EXHIBIT 10.10
*Omitted and filed separately with the Commission.
RETAIL LICENSE
WARNER BROS. CONSUMER PRODUCTS
#3775-WBLT
LICENSE AGREEMENT made MARCH 22, 1994, by and between Warner Bros., division of
Time Warner Entertainment, L.P., c/o Warner Bros. Consumer Products, a Time
Warner Entertainment Company, 4000 Warner Blvd., Burbank, CA 91522 (hereinafter
referred to as "LICENSOR") AND Ace Novelty, Inc., whose address is 13434
Northeast 16th Street, Bellevue, WA 98005 Attn: Saul Gamoran (hereinafter
referred to as "LICENSEE").
The Parties hereto agree as follows:
1. DEFINITIONS: As used in the Agreement, the following terms shall have the
following respective meanings:
(a) "Name and Character": the representations, names and logos,
movements, personalities, artwork, photographs and other material in
connection with the following "LOONEY TUNES" characters: BUGS BUNNY,
SYLVESTER, TWEETY, PEP LE PEW, PORKY PIG, DAFFY DUCK, SYLVESTER JR.,
ELMER FUDD, YOSEMITE SAM, ROAD RUNNER, WILE COYOTE, SPEEDY GONZALES,
WILE COYOTE, MARC ANTONY, TASMANIAN DEVIL, FOGHORN LEGHORN, HENERY
HAWK, PEPE LE PEW AND MARVIN THE MARTIAN only.
(b) "Licensed Product(s)":
i) Plush depictions of Characters
ii) *REDACTED
iii) *REDACTED
iv) *REDACTED
v) *REDACTED
vi) *REDACTED
vii) *REDACTED
viii) *REDACTED
ix) *REDACTED
x) *REDACTED
xi) *REDACTED
xii) *REDACTED
xiii) *REDACTED
ixx) *REDACTED
xx) *REDACTED
xxi) *REDACTED
xxii) *REDACTED
xxiii)*REDACTED
xxiv) *REDACTED
It is understood and agreed between the parties that the above
mentioned Licensed Products shall be distributed to the Amusement
Industry trade only. Sales through any other channel of distribution
are specifically excluded from the rights granted to Licensee
hereunder. It is further agreed that the Licensed Products are to be
awarded as prizes in connection with games of skill and are not to
be sold to the general public under any circumstances.
*redacted
*Omitted and filed separately with the Commission.
** The category of "Bean Bag Chairs" shall be distributed and sold only
through the retail channel of distribution on a non-exclusive basis.
This Agreement specifically excludes the following articles: Vinyl
soft-stuffed balls, vinyl soft-stuffed figures and pillows,
bean-filled footballs (hack sacks), caps, plastic mugs & squeeze
bottles.
* Licensee recognizes that if figural prototype inflatables are
submitted, Licensor may elect not to approve for Licensee production
at any time during the Term of this Agreement.
(c) "Territory": United States
(d) "Marketing": June 1, 1994
(e) "Term": January 1, 1994 through *REDACTED
(f) "Royalty Rate": Licensee shall pay to Licensor the sum equal to
*REDACTED of all net sales by Licensee of the Licensed Product(s)
and *REDACTED of Licencee's net sales of the Licensed Product(s)sold
to customers F.O.B. to a location in the Territory.
(g) "Guaranteed Consideration": The sum of *REDACTED payable as
follows:
*REDACTED payable simultaneously upon the execution hereof; and
*REDACTED payable on or before *REDACTED
*REDACTED payable on or before *REDACTED
*REDACTED payable on or before *REDACTED
*REDACTED payable on or before *REDACTED
*REDACTED payable on or before *REDACTED
*REDACTED payable on or before *REDACTED
*REDACTED payable on or before *REDACTED
*REDACTED payable on or before *REDACTED
2. GRANT OF LICENSE.
(a) Upon the terms and conditions set forth in this Agreement, Licensor
hereby grants to Licensee and Licenseee hereby accepts for the Term
of this Agreement, a license to utilize the Name and Character
solely on or in connection with the manufacture, distribution and
sale of the Licensed Product(s) as specified above for the ultimate
retail sale to the public throughout the Territory on an exclusive
basis subject to Paragraph 1(b).
(b) For purposes of interpretation throughout this Agreement, every
application and utilization of each enumerated Name and Character
set forth above as to any given Licensed Product set forth above
shall be considered as a separate grant, and as a separate Licensed
Product.
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(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 Name
and Character, 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 specifically understands and agrees that no rights are
granted herein with respect to the Warner Bros. "LOONEY TUNES
LOVABLES" infant property, it being understood that all rights in
and to said property are reserved exclusively to Licensor for us
and/or licensing as it deems appropriate to third party(s) of its
choice.
(e) Without limiting any other approvals of Licensor as contained
herein, no television commercials may be utilized under this License
without specific prior written approval of Licensor.
3. CONSIDERATION.
(a) The Guaranteed Consideration paid by Licensee as set forth above
shall be applied 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 shall not
offset any Guaranteed Consideration applicable to any prior terms.
(b) Royalty Payments: Licensee shall pay to Licensor a sum equal to the
Royalty Rate as set forth above all net sales by Licensee of the
Licensed Product(s) 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 shall be
made for actual returns may not exceed 5% of total sales. No costs
incurred in the manufacture, sale, distribution, advertisement, or
exploitation of the Licensed Prodcut(s) shall be deducted from any
royalties payable by Licensee.
(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.
4. 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 Name
and Character, artwork and textual matter in connection with other
products whether similar or identical to the Licensed Product(s) or
otherwise. Notwithstanding anyting to the contrary in the foregoing
paragraph or elsewhere set forth in this Agreement, Licensor
specifically reserves the right without limitation throughout the
world to itself use, or license any third party(s) of its choice for
the manufacture, distribution and sale of products similar or
identical to those licensed herein in Paragraph 1(b) above for sale
through any catalogue(s) produced or distributed by or on behalf of
Licensor or its affiliated companies, or for
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sale or distribution in any motion picture theaters, or for sale or
distribution in any retail stores operated by or on behalf of
Licensor or its affiliated compaies, or for sale or distribution in
any theme/amusement parks operated by or on behalf of Licensor and
its affiliated companies. In addition, Licensor reserves the right
to allow Six Flags Corporation to manufacture (or have manufactured
by a third party) products similar or identical to those licensed
herin for distribution or sale in theme and/or amusement parks owned
or operated by Six Flags Corporation. 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.
(b) 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 Product(s) 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 TEN PERCENT (10%) 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 intenet of which is to
promote, publicize and or sell the products, services or business
image of the user of such item.
5. PERIODIC STATEMENTS.
(a) Within THIRTY (30) days after the initial shipment of the Licensed
Product(s) and promptly on the 15th day of every 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 Product(s)
distributed and sold by Licensee during the preceding calendar month
the number of units, description of items sold (specifiying the
components of the Name and Character utilized and specifiying the
nature of the Licensed Product(s), gross sales price and itemized
deductions from gross sales price, and net sales price together with
any returns make during the preceding calendar month. Such
statements shall be furnished to Licensor whether or not any of the
Licensed Product(s) have been sold during the 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 it's own expense, but not more than once in any twelve (12) month
period, furnish to Licensor a detailed statement by an independent
certified accountant showing the number, description of items sold
specifying of the Name and Character utilized and nature of Licensed
Product(s), gross sales price itemized deductions from gross sales
price and net sales price of the Licensed Product(s) covered by this
Agreement distributed and/or sold by Licensee up to and including
the date upon which Licensor has made such demand.
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(b) The statements and payments required hereunder shall be delivered
to:
Warners Bros. Consumer Products
Domestic Accounting
4000 Warner Boulevard
Tower - 11th Floor
Burbank, California 91522
(c) Licensee agrees to provide, in the event of a material default in
payment, at Licensor's request: (i) a letter of credit issued in
favor of Licensor from a financial institution as approved by
Licensor in an amount up to the Guaranteed Consideration; and /or
(ii) such other form of security acceptable to Licensor. Licensee
agrees to execute all docuemnentation as Licensor may require in
connection with perfecting such security interests.
(d) Any payments which are made to Licensor hereunder after the due date
required therefore, shall bear interest at the then current prime
rate (or the minimum rate permissible by law, if less than the
current prime rate) from the date such payments are due to the date
of payment. Licensor's right hereunder to interest on late payments
shall not preclude Licensor from exercising any of its rights or
remedies pursuant to this Agreement or otherwise with regard to
Licensee's failure to make timely remittances.
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 this Agreement or any renewal(s)
hereof, complete and accurate records of accounts including, without
limitation, invoices, correspondence, banking and financial and
other records pertaining to the various items required to be
submitted by Licensee. Such records and accounts shall be available
for inspeciton and audit at any time or times during or after the
term of this Agreement or any renewal(s) hereof 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 or 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 on or on behalf of Licensee shall be without prejudice to
any rights or remedies of Licensor and such acceptance, receipt
and/or deposity shall not preclude or prevent Licensor from
thereafter disputing the accuracy of any such statements or payment,
(c) If pursuant to its rights hereunder Licensor causes an audit and
inspection to be instituted when 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 be
responsible for payment of 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
5
deficiency is more than 5%, then Licensee shall pay the reasonable
costs and expenses of such audit and inspection.
7. INDEMNIFICATION.
(a) During the Term, and continuing after the expiration or termination
of this Agreement, Licensor shall idemnify 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 representaions 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 suit so brought. Licensee
shall not, however, be entitled to recover for lost profits.
Licensee shall cooperate fully in all respects with Licensor in the
conduct and defense of said suit and/or proceedings related thereto.
(b) During the Term, and continuing after the expiration or termination
of this Agreement, Licensee shall indemnify Licensor 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 Licensor by reason of: (i) any branch of Licensee's
covenants and undertakings hereunder, including those set forth in
paragraph 13 hereof; (ii) any unauthorized use of the Name and
Character; (iii) any unauthorized use of any trademark, copyright,
design, patent, process, method or device, except for those uses of
the Name and Character that are specifically approved by Licensor
pursuant to the terms of this Agreement; (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
Product(s) or the use thereof.
(c) With regard to 7(b) above, Licensee agrees to obtain, at its own
expense, product liability insurance 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 as an additional insured party and, requiring that the
insurer shall not terminate or materially modify such without
written notice to Licensor at least twenty (20) days in advance
thereof.
8. ARTWORK; COPYRIGHT AND TRADEMARK NOTICES.
(a) The Name and Character 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 authorized
for use hereunder by Licensor in connection with the Licensed
Product(s) or which otherwise features or includes the Name and
Character shall be owned in its entirety exclusively by Licensor.
Licensor reserves for itself or its designees all rights to sue any
and all artwork created, utilized and/or approved hereunder without
limitation.
6
(b) Licenses acknowledges that, as between Licensor and License, that
Name and character and all copyrights, trademarks and other
proprietary rights in and to the name and Character are owned
exclusively by Licensor. Licensee acknowledges that Licensor shall
have the right to terminate this Agreement in the event Licensee
asserts any rights (other than those granted pursuant to the
Agreement) in or to the Name and Character. Licensee further agrees
and acknowledges that Licensor shall own the copyright and other
proprietary rights in any and all artwork authorized for use
hereunder that incorporates the Name and Character. At the request
of Licensor, Licensee shall execute such form(s) of assignment of
copyright in any amendments or derivative works based in whole or
part on the Name and Character as Licensor may reasonably request.
If any third party makes or has made any contribution to the
creation of artwork authorized for use hereunder, Licensee agrees to
obtain from such party a full assignment of rights so that the
foregoing assignment by Licensee shall vest full rights in Licensor.
(c) Licensee shall, within thirty (30) days of receiving an invoice, pay
Licensor for artwork executed by Licensor (or by third parties under
contract to Licenser) for use in the development of the Licensed
Product(s) and any related packaging, display and promotional
materials at Licensor's prevailing commercial art rates. The
foregoing shall include any artwork that, in Licensor'opinion, is
necessary to modify artwork initially prepared by Licensee and
submitted for approval. Estimates of artwork charges are available
upon request.
(d) Licensee shall cause to be imprinted, irremovably and legibly on
each Licensed Product(s) manufactured, distributed or sold under
this Agreement, and all advertising, promotional packaging and
wrapping material wherein the Name and Character appears, the
following as directed by Licensor:
(i) The appropriate Copyright Notices, as directed and in each
instance specified by Licensor, including an encircled c, the
Name of Licensor, year date of first publication of the art
and/or textual material generally in the following form:
LOONET TUNES, names, characters and all related indicia are
trademarks of Warner Bros. C 199-. The year data shall be as
instructed by Licensor.
(ii) The appropriate Trademark, Notices with respect to the
Trademark(s) and Character(s) (and: any component thereof) as
specified in each instance by Licensor, including the initials
"TM", or the letter "R" encircled or "*"(asterisk), and/ or
any such legend(s) as may be required by Licensor, including
but not limited to a legend that the Name and Character (and
any component thereof) are trademarks of Licensor used under
license by Licensee.
(e) In no event shall Licensee use, in respect to the Licensed
Product(s) 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 Name and Character.
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(f) Licensee agrees to deliver to Licensor free of cost twelve(12) of
each of the Licensed Product(s) together with their packaging and
wrapping 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
Product(s) 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 Product(s) in
intrastate commerce.
(g) Licensee shall assist Licensor, at Licensor's expense, in the
procurement, protection, and maintenance of Licensor's rights to the
Name and Character. 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 Name and Character either in its own name, or in the name of
Licensee, or join 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 or
the Name and Character, on or in relation to products identical to
similar to or related to the Licensed Product(s). 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.
9. APPROVALS AND QUALITY CONTROLS.
(a) Licensee agrees to comply and maintain compliance with the quality
standards and specifications of Licensor in respect to all usage of
the Name and Character on or in relation to the licensed Product(s)
throughout the Term of this Agreement and any renewals or extensions
thereof. Licensee agrees to furnish to Licensor free of cost for its
written approval as to quality and style, samples of each of the
Licensed Product(s), together with their packaging, hangtags,
wrapping material, as follows in the successive stages indicated (a)
rough sketches/layout concepts; (b) finished artwork or final
proofs; (C) preproduction samples or strike-offs; (d) finished
products, including packaged samples.
(b) No Licensed Product(s) and no material whatever utilizing the Name
and Character 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 name and Character on such promotional,
display and advertising material as may, in its reasonable judgment,
promote the sale of the Licensed Product(s). All advertising and
promotional material relating to the Licensed Product(s) must be
submitted to the Licensor for its written approval at the following
stages appropriate to the medium used. (a) rough concepts (b)
layout, storyboard, script; and (C) finished materials.
(c) Approval or disapproval shall lie in Licensor's sole discretion. Any
Licensed Product(s) not so approved in writing shall be deemed
unlicensed and shall not be manufactured or sold. If any unapproved
Licensed Product(s) are being sold, Licensor may, together with
8
other remedies available to it including, but not limited to,
immediate termination of this Agreement, require such Licensed
Product(s) 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 Product(s) must conform in all material respects to the
final production samples approved by Licensor. If in Licensor's
reasonable judgment, 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, upon reasonable notice, to impact
Licensee's manufacturing operations and testing records (including
those operations and records of any supplier or manufacturer
approved pursuant to Paragraph 10 below) with respect to the
Licensed Product(s).
(g) If any changes or modifications are required to be made to any
material submitted to Licensor for its written approval in order to
ensure compliance with Licensor's specifications or standards of
quality, licensee agrees promptly to make such changes of
modifications . Subsequent to final approval , no fewer than
twenty-four (24) production samples of Licensed Product(s) will be
sent to Licensor, to ensure quality control simultaneously upon
distribution to the public. In addition, Licensor shall have the
right to purchase any and all licensed Product(s) in any quantity at
the price Licensee charges its customer at the maximum discount
price.
(h) To avoid confusion of the public, licensee agrees not to associate
other characters or licensed properties with the Name and Character
on the Licensed Product(s) or in any packaging, promotional or
display materials unless Licensee receives Licensor's prior written
approval. Furthermore, Licensee agrees not to use the Name and
Character (or any component thereof) on any business sign, business
cards, stationery or forms, nor to use the Name and Character as
part of the name of Licensee's business or any division thereof.
(i) 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.
(j) 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 customary rates. Any payment made to Warner Bros.
Animation for such animation shall be in addition to and shall not
offset the consideration set forth in paragraph 3.
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10. DISTRIBUTION; SUB-LICENSEE MANUFACTURE
(a) Licensee shall sell the Licensed Product(s) either to jobbers,
wholesalers, distributors or retailers for sale or resale and
distribution directly to the public. If licensee sells or
distributes the Licensed Product(s) 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 and of its rights
under this Agreement. In the event licensee is not the manufacturer
of the Licensed Product(s), Licensee shall be, subject to the prior
written approval of Licensor (which approval shall not be
unreasonably withheld), be entitled to utilize a third party
manufacturer in connection with the manufacture and production of
the Licensed Product(s) provided that such manufacturer shall
execute a letter in the form of Exhibit 1 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. In no event shall any such sub-license agreement include
the right to grant any further sublicenses.
11. GOOD WILL.
Licensee recognizes the great value of the publicity and good will
associated with the Name and Character and, acknowledges (I) such goodwill
is exclusively that of the Licensor and (ii) that the Name and Character
have 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 Name and Character, thereby entitling Licensor to seek 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 Name and Character 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 existing between Licensor and any
other person, firm or corporation.
13. SPECIFIC UNDERTAKINGS OF LICENSEE.
During the Term and thereafter, Licensee agrees that:
(a) It will not attack the title of Licensor or its Grantors in and to
the Name and Character or any copyright or trademark pertaining
thereto, nor will it attack the validity of the license granted
hereunder:
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(b) It will not harm, misuse or bring into disrepute the Name and
Character, but on the contrary, will maintain the value and
reputation thereof to the best of its ability;
(c) It will manufacture, sell, promote and distribute the Licensed
Product(s) 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;
(e) It will protect to the best of its ability its right to manufacture,
sell, promote, and distribute the Licensed Product(s) 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 Product(s),
and shall maintain its appropriate customary high quality standards.
It shall comply with any regulatory agencies which shall have
jurisdiction over the Licensed Product(s) 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 relation 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 Product(s) comply with such laws,
regulations and standards. Upon reasonable notice, Licensee shall
permit Licensor or its designees to inspect testing records and
procedures with respect to the Licensed product(s) for compliance.
Licensed Product(s) that do not comply with all applicable laws,
regulations and standards shall automatically be deemed unapproved;
(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.
(h) It will provide Licensor with the date(s) of first use of the
Licensed Product(s) in interstate and intrastate commerce, where
appropriate; and
(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 Name and Character 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 Name
and Character. Licensee hereby appoints Licensor its
Attorney-in-fact for such purpose.
14. TERMINATION BY LICENSOR.
(a) Licensor shall have the right to terminate this Agreement without
prejudice to any rights which it may have in the premises, whether
pursuant to the provisions of this
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Agreement, in law, or in equity, or otherwise, upon the occurrence
of any one or more of the following events (herein called
"defaults"):
(i) If 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
subparagraph 7(c) hereof; or
(iii) If Licensee shall fail to make any payments due hereunder on
the date due; or
(iv) If Licensee shall fail to deliver any of the statements
hereinabove referred to 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) If 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
Product(s) 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) If 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, country 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) In the event that Licensee does not commence in good faith to
manufacture, distribute and sell each Licensed Product(s) and
utilize each Character set forth in the Name and Character
within 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 within 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 Product(s), which or wherein Licensee fails
to meet said Marketing Date requirement; or
(viii) If Licensee shall manufacture, sell or distribute, whichever
first occurs, any of the Licensed Products(s) without the
prior written approval of Licensor as provided in paragraph 9
hereof; or
(ix) If Licensee undergoes a substantial change of management; or
(x) If a manufacturer approved pursuant to subparagraph 10(b)
hereof shall engage in conduct, which conduct if engaged in by
Licensee would entitle Licensor to terminate this Agreement;
or
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(xi) If Licensee delivers or sells Licensed Product(s) outside the
Territory or knowingly sells Licensed Products(s) to a third
party for delivery outside the Territory; or
(xii) If Licensee shall breach any other agreement in effect between
Licensor or any other client or Warner Bros. Consumer Products
on the other.
(b) In the event any of these defaults occur, Licensor shall give notice
of termination in writing to Licensee by certified mail. Licensee
shall have ten (10) days from the date of receiving notice in which
to correct any of these defaults (except subdivisions (vi) and
(viii) 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 and
no portion of prior payments shall be repayable to Licensee.
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, a statement
indicating the number and description of Licensed Product(s) on hand
together with a description of all advertising and promotional materials
relating thereto. Following expiration or termination, Licensee shall not
continue to manufacture the Licensed Product(s). However, if Licensee has
complied with all the terms of this Agreement, including, but not limited
to, complete and timely payment of the Guaranteed Consideration then,
Licensee may continue to distribute and sell its remaining inventory on a
non-exclusive basis for a period not to exceed SIXTY (60) days following
such termination or expiration, subject to payment of applicable royalties
thereto. In no event, however, may Licensee distribute and sell during
such period an amount of Licensed Product(s) that exceeds the average
amount of Licensed Product(s) sold during a consecutive SIXTY (60) day
period during the Term. If Licensee has any remaining inventory of the
Licensed Product(s) following such SIXTY (60) day period, Licensee shall,
at Licensor's option, make available such inventory to Licensor for
purchase at cost, deliver up to Licensor for destruction said remaining
inventory or furnish to Licensor an affidavit attesting to the destruction
of said remaining inventory. Licensor shall have the right to conduct a
physical inventory in order to ascertain or verify such inventory and/or
physical inventory. In the event this Agreement is terminated by Licensor
for cause, Licensee shall be deemed to have forfeited its sell-off rights
hereunder. 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 is 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 to a
facsimile or over-night delivery
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service and the date of said mailing shall be the date of the giving of
such notice and/or transmitted via facsimile with receipt of a confirming
copy.
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. NON-ASSIGNABILITY.
This Agreement shall bind and inure to the benefit of Licensor, its
successors and assigns. This Agreement is personal to Licensee, and
Licensee shall not sub-license nor franchise its rights hereunder, and
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, liquidation,
trustee or other party.
19. CONSTRUCTION.
This Agreement shall be construed in accordance with the laws of the
State of California and of the United States of America.
20. 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 or 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.
21. 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, a Time Warner Entertainment
Company 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, a Time Warner Entertainment Company of any check or
other consideration given by Licensee and/or delivery of any material by
Warner Bros. Consumer Products, a Time Warner
14
Entertainment Company to Licensee shall not be deemed an acceptance by
Warner Bros. Consumer Products, a Time Warner Entertainment Company of
this application. The foregoing shall apply to any documents relating to
renewals or modifications hereof.
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 PRODUCTS, A ACE NOVELTY COMPANY, INC.
TIME WARNER ENTERTAINMENT COMPANY
As Agent for Warner Bros. a
division of Time Entertainment
Company, L.F.
By: /s/ GARY R. SIMON By: /s/ SAUL GAMORAN
Gary R. Simon Saul Gamoran
Vice President, Legal Affairs Executive Vice President
Date: 3/22/97 Date: 3-17-97
15
EXHIBIT 1 #3775-WBLT
Dated
Warner Bros. Consumer Products, a
Time Warner Entertainment Company
4000 Warner Boulevard
Burbank, CA 91522
Gentlemen:
This letter will serve as notice to you that pursuant to subparagraph
10(b) of the License Agreement between your client WARNER BROS. and ACE NOVELTY
COMPANY, INC., we have been engaged as the manufacturer for ACE NOVELTY COMPANY,
INC. in connection with the manufacture of the Licensed Product(s) as defined in
the aforesaid License Agreement. We hereby acknowledge that we have received a
copy and are cognizant of the terms and conditions set forth in said License
Agreement and hereby agree to observe those provisions of said License Agreement
which are applicable to our function as manufacturer of the Licensed Product(s).
It is understood that this engagement is on a royalty free basis.
We understand that our engagement as the manufacturer for ACE NOVELTY
COMPANY, INC. is subject to your written approval. We request, therefore, that
you sign in the space below, thereby showing your acceptance of our engagement
as aforesaid.
Very truly yours,
(MANUFACTURER)
By: ____________________________
Signature
____________________________
Printed name
____________________________
Address
____________________________
____________________________
Dated
AGREED TO AND ACCEPTED;
WARNER BROS. CONSUMER PRODUCTS, A
TIME WARNER ENTERTAINMENT COMPANY
By: _____________________________
Gary R. Simon
Vice President, Legal Affairs
Date: __________________
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