EXHIBIT 10.11
RETAIL LICENSE
WARNER BROS. CONSUMER PRODUCTS
#6832-SPJ/WBLT
LICENSE AGREEMENT made 3-22-96, by and between Warner Bros., a division of Time
Warner Entertainment Company, 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 Company, Inc., whose address is 13434
Northeast 16th Street, Bellevue, WA 98005 Attn: Saul Gamoran (hereinafter
referred to as "LICENSEE").
WITNESSETH:
The Parties hereto agree as follows:
1. DEFININTIONS: As used in the Agreement, the following term shall have the
following respective meanings:
(a) "Licensed Property(s)":
1. Those certain elements depicted in the theatrical motion picture
entitled "SPACE JAM" (the "Motion Picture"), including all
trademarks, copyrights, related logos, indicia, set and costume
designs, and other elements depicted therein. In addition, the
Licensed Property shall also include the representations, names,
logos, movements, personalities, artwork, photographs, and other
material in connection with the animated characters NERDLUCKS,
MONSTARS, SWACKHAMMER, and LOLA BUNNY as well as the following
"Looney Tunes" animated characters as depicted in the Motion
Picture: BUGS BUNNY, DAFFY DUCK, SYLVESTER, TWEETY, ROAD RUNNER,
WILE E. COYOTE, TASMANIAN DEVIL, ELMER FUDD, PORKY PIG, YOSEMITE
SAM, PEPE LE PEW AND MARVIN THE MARTIAN only. Specifically excluded
herein, however, is the right to reproduce the likenesses of the
actors and actresses in the Motion Picture (the "Performer(s)")
except to the extent specifically permitted otherwise in writing by
Licensor and then only to the extent the Performer(s) have granted
merchandising rights to Licensor. Notwithstanding the foregoing, all
uses of any of the elements set forth above, including the names and
likenesses of any of the performer(s) afforded hereunder must be
specifically approved in writing by Licensor, pursuant to Paragraph
9 herein. It is specifically understood that subject to approval of
the specific Licensed Product(s), the license granted hereunder
shall include the right to use the name and likeness of Michael
Jordan. However, Licensee understands and agrees that Licensee has
no rights in and to Michael Jordan's voice and that Michael Jordan's
voice shall not be utilized or reproduced under any circumstances.
Licensee acknowledges that the rights granted herein are limited
only to the elements contained in the Motion Picture and that any
and all rights in, to or associated with any subsequently produced
motion picture, as well as with any sequels thereto, as well as with
any subsequently produced television series are specifically
excluded herefrom.
2. The representations, names, logos, movements, personalities,
artwork, photographs and other material in connection with the
following "LOONEY TUNES" characters: BUGS BUNNY, SYLVESTER, TWEETY,
PORKY PIG, SPEEDY GONZALES, DAFFY DUCK, ROAD RUNNER, WILE E. COYOTE,
YOSEMITE SAM, TASMANIAN DEVIL, PETUNIA PIG, FOGHORN LEGHORN, HENERY
HAWK, SHE-DEVIL, HECTOR, MARC ANTHONY, PEPE LE PEW, PENELOPE, MARVIN
THE MARTIAN, SYLVESTER JR., GRANNY, PUSSYFOOT, GOSSAMER and MICHIGAN
J. FROG only.
*Omitted and filed separately with the Commission.
(b) "Licensed Product(s)":
1. Exclusive Products including:
i) Plush Characters
ii) Plush Puppets
iii) Plush with features
(for example pull-string design)
iv) Plush Marionettes
2. Non Exclusive Products including:
v) *REDACTED
vi) *REDACTED
vii) *REDACTED
viii) *REDACTED
ix) *REDACTED
x) *REDACTED
xi) *REDACTED
xii) *REDACTED
xiii) *REDACTED
xiv) *REDACTED
xv) *REDACTED
xvi) *REDACTED
The above mentioned Licensed Products (i) through (xvi) shall be
distributed in Mass Market in the United States and Canada; and
Amusement Industry and Licensee's Fund Raising Division in the
United States only.
3. Non Exclusive Products for "Space Jam" only:
(without M. Jordan's likeness)
xvii) *REDACTED
xviii) *REDACTED
xix) *REDACTED
xx) *REDACTED
xxi) *REDACTED
xxii) *REDACTED
xxiii) *REDACTED
xxiv) *REDACTED
xxv) *REDACTED
xxvi) *REDACTED
The above mentioned Licensed Products (xvii) through (xxv) shall
only be distributed in the United States through the Amusement
Industry (as defined herein) and Licensee's Fund Raising Division;
and through Licensed Product (xxvi) may be distributed and sold in
Mass Market, Amusement Industry and Licensee's Fund Raising
Division.
Sales through the Amusement Industry channel of distribution are to
be awarded as prized in connection with games of skill and are not
be sold to the general public under any circumstance. Furthermore,
fund raising sales on a non-exclusive basis, may be through direct
mail, prize programs and in-school sales.
Distribution in Canada: Mass Merchandisers in toy department only,
Mass Markets (toy department only), Toy Wholesalers, Supermarkets,
Toy Stores, Catalog Show Rooms and Drug Store Chains.
It is understood and agreed between the parties that then above
mentioned Licensed Products shall not be packaged and sold as party
favors.
(c) "Territory": United States (fifty states) and Canada
(d) "Marketing Date": September 1, 1996 for "Looney Tunes" and "Space
Jam" Licensed Products, with the exception as
noted below.
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*Omitted and filed separately with the Commission.
Licensee specifically understands and agrees that the category of
SPACE JAM "Plush" Licensed Products shall not be on the retail
shelves until December 1, 1996.
(e) "Term": With respect to Licensed Property "Looney Tunes" the Term
shall be January 1, 1996 through *REDACTED. With respect to Licensed
Property "Space Jam" the Term shall be January 1, 1996 through
*REDACTED.
(f) "Royalty Rate": With respect to Licensed Property, "Looney Tunes"
Licensee shall pay *REDACTED of all net sales. With respect to
Licensed Property, "Space Jam" Licensee shall pay *REDACTED of all
net sales.
(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.
2. GRANT OF LICENSE.
(a) Upon the terms and conditions 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 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). Licensee acknowledges that Licensor has
granted rights to certain characters "Nerdlucks" based from the
Motion Picture to an alternate licensee through an affiliate of
Licensor. Licensee further acknowledges that Licensor may grant a
license to a third party for the category of "Plush Characters"
embodied with electronic features, so long as the third party
advertises the electronic "Plush" on television.
(b) For purposes of interpretation throughout this Agreement, every
application and utilization of each enumerated Licensed Property 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.
(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) or 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
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*Omitted and filed separately with the Commission.
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 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 the 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 term.
(b) To secure payment by Licensee to Licensor of the Guaranteed
Consideration referred to in Paragraph 3(a) above, Licensee shall
deliver to Licensor and original irrevocable standby letter of
credit in an aggregate fact amount of *REDACTED (the "Letter of
Credit"). Timely delivery of the Letter of Credit shall by thirty
(30) days after execution of this Agreement. The Letter of Credit
shall have a term concurrent with the Term of this Agreement and
shall be self-liquidating to the amount of Guaranteed Consideration
remaining unpaid under this Agreement. Upon payment to Licensor of
the total amount of Guaranteed Consideration due under this
Agreement, the Letter of Credit shall terminate. The Letter of
Credit shall be issued by a United States bank approved by Licensor
and shall contain terms and conditions satisfactory to Licensor in
its reasonable discretion. In the event of the bankruptcy or
insolvency of Licensee, or upon the occurrence of any other default
as set forth in Paragraph 14 below, in addition to Licensor's other
rights and remedies hereunder, at law, in equity or otherwise,
Licensor shall, at Licensor's election, be entitled to draw down the
full face amount available under the Letter of Credit and retain all
such as cash collateral and then or at any time thereafter apply
such sums against any and all amounts then due or thereafter to
become due to Licensor hereunder, at law, in equity or otherwise.
(c) 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 Product(s) covered by this Agreement. The term "net sales"
shall mean the gross invoice price billed customers, less quantity
discounts, returns and freight charges if itemized separately, but
no deduction shall be made for uncollectable accounts. It is a
material term and condition of this Agreement that Licensee report
net sales separately on each of the Licensed Properties and on a
country-by-country basis. In the event Licensee fails to do so,
Licensor shall have the right to terminate this Agreement. No costs
incurred in the manufacture, sale, distribution, advertisement, or
exploitation of the Licensed Product(s) shall be deducted from any
royalties payable by Licensee.
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(d) 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
Licensed Property, artwork and textual matter in connection with
other products whether similar or identical to the Licensed
Product(s).
(b) Notwithstanding anything 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 product. 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 sale or distribution in any
theaters or arena, or for sale or distribution in any retail stores
operated by or on behalf of Licensor, its affiliated companies
franchises, or for sale or distribution in any theme/amusement parks
operated by or on behalf of Licensor and its affiliated companies,
including without limitation, the Six Flags and Movie World parks.
In addition, Licensor reserves the right to allow Six Flags
Corporation 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 Corporation and 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.
(c) 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 (1O%) 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.
5. PERIODIC STATEMENTS.
(a) Within THIRTY (30) days after the initial shipment of the Licensed
Product(s) and promptly on the 30th 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 (specifying the
components of the Licensed Property utilized and specifying the
nature of the Licensed Product(s), gross sales price and itemized
deductions
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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
Product(s) 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 number, description of items
sold specifying the components of the Licensed Property 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.
(b) The statements and payments required hereunder shall be delivered
to:
Warner Bros. Consumer Products
4000 Warner Boulevard
Bridge Building, 4th Floor
Burbank, California 91522
Attn: Asst. controller, Domestic Accounting
(c) 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 maximum 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 other 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, purchase orders, inventory records, 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 inspection 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 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
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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 payments
(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 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 deficiency is more
than five percent (5%), then Licensee shall pay the reasonable costs
and expenses of such audit and inspection.
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 License 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 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 breach of Licensee's
covenants and undertakings hereunder, including those set forth in
Paragraph 13 hereof; (ii) any unauthorized use of the Licensed
Property; (iii) any use of any trademark, copyright, design, patent,
process, method. or device, except for those uses of the Licensed
Property 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 Licenser 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.
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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 the License Property 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
Licensed Property shall be owned in its entirety exclusively by
Licensor. 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 all copyrights, trademarks and other
proprietary rights in and to the Licensed Property 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 Licensed Property. 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 Licensed Property. 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 Licensed Property 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 right 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 Licensor) 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's 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 Licensed Property 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:
TX & (copyright) Warner Bros. 199_.
LOONEY TUNES, characters, names and all related
indicia are trademarks of Warner Bros. (copyright) l99_.
(The year date shall be as instructed by Licensor)
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(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
such legend(s) as may be required by Licensor, including but
not limited to a legend indicating that the Licensed Property
(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 Licensed Property.
(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
Property 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 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 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 CONTR0LS,
(a) Licensee agrees to comply and maintain compliance with the quality
standards and specifications of Licensor in respect to all usage of
the Licensed Property 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, and
wrapping material, as follows in the successive stages indicated (a)
rough sketches/layout concepts; (b) finished artwork or final
proofs; (c)pre-production samples or strike-offs; (d) finished
products, including packaged samples.
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(b) No Licensed Product(s) and no material whatever 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 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 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
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 inspect
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 or
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 best 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 Licensed Property
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 Licensed
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Property (or any component thereof) on any business sign, business
cards, stationery or forms, nor to use the Licensed Property as
part of the name of Licensee's business or any division thereof.
(i) Licensee shall use its best of forts 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 Bras. Animation pursuant to a separate
agreement between Licensee and Warner Bros. Animation, subject to
Warner Bras. 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.
(k) Licensor's approval of Licensed Product(s) (including without
limitation, the Licensed Product(s) 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 as set forth in Paragraph 1(b)
hereof, Licensee shall sell the Licensed Product(s) either to
jobbers, wholesalers, distributors or retailers for sale or resale
and distribution directly to the public. Unless explicitly set
forth in Paragraph 1(h) hereof, Licensee shall not sell the
Licensed Product(s) through any cable home shopping service. If
Licensee sells or distributes the Licensed Product(s) at a special
price, directly or indirectly, to itself, including with out
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 such
sales or distribution, based upon the price generally charged the
trade by Licensee.
(b) Licensee shall not be entitled to sublicense any 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
sublicense agreement include the right to grant any further
sublicenses.
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 have
acquired a secondary
11
meaning as Licensor's trademarks and/or identifications in the mind or 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 damaqes in an action at law, and may, in addition thereto,
constitute an infringement of Licensor'8 copyrights, trademarks and/other
proprietary rights in, and to the Licensed Property, 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 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 existing between Licensor and any
other 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 its Grantors in and to
the Licensed Property or any copyright or trademark 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;
(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
12
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;
(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; and
(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.
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 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
Paragraph 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
13
(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, 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) 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 Licensed Property
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 Paragraph 10(b) hereof
shall engage in conduct, which conduct if engaged in by
Licensee would entitle Licensor to terminate this Agreement;
or
(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 has made a material misrepresentation or has
omitted to state a material fact necessary to make the
statements not misleading; or
(xiii)If Licensee shall breach any other agreement in effect
between Licensee and Licensor.
(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 (vii), (viii),
(xi) 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 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,
14
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 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 contained herein 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, liquidator,
trustee or other party.
19. CONSTRUCTION.
This Agreement shall be construed in accordance with the laws of the
State of California 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
15
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 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.
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:
PARKER BR0S. CONSUMER PRODUCTS, A ACE NOVELTY COMPANY, INC.
TIME WARNER ENTERAINMENT COMPANY
as Agent for Warner Bros., a
division of Time Warner
Entertainment Company, L.P.
By:/s/ GARY R. SIMON By:/s/ SAUL GAMORAN
Gary R. Simon
Vice President, Legal Affairs
Date: 3/22/96 Date:3/19/96
16
EXHIBIT 1 #6832-SPJ/WBLT
Dated
Warner Bros. Consumer Products
4000 Warner Boulevard
Burbank, CA 91522
RE: APPROVAL FOR THIRD PARTY MANUFACTURER
Gentlemen:
This letter will serve as notice to you that pursuant to Paragraph 10(b)
of the License Agreement dated ______, 199_ between your client WARNER BROS. and
ACE NOVELTY COMPANY INC, ("Licensee"), we have been engaged as the manufacturer
for LICENSEE in connection with the manufacture of the Licensed Product(s) as
defined in the aforesaid License Agreement. We hereby acknowledge that we may
not manufacture Licensed Product(s) for, or sell or distribute Licensed
Product(s) to, anyone other than Licensee. We hereby further 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 LICENSEE 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.
Sincerely,
_______________________________
MANUFACTURER/COMPANY NAME
By:____________________________
SIGNATURE
____________________________
PRINTED NAME
____________________________
ADDRESS
____________________________
____________________________
DATED
AGREED TO AND ACCEPTED:
WARNER BROS. CONSUMER PRODUCTS
By:________________________
Gary R. Simon
Vice President, Legal Affairs
Date:_______________
17