Polo Ralph Lauren Corporation (NYSE: RL) today announced it has filed a complaint in the Supreme Court of the State of New York against Jones Apparel Group, Inc seeking among other things an injunction and a declaratory judgment that the Lauren license agreements terminate as of December 31, 2003 pursuant to the express terms of a separate cross-default agreement executed by the parties.
The Cross-Default Agreement executed by the companies on or about May 11, 1998 provides that the ''termination or expiration'' of any of the Lauren Agreements or Ralph Agreements “shall result in the simultaneous termination or expiration” of all such agreements. Polo Ralph Lauren believes that the Cross-Default Agreement was triggered when Jones failed to meet its minimum aggregate net sales volume for the period of January 1, 2002 to December 31, 2002 required to permit the renewal of the Ralph license agreements. Jones admits that the Ralph license agreement terminate effective December 31, 2003.
Roger Farah, President and Chief Operating Officer of Polo Ralph Lauren, said, ''We regret taking this action, but we felt we had no choice but to seek immediate Court relief from what we believe is obstructionist behavior from a business partner that may irreparably damage our brands. We believe that we are well within our legal right to reclaim our licenses. We are confident that the Court will enforce our clear contractual rights enabling us to serve our customers without interruption.''
