EXHIBIT 10.20
-----------------------------------
CONFIDENTIAL TREATMENT
REQUESTED BY
PLAY BY PLAY TOYS & NOVELTIES, INC.
-----------------------------------
CERTAIN PORTIONS OF THIS EXHIBIT, MARKED AS "*REDACTED*,"
HAVE BEEN OMITTED HEREFROM AND FILED SEPARATELY
WITH THE COMMISSION BASED UPON A REQUEST FOR
CONFIDENTIAL TREATMENT.
RETAIL LICENSE
WARNER BROS. CONSUMER PRODUCTS
#12174-WBLT
THIS AGREEMENT SUPERSEDES AND REPLACES THAT CERTAIN LICENSE DATED MARCH
22, 1994 (#3775-WBLT) AND ANY AMENDMENTS THERETO BETWEEN WARNER BROS. AND
LICENSEE.
LICENSE AGREEMENT made July 26, 2000, by and between Warner Bros., a
Division of Time Warner Entertainment Company, L.P., c/o Warner Bros. Consumer
Products, a Division of Time Warner Entertainment Company, L.P., whose address
is 4000 Warner Blvd., Burbank, CA 91522 (hereinafter referred to as "LICENSOR")
and PLAY-BY-PLAY TOYS & NOVELTIES whose address is 4400 Tejasco, San Antonio,
TX 78218-0267, Attention: Raymond Braun (hereinafter referred to as "LICENSEE").
WITNESSETH:
The parties hereto mutually agree as follows:
1. DEFINITIONS: As used in this Agreement, the following terms shall have
the following respective meanings:
(A) "CHANNELS OF DISTRIBUTION": Licensee may sell the Licensed Products
through the following channel of distribution only: *REDACTED*
All other channels of distribution which are not specified above in
this Paragraph 1(a), are specifically excluded from this Agreement.
(B) "GUARANTEED CONSIDERATION": The sum of *REDACTED* payable as follows:
*REDACTED* payable simultaneously with the execution of this
Agreement;
*REDACTED* payable on or before December 15, 2000;
*REDACTED* payable on or before June 15, 2001;
1
-----------------------------------
CONFIDENTIAL TREATMENT
REQUESTED BY
PLAY BY PLAY TOYS & NOVELTIES, INC.
-----------------------------------
*REDACTED* payable on or before December 15, 2001; and
*REDACTED* payable on or before December 15, 2002.
(C) "LICENSED PRODUCT (S)":
A) "EXCLUSIVE LICENSED PRODUCTS":
1) *REDACTED*;
2) *REDACTED*;
3) *REDACTED*;
4) *REDACTED*;
5) *REDACTED*;
6) *REDACTED*;
7) *REDACTED*;
8) *REDACTED*;
9) *REDACTED*;
10) *REDACTED*;
11) *REDACTED*;
12) *REDACTED*;
13) *REDACTED*;
14) *REDACTED*;
15) *REDACTED*;
16) *REDACTED*;
17) *REDACTED*;
18) *REDACTED*;
19) *REDACTED*
B) "NON-EXCLUSIVE LICENSED PRODUCTS":
1) *REDACTED*;
2) *REDACTED*;
3) *REDACTED*;
4) *REDACTED*;
5) *REDACTED*;
6) *REDACTED*;
7) *REDACTED*;
8) *REDACTED*;
9) *REDACTED*;
10) *REDACTED*;
11) *REDACTED*;
12) *REDACTED*;
13) *REDACTED*;
14) *REDACTED*;
15) *REDACTED*;
2
-----------------------------------
CONFIDENTIAL TREATMENT
REQUESTED BY
PLAY BY PLAY TOYS & NOVELTIES, INC.
-----------------------------------
16) *REDACTED*;
17) *REDACTED*;
18) *REDACTED*;
19) *REDACTED*;
20) *REDACTED*;
21) *REDACTED*;
22) *REDACTED*;
23) *REDACTED*;
24) *REDACTED*;
25) *REDACTED*;
26) *REDACTED*;
27) *REDACTED*;
28) *REDACTED*;
29) *REDACTED*;
30) *REDACTED*;
31) *REDACTED*;
32) *REDACTED*;
33) *REDACTED*;
34) *REDACTED*;
35) *REDACTED*;
36) *REDACTED*;
37) *REDACTED*;
38) *REDACTED*;
39) *REDACTED*;
40) *REDACTED*;
41) *REDACTED*;
42) *REDACTED*;
43) *REDACTED*;
44) *REDACTED*;
45) *REDACTED*;
46) *REDACTED*;
47) *REDACTED*;
48) *REDACTED*;
49) *REDACTED*;
50) *REDACTED*;
51) *REDACTED*;
52) *REDACTED*;
53) *REDACTED*;
54) *REDACTED*;
55) *REDACTED*;
56) *REDACTED*;
57) *REDACTED*;
58) *REDACTED*;
59) *REDACTED*;
60) *REDACTED*;
3
-----------------------------------
CONFIDENTIAL TREATMENT
REQUESTED BY
PLAY BY PLAY TOYS & NOVELTIES, INC.
-----------------------------------
61) *REDACTED*;
62) *REDACTED*;
63) *REDACTED*;
64) *REDACTED*;
65) *REDACTED*;
66) *REDACTED*;
67) *REDACTED*;
68) *REDACTED*;
69) *REDACTED*;
70) *REDACTED*;
71) *REDACTED*;
72) *REDACTED*;
73) *REDACTED*;
74) *REDACTED*;
75) *REDACTED*;
76) *REDACTED*;
77) *REDACTED*;
78) *REDACTED*;
79) *REDACTED*;
80) *REDACTED*;
81) *REDACTED*;
82) *REDACTED*;
83) *REDACTED*;
84) *REDACTED*;
85) *REDACTED*;
86) *REDACTED*;
87) *REDACTED*;
88) *REDACTED*;
89) *REDACTED*;
90) *REDACTED*;
91) *REDACTED*;
92) *REDACTED*;
93) *REDACTED*;
94) *REDACTED*;
95) *REDACTED*;
96) *REDACTED*;
97) *REDACTED*;
98) *REDACTED*;
99) *REDACTED*;
100) *REDACTED*;
101) *REDACTED*;
102) *REDACTED*;
103) *REDACTED*;
104) *REDACTED*;
105) *REDACTED*;
4
-----------------------------------
CONFIDENTIAL TREATMENT
REQUESTED BY
PLAY BY PLAY TOYS & NOVELTIES, INC.
-----------------------------------
106) *REDACTED*;
107) *REDACTED*;
108) *REDACTED*;
109) *REDACTED*;
110) *REDACTED*;
111) *REDACTED*;
112) *REDACTED*;
113) *REDACTED*;
114) *REDACTED*;
115) *REDACTED*;
116) *REDACTED*;
117) *REDACTED*;
118) *REDACTED*;
119) *REDACTED*;
120) *REDACTED*;
121) *REDACTED*;
122) *REDACTED*;
123) *REDACTED*;
124) *REDACTED*;
125) *REDACTED*;
126) *REDACTED*;
127) *REDACTED*;
128) *REDACTED*;
129) *REDACTED*;
130) *REDACTED*;
131) *REDACTED*;
132) *REDACTED*;
133) *REDACTED*;
134) *REDACTED*;
135) *REDACTED*;
136) *REDACTED*;
137) *REDACTED*;
138) *REDACTED*
The "Exclusive Licensed Products" (set forth in Paragraph 1(c)
(A) above) and the "Non-Exclusive Licensed Products" (set forth
in Paragraph 1 (c) (B) above) shall be collectively referred to
herein as the "Licensed Products".
"Exclusive Products" shall become "Non-Exclusive Products" in
the event that Licensee fails to pay the guaranteed
Consideration within thirty (30) days of the payment due dates
as set forth in Paragraph 1 (b) below, and fails to make royalty
payments within thirty (30) days of the due date as described in
Paragraph 5 (a) below.
5
-----------------------------------
CONFIDENTIAL TREATMENT
REQUESTED BY
PLAY BY PLAY TOYS & NOVELTIES, INC.
-----------------------------------
"Exclusive Products" shall become "Non-Exclusive Products" in
the event that such "Exclusive Products" are used in an
assortment with another item or another Licensed Product.
Licensee understands that any and all rights to any sound
element related to the Licensed Products must be obtained
pursuant to a separate agreement subject to Licensor's approval.
(D) "LICENSED PROPERTY": The fictional cartoon characters *REDACTED*
which constitute "LOONEY TUNES", including the names of said
characters and all trademarks, copyrights, environmental
settings and artwork associated therewith. Licensee specifically
understands and agrees that no rights are granted herein with
respect to the Warner Bros. "BABY LOONEY TUNES" or "BABY LOONEY
TUNES CLASSIC COLLECTION" properties, it being understood that
all rights in and to said property are reserved exclusively to
Licensor for use and/or licensing as it deems appropriate to
third parties of its choice. Licensee further understands and
agrees that the rights granted herein are limited only to the
cartoon characters set forth above and that any and all rights
in, to or associated any theatrical motion picture or direct to
video containing the "LOONEY TUNES" cartoon characters, whether
live action, animation or both, as well as with any sequels
thereto, are specifically excluded herefrom, it being understood
that all rights in and to said property are reserved exclusively
to Licensor for use/or licensing as it deems appropriate to
third parties of its choice. Any and all rights in any music or
sound elements associates with the "LOONEY TUNES" characters are
specifically excluded herefrom.
(E) "MARKETING DATE": July 1, 2000
(F) "ROYALTY RATE": Licensee shall pay to Licensor the sum equal to
*REDACTED*.
(G) "STYLE GUIDE": Any materials provided by Licensor to Licensee
which sets forth the style, format, characterization and any
artwork depicting the Licensed Property which has been approved
by Licensor in writing.
(H) "TERM": July 1, 2000 through *REDACTED*
(I) "TERRITORY": United States (fifty states), Puerto Rico and the
United States Virgin Islands.
2. GRANT OF LICENSE:
6
-----------------------------------
CONFIDENTIAL TREATMENT
REQUESTED BY
PLAY BY PLAY TOYS & NOVELTIES, INC.
-----------------------------------
(A) Subject to the restrictions, limitations, reservations and
conditions and Licensor's approval rights set forth in this
Agreement, Licensor hereby grants to Licensee and Licensee hereby
accepts for the Term of this Agreement, a license to utilize the
Licensed Property solely on or in connection with the
manufacture, distribution and sale of the Licensed Products as
specified above for the ultimate retail sale to the public
throughout the Territory *REDACTED*.
(B) Without limiting any other approval rights of Licensor as
contained herein, no television commercials may be utilized under
this Agreement without the specific prior written approval of
Licensor.
3. RESERVATION OF RIGHTS; PREMIUMS:
(A) Licensor reserves all rights not expressly conveyed to Licensee
hereunder, and Licensor may grant licenses to others to use the
Licensed Property, artwork and textual matter in connection with
other uses, services and products without limitation.
(B) Notwithstanding anything to the contrary stated herein, Licensor,
for itself and its affiliates, specifically reserves the right,
without limitation throughout the world, to use, or license any
third party (s) of its or their choice to use the Licensed
Property for the marketing, promotion, manufacture, distribution
and sale of products similar or identical to those licensed
herein in Paragraph 1 (c) above including without limitation for
sale through any catalogue (s) or online website produced or
distributed by or on behalf of Licensor or its affiliated
companies, or for sale or distribution in any theaters, arenas or
restaurants or for sale or distribution in connection with any
home video product, including DVD or other formats, or for sale
or distribution in any retail stores operated by or on behalf of
Licensor, its affiliated companies or franchisees, or for sake or
distribution in any theme/amusement parks operated by or on
behalf of Licensor or its licensees, Six Flags, Premier Parks,
Movie Works, or their affiliated companies. In addition, Licensor
reserves the right to allow Six Flags, Premier Parks and Movie
World to manufacture (or have manufactured by a third party)
products similar or identical to those licensed herein for
distribution or sale in theme and/or amusement parks owned or
operated by Six Flags, Premier Parks and /or Movie World.
Further, Licensor reserves the right to use, or license others to
use, and/or manufacture products similar or identical to those
licensed herein for use as premiums.
7
-----------------------------------
CONFIDENTIAL TREATMENT
REQUESTED BY
PLAY BY PLAY TOYS & NOVELTIES, INC.
-----------------------------------
(C) Licensee specifically understands and agrees that no rights are
granted herein with respect to the Warner Bros. "shield" logo or
trademark, or any other trademark(s), logo(s) or copyrights owned
by Licensor other than those specifically set forth above in the
Licensed Property, it being understood that all rights in and to
said properties are reserved exclusively to Licensor for use
and/or licensing as it deems appropriate to third party(s) of its
choice.
(D) Licensee agrees that it will not use, or knowingly permit the
use, of, and will exercise due care that its customers likewise
will refrain from the use of , the Licensed Products as a
premium, except with the prior written consent of Licensor.
Subject to Licensor's prior written approval as aforesaid,
Licensee shall pay to Licensor a sum equal to *REDACTED* of all
premium sales. For purposes of this paragraph, the term "premium"
shall be defined as including , but not necessarily limited to,
combination sales, free or self-liquidating items offered to the
public in conjunction with the sale or promotion of a product or
service, including traffic building or continuity visits by the
consumer/customer, or any similar scheme or device, the prime
intent of which is to use the Licensed Products in such a way as
to promote, publicize and or sell the products, services or
business image of the user of such item.
4. CONSIDERATION:
(A) The Guaranteed Consideration paid by licensee as set forth above
shall be applies against such royalties as are, or have become,
due to Licensor. No part of such Guaranteed Consideration shall
be repayable to Licensee. Royalties earned in excess of the
Guaranteed Consideration applicable to the Term hereof shall not
offset any Guaranteed Consideration required in respect of the
succeeding renewal term (if any); likewise, royalties earned in
excess of the Guaranteed Consideration applicable to the renewal
term (if any) shall not offset any Guaranteed Consideration
applicable to any prior term.
(B) Royalty Payments: Licensee shall pay to Licensor a sum equal to
the Royalty Rate as set forth above of all net sales by Licensee
of the Licensed Products covered by this Agreement. The term "net
sales" herein shall mean the gross invoice price billed
customers, less actual quantity discounts and actual returns, but
no deductions shall be made for uncollectible accounts and
deductions for actual returns may not exceed 5% of total sales.
No costs incurred in the manufacture, sale, distribution,
advertisement, or exploitation of the Licensed Products shall be
deducted from any royalties payable by Licensee.
8
-----------------------------------
CONFIDENTIAL TREATMENT
REQUESTED BY
PLAY BY PLAY TOYS & NOVELTIES, INC.
-----------------------------------
(C) Royalties shall be payable concurrently with the periodic
statements required in Paragraph 5 hereof, except to the extent
offset by Guaranteed Consideration theretofore remitted.
5. PERIODIC STATEMENTS:
(A) Within thirty (30) days after the end of the first calendar month
after the date of execution of the License Agreement and promptly
on the 30th day after the end of each calendar month thereafter,
Licensee shall furnish to Licensor complete and accurate
statements certified to be accurate by Licensee, or if a
corporation, by an officer of Licensee, showing with respect to
all Licensed Products distributed and sold by Licensee during the
preceding calendar month the (I) number of units; (ii) country in
which manufactured, sold and /or to which shipped; (iii)
Description (as such term is defined below) of the Licensed
Products; (iv) gross sales prices, and (v) itemized deductions
from gross sales price, and net sales price together with any
returns made during the preceding calendar month. Such statements
shall be furnished to Licensor whether or not any of the licensed
Products have been sold during calendar months to which such
statements refer. Receipt or acceptance by Licensor of any of the
statements furnished pursuant to this Agreement or of any sums
paid hereunder shall not preclude Licensor from questioning the
correctness thereof at any time, and in the event that any
inconsistencies or mistakes are discovered in such statements or
payments, they shall immediately be rectified and the appropriate
payments made by Licensee. Upon demand of Licensor, Licensee
shall at its own expense, but not more than once in any twelve
(12) month period, furnish to Licensor a detailed statement by an
independent certified public accountant showing the (I) number of
units; (ii) country in which manufactured, sold and/or to which
shipped; (iii) Description of the Licensed Products; (iv) gross
sales price; and (v) itemized deductions from gross sales price
and net sales price of the Licensed Products covered by this
Agreement distributed and/or sold by Licensee up to and including
the date upon which Licensor has made such demand. For purposes
of this Subparagraph, the term "Description" shall mean a
detailed description of the Licensed Products including the
nature of each of the Licensed Products, any and all names and
likenesses, whether live actors or animated characters, from the
Licensed Property utilized on the Licensed Products and/or any
related packaging and/or wrapping material, and any other
components of the Licensed Property utilized on the Licensed
Products and/or any related packaging and/or wrapping material.
In the event Licensor is responsible for the payment of any
additional third party participations based on Licensee not
reporting by character name and likeness as provided above,
9
-----------------------------------
CONFIDENTIAL TREATMENT
REQUESTED BY
PLAY BY PLAY TOYS & NOVELTIES, INC.
-----------------------------------
Licensee shall be responsible for reimbursing Licensor for the
full amount of all such third party claims, including without
limitation, the participation itself, interest, audit and
attorneys' fees. Licensee understands and agrees that it is a
material term and condition of this Agreement that Licensee
include the Description on all statements. In the event Licensee
fails to do so, Licensor shall have the right to terminate this
Agreement, in accordance with the provisions of Paragraph 14
herein.
(B) For the statements and payments required hereunder (Licensee
shall reference the contract number(s) on all statements and
payments) if the United States Postal Service is used deliver to
the following:
WARNER BROS. COSUMER PRODUCTS
21477 Network Place
Chicago, IL 60673-1214
For the statements and payments required hereunder (Licensee
shall reference the contract number (s) on all statements and
payments) if sent by Federal Express or any other Courier Service
deliver to the following:
FIRST CHICAGO NATIONAL BANK
Attention WBCP lockbox #21477
525 West Monroe
8th Floor Mail Room
Chicago, IL 60661
Telephone Number 312-732-6277
(C) Any payments which are made to Licensor hereunder after the due
date required therefor, shall bear interest at the then current
prime rate, as published in The Wall Street Journal (New York
edition), plus six (6%) percent (or the maximum rate permissible
by law, if less) from the date such payments are due to the date
of payment. Licensor's rights hereunder to interest on late
payments shall not preclude Licensor from exercising any of its
other rights or remedies pursuant to this Agreement or otherwise
with regard to Licensee's failure to make timely remittances.
(D) Subject completely to the representations, promises and
conditions set forth in that Licensor Agreement dated October 5,
1999, by Warner Bros, Consumer Products to Congress Financial
Corporation (Southwest) (hereinafter the "Licensor Congress
Agreement"), and to the extent permitted by lender as defined
therein, Licensee hereby grants to Licensor a lien and security
interest in Licensee's inventory,
10
-----------------------------------
CONFIDENTIAL TREATMENT
REQUESTED BY
PLAY BY PLAY TOYS & NOVELTIES, INC.
-----------------------------------
contract rights and accounts receivable, and all proceeds
thereof, with respect to the Licensed Products only. Licensee
agrees to execute all documentation as Licensor may require in
connection with perfecting such security interests.
6. BOOKS AND RECORDS:
(A) Licensee shall keep, maintain and preserve (in Licensee's
principal place of business) for at least two (2) years following
termination or expiration of the Term of the Agreement or any
renewal(s) hereof (if applicable), complete and accurate records
of accounts including, without limitation, purchase orders,
inventory records, invoices, correspondence, banking and
financial and other records pertaining to the various items
required to be submitted by Licensee as well as to ensure
Licensee's compliance with local laws as required pursuant to
Paragraph 13 (k) hereof. Such records and accounts shall be
available for inspection and audit at any time or times during or
after the Term of this Agreement or any renewal(s) hereof (if
applicable) during reasonable business hours and upon reasonable
notice by Licensor or its nominees. Licensee agrees not to cause
or permit any interference with Licensor or nominees of Licensor
in the performance of their duties. During such inspections and
audits, Licensor shall have the right to take extracts and/or
make copies of Licensee's records as it deems necessary.
(B) The exercise by Licensor in whole or in part, at any time of the
right to audit records and accounts or of any other right herein
granted, or the acceptance by Licensor of any statement or
statements or the receipt and/or deposit by Licensor, of any
payment tendered by or on behalf of Licensee shall be without
prejudice to any rights or remedies of Licensor and such
acceptance, receipt and/or deposit shall not preclude or prevent
Licensor from thereafter disputing the accuracy of any such
statement or payment.
(C) If pursuant to its right hereunder Licensor causes an audit and
inspection to be instituted which thereafter discloses a
deficiency between the amount found to be due to Licensor and the
amount actually received or credited to Licensor, then Licensee
shall, upon Licensor's demand, promptly pay the deficiency,
together with interest thereon at the then current prime rate
from the date such amount became due until the date of payment ,
and, if the deficiency is more than 3% of all royalties paid by
Licensee during the period covered by the audit, then Licensee
shall pay the reasonable costs and expenses of such audit and
inspection.
11
-----------------------------------
CONFIDENTIAL TREATMENT
REQUESTED BY
PLAY BY PLAY TOYS & NOVELTIES, INC.
-----------------------------------
7. INDEMNIFICATIONS:
(A) During the Term, and continuing after the expiration or
termination of this Agreement, Licensor shall indemnify Licensee
and shall hold it harmless from any loss, liability, damage, cost
or expense, arising out of any claims or suits which may be
brought or made against Licensee by reason of the breach by
Licensor of the warranties or representations as set forth in
Paragraph 12 hereof, provided that Licensee shall give prompt
written notice, and full cooperation and assistance to Licensor
relative to any such claim or suit and provided, further, that
Licensor shall have the option to undertake and conduct the
defense of any suite so brought. Licensee shall not, however, be
entitled to recover for list profits. Licensee shall cooperate
fully in all respect with Licensor in the conduct and defense of
said suite and/or proceedings related thereto.
(B) During the Term, and continuing after the expiration or
termination of this Agreement, Licensee shall indemnify Licensor,
Time Warner Entertainment Company, L.P. ("TWE") and each of its
affiliates and shall hold them harmless from any loss, liability,
damage, cost or expense arising out of any claims or suits which
may be brought or made against Licensor, TWE or any of its
affiliates, by reason of: (I) any breach of Licensee's covenants
and undertakings hereunder: (ii) any unauthorized use by Licensee
of the Licensed Property; (iii) any use of any trademark or
copyright (except trademarks or copyrights in the Licensed
Property used in accordance with the terms of this Agreement),
design, patent, process, method or device; (iv) Licensee's
non-compliance with any applicable federal, state or local laws
or with any other applicable regulations; and (v) any alleged
defects and/or inherent dangers (whether obvious or hidden( in
the Licensed Products or the use thereof.
(C) With regard to Paragraph 7 (b) (iii), (iv) and (v) above,
Licensee agrees to obtain, at its own expense, Comprehensive
Commercial General Liability Insurance, including product
liability coverage providing adequate protection for Licensor and
Licensee against any such claims or suits in amounts no less than
three million dollars ($3,000,000) per occurrence, combined
single limits. Simultaneously with the execution of this
Agreement, Licensee undertakes to submit to Licensor a fully paid
policy or certificate of insurance naming Licensor, TWE and each
of its affiliates as additional insured parties and, requiring
that the insurer shall not terminate or materially modify such
policy or certificate of insurance without written notice to
Licensor at least twenty (20) days in advance thereof. Such
insurance
12
-----------------------------------
CONFIDENTIAL TREATMENT
REQUESTED BY
PLAY BY PLAY TOYS & NOVELTIES, INC.
-----------------------------------
shall at all times be primary and not contributory with any
insurance carried by Licensor, TWE or any of their affiliates.
Further the delivery of the policy or certificate, as provided in
this Paragraph 7 (c) are material obligations of Licensee.
8. ARTWORK; COPYRIGHT AND TRADEMARK NOTICES:
(A) The Licensed Property shall be displayed or used only in such
form and in such manner as has been specifically approved in
writing by Licensor in advance and Licensee undertakes to assure
usage of the trademark(s) and character(s) solely as approved
hereunder. Licensee further agrees and acknowledges that any and
all Artwork (defined below) created, utilized, approved and/or
authorized for use hereunder by Licensor in connection with the
Licensed Products or which otherwise features or includes the
Licensed Property shall be owned in its entirety exclusively by
Licensor. "Artwork" as used herein shall include, without
limitation, all pictorial, graphic, visual, audio, audio-visual,
digital, literary, animated, artistic, dramatic, sculptural,
musical or any other type of creations and applications, whether
finished or not, including, but not limited to, animation,
drawings, designs, sketches, images, tooling and tooling aids,
illustrations, film, video, electronic, digitized or computerized
information, software, object code, source code, on-line
elements, music, text, dialogue, stories, visuals, effects,
scripts, voiceovers, logos, one-sheets, promotional pieces,
packaging, display materials, printed materials, photographs,
interstitials, notes, shot logs, character profiles and
translations, produced by Licensee or for Licensee, pursuant to
this Agreement. Licensor reserves for itself or its designees all
rights to use any and all Artwork created, utilized and/or
approved hereunder without limitation.
(B) Licensee acknowledges that, as between Licensor and Licensee, the
Licensed Property and Artwork and all other depictions
expressions and derivations thereof, and all copyrights,
trademarks and other proprietary rights therein are owned
exclusively by Licensor and Licensee shall have no interest in or
claim thereto, except for the limited right to use the same
pursuant to this Agreement and subject to its terms and
conditions.
Licensee agrees and acknowledges that any Artwork created by
Licensee or for Licensee hereunder is a "work made for hire" for
Licensor under the U.S. Copyright Act, and any and all similar
provisions of law under other jurisdictions, and that Licensor is
the author of such works for all purposes, and that Licensor is
the exclusive owner of all the rights comprised in the undivided
copyright
13
-----------------------------------
CONFIDENTIAL TREATMENT
REQUESTED BY
PLAY BY PLAY TOYS & NOVELTIES, INC.
-----------------------------------
and all renewals, extensions and reversions therein, in and to
such works in perpetuity and throughout the universe. Licensee
hereby waives and releases in favor of Licensor all rights (if
any) of "droit moral" rental rights and similar rights in and to
the Artwork (the "Intangible Rights") and agrees that licensor
shall have the right to revise, condense, abridge, expand, adapt,
change, modify, add to, subtract from, re-title, re-draw,
re-color, or otherwise modify the Artwork, without the consent of
Licensee. Licensee hereby irrevocably grants, transfers and
assigns to Licensor all right, title and interest, including
copyrights, trademark rights, patent rights and other proprietary
rights, it may have in and to the artwork in perpetuity and
throughout the universe, and to all proprietary depictions,
expressions or derivations of the licensed Property created by or
for Licensee. Licensee acknowledges that Licensor shall have the
right to terminate this Agreement in the event Licensee asserts
any rights (other than those specifically granted pursuant to
this Agreement) in or to the Licensed Property or Artwork.
Licensee hereby warrants that any and all work created by
Licensee under this Agreement apart from the materials provided
to Licensee by Licensor is and shall by wholly original with or
fully cleared by Licensee and shall not copy or otherwise
infringe the rights of any third parties, and Licensee hereby
indemnifies Licensor and will hold Licensor harmless from any
such claim of infringement or otherwise involving Licensee's
performance hereunder. At the request of Licensor, Licensee shall
execute such form(s) of assignment of copyright or other papers
as Licensor may reasonably request in order to confirm and vest
in Licensor the rights in the properties as provided for herein.
In addition, Licensee hereby appoints Licensor as Licensee's
Attorney-in-Fact to take such actions and to make, sign, execute,
acknowledge and deliver all such documents as may from time to
time be necessary to confirm in Licensor, its successors and
assigns, all rights granted herein. If any third party makes or
has made any contribution to the creations of Artwork authorized
for use hereunder, Licensee agrees to obtain from such party a
full confirmation and assignment of rights so that the foregoing
rights shall vest fully in Licensor, in the form of the
Contributor's Agreement attached hereto as Exhibit 1 and by this
reference made a part hereof, prior to commencing work, and
subject to the prior written approval of Licensor ensuring that
all rights in the Artwork and Licensed Property arise in and are
assigned to Licensor. Promptly upon entering into each such
Contributor's Agreement, Licensee shall give Licensor a copy of
such Contributor's Agreements. Licensee assumes all
responsibility for such parties and agrees that Licensee shall
bear any and all risks arising out of or relating to the
performance of services by
14
-----------------------------------
CONFIDENTIAL TREATMENT
REQUESTED BY
PLAY BY PLAY TOYS & NOVELTIES, INC.
-----------------------------------
them and to the fulfillment of their obligations under the
Contributor's Agreement.
Upon expiration or termination of this Agreement for any reason,
or upon demand by Licensor at any time, Licensee shall promptly
deliver to Licensor all Artwork or Licensed Property, whether
finished or not, including drawings, drafts, sketches,
illustrations, screens, data, digital files and information,
copies or other items, information or things created in the
course of preparing the Licensed Property and all materials
provided to Licensee by Licensor hereunder, or, at Licensor's
option and instruction shall destroy some or all of the foregoing
and shall confirm to Licensor in writing that Licensee has done
so. Licensee shall not sue such Artwork or Licensed Property,
items, information or things, or materials, for any purpose other
than as permitted under this Agreement.
(C) Licensee shall, within thirty (30) days of receiving an invoice,
pay Licensor for artwork executed for Licensee by Licensor (or by
third parties under contract to Licensor) for use in the
development of the Licensed Products and any related packaging,
display and promotional materials at Licensor's prevailing
commercial art rates. The foregoing shall include any artwork
that, in Licensor's opinion, is necessary to modify artwork
initially prepared by Licensee and submitted or approval.
Estimates of artwork charges are available upon request.
(D) Licensee shall cause to be imprinted, irremovably and legibly on
each Licensed Products manufactured, distributed or sold under
this Agreement, and all advertising, promotional, packaging and
wrapping material wherein the Licensed Property appears, the
following copyright and/or trademark notice(s) (or such other
notice as may be approved by Licensor):
LOONEY TUNES, CHARACTERS, NAMES, AND ALL RELATED INDICIA ARE
TRADEMARKS OF WARNER BROS. (C) 20____.
(The year date shall be as instructed by Licensor)
(E) In no event shall Licensee use, in respect to the Licensed
Products and/or in relation to any advertising, promotional,
packaging or wrapping material, any copyright or trademark
notices which shall conflict with, be confusing with, or negate,
any notices required hereunder by Licensor in respect to the
Licensed Property.
(F) Licensee agrees to deliver to Licensor free of cost six (6) of
each of the Licensed Products together with their packaging and
wrapping
15
-----------------------------------
CONFIDENTIAL TREATMENT
REQUESTED BY
PLAY BY PLAY TOYS & NOVELTIES, INC.
-----------------------------------
material for trademark registration purposes in compliance
with applicable laws, simultaneously upon distribution to the
public. Any copyrights or trademarks with respect to the
Licensed Products shall be procured by and for the benefit of
Licensor and at Licensor's expense. Licensee further agrees to
provide Licensor with the date of the first use of the
Licensed Products in interstate and intrastate commerce.
(G) Licensee shall assist Licensor, at Licensor's expense, in the
procurement, protection, and maintenance of Licensor's rights to
the Licensed Property. Licensor may, in its sole discretion,
commence or prosecute and effect the disposition of any claims or
suits relative to the imitation, infringement and/or unauthorized
use of the Licensed Property either in its own name, or in the
name of Licensee, or join Licensee as a party in the prosecution
of such claims or suits. Licensee agrees to cooperate fully with
Licensor in connection with any such claims or suits and
undertakes to furnish full assistance to Licensor in the conduct
of all proceedings in regard thereto. Licensee shall promptly
notify Licensor in writing of any infringements or imitations or
unauthorized uses by others of the Licensed Property, on or in
relation to products identical to, similar to, or related to the
Licensed Products. Licensor shall in its sole discretion have the
right to settle or effect compromises in respect thereof.
Licensee shall not institute any suit or take any action on
account of such infringements, imitations or unauthorized uses.
(H) Licensee acknowledges receipt of Licensor's Style Guide and
undertakes to utilize the depictions of the Licensed Property
(and, if authorized by Licensor, any emblems and/or devices
associated therewith) in the form as set forth therein on all
Licensed Products as well as advertising, promotional, packaging
or wrapping materials, In the event that Licensee desires to
utilize renditions which vary from those as set forth in the
Style Guide, Licensee shall make a request to Licensor in that
connection, and if the request is approved, Licensor shall
prepare appropriate artwork and deliver same to Licensee.
Licensee shall utilize such artwork solely in the form furnished
by Licensor, and shall pay a reasonable fee to Licensor in
respect thereof not later than one month after delivery thereof
by Licensor to Licensee, and such fee shall be additional to and
not offset by any Guaranteed Consideration referred to in
Paragraph 1 (b) hereinabove.
(I) If Licensee is unable or unwilling to use artwork from the
Licensor's Style Guide and if Licensor is unable or unwilling to
provide Licensee with artwork as described in subparagraph (h)
above and if Licensor expressly consents in writing, which
consent shall not be unreasonably
16
-----------------------------------
CONFIDENTIAL TREATMENT
REQUESTED BY
PLAY BY PLAY TOYS & NOVELTIES, INC.
-----------------------------------
withheld, but may be subject to such conditions as Licensor
may elect in its sole discretion, then and only then may the
Licensee create or procure the creation of artwork. In any
event, Licensee shall assign or procure the assignment in
writing of all rights, copyright and otherwise, in and to any
artwork or to other material referring to, pertaining, or
otherwise relating to the Licensed Property, including any and
all newly created characters, ideas, stories, scenes and
scenarios which may be marketed in connection with the
Licensed Property and the Licensed Products, and it is
intended that this provision shall take effect as an
assignment of prospective copyrights in works yet to be
created by or for Licensee referring to, displaying or
otherwise relating to the Licensed Property. The Licensee
further undertakes to take all and any steps necessary for the
recordal or registration of the assignment(s) referred to
hereinabove.
9. APPROVALS AND QUALITY CONTROLS:
(A) Licensee agrees to strictly comply and maintain compliance with
the quality standards, specifications and rights of approval of
Licensor in respect to any and all usage of the Licensed Property
on or in relation to the Licensed Products throughout the Term of
the Agreement and any renewals or extensions thereof (if
applicable). Licensee agrees to furnish to Licensor free of cost
for its written approval as to quality and style, samples of each
of the Licensed Products, together with their packaging,
hangtags, and wrapping material, as follows in the successive
stages indicated: (I) rough sketches/layout concepts; (ii)
finished artwork or final proofs; (iii) pre-production samples or
strike-offs; and (iv) finished products, including packaged
samples.
(B) No Licensed Products and no material utilizing the Licensed
Property shall be manufactured, sold, distributed or promoted by
Licensee without prior written approval. Licensee may, subject to
Licensor's prior written approval, use textual and/or pictorial
matter pertaining to the Licensed Property on such promotional,
display and advertising material as may, in its reasonable
judgment, promote the sale of the Licensed Products. All
advertising and promotional material relating to the Licensed
Products must be submitted to the Licensor for its written
approval at the following stages appropriate to the medium used:
(I) rough concepts; (ii) layout, storyboard, script; and (iii)
finished materials.
(C) Approval or disapproval shall lie in Licensor's sole discretion.
Any Licensed Products not so approved in writing shall be deemed
unlicensed and shall not be manufactured or sold. If any
unapproved Licensed Products are being sold, Licensor may,
together with other
17
-----------------------------------
CONFIDENTIAL TREATMENT
REQUESTED BY
PLAY BY PLAY TOYS & NOVELTIES, INC.
-----------------------------------
remedies available to it including, but not limited to,
immediate termination of this Agreement, require such Licensed
Products to be immediately withdrawn from the market and to be
destroyed, such destruction to be attested to in a certificate
signed by an officer of Licensee.
(D) Any modification of a Licensed Product must be submitted in
advance for Licensor's written approval as if it were a new
Licensed Product. Approval of a Licensed Product which uses
particular artwork does not imply approval of such artwork for
use with a different Licensed Product.
(E) Licensed Products must conform in all material respects to the
final production samples approved by Licensor. If in Licensor's
reasonable judgement, the quality of a Licensed Product
originally approved has deteriorated in later production runs, or
if a Licensed Product has otherwise been altered, Licensor may,
in addition to other remedies available to it, require that such
Licensed Product be immediately withdrawn from the market.
(F) Licensee shall permit Licensor to inspect Licensee's
manufacturing operations, testing and payroll records (including
those operations and records of any supplier or manufacturer
approved pursuant to Paragraph 10 (b) below) with respect to the
Licensed Products.
(G) If any changes or modifications are required to be made to any
material submitted to Licensor for is written approval in order
to ensure compliance with Licensor's specifications or standards
of quality, Licensee agrees promptly to make such changes or
modifications.
(H) Subsequent to final approval, no fewer than twelve (12)
production samples of Licensed Products will be sent to Licensor
to ensure quality control simultaneously upon distribution to the
public. In addition, Licensee shall provide Licensor with six (6)
catalogs which display all of Licensee's products, not just the
Licensed Products. Further, Licensor shall have the right to
purchase any and all Licensed Products in any quantity at the
maximum discount price Licensee charges its best customer.
(I) To avoid confusion of the public, Licensee agrees not to
associate other characters or properties with the Licensed
Property on the Licensed Products or in any packaging,
promotional or display materials unless Licensee receives
Licensor's prior written approval. Furthermore, Licensee agrees
not to use the Licensed Property (or any
18
-----------------------------------
CONFIDENTIAL TREATMENT
REQUESTED BY
PLAY BY PLAY TOYS & NOVELTIES, INC.
-----------------------------------
component thereof) on any business sign, business cards,
stationery or forms, nor as part of the name of Licensee's
business or any division thereof.
(J) Licensee shall use its best efforts to notify its customers of
the requirement that Licensor has the right to approve all
promotional, display and advertising material pursuant to this
Agreement.
(K) It is understood and agreed that any animation used in electronic
media, including but not limited to animation for television
commercials and character voices for radio commercials, shall be
produced by Warner Bros. Animation pursuant to a separate
agreement between Licensee and Warner Bros. Animation, subject to
Warner Bros. Animation's customary rates. It is understood and
agreed that, in the event Licensee utilizes the services of WB
Toys, Licensee shall reimburse WB Toys for all costs and expenses
at WB Toy's customary rates. Any payment made to Warner Bros.
Animation and/or WB Toys for such animation and/or services shall
be in addition to and shall not offset the Guaranteed
Consideration set forth in Paragraph 1 (b).
(L) Licensor's approval of Licensed Products (including without
limitation, the Licensed Products themselves as well as
promotional, display, and advertising materials) shall in no way
constitute or be construed as an approval by Licensor of
Licensee's use of any trademark, copyright and/or other
proprietary materials, not owned by Licensor.
10. DISTRIBUTION; SUB-LICENSE MANUFACTURE:
(A) Within the Channels of Distribution set forth in Paragraph 1 (a)
hereof, Licensee shall sell the Licensed Products to wholesalers,
distributors, or retailers for sale or resale and distribution
directly to the public. If Licensee sells or distributes the
Licensed Products at a special price, directly or indirectly, to
itself, including without limitation, any subsidiary of Licensee
or to any other person, firm, or corporation affiliated with
Licensee or its officers, directors, or major stockholders, for
ultimate sale to unrelated third parties, Licensee shall pay
royalties with respect to such sales or distribution, based upon
the price generally charged the trade by Licensee.
(B) Licensee shall not be entitled to sub-license any of its rights
under this Agreement. In the event Licensee is not the
manufacturer of the Licensed Products, Licensee shall, subject to
the prior written approval of Licensor, which approval shall not
be unreasonably withheld, be
19
-----------------------------------
CONFIDENTIAL TREATMENT
REQUESTED BY
PLAY BY PLAY TOYS & NOVELTIES, INC.
-----------------------------------
entitled to utilize a third party manufacturer in connection
with the manufacture and production of the Licensed Products,
provided that such manufacturer shall execute a letter in the
form of Exhibit 2 attached hereto and by this reference made a
part hereof. In such event, Licensee shall remain primarily
obligated under all of the provisions of this Agreement and
any default of this Agreement by such manufacturer shall be
deemed a default by Licensee hereunder. In no event shall any
such third party manufacturer agreement include the right to
grant any rights to subcontractors.
11. GOODWILL: Licensee recognizes the great value of the publicity
and goodwill associated with the Licensed Property and
acknowledges: (I) such goodwill is exclusively that of Licensor;
and (ii) that the Licensed Property has acquired a secondary
meaning as Licensor's trademarks and/or identifications in the
mind of the purchasing public. Licensee further recognizes and
acknowledges that a breach by Licensee of any of its covenants,
agreements or undertakings hereunder will cause Licensor
irreparable damage, which cannot be readily remedied in damages
in an action at law, and may, in addition thereto, constitute an
infringement of Licensor's copyrights, trademarks and/other
proprietary rights in, and to the Licensed Property, thereby
entitling Licensor to equitable remedies, and costs.
12. LICENSOR'S WARRANTIES AND REPRESENTATIONS:
Licensor represents and warrants to Licensee that:
(A) It has, and will have throughout the Term of this Agreement,
the right to license the Licensed Property to Licensee in
accordance with the terms and provisions of this Agreement;
and
(B) The making of this Agreement by Licensor does not violate
any agreements, rights, or obligations of any person, firm
or corporation.
13. LICENSEE'S WARRANTIES AND REPRESENTATIONS: Licensee represents
and warrants to Licensor that, during the Term and thereafter:
(A) It will not attack the title of Licensor (or third parties
that have granted rights to Licensor) in and to the Licensed
Property or any copyright or trademarks pertaining thereto,
nor will it attack the validity of the license granted
hereunder;
(B) It will not harm, misuse or bring into disrepute the
Licensed Property, but on the contrary, will maintain the
value and reputation thereof to the best of its ability;
20
-----------------------------------
CONFIDENTIAL TREATMENT
REQUESTED BY
PLAY BY PLAY TOYS & NOVELTIES, INC.
-----------------------------------
(C) It will manufacture, sell, promote and distribute the
Licensed Products in an ethical manner and in accordance
with the terms and intent of this Agreement, and in
compliance with all applicable government regulations and
industry standards;
(D) It will not create any expenses chargeable to Licensor
without the prior written approval of Licensor in each and
every instance. Except as provided by the Licensor Congress
Agreement, or as may have been previously granted by
Licensee, pursuant to its recently completed refinancing, it
will not cause or allow any liens or encumbrances to be
placed against, or grant any security interest (except to
Licensor as provided hereunder) in, the Licensed Property
and/or Licensee's inventory, contract rights and/or accounts
receivables, and/or proceeds thereof, with respect to the
Licensed Products without Licensor's prior written consent;
(E) If will protect to the best of its ability its right to
manufacture, sell, promote, and distribute the Licensed
Products hereunder;
(F) It will at all times comply with all government laws and
regulations, including but not limited to product safety,
food, health, drug, cosmetic, sanitary or other similar
laws, and all voluntary industry standards relating or
pertaining to the manufacture, sale, advertising or use of
the Licensed Products, and shall maintain its appropriate
customary high quality standards during the Term hereof. It
shall comply with any regulatory agencies which shall have
jurisdiction over the Licensed Products and shall procure
and maintain in force any and all permissions,
certifications and /or other authorizations from
governmental and/or other official authorities that may be
required in response thereto. Each Licensed Product and
component thereof distributed hereunder shall comply with
all applicable laws, regulations and voluntary industry
standards. Licensee shall follow reasonable and proper
procedures for testing that all Licensed Products comply
with such laws, regulations and standards. Licensee shall
permit Licensor or its designees to inspect testing records
and procedures with respect to the Licensed Products for
compliance. Licensed Products that do not comply with all
applicable laws, regulations and standards shall
automatically be deemed unapproved and immediately taken off
the market;
(G) It shall, upon Licensor's request, provide credit
information to Licensor including, but not limited to,
fiscal year-end financial statements (profit-and-loss
statement and balance sheet) and operating statements;
21
-----------------------------------
CONFIDENTIAL TREATMENT
REQUESTED BY
PLAY BY PLAY TOYS & NOVELTIES, INC.
-----------------------------------
(H) It will provide Licensor with the date(s) of first use of
the Licensed Products in interstate and intrastate commerce,
where appropriate;
(I) It will, pursuant to Licensor's instructions, duly take any
and all necessary steps to secure execution of all necessary
documentation for the recordation of itself as user of the
Licensed Property in any jurisdiction where this is required
or where Licensor reasonably requests that such recordation
shall be effected. Licensee further agrees that it will at
its own expense cooperate with Licensor in cancellation of
any such recordation at the expiration of this Agreement or
upon termination of Licensee's right to use the Licensed
Property. Licensee hereby appoints Licensor its
Attorney-in-Fact for such purpose;
(J) It will not deliver or sell Licensed Products outside the
Territory or knowingly sell Licensed Products to a third
party for delivery outside the Territory;
(K) It will not use any labor that violates any local labor
laws, including all wage and hour laws, laws against
discrimination and that it will not use prison, slave or
child labor in connection with the manufacture of the
Licensed Products;
(L) It shall not send, share with or otherwise disclose any
Artwork to any third party, including licensees of Licensor,
but with the exception of approved third party manufacturers
hereunder, without the prior written consent of Licensor;
(M) It shall at all times comply with all manufacturing, sales,
distribution, retail and marketing policies and strategies
promulgated by Licensor from time-to-time; and
(N) If requested by Licensor to do so, it will utilize specific
design elements of the Licensed Property provided to
Licensee by Licensor on hangtags, labels, and other
materials.
14. TERMINATION BY LICENSOR:
(A) Licensor shall have the right to terminate this Agreement
without prejudice to any rights which it may have, whether
pursuant to the provisions of this Agreement, or otherwise
in law, or in equity, or otherwise, upon the occurrence of
any one or more of the following events (herein called
"defaults"):
22
-----------------------------------
CONFIDENTIAL TREATMENT
REQUESTED BY
PLAY BY PLAY TOYS & NOVELTIES, INC.
-----------------------------------
I. Licensee defaults in the performance of any of its
obligations provided for in this Agreement; or
II. Licensee shall have failed to deliver to Licensor or to
maintain in full force and effect the insurance referred to
in Paragraph 7 (c ) hereof; or
III. Licensee shall fail to make any payments due hereunder on
the date due; or
IV. Licensee shall fail to deliver any of the statements
required herein or to give access to the premises and/or
license records pursuant to the provisions hereof to
Licensor's authorized representatives for the purposes
permitted hereunder; or
V. Licensee shall fail to comply with any laws, regulations or
voluntary industry standards as provided in Paragraph 13
(f), or if any governmental agency or other body, office or
official vested with appropriate authority finds that the
Licensed Products are harmful or defective in any way,
manner or form, or are being manufactured, sold or
distributed in contravention of applicable laws, regulations
or standards, or in a manner likely to cause harm; or
VI. Subject to the conditions of the Licensor Congress
Agreement, Licensee shall be unable to pay its debts when
due, or shall make any assignment for the benefit of
creditors, or shall file any petition under the bankruptcy
or insolvency laws of any jurisdiction, county or place, or
shall have or suffer a receiver or trustee to be appointed
for its business or property, or be adjudicated a bankrupt
or an insolvent; or
VII. Licensee does not commence in good faith to manufacture,
distribute and sell each of the Licensed Products and
utilize each character set forth in the Licensed Property
("Character") throughout the Territory on or before the
Marketing Date and thereafter fails to diligently and
continuously manufacture, distribute and sell each of the
Licensed Products and utilize each Character throughout the
Territory. Such default and Licensor's resultant right of
termination (or recapture) shall only apply to the specific
Character(s) and/or the specific Licensed Products, which or
wherein Licensee fails to meet said Marketing Date
requirement; or
23
-----------------------------------
CONFIDENTIAL TREATMENT
REQUESTED BY
PLAY BY PLAY TOYS & NOVELTIES, INC.
-----------------------------------
VIII. Licensee shall manufacture, sell or distribute, whichever
first occurs, any of the Licensed Products without the prior
written approval of Licensor as provided in Paragraph 9
hereof, or
IX. Licensee undergoes a substantial change of management or
control; or
X. Licensee uses artwork which has not been approved by
Licensor in compliance with the provisions of Paragraph 8
(h) or (I ) hereof; or
XI. A manufacturer approved pursuant to Paragraph 10 (b) hereof
shall sell Licensed Products to parties other than Licensee
or engage in conduct, which conduct if engaged in by
Licensee would entitle Licensor to terminate this Agreement;
or
XII. Licensee delivers or sells Licensed Products outside the
Territory of knowingly sells Licensed Products to a third
party who Licensee knows intends to, or who Licensee
reasonably should suspect intends to, sell or deliver such
Licensed Products outside the Territory; or
XIII. License uses any labor that violates any local labor laws
and/or it uses prison, slave or child labor in connection
with the manufacture of the Licensed Products; or
XIV. Licensee has made a material misrepresentation or has
omitted to state a material fact necessary to make the
statements not misleading; or
XV. Licensee shall breach any other agreement in effect between
Licensee on the one hand and Licensor on the other.
(B) In the event any of these defaults occur, Licensor shall give
notice of termination in writing to Licensee in the manner
prescribed in Paragraph 16 below. Licensee shall have ten (10)
days from the date of giving notice in which to correct any of
these defaults (except subdivisions (vii), (viii), (x), and
(xii) above which are not curable), and failing such, this
Agreement shall thereupon immediately terminate , and any and
all payments then or later due from Licensee hereunder
(including Guaranteed Consideration) shall then be promptly due
and payable in full and no portion of those prior payments shall
be repayable to Licensee.
24
-----------------------------------
CONFIDENTIAL TREATMENT
REQUESTED BY
PLAY BY PLAY TOYS & NOVELTIES, INC.
-----------------------------------
15. FINAL STATEMENT UPON TERMINATION OR EXPIRATION: Licensee shall
deliver, as soon as practicable, but not later than thirty (30)
days following expiration or termination of this Agreement, a
statement indicating the number and description of Licensed
Products on hand together with a description of all advertising
and promotional materials relating thereto. Following expiration
or termination of the Agreement, Licensee shall immediately
cease any and all manufacturing of the Licensed Product.
However, if Licensee has complied with all the terms of the
Agreement, including, but not limited to, complete and timely
payment of the Guaranteed Consideration and Royalty Payments,
then Licensee may continue to distribute and sell its remaining
inventory for a period not to exceed sixty (60) days following
such termination or expiration (the "Sell-Off Period"), subject
to payment of applicable royalties thereto. In no event,
however, may Licensee distribute and sell during the Sell-Off
Period an amount of Licensed Products that exceeds the average
amount of Licensed Products sold during any consecutive sixty
(60) day period during the Term. In the event this Agreement is
terminated by Licensor for any reason under this Agreement,
Licensee shall be deemed to have forfeited its Sell-Off Period.
If Licensee has any remaining inventory of the Licensed Products
following the Sell-Off Period, Licensee shall, at Licensor's
option, make available such inventory to Licensor for purchase
at or below cost, deliver up to Licensor for destruction said
remaining inventory or furnish to Licensor an affidavit
attesting to the destruction of said remaining inventory.
Licensee shall, at Licensor's options, deliver to Licensor at no
charge all tooling, tooling aids and other Artwork related to
the Licensed Products, deliver up to Licensor for destruction
said tooling, tooling aids and other Artwork or furnish to
Licensor an affidavit attesting to the destruction of said
tooling, tooling aids and other Artwork. Licensor shall have the
right to conduct a physical inventory in order to ascertain or
verify such inventory and/or statement. In the event that
Licensee refuses to permit Licensor to conduct such physical
inventory, Licensee shall forfeit its rights to the Sell-Off
Period hereunder or any other rights to dispose of such
inventory. In addition to the forfeiture, Licensor shall have
recourse to all other legal remedies available to it.
16. NOTICES: Except as otherwise specifically provided herein, all
notices which either party hereto are required or may desire to
give to the other shall be given by addressing the same to the
other at the address set forth above, or at such other address
as may be designated in writing by any such party in a notice to
the other given in the manner prescribed in this paragraph. All
such notices shall be sufficiently given when the same shall be
deposited so addressed, postage prepaid, in the United States
mail and/or when the same shall have been delivered, so
addressed, by facsimile or by overnight delivery service, and
the date of transmission by
25
-----------------------------------
CONFIDENTIAL TREATMENT
REQUESTED BY
PLAY BY PLAY TOYS & NOVELTIES, INC.
-----------------------------------
facsimile, receipt of overnight delivery service or two business
days after mailing shall for the purposes of this Agreement be
deemed the date of the giving of such notice.
17. NO PARTNERSHIP, ETC.: This Agreement does not constitute and
shall not be construed as constitution of a partnership or joint
venture between Licensor and Licensee. Neither party shall have
any right to obligate or bind the other party in any manner
whatsoever, and nothing herein contained shall give, or is
intended to give, any rights of any kind to any third persons.
18. NO SUBLICENSING/NON-ASSIGNABILITY: This Agreement shall bind and
inure to the benefit of Licensor, its successors and assigns.
This Agreement is personal to Licensee. Licensee shall not
sublicense, franchise or delegate to third parties its rights
hereunder (except as set forth in Paragraph 10 (b) hereof).
Neither this Agreement nor any of the rights of Licensee
hereunder shall be sold, transferred or assigned by Licensee and
no rights hereunder shall devolve by operation of law or
otherwise upon any receiver, liquidator, trustee or other party.
19. BANKRUPTCY RELATED PROVISIONS:
(A) The parties hereby agree and intend that this Agreement is
an executory contract governed by Section 365 of the
Bankruptcy Code.
(B) In the event of Licensee's bankruptcy, the parties intend
that any royalties payable under this Agreement during the
bankruptcy period be deemed administrative claims under the
Bankruptcy Code because the parties recognize and agree that
the bankruptcy estate's enjoyment of this Agreement will (I)
provide a material benefit to the bankruptcy estate during
its reorganization and (ii) deny Licensor the benefit of the
exploitation of the rights through alternate means during
the bankruptcy reorganization.
(C) The parties acknowledge and agree that any delay in the
decision of the trustee of the bankruptcy estate to assume
or reject the Agreement (the "Decision Period") materially
harms Licensor by interfering with Licensor's ability to
alternatively exploit the rights granted under this
Agreement during a Decision Period of uncertain duration.
The parties recognize that arranging appropriate alternative
exploitation would be a time consuming and expensive process
and that it is unreasonable for Licensor to endure a
Decision Period of extended uncertainty. Therefore, the
parties agree that the Decision Period shall not exceed
sixty (60) days.
26
-----------------------------------
CONFIDENTIAL TREATMENT
REQUESTED BY
PLAY BY PLAY TOYS & NOVELTIES, INC.
-----------------------------------
(D) Licensor, in its interest to safeguard its valuable
interests (including, without limitation, its intellectual
property rights in the Licensed Property), has relied on the
particular skill and knowledge base of Licensee. Therefore,
the parties acknowledge and agree that in a bankruptcy
context this Agreement is a license of the type described by
Section 365 (c ) (1) of the Bankruptcy Code and my not be
assigned without the prior written consent of the Licensor.
20. CONSTRUCTION: This Agreement shall be construed in accordance
with the laws of the State of California of the United States of
America without regard to its conflicts of laws provisions.
21. WAIVER, MODIFICATION, ETC.: No waiver, modification or
cancellation of any term or condition of this Agreement shall be
effective unless executed in writing by the party charged
therewith. No written waiver shall excuse the performance of any
acts other than those specifically referred to therein. The fact
that the Licensor has not previously insisted upon Licensee
expressly complying with any provision of this Agreement shall
not be deemed to be a waiver of Licensor's future right to
require compliance in respect thereof and Licensee specifically
acknowledges and agrees that the prior forbearance in respect of
any act, term or condition shall not prevent Licensor from
subsequently requiring full and complete compliance thereafter.
If any term or provision of this Agreement is held to be invalid
or unenforceable by any court of competent jurisdiction or any
other authority vested with jurisdiction, such holding shall not
affect the validity of enforceability of any other term or
provision hereto and this Agreement shall be interpreted and
construed as if such term or provision, to the extent the same
shall have been held to be invalid, illegal or unenforceable,
had never been contained herein. Headings of paragraphs herein
are for convenience only and are without substantive
significance.
22. CONFIDENTIALITY: The Artwork and the materials and information
supplied to Licensee hereunder constitute, relate to, contain
and form a part of confidential and proprietary information of
Licensor, including, but not limited to , Style Guides, design
elements, characters profiles, unpublished copyrighted material,
release dates, marketing and promotional strategies, information
about new products, properties and characters, the terms and
conditions of this Agreement, and other information which is
proprietary in nature or is a trade secret (collectively, the
"Proprietary Information"). Licensee acknowledges and agrees
that the Proprietary Information is highly confidential and that
disclosure of the Proprietary Information will result in serious
harm to Licensor. Among other damage, unauthorized disclosure of
the Proprietary Information will (I) damage Licensor's carefully
planned marketing
27
-----------------------------------
CONFIDENTIAL TREATMENT
REQUESTED BY
PLAY BY PLAY TOYS & NOVELTIES, INC.
-----------------------------------
strategies, (ii) reduce interest in the Licensed Property, ii)
make unique or novel elements of the Licensed Property
susceptible to imitation or copying by competitors, infringers
third parties prior to Licensor's release of the information or
materials, (iv) damage Licensor's proprietary protection in
undisclosed or unpublished information or materials, and (v)
provide unauthorized third parties with materials capable of
being used to create counterfeit and authorized merchandise,
audio-visual products or other products, all of which will
seriously damage Licensor's rights and business. Except as
expressly approved in writing by licensor, Licensee shall not
reproduce or use the Proprietary Information and shall not
discuss, distribute, disseminate or otherwise disclose the
Proprietary Information or the substance of contents thereof, in
whole or in part, in its original form or in any other form,
with or to any other person or entity other than Licensee's
employees and third parties who have executed a Contributor's
Agreement (as provided in Paragraph 8 (b)) or third party
manufacturer's agreement (as provided in paragraph 10 (b)) and
been approved Licensor as provided hereunder, and such employees
and third parties shall be given access to the Proprietary
Information only on a "need-to-know" basis.
23. ENTIRE AGREEMENT: This Agreement constitutes the entire
Agreement between the parties concerning the subject matter
hereof and cancels and supersedes any prior understandings and
agreements between the parties hereto with respect thereto.
There are no representations, warranties, terms, conditions,
undertakings or collateral agreements, expressed, implied or
statutory, between the parties other than as expressly set forth
in this Agreement.
24. OTHER AGREEMENTS: Licensor hereby consents to the inclusion of
this contract #12174-WBLT on that Schedule A to the Licensor
Congress Agreement, and agrees to execute a copy of it including
this Agreement as subject to it.
25. ACCEPTANCE BY LICENSOR: This instrument, when signed by
Licensee, shall be deemed an application for license and not a
binding agreement unless and until accepted by Warner Bros.
Consumer Products by signature of a duly authorized officer and
the delivery of such a signed copy to Licensee. The receipt
and/or deposit by Warner Bros. Consumer Products of any check or
other consideration given by Licensee and/or delivery of any
material by Warner Bros. Consumer Products to Licensee shall not
be deemed an acceptance by Warner Bros. Consumer Products of
this application. The foregoing shall apply to any documents
relating to renewals or modifications hereof. The deposit by
Licensor of Licensee's $150,000 advance payment together with
Licensee's executed copy of this Agreement shall be an
acceptance by Warner Bros. Consumer Products of the Agreement,
notwithstanding provision to the contrary.
28
-----------------------------------
CONFIDENTIAL TREATMENT
REQUESTED BY
PLAY BY PLAY TOYS & NOVELTIES, INC.
-----------------------------------
This Agreement shall be of no force or effect unless and until it is
signed by all of the parties listed below:
AGREED AND ACCEPTED: AGREED AND ACCEPTED:
LICENSOR: LICENSEE:
WARNER BROS. CONSUMER PLAY-BY-PLAY TOYS
PRODUCTS, A Division of Time & NOVELTIES
Warner Entertainment Company, L.P.
on Behalf of itself and as Agent for
Warner Bros., A Division of Time
Warner Entertainment Company, L.P.
By:_________________________________ By:___________________________
Gary R. Simon
Vice President & General Counsel
Date:_______________________________ Date:_________________________
29