SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (date of earliest event reported): September 6, 1996
PremiumWear, Inc.
(Exact name of Registrant as specified in its charter)
Delaware 1-63 41-0429620
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
8000 West 78th Street, Suite 400
Minneapolis, Minnesota 55439
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (612) 943-5000
Munsingwear, Inc.
(Former name or former address, if changed since last report)
Item 2. Acquisition or Disposition of Assets.
SALE OF ASSETS.
On September 6, 1996, the stockholders of Munsingwear, Inc. (the
"Company") approved the transactions contemplated in the Purchase and Sale
Agreement (the "Agreement") entered into by the Company and Supreme
International Corporation ("Supreme") as of May 22, 1996. Pursuant to the
Agreement, Supreme acquired all rights to the Company's trademarks and certain
associated rights relating to the Company's retail and professional golf
businesses (the "Retail and Professional Golf Businesses"). Upon execution of
the Agreement, the parties also entered into a Management Agreement under which
Supreme agreed to immediately assume responsibility for operations of the
business related to the assets being purchased. The Management Agreement
terminated as of September 6, 1996, the closing date of the disposition (the
"Closing Date").
Supreme imports and markets fashion-oriented moderate and better men's
and boys' sportswear and its products are sold to department stores, chain
stores and specialty retail stores throughout the United States and Puerto Rico.
The assets sold and transferred by the Company to Supreme included
substantially all of the Company's interest in common law and registered trade
names and trademarks worldwide (but excluding the trademarks and tradenames for
the Peoples Republic of China, Vietnam, Macau and such other excluded trademarks
as have previously been sold), customer lists and records for the Retail and
Professional Golf Businesses, rights in and to existing and pending license
agreements and related cash royalty income payable after the closing,
advertising materials related to the Retail and Professional Golf Businesses,
certain design archives and equipment, embroidery disks, records relating to the
Retail and Professional Golf Businesses, copyrights associated with any of the
assets being acquired by Supreme and trademark sourcing and license sourcing
rights (collectively, the "Purchased Assets"). Under the Agreement, Supreme also
acquired the Company's rights in the corporate name "Munsingwear" and the
corporate name change described below was a condition to consummation of the
Agreement.
The Purchased Assets were transferred to Supreme in exchange for
approximately $18 million in cash, an amount determined following extensive
negotiation between the parties.
Except for liabilities arising from the licenses included in the Retail
and Professional Golf Businesses and certain trademark litigation in which the
Company is a party, Supreme did not assume any liabilities or obligations of the
Company. With respect to the trademark litigation, Supreme only assumed the fees
and costs of such litigation incurred after the Closing Date. The Company
deposited $350,000 of the purchase price into an escrow account at the time of
closing to cover the costs incurred in connection with a certain trademark
litigation which Supreme has agreed to assume.
The net proceeds of the sale, together with proceeds from the
liquidation of retail and pro golf inventory (which were not sold to Supreme)
and the collection of accounts receivable (which were not sold to Supreme), will
be used (i) to pay off Company debt, including bank debt and transaction costs
related to the sale of the Purchased Assets, (ii) to retain between
approximately $1 million and $4 million for working capital purposes and (iii)
to distribute between $12 million and $15 million to the Company's stockholders.
The distribution to stockholders will occur within 180 days of the Annual
Meeting of Stockholders held on September 6, 1996, the precise date depending on
certain income tax factors. Pending such distribution, $12 million will be held
in a separate account.
In conjunction with the closing of the sale, the parties entered into a
License Agreement (the "License Agreement"), whereby Supreme granted the Company
an exclusive license to manufacture or have manufactured, market and sell knit
shirts, pants, woven shirts, outerwear and rainwear, all bearing the Munsingwear
brand and Penguin logo by label or tag solely inside the garment, packaging or
advertising, in order to operate the Company's Advertising Specialty Incentive,
Uniform Markets and Specialty Distributor business (collectively, the "Premium
Business"). The Company has the ability to manufacture these products anywhere
in the world and to sell the products in the Premium Business in the United
States and Canada. The term of the license differs with respect to the type of
licensed product. Generally, the term for the knit shirt products is 20 years
and the term of the other products is five years. There is no royalty obligation
to Supreme on the knit shirt products until August 2001, unless net sales exceed
$50 million in one year, at which time the Company will be obligated to pay a
royalty on net sales in excess of $50 million. After August 2001, the Company
must pay a royalty for net sales of all knit shirts bearing the licensed
trademarks. There is a minimum royalty for each of the other licensed products,
which increases each year during the term of the License Agreement.
Concurrent with execution of the Agreement, the parties also entered
into a Right of First Refusal Agreement ("Right of First Refusal Agreement")
pursuant to which the Company granted to Supreme a right of first refusal to
acquire the Company's Premium Business at a price of 110% of the amount of a
bona fide offer from a third party. The Right of First Refusal Agreement will
remain in effect until the earlier of 20 years after the Closing Date or the
termination of the License Agreement.
CORPORATE NAME CHANGE/TRADING SYMBOL CHANGE.
Under the Agreement, Supreme also acquired the Company's rights in the
corporate name "Munsingwear." Therefore, in connection with the sale of the
Purchased Assets, the stockholders also approved an Amendment to the Company's
Certificate of Incorporation changing the Company's name to "PremiumWear, Inc."
The name change became effective upon the filing of a Certificate of Amendment
with the Delaware Secretary of State on September 6, 1996.
In conjunction with the name change and effective as of September 12,
1996, the Company's common stock, which is listed on the New York Stock
Exchange, will begin trading under the new symbol "PWA."
Item 5. Other Events
Effective September 9, 1996, Lowell M. Fisher resigned as President and
Chief Executive Officer and a member of the Board of Directors of the Company.
Thomas D. Gleason, current Chairman of the Board of the Company, was named Chief
Executive Officer on an interim basis.
Item 7. Financial Statements and Exhibits.
(a) FINANCIAL STATEMENTS OF BUSINESS ACQUIRED.
Not applicable.
(b) PRO FORMA FINANCIAL INFORMATION.
It is currently impracticable to provide the required pro
forma financial information. Pursuant to paragraph (b)(2) of
Item 7 of Form 8-K, such financial information will be filed
by amendment no later than 60 days after the due date of this
report on Form 8-K.
(c) EXHIBITS.
2.1 Purchase and Sale Agreement dated as of May 22, 1996
between the registrant and Supreme International
Corporation (incorporated by reference to Exhibit A
to the Definitive Proxy Statement filed with the
Securities and Exchange Commission on August 16,
1996).
2.2 License Agreement between the registrant and Supreme
International Corporation made and entered into as of
September 6, 1996. (Puruant to Rule 24b-2, certain
information has been deleted and filed separately
with the Commission).
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
PREMIUMWEAR, INC.
By /s/ Thomas D. Gleason
-----------------------------------
Thomas D. Gleason
Chief Executive Officer
Dated: September __, 1996
CERTAIN PORTIONS OF THIS EXHIBIT HAVE BEEN DELETED AND FILED SEPARATELY WITH
THE COMMISSION PURSUANT TO RULE 24b-2. (SPACES CORRESPONDING TO DELETED PORTIONS
APPEAR IN BRACKETS WITH ASTERISKS.)
EXHIBIT 2.2
LICENSE AGREEMENT
This License Agreement (the "Agreement"), is made effective as of the
6th day of September, 1996 (the "Effective Date") by and between Supreme
International Corporation, a Florida corporation ("Supreme") and PremiumWear,
Inc., a Delaware corporation formerly known as Munsingwear, Inc., a Delaware
corporation ("Munsingwear").
W I T N E S S E T H:
WHEREAS, pursuant to a Purchase and Sale Agreement entered into as of
May 22, 1996 (the "Purchase Agreement") by and between Supreme and Munsingwear,
Supreme has agreed to purchase certain trade names, trademarks, assets,
properties, contracts and rights used in the design, sourcing, production and
distribution of shirts and other apparel products to retailers and professional
golf shops; and
WHEREAS, Munsingwear desires to obtain from Supreme a license back to
use the trademarks, trademark registrations and applications for the trademarks
set forth in Exhibit A in connection with the manufacture, marketing and sale of
certain apparel products to certain markets as set forth below, and Supreme is
willing to grant such a license, on the terms and conditions set forth below;
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
ARTICLE ONE -- DEFINITIONS
1. Definitions: For the purposes of this Agreement, the following terms
shall be defined as follows:
1.1 "Authorized Channels of Distribution" - those channels of
distribution set forth in Exhibit B with respect to particular Licensed
Trademarks.
1.2 "Licensed Knit Shirt Product[s]" - collar and placket knit shirts,
all bearing by label or tag solely inside the garment, packaging or advertising,
any of the Licensed Trademarks.
1.3 "Licensed Pant Products" - long pants and shirts made of standard
and industrial fabrics, all bearing by label or tag solely inside the garment,
packaging or advertising, any of the Licensed Trademarks.
1.4 "Licensed Footwear and Headwear Products" - footwear and headwear,
including baseball caps and hard visor caps, all bearing by label or tag solely
inside the garment, packaging or advertising, any of the Licensed Trademarks.
1.5 "Other Licensed Product[s]" - woven shirts (including chambray),
outerwear (basic jackets, windbreakers and sweaters), rainwear, and footwear,
all bearing by label or tag solely inside the garment, packaging or advertising,
any of the Licensed Trademarks.
1.6 "Licensed Product[s]" - Licensed Knit Shirt Products, Licensed Pant
Products, Licensed Footwear and Headwear Products and Other Licensed Products
are sometimes collectively referred to herein as "Licensed Products."
1.7 "Licensed Trademarks" - the trademarks listed in Exhibit A.
1.8 "License Year" - the first "License Year" shall be the twelve-month
period beginning on the Effective Date and each consecutive twelve-month period
thereafter during the Term.
1.9 "Net Sales" - the total amounts of invoices by Munsingwear for
Licensed Products, less only (i) returns evidenced by credit memoranda, (ii)
allowances for unreturned but defective Licensed Products evidenced by credit
memoranda, (iii) normal and reasonable cash, trade and quantity discounts
allowed to customers which are not related to Munsingwear by ownership, control
or affiliation, (iv) the actual cost of freight and other transportation costs
from Munsingwear to its customers, (v) sales taxes and excise taxes, if
separately stated on sales invoices to Munsingwear's customer, (vi) costs
incurred in providing catalogs without charge to customers, and (vii)
Munsingwear's cost of any samples provided without charge to customers and sales
persons. In determining Net Sales, no deductions may be made for early payments.
1.10 "Percentage Royalties" - the percentage royalty payments set forth
in Section 3.1.
1.11 "Term" - the period[s] set forth in Section 8.1.
1.12 "Territory" - the fifty states of the United States and Canada.
Notwithstanding the foregoing, shipments from the United States to anywhere in
the world shall be deemed to be within the Territory so long as the sale
occurred in the United States or Canada or the shipment is made to any
international affiliate of a United States customer and the product is not being
sold for resale purposes.
1.13 "Existing Licenses" - all outstanding license rights granted by
Munsingwear prior to the Effective Date.
ARTICLE TWO -- GRANT OF LICENSE
2.1 Grant of the License. Subject to the Existing Licenses, Supreme
hereby grants to Munsingwear, and Munsingwear hereby accepts, an exclusive
license throughout the Term to manufacture or have manufactured Licensed
Products anywhere in the world and to market and sell the Licensed Products
through Authorized Channels of Distribution within the Territory.
2.2 Reservation of Rights. Supreme reserves all rights to the Licensed
Trademarks except as specifically granted to Munsingwear hereunder and Supreme
may exercise such rights at any time and from time to time.
2.3 Export. Except as permitted by Section 1.12, and to the extent
permitted by law, Munsingwear acknowledges and agrees that it has no right to
and shall not export any Licensed Products from, or market or sell any Licensed
Products outside of the Territory, or sell, transfer or otherwise dispose of any
Licensed Products to any person or entity which Munsingwear knows or has reason
to know will export any Licensed Products from, or sell or market any Licensed
Products outside of, the Territory for purposes of resale.
ARTICLE THREE -- ROYALTIES
3.1 Percentage Royalties.
(a) Licensed Knit Shirt Products. With respect to Licensed
Knit Shirt Products, this License Agreement shall be royalty-free until
September 6, 2001; provided, however, that if the Net Sales of Licensed
Knit Shirt Products through Authorized Channels of Distribution shall
exceed $50 million for a particular License Year during such period,
Munsingwear shall, for each such License Year, pay the following
Percentage Royalties to Supreme: [**] percent ([**]%) of Net Sales of
Licensed Knit Shirt Products in excess of $50 million during that
License Year. For the period from September 6, 2001 until the end of
the Term, Munsingwear shall, for each License Year, pay the following
Percentage Royalties to Supreme: [**] percent ([**]%) of the first $20
million in Net Sales of Licensed Knit Shirt Products during that
License Year and [**] percent ([**]%) of any Net Sales of Licensed Knit
Shirt Products during that License Year in excess of $20 million.
(b) Licensed Pant Products. With respect to Licensed Pant
Products, Munsingwear shall, for each License Year during the Term, pay
the following Percentage Royalties to Supreme: [**] percent ([**]%) of
Net Sales of Licensed Pant Products until January 1, 1998, and [**]
percent ([**]%) of Net Sales of Licensed Pant Products between January
1, 1998 and the end of the Term.
(c) Licensed Footwear and Headwear Products. With respect to
Licensed Footwear and Headwear Products, Munsingwear shall, for each
License Year during the Term, pay the following Percentage Royalties to
Supreme: [**] percent ([**]%) of Net Sales of Licensed Footwear and
Headwear Products until the end of the Term.
(d) Other Licensed Products. With respect to Other Licensed
Products, Munsingwear shall, for each License Year during the Term, pay
the following Percentage Royalties to Supreme: [**] percent ([**]%) of
Net Sales of Other Licensed Products. It is understood and agreed that
any Net Sales of Other Licensed Products by Munsingwear pursuant to
Existing Licenses shall be excluded from the calculation of Percentage
Royalties in this Section 3.1 for the duration of each such Existing
License.
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BRACKETS WITH ASTERISKS CORRESPOND TO DELETED TEXT THAT IS SUBJECT TO A
CONFIDENTIAL TREATMENT REQUEST FILED WITH THE COMMISSION PURSUANT TO RULE 24b-2.
(e) It is further understood and agreed that, for the purposes
of calculating the Percentage Royalties, each License Year shall be
treated separately, and sales made in one License Year shall not be
added to or included in Net Sales for any other License Year. The
payments of Percentage Royalties shall be due and paid to Supreme
within forty-five (45) days after the last day of the calendar quarter
in which the sales on which they are based are made. A sale of Licensed
Products shall be deemed made when the Licensed Products are invoiced,
shipped or paid for, whichever is first to occur.
3.2 Guaranteed Minimum Royalty. With respect to Licensed Pant Products,
Licensed Footwear and Headwear Products and Other Licensed Products, Munsingwear
guarantees to pay Supreme any difference between annual royalties paid and the
following amounts, computed on an annual basis beginning on the Effective Date
(the "Minimum Royalty"):
(a) Licensed Pant Products. $[**] for the first year of the
Term, which amount shall increase by [**]% each year of the Term
thereafter until January 1, 1998; $[**] beginning January 1, 1998,
which amount shall increase by [**]% each year of the Term thereafter.
(b) Licensed Footwear and Headwear Products. $[**] for
footwear for the first year of the Term and $[**] for headwear for
the first year of the Term, which amounts shall increase by [**]% each
year of the Term thereafter.
(c) Other Licensed Products. [**]% of the minimum sales
permitted under the Existing Licenses each year of the Term, except
that no royalty shall be due until the expiration of each Existing
License.
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BRACKETS WITH ASTERISKS CORRESPOND TO DELETED TEXT THAT IS SUBJECT TO A
CONFIDENTIAL TREATMENT REQUEST FILED WITH THE COMMISSION PURSUANT TO RULE 24b-2.
(d) In the event Munsingwear fails to pay the Minimum Royalty
due on any of the Licensed Products, Supreme shall give Munsingwear ten
days' notice of such failure, and if Munsingwear fails to pay such
Minimum Royalty during such ten-day period, this Agreement shall
terminate with respect to any category of Products on which Supreme has
not received such Minimum Royalty.
3.3 Royalty Reporting Requirements. Munsingwear agrees to furnish
Supreme, within forty-five (45) days after the last day of each calendar
quarter, a royalty statement, verified by an officer of Munsingwear, showing all
gross and Net Sales of the Licensed Products (by dollars and units, by account
or account group, when appropriate, by Licensed Trademark, by Licensed Product
and by country) and all customary trade discounts, sales taxes and excise taxes
for the calendar quarter and a computation of Net Sales and the Percentage
Royalties payable hereunder for the calendar quarter. Within seventy-five (75)
days after the end of each License Year, Munsingwear shall furnish to Supreme a
summary statement for the License Year then completed, certified by an officer
of Munsingwear, showing all Net Sales of the Licensed Products during such
License Year, a computation of Net Sales and the Percentage Royalties payable
hereunder for such License Year and a list of customers and their respective Net
Sales to whom the Licensed Products were sold during each License Year.
3.4 Interest on Late Payments. In addition to any other rights or
remedies Supreme may have under this Agreement or otherwise, in the event that
Munsingwear fails to make any of the payments due Supreme hereunder as and when
due, Munsingwear shall be obligated to pay to Supreme interest on the overdue
amounts at two percent (2%) above the prime rate per annum then charged by
Citibank, N.A. in New York or the maximum legal rate, whichever is lower.
ARTICLE FOUR -- MAINTENANCE OF STANDARDS
4.1 Maintenance of Standards. The right to use the Licensed Trademarks
granted to Munsingwear shall be restricted to such Licensed Products as are
designed, produced, selected, manufactured, packaged, distributed, and
merchandised by Munsingwear according to standards of quality which are no less
than those of Munsingwear in connection with products which utilized the
Licensed Trademarks immediately prior to the Effective Date of this Agreement.
Without limiting the generality of the foregoing, the Licensed Products shall at
all times be of a high and merchantable quality.
4.2 Reputation. Munsingwear acknowledges that the availability of a
selection of products, fabrication, colors and sizes are an integral part of the
high reputation and value which the public associates with the Licensed
Trademarks. Consequently, Munsingwear agrees that its policy with regard to the
sale, merchandising and distribution of Licensed Products shall be of a high
standard and shall in no way reflect adversely upon the good name and reputation
associated with the Licensed Trademarks.
4.3 Inspection. In order for Supreme to determine and assure
maintenance of the standards and quality required under this Agreement, Supreme
shall have the right, upon reasonable notice to Munsingwear, to inspect the
manufacturing process for any Licensed Product, at whatever place or places it
may be manufactured. If Supreme reasonably determines that any sample of a
Licensed Product does not meet the standards or quality required under this
Agreement, Munsingwear shall, within fourteen (14) days after Supreme's notice
with regard thereto, correct such deficiency at Munsingwear's expense by making
such changes in construction and quality as may be suggested by Supreme.
4.4 Applicable Laws and Regulations. All Licensed Products shall be
manufactured, sold and advertised in compliance with all applicable governmental
laws, rules and regulations. Munsingwear shall cause truthful and accurate
labeling regarding the care, maintenance and use of the Licensed Products, where
applicable, to be affixed to such Licensed Products.
4.5 Manufacturer's Agreement. Munsingwear or its designee may
manufacture the Licensed Products anywhere in the world, provided that none of
the Licensed Products are marketed or sold outside of the Territory (other than
as permitted in Section 1.12), or through any distribution channel in the
Territory which is not an Authorized Channel of Distribution, or otherwise than
in accordance with the provisions of this Agreement. Munsingwear shall have the
proposed manufacturer sign in duplicate original a "Manufacturer's Agreement"
identical to Exhibit C and provide a fully executed original Manufacturer's
Agreement to Supreme.
ARTICLE FIVE -- PROTECTION OF THE LICENSED TRADEMARKS
5.1 Representations, Warranties and Covenants. Supreme hereby
covenants, represents and warrants that:
(a) it has full right and power to grant the license herein
set forth; and
(b) it has no license or other agreements with or obligations,
commitments, liens or mortgages and encumbrances of any kind which may
diminish, encumber or limit in any manner the rights granted to
Munsingwear hereunder; and
(c) it will not take any actions which might in any manner
diminish, encumber or impair the rights of Munsingwear under this
Agreement in any material respects. Notwithstanding the foregoing,
nothing herein shall obligate Supreme to use or to continue to use the
Licensed Trademarks in any manner.
5.2 Infringement of the Licensed Trademarks. Munsingwear shall promptly
notify Supreme in writing of any infringement of the Licensed Trademarks or any
act of unfair competition by third parties relating to the Licensed Trademarks
whenever such infringement or act shall come to Munsingwear's attention. Supreme
may, at Supreme's discretion, take such action (including the initiation of
proceedings and participation in proceedings brought against Munsingwear) to
stop any infringement or act as Supreme may deem necessary to protect the
Licensed Trademarks. In connection therewith, Munsingwear shall cooperate to the
extent reasonably required by Supreme to stop such infringement or act, and, if
so requested by Supreme, shall join with Supreme as a party to any action
brought by Supreme for such purpose. Supreme shall have full control over any
action taken, including without limitation, the right to select counsel, to
settle on any terms it deems advisable in its discretion, to appeal any adverse
decision rendered in any court, to discontinue any action taken by it, and
otherwise to make any decision in respect thereto as it in its discretion deems
advisable. Supreme shall bear all expenses connected with the foregoing, except
that if Munsingwear desires to retain its own counsel, it shall do so at its own
expense. Any recovery as a result of such action shall belong solely to Supreme.
5.3 Licensed Trademark Registrations. Munsingwear shall fully cooperate
with Supreme with respect to the maintenance and renewal of all Licensed
Trademarks and any registered user requirements or any challenges to any
Licensed Trademark, and shall supply all information requested by Supreme with
respect thereto (including without limitation, evidence of use) on a timely
basis.
5.4 Trademark and Copyright Notices. Munsingwear shall use, in
connection with the Licensed Trademarks and their packaging and advertising,
such trademark and copyright notices and identifications as shall be reasonably
required by Supreme and applicable law.
ARTICLE SIX -- MAINTENANCE OF RECORDS
6.1 Maintenance of Records. Munsingwear shall keep separate, true and
accurate books and records respecting all transactions related to this Agreement
in accordance with generally accepted accounting practices consistently applied,
which books and records shall be kept and maintained so as to enable and
facilitate verification of the payments due Supreme under this Agreement and
shall reflect all sales and shipments of Licensed Products, all customary trade
discounts, sales taxes, and excise taxes; all consumer and account complaints;
and the amount of the Percentage Royalties payable to Supreme hereunder.
Munsingwear shall maintain such books and records for a period of at least two
(2) years following the end of each License Year.
6.2 Inspection. Supreme and its representatives shall have the right,
at any time during the Term of this Agreement and for a period of two (2) years
thereafter, upon ten (10) days prior written notice to Munsingwear, to examine
any or all of the books or records which Munsingwear is required to maintain
pursuant to this Article Six and all other records, documents and material in
possession or under control of Munsingwear (including, but not limited to,
production records and consumer and account complaint information) reasonably
necessary to verify Munsingwear's compliance with provisions of this Agreement.
In its discretion, Supreme may use Munsingwear's independent auditors as its
representative for this purpose or select another representative. Such books,
records, documents and material shall be made available to Supreme and Supreme's
representatives during normal business hours at Munsingwear's offices and
Munsingwear shall render reasonable assistance to Supreme and Supreme's
representatives for the purpose of facilitating such examination. All payments
required to be made by Munsingwear to eliminate any discrepancy revealed by such
examination shall be made immediately upon demand with interest in accordance
with Section 3.3. If the audit discloses a 5% or greater discrepancy,
Munsingwear shall reimburse Supreme for the cost of the audit.
ARTICLE SEVEN -- ASSIGNMENT
7. Assignment. Supreme may assign, pledge or transfer all or any part
of this Agreement or its rights or obligations hereunder to any person or
entity. With respect to Licensed Knit Shirt Products and Licensed Pant Products,
and subject to certain purchase rights of Supreme as set forth in the Purchase
Agreement, Munsingwear may assign or transfer, by operation of law, merger or
otherwise, its rights or obligations hereunder to any bona fide purchaser of
Munsingwear's business related to the Licensed Knit Shirt Products or Licensed
Pant Products. Munsingwear may not assign or transfer its rights or obligations
hereunder, by operation or law, merger or otherwise with respect to Licensed
Footwear and Headwear Products or Other Licensed Products and may not sublicense
its rights under this Agreement without Supreme's consent. Except as otherwise
provided herein, this Agreement shall inure to the benefit of and shall be
binding upon the parties, their respective successors, Supreme's transferees and
assigns and Munsingwear's permitted transferees and assigns.
ARTICLE EIGHT -- TERM
8.1 Term.
(a) The Term of this License Agreement with respect to
Licensed Knit Shirt Products shall begin on the Effective Date and
shall expire on September 6, 2016.
(b) The Term of this License with respect to Licensed Pant
Products shall begin on the Effective Date and shall expire on
September 6, 2001.
(c) The Term of this License with respect to Licensed Footwear
and Headwear Products shall begin on the Effective Date and shall
expire on September 6, 2001.
(d) The Term of this License Agreement with respect to Other
Licensed Products shall begin on the Effective Date and expire on
September 6, 2001.
ARTICLE NINE -- TERMINATION
9.1 Termination by Supreme. Supreme may terminate this Agreement
immediately upon written notice to Munsingwear if Munsingwear shall: (i) be in
violation of the provisions of the license granted in Section 2.1 or (ii) become
insolvent, make a general assignment for the benefit of its creditors, have a
receiver or manager appointed or otherwise commence, or become the subject of,
any action relating to bankruptcy, insolvency, reorganization, dissolution or
winding up. If Munsingwear shall breach or be in default of any of the royalty
payment provisions of this Agreement and such breach or default is not remedied
to Supreme's satisfaction within fifteen (15) days after Munsingwear has
received written notice of such breach or default from Supreme, Supreme may, at
its sole election, terminate this Agreement by written notice to Munsingwear. If
Munsingwear shall at any time breach or be in default of any other provision of
this Agreement and such breach or default is not remedied to Supreme's
satisfaction within thirty (30) days after Supreme has given Munsingwear written
notice of such breach or default, Supreme may, at its sole election, terminate
this Agreement by written notice of termination to Munsingwear. Termination
under the provisions of this Section 9.1 shall be effective upon the effective
date of any such notice of termination.
9.2 Termination by Munsingwear. If Supreme shall at any time breach or
be in default of any provision of this Agreement and such breach or default is
not remedied to Munsingwear's satisfaction within thirty (30) days after
Munsingwear has given Supreme written notice of such breach or default,
Munsingwear may, at its sole election, terminate this Agreement by written
notice of termination to Supreme. Termination under the provisions of this
Section 9.2 shall be effective upon the effective date of any such notice of
termination.
9.3 Effect of Termination. No failure or delay on the part of either
Supreme or Munsingwear to exercise its right of termination hereunder for any
one or more causes shall be considered to prejudice its rights of termination
for any other or subsequent cause. Termination or expiration of all or part this
Agreement for any reason whatsoever shall not relieve the parties from their
respective obligations arising hereunder prior to such termination or expiration
or with respect to any unexpired portion of this Agreement. Termination of this
Agreement by either party under the provisions of this Article Nine shall be in
addition to, and without prejudice to, any other rights or remedies (including,
without limitation, damages) which that party may have.
ARTICLE TEN -- OBLIGATIONS ON EXPIRATION OR TERMINATION
10.1 Inventory Report. Munsingwear shall furnish to Supreme, within
thirty (30) days after termination or expiration of this Agreement, a statement
showing the number and description of all Licensed Products it has in inventory,
or the inventory of any manufacturer, at such termination or expiration. Such
statement shall be certified by a duly authorized officer of Munsingwear.
10.2 Sell-Out Period. Provided that Supreme has not terminated this
Agreement under Section 9.1 and that Munsingwear has complied with Section 10.1,
then Munsingwear may, for a period of six (6) months after such termination or
expiration (the "Sell-Out Period"), sell the inventory of Licensed Products
(finished and in process) existing on the date expiration or termination is
effective, provided such sales are made through its normal Authorized Channels
of Distribution and in accordance with its normal sales terms and procedures,
and provided further that such Licensed Products and the sale thereof comply
with the provisions of this Agreement, including the payment to Supreme of the
Percentage Royalties on all sales during the Sell-Out Period. After the
expiration of the Sell-Out Period, Munsingwear shall not market or advertise any
Licensed Products nor shall it use any of the Licensed Products in any way in
connection with its business operations or otherwise. Before Munsingwear sells
or disposes of the Licensed Products as set forth in this Article Ten, it shall
offer Supreme an opportunity to purchase Munsingwear's inventory of such
Licensed Products, and Munsingwear agrees not to sell such Licensed Products to
third parties unless it has first offered to sell such Licensed Products to
Supreme on terms and conditions at least as favorable as the best terms and
conditions offered to third parties.
10.3 Return of Materials. Within thirty (30) days after the termination
or expiration of this Agreement or of the expiration of the sell-out period
described in Section 10.2, if Munsingwear is entitled to such sell-out period,
Munsingwear shall, at Munsingwear's cost, deliver to Supreme all advertising,
packaging, labels, tags, publicity material, merchandising material and
promotional material, including without limitation point-of-sale material
bearing any of the Licensed Trademarks and all Licensed Products permanently
identified with the Licensed Trademarks in Munsingwear's custody or control or
in the custody or control of Munsingwear's manufacturers.
ARTICLE ELEVEN -- MISCELLANEOUS PROVISIONS
11.1 Relationship. Nothing in this Agreement shall create a partnership
or joint venture or establish the relationship of principal and agent or any
other relationship of similar nature between the parties.
11.2 Notices. All notices under this Agreement shall be in writing, and
may be delivered by hand or sent by mail, facsimile transmission or overnight
courier. Notices sent by mail shall be sent by certified mail, return receipt
required, and shall be deemed received on the date of receipt indicated by the
receipt verification provided by the national postal service. Notices delivered
by overnight courier shall be deemed received on the date of receipt indicated
by the verification provided by the courier. Notices sent by facsimile
transmission shall be deemed received the day on which sent, and shall be
conclusively presumed to have been received in the event that the sender's copy
of the facsimile transmission contains the "answer back" of the other party's
facsimile transmission. Notices shall be effective upon receipt. Notice shall be
given, mailed or sent to the parties at the following addresses:
To Supreme at:
Supreme International Corporation
7495 N.W. 48th Street
Miami FL 33166
Attn: George Feldenkreis, Chairman
Facsimile: (305) 577-6011
With a copy to:
Broad and Cassel
201 S. Biscayne Boulevard
Miami Center - Suite 3000
Miami, FL 33131
Attn: Dale S. Bergman, Esq.
Facsimile: (305) 373-9443
To Munsingwear at:
Munsingwear, Inc.
8000 West 78th Street, Suite 400
Minneapolis, MN 55439
Attn: President & Chief Executive Officer
Facsimile: (612) 943-5052
With a copy to:
John R. Houston, Esq.
Lindquist & Vennum P.L.L.P.
4200 IDS Center
80 South Eighth Street
Minneapolis, MN 55402
Facsimile: (612) 371-3207
Any party hereto may designate any other address for notices given it
hereunder by written notice to the other party given at least ten (10) days
prior to the effective date of such change.
11.3 Entire Agreement; Amendment; Waiver. This Agreement constitutes
the entire agreement between the parties hereto pertaining to the subject matter
hereof and supersedes all prior agreements, understandings, negotiations and
discussions, whether oral or written, of the parties hereto, pertaining to such
subject matter. No amendment, supplement, modification or waiver of this
Agreement shall be binding unless it is set forth in a written document signed
by Supreme and Munsingwear. No waiver of any of the provisions of this Agreement
shall be deemed or shall constitute a waiver of any other provisions (whether or
not similar) nor shall such waiver constitute a continuing waiver unless
otherwise expressly provided in a written document signed by the parties hereto.
11.4 Severability. In the event that any provision of this Agreement is
held invalid by the final judgment of any court of competent jurisdiction, the
remaining provisions shall remain in full force and effect as if such invalid
provision had not been included herein.
11.5 U.S. Dollars. All payments required by this Agreement shall be
made in U.S. Dollars.
11.6 Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the State of Delaware without giving effect to the
rules or principles of any jurisdiction with respect to conflict of laws.
11.7 Survival. The provisions of Articles 3, 6, 9, 10, 11 and any other
provision which by its terms is intended to survive the termination of this
Agreement, shall survive the termination of this Agreement and remain in full
force and effect thereafter.
IN WITNESS WHEREOF the parties hereto, intending to be legally bound
thereby, have executed this Agreement as of the date first above written.
MUNSINGWEAR, INC. SUPREME INTERNATIONAL
CORPORATION
By: /s/ Lowell M. Fisher By: /s/ George Feldenkreis
----------------------------- --------------------------------
Its: Chief Executive Officer Its: Chief Executive Officer
EXHIBIT A
The "Licensed Trademarks" are the following
trademarks:
MUNSINGWEAR
PENGUIN Design Logo
(used only in conjunction with the Munsingwear Trademark)
EXHIBIT B
AUTHORIZED CHANNELS OF DISTRIBUTION
(1) The Advertising Specialty Incentive (ASI) Market --
independent distributors of business incentive products, such
as embroidered apparel, mugs and calendars.
(2) The Specialty Distributor Market -- distributors who stock and
sell incentive products (generally, apparel) to institutions
and smaller ASI distributors, and also provide value-added
services to their customers, such as embroidery and credit
services.
(3) The Uniform Market -- institutions purchasing a collection of
coordinated clothing items designed by such institutions to be
worn by their employees and their agents whereby the name or
logo of the institution appears on the clothing.
In addition, Munsingwear may sell the Licensed Products through retail
channels if the specific accounts are pre-approved by Supreme, which approval
may be withheld by Supreme in its sole discretion.
EXHIBIT C
MANUFACTURER'S AGREEMENT
This Manufacturer's Agreement is made pursuant to that certain License Agreement
("License Agreement") between SUPREME INTERNATIONAL CORPORATION ("Licensor") and
PREMIUMWEAR, INC., a Delaware corporation formerly known as Munsingwear, Inc.
("Licensee") dated September 6, 1996.
As a condition to the manufacture or production by the undersigned Manufacturer
of any of the Licensed Products bearing the "Licensed Trademarks" (as defined
according to the terms and conditions in the License Agreement), the
Manufacturer acknowledges that the Licensed Trademarks are the sole property of
Licensor and that the right of the Manufacturer to manufacture or produce the
Licensed Products with the Licensed Trademarks thereon is in all respects
subject to the terms and conditions set forth in the License Agreement. The
Manufacturer agrees that the provisions of the License Agreement shall take
precedence over and supersede any and all contractual relationships between
Licensee and the Manufacturer and, in particular, the Manufacturer recognizes
that all manufacturing or production rights are subject to (a) the restrictions
on the use of the Licensed Trademarks and (b) the termination provisions as set
forth in the License Agreement. The Manufacturer further acknowledges that its
manufacture or production of the Licensed Products shall give the Manufacturer
no right to use the Licensed Trademarks or to sell the Licensed Products bearing
the Licensed Trademarks to Licensee beyond the term permitted by the License
Agreement. The Manufacturer further promises not to sell the Licensed Products
with the Licensed Trademarks thereon to any party except Licensee. If Licensor
terminates the License Agreement, the Manufacturer agrees to make no claim
against Licensor for any reason whatsoever. This Manufacturer's Agreement shall
not be valid unless and until signed by all parties.
Accepted and Agreed: Acknowledged:
By By
-------------------------------- -----------------------------------
Manufacturer Supreme International Corporation
Date:
-----------------------------
By Date:
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