Exhibit 10.35

 

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January 9, 2014

 

Jason J. Kelroy

Director, Kohl’s Illinois, Inc.

c/o Kohl’s Department Stores, Inc.

N56 W17000 Ridgewood Drive

Menomonee Falls, Wisconsin 53051

 

Dear Jason,

 

Pursuant to our discussions, this letter will serve as an amendment to the
April 28, 2005 Retail License Agreement as previously amended on May 6, 2008,
January 30, 2009, and May 26, 2011, renewed on April 1, 2010, and assigned on
July 26, 2011 (collectively the “Agreement”) by and between Hawk Designs, Inc.,
a wholly owned subsidiary of Quiksilver, Inc. (“Licensor”) and Kohl’s
Illinois, Inc., as assignee of Kohl’s Department Stores, Inc. (“Licensee”).
Capitalized terms used in this letter and not otherwise defined shall have the
meanings ascribed to them in the Agreement.

 

Subject to Cherokee Inc. or its designee’s acquisition of the rights to the
Trademarks, this Agreement and the Licensed Goods pursuant to an Asset Purchase
Agreement by and among Cherokee Inc., Hawk Designs, Inc. and Quiksilver, Inc.
(the “APA”), we have agreed that:

 

1.          Cherokee Inc. or its designee shall be known as Licensor from the
date of execution of the APA by and among Cherokee Inc. or its designee, Hawk
Designs, Inc. and Quiksilver, Inc.

 

2.            Notwithstanding the foregoing Article V, Paragraph 2, this
Agreement shall extend through January 27, 2018. If Licensee is not then in
material default of the terms of this Agreement, this Agreement may be renewed
by Licensee, in Licensee’s sole discretion, for up to three (3) additional terms
of four (4) Contract Years each (the “Renewal Terms”), provided that, for each
such renewal Licensee has notified Licensor in writing of its election to renew
this Agreement no later than 12 months prior to the expiration of the
then-current term.

 

3.            Notwithstanding the foregoing Article III, Paragraph 2, commencing
with the Contract Year beginning February 2, 2014, the Minimum Guaranteed
Royalty shall be $4,800,000 for each Contract Year thereafter.

 

4.             Licensor hereby grants Licensee the non-exclusive right to sell
Licensed Goods on the Internet on a worldwide basis excluding Canada through any
Web pages owned and/or operated by or for Licensee, including but not limited to
kohls.com, provided that (1) Licensee shall alert Licensor to any URLs other
than kohls.com on which Licensee will be offering the Licensed Goods for sale to
consumers outside the United States; and (2) the rights outside the Territory
are granted to Licensee on a non-exclusive basis. Notwithstanding the foregoing,
Licensee hereby agrees and acknowledges that Licensor has the right in its sole
and absolute discretion to enter in to exclusive licenses for Licensed Goods
bearing the Trademark outside of the United States with third parties (“Other
Licensees”). In the event that Licensor enters into an exclusive license
agreement outside the United States with Other Licensees, Licensor shall give
Licensee six (6) months written notice of such and any countries included in the
agreement with the Other Licensee shall be automatically excluded from this
Agreement.

 

5.            Article VI. 6: The requirement for Licensee to have Contract
Manufacturers sign Exhibit C (manufacturers agreement) shall be deleted from
this Agreement To that end, Article VI, Section 6 shall be deleted in its
entirety and replaced with the following:

 

5990 Sepulveda Blvd., Suite 600, Sherman Oaks, CA 91411 ·  P (818) 908-9868   F (818) 908-9191

www.cherokeegroup.com

 

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6. Contract Manufacturers. Licensee shall be entitled to contract the design and
manufacture of Licensed Products without the prior written approval of Licensor.
Licensee’s current Terms of Engagement are attached hereto as Exhibit A.
Licensee shall use commercially reasonable efforts to ensure that all Contract
Manufacturers perform in accordance with these Terms of Engagement, provided
that if Licensee revises its Terms of Engagement for all manufacturers and
vendors, such revised terms shall be applicable to the Contract Manufacturers,
as long as such revised terms are no less restrictive with respect to standards
of human rights practices and policies (e.g., child labor and workplace
conditions) than Licensee’s current Terms of Engagement and, with respect to all
other matters addressed therein, the standards applicable to Licensee’s other
licensed and “private label” lines of products. In connection therewith,
Licensee shall monitor the performance of its Contract Manufacturers to assure
compliance with such Terms of Engagement in a manner consistent with Licensee’s
practices for Licensee’s other licensed and “private label” lines of products.

 

6.             Article X. 3: The three (3) year records retention requirement
shall be replaced with a rolling twenty-four (24) month requirement. If, at any
time during a rolling twenty-four (24) month period, Licensor provides written
notice to Licensee that Licensor intends to exercise its audit rights, Licensee
shall, upon Licensor’s written request, maintain the records required beyond the
rolling twenty-four (24) month period, by archiving, saving to tape or otherwise
preserving the information. All other terms and conditions of this Article shall
remain in full force and effect.

 

7.             Licensor shall provide the support and services to Licensee
defined in Exhibit B.

 

8.             Other than as stated in the Agreement as amended and extended,
Licensee hereby acknowledges that there are no other existing contracts or
understandings, either written or verbal with regards to the Agreement.

 

Except as otherwise specifically set forth in this letter, the Agreement shall
remain in full force and effect as amended and extended. If Kohl’s
Illinois, Inc. is in agreement with these terms, please sign the enclosed copies
of this letter and return one original to me. The other copy is for your files.

 

 

Very truly yours,

 

Cherokee Inc.

 

 

 

/s/ Henry Stupp

 

 

 

Henry Stupp

 

Chief Executive Officer

 

cc:                                Peggy Eskenasi

Senior Executive Vice President, Product Development

Kohl’s Department Stores, Inc.

 

Agreed and accepted to this 9th day of January, 2014

 

Kohl’s Illinois, Inc.

 

By:

/s/ Jason J. Kelroy

  Rev. HLB

 

Jason J. Kelroy

Director, Kohl’s Illinois, Inc.

 

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EXHIBIT A

 

Kohl’s Terms of Engagement (December 2013)

 

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TERMS OF ENGAGEMENT

FOR KOHL’S BUSINESS PARTNERS

 

These Terms of Engagement apply to all of Kohl’s Business Partners. Kohl’s
strongly encourages Business Partners to exceed these Terms of Engagement and
promote best practices and compliance by Business Partners with the Terms of
Engagement In all factories in which they manufacture merchandise.

 

While Kohl’s recognizes that there are different legal and cultural environments
In which Business Partners operate throughout the world, these Terms of
Engagement set forth the basic minimum requirements Business Partners must meet
in order to do business with Kohl’s. The Terms of Engagement also provide the
foundation for Kohl’s ongoing evaluation of compliance by Business Partners with
the Terms of Engagement.

 

Business Partners are defined as vendors, manufacturers, contractors,
subcontractors and other suppliers, sources and agents who provide Kohl’s with
goods or services ordered pursuant to any purchase order, contract or agreement
issued directly by Kohl’s or ordered on Kohl’s behalf.

 

LAWS &

 

 

 

 

REGULATIONS

 

All Kohl’s Business Partners must operate in full compliance with all applicable
local and national laws, rules and regulations pertaining to all aspects of
factory operations in the jurisdiction of which they conduct business.

 

 

 

 

 

EMPLOYMENT

 

 

 

 

PRACTICES

 

Kohl’s will only do business with Business Partners whose workers are treated
fairly and who in all cases are present voluntarily, not put at risk of physical
harm, fairly compensated, and allowed the right of free association and not
exploited in any way. Business Partners shall ensure procedures are in place by
which workers, alleging violations of these Terms of Engagement, may do so
without fear of negative repercussions.

 

 

 

 

 

 

 

In addition, Kohl’s Business Partners must adhere to the following:

 

 

 

 

 

 

 

·                  Wages and

 

 

Benefits:

 

Kohl’s Business Partners must pay workers wages and legally mandated benefits
that comply with the higher of (a) any applicable law, or (b) to match the
prevailing local manufacturing or Industry practices. In addition to their
compensation for regular hours of work, workers shall be compensated for
overtime hours at such premium rates as are legally required, or in those
countries where such laws do not exist, at least equal to their regular hourly
wage rate. Kohl’s recognizes that wages are essential to meet workers’ basic
needs. Kohl’s will seek and favor Business Partners who are committed to the
betterment of wages and benefits within their facilities.

 

 

 

 

 

 

 

·                  Working

 

 

Hours:

 

Kohl’s expects its Business Partners to operate based on prevailing local work
hours. Except in extraordinary circumstances, Business Partners shall limit the
number of hours that workers may work on a regularly scheduled basis to the
legal limit on regular and overtime hours established by local laws and
regulations in the jurisdiction in which they manufacture. Subject to the
requirements of local law, a regularly scheduled workweek of no more than sixty
(60) hours and one day off in every seven (7) day period are encouraged.
Partners will comply with applicable laws that entitle workers to vacation time,
leave periods and holidays. Business Partners must regularly provide reasonable
rest periods and one day off within a seven-day period. Any time worked over the
norm for the area should be compensated as prescribed by the local labor laws.

 

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TERMS OF ENGAGEMENT

[December 2013]

 

 

 

 

 

Working hours must be recorded by an automated timekeeping system. Whenever a
worker is present in a facility, the worker’s time must be recorded and the
worker properly compensated. This applies to both regular and overtime working
hours and any time used for work preparations or repairs.

 

 

 

 

 

 

 

·                  Child Labor:

 

Use of child labor is strictly prohibited. Business Partners must observe all
legal requirements for the work of authorized minors, particularly those
relating to hours of work, wages, minimum education and working conditions.
Kohl’s supports the development of legitimate, workplace apprenticeship programs
and Business Partners will be expected to comply with all laws and regulations
applicable to such apprenticeship programs.

 

 

 

 

 

 

 

 

 

“Child” is defined as a person who is younger than 15 (or 14 where the law of
that country permits) or younger than the age for completing compulsory
education in the country where such age is higher than 15. Kohl’s will not
utilize Business Partners who use or permit the use of child labor in any of
their facilities.

 

 

 

 

 

 

 

·                  Prison Labor/

 

 

 

 

Forced Labor:

 

Business Partners will not use or permit the use of bonded labor, Indentured
labor, prison labor or Forced Labor in the manufacture or finishing of products
ordered by Kohl’s. Nor will Kohl’s knowingly purchase materials from a Business
Partner utilizing bonded labor, indentured labor, prison labor or Forced Labor.
“Forced Labor” is defined as any work or service which is extracted from any
person under the threat of penalty for its non-performance and for which the
worker does not offer himself voluntarily and includes, without limitation,
prison and slave labor or human trafficking for the purposes thereof. An
employer involuntarily keeping workers identification documents is prohibited.

 

 

 

 

 

 

 

·                  Discrimination:

While Kohl’s recognizes and respects cultural differences, employment (hiring,
wages, benefits, advancement, termination, and retirement) shall be based on the
worker’s ability and not on personal characteristics. Kohl’s believes that
workers should be employed on the basis of their ability to do the job, rather
than on the basis of gender, age, disability, sexual orientation, racial
characteristics, cultural or religious beliefs or similar factors. Kohl’s will
not utilize Business Partners who discriminate against workers on the basis of
gender, age, disability, sexual orientation, racial characteristics, cultural or
religious beliefs or similar factors.

 

 

 

 

 

 

 

·                  Free

 

 

 

 

Association:

 

Workers must be free to join organizations of their own choice. Business
Partners shall recognize and respect the rights of workers to freedom of
association and collective bargaining. Workers shall not be subject to
intimidation or harassment in the peaceful exercise of their legal right to join
or to refrain from joining an Organization.

 

 

 

 

 

 

 

·                  Disciplinary

 

 

 

 

Practices:

 

All Business Partners must treat all workers with respect and dignity. Kohl’s
will not utilize Business Partners who use, or permit the use of corporal
punishment, physical, sexual, psychological or verbal harassment or other forms
of mental or physical coercion, abuse or intimidation.

 

2

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Business Partners shall not use, or permit the use of fines as a disciplinary
practice.

 

 

 

 

 

 

 

·                  Women’s

 

 

 

 

Rights:

 

All Business Partners will ensure that workers who are women receive equal
treatment in all aspects of employment. Pregnancy tests will not be a condition
of employment or continuation thereof and pregnancy testing, to the extent it is
provided, will be voluntary and at the option of the worker. Workers will not be
exposed to hazards that may endanger their reproductive health and Business
Partners will not force workers to use contraception.

 

 

 

 

 

 

 

·                  Health &

 

 

 

 

Safety:

 

Kohl’s will only utilize Business Partners who provide workers with a clean,
safe and healthful work environment designated to prevent accidents and injuries
arising out of or occurring while in the course of work or as a result of the
operation of a Business Partner’s facility. All Business Partners must comply
with all applicable, legally mandated standards for workplace health and safety.
Where applicable, Business Partners who provide residential facilities for their
workers must provide safe and healthy facilities, separate from production
facilities, that comply with legally mandated standards for health and safety.

 

 

 

 

 

ETHICAL STANDARDS

 

Kohl’s will seek to identify and work with Business Partners who aspire as
individuals and in the conduct of their business to a set of ethical standards
which are compatible with Kohl’s standards. Bribes, kickbacks or other similar
unlawful or improper payments are strictly prohibited to be given to any person
or entity to obtain or retain business.

 

 

 

ENVIRONMENTAL

 

 

REQUIREMENTS

 

Kohl’s will only do business with Business Partners who comply with all
applicable government laws and regulations, International standards, U.S.
regulations prohibiting the use of ozone depleting chemicals
(hydrochlorofluourocarbons) and the International Trade in Endangered Species of
Wild Fauna and Flora, as listed in the United States Endangered Species Act of
1973.

 

 

 

LEGAL

 

 

REQUIREMENTS

 

Kohl’s policy is to obey the laws of each country in which merchandise is
manufactured for Kohl’s. Business Partners will comply with all applicable local
and national laws, rules and regulations pertaining to all aspects of factory
operations. This Includes compliance with these Terms of Engagement and the
terms and conditions of purchase orders Issued by Kohl’s or on Kohl’s behalf and
also requires attention to U.S. country of origin regulations which govern quota
classification and the marking of products. Business Partners manufacturing
facilities will comply with US Customs-Trade Partnership Against Terrorism
(C-TPAT) requirements.

 

 

 

COMMUNICATION

 

All Business Partners must post the Terms of Engagement in places in their
factories readily accessible to workers, translated into the language of the
workers and supervisors and communicate these provisions to all workers.
Business Partners shall take appropriate steps to ensure the provisions of these
Terms of Engagement are communicated to all workers. Upon employment, as part of
worker orientation, the Terms of Engagement shall be presented to workers and
explained to them. From time to time Business Partners shall periodically review
these Terms of Engagement with workers.

 

3

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MONITORING/

 

 

COMPLIANCE

 

Kohl’s takes affirmative measures to monitor compliance with Kohl’s Terms of
Engagement and Kohl’s Purchase Order Terms and Conditions. Such measures may
include prescreening Business Partners, scheduled or random, announced and
unannounced on-site inspections of factories by Kohl’s representatives, or
certification by Kohl’s Business Partners that Kohl’s Terms of Engagement have
been compiled with.

 

 

 

 

 

Kohl’s associates and representatives have been asked to be watchful for
violations of Kohl’s Terms of Engagement on visits to factories or manufacturing
facilities and to report questionable conduct to management for follow up and
when appropriate, for corrective action.

 

 

 

RECORD

 

 

KEEPING

 

All Business Partners must maintain in the factories producing merchandise for
Kohl’s all documentation necessary to demonstrate compliance with Kohl’s Terms
of Engagement. Business Partners must furnish Kohl’s representatives reasonable
access to production facilities, employment records and workers for confidential
interviews in connection with monitoring factory or inspection visits. Business
Partners must promptly respond to reasonable inquiries by Kohl’s representatives
concerning the operations of factories with respect to Kohl’s Terms of
Engagement.

 

 

 

SUBCONTRACTING

 

Business Partners shall not utilize subcontractors for the production of Kohl’s
merchandise, or components thereof, without Kohl’s prior written approval and
only after the subcontractor has agreed to comply with Kohl’s Terms of
Engagement. Business Partners shall require each Kohl’s approved subcontractor
to abide by the Terms of Engagement. Business Partners shall be held accountable
for a subcontractor’s failure to abide by Kohl’s Terms of Engagement.

 

 

 

CORRECTIVE

 

 

ACTION

 

If a Business Partner is in violation of Kohl’s Terms of Engagement, Kohl’s will
work with the Business Partner to remediate the violation if at all possible. If
this effort is unsuccessful or not possible, Kohl’s shall reevaluate its
business relationship with the Business Partner and shall take appropriate
corrective action. Corrective action may include cancellation of the affected
order, prohibition of subsequent use of a factory or termination of Kohl’s
business relationship with any Business Partner found to be in violation of
these Terms of Engagement, or exercising any other rights and remedies to which
Kohl’s may be entitled under Purchase Orders issued by Kohl’s or on behalf of
Kohl’s, at law or otherwise.

 

 

 

COUNTRY

 

 

EXCEPTIONS

 

Business Partners will not produce merchandise for Kohl’s in countries which are
considered by Kohl’s to deny basic human rights. Kohl’s will not initiate or
continue its business relationship with Business Partners that produce
merchandise for Kohl’s where there are gross and systematic violations of human
rights and when there is a recognized movement from within the country calling
for withdrawal.

 

Kohl’s will periodically review these Terms of Engagement to determine whether
revisions are appropriate. Any such revisions will be promptly published by
Kohl’s.

 

For questions or for information pertaining to Kohl’s Terms of Engagement
e-mail: factory.compliance@kohls.com

 

4

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EXHIBIT B

 

Licensor Provided Support and Services

 

·               Licensor is entering into a new agreement establishing
additional services with Tony Hawk, the individual, (“Additional Service
Agreement”) to increase his direct involvement of the TONY HAWK brand with
Licensee and establishing a better framework for Licensee and the TONY HAWK
brand. Licensor shall be able to twice annually develop digital assets, which
will provide updated photography and b-roll video that can and should be used
for advertising, in-store, on kohls.com (or any other Webpages owned and/or
operated by or for Licensee) and for social media purposes. In addition,
Licensor, in conjunction with Licensee’s marketing department shall be able to
develop and execute with proper oversight a significantly more robust editorial
and promotional campaign. As part of this campaign, Licensor shall have Tony
Hawk use best efforts to be directly involved in leveraging his fan base through
social media to drive traffic to Licensee. This Additional Service Agreement is
at Licensor’s expense and more directly incentivizes Tony Hawk on the increased
performance and sale of TONY HAWK branded products.

 

·               Licensor shall use its best efforts related to marketing and
advertising the TONY HAWK brand by collaborating with Licensee to improve the
customer experience by focusing on in-store enhancements in an effort to
increase adoption and conversion to purchase (“ln-store Marketing”). In order to
financially support ln-store Marketing initiatives, Licensee shall allocate an
amount equal to fifteen percent (15%) of Royalties over $4,800,000 (the “Annual
Threshold”) per Contract Year (the “Marketing Allocation”) for the said ln-store
Marketing initiatives. However, the minimum Marketing Allocation shall not be
less than $200,000 per year or $800,000 in totality from the Contract Year
beginning February 2, 2014 through the Contract Year ending January 27, 2018
(the “Minimum Marketing Allocation”). Licensor shall be responsible for the
timely payment of such Marketing Allocations directly to the appropriate vendors
and Licensee shall not deduct any such amounts from Royalties earned and due to
Licensor. The ultimate use and timing of the said Marketing Allocation shall be
determined jointly by Licensor and Licensee.

 

·               Additionally, Licensor is committed to implementing the
following additional services, once it has adequately transitioned the business
but in any event within a commercially reasonable time; but not less than six
(6) months and not more than nine (9) months after the APA has been executed.
For the avoidance of doubt, all existing design support currently provided by
Quiksilver to Licensee will remain in place until Licensor has implemented the
new services below.

 

·                 Licensor shall support and fund the creative direction,
design, and product management for the TONY HAWK brand. This support will
include local product development talent based in Menomonee Falls, WI with the
details to be mutually agreed upon in writing by Licensor and Licensee.

 

·                 Licensor shall assign a Sales Manager committed to the TONY
HAWK brand.

 

·                 Licensor shall hire a Creative Manager to establish a tighter
working relationship between both the Licensee’s and Licensor’s creative teams
to help ensure the consistent delivery of relevant product that provides a
strong point-of-view and point-of-difference for Licensee’s customers.

 

·                 Licensor shall facilitate introductions for Licensee to meet
with third-party global manufacturers (the “Cherokee Development Group”) in an
effort to provide Licensee with additional options for the production of the
TONY HAWK branded products.

 

Notwithstanding the foregoing, Licensor and Licensee shall collectively
establish a written strategy (the “New Strategy”) outlining a new organizational
structure focusing on:

 

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1.            Product Development (including but not limited to trend, design,
graphics, graphic language, and updated branding).

2.            Marketing (including but not limited to in-store, online,
social/digital media and promotions). The specifics detailing the deliverables
with regards to the New Strategy and accompanying timeline for implementation to
be determined by both parties and agreed to in writing no later than February 1,
2014 or as soon thereafter as reasonably practical, in order to effectively
re-launch the TONY HAWK brand at Kohl’s for February 2015.

 

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JASON J. KELROY

TEL: (262) 703-1727

FAX: (262) 703-7274

 

July 26, 2011

 

VlA UPS OVERNIGHT

 

Mr. Charles Exon

Hawk Designs, Inc.

15202 Graham Street

Huntington Beach, CA 92649

 

Re:                             TONY HAWK License Agreement — Proposed
Assignment

 

Dear Mr. Exon:

 

I writing to request that Hawk Designs, Inc. consent to an assignment of the
April 28, 2005 TONY HAWK Retail License Agreement between Kohl’s Department
Stores, Inc. (“KDSI”) and Hawk Designs, Inc. (the “License Agreement”).
Specifically, KDSI is seeking to assign all of its rights and obligations under
the License Agreement to Kohl’s Illinois, Inc. (“KIN”), a wholly-owned
subsidiary of KDSL KIN currently owns all of Kohl’s own intellectual property
assets (i.e., all of Kohl’s private brand trademarks and marketing handles).
This proposed assignment is not unique to Hawk Designs, Inc. Kohl’s is in the
process of assigning all existing trademark license agreements from KDSI to KIN.
At this point, we expect the assignments to be completed and effective as of
July 31, 2011.

 

KDSI expressly acknowledges and agrees that, as the original signatory to
License Agreement, KDSI shall remain responsible and liable for all liabilities
of KDSI under the License Agreement and for full performance of KDSI’s
obligations as set forth in the License Agreement. In addition, KDSI hereby
guarantees the performance and payment obligations of KIN, including, without
limitation the payment of any sums that are or become payable after the date of
assignment under the License Agreement.

 

CORPORATE OFFICES · N56 W17000 RIDGEWOOD DRIVE · MENOMONEE FALLS, WISCONSIN
53051 · (262) 703-7000

 

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Please confirm that Hawk Designs, Inc. will consent to the proposed assignment
of the License Agreement by having the acknowledgement below signed and returned
to me. As always, we look forward to our continuing partnership with Quiksilver
and Hawk Designs, Inc.

 

 

Very truly yours,

 

 

 

/s/ Jason J. Kelroy

 

Jason J. Kelroy

 

VP, Associate General Counsel

 

cc:                                Sean Pence (via e-mail)

 

 

 

ACCEPTED AND AGREED TO:

 

 

 

Hawk Designs, Inc.

 

 

 

/s/ Charles S. Exon

 

Name:

Charles S. Exon

 

Title:

Director and Executive Vice President

 

 

Chief Administrative Officer

 

 

General Counsel and Secretary

 

Date:

7/29/11

 

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[g31712kk05i002.jpg]

 

 

Peggy Eskenasi

TEL: (262) 703-2614

FAX: (262) 703-6256

 

May 26, 2011

 

VIA U.S. MAIL & E-MAIL

 

Sean M. Pence

SVP & General Counsel, Americas

Quiksilver, Inc.

15202 Graham Street

Huntington Beach, California 92649

 

Re:                             TONY HAWK Retail License Agreement

 

Dear Sean:

 

This letter confirms the parties’ understanding with respect to the following
issues under the April 28, 2005 Retail License Agreement between Kohl’s
Department Stores, Inc. and Hawk Designs, Inc., a wholly owned subsidiary of
Quiksilver, Inc.:

 

Style names – Kohl’s shall be responsible for clearing, and any potential
liability associated with, any style names used on or in connection with “Hawk”
“Licensed Goods,” regardless of whether such style names come from internal
documents used or provided by Quiksilver.

 

Quiksilver provided graphics/artwork – If Quiksilver provides graphics/artwork
on “Hawk” “Licensed Goods,” Quiksilver shall be responsible for clearing, and
any potential liability associated with, all such graphics/artwork.

 

Kohls provided graphics/artwork/subcontracted services – If Kohl’s provides
Quiksilver with graphics/artwork for use on or in connection with “Hawk”
“Licensed Goods,” Kohl’s shall be responsible for clearing, and any potential
liability associated with, all such graphics/artwork. In addition, if Kohl’s
subcontracts any design services to third parties in connection with “Hawk”
“Licensed Goods,” Kohl’s or its subcontractors shall be responsible for
clearing, and, as between Kohl’s and Quiksilver, Kohl’s shall be responsible for
any potential liability associated with, all such graphics/artwork/designs.

 

****

 

CORPORATE OFFICES · N56 W17000 RIDGEWOOD DRIVE · MENOMONEE FALLS, WISCONSIN
53051 · (262) 703-7000

 

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Please have a copy of this letter signed and returned to me to confirm our
understanding.

 

 

Very truly yours,

 

 

 

/s/ Peggy Eskenasi

 

Peggy Eskenasi

 

Senior EVP – Product Development

 

PE/hb

 

 

 

 

 

Quiksilver, Inc. / Hawk Designs, Inc.

 

 

 

/s/ Sean Pence

 

Name: Sean Pence

 

Title: SVP

 

 

2

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[g31712kk07i001.jpg]

 

Peggy Eskenasi

TEL: (262) 703-2614

FAX: (262) 703-6256

 

April 1, 2010

 

VIA FACSIMILE [(714) 889-4250]
AND U.S. MAIL

 

Mr. Charles Exon

Hawk Designs, Inc.

15202 Graham Street

Huntington Beach, CA 92649

 

Re:          TONY HAWK License Agreement

 

Dear Mr. Exon:

 

This letter confirms Kohl’s election of its renewal rights under the April 28,
2005 TONY HAWK Retail License Agreement between Kohl’s and Hawk Designs, Inc.
for the first renewal term of five (5) Contract Years as provided for in
Article V, Paragraph 2 of that agreement. We look forward to our continuing
partnership with Quiksilver and Hawk Designs, Inc.

 

 

Very truly yours,

 

 

 

/s/ Peggy Eskenasi

 

Peggy Eskenasi

 

EVP – Product Development

 

PE/jjk

 

cc:

Steve Tully (via e-mail)

 

 

 

Sean Pence (via e-mail)

 

 

 

CORPORATE OFFICES · N56 W17000 RIDGEWOOD DRIVE · MENOMONEE FALLS, WISCONSIN
53051 · (262) 703-7000

 

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PEGGY ESKENASI

Writer’s Direct Dial: (262) 703-2614

Facsimile: (262) 703-6256

E-mail: peggy.eskenasi@kohls.com

 

May 6, 2008

 

VIA DHL OVERNIGHT

 

Mr. Marty Samuels

President

Quiksilver Americas

15202 Graham Street

Huntington Beach, CA 92649

 

Re:          Amendment to Retail License Agreement

 

Dear Marty:

 

This letter will serve as an amendment to the April 28, 2005 Retail License
Agreement (“Agreement”) by and between Hawk Designs, Inc., a wholly owned
subsidiary of Quiksilver, Inc. (“Licensor”) and Kohl’s Department Stores, Inc.
(“Licensee”). Capitalized terms used in this letter and not otherwise defined
shall have the meanings ascribed to them in the Agreement. We have agreed that:

 

A.                 During the Initial Term only, Paragraph 7 of Article I of the
Agreement shall be amended to read in full as follows:

 

7.                                   “Territory” is the United States and
Canada, wherein Licensee may sell the Licensed Goods only at retail and only
through Licensee’s Kohl’s branded stores, or over the Internet via Licensee’s
Kohl’s branded ecommerce website.

 

B.                 It is expressly agreed that Licensee shall have the right,
but no obligation, to market or sell any Licensed Goods in all areas of the
Territory.

 

C.                 In consideration of the amendment set forth in the paragraph
A above, Licensee shall pay Licensor the following royalty (“Additional
Royalty”) in addition to the royalty set forth in Article III of the Agreement:

 

i.                                          A quarterly Additional Royalty of
$50,000, payable within sixty (60) days after the end of each Contract Quarter
of Contract Year 3;

ii.                                       A quarterly Additional Royalty of
$75,000, payable within sixty (60) days after the end of each Contract Quarter
of Contract Year 4; and

iii.                                    A quarterly Additional Royalty of
$100,000, payable within sixty (60) days after the end of each Contract Quarter
of Contract Year 5.

 

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D.                 The Additional Royalty payable in any Contract Year shall be
offset by royalties otherwise payable pursuant to Article III of the Agreement
to the extent such royalties are attributable to Licensee’s sales of Licensed
Goods in Canada.

 

Except as otherwise specifically set forth in this letter, the Agreement shall
remain in full force and effect as originally written. Please call me if you
have any questions or if this letter does not accurately reflect our agreement.
If you arc in agreement with these terms, please sign the enclosed copies of
this letter and return one original to me. The other copy is for your files.

 

 

 

Very truly yours,

 

Kohl’s Department Stores, Inc.

 

 

 

/s/ Peggy Eskenasi

 

Peggy Eskenasi

 

Executive Vice President, Product Development

 

 

Accepted and agreed to this 21 day of May, 2008.

 

Hawk Designs, Inc.

 

 

 

By:

/s/ Martin Samuels

 

Name:

Martin Samuels

 

Title:

President

 

 

cc:                              Charles Exon

Hawk Designs, Inc.

15202 Graham Street

Huntington Beach, CA 92649

 

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ORIGINAL

 

Retail License Agreement

 

This Retail License Agreement (“Agreement”) is effective on this 28th day of
April 2005, by and between Hawk Designs, Inc. (“Licensor”), a California
corporation (a wholly owned subsidiary of Quiksilver, Inc.), and Kohl’s
Department Stores, Inc. (“Licensee”), a Delaware corporation.

 

Recitals

 

Licensor is a manufacturer and distributor of apparel and accessories under
various brand names, and owns certain Trademarks (as defined below); and

 

Licensee is a retailer of various consumer products, with expertise and ability
in distributing and selling goods at retail; and

 

Licensee desires to license from Licensor the Trademarks and Licensor desires to
enter into such a license; and

 

As part of the obligations of this license, Licensee undertakes to pay Licensor
a minimum annual royalty;

 

NOW, THEREFORE, in consideration of the premises and the mutual covenants and
agreements set forth below, the parties hereto covenant and agree as follows:

 

Article I.                      Definitions

 

For the purpose of this Agreement, the following terms shall have the meanings
set forth:

 

1.                                “Affiliate” means any entity having any
relationship, contract, or arrangement with Licensee with respect to any matter
winch affects or is affected by this Agreement wherein this entity has or
exercises or has the power to exercise, directly or indirectly, in any manner,
control, direction, or restraint of Licensee or wherein such entity and Licensee
are subject to common or mutual control, direction, or restraint or wherein
Licensee has the power to exercise, directly or indirectly, in any manner,
control, direction, or restraint of such entity.

 

2.                                “Contract Year” means a period of time
coinciding precisely with Licensee’s fiscal year. Licensee has adopted what is
known as the ‘4-5-4 retail calendar’, with each fiscal year beginning on the
Saturday closest to the end of January. Each Contract Year shall consist of four
(4) quarters, coinciding precisely with Licensee’s fiscal quarters (each, a
“Contract Quarter”). For example, the first Contract Year shall begin on
January 30, 2006 and end on February 3, 2007. The Contract Quarters during the
first Contract Year will end on April 29, 2006, July 29, 2006, October 28, 2006
and February 3, 2007.

 

3.                                “Licensed Goods” means the following
categories of goods, in connection with which the Trademarks will be used:
belts, coats, jackets, jerseys, pants, rainwear, shirts, shorts, sweat pants,
sweat shirts, sweaters, t-shirts, tank tops, swim wear, wind-resistant jackets,
headwear, backpacks, duffel bags and wallets.

 

1

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4.                                      “Net Sales” is the total actual retail
sales of all Licensed Goods, less:

 

(a)                         Amounts credited for returns, exchanges, and
discounts and allowances of all types to Licensee’s customers (including without
limitation employee discounts); and

 

(b)                         Any sales and use taxes or similar fees or
assessments collected.

 

No deductions shall be made for any other costs incurred, such as, but not
limited to, costs of manufacture, sales, distribution, or exploitation of the
Licensed Goods.

 

5.                                      “Subsidiary” means any entity with
respect to which Licensee owns or controls, directly or indirectly, the majority
of the stock entitled to vote for the election of directors or persons
performing similar functions.

 

6.                                      “Term” and “Renewal Term” are the
periods expressly set forth in this Agreement.

 

7.                                      “Territory” is the United States,
wherein Licensee may sell the Licensed Goods only at retail and only through
Licensee’s Kohl’s branded retail stores, or over the Internet via Licensee’s
Kohl’s branded ecommerce website.

 

8.                                      “Trademarks” means (i) the trademarks
embodied in United States Trademark Registration Nos. 2299696, 2849404, 2855
111,2931627, copies of which are attached hereto on EXHIBIT A, as amended and
supplemented from time to time with Licensee’s written consent; and (ii) all of
Licensor’s right, title and interest in the trademark “Hawk” and any and all
stylized presentations of the word “Hawk” that have ever been used by Licensor
as trademarks in conjunction with the production, manufacture, distribution,
promotion and sale of merchandise of any kind in the United States (samples of
which are attached hereto as EXHIBIT B).

 

9.                                      “Ultimate Parent” means
Quiksilver, Inc., a Delaware corporation.

 

Article II.                 License

 

1.                                      Grant of License.

 

(a)                                 Licensor hereby grants to Licensee and
Licensee’s Affiliates an exclusive license to use the Trademarks upon or in
connection with production, manufacture, distribution, promotion and sale of the
Licensed Goods throughout the Territory in a manner consistent with Licensor’s
prior usage thereof, specifically, as generally associated with the surf, skate,
and skateboarding lifestyle, and skateboarding personality Tony Hawk. Licensor
does not own, and does not purport to convey, any rights in and to the generic
word “hawk” other than as a proper noun.

 

(b)                                 So long as Licensor or its Affiliates do not
have a pre-existing exclusive arrangement or existing plans to enter into an
exclusive arrangement with any third party with respect to the Trademarks in an
area other than the Territory, or are not themselves currently exploiting the
Trademarks and to not have plans to do so in the foreseeable future in such an
area, at the time Licensee formulates plans to open and operate Kohl’s branded
retail stores in such area, the license granted herein shall extend to such area
and the definition of “Territory” contained herein shall thereafter be deemed to
include such area. At the appropriate time, Licensee will consult with Licensor
in connection with Licensee’s expansion of its business into areas other than
the Territory, and, if appropriate, the parties will execute a written amendment
revising the definition of “Territory” to include such area. The parties
understand that Licensee’s stores outside of the Territory as currently defined
might not be branded “Kohl’s,” but will be of a similar format and be positioned
in a similar or better market segment as are the Kohl’s stores in the Territory
as currently defined.

 

2

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(c)                                  Licensor also hereby grants to Licensee and
Licensee’s Affiliates a non-exclusive license to use the Trademarks on a
worldwide basis in connection with the production and manufacture of such
Licensed Goods so long as they are not sold outside the Territory or the
additional areas referenced above in subsection II(1)(b).

 

(d)                                 Licensor agrees that the Trademarks shall
not be used in connection with the production, manufacture, distribution,
promotion or sale of any merchandise other than the Licensed Goods (“Additional
Uses”), without Licensee’s written consent. In the event Licensor intends to
directly utilize the Trademarks in connection with an Additional Use, then
Licensee shall be offered the opportunity to expand this Agreement to include
the Additional Use on the terms and conditions set forth in this Agreement. In
the event the contemplated Additional Uses are proposed to be by a third party,
then Licensee shall have the right to match the terms of the contemplated
third-party transaction for the Additional Uses, but in no event shall the terms
and conditions of such arrangement be less favorable to Licensee than those set
forth in this Agreement.

 

(e)                                  The license is nondivisible, nonassignable,
and nonsublicensable.

 

2.                                      Limitations on License.

 

(a)                                 Except as set forth in this Agreement, no
other right or license is granted by Licensor to Licensee or by Licensee to
Licensor, either express or implied, with respect to any other trademark, trade
name, service mark, or other intellectual properly right owned, possessed, or
licensed by or to Licensor. Licensee shall not use the Trademarks in any manner
not specifically authorized by this Agreement.

 

(b)                                 Licensee acknowledges that Licensor’s
relationships with its dealers, distributors and licensees throughout the world
are valuable to Licensor, and that Licensor’s ability to control the
distribution of Licensed Goods is essential to the continued viability of the
licensed brand. Therefore, Licensee agrees that Licensee shall not knowingly
authorize the resale or transfer of any Licensed Goods to any other retailer,
wholesaler, intermediary, or agent of any other person or entity, foreign or
domestic, that Licensee knew or should have known had the intent to resell the
Licensed Goods, without Licensor’s consent

 

Article III.                                    Royalties

 

1.                                      Royalty Rate. Licensee agrees to pay a
royalty to Licensor according to the following chart:

 

Annual Net Sales

 

Royalty

 

 

 

 

 

$ 0 to $125 million

 

4.0

%

Over $125 million to $225 million

 

3.5

%

Over $225 million to $325 million

 

3.0

%

Over $325 million

 

2.5

%

 

3

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2.                                      Guaranteed Minimum Royalties. Licensee
shall pay to Licensor the Guaranteed Minimum Royalties opposite the respective
Contract Years:

 

Contract Year

 

Minimum Guaranteed Royalty

 

 

 

 

 

1

 

$1.5 million

 

2

 

$4 million

 

3

 

$5.0 million

 

4

 

$5.875 million

 

5

 

$6.75 million

 

Each year of any Renewal Term

 

$6.75 million

 

 

Minimum Guaranteed Royalties will be due and payable on a Contract Quarterly
basis, as more specifically set forth below.

 

Article IV.                                     Design Services

 

1.                                      Design Services. Licensor shall provide
all necessary design services with respect to the Licensed Goods based on
parameters and guidelines established by Licensee in consideration of Licensee’s
planned sales volumes and store fixture allocations.  Such design services shall
be provided by a team of professional designers retained or otherwise employed
by Licensor, at Licensor’s sole expense. Licensor’s design team staffing shall
be subject to approval by Licensee, which approval shall not be unreasonably
withheld. Licensor’s design team shall collaborate with Licensee’s product
development team to plan and design mutually acceptable: (a) product designs,
(b) packaging and labeling creative and design, (c) graphic art for the Licensed
Goods (i.e., screen prints, embroideries, appliqués), (d) creative concept and
design services with respect to in-store graphics and presentation, as well as
national advertising in magazines, newspaper inserts, internet television, radio
and other media.

 

2.                                      Design Fee. Licensee will pay Licensor
the sum of $1.5 million as a non-refundable fee for past design services, which
sum will be paid as follows:

 

(a)                                 $750,000 on or prior to August 1, 2005; and

 

(b)                                 $750,000 on or prior to February 1, 2006.

 

Article V.                                          Term

 

1.                                 Initial Term. The Initial Term of this
Agreement shall commence on January 30, 2006 and shall consist of Five (5)
consecutive Contract Years, ending on January 29, 2011.

 

2.                                 Renewal Term. If Licensee is not then in
material default of the terms of this Agreement, this Agreement may be renewed
by Licensee, in Licensee’s sole discretion, for up to three (3) additional terms
of five (5) Contract Years each (“Renewal Terms”), provided that, for each such
renewal, the following conditions have been met: (a) Licensee has notified
Licensor in writing of its election not to renew this Agreement no later than 12
months prior to the expiration of the then-current term, and (b) Licensee has
paid to Licensor Royalties pursuant to this Agreement of at least $6.75 million
during the fifth Contract Year of the then-expiring term. Licensor may, in its
sole discretion, waive condition (b) contained herein.

 

4

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Article VI.                                     Marking, Quality Control and
Maintenance

 

1.                                      Trademarks. Licensee shall use the
Trademarks in accordance with the terms and conditions set forth in this
Agreement. Licensee, shall use upon or in connection with the Licensed Goods the
symbol TM or, where a United States Federal Trademark Registration has been
obtained, the symbol ®. Licensee shall not otherwise affix or use such in
connection with nor use any other trademark or trade name in connection with the
Licensed Goods without Licensor’s prior written approval.

 

2.                                      Standards. Licensee shall use
commercially reasonable efforts to ensure that (i) the quality and workmanship
of all Licensed Goods manufactured by or on behalf of Licensee shall be
consistent with corresponding products sold by Licensee from time to time under
Licensee’s best licensed and “private label” lines of products; (ii) shall in no
manner adversely affect any rights of ownership of Licensor in the Trademarks
and shall in no manner derogate or detract from the repute of Licensor or the
Trademarks; and (iii) shall in all respects (including, without limitation, the
manufacture, sale, marketing and advertising) be in accordance with all of the
terms and provisions of this Agreement, with all applicable laws, rules and
regulations.

 

3.                                      Quality Control. From time to time at
Licensor’s reasonable request, Licensee shall make available to Licensor in a
mutually convenient manner, current samples of Licensed Goods so that Licensor
may inspect the quality of such Licensed Goods. Licensor agrees that it will not
object to the Licensed Goods on the basis of quality so long as the quality is
consistent with the standards set forth in subsection VI(2) above. If the
Licensed Goods do not meet those standards, Licensee will work in good faith to
correct the quality issues, and if it cannot do so in a reasonable manner,
Licensee shall discontinue the subject item(s).

 

4.                                      Quality Control Standards. Concurrently
with the execution of this Agreement, and on an annual basis thereafter,
Licensee shall provide Licensor with a written copy of Licensee’s quality
control standards and procedures.

 

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5.                                      Concept Meetings

 

Licensee and Licensor shall meet twice annually, once with respect to Spring and
once with respect to Fall of each year (each a “Concept Meeting”) to review and
consult with respect to the direction and types of Licensed Goods to be produced
for the next season and the concepts and trends being emphasized. It is
contemplated that members of Licensee’s merchandising teams will attend the
Concept Meetings and that Licensor will be given samples, pictures or drawings
of proposed Licensed Goods and samples of any tags, labels and packaging
materials proposed to be used by Licensee in connection with Licensed Goods.
Licensee agrees to give good faith consideration to Licensor’s comments and
suggestions, but Licensor acknowledges that Licensed Goods shall be developed,
modified and executed in Licensee’s sole discretion. Upon Licensor’s reasonable
request from time to time, Licensee shall submit to Licensor then current
samples of specified Licensed Goods. It is understood that Licensor, may, in
rare cases, find one or more Articles to be so objectionable that it requests
that Licensee stop producing or selling the Licensed Goods, provided, however,
that any such objections will be made by Licensor only where Licensor determines
in good faith that such Licensed Goods would materially and adversely affect the
value and image of the Trademarks. Any such request made by Licensor shall be in
writing and the parties acknowledge that any necessary changes to, or
discontinuation of, any Licensed Goods will be implemented in a manner so as to
cause the least disruption of the business to be conducted by Licensee
hereunder.

 

Upon Licensor’s reasonable request from time to time, Licensee shall submit to
Licensor then current samples of marketing materials, for example, advertising,
promotional, publicity or other exploitation materials produced and used by
Licensee in connection with the Licensed Goods.

 

6.                                      Contract Manufacturers. Licensee shall
be entitled to contract the manufacture of Licensed Products without the prior
written approval of Licensor provided contractor has signed EXHIBIT C
(manufacturers agreement) and a copy of said agreement is sent to Licensee.
Licensee shall use commercially reasonable efforts to ensure that all Licensed
Products are manufactured, marketed, sold, labeled and packaged in accordance
with Licensee’s then current “Terms of Engagement”, available for review on
kohlspartners.com. In connection therewith, Licensee shall monitor the
performance of its contractors to assure compliance with such Terms of
Engagement in a manner consistent with Licensee’s practices for corresponding
products of Licensee’s best licensed and “private label” lines of products,

 

Article VII.                                Trademark Registration

 

1.                                      At the request of Licensor, and without
compensation to Licensee other than reimbursement of Licensee’s reasonable
expenses, Licensee shall promptly do such acts and execute, acknowledge, and
deliver all such papers as may be necessary or desirable, in the sole discretion
of Licensor, to obtain, maintain, protect, and/or vest in Licensor the entire
right, title, and interest in and to any Trademark in the Territory; including
rendering such assistance as Licensor may request in any litigation, Patent and
Trademark Office proceeding, or other proceeding.

 

2.                                      Licensor shall use commercially
reasonable efforts to protect the Trademarks in the Territory and take such
actions as necessary to allow Licensee to take full advantage of the rights
afforded to Licensee hereunder. In the event that Licensee learns of any
infringement, imitation or counterfeiting of the Trademarks or of any use by any
person of a trademark similar to the Trademarks, it shall notify Licensor. Upon
receiving notice of any potential infringement, Licensor shall take commercially
reasonable actions to protect its rights in and to the Trademarks. If requested
to do so by Licensor, Licensee shall cooperate with Licensor in all respects in
connection therewith, including by being a plaintiff or co-plaintiff and/or by
causing its officers to execute pleadings and other necessary documents.

 

6

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In the event commercially reasonable action is not taken by Licensor within 30
days after its receipt of notice from Licensee, Licensee shall have the right
(but not the obligation) to take such action as it deems advisable for the
protection of its rights in and to the Trademarks as set forth in this Agreement
but no settlement of any claim shall be made without the approval of Licensor,
which approval shall not be withheld or delayed unreasonably. Even if
appropriate action is taken by Licensor, Licensee may, at its own expense, be
represented by its own counsel in such action. In any case, Licensor and
Licensee shall keep each other fully advised of all developments and shall
cooperate fully with each other in all respects in connection with any action
arising under this subsection. All costs, fees and expenses (including
investigatory expenses and legal expenses such as attorneys’ fees, court costs
and filing fees) incurred in connection with any action taken under this
subsection shall be borne by the party taking such action, and such party shall
be entitled to retain any damages awarded in any such action.

 

3.                                      All use of the Trademarks by Licensee
and the goodwill generated thereby shall inure to the benefit and be the
property of Licensor.

 

4.                                      In the event that Licensee designs,
manufactures, packages or distributes any merchandise or other materials related
to the Licensed Goods that qualify for protection under the United States patent
or, with respect to marketing materials, copyright laws, Licensee shall have the
ownership of all such rights and shall have the exclusive right to seek and
maintain patent or copyright protection therefor.

 

Article VIII.                           Validity of Rights

 

Licensee shall not contest Licensor’s ownership of the Trademark or Licensee’s
obligation to assign any rights hereunder including any rights Licensee may
create in the Trademark. Licensee shall not contest or impair these rights,
either directly or indirectly, or in any way assist others to contest or impair
the same and hereby expressly acknowledge Licensor’s superior rights. This
obligation shall survive any termination of this Agreement.

 

Article IX.                                    Warranties and Indemnities

 

1.                                      Licensor warrants that: (a) Licensor has
all right, title, and interest in and to the Trademarks and the right to license
the Trademarks; (b) Licensor has no notice of any threatened challenge to
Licensor’s ownership of the Trademarks; (c) the use of the Trademarks by
Licensee as contemplated in this Agreement will not violate the intellectual
property rights of any other parties; and (d) Licensor has the right to enter
this Agreement, and to agree to the terms and conditions of this Agreement.

 

2.                                      Licensee warrants that it has the right
to enter into this Agreement and to agree to the terms and conditions of this
Agreement.

 

3.                                      Licensee’s Indemnity. Licensee shall
indemnify, hold harmless, and defend (and pay any and all other expenses and
attorney’s fees, in connection therewith) Licensor and its officers, directors,
agents, and employees, from and against any and all liability, loss, claims,
and/or actions arising out of any alleged defect in any Licensed Good.

 

7

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4.                                      Licensor’s Indemnity. Licensor and its
Ultimate Parent shall indemnify, hold harmless, and defend (and pay any and all
other expenses and attorney’s fees, in connection therewith) Licensee and its
officers, directors, agents, and employees, from and against any and all
liability, loss, claims, and/or actions arising out of any claim, allegation or
assertion that Licensee’s use of the Trademarks in accordance with this
Agreement infringes upon the trademark, copyright or other proprietary rights of
any third party.

 

5.                                      Mutual Indemnity. Each party shall
indemnify, hold harmless, and defend (and pay any and all other expenses and
attorney’s fees, in connection therewith) the other party and such other party’s
officers, directors, agents, and employees, from and against any and all
liability, loss, claims, and/or actions arising out of:

 

(a)                                 Any alleged unauthorized use of any
Trademark (except as to any right licensed hereunder) by the indemnifying party;

 

(b)                                 Any alleged libel or slander against, or
invasion of, the right of privacy or publicity or any other similar right of any
third party (except as to any right licensed hereunder);

 

(c)                                  Any claim by a third party resulting from
the indemnifying party’s breach or alleged breach of any term or condition of
this Agreement.

 

The warranties and indemnities set forth herein shall survive termination of the
Agreement.

 

6.                                      Insurance. Licensee warrants that it
shall promptly obtain and maintain, at its sole cost and expense, standard
Commercial General Liability, Product Liability and Advertising Liability
Insurance in the amount of two (2) million dollars “Combined Single Limit.”

 

Article X.                                         Books, Records and Payments

 

1.                                      Statements. Licensee shall throughout
the Initial Term and any Renewal Term of this Agreement render statements to
Licensor on a quarterly basis within sixty (60) days after the end of each
Contract Quarter. Such statement shall include:

 

(a)                                 The aggregate Net Sales of the Licensed
Goods for such month; and

 

(b)                                 Any other information that may be required
under any other provision of this Agreement or that may, from time to time, be
reasonably required by Licensor.

 

2.                                      Royalty Payments. Within sixty(60) days
after the end of each Contract Quarter, along with the statements rendered to
Licensor pursuant to Article X, Section 1, Licensee shall remit to Licensor any
royalties then due and owing. Payments by Licensee to Licensor will be such that
within sixty (60) days’ after the end of each Contract Quarter of each
respective Contract Year, Licensee will have paid to Licensor an amount at least
equal to the appropriate proportion of the Minimum Guaranteed Royalty then due
and owing for such Contract Year. During the first Contract Year, however,
Licensee shall have no obligation to make any royalty payments with respect to
the first $37,500,000 in Net Sales (other than the Minimum Guaranteed Royalty if
Net Sales do not exceed $37,500,000 for such Contract Year), and shall have no
obligation to make a payment against the Minimum Guaranteed Royalty (unless a
royally is otherwise owed on actual Net Sales) until thirty days’ after the end
of third Contract Quarter, at which time Licensee must have paid to Licensor
royalties equal to at least one-half of the first Contract Year’s Minimum
Guaranteed Royalty (an amount of royalties equal to at least the balance of the
Minimum Guaranteed Royalty for the first Contract Year being due and payable at
the latest by sixty (60) days after the end of the first Contract Year).

 

8

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3.                                      Books and Records. During the term of
this Agreement, Licensee shall keep accurate books of account and records in
accordance with generally accepted accounting principles covering all
transactions relating to this Agreement at Licensee’s principal place of
business for not less than three years after the Contract Quarter to which such
books of account and records relate, and shall allow Licensor and its
representative to audit such books of account and records and to make copies
thereof at Licensor’s expense; if any such audit reveals royalties due Licensor
in excess of three percent (3%) more than the royalties paid to Licensor for the
period covered by such audit, all reasonable and documented audit fees, costs,
and expenses shall be borne by Licensee, in addition to which interest shall be
added to the amount discovered to be due, from the first dollar more than the
royalties actually paid, at an accrued rate of six percent (6%) per annum, or,
if lower, the maximum legal rate.

 

4.                                      Final Royalty Determination. In the
event that an auditor representing Licensee shall disagree with Licensor as to
whether the amount owed exceeds the above-described three percent (3%), then the
auditor representing Licensee and the auditor representing Licensor shall
jointly select a third auditor whose determination of the amount owed shall be
final and binding upon Licensee and Licensor. If such third auditor concludes
that royalties due Licensor are not in excess of three percent (3%) more than
the royalties paid to Licensor for the period covered by such audit, then all
reasonable and documented audit fees, costs, and expenses of all three auditors
shall be borne by Licensor.

 

5.                                      Right to Contest. The receipt and
deposit of monies by Licensor shall not prevent or limit Licensor’s right to
contest the accuracy and/or correctness of any statement in respect of such
monies.

 

6.                                      Confidentiality. Licensor agrees to hold
in confidence any information provided by Licensee under this Agreement,
including without limitation the information provided pursuant to this Article,
in accordance with the Confidentiality and Nondisclosure Agreement between
Licensor and Licensee dated April 11, 2005.

 

Article XI.                                    Termination

 

1.                                      Termination for Breach. In the event
either Licensee or Licensor fails to perform any of their respective obligations
under this Agreement and (i) such default is not curable, or (ii) such default
is curable but continues uncured for a period of 30 days after written notice
thereof has been given to the defaulting party by the other party, or (iii) such
default is curable, but not within 30 days, and all reasonable steps necessary
to cure the default have not been taken by the defaulting party within the
30-day period or the defaulting party is not diligently taking all steps
necessary to cure the default as promptly as practicable or, in any event, the
default continues to remain uncured for at least 60 days after such notice, the
other party may terminate this Agreement upon written notice to the defaulting
party. Any termination of this Agreement will not preclude the non-breaching
party from seeking damages for such breach, and pursuing any other remedy for
such breach available to it under the law.

 

9

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2.                                      Licensee’s Termination. It is understood
that Licensee’s willingness to enter into this Agreement is premised upon Tony
Hawk’s general good standing and character reputation in the business community.
The value of the rights provided to Licensee hereunder may be substantially
diminished in the event Tony Hawk commits an act that: (1) would reasonably
shock or offend a majority of the community; (2) a reasonable person would
conclude ridicules public decency, or (3) results in Tony Hawk’s conviction on
felony or morals-related criminal charges. In the event Licensee’s sales of
Licensed Goods are materially adversely affected by such an act, Licensee may,
at its option, terminate this Agreement on thirty (30) days’ written notice to
Licensor, and from the effective date of such termination, Licensee shall have
no further obligations hereunder, provided such notice is given no later than
sixty (60) days’ after the date it is conclusively determined the act occurred.

 

Further, Licensee may terminate this Agreement for any reason at the end of the
fifth Contract Year of the Initial Term or any Renewal Term if it gives Licensor
written notice of its intent to do so at least twelve (12) months prior to the
end of such fifth Contract Year.

 

3.                                      Rights Upon Termination. Upon the
expiration of this Agreement or any earlier termination of this Agreement:

 

(a)                                 All rights granted to Licensee hereunder
shall automatically revert to Licensor and Licensee shall execute any and all
documents evidencing such automatic reversion;

 

(b)                                 Licensee shall, at Licensor’s discretion,
either deliver to Licensor all patterns, proofs, and any other material that
reproduce the Trademarks or give to Licensor satisfactory proof of the
destruction thereof;

 

(c)                                  Licensee shall, within two month(s) after
such expiration or termination, deliver to Licensor a complete and accurate
statement indicating the number, description, and whereabouts of all Licensed
Goods on hand and/or in the process of manufacture, as of both the date of such
expiration or termination and the date of such statement;

 

(d)                                 Licensor shall have the right to enter onto
Licensee’s premises and/or the premises of any subcontractor of Licensee, to the
extent that Licensee has the right to grant such entry, to conduct physical
inventories to verify the accuracy of the above-described statement;

 

(e)                                  Licensee may sell existing inventories of
Licensed Goods (including Licensed Goods on order) on a nonexclusive basis, for
a period of 180 days, subject to all of the other terms and conditions of this
Agreement, including, but not limited to, Licensee’s obligation to provide
reports and make royally payments to Licensor. Such sales must be through the
same channels used by Licensee prior to the termination of this Agreement.

 

Article XII.                               Assignments

 

Neither this Agreement nor any of the rights or duties hereunder nor the license
granted hereby may be assigned, sub-licensed, encumbered or otherwise
transferred in any way by Licensee, without the prior written consent and
agreement of Licensor, which may be withheld in Licensor’s sole and absolute
discretion. Any purported assignment, sub-license, encumbrance or other transfer
shall be null and void and shall constitute a default hereunder by Licensee.

 

10

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Article XIII.                          General

 

1.                                           Notices. All notices and other
communications required or permitted to be given under this Agreement shall be
in writing and shall be delivered either by personal service, overnight mail,
facsimile or by United States mail, registered or certified mail, postage
prepaid, return receipt requested, and addressed as follows:

 

If to Licensor:

Mr. Charles Exon
Hawk Designs, Inc.
15202 Graham Street
Huntington Beach, CA 92649
Facsimile: 714-889-4250

 

If to Licensee:

Ms. Peggy Eskenasi
Kohl’s Department Stores,, Inc.
N56 W17000 Ridgewood Dr.
Menomonee Falls, WI 53051
Facsimile: 262-703-6143

 

With a copy to:

General Counsel
Kohl’s Department Stores, Inc.
N56 W17000 Ridgewood Dr.
Menomonee Falls, WI 53051
Facsimile: 262-703-7274

 

If delivered personally, such notices or other communications shall be deemed
delivered upon delivery. If sent by fax, such notice or other communications
shall be deemed delivered when received provided that the sender has
confirmation of receipt. If sent by overnight or United States mail, registered
or certified mail, postage prepaid, return receipt requested, such notices or
other communications shall be deemed delivered upon delivery or refusal to
accept delivery as indicated on the return receipt. Either party may change its
address at any time by written notice to the other party as set forth above.

 

2.                                      Governing Law and Jurisdiction. This
Agreement shall be deemed entered into in the State of Wisconsin and shall be
construed and governed solely by the laws of such State except to the extent
that the choice-of-law rules of that State would result in the application of
the law of any other State.

 

3.                                      Amendment. No amendment or modification
of this Agreement shall be valid or binding unless the same shall be made in
writing and signed on behalf of each party by their respective proper officers
duly authorized to do so.

 

4.                                      Captions and Definitions. The captions
in this Agreement are inserted for convenience only and shall not be construed
as limiting in any manner.

 

The definitions provided in this Agreement and set forth in Article I are
referred to by fully capitalizing such definitions throughout this Agreement.
The definitions of such terms are understood to be applicable to both singular
and plural uses of such defined terms.

 

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5.                                      No Waiver. The failure to enforce any of
the terms and conditions of this Agreement by either of the parties hereto shall
not be deemed a waiver of any other right or privilege under this Agreement or a
waiver of the right to thereafter claim damages for any deficiencies resulting
from any misrepresentation, breach of warranty, or nonfulfillment of any
obligation of any other party to this Agreement.

 

In order for there to be a waiver of any term or condition of this Agreement,
such waiver must be in writing and signed by the party making such waiver.

 

6.                                      Attorneys’ Fees. In any action brought
by a party hereto under this Agreement, the prevailing party shall be entitled
to recover its reasonable attorneys’ fees, costs, and expenses of suit.

 

7.                                      Counterparts. This Agreement may be
signed in two or more counterparts, each of which shall be an original.

 

8.                                      Preamble. The preamble to this Agreement
is hereby incorporated and by this reference shall hereby become part of this
Agreement as if set forth herein word for word.

 

INTENTIONALLY LEFT BLANK

 

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9.                                      Cooperation. The parties to this
Agreement shall at any and all times, upon request by the other party, or its
legal representative, make, execute, and deliver any and all such other and
further instruments as may be necessary or desirable for the purpose of giving
full force and effect to the provisions of this Agreement, without charge
therefor.

 

IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be
executed personally or, as appropriate, by its duly authorized officers, of the
date first above written.

 

 

 

LICENSEE:

Kohl’s Department Stores, Inc.

 

 

 

 

 

By:

/s/ Peggy Eskenasi

 

 

 

 

 

 

Name:

Peggy Eskenasi

 

 

 

 

 

 

Title:

Executive Vice President - P.D

 

 

 

 

 

 

 

 

 

LICENSOR:

Hawk Designs, Inc.

 

 

 

 

 

 

By:

/s/ Bill Bussiere

 

 

 

 

 

 

Name:

Bill Bussiere

 

 

 

 

 

 

Title:

Chief Financial Officer

 

 

 

 

 

 

 

 

 

ULTIMATE PARENT:

Quiksilver, Inc. (for purposes of indemnity only—Art. IX, para. 4)

 

 

 

 

 

 

By:

/s/ Charles Exon

 

 

 

 

 

 

Name:

Charles Exon

 

 

 

 

 

 

Title:

General Counsel

 

13

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EXHIBIT A

 

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Int. Cl.: 25

 

 

 

Prior U.S. Cls.: 22 and 39

Reg. No. 2,299,696

 

 

United States Patent and Trademark Office

Registered Dec. 14, 1999

 

TRADEMARK
PRINCIPAL REGISTER

 

TONY HAWK

 

HAWK, ANTHONY (UNITED STATES CITIZEN)

HEADWEAR, IN CLASS 25 (U.S. CLS. 22 AND 39).

31878 DEL OBISPO

FIRST USE 3-1-1998; IN COMMERCE 6-15-1998.

STE 118-514

 

SAN JUAN CAPISTRANO, CA 92675

THE NAME “TONY HAWK” IDENTIFIES A LIVING INDIVIDUAL WHOSE CONSENT IS OF RECORD.

FOR: CLOTHING, NAMELY, BELTS, COATS,

 

JACKETS, JERSEYS, PANTS, RAINWEAR,

SER. NO. 75-530,117, FILED 8-3-1998.

SHIRTS, SHORTS, SWEAT PANTS, SWEAT

 

SHIRTS, SWEATERS, T-SHIRTS, TANK TOPS,

ANDREW A. ROPPEL, EXAMINING ATTORNEY

WIND-RESISTANT JACKETS; FOOTWEAR,

 

 

--------------------------------------------------------------------------------

 

Int. Cl.: 18

 

 

 

Prior U.S. Cls.: 1, 2, 3, 22, and 41

Reg. No. 2,849,404

 

 

United States Patent and Trademark Office

Registered June 1, 2004

 

TRADEMARK

PRINCIPAL REGISTER

 

TONY HAWK

 

HAWK DESIGNS, INC. (CALIFORNIA CORPORATION)

 

THE NAME “TONY HAWK” IDENTIFIES A LIVING INDIVIDUAL WHOSE CONSENT IS OF RECORD.

15202 GRAHAM STREET

HUNTINGTON BEACH, CA 92649

 

 

 

 

 

FOR: BACKPACKS, DUFFEL BAGS AND WALLETS, IN CLASS 18 (U.S. CLS. 1, 2, 3, 22 AND
41).

 

 

 

SN 78-158,946, FILED 8-28-2002.

 

 

 

FIRST USE 11-29-2000; IN COMMERCE 11-29-2000.

 

 

 

 

 

OWNER OF U.S. REG. NO. 2,299,696.

 

WANDA KAY PRICE, EXAMINING ATTORNEY

 

--------------------------------------------------------------------------------

 

Int. Cl.: 25

 

 

 

Prior U.S. Cls.: 22 and 39

Reg. No. 2,931,627

 

 

United States Patent and Trademark Office

Registered Mar. 8, 2005

 

TRADEMARK

PRINCIPAL REGISTER

 

[g31712kk13i001.jpg]

 

HAWK DESIGNS, INC. (CALIFORNIA CORPORATION)

FIRST USE 11-24-2000; IN COMMERCE 11-24-2000.

15202 GRAHAM STREET

 

HUNTINGTON BEACH, CA 92649

SEC. 2(F).

 

 

FOR: CLOTHING AND HEADGEAR, NAMELY, SHIRTS, T-SHIRTS, SWEATSHIRTS, SWEATPANTS,

 

TANK TOPS, SHORTS, PANTS, JACKETS, SWEA-

SN 78-168,632, FILED 9-27-2002.

TERS, SOCKS, BELTS, GLOVES, THERMAL T-

 

SHIRTS, HATS, CAPS, AND VISORS, AND SNOW

 

HATS, IN CLASS 25 (U.S. CLS. 22 AND 39).

KIMBERLY PERRY, EXAMINING ATTORNEY

 

--------------------------------------------------------------------------------

 

Int. Cl.: 18

 

 

 

Prior U.S. Cls.: 1, 2, 3, 22, and 41

Reg. No. 2,855,111

 

 

United States Patent and Trademark Office

Registered June 15, 2004

 

TRADEMARK

PRINCIPAL REGISTER

 

[g31712kk15i001.jpg]

 

HAWK DESIGNS, INC. (CALIFORNIA CORPORATION)
15202 GRAHAM STREET
HUNTINGTON BEACH, CA 92649

FIRST USE 11-29-2000; IN COMMERCE 11-29-2000.

 

SN 78-170,181, FILED 10-2-2002.

FOR: LUGGAGE, BACKPACKS, WALLETS, FANNY PACKS, TRAVEL BAGS, TOTE BAGS, DUFFEL
BAGS, AND ATHLETIC BAGS, IN CLASS 18 (U.S. CLS. 1, 2, 3, 22 AND 41).

ARETHA MASTERSON, EXAMINING ATTORNEY

 

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EXHIBIT B

 

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[g31712kk15i002.jpg]

 

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[g31712kk15i003.jpg]

 

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[g31712kk15i004.jpg]

 

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EXHIBIT C

 

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EXHIBIT C

(Letter from Licensee to Contractor)

 

Re:      Manufacture of Products Using the “Tony Hawk” and “Hawk” Trademarks

 

Gentlemen:

 

We are a licensee of Hawk Designs, Inc., a subsidiary of Quiksilver, Inc.
(“Licensor”) and have the exclusive right to use various “Tony Hawk” and “Hawk”
trademarks (collectively, “Hawk trademarks”) upon or in connection with
production, manufacture, distribution, promotion and sale of various
classifications of products, including those listed on Schedule 1 hereto (the
“Hawk products”). We have engaged you as a manufacturer for products bearing the
Hawk trademarks. This letter sets forth and limits your sole authorization for
use of the Hawk trademarks in connection with manufacturing products for us.

 

You shall not use the Hawk trademarks in any manner whatsoever other than as
directed by us. You shall affix or apply the Hawk trademarks to the products
and/or packaging materials strictly in conformity with specifications provided
by us or as otherwise directed by us. You agree to order any Hawk logoed
packaging, labeling, trim or product only from manufacturers that have been
pre-approved by us. We will provide you with a list of such currently approved
manufacturers. If you desire to add a manufacturer to such list, you will need
to provide all information, necessary for us to make a determination as to
whether to approve such manufacturer.

 

You shall not use any other name, trademark or design in connection with Hawk
packaging materials unless so directed by us.

 

You represent and warrant that all merchandise that you manufacture for us will
be manufactured by you in your factory or factories set forth in Schedule 2
hereof or by your subcontractors in their factories whose locations are set
forth on Schedule 2 hereof and that all merchandise will be labeled accordingly
with the correct country of origin and in accordance with the laws, rules and
regulations of the governments of the countries where the Hawk products
manufactured by you are sold at retail. All your subcontractors must sign a
Maker’s Certificate, also.

 

Your manufacturer’s RN number is                                   .

 

In the event that any Hawk products are rejected by us, because the products are
defective in quality or otherwise defective, you agree to immediately remove all
labels, tabs, snaps, and other markings bearing the Hawk trademarks on such
products before disposing of them (other than the care label if shipped to the
United States). In the event that such markings cannot be removed from the
products, they must be destroyed, or marked “Irregular” and you must contact us.

 

In the event that any Hawk products are rejected by us because they are shipped
late, the order for such products has been canceled, or for any other reason,
you agree to immediately remove all labels, tabs, snaps, and other markings
bearing the Hawk trademarks on such products before disposing of them (other
than the care label if shipped to the United States). In the event that such
markings cannot be removed from the products, you agree to immediately notify us
that such markings cannot be removed and then you may either immediately destroy
them or with our approval sell them to any approved retailer. Prior to
contacting any diverters, jobbers, or make any international sales, you must
contact us and advise to whom you intend to sell such products, and if we
approve your buyer, you may sell such products only to such buyer.

 

14

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You shall at all times adhere to Kohl’s quality control guidelines and Kohl’s
Vendor Partner Terms of Engagement.

 

You should not directly or indirectly, disclose or use at any time (either
during or after the completion of your manufacturing obligations, except to or
for our benefit as we may direct) any confidential information of ours. All
information and supporting materials of any kind (and rights arising therefrom)
relating to the production, design, sale or marketing of any product bearing the
Hawk trademarks are and will be ours and/or the Licensor’s sole property and are
to be used solely in accordance with our instructions, and under no
circumstances, are to be used by you, or any of your employees, or anyone else,
in relation to any non-Hawk product or trademark.

 

You shall permit Licensor or its agent to inspect your activities and premises.

 

In the event of your failure to abide by any of the foregoing, Licensor or we
may seek all legal remedies against you, including seeking compensation for all
damages sustained as a result of your actions or omissions, as well as
injunctive relief.

 

You acknowledge that you do not have any claims against Licensor arising out of
this Agreement and that you will only look to us in connection with any claim
under this Agreement.

 

This Agreement shall commence as of the date hereof and shall continue in effect
for such period of time as we continue your engagement as a manufacturer of Hawk
products.

 

We have the right to terminate this Agreement immediately upon written notice to
Manufacturer in the event of (a) your affirmative act of insolvency, (b) the
appointment of any receiver or trustee to take possession of your properties,
(c) the winding-up, sale, consolidation, merger or any sequestration by
governmental authority of your business or facility, or (d) your material breach
of any significant provision hereof. In addition, should the Trademark License
Agreement in effect between Licensor and us expire or be terminated, for any
reason, the Agreement shall likewise terminate.

 

Please execute and return the enclosed copy of this letter to the undersigned
acknowledging your agreement to abide by the foregoing.

 

Licensee Name: (print)

 

 

Signature:

 

 

 

Licensee (Company) Name: (print)

 

 

Date:

 

 

 

ACCEPTED AND AGREED:

 

 

 

Maker Name:(print)

 

 

Signature:

 

 

 

Maker (Company) Name:(print)

 

 

Date:

 

 

15

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Schedule 1 to Letter from Licensee to Contractor

 

Categories of merchandise that Licensee has the right to design, manufacture and
sell.

 

 

DBA:

 

NAME (print)

 

RN #

 

 

At the time you cease to be an approved Maker, you shall either sell to Licensor
(at cost) all labels in your possession or destroy such labels.

 

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Schedule 2 to Letter From Licensee to Contractor

 

A.                              The Name and Address of all of your locations
where you manufacture Hawk products are:

 

B.                              The Name and Address of all your
Sub-Contractors’ locations where you have Hawk products manufactured for you
are:

 

17

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