Trademark Purchase And License Assignment

CONFORMED COPY


TRADEMARK PURCHASE
AND LICENSE ASSIGNMENT AGREEMENT


TRADEMARK PURCHASE AND LICENSE ASSIGNMENT AGREEMENT (this "AGREEMENT") dated as of December 23, 1997, between Cherokee, Inc., a Delaware corporation ("CHEROKEE") and SPELL C. LLC, a Delaware limited liability company ("SPV").


W I T N E S S E T H:


WHEREAS, Cherokee owns the Trademark (as defined below);


WHEREAS, Cherokee and Licensee (as defined below) have entered into a License Agreement (as defined below), whereby Cherokee granted Licensee certain rights to use the Trademark pursuant to the License Agreement;


WHEREAS, SPV is a direct, wholly-owned, bankruptcy-remote limited purpose subsidiary of Cherokee; and


WHEREAS, Cherokee desires to sell, and SPV desires to purchase, the Trademark Rights (as defined below), and Cherokee desires to assign, and SPV desires to assume, the License Rights, in each case upon the terms and subject to the conditions hereinafter set forth;


NOW, THEREFORE, the parties hereto agree as follows:


ARTICLE 1


Definitions


Section 1.0. Definitions. Capitalized terms used but not defined herein shall have the respective meanings given to such terms in the Indenture dated December 23, 1997 between SPV and Wilmington Trust Company, as Trustee (the "INDENTURE"). The following additional terms, as used herein, have the following respective meanings:


"AGREEMENT" has the meaning assigned to that term in the first paragraph hereof.


"ASSIGNED RIGHTS" has the meaning assigned to that term in Section 2.01.


"ASSIGNMENT" has the meaning assigned to that term in Section 2.01.


"CHEROKEE" has the meaning assigned to that term in the first paragraph hereof.


"CHEROKEE LICENSES" has the meaning assigned to that term in Section 2.01.


"INDIAN HEAD DESIGN" means the design included in Exhibit A.


"INDENTURE" has the meaning assigned to that term in the introductory sentence to this Section 1.01.


"LICENSE AGREEMENT" has the meaning assigned to that term in Section 2.01.


"LICENSEE" has the meaning assigned to that term in Section 2.01.


"LICENSE RIGHTS" has the meaning assigned to that term in Section 2.01.


"OTHER EXISTING LICENSES" has the meaning assigned to that term in Section 2.01.


"OTHER PERMITTED LICENSES" means the Cherokee Licenses and the license granted by SPV to Cherokee pursuant to Section 4.01 hereof.


"SPV" has the meaning assigned to that term in the first paragraph hereof.


"SPV INDEMNIFIED PARTIES" has the meaning assigned to that term in Section 8.11.


"TRADEMARK" means all United States right, title and interest of Cherokee in and to the "Cherokee" trademark and other marks incorporating the name Cherokee, with various stylized designs, including the "Indian Head Design," as used and registered in the United States Patent and Trademark Office, copies of which registrations are attached as Exhibit A hereto.


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"TRADEMARK RIGHTS" has the meaning assigned to that term in Section 2.01.


ARTICLE 2


Sale, Assignment and Transfer


Section 2.01. Transfer to SPV. On the terms set forth herein and subject to (i) the due execution and delivery of this Agreement by each of the parties hereto and (ii the receipt by Cherokee of the payment required to be made under Section 3.01 hereof, as of the date hereof Cherokee hereby:


(a) assigns all of its rights and obligations as licensor under the License Agreement (the "LICENSE AGREEMENT") dated as of November 12, 1997 between Cherokee and Dayton Hudson Corporation (the "LICENSEE") together with all rights and privileges granted, secured and provided thereby (the "LICENSE RIGHTS"), such rights to be held and enjoyed by SPV from and after the date hereof, for its own use and benefit and for the use and benefit of its successors, assigns or other legal representatives, as fully and entirely as the same would have been held and enjoyed by Cherokee if this assignment and assumption had not been made; and


(b) sells, assigns and transfers to SPV all of its right, title and interest in, to and under the Trademark, together with any United States extensions or renewals thereof, United States trademark registrations and trademark applications for the Cherokee trademark, any other mark incorporating the Cherokee name or the Indian Head Design, and United States common law rights to the Cherokee trademark, other marks incorporating the name Cherokee and the Indian Head Design, whether presently existing or hereafter arising or acquired, together with the good will of the business connected with the use of or symbolized by the foregoing, together with all rights and privileges granted and secured thereby, including without limitation any and all claims and causes of action which may hereafter arise by reason of unfair competition therewith, infringement, violation or dilution thereof or injury to the associated goodwill or otherwise, such rights to be held and enjoyed by SPV, for its own use and benefit and for the use and benefit of its successors, assigns or other legal representatives as fully and entirely as the same would have been held and enjoyed by Cherokee if this assignment had not been made (the "TRADEMARK RIGHTS" and, together with the License Rights, the "ASSIGNED RIGHTS"); provided, that the sale, assignment and transfer contemplated in this clause (b) is subject to (x) the License Agreement, (y) the other existing licenses of the Trademark set forth in


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Schedule 2.01 (the "OTHER EXISTING LICENSES") and (z) retail license agreements (in the category of cosmetics, bath and body products only) hereafter granted by Cherokee as permitted by Section 7(b)(v)(b) of the License Agreement and Section 4.01 hereof (such other retail license agreements referred to in (z), together with the Other Existing Licenses, the "CHEROKEE LICENSES"), and conveys no interest in the Cherokee Licenses.


The sale, assignment and transfer contemplated in this Section 2.01 shall together be referred to herein as the "ASSIGNMENT."


Section 2.02. Acceptance and Assumption. SPV hereby acknowledges its acceptance and assumption of all right, title and interest in and to the Trademark and the License Agreement. SPV hereby expressly assumes all of Cherokee's liabilities and obligations under the License Agreement.


Section 2.03. Absolute Transfer. Cherokee and SPV hereby agree and acknowledge that the Assignment is an absolute and irrevocable transfer of the Trademark and the License Agreement, and is not intended to be a transfer for purposes of security.


Section 2.04. No Recourse. The Assignment shall be without recourse, representation or warranty except as expressly provided herein. Without limiting the generality of the foregoing, Cherokee shall have no responsibility for performance by the Licensee of its obligations under the License Agreement.


ARTICLE 3


Payment of Purchase Price


Section 3.01. Purchase Price. As consideration for the Assignment, SPV shall, by not later than 1:00 p.m. New York time on the date hereof, pay or cause to be paid to Cherokee an amount equal to $47,845,558.83.


Section 3.02. Allocation. Cherokee and SPV agree that any payments due pursuant to the License Agreement after the date hereof shall be payable to, and for the account of, SPV, regardless of whether some portion thereof may have accrued prior to the date hereof.


Section 3.03. Account Information. The payment hereunder to Cherokee shall be made in immediately available funds, without setoff, deduction or


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counterclaim by payment to such bank account as Cherokee may specify for this purpose.


ARTICLE 4


Other Permitted Licenses


Section 4.01. License to Cherokee. SPV hereby grants to Cherokee, and Cherokee hereby accepts, the right and license to use the Trademark to the extent necessary or appropriate to enable Cherokee to grant and maintain the Cherokee Licenses and perform its obligations thereunder and receive the rights and benefits thereof, in each case subject to Section 4.02. Except as contemplated by Section 4.02, no royalty shall be payable by Cherokee for any license granted pu ...