sale or promotion of Designated Merchandise purchased by P&G or its affiliates from LICENSEE, nor will it grant any other licenses for the Licensed Territory to take effect during the Term of this Agreement or the Disposal Period, for the use of Trade Name in connection with the sale of Designated Merchandise. Further, P&G agrees that during the Term hereof, it shall not enter into any arrangement with any person, firm or corporation granting the right to use the Trade Name in connection with the Designated Merchandise for ultimate disposition outside the Licensed Territory, knowing or having reason to believe that the person, firm or corporation intends to sell or distribute, directly or indirectly, Designated Merchandise within the Licensed Territory. In the event LICENSEE advises P&G in writing that merchandise similar to the Designated Merchandise bearing the Trade Name is being sold or distributed in the Licensed Territory by a third party, P&G will take reasonable steps, including (i) notifying the appropriate Customs Office(s) of such improper sales or distribution, and requesting assistance in preventing such improper sales or distribution; and, (ii) initiating litigation if it determines, in its sole discretion, that to do so would be feasible and successful, to prevent any further distribution or sale of such merchandise by such third party in the Licensed Territory. (b) LICENSEE agrees not to sell in *** products of the type or description identified as Designated Merchandise under any other trademark or brand other than that covered by this License Agreement as long as this License Agreement remains in effect; provided, however, that nothing herein is intended to restrict or otherwise prohibit LICENSEE from marketing products of the type or description identified as Designated Merchandise under private labels of specific - ---------------- *** Confidential material redacted and filed separately with the Commission. 14 customers or as a generic product that carries no consumer advertising provided further such products utilize different aesthetics and different molds, and provided further that LICENSEE shall not manufacture or distribute any products that are sold in the Licensed Territory which ***. Notwithstanding the foregoing, however, LICENSEE shall be entitled to sell products under the following trademarks brands: ***. Additionally, LICENSEE can market products directly to the professional trade pursuant to Section 9. SECTION 5 - STANDARDS OF MERCHANDISE (a) LICENSEE agrees that all Designated Merchandise shall be manufactured according to standards equivalent to the Underwriters Laboratories for the relevant countries within the Licensed Territory, or by such comparable governmental or standard facility certifying electrical appliances, and bear its seal, and be in full compliance with all applicable standards and regulations in Licensed Territory for all merchandise sold. P&G shall have an unconditional right of approval over any and all designs, construction and component parts of Designated Merchandise, including without limitation, motors, brushes, plastic molded parts, switches and heating coils, except that with respect to such component parts, P&G may not unreasonably withhold its approval, and LICENSEE agrees not to sell any design of Designated Merchandise with the Trade Name without P&G's prior written approval. As long as LICENSEE shall comply with the standards set forth herein, P&G may not withdraw its approval for any design of Designated Merchandise after LICENSEE has commenced to manufacture and sell such Designated Merchandise. Approvals required of P&G hereunder shall be requested in accordance with and governed by the terms of Section 7(e) hereof. (b) During the term hereof, P&G shall have the right to notify LICENSEE at any time - ------------------- *** Confidential material redacted and filed separately with the Commission. 15 that all or any of the Designated Merchandise being manufactured, sold and distributed by LICENSEE under the Trade Name does not meet the design or quality standards as previously approved by P&G pursuant to Section 5(a), which notice shall list the specific merchandise and specify in what respects such merchandise fails to meet such standards. LICENSEE agrees that the Trade Name shall not be placed on any Designated Merchandise that does not meet such standards, and upon receipt of notice that a particular model of the Designated Merchandise does not meet such standards, shall not place the Trade Name on any further units of that model of the Designated Merchandise until such as P&G agrees in writing that such Designated Merchandise has met such quality standards. In the event that any Designated Merchandise cannot be sold by LICENSEE as a result of the provisions of this Section 5(b), LICENSEE and P&G agree to negotiate in good faith to provide for the disposition of such Designated Merchandise. (c) In furtherance of the provisions of Section 5(a), LICENSEE agrees to permit P&G, its agents and employees to have access, during normal business hours and after reasonable notice, to its manufacturing and warehouse facilities, or to arrange, if requested, for P&G, its agents or employees to have access to the facilities of is subcontractors. P&G shall have the right to open and inspect shipping cartons, and make such other tests and inspections as it shall deem necessary to ensure the quality of the Designated Merchandise. P&G agrees not to disclose to third parties any proprietary or confidential information obtained as a result of or during any such visit, investigation or inspection. SECTION 6 - ACKNOWLEDGMENT AND PROTECTIONS OF THE TRADE NAME (a) LICENSEE hereby acknowledges and agrees that: (i) LICENSEE shall acquire no right in or to the Trade Name by virtue of this Agreement, except for the rights incident to the grant of the license hereunder for the term herein specified; 16 (ii) LICENSEE recognizes the great value of the Trade Name and the goodwill associated therewith in the Licensed Territory, and acknowledges that the Trade Name and all rights therein and goodwill pertaining thereto, belong exclusively to P&G; (iii) The consuming public now associates the Trade Name with products and service of consistently high quality; and (iv) The conditions, terms, restrictions, covenants and limitations of this Agreement are necessary, equitable, reasonable and essential to assure the consuming public that all goods or services sold under the Trade Name are of the same consistently high quality as sold by others who are or may hereafter be licensed to sell merchandise or services under the Trade Name. (b) Both parties acknowledge that the Trade Name has become established among the consuming public as representing goods and services of high quality, and further agree that it is in the mutual interest of the parties hereto to protect and foster the value and consumer acceptance of the Trade Name. P&G will take reasonable and cost effective steps to protect the goodwill of the Trade Name. (c) To help protect the good reputation of the Trade Name, LICENSEE will, make a good faith effort to handle consumer complaints to satisfactory conclusions. SECTION 7 - APPROVAL OF LABELING, PACKAGING AND ADVERTISING (a) LICENSEE agrees that all labels and tags, if any, attached to units of Designated Merchandise sold by LICENSEE under the Trade Name shall be in form and design, approved in writing by P&G. Said labels and tags, if any, shall comply with all applicable statutes and with the rules and regulations promulgated by any governmental agency, including such designations as may be required or permitted to indicate the proprietary nature of the Trade Name. 17 (b) The Trade Name shall be physically affixed and displayed on each item of Designated Merchandise manufactured or sold by LICENSEE pursuant to the terms hereof. P&G shall have the right to approve the size, coloring, lettering, placement and manner of use of the Trade Name, and LICENSEE agrees that no items of Designated Merchandise will be sold without LICENSEE first obtaining P&G's prior written approval of such placement and manner of use. (c) During the Term hereof and any extension thereof, or the Disposal Period, LICENSEE may use the Trade Name in advertisements of the Designated Merchandise in electronic or print media, trade papers, direct mail and advertising mats for retailers. All advertising and promotional activities, including specifically but not limited to themes, media, standards, policies and uses to the extent such items are within LICENSEE's control, shall be subject to P&G's prior written approval. Any advertising or promotional format which has been approved by P&G may be used by LICENSEE for other items of Designated Merchandise without obtaining the additional approval of P&G. (d) If any items of Designated Merchandise are marketed in a carton, container, packing or wrapping material bearing the Trade Name, written approval of P&G must first be obtained. (e) All approvals or disapprovals required of P&G pursuant to the provisions of Sections 5(a), 7(a), 7(b), 7(c) or 7(d) hereof shall be given by P&G in writing no later than thirty (30) days following receipt of a written request from LICENSEE requesting such approval. If LICENSEE does not receive notice of disapproval from P&G within said thirty (30) days, then LICENSEE may deem such request approved. In any case in which P&G disapproves of any request made by LICENSEE pursuant to the aforementioned sections, P&G shall state, with sufficient specificity so as to allow LICENSEE an opportunity to correct any defects, the reasons 18 for such disapproval. In any event, P&G shall not unreasonably withhold, delay or condition any required approval. SECTION 8 - MAINTENANCE OF RECORDS (a) LICENSEE shall keep true and accurate books of account and records in accordance with generally accepted accounting principles, consistently applied covering all transactions relating to the license hereby granted, and P&G and its duly authorized representatives shall, after reasonable notice, have the right at all reasonable hours of the day to an examination of such books of account and records, and of all other documents and materials in the possession or under the control of LICENSEE with respect to the subject matter and terms of this Agreement, and shall have free and full access thereto for such purposes and for the purpose of making extracts therefrom. All books of account and records shall be kept available for at least four (4) years after the License Year to which they pertain. P&G agrees not to disclose to third party any proprietary or confidential information obtained as a result of such examination. (b) During the term of this Agreement, LICENSEE agrees to furnish to P&G simultaneously with its quarterly royalty payment a statement verified by LICENSEE's Chief Financial Officer showing the number, description, gross sales price and net sales price of the item of Designated Merchandise distributed or sold by LICENSEE in the Licensed Territory during the quarter just ended, along with a statement showing how the royalty was computed. (c) Within one hundred twenty (120) days of the completion of each fiscal year of LICENSEE during which this Agreement shall have been in effect, LICENSEE shall provide P&G with a statement showing all sales of Designated Merchandise sold under the Trade Name during such fiscal year, along with a computation of the royalties paid and payable hereunder with respect to such sales. In the event P&G shall question LICENSEE's determination of Net 19 Sales, it shall have the right, to be exercised only within four (4) years of the date P&G receives the aforementioned statement, to require LICENSEE's independent public accounting firm to audit the Net Sales for the License Year, and to certify the amount thereof. In the event that Net Sales, as certified by said accounting firm, shall exceed by Two Percent (2%) or more the Net Sales as shown on the certificate provided by P&G by LICENSEE, then LICENSEE agrees that it shall pay the cost of the Net Sales audit. In all other events, P&G shall pay the cost of said Net Sales audit. (d) Within thirty (30) days following the last day of each calendar month during the term hereof, LICENSEE agrees to provide, upon request of P&G, a listing, prepared upon LICENSEE's data processing equipment, of each invoice for Designated Merchandise shipped during said month. SECTION 9 - OWNERSHIP OF DESIGNS P&G and LICENSEE agree that LICENSEE shall not, in the countries of ***, use, nor license the use of, the molds, tooling and designs created to produce "Type A" (as set forth on Exhibit A) Designated Merchandise to be sold in retail outlets selling such products to the consuming public. Notwithstanding the above, LICENSEE may use such molds, tooling and designs for the production of such items of Designated Merchandise to be sold under LICENSEE'S trade names to hair salons and beauty supply houses for the professional trade. Upon the termination hereof, P&G shall have the right to purchase all or any part of such molds and tooling, at a price based upon the cost of such items to LICENSEE depreciated on a straight-line basis over a period of five (5) years, but not less than ten percent (10%) of the cost of such item. LICENSEE agrees it shall not, at any time after the termination hereof, use, or - -------------------- *** Confidential material redacted and filed separately with the Commission. 20 license the use of any such mold, tooling or the design for that particular mold or tooling purchased by P&G, except, however, that LICENSEE shall be entitled to sell products utilizing such designs to hair salons and beauty supply houses with an agreed credit to the mold purchase price. This excludes sale to an outlet who sells to the consuming public. LICENSEE shall, upon the termination hereof however, be free to use or license the use of any such mold or tooling, or any design therefor, not purchased by P&G as provided herein. SECTION 10 - CREATIVE SERVICES P&G agrees that upon LICENSEE's written request, P&G shall provide LICENSEE with creative services required for advertising and promoting Designated Merchandise. LICENSEE agrees to pay to P&G, P&G's actual out-of-pocket costs or applicable fees, plus twenty-five percent (25%) thereon, for all such creative services performed under P&G's direction. SECTION 11 - ASSIGNMENTS, SUBLICENSES (a) The rights under this Agreement may only be assigned or sublicensed by LICENSEE with the prior written consent of P&G. For purposes of this Agreement, it is agreed that in the event this Agreement is assigned in connection with and as a part of the sale of at least eighty percent (80%) of all of LICENSEE's assets, based upon the value of such assets on LICENSEE's most recent audited financial statement, to a single individual or entity who or which does not compete in the hair care category, then such sale or transfer of this Agreement shall not be deemed an assignment of this Agreement. P&G consents to an assignment or sublicense of the rights under this Agreement to an affiliate of LICENSEE provided LICENSEE informs P&G and LICENSEE, and its affiliate, Helen of Troy Texas Corporation, are guarantors of all obligations to be fulfilled by such assignee or sublicensee. 21 (b) Nothing contained in Subsection (a) above shall be deemed to prohibit LICENSEE from appointing an exclusive distributor to sell the Designated Merchandise in the Licensed Territory, or any part thereof. (c) LICENSEE shall have the right to subcontract the actual manufacture of the Designated Merchandise bearing the Trade Name, so long as said Designated Merchandise meets the quality standards set forth herein. SECTION 12 - INDEMNIFICATION (a) LICENSEE hereby indemnifies and hold P&G, its parent, affiliates and subsidiaries and any of their employees, directors, officers, agents or other representatives harmless from any claims, suits, loss or damage (including reasonable attorneys' fees) arising out of any allegedly unauthorized use of any patent, process, idea, method, industrial design or devise by LICENSEE in connection with the Designated Merchandise manufactured and sold pursuant to this Agreement, and also, from any claims, suits, loss and damage for personal injury, death or property damage arising out of alleged defects in the Designated Merchandise, or arising out of the advertisement, sale or promotion of the Designated Merchandise. Without limiting such indemnification and in addition to it, LICENSEE shall obtain, at its own expense, liability insurance from a recognized insurance company (approved in writing by P&G), providing protection in the amount of at least Ten Million Dollars ($10,000,000) for P&G against any claims, suits, loss or damage arising out of any alleged defects in the Designated Merchandise, personal injury, death or property damage resulting from LICENSEE's activities in connection herewith. As proof of such insurance, a certificate of insurance naming P&G and appropriate parents, affiliates and subsidiaries as may be reasonably requested by P&G as an insured party shall be submitted to P&G by LICENSEE. As used in this Section 12(a), P&G shall also include the officers, directors, agents and employees of P&G or any of its parent, 22 subsidiaries or affiliates, and any persons, the use of whose name may be licensed hereunder. In the event LICENSEE cannot obtain the insurance coverage set forth herein, or it would be more economical for P&G to obtain the coverage, P&G agrees to obtain such coverage and LICENSEE agrees to reimburse P&G for the cost thereof. (b) P&G shall indemnify and hold LICENSEE harmless from and against any and all claims, suits, loss or damage (including reasonable attorneys' fees) arising from infringement of statutory or common law trademark or trade name rights of others through the use of the Trade Name hereunder (including specifically, without limitation, any license agreement or understanding by which P&G licensed others to produce merchandise included within the scope hereof), and P&G upon written notice from LICENSEE, shall defend at its own expense any litigation instituted by others against LICENSEE resulting therefrom. LICENSEE agrees to cooperate and assist P&G in connection with any litigation arising pursuant hereto. LICENSEE shall have the right, if it so elects, to conduct the defense of any such litigation brought against it at its own cost and expense and by its own counsel, and P&G may at its option join therein, but LICENSEE shall in such case pay its own costs and expenses of such litigation. (c) LICENSEE shall apprise P&G in writing as soon as practicable of any infringement of the Trade Name which comes to the attention of LICENSEE. P&G, at its sole cost and expense and in its own name, may prosecute and defend any action or proceeding which P&G deems necessary or desirable to protect the Trade Name, including but not limited to actions or proceedings involving infringement of the Trade Name. LICENSEE, upon written request by P&G, shall join P&G in any such action or proceeding at P&G's sole cost. P&G may prosecute and defend at its sole cost and expense and in its own name any action or proceeding to protect its own designs or styles. LICENSEE shall not commence any action or proceeding alleging infringement thereof without the prior written consent of P&G and shall not defend any 23 such action unless it shall first make written demand upon P&G so to do. Any and all damages recovered in any action or proceeding commenced by P&G shall belong solely and exclusively to P&G. (d) P&G shall have no liability to LICENSEE or to any other person for any damages awarded or recovered against LICENSEE or such other person based on any action or proceeding alleging any violation of any antitrust, trade regulation or similar statue, or unfair competition involving any acts or omissions of LICENSEE. (e) Nothing in this Agreement shall create a joint venture or establish the relationship of principal and agent, or any other relationship of a similar nature between the parties. SECTION 13 - P&G'S WARRANTIES P&G represents and warrants that, within the Licensed Territory, it has sole and exclusive ownership rights to the Trade Name; that it has authority to enter into this Agreement; that no other person, firm or corporation has nor will have, during the Term hereof, the right to use the Trade Name or any variant thereof, with respect to the Designated Merchandise within the Licensed Territory or in violation of the terms and provisions of this Agreement; that P&G, as of the effective date hereof, has not licensed the use of the Trade Name with respect to the Designated Merchandise other than pursuant to agreements with LICENSEE; and, that the Trade Name is valid, subsisting and in full force, and does not infringe upon the rights of third parties in those countries where the Trade Name is registered and used. P&G additionally represents and warrants that it has the right to license the Trade Name in connection with the manufacture, sale and distribution of the Designated Merchandise in the Licensed Territory, and that there are no agreements existing as of the effective date hereof restricting P&G's right to use or license the use of Trade Name in connection with the manufacture, sale and distribution of the Designated Merchandise in the Licensed Territory. P&G agrees to maintain and keep in full force and effect 24 the current and future registrations of the Trade Name, as it relates to the Designated Merchandise, in the Licensed Territory, throughout the Term hereof. The Trade Name is currently registered in the jurisdictions listed on Exhibit "B" attached hereto. In addition, P&G will register the Trade Name in any jurisdiction in the Territory in which it is not registered at the cost of LICENSEE, which is agreed to be $2,500.00 per registration. SECTION 14 - BANKRUPTCY (a) If LICENSEE is adjudicated bankrupt, or if a petition in bankruptcy is filed against LICENSEE by a third party or parties, and such petition is not dismissed or transferred to a reorganization proceeding under any provision of the Bankruptcy Code within ninety (90) days after the date of such filing, or LICENSEE make a general assignment of the benefit of its creditors or an arrangement pursuant to any bankruptcy or reorganization law (except the filing of a reorganization proceeding under any provision of the Bankruptcy Code) or discontinues its business, or if a receiver is appointed for it or its business and is not withdrawn within ninety (90) days of the date of such appointment, it shall be deemed a default hereunder entitling P&G to terminate this Agreement upon written notice of such effect. In the event this Agreement is terminated as a result of such default, except as provided in Section 3(h), LICENSEE, its receivers, representatives, trustees, agents, administrators, successors or assigns shall have no further rights hereunder. It is understood and agreed that nothing contained in this Section 14 shall be deemed to relieve LICENSEE of any obligation to pay the royalties due hereunder by reason of the sale of Designated Merchandise. SECTION 15 - GENERAL PROVISIONS (a) All notices and other communications which are required or which may be given under the provisions of this Agreement shall be in writing and shall be sent by telex or mailed by registered or certified mail, postage prepaid, as follows: 25 If to P&G: The Procter & Gamble Company 1 Procter & Gamble Plaza Cincinnati, OH 45202 U.S.A. Attention: Vice President - External Business Development & Global Licensing With a copy to: The Procter & Gamble Company 1 Procter & Gamble Plaza Cincinnati, OH 45202 U.S.A. Attention: Associate General Counsel - Trademarks If to LICENSEE: Helen of Troy Limited A Barbados Company Whitepark House White Park Road P.O. Box 836E Bridgetown, Barbados Attn: Chairman of the Board, Chief Executive Officer, and President With a copy to: Helen of Troy L.P. One Helen of Troy Plaza El Paso, Texas 79912 Attn: Chief Executive Officer Fax No.: (915) 225-8001 With a copy to: Helen of Troy L.P. One Helen of Troy Plaza El Paso, TX 79912 Attn: General Counsel Fax No. (915) 225-8081 All notices and communications shall be effective upon the date on which they are received by the party to which they are required or permitted to be given. 26 (b) Whenever, pursuant to this Agreement, Licensor's approval is required, request for approval should be addressed to: External Business Development and Global Licensing Attention: K. M. Sammons The Procter & Gamble Company One Procter & Gamble Plaza, C-10 Cincinnati, Ohio 45202 or such other address as shall be designated by written notice. (c) In the event P&G approves, in accordance with Section 1(e), LICENSEE's manufacture, sale and distribution of any product not then within the scope of the Designated Merchandise, or in the event LICENSEE agrees to and actually commences the manufacture, sale and distribution of a product not then within the scope of the Designated Merchandise; as provided in Sections 1(f) and 1(g), then such product shall, as of the date of P&G's approval of such product or LICENSEE's acceptance and commencement of manufacture and sale of such product, be deemed to be included as part of the Designated Merchandise. (d) This Agreement sets forth the entire Agreement and understanding between the parties, and may not be orally changed, altered, modified or amended in any respect. To effect any change, modification, alteration or amendment, the same must be in writing, signed by the parties hereto. (e) Except as otherwise specifically limited herein, in the event that either party should breach or violate any of the covenants, representations or warranties contained in this Agreement, the other party shall be entitled to exercise any right or remedy available to it either at law or in equity. Such rights and remedies shall include but shall not be limited to termination (as provided herein), damages and injunctive relief. The exercise of any right or remedy available to a party shall not preclude the concurrent or subsequent exercise by it of any other right or remedy, and all rights and remedies shall be cumulative. 27 (f) Waiver of a particular default by either party shall constitute a waiver as to the particular default, but shall not constitute a waiver of any subsequent breach, whether or not of the same nature. (g) The parties hereto intend to comply with the laws of the individual countries where license rights exist. In the event that a representative of any governmental body within any individual country covered by this license asserts a bona fide claim that this Agreement, or any provision hereof, violates any law, and the parties hereto cannot mutually agree as to an assertion, either party may terminate that provision of this Agreement on ten (10) days notice therefor; subject to the other party's recourse to legal action, as herein provided, to contest such termination on the basis of whether such assertion is a bona fide claim or not. A bona fide claim shall be considered as one having sufficient merit as to be likely to prevail if finally litigated. (h) This Agreement shall be binding upon and inure to the benefit of the successors and assigns of both parties, subject to the requirements of obtaining consent to assignments provided hereinabove. (i) This Agreement is executed and delivered within the State of Ohio, and its expressly agreed that it shall be construed in accordance with the laws of the State of Ohio. (j) The titles set forth in this Agreement are for convenience only and shall not be considered as part of the Agreement in an respect, not shall they in any way affect the substance of any provisions contained in this Agreement. (k) Neither party shall be held responsible in any way for failure to perform their duties and obligations under this Agreement caused by strikes, accidents, riots, damage to or destruction of plant, inability of common carrier to make transportation or other causes beyond the control of such party; provided, however, that if either party shall fail of a period of one (1) year to perform this Agreement from any cause, whether beyond its control or not, the other 28 party commences on a continuing basis, the performance of its obligations hereunder during this one (1) year period, in which case the other party shall not be entitled to cancel this Agreement as a result of such nonperformance. (l) Each party warrants to the other that the warranting party has engaged no broker in connection with this Agreement. (m) All time limits stated in this Agreement are of the essence of this Agreement. (n) In the event that the existing license of Trade Name for any Designated Merchandise in all or any part of Asia shall expire or terminate, P&G shall first offer such license to LICENSEE and shall negotiate in good faith toward adding such area in Asia to the Territory. If no such agreement is reached within ninety (90) days following notice to LICENSEE of such opportunity, then P&G shall be under no further obligation to LICENSEE with respect to such opportunity. 29 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their duly authorized officers and their corporate seals affixed the day anal year first above written. THE PROCTER, & GAMBLE COMPANY By: /s/ Jeffrey D. Weedman --------------------------------------- Printed Name: Jeffrey D. Weedman Title: Vice President Date: 12/19/02 HELEN OF TROY LIMITED By: /s/ Gerald J. Rubin --------------------------------------- Gerald J. Rubin, Chairman, Chief Executive Officer and President Date: 12/11/02 30 EXHIBIT "A" DESIGNATED MERCHANDISE Type A Electric, battery-operated and non-electric personal care appliances, as well as the accessories and attachments therefor, including, without limitation: Hair Dryers Hair Styling Irons and Flatteners Hot Air Hair Brushes Hot Hair Rollers Hair Styling Appliances Mirrors Hair Trimmers Shavers for beard/mustache grooming (excluding shavers designed for everyday removal of facial hair) Hair Clippers Type B Hair Brushes, Hair Combs, Hair Ornaments and Hair Accessories (including, without limitation, bobby pins and hair rollers) 31 EXHIBIT "B" JURISDICTIONS IN WHICH TRADE NAME IS REGISTERED [see attached listing] 32 VS SASSOON - Global Registrations and Applications
178 Marks VS SASSOON - Global Registrations and Applications
178 Marks VS SASSOON - Global 178 Marks Registrations and Applications
VS SASSOON - Global 178 Marks Registrations and Applications
VS SASSOON - Global 178 Marks Registrations and Applications
VIDAL SASSOON - Global Registrations and Applications
704 Marks VIDAL SASSOON - Global Registrations and Applications
704 Marks VIDAL SASSQON - Global Registrations and Applications
704 Marks VIDAL SASSOON - Global Registrations and Applications
704 Marks VIDAL SASSOON - Global Registrations and Applications
704 Marks VIDAL SASSOON - Global Registrations and Applications
704 Marks VIDAL SASSOON - Global Registrations and Applications
704 Marks VIDAL SASSOON - Global Registrations and Applications
704 Marks VIDAL SASSOON - Global Registrations and Applications
704 Marks VIDAL SASSOON - Global Registrations and Applications
704 Marks VIDAL SASSOON - Global Registrations and Applications
704 Marks VIDAL SASSOON - Global Registrations and Applications
704 Marks VIDAL SASSOON - Global Registrations and Applications
704 Marks VIDAL SASSOON - Global Registrations and Applications
704 Marks VIDAL SASSOON ? Global Registrations and Applications
704 Marks VIDAL SASSOON - Global Registrations and Applications
704 Marks VIDAL SASSOON - Global Registrations and Applications
704 Marks VIDAL SASSOON - Global Registrations and Applications
704 Marks VIDAL SASSOON - Global Registrations and Applications
704 Marks