MERCHANDISING LICENSING AGREEMENT
---------------------------------
1. Licensor: Signature Network, Inc. ("Signatures"),
as agent for John Paul Densmore, Raymond D.
Manzarek, Robert Allen Krieger, and the Sole
Beneficiaries of the Estate of James Douglas Morrison (collectively, "Licensor")
Two Bryant Street
San Francisco, CA 94105
Attention: Music Licensing Division
Phone:(415) 247-7400; Fax: (415) 247-7407
Licensee: Famous Fixins ("Licensee"),
a N.Y. corporation
250 West 57th Street
Suite 2501
New York, NY 10107
Attention: Jason Bauer
Phone:(212) 245-7773; Fax: (570) 288-1855
2. Artist: The musical group "The Doors" ("Artist").
3. Proprietary Subject Matter: The name(s), symbols, logos,
approved images, and approved likenesses of the
Artist ("Proprietary Subject Matter").
4. Articles: The following products utilizing, bearing, or
otherwise relating to the Proprietary Subject
Matter ("Articles") and, for each of the
Articles, its initially listed billing price
("PWP") and suggested retail selling price
("RSP"):
Disposable Lighters (PWP: $0.50-$4.00; RSP: $1.00-
$7.99
5. Territory: United States ("Territory").
6. Term: The Term shall commence on July 1, 2001 and expire
on June 30, 2003 unless sooner terminated as
provided in Exhibit "A" hereto ("Term").
7. Exclusivity: Non-exclusive license.
8. Royalty Rate: 11% of Net Sales ("Royalty Rate").
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9. Advance: US $20,000 ("Advance"), payable as follows:
$10,000 due on Licensee's execution of this
Agreement;
US $25,000 due on or before June 30, 2002
10. Guarantee: US $20,000 (inclusive of the Advance)
("Guarantee").
11. Channels of Distribution: The sale of Articles (i) to jobbers,
wholesalers, and distributors for sale and distribution to retail stores and
merchants; (ii) to retail stores and merchants directly for sale and
distribution to the public; (iii) to those third party direct marketing
catalogue companies for which Licensor has given its prior written approval; and
(iv) directly to the ultimate consumer via Licensee's direct-to-the-consumer
programs; provided however, that nothing in this Agreement shall be construed to
authorize Licensee to use the Proprietary Subject Matter in a manner designed to
promote its website ("Channels of Distribution").
12. Earliest In-Store Date: September 1, 2000 ("Earliest In-Store Date").
13. Shipping Date: December 1, 2001 ("Shipping Date").
14. Copyright and Trademark Notices:
Copyright: (c) 200[x] Doors Music Company
All Rights Reserved.
15. Approvals: All Articles and any related packaging and advertising must be
approved by Licensor in writing before distribution or sale by Licensee. Such
approvals or disapprovals are within Licensor's sole discretion, and any
submission not approved in writing is deemed disapproved.
16. Insurance Amount: $1,000,000 per occurrence per year.
17. Samples: 24 of each Article.
18. Additional Terms: The attached Exhibit "A" (Standard Terms and
Conditions) is incorporated herein by this
reference.
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By signing below, Licensee affirms that it is in agreement with the foregoing
and that it has read and understands and agrees to be bound by Exhibit "A"
(Standard Terms and Conditions) attached hereto and forming a part hereof.
Licensee further agrees that this Agreement shall also serve as an invoice to
Licensee with respect to the amounts payable as set forth above and Licensee
agrees to pay such amounts to Licensor as and when specified above. LICENSEE
ACKNOWLEDGES THAT IT HAS NO RIGHTS TO THE USE OF THE PROPRIETARY SUBJECT MATTER
UNTIL THIS AGREEMENT IS EXECUTED BY LICENSOR. LICENSOR SHALL NOT BE RESPONSIBLE
FOR ANY COSTS OR EXPENSES INCURRED BY LICENSEE BEFORE OR AFTER THIS AGREEMENT IS
SIGNED BY LICENSOR. THIS AGREEMENT SHALL NOT BE BINDING UPON LICENSOR UNTIL
FULLY EXECUTED AND DELIVERED.
ACCEPTED AND AGREED TO:
SIGNATURES NETWORK, INC. FAMOUS FIXINS
as agent for JOHN PAUL DENSMORE,
RAYMOND D. MANZAREK, ROBERT ALLEN
KRIEGER, and the SOLE BENEFICIARIES
OF THE ESTATE OF JAMES DOUGLAS
MORRISON
By: /s/ Dell Fierano By: /s/ Jason Bauer
Print Name: Dell Fierano Print Name: Jason Bauer
Title: CEO Title: President
Date: 9/21/01 Date: 9/19/01
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EXHIBIT "A"
-----------
MERCHANDISING LICENSE AGREEMENT
STANDARD TERMS AND CONDITIONS
These Standard Terms and Conditions shall be deemed fully incorporated in
the Merchandising License Agreement ("Underlying Agreement") to which this
Exhibit "A" is attached, and these Standard Terms and Conditions and the
Underlying Agreement shall hereinafter be collectively referred to as the
"Agreement". All terms shall, unless expressly provided to the contrary herein,
have the same respective meanings as set forth in the Underlying Agreement.
Unless expressly provided to the contrary herein, to the extent that any
provision of these Standard Terms and Conditions conflicts with any provision of
the Underlying Agreement, the Underlying Agreement shall control.
19. FURTHER CONDITIONS ON GRANTS OF RIGHTS.
---------------------------------------
Licensor hereby grants to Licensee, and Licensee hereby accepts, the right
and license to utilize during the Term the Proprietary Subject Matter solely on
or in connection with the manufacture and sale of Articles in the Territory,
subject to the terms and conditions hereunder. Licensee shall be entitled to
sell Articles solely in the Channels of Distribution set forth in Paragraph 11
of the Underlying Agreement. No such sales shall be on an approval, consignment,
guaranteed sale or return basis. Licensee agrees that it will not make or
authorize any use, direct or indirect, of the Articles outside the Territory and
that it will not intentionally sell Articles to persons who intend or are likely
to resell them outside the Territory.
20. CONSIDERATION.
--------------
20.1 Licensee shall pay Licensor a nonrefundable Advance against Royalties
in the amount(s) and at the time(s) specified in Paragraph 9. Licensee shall be
entitled to apply the Advance against Royalties due Licensor hereunder during
the Term.
20.2. Licensee shall pay Licensor the Royalty Rate specified in Paragraph 8.
Royalties shall be paid on all units of Articles (i) sold by Licensee or (ii)
distributed by Licensee on a "no charge" basis for promotional, marketing, or
goodwill purposes. For purposes of this Agreement, "Net Sales" shall mean
Licensee's gross sales (the gross invoice amount billed customers) of Articles
sold or otherwise distributed during the Term pursuant to this Agreement, less
deductions for trade and quantity discounts actually taken (provided, however,
that such trade and quantity discounts shall not exceed ten percent (10%) of
gross sales), returns for damaged goods actually credited (and supported by
credit memoranda actually issued to the customers), and sales taxes (if
applicable). It is understood that credit against sales will be allowed only for
actual returns of damaged goods, and that no credit against sales will be
allowed on the basis of an accrual or reserve system. No other deductions shall
be taken from Net Sales including, without limitation, deductions for cash or
other discounts or uncollectible accounts. No costs incurred in the manufacture,
sale, distribution, or promotion of Articles shall be deducted from any
Royalties payable to Licensor. Licensee shall pay, and hold Licensor forever
harmless from, all taxes, customs, duties, levies, impost or any other charges
now or hereafter imposed or based upon the manufacture, delivery, license, sale,
possession or use hereunder to or by Licensee of the Articles (including, but
not limited to sales, use, inventory, income and value added taxes on sales of
Articles), which charges shall not be deducted from Licensor's Royalties, the
Advance, or the Guarantee. In addition, Royalties shall be paid by the Licensee
based on Licensee's usual sales price where (a) Articles are distributed by
Licensee on a "no charge" basis for promotional marketing or goodwill purposes,
(b) the billed price for the Articles is less than the usual sales price and the
Licensee receives other compensation attributable to the distribution of the
Articles separate from the price which appears on the respective invoice, or (c)
the Articles are sold by Licensee to an affiliate.
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20.3 Unless otherwise expressly provided herein, Licensee shall not,
without the express prior written consent of Licensor, permit the distribution
or other marketing of any Articles on an F.O.B. or L.C. basis (as those terms
are commonly understood in the international merchandising business). All
Articles distributed or marketed (and subject to Licensor's prior written
approval) on an F.O.B. or L.C. basis will be subject to Royalties based on the
greater of (a) a royalty rate computed on the same basis as if such Articles had
been shipped directly to Licensee, or (b) a royalty rate equal to one-half of
the Royalty Rate specified in Paragraph 8, but based on the suggested retail
sales price of Articles sold by Licensee's customers.
20.4 All royalties due Licensor as set forth in Paragraphs 20.2 and 20.3
shall be collectively referred to as "Royalties". Royalties hereunder shall
accrue when the Articles are sold, shipped, distributed, billed and/or paid for,
whichever occurs first.
20.5 If withholding taxes based on Licensor's direct net income taxes are
required, Licensee may deduct the required amount from Royalties prior to
remitting same to Licensor, provided Licensee provides Licensor with a copy of
such withholding tax payment prior to such deduction and provides Licensor with
the appropriate tax credit forms within sixty (60) days of payment of such
withholding tax and affords all necessary cooperation and support to Licensor in
order to get reimbursed and/or credited. In the event Licensee does not provide
the appropriate tax credit form within sixty (60) days of payment of withholding
taxes, Licensee shall be liable to and shall reimburse Licensor for the amounts
deducted from Royalties for withholding taxes in the immediately following
Royalty Report.
20.6 Licensee shall pay Licensor a minimum Royalties Guarantee for the
Term, inclusive of the Advance, in the amount specified in Paragraph 10, payable
at the expiration or earlier termination of the Term.
21. ACCOUNTING; AUDITING.
--------------------
21.1 On the form attached hereto or on such other form as Licensor may
from time to time provide to Licensee, Licensee shall (i) render royalty reports
("Royalty Reports") to Licensor on a quarterly basis within thirty (30) days
after the close of each calendar quarter during the Term hereof, whether or not
any payment is shown to be due to Licensor thereunder, and (ii) remit payments
due Licensor, if any, along with such Royalty Reports. If the Territory covers
more than one country, Royalty Reports shall be prepared on a country-by-country
basis. Royalties may be computed in the currency of the country where earned and
paid to the Licensor in U.S. Dollars at the exchange rate received by Licensee
at the time of conversion. Licensee shall be solely responsible for all costs of
any currency conversion to U.S. Dollars, and such costs shall not reduce the
amounts due to Licensor hereunder. Acceptance of Royalties by Licensor shall not
preclude Licensor from questioning the correctness of same at any time. All
Royalties shall be made without set-off of any amount whatsoever, whether based
upon any claimed debt or liability of Licensor to Licensee. All Royalties and
Royalty Reports shall be sent to: Signatures Network, Inc., P.O. Box 191627, San
Francisco, CA 94119, Attn.: Accounting-The Doors.
21.2 Licensee shall keep and maintain accurate books of account and
records covering all transactions relating to this Agreement. Licensor or its
designee shall be entitled to (i) audit and inspect such books and records at
any time or times during or after the Term of the Agreement during reasonable
business hours and upon five (5) days prior written notice to Licensee, and (ii)
make copies and summaries of such books and records. All such books of account
and records shall be retained by Licensee for a minimum of three (3) years after
expiration or termination of this Agreement. If Licensor's duly authorized
representative discovers a deficiency in the Royalties paid to Licensor for any
period under audit (an "Audit Deficiency"), Licensee shall promptly pay such
Audit Deficiency to Licensor and, if such Audit Deficiency is three percent (3%)
or more of the
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Royalties paid to Licensor for such audit period, Licensee shall also reimburse
Licensor for all costs and expenses incurred by Licensor in connection with such
audit. In calculating costs for an internal auditor to perform such audit,
Licensor shall bill its personnel costs incurred in performing such audit on an
hourly basis at the hourly salaried rate of the personnel performing such
services multiplied by a factor of 1.75. If such Audit Deficiency is twenty
percent (20%) or more of the Royalties paid to Licensor for such audit period,
then in addition to the above, Licensor may, at its sole option, immediately
terminate the Agreement upon notice to Licensee, even if Licensee tenders the
Audit Deficiency and associated costs and expenses to Licensor.
21.3 Without prejudice to any other rights of Licensor hereunder, time is
of the essence regarding all payments due hereunder and Licensee shall pay
interest on any Audit Deficiency, as well as on all delinquent Royalty payments
hereunder, at two percent plus the "prime rate" established by the Bank of
America in San Francisco, compounded annually at the rate from time to time in
effect and calculated from the date on which such payment was due.
22. EXCLUSIVITY.
-----------
22.1 If, and only if, the Underlying Agreement specifies that Licensee's
license hereunder is exclusive, Licensor shall not, except as otherwise provided
herein, grant any other licenses effective during the Term for the use of the
Proprietary Subject Matter in connection with the manufacture, distribution and
sale in the Channels of Distribution in the Territory of the Articles as
expressly described in the Underlying Agreement. Notwithstanding the foregoing,
nothing in this Agreement shall be construed to prevent Licensor from granting
any licenses for the use of the Proprietary Subject Matter other than as
provided herein, or from utilizing the Proprietary Subject Matter in any manner
whatsoever other than as provided herein. If the Underlying Agreement specifies
that Licensee's license hereunder is exclusive, and in the event that Licensee
is unable to timely provide Signatures with such quantities of Articles as it
from time to time requests pursuant to Paragraph 28.6, then Signatures shall
have the right to manufacture, advertise, and sell Articles so long as such
Articles are sold only in retail establishments owned or controlled by
Signatures.
22.2 If the Underlying Agreement specifies that Licensee's license
hereunder is non-exclusive, then Licensor shall be free to utilize, or to grant
any license to third parties to utilize, the Proprietary Subject Matter in any
manner for any purposes whatsoever.
23. COPYRIGHT, TRADEMARKS, ETC.
--------------------------
23.1 Licensee's use of the Proprietary Subject Matter shall inure
exclusively to the benefit of Licensor, and Licensee shall not acquire any
rights therein. Licensee recognizes the value of the goodwill associated with
the Proprietary Subject Matter, and that the Proprietary Subject Matter has
acquired secondary meaning in the mind of the public. Licensee agrees, during
the Term and thereafter, never to contest the rights of Licensor in such
Proprietary Subject Matter or the validity of the license herein granted to it.
Licensee shall not at any time apply for any registration of any copyright,
trademark, patent, or any other intellectual property right, whether recognized
currently or in the future, or other designation which would affect the
ownership or rights of Licensor in and to the Proprietary Subject Matter nor
file any document with any governmental authority or otherwise to take any
action which would adversely affect any of such ownership or rights in and to
the Proprietary Subject Matter, or assist anyone else in doing so.
23.2 Ownership of all intellectual property rights, whether recognized
currently or in the future, including, without limitation, copyright, patent and
trademark rights, in the Articles and in all artwork, packaging, copy, literary
text, advertising material and promotion material of any sort utilizing the
Proprietary Subject Matter, including all such material developed by Licensee,
shall vest in Licensor and title thereof shall be in the name of Licensor, or
its respective designees. All such items and all
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Articles shall bear the copyright and trademark notices specified in Paragraph
14 and any other legal notices which Licensor may from time to time prescribe.
Any and all additions to, and new renderings, modifications or embellishments of
the artwork shall, notwithstanding their invention, creation and use by Licensee
or its agents, be and remain the property of Licensor, and Licensor may use, and
license others to use the same, subject only to the provisions of this
Agreement. Licensee shall enter into written agreements with all of its
employees and independent contractors (i) providing that all artwork and designs
created by them in the course of Licensee's performance under this Agreement
shall be the property of Licensor either as works for hire under United States
copyright law or otherwise, and (ii) obligating them to assign all rights in
such artwork and designs to Licensor. Upon the request of Licensor, Licensee
shall submit to Licensor for Licensor's approval copies of all such agreements
prior to use thereof. Licensee shall not permit any of its employees or
independent contractors to obtain or reserve, by written or oral agreement or
otherwise, any rights as "authors" or "inventors" of any such artwork or designs
(as such terms are used in present or future United States copyright and/or
patent statutes or judicial decisions). Licensee shall furnish to Licensor at
Licensor's request, full information concerning the invention and creation of
such artwork and designs, together with the originals of assignments of all
rights therein obtained from all such third parties to Licensor.
23.3 Licensee shall assist Licensor, at Licensor's request and expense, in
the procurement and maintenance of Licensor's rights in the Proprietary Subject
Matter (including all intellectual property rights, whether recognized currently
or in the future). In connection therewith, Licensee shall, without limitation,
execute and deliver to Licensor in such form as it may reasonably request, all
instruments necessary to (i) effectuate copyright and trademark protection, (ii)
record Licensee as a registered user of any trademarks pursuant to this
Agreement, or (iii) cancel any such registration. Such registration shall be
handled by attorneys selected or approved by Licensor. Licensor makes no
warranty or representation that trademark or copyright protection shall be
secured in the Proprietary Subject Matter.
23.4 Licensor and Licensee shall cooperate to ensure that third parties
may not unlawfully infringe on the Proprietary Subject Matter or engage in any
acts of unfair competition involving the Proprietary Subject Matter. Licensee
shall promptly notify the Licensor of any such infringements or acts of unfair
competition by third parties that comes to its attention. Licensor shall have
the exclusive right, exercisable at its discretion, to institute in its own name
and/or Licensee's name and to control, all actions against third parties
relating to Licensor's copyrights, trademarks, and other proprietary rights in
and to the Proprietary Subject Matter, at Licensor's expense. With respect to
any such actions, Licensor shall employ counsel of its own choice to direct the
handling of the litigation and any settlement thereof. Licensor shall be
entitled to receive and retain all amounts awarded, if any, as damages, profits
or otherwise in connection with such suits. Licensee shall not, without
Licensor's prior written consent, institute any suit or take any action on
account of such infringements, acts of unfair competition or unauthorized uses.
If, with Licensor's consent, Licensee institutes, at its sole cost and expense,
such a suit or action, Licensee shall be entitled to recover all reasonable
costs and expenses incurred in such suit or action from any financial recovery
awarded or obtained and the remainder shall be treated as Net Sales hereunder.
Licensor shall incur no liability to Licensee by reason of Licensor's failure or
refusal to prosecute, or by Licensor's refusal to permit Licensee to prosecute,
any alleged infringement by third parties, nor by reason of any settlement to
which Licensor may agree.
23.5 Licensor can withdraw any or all elements of the Proprietary Subject
Matter, or any component part thereof, from the terms of this Agreement if
Licensor determines that the exploitation therefor would or might violate or
infringe the copyright, trademark or other proprietary rights of third parties,
or subject Licensor to any liability or violate any law, court order, government
regulation or other ruling of any governmental agency, or if, on account of the
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expiration or sooner termination of an agreement between Licensor and a third
party from whom Licensor has obtained certain underlying rights relating to the
exploitation of the Proprietary Subject Matter hereunder or otherwise, Licensor
shall no longer have the right to act in the capacity herein contemplated on
behalf of any third party or parties, or if Licensor determines that it cannot
adequately protect its rights in the Proprietary Subject Matter under the
copyright, trademark or other laws of the Territory. Such a withdrawal shall not
be deemed a breach of this Agreement. Within five (5) business days of such
withdrawal, Licensee shall, at Licensor's sole discretion, (a) destroy or (b)
deliver to Licensor at Licensor's expense, any Articles which are in Licensee's
inventory. Licensor shall indemnify Licensee for the direct production cost of
such destroyed or returned Articles; provided, however, that Licensee furnishes
Licensor with (i) a detailed inventory of such Articles, (ii) source
documentation supporting such direct production costs, and (iii) an affidavit of
destruction, if applicable, in a form acceptable to Licensor, evidencing the
same.
23.6 Licensee shall not use Licensor's name, or the Proprietary Subject
Matter, other than as permitted hereunder and, in particular, shall not
incorporate Licensor's name, or the Proprietary Subject Matter, in the
Licensee's corporate or business name in any manner whatsoever. Licensee agrees
that in using the Proprietary Subject Matter it will in no way represent that it
has any rights, title and/or interest in or to the Proprietary Subject Matter
other than those expressly granted under the terms of this Agreement. Licensee
further agrees that it will not use or authorize the use, either during or after
the Term, of any configuration, trademark, trade name, or other designation
confusingly or substantially similar to the Proprietary Subject Matter, or any
element thereof.
24. INDEMNIFICATION.
---------------
24.1 Licensor shall indemnify, hold harmless and defend Licensee, and its
parents, subsidiaries, affiliates, officers, directors and employees, against
any claims, liabilities, demands, causes of action, judgments, settlements and
expenses (including, but not limited to, reasonable attorneys' fees and court
costs) arising solely out of Licensee's use of the Proprietary Subject Matter as
authorized hereunder; provided, however, that Licensee shall notify Licensor in
writing within ten (10) days after Licensee receives notification of any claim
or suit relating to the Proprietary Subject Matter. Licensor shall undertake and
control the defense and settlement of any such claim or suit and Licensee shall
cooperate fully with Licensor in connection herewith. In no event shall Licensor
be liable for any consequential damages or loss of profits which Licensee may
suffer arising out of same. The foregoing indemnity shall not be construed to
cover any claim with respect to which Licensee has committed to indemnify
Licensor under Paragraph 24.2 below.
24.2 During and after the Term hereof, Licensee shall indemnify and hold
harmless, Licensor and Signatures, and their respective parents, subsidiaries,
affiliates, officers, directors, representatives, employees and agents, and all
persons whose names and/or likenesses are licensed hereunder (each, an
"Indemnitee" and collectively "Indemnitees") from and against any and all
claims, liabilities, demands, causes of action, judgments, settlements and
expenses (including, but not limited to, reasonable attorneys' fees and court
costs) ("Claim") arising out of or in connection with (i) the design,
manufacture, packaging, distribution, shipment, advertising, promotion, sale, or
exploitation of the Articles, (ii) any breach of any representation, warranty,
or covenant made by Licensee hereunder, or (iii) the failure of Licensee to
perform any of its covenants or obligations contained in this Agreement. Without
limiting the generality of the foregoing, Licensee's indemnity shall
specifically apply to claims relating to or based upon defects in the Articles,
whether hidden or obvious, and despite Licensor's approval of the Articles, it
being agreed that any governmental order of recall or injunction against
distribution and/or sale shall, as between Licensee and Licensor, be deemed
conclusive proof of such defect for purposes of invoking Licensee's indemnity
hereunder. The foregoing indemnity shall not be construed to cover any claim
with respect to which Licensor has committed to indemnify Licensee under
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Paragraph 24.1 above. If any Claim is initiated against any Indemnitee with
respect to which such Indemnitee may make a claim against Licensee pursuant to
this Paragraph 24.2, then the Indemnitee shall give prompt written notice of
such Claim to the Licensee; provided, however, that the failure to so notify the
Licensee shall not relieve the Licensee from any liability under this Paragraph
24.2 unless, and only to the extent that, such failure results in prejudice to
or forfeiture of, substantive rights or defenses of the Licensee. Licensee, at
Licensee's own expense, shall have the option to assume the defense of such
Claim. If Licensee assumes the defense of such Claim, (i) Licensee shall keep
the Indemnitee informed of all material developments and events relating to such
Claim, (ii) the Indemnitee shall have the right to participate, at its own
expense, in the defense of such Claim (but such participation shall not be
deemed to give the Indemitee the right to control such defense), (iii) the
Indemnitee shall cooperate as reasonably requested by Licensee in the defense of
such Claim, and (iv) Licensee shall not settle such Claim without the prior
written consent of the Indemnitee, which consent shall not be unreasonably
withheld. If Licensee fails to assume the defense of such Claim, or fails to
diligently defend such Claim, Indemnitee may assume the defense of such Claim
and Licensee shall reimburse Indemnitee for all reasonable expenses (including
reasonable attorneys' fees which may include, without limitation, an allocation
for in-house counsel) as such expenses are incurred, relating to the defense of
such Claim.
25. INSURANCE.
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Licensee shall at all times while this Agreement is in effect and for
three (3) years thereafter, obtain and maintain at its own expense, from a
qualified insurance carrier with a Best rating of at least "B", insurance,
including, without limitation, products, personal injury, advertising, and
contractual liability coverage, which includes as additional insureds Licensor
and Signatures, and their respective parents, subsidiaries, affiliates,
officers, directors, employees, representatives and agents. The amount of
coverage shall be not less than the amount specified in Paragraph 16 combined
single limit (with no deductible amount) for each single occurrence. The policy
shall provide for thirty (30) days written notice to Licensor and Signatures
from the insurer by registered or certified mail, return receipt requested, in
the event of any modification, cancellation or termination. Upon execution of
this Agreement, Licensee shall furnish Licensor with a certificate of insurance
issued by the carrier evidencing the same. In no event shall Licensee
manufacture, advertise, distribute or sell any Articles prior to Licensor's
receipt of such certificate of insurance.
26. ARTWORK; APPROVALS; SAMPLES; OUALITY CONTROL.
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26.1 Licensee undertakes that the Articles as well as all packaging, hang
tags, labels, press releases, advertising, promotion display or other materials
of any and all types prepared in connection with the Articles (collectively the
"Collateral Materials") shall be of the highest standard and quality and shall
ensure that all Articles and the manufacture, distribution, sale, promotion and
advertisement thereof comply with all federal, state and local laws and
regulations.
26.2 At Licensee's request, Licensor shall supply Licensee with
"thumbnails" embodying the Proprietary Subject Matter for Licensee's preliminary
use in developing the Articles. All other artwork requested by Licensee for the
development and production of the Articles or the Collateral Materials
(including but not limited to photographs, transparencies, designs, and
materials) shall be subject to availability, and shall be provided at Licensor's
standard licensee price therefor. (All of the artwork supplied to Licensee by
Licensor shall be collectively referred to herein as "Artwork")
26.3 Licensee shall submit to Licensor and Licensor shall have absolute
approval over all artwork (whether Artwork or artwork created by Licensee and/or
its designees), all Articles and all Collateral Materials at all stages of
development and production. Licensee
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may not manufacture, use, offer for sale, sell, advertise, ship or distribute
any Articles or Collateral Materials without Licensor's prior written approval.
Licensee shall, at its own cost, submit to Licensor for approval, two (2)
prototypes of each Article ("Prototype") and each Collateral Material and/or two
(2) drawings, storyboards or rough cuts of each Article (collectively
"Preliminary Artwork"), as applicable. All such Prototypes and/or Preliminary
Artwork shall be sent to: Signatures Network, Inc., Two Bryant Street, San
Francisco, CA, 94105, Attn.: Gladys Ng Blumin. Licensee shall submit Prototypes
and Preliminary Artwork, as applicable, for approval as provided herein not
later than sixty (60) days after receipt of Artwork from Licensor. Any
submission of a Prototype and/or Preliminary Artwork which is not approved in
writing by Licensor shall be deemed disapproved. Any changes required by
Licensor to any such Prototypes and/or Preliminary Artwork which have been
disapproved by Licensor, shall be made by Licensee. Thereafter, Licensee shall
submit final samples of all Articles and Collateral Materials to Licensor for
final approval. With respect to all such samples which have received Licensor's
final approval, Licensee shall not depart therefrom in any material respect,
without Licensor's prior written approval. All Articles and Collateral Materials
not approved by Licensor shall be destroyed or shall have the Proprietary
Subject Matter removed. Such destruction shall be attested to in a certificate
signed by one of Licensee's officers.
26.4 Licensee shall furnish to Licensor, without charge, a minimum number
of samples of each finished Article from the first production run, together with
its Collateral Materials, as is specified in Paragraph 17. Licensee shall not
sell, ship, or distribute any Articles until all such samples have been
furnished to Licensor. Licensor may, periodically, but not more often than twice
per calendar year, during the Term, require that Licensee submit to Licensor,
without charge, up to six (6) additional samples of Articles, together with
Collateral Materials, for subsequent review of the quality and copyright,
trademark, and other legal notices on same and for any other purpose the
Licensor deems appropriate. No Royalties shall be due or payable on all finished
samples furnished to Licensor.
26.5 Licensee shall allow Licensor or its representative to enter
Licensee's premises and all manufacturing facilities during regular business
hours, upon three (3) business days notice, for the purpose of inspecting the
Articles, the Collateral Materials, and the facilities in which they are
manufactured and packaged. In the event that the quality standards hereinabove
referred to are not met, Licensee shall, upon written notice from Licensor,
discontinue the manufacture and distribution of such Articles and/or the
Collateral Materials related thereto, unless Licensee shall have remedied such
failure of quality to Licensor's satisfaction within ten (10) days after
Licensee's receipt of notice thereof; failure to effect such remedial measures
shall entitle Licensor to terminate this Agreement upon notice to Licensee.
27. RESERVED RIGHTS.
---------------
27.1 Licensor reserves all rights not expressly granted to Licensee
hereunder.
27.2 Licensor shall not be prevented from granting third parties the right
to use the Proprietary Subject Matter in any manner whatsoever, except as
otherwise provided herein.
27.3 Licensor specifically reserves unto itself and/or its designees the
right to manufacture, distribute, offer for sale, advertise, promote, display
and otherwise exploit without limitation and throughout the world merchandise,
goods and products similar and/or identical to the Articles for use in
connection with premium sales, promotional tie-ins, giveaways, home television
sales (e.g., QVC), cable programs, vending machines, electronic sales (e.g.,
Prodigy and Internet sales directly to the public), direct response sales (e.g.,
direct mail and telephone sales directly to the public), in-theater sales, sales
at theme parks, amusement parks, entertainment centers or other amusement or
live entertainment attractions and
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performances (e.g., concert halls, arena shows, stadiums), radio sales, sales by
or through fan clubs and conventions, and fund-raisers.
27.4 It is specifically acknowledged by Licensee that all personal,
publicity and other rights of Licensor not granted in Paragraph 3 (including,
but not limited to, the voice and sound recordings of Artist), shall not be
included in the definition of Proprietary Subject Matter and the use thereof is
not licensed herein.
27.5 Licensee acknowledges that the license granted herein does not
include any right, title, or interest in or to the Artist nor to any
intellectual property rights in the Artist, including, without limitation, any
copyrights, patents, and/or trademarks therein or associated therewith.
Furthermore, Licensee acknowledges that the license granted herein does not
include the portrayals of or by Artist in any motion picture, television
production, and the like ("Media Properties"). In this connection, Licensee
expressly acknowledges that its license hereunder does not include the right to
use photographs, designs, materials, and artwork from Media Properties to the
extent such materials are different from the Proprietary Subject Matter.
27.6 Neither Licensee nor any third party connected with Licensee shall
engage in any offer for sale, sale, or distribution of Articles in and about or
at the premises of any of Artist's live performances.
28. MANUFACTURE AND DISTRIBUTION.
----------------------------
28.1 The Proprietary Subject Matter may only be used in connection with
the manufacture, actual packaging and advertising, promotion and distribution of
the Articles.
28.2 Licensee shall be entitled to sublicense the right to manufacture
Articles to any third party ("Supplier"), in whole or in part, with Licensor's
prior written consent. Licensee represents and warrants that it shall
familiarize each such Supplier with the terms and conditions of this Agreement
as they apply to such Supplier. In addition, Licensee acknowledges and agrees
that Licensee's use of any such Supplier shall in no way derogate from or
relieve Licensee of any of its obligations under this Agreement. Licensee
further acknowledges and agrees that it shall be responsible and primarily
liable for all activities and obligations of all such Suppliers with respect to
the Articles. Furthermore, if Licensor so requests, Licensee shall cause each
such Supplier to sign an agreement with Licensee for the manufacture of the
Articles, in whole or in part, in a form satisfactory to Licensor.
28.3 Without the prior written consent of Licensor, Licensee shall not
commence distribution, shipment, and sale of Articles prior to the Earliest
In-Store Date specified in Paragraph 12.
28.4 Licensee shall commence distribution, shipment and sale of
substantial quantities of Articles no later than the Shipping Date specified in
Paragraph 13.
28.5 During the Term, and subject to the terms and conditions hereof,
Licensee shall (i) continue to diligently and continuously advertise, promote,
distribute, ship and sell the Articles in the Territory, and (ii) use its best
efforts to make and maintain adequate arrangements for the distribution,
shipment and sale necessary to meet the demand for such Articles in the
Territory.
28.6 Licensee shall sell to Licensor such quantities of the Articles as
Licensor and/or Signatures shall request at as low a rate and on as favorable
terms as Licensee sells similar quantities of the Articles to the general trade.
Fruthermore, Royalties shall be payable on all such sales.
28.7 The Proprietary Subject Matter shall not be used in conjunction with
any other musical artist or group, name, character, symbol, design, likeness or
literary or artistic material, except that actual representations of an Article
and its packaging may be shown in advertising showing other articles sold by
Licensee, provided such use is not made in a manner that may be likely to cause
doubt or confusion in the minds of
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the public as to the ownership of the Proprietary Subject Matter, and in no
event may the Articles be packaged for sale with other articles.
28.8 Upon request by Licensor and upon ten (10) days prior written notice
to Licensee, Licensee agrees to provide Licensor with any and all lists compiled
by Licensee in connection with Licensee's marketing of the Articles hereunder of
names and addresses of customers or potential customers thereof, including but
not limited to any so-called registration cards as completed and sent to
Licensee by purchasers of the Articles hereunder. Licensor acknowledges and
agrees that it can neither provide such lists to existing licensees who have
licenses for similar products in the Territory, nor utilize such lists for its
own purposes for similar articles in the Territory during the Term.
29. REPRESENTATIONS AND WARRANTIES.
------------------------------
29.1 Licensor represents and warrants to Licensee as follows: (i) Licensor
owns or controls all rights in and to the Proprietary Subject Matter; (ii)
Licensor has the full right, authority and power to enter into this Agreement
and to perform all its obligations hereunder; and (iii) Signatures has the
authority on behalf of Licensor to grant the rights being granted herein.
Licensor makes no representation or warranty as to the amount of receipts
Licensee will derive or as to the quality or success of the Artist. Furthermore,
Licensor does not represent or warrant that the Artist will continue to perform,
compose, record, or otherwise act as a musical artist or group.
29.2 Licensee represents and warrants to Licensor as follows: (i) Licensee
has full power and authority to enter into this Agreement and perform its
obligations herein; and (ii) Licensee's execution, delivery, and performance of
this Agreement will not infringe upon the rights of any third party or violate
the provisions of any agreement to which Licensee is a party.
30. TERMINATION.
-----------
30.1 In addition to any and all other remedies available to it hereunder,
Licensor shall have the right to immediately terminate this Agreement upon
written notice to Licensee upon the occurrence of any of the following:
30.1.1 Licensee makes, sells, offers for sale, uses or distributes any
Article without having the prior written approval of Licensor as specified in
Paragraph 26.3 or continues to make, sell, offer for sale, use or distribute any
Article after receipt of notice from Licensor withdrawing approval of same.
30.1.2 Licensee becomes subject to any voluntary or involuntary order of
any government agency involving the recall of any of the Articles because of
safety, health or other hazards or risks to the public.
30.2 In addition to any and all other remedies available to it hereunder,
on seven (7) days prior written notice to Licensee, Licensor may terminate this
Agreement (in which case such termination shall be effective immediately upon
expiration of the seven (7) day notice period), upon the occurrence of any of
the following circumstances, provided that during such seven (7) day period,
Licensee fails to cure the breach to Licensor's satisfaction:
30.2.1 Licensee fails to immediately discontinue the advertising,
distribution or sale of Articles which do not contain the appropriate legal
legend or notice.
30.2.2 Licensee breaches any of the provisions of this Agreement relating
to the unauthorized assertion of rights in the Proprietary Subject Matter.
30.2.3 Licensee fails to make timely payment of Royalties when due or
fails to make timely submission of Royalty Reports when due. However, in the
event Licensee has previously been given notification and time to cure a prior
breach relating to Licensee's failure to remit a Royalty payment (including
Advances or Guarantees) and/or Royalty Report when due, then Licensor may
terminate this Agreement immediately upon notice to Licensee and no further time
to cure need be given to Licensee by Licensor regardless of whether or not
Licensee cured any prior failure or breach.
30.2.4 Licensee intentionally sells or authorizes the sales of Articles
outside
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the Territory, or sells the Articles to persons who intend or are likely to
resell them outside the Territory.
30.3 In addition to any and all other remedies available to it hereunder,
on thirty (30) days prior written notice to Licensee, Licensor may terminate
this Agreement (in which case such termination shall be effective immediately
upon expiration of the thirty (30) day notice period), upon the occurrence of
any of the following circumstances, provided that during such thirty (30) day
period, Licensee fails to cure the breach to Licensor's satisfaction:
30.3.1 Licensee fails to obtain or maintain insurance as required under
Paragraph 25 hereof.
30.3.2 During any calendar quarter of the Term, if Licensee fails to
reasonably satisfy Paragraphs 28.4 or 28.5, Licensor may terminate this
Agreement as to such Article(s) in any country in the Territory or in whole, by
written notice to Licensee.
30.3.3 Licensee fails to timely submit Prototype and/or Preliminary
Artwork for approval by Licensor as provided in Paragraph 26.3.
30.3.4 A petition in bankruptcy is filed by or against Licensee; Licensee
is adjudicated bankrupt or insolvent, or makes an assignment for the benefit of
creditors or an arrangement pursuant to any bankruptcy law; Licensee
discontinues its business, or a receiver is appointed for Licensee or Licensee's
business and such receiver is not discharged within thirty (30) days.
30.3.5 Licensee or any of its controlling shareholders, officers,
directors or employees take any actions in connection with the manufacture,
sale, distribution or advertising of the Articles which damages or reflects
adversely upon the Licensor, the Artist and/or the Proprietary Subject Matter.
30.3.6 Licensee violates any of its other obligations or breaches any of
its covenants, agreements, representations or warranties hereunder.
31. EFFECT OF TERMINATION.
---------------------
31.1 On expiration or termination of this Agreement, all Royalties
(including unpaid portions of the Guarantee, if any) shall be immediately due
and payable without set-off of any kind and no Advance or Guarantee paid to
Licensor shall be refunded to Licensee. Termination of this Agreement, or any
portions thereof, by Licensor pursuant to Paragraph 30 shall in no way reduce,
proportionally or otherwise, the Guarantee required to be paid to Licensor
hereunder. Ninety (90) days before the expiration of the Term, and in the event
of its sooner termination, ten (10) business days after receipt of notice of
termination, a statement showing the number and description of Articles on hand
or in process shall be furnished by Licensee to Licensor. Licensor shall have
the right to take a physical inventory to ascertain or verify such inventory and
statement. Refusal by Licensee to submit to such physical inventory by Licensor
and/or failure by Licensee to render the final statement as and when required by
this provision, shall result in a forfeiture by Licensee of Licensee's right to
dispose of its inventory (as provided by Paragraph 31.2 hereof), Licensor
retaining all other legal and equitable rights Licensor may have in the
circumstances.
31.2 On expiration of this Agreement only (as compared to an early
termination pursuant to Paragraph 30), Licensee shall have a period of ninety
(90) days commencing with the expiration date, in which to sell-off (on a
non-exclusive basis) Articles which are on hand or in process as of the
expiration date; provided, however:(i) Licensee complies with all the terms and
conditions of this Agreement, including, but not limited to, Licensee's
obligation to pay Royalties on and to account to Licensor for such sales (such
accounting to be provided to Licensor within fifteen (15) days after the
expiration of the sell-off period); (ii) Licensee has not manufactured Articles
solely or principally for sale during the sell-off period; and (iii) Licensee
has given Licensor the opportunity to purchase such Articles at Licensee's cost
of manufacture thereof, which purchase may be of some or all such units, in
Licensor's sole discretion. Royalties earned during the sell-off period may not
be applied to
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any Guarantee shortfall. Licensee shall not be authorized to dispose of the
excess inventory in the sell-off period to the extent that it exceeds ten
percent (10%) of the total number of Articles sold during the Term, without
Licensor's prior written consent. During the sell-off period, Licensor may use
or license the use of the Proprietary Subject Matter in any manner, at any time,
anywhere in the world.
31.3 On expiration or termination of termination of the Agreement, except
as noted in Paragraph 31.2 above, Licensee shall have no further right to
exercise the rights licensed hereunder or otherwise acquired in relation to this
Agreement and such rights shall forthwith revert to the Licensor. All Artwork
and any other materials supplied to Licensee by Licensor hereunder shall be
immediately returned to Licensor at Licensee's expense. All remaining Articles
and component parts thereof shall be destroyed within five (5) business days.
Licensee shall within five (5) business days after such destruction deliver to
Licensor a certificate of destruction evidencing same. Licensee agrees that (i)
its failure to cease the manufacture, sale and/or distribution of Articles upon
the expiration or termination of this Agreement will result in immediate and
irreparable damage to Licensor, (ii) there is no adequate remedy at law for such
failure and (iii) in the event of such failure, Licensor shall be entitled to
injunctive relief.
31.4 Upon expiration or termination of this Agreement, (i) if the
Underlying Agreement specifies that the license granted hereunder is an
exclusive license, Licensor shall be free to license others to use the
Proprietary Subject Matter in connection with the manufacture, sale,
distribution and promotion of the Articles in the Territory (it being
acknowledged that Licensor has the full and complete right so to do during the
Term if the license granted is a non-exclusive License), and (ii) Licensee shall
refrain from further use of the Proprietary Subject Matter or any further
reference, direct or indirect, thereto or to anything deemed by Licensor to be
similar to the Proprietary Subject Matter, in connection with the manufacture,
sale, distribution or promotion of Licensee's products except as permitted in
Paragraph 31.2 above. It shall not be a violation of any right of Licensee if
Licensor should at any time during the Term enter into negotiations with another
to license use of the Proprietary Subject Matter in respect to the Articles
within the Territory provided that, in the event that the license granted to
Licensee hereunder is an exclusive license, it is contemplated that such
prospective license shall commence after termination of the Agreement.
32. NOTICES.
-------
All notices, demands, contracts or waivers hereunder shall be given in
writing by mail, messenger, overnight air courier or telefax addressed as
indicated in the Underlying Agreement or as otherwise indicated in writing by a
party hereto. The date of messengering or telefaxing shall be deemed to be the
date of service. Three (3) business days from the date of mailing shall be
deemed to be the date of service for mailed notices. One(1) business day from
the date of overnight air courier handling shall be deemed to be the date of
service for courier handled notices.
33. NO MODIFICATION; WAIVER.
-----------------------
The terms of this Agreement shall not be modified except by an agreement in
writing signed by both parties hereto. No waiver by either party of a breach or
default hereunder shall be deemed a waiver by such party of a subsequent breach
or default of a like or similar nature.
34. ENTIRE AGREEMENT.
----------------
This Agreement shall constitute the entire understanding of the parties
with respect to the subject matter, superseding all prior and contemporaneous
promises, agreements and understandings, whether written or oral pertaining
thereto.
35. RELATIONSHIP OF THE PARTIES.
---------------------------
This Agreement does not appoint either party as the agent of the other
party, or create a partnership or joint venture between the parties.
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36. GOVERNING LAW.
-------------
This Agreement shall be construed and interpreted pursuant to the laws of
the State of California, and the parties hereto submit and consent to the
jurisdiction of the courts of the State of California, including Federal Courts
located therein, should Federal jurisdiction requirements exist, in any action
brought to enforce (or otherwise relating to) this Agreement. Notwithstanding
the preceding sentence, nothing contained in this Agreement shall preclude
Licensor from bringing an action in any appropriate forum to enforce the terms
and provisions of this Agreement. Licensee hereby consents to the exclusive
jurisdiction of any State or Federal court empowered to enforce this Agreement
in the State of California, Los Angeles County, and waives any objection thereto
on the basis of personal jurisdiction or venue.
37. SEVERABILITY.
------------
If any provision of this Agreement is held by a court of competent
jurisdiction to be unenforceable, such decision shall not affect the validity or
enforceability of any of the remaining provisions, which remaining provisions
shall continue to have full force and effect.
38. CONFIDENTIALITY.
---------------
Other than as may be required by any applicable law, government order or
regulation, or by order or decree of any court of competent jurisdiction,
Licensee shall not publicly divulge or announce, or in any manner disclose to
any third party, any information or matters revealed to Licensee pursuant
hereto, or any of the specific terms and conditions (including but not limited
to Royalty Rates, Advances, Guarantees and Net Sales of Articles) of this
Agreement.
39. COUNTERPARTS.
------------
This Agreement may be executed in any number of counterparts, each of
which shall be deemed to be an original and all of which together shall be
deemed to be one and the same Agreement.
40. FURTHER ASSURANCES.
------------------
The parties hereto shall execute such further documents and perform such
further acts as may be necessary to comply with the terms of this Agreement and
consummate the transactions herein provided.
41. ATTORNEYS' FEES.
---------------
If any legal action or any other proceeding is brought for the enforcement
of this Agreement, or if a dispute arises under this Agreement, the successful
or prevailing party shall be entitled to recover reasonable attorneys' fees and
other costs incurred in that action or proceeding, in addition to any other
relief to which it may be entitled.
42. HEADINGS.
--------
The headings contained in this Agreement are for convenience and reference
purposes only. They do not form a part hereof and shall not affect the meaning
or interpretation of this Agreement.
43. ADMINISTRATION.
--------------
Licensee expressly acknowledges that Signatures is authorized to
administer this Agreement on behalf of Licensor, and in connection therewith to
exercise such rights and powers as Licensor may exercise with respect to the
enforcement and administration of this Agreement. Such rights and powers
include, without limitation, monitoring and overseeing Licensee's obligations
under this Agreement to ensure that all Advances, Guarantees, Royalties, Royalty
Reports, and the like are timely submitted, and to ensure that the quality
control provisions of this Agreement are being complied with by Licensee.
Furthermore, Licensee acknowledges and agrees that any administrative matters
relating to this Agreement shall be submitted by Licensee to Signatures, rather
than directly to Licensor. The provisions of this Paragraph 43 shall apply until
Licensee receives notice of the revocation thereof
-15-
from Licensor.
44. ASSIGNMENT.
----------
Licensee's rights and obligations hereunder are personal to Licensee and
shall not be assigned to any affiliate of Licensee (including, without
limitation, subsidiary and parent companies, and partnerships, joint ventures
and the like, in which Licensee has an interest.) Licensee's rights and
obligations hereunder shall not be sublicensed, assigned, mortgaged or otherwise
transferred or encumbered by Licensee or by operation of law unless otherwise
previously agreed in writing by Licensor. Licensor reserves the right to assign
this Agreement to any third party and to hypothecate or pledge this Agreement as
collateral for any purpose. In the event of any such assignment, Licensee shall
pay the Royalties and the Guarantee due hereunder as directed by Licensor. This
Agreement shall be binding upon and shall inure to the benefit of the successors
and assigns of Licensor.
45. EQUITABLE REMEDIES.
------------------
Licensee acknowledges that its failure to perform any of the material
terms or conditions of this Agreement shall result in immediate and irreparable
damage to Licensor. Licensee also acknowledges that there may be no adequate
remedy at law for such failures and that in the event thereof, Licensor shall be
entitled to equitable relief in the nature of an injunction and to all other
available relief, at law or in equity.
END OF STANDARD TERMS AND
- -------------------------
CONDITIONS.
- -----------
-16-
RIDER TO AGREEMENT
------------------
This Rider is hereby incorporated into and made a part of that certain
Merchandising License Agreement ("Agreement") effective as of January 1, 2001
between Signatures Network, Inc. ("Signatures"), as agent for John Paul
Densmore, Raymond D. Manzarek, Robert Allen Krieger, and the Sole Beneficiaries
of the Estate of James Douglas Morrison ("Licensor") and Famous Fixins in
connection with the Proprietary Subject Matter.
1. DEFINED TERMS.
-------------
All capitalized terms in this Rider shall, unless expressly provided to
the contrary, have the same respective meanings as set forth in the Agreement.
2. MANUFACTURE AND DISTRIBUTION.
----------------------------
Notwithstanding anything to the contrary in Paragraph 28.6, Licensee
agrees to sell Articles directly to Licensor at Licensees' manufacturing cost
therefor, plus twenty percent (20%) per Article. Such Articles may be resold by
Licensor only through catalog sales, electronic sales, online sales, and point
of purchase premiums. Royalties shall not be payable on such sales by Licensee
to Licensor.
Initials: /s/ /s/
------------- ---------------
Licensor Licensee
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