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EXHIBIT 10.30
LICENSE AGREEMENT
Date: December 13, 1996
Re: DISNEY'S GEORGE OF THE JUNGLE
This License agreement ("Agreement") is entered into by and between Disney
Enterprises, Inc. ("Disney"), with a principal place of business at 500 South
Buena Vista Street, Burbank, California 91521, and IMPACT, INC. ("Licensee"),
with its principal place of business at 1515 N. Federal Highway, Suite 208,
Boca Raton, Florida 33432. Disney and Licensee agree as follows:
1. MEANING OF TERMS
A. "LICENSED MATERIAL" means the graphic representations of the
following:
DISNEY'S GEORGE OF THE JUNGLE characters, but only
such characters and depictions of such characters as
may be designated by Disney;
and designated still scenes from the motion picture identified
in Subparagraph 1.B. hereafter.
B. "TRADEMARKS" means "Wait Disney", "Disney", the
representations of Licensed Material included in Subparagraph
1.A. above, and the logo of the following motion picture:
DISNEY'S GEORGE OF THE JUNGLE
C. "ARTICLES" means the following items on or in connection with
which the Licensed Material and/or the Trademarks are
reproduced or used, and includes each and every stock keeping
unit ("SKU") of each Article:
(1) Portfolios
(2) Binders
(3) Theme books
(4) Study kits, including pencil pouch, ruler, sharpener,
eraser (poly bagged)
(5) 12" die-cut rulers
(6) Five (5) pack pencils
(7) 3"x5" memo pads
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(8) Die-cut erasers
D. "MINIMUM PER ARTICLE ROYALTY" means for each Article
identified herein which is sold the sum indicated herein:
[*]
E. "PRINCIPAL TERM" means the period commencing December 13,
1996, and ending December 31, 1999.
F. "TERRITORY" means the United States, United States PX's
wherever located, and United States territories and
possessions, excluding Puerto Rico, Guam, Commonwealth of
Northern Mariana Islands and Palau. However, if sales are
made to chain stores in the United States which have stores in
Puerto Rico, such chain stores may supply Articles to such
stores in Puerto Rico.
G. "ROYALTIES" means a royalty in the amounts set forth below in
Subparagraphs 1.G.(1)(a), (b), and (c) and Royalties shall be
further governed by the provisions contained in Subparagraphs
1.G.(2)-(6):
(1)(a) [*] of Licensee's Net Invoiced Billings to authorized
Retailers and Wholesalers for Articles shipped by
Licensee from a location in the Territory for
delivery to a customer located in the Territory
("F.O.B. In Sales"); or
(b) [*] of Licensee's Net Invoiced Billings to authorized
Retailers and Wholesalers when Licensee's customer
located in the Territory takes title to the Articles
outside the Territory and/or bears the risk of loss
of Articles manufactured and shipped to the customer
from outside the Territory ("F.O.B. Out Sales"); or
(c) if a Minimum Per Article Royalty has been specified
in Subparagraph 1.D. above, and it would result in a
higher royalty to be paid for the Articles, Licensee
agrees to pay the higher royalty amount.
__________________________________
* FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT.
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(2) The sums paid to Disney as Royalties on any sales to
Licensee's Affiliates shall be no less than the sums
paid on sales to customers not affiliated with
Licensee.
(3) All sales of Articles shipped to a customer outside
the Territory pursuant to a distribution permission
shall bear a Royalty at the rate for F.O.B. Out
Sales. However, sales of Articles to Disney's
Affiliates outside the Territory shall bear a Royalty
at the rate for F.O.B. In Sales.
(4) No Royalties are payable on the mere manufacture of
Articles.
(5) The full Royalty percentage shall be payable on
close-out or other deep discount sales of Articles,
including sales to employees.
(6) Royalties reported on sales of Articles which have
been returned to Licensee for credit or refund and
on which a refund has been made or credit memo issued
may be credited against Royalties due. The credit
shall be taken in the Royalty Payment Period in which
the refund is given or credit memo issued. Unused
credits may be carried forward, but in no event shall
Licensee be entitled to a refund of Royalties.
H. "NET INVOICED BILLINGS" means the following:
(1) actual invoiced billings (i.e., sales quantity
multiplied by Licensee's selling price) for Articles
sold, and all other receivables of any kind
whatsoever, received in payment for the Articles,
whether received by Licensee or any of Licensee's
Affiliates, except as provided in Subparagraph
1.H.(2), less "Allowable Deductions" as hereinafter
defined.
(2) The following are not part of Net Invoiced Billings:
invoiced charges for transportation of Articles
within the Territory which are separately identified
on the sales invoice, and sales taxes.
I. "ALLOWABLE DEDUCTIONS" means the following:
(1) volume discounts, and other discounts from the
invoice price (or post-invoice credits) unilaterally
imposed in the regular course of business by
Licensee's customers, so long as Licensee documents
such discounts (or credits) to Disney's
satisfaction. In the event a documented
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unilateral discount (or credit) is taken with respect
to combined sales of Articles and other products not
licensed by Disney, and Licensee cannot document the
portion of the discount (or credit) applicable to the
Articles, Licensee may apply only a pro rata portion
of the discount (or credit) to the Articles.
Unilateral discounts or credits are never deductible
if they represent items listed below in Subparagraph
1.I.(2).
(2) The following are not Allowable Deductions, whether
granted on sales invoices or unilaterally imposed as
discounts or as post-invoice credits: cash discounts
granted as terms of payment; early payment discounts;
allowances or discounts relating to advertising; mark
down allowances; new store allowances; defective
goods allowances or allowances taken by customers in
lieu of returning goods; costs incurred in
manufacturing, importing, selling or advertising
Articles; freight costs incorporated in the selling
price; and uncollectible accounts.
J. "ROYALTY PAYMENT PERIOD" means each calendar quarterly period
during the Principal Term and during the sell-off period, if
granted.
K. "ADVANCE" means the following sum(s) payable by the following
date(s) as an advance on Royalties to accrue in the following
period(s):
[*] payable upon Licensee's signing of this Agreement
for the Principal Term,
L. "GUARANTEE" means the following sum(s) which Licensee
guarantees to pay as minimum Royalties on Licensee's
cumulative sales in the following period(s):
[*] for the Principal Term.
M. "SAMPLES" means twelve (12) samples of each SKU of each
Article, from the first production run of each supplier of
each SKU of each Article.
N. "PROMOTION COMMITMENT" means the following sum(s) which
Licensee agrees to spend in the following way(s):
__________________________________
* FILED SEPARATELY WITH COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT.
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Licensee hereby acknowledges Licensee's understanding that
Disney is implementing a common marketing and promotional fund
(the "Common Marketing Fund"), during the Principal Term, for
purposes of marketing and promoting the Licensed Material and
the Trademarks, as Disney may deem appropriate in Disney's
absolute discretion. In order to implement the Common
Marketing Fund, Licensee shall be required, from time to time
at Disney's request, to provide a contribution(s) to the
Common Marketing Fund, the cumulative total of which shall not
exceed one percent (1%) of Licensee's Net Invoiced Billings
for Articles (such Net Invoiced Billings to be estimated by
Disney in a reasonable manner) during the Principal Term, but
in no event less than a cumulative total of one percent (1%)
of the quotient of (the Guarantee divided by the Royalty rate
for F.O.B. In Sales). Within fifteen (15) days after each
request by Disney, Licensee shall pay to Disney the amount of
the contribution designated by Disney. Such contribution may
be expended by Disney and/or Disney's designees in the amount
and in the manner Disney deems most appropriate in order to
market, promote, and advertise the Licensed Material and the
Trademarks. Licensee's contribution shall only be spent for
the promotion of the Licensed Material and the Trademarks
licensed hereunder. However, Disney does not ensure that
Licensee will benefit directly or pro-rata from the operation
of the Common Marketing Fund. Licensee shall not be entitled
to any audit rights with regard to the Common Marketing Fund.
O. "MARKETING DATE" means the following date(s) by which the
following Article(s) shall be available for purchase by the
public at the retail outlets authorized pursuant to
Subparagraph 2.A.:
By the release date of the motion picture referenced
in Subparagraph 1.B. (to be determined), for all
Articles. When the actual release date of the motion
picture is determined, Licensee shall be advised of
such date in writing.
P. "AFFILIATE" means, with regard to Licensee, any corporation or
other entity which directly or indirectly controls, is
controlled by, or is under common control with Licensee, with
regard to Disney, "Affiliate" means any corporation or other
entity which directly or indirectly controls, is controlled
by, or is under common control with Disney. "Control" of an
entity shall mean possession, directly or indirectly, of power
to direct or cause the direction of management : or policies
of such entity, whether through ownership of voting
securities, by contract or otherwise.
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Q. "LAWS" means any and all applicable laws, rules, regulations,
voluntary industry standards, association laws, codes or other
obligations pertaining to any of Licensee's activities under
this Agreement, including but not limited to those applicable
to the manufacture, pricing, sale and/or distribution of the
Articles.
R. "RETAILER" means independent and chain retail outlets which
have storefronts and business licenses, and which customers
walk into, not up to; "WHOLESALER" means a seller of items to
retailers, not consumers, and includes the term "distributor".
The following do not qualify as authorized sales outlets for
Articles under this Agreement under any circumstances: swap
meets, flea markets, street peddlers, unauthorized kiosks, and
the like.
2. RIGHTS GRANTED
A. In consideration for Licensee's promise to pay and Licensee's
payment of all Royalties, Advances and Guarantees required
hereunder, Disney grants Licensee the non-exclusive right,
during the Principal Term, and only within the Territory, to
reproduce the Licensed Material only on or in connection with
the Articles, to use such Trademarks and uses thereof as may
be approved when each SKU of the Articles is approved and only
on or in connection with the Articles, and to manufacture,
distribute for sale and sell the Articles (other than by
direct marketing methods, which includes but is not limited
to, computer on-line selling, direct mail and door-to-door
solicitation). Licensee will sell the Articles only to the
following Retailers in the Territory for resale to the public
in the Territory, or to Wholesalers in the Territory for
resale only to the following Retailers: (1) mass market
Retailers (including such Retailers as Target, Toys R Us,
WalMart and KMart), (2) value-oriented department stores
(including such Retailers as Sears, Mervyn's and Montgomery
Ward), (3) value-oriented specialty stores, (4) mid-tier
department stores (including such Retailers as J.C. Penney and
Kohl's), and (5) drug chains. Licensee will not sell the
Articles to other Retailers, or to supermarkets or food
chains, or to other Wholesalers. In addition, Licensee may not
sell the Articles to Retailers selling merchandise on a
duty-free basis, or to Wholesalers for resale to such
Retailers, unless such Retailer or Wholesaler has a
then-current license agreement with Disney or any of Disney's
Affiliates permitting it to make such duty-free sales.
Licensee may sell the Articles to authorized customers for
resale through the pre-approved mail order catalogs listed on
the Catalog Schedule to this Agreement. If there is a question
as to whether a particular customer falls within any of the
categories specified above, Disney's determination shall be
binding.
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B. Unless Disney consents in writing, Licensee shall not sell or
otherwise provide Articles for use as premiums (including
those in purchase-with purchase promotions), promotions,
give-aways, fund-raisers, or entries in sweepstakes, or
through unapproved direct marketing methods, including but not
limited to, home shopping television programs, or to customers
for inclusion in another product. If Licensee wishes to sell
the Articles to customers for resale through mail order
catalogs other than those listed on the Catalog Schedule
hereto, Licensee must obtain Disney's prior written consent in
each instance. However, Licensee may solicit orders by mail
from those Wholesalers or Retailers authorized pursuant to
Subparagraph 2.A. above, and Licensee may sell to such
authorized Retailers which sell predominantly at retail, but
which include the Articles in their mail order catalogs, or
otherwise sell Articles by direct marketing methods as well as
at retail.
C. The prohibition of computer on-line selling referenced in
Subparagraph 2.A. includes, but is not limited to, the
display, promotion or offering of Articles in or on any
on-line venues, including but not limited to, any catalog
company's or Retailer's "Websites," "home pages," or any
similar venues, except as specifically permitted in the next
two sentences. With Disney's prior written permission,
Articles approved by Disney may be displayed and promoted on
Disney-controlled Internet services, only within the
Territory. In addition, with Disney's prior written
permission, Articles approved by Disney may be displayed and
promoted on Licensee's own Website; however, Licensee must
obtain Disney's prior written approval of all creative and
editorial elements of such promotional uses, in accordance
with the provisions of Paragraph 7 of this Agreement.
D. Unless Disney consents in writing, Licensee shall not give
away or donate Articles to Licensee's accounts or other
persons for the purpose of promoting sales of Articles, except
for minor quantities or samples which are not for onward
distribution.
E. Nothing contained herein shall preclude Licensee from selling
Articles to Disney or to any of Disney's Affiliates, or to
Licensee's or Disney's employees, subject to the payment to
Disney of Royalties on such sales.
F. Disney further grants Licensee the right to reproduce the
Licensed Material and to use the approved Trademarks, only
within the Territory, during the Principal Term, on
containers, packaging and display material for the Articles,
and in advertising for the Articles.
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G. Nothing contained in this Agreement shall be deemed to imply
any restriction on Licensee's freedom and that of Licensee's
customers to sell the Articles at such prices as Licensee or
they shall determine.
H. Licensee recognizes and acknowledges the vital importance to
Disney of the characters and other proprietary material Disney
owns and creates, and the association of the Disney name with
them. In order to prevent the denigration of Disney's products
and the value of their association with the Disney name, and
in order to ensure the dedication of Licensee's best efforts
to preserve and maintain that value, Licensee agrees that,
during the Principal Term and any extension hereof, Licensee
will not manufacture or distribute any merchandise embodying
or bearing any artwork or other representation which Disney
determines, in Disney's reasonable discretion, is confusingly
similar to Disney's characters or other proprietary material.
I. Licensee's obligations under this Agreement shall be secured
by the letter of credit which is the subject of the Revised
Global Amendment dated December 6, 1996, between Disney and
ERO, Inc. In the event such Revised Global Amendment is not
executed, then Licensee shall maintain the irrevocable letter
of credit it currently has in place to secure payment of
Licensee's obligations hereunder and under any other prior,
concurrent or subsequent agreement between the parties (in
addition to any and all separate letters of credit that may be
in place regarding such agreement(s)). Licensee agrees to
modify such letter of credit as necessary to ensure that it
does not expire earlier than May 31, 2000. In the event of
one or more partial draws on such letter of credit, Licensee
agrees to restore it to the original amount within fifteen (
15) days after the partial draw(s).
3. ADVANCE
A. Licensee agrees to pay the Advance, which shall be on account
of Royalties to accrue during the Principal Term only, and
only with respect to sales in the Territory; provided,
however, that if any part of the Advance is specified
hereinabove as applying to any period less than the Principal
Term, such part shall be on account of Royalties to accrue
during such lesser period only. If said Royalties should be
less than the Advance, no part of the Advance shall be
repayable.
B. Royalties accruing during any sell-off period or extension of
the Principal Term shall not be offset against the Advance
unless otherwise agreed in writing.
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Royalties accruing during any extension of the Principal Term
or any other term shall be offset only against an advance paid
with respect to such extended term.
C. In no event shall Royalties accruing by reason of any sales to
Disney or any of Disney's Affiliates or by reason of sales
outside the Territory pursuant to a distribution permission be
offset against the Advance or any subsequent advance.
4. GUARANTEE
A. Licensee shall, with Licensee's statement for each Royalty
Payment Period ending on a date indicated in Subparagraph I.L.
hereof defining "Guarantee," or upon termination if the
Agreement is terminated prior to the end of the Principal
Term, pay Disney the amount, if any, by which cumulative
Royalties paid with respect to sales in the Territory during
any period or periods covered by the Guarantee provision, or
any Guarantee provision contained in any agreement extending
the term hereof, fall short of the amount of the Guarantee for
such period.
B. Advances applicable to Royalties due on sales in the period to
which the Guarantee relates apply towards meeting the
Guarantee.
C. In no event shall Royalties paid with respect to sales to
Disney or to any of Disney's Affiliates, or with respect to
sales outside the Territory pursuant to a distribution
permission, apply towards the meeting of the Guarantee or any
subsequent guarantee.
5. PRE-PRODUCTION APPROVALS
A. As early as possible, and in any case before commercial
production of any Article, Licensee shall submit to Disney for
Disney's review and written approval (to utilize such
materials in preparing a pre-production sample) all concepts,
all preliminary and proposed final artwork, and all three
dimensional models which are to appear on or in any and all
SKUs of the Article. Thereafter, Licensee shall submit to
Disney for Disney's written approval a pre-production sample
of each SKU of each Article. Disney shaH endeavor to respond
to such requests within a reasonable time, but such approvals
should be sought as early as possible in case of delays. In
addition to the foregoing, as early as possible, and in any
case no later than sixty (60) days following written
conceptual approval, Licensee shall supply to Disney for
Disney's use for
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internal purposes, a mock-up, prototype or pre production
sample of each SKU of each Article on or in connection with
which the Licensed Material is used. Licensee acknowledges
that Disney may not approve concepts or artwork submitted near
the end of the Principal Term. Any pre-production approval
Disney may give will not constitute or imply a representation
or belief by Disney that such materials comply with any
applicable Laws.
B. Approval or disapproval shall lie solely in Disney's
discretion, and any SKU of any Article not so approved in
writing shall be deemed unlicensed and shall not be
manufactured or sold. If any unapproved SKU of any Article is
being sold, Disney may, together with other remedies available
to Disney, including but not limited to, immediate termination
of this Agreement, by written notice require such SKU of such
Article to be immediately withdrawn from the market. Any
modification of any SKU of an Article, including, but not
limited to, change of materials, color, design or size of the
representation of Licensed Material must be submitted in
advance for Disney's written approval as if it were a new SKU
of an Article. Approval of any SKU of an Article which uses
particular artwork does not imply approval of such artwork for
use with a different Article. The fact that artwork has been
taken from a Disney publication or a previously approved
Article does not mean that its use will necessarily be
approved in connection with an Article licensed hereunder.
C. If Licensee submits for approval artwork from an article or
book manufactured or published by another licensee of Disney's
or of any of Disney's Affiliates, Licensee must advise Disney
in writing of the source of such artwork. If Licensee fails to
do so, any approval which Disney may give for use by Licensee
of such artwork may be withdrawn by giving Licensee written
notice thereof, and Licensee may be required by Disney not to
sell Articles using such artwork.
D. Licensee is responsible for the consistent quality and safety
of the Articles and their compliance with applicable Laws.
Disney will not unreasonably object to any change in the
design of an Article or in the materials used in the
manufacture of the Article or in the process of manufacturing
the Articles which Licensee advises Disney in writing is
intended to make the Article safer or more durable.
E. If Disney has supplied Licensee with forms for use in applying
for approval of artwork, models, pre-production and production
samples of Articles, Licensee shall use such forms when
submitting anything for Disney's approval.
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F. The Articles are subject to any third party approvals Disney
deems necessary to obtain. Disney will act as the liaison with
such third parties during the approval process.
6. APPROVAL OF PRODUCTION SAMPLES
A. Before shipping an Article to any customer, Licensee agrees to
furnish to Disney, from the first production run of each
supplier of each of the Articles, for Disney's approval of all
aspects of the Article in question, the number of Samples with
packaging which is hereinabove set forth, which shall conform
to the approved artwork, three-dimensional models and
pre-production sample. Approval or disapproval of the artwork
as it appears on any SKU of the Article, as well as of the
quality of the Article, shall lie in Disney's sole discretion
and may, among other things, be based on unacceptable quality
of the artwork or of the Article as manufactured. Any SKU of
any Article not so approved shall be deemed unlicensed, shall
not be sold and, unless otherwise agreed by Disney in writing,
shall be destroyed. Such destruction shall be attested to in a
certificate signed by one of Licensee's officers. Production
samples of Articles for which Disney has approved a
preproduction sample shall be deemed approved, unless within
twenty (20) days of Disney's receipt of such production sample
Disney notifies Licensee to the contrary. Any approval of a
production sample attributable to Disney win not constitute or
imply a representation or belief by Disney that such
production sample complies with any applicable Laws.
B. Licensee agrees to make available at no charge such additional
samples of any or all SKUs of each Article as Disney may from
time to time reasonably request for the purpose of comparison
with earlier samples, or for Disney's anti-piracy efforts, or
to test for compliance with applicable Laws, and to permit
Disney to inspect Licensee's manufacturing operations and
testing records (and those of Licensee's third-party
manufacturers) for the Articles.
C. Licensee acknowledges that Disney may disapprove any SKU of an
Article or a production run of any SKU of an Article because
the quality is unacceptable to Disney, and accordingly, Disney
recommends that Licensee submit production samples to Disney
for approval before committing to a large original production
run or to purchase a large shipment from a new supplier.
D. No modification of an approved production sample shall be made
without Disney's further prior written approval. Ail SKUs of
Articles being sold must conform in all respects to the
approved production sample. It is understood that
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if in Disney's reasonable judgment the quality of any SKU of
an Article originally approved has deteriorated in later
production runs, or if the SKU has otherwise been altered,
Disney may, in addition to other remedies available to Disney,
by written notice require such SKU of the Article to be
immediately withdrawn from the market.
E. The rights granted hereunder do not permit the sale of
"seconds" or "irregulars". All Articles not meeting the
standard of approved samples shall be destroyed or all
Licensed Material and Trademarks shall be removed or
obliterated therefrom.
F. Licensee is responsible for the consistent quality and safety
of the Articles and their compliance with applicable Laws.
Disney will not unreasonably object to any change in the
design of an Article or in the materials used in the
manufacture of the Article or in the process of manufacturing
the Articles which Licensee advises Disney in writing is
intended to make the Article safer or more durable.
G. Disney shall have the right, by written notice to Licensee, to
require modification of any SKU of any Article approved by
Disney under this or any previous agreement between the
parties pertaining to Licensed Material. Likewise, if the
Principal Term of this Agreement is extended by mutual
agreement, Disney shall have the fight, by written notice to
Licensee, to require modification of any SKU of any Article
approved by Disney under this Agreement. It is understood that
there is no obligation upon either party to extend the
Agreement.
H. If Disney notifies Licensee of a required modification under
Subparagraph 6.G. with respect to any SKU of a particular
Article, such notification shall advise Licensee of the nature
of the changes required, and Licensee shall not accept any
order for any such Article until the subject SKU has been
resubmitted to Disney with such changes and Licensee has
received Disney's written approval of the Article as modified.
However, Licensee may continue to distribute Licensee's
inventory of the previously approved Articles until such
inventory is exhausted (unless such Articles are dangerously
defective, as determined by Disney). Upon Disney's request,
Licensee agrees to give Disney written notice of the first
ship date for each Article.
I. If Disney has inadvertently approved a concept, pre-production
sample, or production sample of a product which is not
included in the Articles under this
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Agreement, or if Disney has inadvertently approved an Article
using artwork and/or trademarks not included in the Agreement,
such approval may be revoked at any time without any
obligation whatsoever on Disney's part to Licensee. Any such
product as to which Disney's approval is revoked shall be
deemed unauthorized and shall not be distributed or sold by or
for Licensee.
7. APPROVAL OF PACKAGING, PROMOTIONAL MATERIAL AND ADVERTISING
A. All containers, packaging, display material, promotional
material, catalogs, and all advertising, including but not
limited to, television advertising and press releases, for
Articles must be submitted to Disney and receive Disney's
written approval before use. To avoid unnecessary expense if
changes are required, Disney's approval thereof should be
procured when such is still in rough or storyboard format.
Disney shall endeavor to respond to requests for approval
within a reasonable time. Approval or disapproval shall lie in
Disney's sole discretion, and the use of unapproved
containers, packaging, display material, promotional material,
catalogs or advertising is prohibited. Disney's approval of
any containers, packaging, display material, promotional
material, catalogs or advertising under this Agreement will
not constitute or imply a representation or belief by Disney
that such materials comply with any applicable Laws. Whenever
Licensee prepares catalog sheets or other printed matter
containing illustrations of Articles, Licensee will furnish to
Disney five (5) copies thereof when they are published.
B. If Disney has supplied Licensee with forms for use in applying
for approval of materials referenced in this Paragraph 7,
Licensee shall use such forms when submitting anything for
Disney's approval.
C. Disney has designed character artwork and/or a brand name
logo(s) to be used by all licensees in connection with the
packaging of all merchandise using the Licensed Material, and,
if applicable, on hang tags and garment labels for such
merchandise. Disney will supply Licensee with reproduction
artwork thereof, and Licensee agrees to use such artwork
and/or logo(s) on the packaging of the Articles, and, if
applicable, on hang tags and garment labels, which Licensee
will have printed and attached to each Article at Licensee's
cost. Disney recommends that Licensee source the hang tags and
garment labels from Disney's authorized manufacturer (if any)
of pre approved hang tags and garment labels, the name of
which will be provided to Licensee upon request. However,
Licensee may use another manufacturer for the required hang
tags
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and garment labels if the hang tags and garment labels
manufactured are of equivalent quality and are approved by
Disney in accordance with Disney's usual approval process.
8. ARTWORK
Licensee shall pay Disney, within thirty (30) days of receiving an
invoice therefor, for Style Guides and for artwork done at Licensee's
request by Disney or third parties under contract to Disney in the
development and creation of Articles, display, packaging or
promotional material (including any artwork which in Disney's opinion
is necessary to modify artwork initially prepared by Licensee and
submitted to Disney for approval, subject to Licensee's prior written
approval) at Disney's then prevailing commercial art rates. Estimates
of artwork charges are available upon request. While Licensee is not
obligated to utilize the services of Disney's Art Department, Licensee
is encouraged to do so in order to minimize delays which may occur if
outside artists do renditions of Licensed Material which Disney cannot
approve and to maximize the attractiveness of the Articles. Artwork
will be returned to Licensee by overnight courier, at Licensee's cost
(unless other arrangements are made).
9. PRINT, RADIO OR TV ADVERTISING
Licensee will obtain all approvals necessary in connection with print,
radio or television advertising, if any, which Disney may authorize.
Licensee represents and warrants that all advertising and promotional
materials shall comply with all applicable Laws. Disney's approval of
copy or storyboards for such advertising will not constitute or imply
a representation or belief by Disney that such copy or storyboards
comply with any applicable Laws. This Agreement does not grant
Licensee any rights to use the Licensed Material in animation.
Licensee may not use any animation or live action footage from the
motion picture from which the Licensed Material comes without Disney's
prior written approval in each instance. In the event Disney approves
the use of film clips of the motion picture from which the Licensed
Material comes, for use in a television commercial, Licensee shall be
responsible for any re-use fees which may be applicable, including SAG
payments for talent. No reproduction of the film clip footage shall
be made except for inclusion, as approved by Disney, in such
commercial and there shall be no modifications of the film clip
footage. All film clip footage shall be returned to Disney immediately
after its inclusion in such commercial. Disney shall have the right to
prohibit Licensee from advertising the Articles by means of television
and/or billboards. Such fight shall be exercised within Disney's
absolute discretion, including without limitation for reasons of
overexposure of the Licensed Material.
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10. LICENSEE NAME AND ADDRESS ON ARTICLES
A. Licensee's name, trade name (or Licensee's trademark which
Licensee has advised Disney in writing that Licensee is using)
and Licensee's address (at least city and state) will appear
on permanently affixed labeling on each Article or, if the
Article is sold to the public in packaging or a container,
printed on such packaging or a container so that the public
can identify the supplier of the Article. On soft goods
"permanently affixed" shall mean sewn on. RN numbers do not
constitute a sufficient label under this paragraph.
B. Licensee shall advise Disney in writing of all trade names or
trademarks Licensee wishes to use on Articles being sold under
this license. Licensee may sell the Articles only under
mutually agreed upon trade names or trademarks.
11. COMPLIANCE WITH APPROVED SAMPLES AND APPLICABLE LAWS AND STANDARDS
A. Licensee covenants that each Article and component thereof
distributed hereunder shall be of good quality and free of
defects in design, materials and workmanship, and shall comply
with all applicable Laws, and such specifications, if any, as
may have been specified in connection with this Agreement
(e.g., Disney's Apparel Performance Specification Manual, if
the Articles are items of apparel), and shall conform to the
Sample thereof approved by Disney.
B. Without limiting the foregoing, Licensee covenants on behalf
of Licensee's own company, and on behalf of all of Licensee's
third-party manufacturers and suppliers (collectively,
"Manufacturers"), as follows:
(1) Licensee and the Manufacturers agree not to use child
labor in the manufacturing, packaging or distribution
of Disney merchandise, The term "child" refers to a
person younger than the age for completing compulsory
education, but in no case shall any child younger
than fourteen (14) years of age be employed in the
manufacturing, packaging or distribution of Disney
merchandise.
(2) Licensee and the Manufacturers agree to provide
employees with a safe and healthy workplace in
compliance with all applicable Laws. Licensee and the
Manufacturers agree to provide Disney with all
information
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Disney may request about manufacturing, packaging and
distribution facilities for the Articles.
(3) Licensee and the Manufacturers agree only to employ
persons whose presence is voluntary. Licensee and
the Manufacturers agree not to use prison labor, or
to use corporal punishment or other forms of mental
or physical coercion as a form of discipline of
employees.
(4) Licensee and the Manufacturers agree to comply with
all applicable wage and hour Laws, including minimum
wage, overtime, and maximum hours. Licensee and the
Manufacturers agree to utilize fair employment
practices as defined by applicable Laws.
(5) Licensee and the Manufacturers agree not to
discriminate in hiring and employment practices on
grounds of race, religion, national origin, political
affiliation, sexual preference, or gender.
(6) Licensee and the Manufacturers agree to comply with
all applicable environmental Laws.
(7) Licensee and the Manufacturers agree to comply with
all applicable Laws pertaining to the manufacture,
pricing, sale and distribution of the Articles.
(8) Licensee and the Manufacturers agree that Disney may
engage in activities such as unannounced on-site
inspections of manufacturing, packaging and
distribution facilities in order to monitor
compliance with applicable Laws.
C. Both before and after Licensee puts Articles on the market,
Licensee shall follow reasonable and proper procedures for
testing that Articles comply with a applicable Laws, and shall
permit Disney's designees to inspect testing, manufacturing
and quality control records and procedures and to test the
Articles for compliance. Licensee agrees to promptly reimburse
Disney for the reasonable costs of such testing. Licensee
shall also give due consideration to any recommendations by
Disney that Articles exceed the requirements of applicable
Laws. Articles not manufactured, packaged or distributed in
accordance with applicable Laws shall be deemed unapproved,
even if previously approved by Disney, and shall not be
shipped unless and until they have been brought into full
compliance therewith.
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12. DISNEY OWNERSHIP OF ALL RIGHTS IN LICENSED MATERIAL
Licensee acknowledges that the copyrights and all other proprietary
rights in and to Licensed Material are exclusively owned by and
reserved to Disney or its licensor. Licensee shall neither acquire nor
assert copyright ownership or any other proprietary rights in Licensed
Material or in any derivation, adaptation, variation or name thereof
Without limiting the foregoing, Licensee hereby assigns to Disney an
Licensee's worldwide right, title and interest in the Licensed
Material and in any material objects consisting of or incorporating
drawings, paintings, animation cels, or sculptures of Licensed
Material, or other derivations, adaptations, computations, collective
works, variations or names of Licensed Material, heretofore or
hereafter created by or for Licensee or any of Licensee's Affiliates.
All such new materials shall be included in the definition of
"Licensed Material" under this Agreement. If any third party makes or
has made any contribution to the creation of any new materials which
are included in the definition of Licensed Material under this
Paragraph 12, Licensee agrees to obtain from such party a full
assignment of rights so that the foregoing assignment by Licensee
shall vest full rights to such new materials in Disney. Licensee
further covenants that any such new materials created by Licensee or
by any third party Licensee has engaged are original to Licensee or
-such third party and do not violate the rights of any other person or
entity; this covenant regarding originality shall not extend to any
materials Disney supplies to Licensee, but does apply to all materials
Licensee or Licensee's third party contractors may add thereto. The
foregoing assignment to Disney of material objects shall not include
that portion of Licensee's displays, catalogs or promotional material
not containing Licensed Material, or the physical items constituting
the Articles, unless such items are in the shape of the Licensed
Material.
13. COPYRIGHT NOTICE
As a condition to the grant of rights hereunder, each Article and any
other matter containing Licensed Material shall bear a properly
located permanently affixed copyright notice in Disney's name (e.g.,
"(C) Disney"), and in the name of Jay Ward Productions, Inc. (e.g.,
"Animated characters (C)Jay Ward Productions, Inc."), or such other
notice as Disney specifies to Licensee in writing. Licensee will
comply with such instructions as to form, location and content of the
notice as Disney may give from time to time. Licensee will not,
without Disney's prior written consent, affix to any Article or any
other matter containing Licensed Material a copyright notice in any
other name. If through inadvertence or otherwise a copyright notice on
any Article or other such matter should appear in Licensee's name or
the name of a third party, Licensee hereby agrees to assign to Disney
the copyright represented by any such copyright notice in Licensee's
name and, upon request, cause the execution and delivery to
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Disney of whatever documents are necessary to convey to Disney that
copyright represented by any such copyright notice. If by inadvertence
a proper copyright notice is omitted from any Article or other matter
containing Licensed Material, Licensee agrees at Licensee's expense to
use all reasonable efforts to correct the omission on a such Articles
or other matter in process of manufacture or in distribution. Licensee
agrees to advise Disney promptly and in writing of the steps being
taken to correct any such omission and to make the corrections on
existing Articles which can be located.
14. NON-ASSOCIATION OF OTHER FANCIFUL CHARACTERS WITH LICENSED MATERIAL
To preserve Disney's identification with Disney's characters and to
avoid confusion of the public, Licensee agrees not to associate other
characters or licensed properties with the Licensed Material or the
Trademarks either on the Articles or in their packaging, or, without
Disney's written permission, on advertising, promotional or display
materials. If Licensee wishes to use a character which constitutes
Licensee's trademark on the Articles or their packaging, or otherwise
in connection with the Articles, Licensee agrees to obtain Disney's
prior written permission.
15. ACTIVE MARKETING OF ARTICLES
Licensee agrees to manufacture (or have manufactured for Licensee) and
offer for sale all the Articles and to exercise the rights granted
herein. Licensee agrees that by the Marketing Date applicable to a
particular Article or, if such a date is not specified in Subparagraph
1.0., by six (6) months from the commencement of the Principal Term or
the date of any applicable amendment, shipments to customers of such
Article will have taken place in sufficient time that such Article
shall be available for purchase in commercial quantities by the public
at the retail outlets authorized pursuant to Subparagraph 2.A. In any
case in which such sales have not taken place or when the Article is
not then and thereafter available for purchase in commercial
quantities by the public, Disney may either invoke Disney's remedies
under Paragraph 28, or withdraw such Article from the list of Articles
licensed in this Agreement without obligation to Licensee other than
to give Licensee written notice thereof.
16. PROMOTION COMMITMENT
Licensee agrees to carry out the Promotion Commitment, if any, as
defined in Subparagraph 1.N.
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17. TRADEMARK RIGHTS AND OBLIGATIONS
A. All uses of the Trademarks by Licensee hereunder shall inure
to Disney's benefit. Licensee acknowledges that Disney or its
licensor is the exclusive owner of all the Trademarks, and of
any trademark incorporating all or any part of a Trademark or
any Licensed Material, and the trademark rights created by
such uses. Without limiting the foregoing, Licensee hereby
assigns to Disney all the Trademarks, and any trademark
incorporating all or any part of a Trademark or any Licensed
Material, and the trademark rights created by such uses,
together with the goodwill attaching to that part of the
business in connection with which such Trademarks or
trademarks are used. Licensee agrees to execute and deliver to
Disney such documents as Disney requires to register Licensee
as a Registered User or Permitted User of the Trademarks or
such trademarks and to follow Disney's instructions for proper
use thereof in order that protection and/or registrations for
the Trademarks and such trademarks may be obtained or
maintained.
B. Licensee agrees not to use any Licensed Material or
Trademarks, or any trademark incorporating all or any part of
a Trademark or of any Licensed Material, on any business sign,
business cards, stationery or forms (except as licensed
herein), or to use any Licensed Material or Trademark as the
name of Licensee's business or any division thereof, unless
otherwise agreed by Disney in writing.
C. Nothing contained herein shall prohibit Licensee from using
Licensee's own trademarks on the Articles or Licensee's
copyright notice on the Articles when the Articles contain
independent material which is Licensee's property. Nothing
contained herein is intended to give Disney any rights to, and
Disney shall not use, any trademark, copyright or patent used
by Licensee in connection with the Articles which is not
derived or adapted from Licensed Material, Trademarks, or
other materials owned by Disney or its licensor.
18. REGISTRATIONS
Except with Disney's written consent, neither Licensee nor any of
Licensee's Affiliates will register or attempt in any country to
register copyrights in, or to register as a trademark, service mark,
design patent or industrial design, or business designation, any of
the Licensed Material, Trademarks or derivations or adaptations
thereof, or any word, symbol or design which is so similar thereto as
to suggest association with or sponsorship by Disney or any of
Disney's Affiliates. In the event of breach of the
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foregoing, Licensee agrees, at Licensee's expense and at Disney's
request, immediately to terminate the unauthorized registration
activity and promptly to execute and deliver, or cause to be
delivered, to Disney such assignments and other documents as Disney
may require to transfer to Disney all rights to the registrations,
patents or applications involved.
19. UNLICENSED USE OF LICENSED MATERIALS
A. Licensee agrees that Licensee will not use the Licensed
Material, or the Trademarks, or any other material the
copyright to which is owned or licensed by Disney in any way
other than as herein authorized (or as is authorized in any
other written contract in effect between the parties). In
addition to any other remedy Disney may have, Licensee agrees
that all revenues from any use thereof on products other than
the Articles (unless authorized by Disney in writing), and all
revenues from the use of any other copyrighted material of
Disney's or its licensor's without written authorization,
shall be immediately payable to Disney.
B. Licensee agrees to give Disney prompt written notice of any
unlicensed use by third parties of Licensed Material or
Trademarks, and that Licensee will not, without Disney's
written consent, bring or cause to be brought any criminal
prosecution, lawsuit or administrative action for
infringement, interference with or violation of any fights to
Licensed Material or Trademarks. Because of the need for and
the high costs of an effective anti piracy enforcement
program, Licensee agrees to cooperate with Disney, and, if
necessary, to be named by Disney as a sole complainant or
co-complainant in any action against an infringer of the
Licensed Material or Trademarks and, notwithstanding any right
of Licensee to recover same, legal or otherwise, Licensee
agrees to pay to Disney, and hereby waives all claims to, all
damages or other monetary relief recovered in such action by
reason of a judgment or settlement whether or not such damages
or other monetary relief, or any part thereof, represent or
are intended to represent injury sustained by Licensee as a
licensee hereunder; in any such action against an infringer,
Disney agrees to reimburse Licensee for reasonable expenses
incurred at Disney's request, including reasonable attorney's
fees if Disney has requested Licensee to retain separate
counsel.
20. STATEMENTS AND PAYMENTS OF ROYALTIES
A. Licensee agrees to furnish to Disney by the 30th day after
each Royalty Payment Period full and accurate statements on
statement forms Disney
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designates for Licensee's use, showing all information
requested by such forms, including but not limited to, the
quantities, Net Invoiced Billings and applicable Royalty
rate(s) of Articles invoiced during the preceding Royalty
Payment Period, and the quantities and invoice value of
Articles returned for credit or refund in such period. At the
same time Licensee %kill pay Disney all Royalties due on
billings shown by such statements. To the extent that any
Royalties are not paid, Licensee authorizes Disney to offset
Royalties due against any sums which Disney or any of Disney's
Affiliates may owe to Licensee or any of Licensee's
Affiliates. No deduction or withholding from Royalties payable
to Disney shall be made by reason of any tax. Any applicable
tax on the manufacture, distribution and sale of the Articles
shall be borne by Licensee.
B. The statement forms Disney designates for Licensee's use may
be changed from time to time, and Licensee agrees to use the
most current form Disney provides to Licensee. Licensee agrees
to fully comply with all instructions supplied by Disney for
completing such forms.
C. In addition to the other information requested by the
statement forms, Licensee's statement shall with respect to
all Articles report separately:
(1) F.O.B. In Sales;
(2) F.O.B. Out Sales,
(3) if licensed hereunder, sales of Articles using
Licensed Material consisting of animated characters
(separately reported by SKU and character);
(4) if licensed hereunder, sales of Articles using
Licensed Material consisting of live action
characters from the motion picture referenced in
Subparagraph 1.B. (separately reported by SKU and
character);
(5) sales of Articles outside the Territory pursuant to a
distribution permission (indicating the country
involved);
(6) Licensee's sales of Articles to any of Disney's
licensees or Disney's Affiliates' licensees who are
licensed to sell the Articles, and who are reselling
such Articles and paying Disney royalties on such
resales;
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(7) sales of Articles to Disney or any of Disney's
Affiliates;
(8) sales of Articles to Licensee's or Disney's
employees;
(9) sales of Articles under any brand or program
identified in Subparagraph 1.B. hereinabove,
(10) sales of Articles to or for distribution through any
mail order catalogs approved under this Agreement.
D. Sales of items licensed under contracts with Disney other than
this Agreement shall not be reported on the same statement as
sales of Articles under this Agreement.
E. Licensee's statements and payments, including all Royalties,
shall be delivered to Wachovia South Metro Center, DEI
Account, P.O. Box 101947, Atlanta, Georgia 30392. A copy of
each statement must be sent to Disney at 500 South Buena Vista
Street, Burbank, California 91521-6771, to the attention of
the Contract Administrator, Consumer Products Division. If
Licensee wishes to send statements and payments by overnight
courier, please use the following address: Wachovia South
Metro Center, DEI Account, 3585 Atlanta Avenue, Hapeville, GA
30354, Attention Peggy Morris, Reference Lock box 101947.
However, Advances should be mailed directly to Disney at 500
South Buena Vista Street, Burbank, California 91521-6771, to
the attention of the Contract Administrator or Legal
Department, Consumer Products Division.
21. CONFIDENTIALITY
Licensee represents and warrants that Licensee did not disclose to any
third party the prospect of a license from Disney, and that Licensee
did not trade on the prospect of a license from Disney, prior to full
execution of this Agreement. Licensee agrees to keep the terms and
conditions of this Agreement confidential, and Licensee shall not
disclose such terms and conditions to any third party without
obtaining Disney's prior written consent; provided, however, that this
Agreement may be disclosed on a need-to-know basis to Licensee's
attorneys and accountants who agree to be bound by this
confidentiality provision.
22. INTEREST
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Royalties or any other payments due to Disney hereunder which are
received after the due date shall bear interest at the rate of 18% per
annum from the due date (or the maximum permissible by law if less
than 18%).
23. AUDITS AND MAINTAINING RECORDS
A. Licensee agrees to keep accurate records of all transactions
relating to this Agreement and any prior agreement with Disney
regarding the Licensed Material, including, without
limitation, shipments to Licensee of Articles and components
thereof, inventory records, records of sales and shipments by
Licensee, and records of returns, and to preserve such records
for the lesser of seven (7) years or two (2) years after the
expiration or termination of this Agreement.
B. Disney, or Disney's representatives, shall have the right from
time to time, during Licensee's normal business hours, but
only for the purpose of confirming Licensee's performance
hereunder, to examine and make extracts from all such records,
including the general ledger, invoices and any other records
which Disney reasonably deems appropriate to verify the
accuracy of Licensee's statements or Licensee's performance
hereunder, including records of Licensee's Affiliates if they
are involved in activities which are the subject of this
Agreement. In particular, Licensee's invoices shall identify
the Articles separately from goods which are not licensed
hereunder. Licensee acknowledges that Disney may furnish
Licensee with an audit questionnaire, and Licensee agrees to
fully and accurately complete such questionnaire, and return
it to Disney within the designated time. Disney's use of an
audit questionnaire shall not limit Disney's ability to
conduct any on-site audit(s) as provided above.
C. If in an audit of Licensee's records it is determined that
there is a short fall of five percent (5%) or more in
Royalties reported for any Royalty Payment Period, Licensee
shall upon request from Disney reimburse Disney for the full
out-of-pocket costs of the audit, including the costs of
employee auditors calculated at $60 per hour per person for
travel time during normal working hours and actual working
time.
D. If Licensee has failed to keep adequate records for one or
more Royalty Payment Periods, Disney will assume that the
Royalties owed to Disney for such Royalty Payment Period(s)
are equal to a reasonable amount, determined in Disney's
absolute discretion, which may be up to but will not exceed
the highest Royalties owed to Disney in a Royalty Payment
Period for which Licensee has
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kept adequate records; if Licensee has failed to keep adequate
records for any Royalty Payment Period, Disney will assume a
reasonable amount of Royalties which Licensee will owe to
Disney, based on the records Licensee has kept and other
reasonable assumptions Disney deems appropriate.
24. MANUFACTURE OF ARTICLES BY THIRD PARTY MANUFACTURERS
A. If Licensee at any time desires to have Articles or components
thereof containing Licensed Material manufactured by a third
party, whether the third party is located within or outside
the United States, Licensee must, as a condition to the
continuation of this Agreement, notify Disney of the name and
address of such manufacturer and the Articles or components
involved and obtain Disney's prior written permission to do
so. If Disney is prepared to grant permission, Disney will do
so if Licensee and each of Licensee's manufacturers and any
submanufacturers sign a Consent/Manufacturer's Agreement in a
form which Disney will furnish to Licensee and Disney receives
all such agreements properly signed.
(A SAMPLE OF SAID AGREEMENT FORM IS AVAILABLE ON REQUEST)
B. It is not Disney's policy to reveal the names of Licensee's
suppliers to third parties or to any Disney division involved
with buying products, except as may be necessary to enforce
Disney's contract fights or protect Disney's trademarks and
copyrights.
C. If any such manufacturer utilizes Licensed Material or
Trademarks for any unauthorized purpose, Licensee shall
cooperate fully in bringing such utilization to an immediate
halt. If, by reason of Licensee's not having supplied the
above mentioned agreements to Disney or not having given
Disney the name of any supplier, Disney makes any
representation or takes any action and is thereby subjected to
any penalty or expense, Licensee will fully compensate Disney
for any cost or loss Disney sustains (in addition to any other
legal or equitable remedies available to Disney.
25. INDEMNITY
A. Licensee shall indemnify Disney during and after the term
hereof against all claims, demands, suits, judgments, losses,
liabilities (including settlements entered into in good faith
with Licensee's consent, not to be unreasonably withheld) and
expenses of any nature (including reasonable attorneys' fees)
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arising out of Licensee's activities under this Agreement,
including but not limited to, any actual or alleged: (1)
negligent acts or omissions on Licensee's part, (2) defect
(whether obvious or hidden and whether or not present in any
Sample approved by Disney) in an Article, (3) personal injury,
(4) infringement of any rights of any other person by the
manufacture, sale, possession or use of Articles, (5) breach
on Licensee's part of any covenant contained in this
Agreement, or (6) failure of the Articles or by Licensee to
comply with applicable Laws. The parties indemnified hereunder
shall include Disney Enterprises, Inc., its licensor, and its
and their parent, Affiliates and successors, and its and their
officers, directors, employees and agents. The indemnity shall
not apply to any claim or liability relating to any
infringement of the copyright of a third party caused by
Licensee's utilization of the Licensed Material and the
Trademarks in accordance with the provisions hereof, unless
such claim or liability arises out of Licensee's failure to
obtain the full assignment of rights referenced in Paragraph
12.
B. Disney shall indemnify Licensee during and after the term
hereof against all claims, demands, suits, judgments, losses,
liabilities (including settlements entered into in good faith
with Disney's consent, not to be unreasonably withheld) and
expenses of any nature (including reasonable attorneys' fees)
arising out of any claim that Licensee's use of any
representation of the Licensed Material or the Trademarks
approved in accordance with the provisions of this Agreement
infringes the copyright of any third party or infringes any
right granted by Disney to such third party, except for claims
arising out of Licensee's failure to obtain the full
assignment of rights referenced in Paragraph 12. ~Licensee
shall not, in any case, be entitled to recover for lost
profits.
C. Additionally, if by reason of any claims referred to in
Subparagraph 25.B., Licensee is precluded from selling any
stock of Articles or utilizing any materials in Licensee's
possession or which come into Licensee's possession by reason
of any required recall, Disney shall be obligated to purchase
such Articles and materials from Licensee at their
out-of-pocket cost to Licensee, excluding overheads, but
Disney shall have no other responsibility or liability with
respect to such Articles or materials.
D. Disney gives no warranty or indemnity with respect to any
liability or expense arising from any claim that use of the
Licensed Material or the Trademarks on or in connection with
the Articles hereunder or any packaging, advertising or
promotional material infringes on any trademark right of any
third party or
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otherwise constitutes unfair competition by reason of any
prior rights acquired by such third party, other than rights
acquired from Disney. It is expressly agreed that it is
Licensee's responsibility to carry out such investigations as
Licensee may deem appropriate to establish that Articles,
packaging, and promotional and advertising material which are
manufactured or created hereunder, including any use made of
the Licensed Material and the Trademarks therewith, do not
infringe such right of any third party, and Disney shall not
be liable to Licensee if such infringement occurs.
E. Licensee and Disney agree to give each other prompt written
notice of any claim or suit which may arise under the
indemnity provisions set forth above. Without limiting the
foregoing, Licensee agrees to give Disney written notice of
any product liability claim made or suit filed with respect to
any Article, any investigations or directives regarding the
Articles issued by the Consumer Product Safety Commission
("CPSC") or other federal, state or local consumer safety
agency, and any notices sent by Licensee to, or received by
Licensee from, the CPSC or other consumer safety agency
regarding the Articles within seven (7) days of Licensee's
receipt or promulgation of the claim, suit, investigation,
directive, or notice.
26. INSURANCE
Licensee shall maintain in full force and effect at all times while
this Agreement is in effect and for three years thereafter commercial
general liability insurance on a per occurrence form, including broad
form coverage for contractual liability, property damage, products
liability and personal injury liability (including bodily injury and
death), waiving subrogation, with minimum limits of no less than two
million dollars (US $2,000,000.00) per occurrence, and naming as
additional insureds those indemnified in Paragraph 25 hereof.
Licensee also agrees to maintain in full force and effect at all times
while this Agreement is in effect such Worker's Compensation Insurance
as is required by applicable law and Employer's Liability Insurance
with minimum limits of one million dollars (US $1,000,000.00) per
occurrence. All insurance shall be primary and not contributory.
Licensee shall deliver to Disney a certificate or certificates of
insurance evidencing satisfactory coverage and indicating that Disney
shall receive thirty (30) days unrestricted prior written notice of
cancellation, non-renewal or of any material change in coverage.
Licensee's insurance shall be carried by an insurer with a BEST Guide
rating of B + VII or better. Compliance herewith in no way limits
Licensee's indemnity obligations, except to the extent that Licensee's
insurance company actually pays Disney amounts which Licensee would
otherwise pay Disney.
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27. WITHDRAWAL OF LICENSED MATERIAL
Licensee agrees that Disney may, without obligation to Licensee other
than to give Licensee written notice thereof, withdraw from the scope
of this Agreement any Licensed Material which by the Marketing Date
or, if such a date is not specified in Subparagraph 1.O., by six (6)
months from the commencement of the Principal Term or the date of any
applicable amendment, is not being used on or in connection with the
Articles. Disney may also withdraw any Licensed Material or Articles
the use or sale of which under this Agreement would infringe or
reasonably be claimed to infringe the rights of a third party, other
than rights granted by Disney, in which case Disney's obligations to
Licensee shall be limited to the purchase at cost of Articles and
other materials utilizing such withdrawn Licensed Material which
cannot be sold or used. In the case of any withdrawal under the
preceding sentence, the Advances and Guarantees shall be adjusted to
correspond to the time remaining in the Principal Term, or the number
of Articles remaining under the Agreement, at the date of withdrawal.
28. TERMINATION
Without prejudice to any other right or remedy available to Disney:
A. Disney shall have the right at any time to terminate this
Agreement by giving Licensee written notice thereof, if
Licensee fails to manufacture, sell and distribute the
Articles, or to furnish statements and pay Royalties as herein
provided, or if Licensee otherwise breaches the terms of this
Agreement, and if any such failure is not corrected within
fifteen (15) days after Disney sends Licensee written notice
thereof.
B. Disney shall have the right at any time to terminate this
Agreement immediately by giving Licensee written notice
thereof:
(1) if Licensee delivers to any customer without Disney's
written authorization merchandise containing
representations of Licensed Material or other
material the copyright or other proprietary rights to
which are owned or licensed by Disney other than
Articles listed herein and approved in accordance
with the provisions hereof,
(2) if Licensee delivers Articles outside the Territory
or knowingly sells Articles to a third party for
delivery outside the Territory, unless pursuant to a
written distribution permission or separate written
license agreement with Disney or any of Disney's
Affiliates;
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Page 28
(3) if a breach occurs which is of the same nature, and
which violates the same provision of this Agreement,
as a breach of which Disney has previously given
Licensee written notice;
(4) if Licensee breaches any material term of any other
license agreement between the parties, and Disney
terminates such agreement for cause;
(5) if Licensee shall make any assignment for the benefit
of creditors, or file a petition in bankruptcy, or is
adjudged bankrupt, or becomes insolvent, or is placed
in the hands of a receiver, or if the equivalent of
any such proceedings or acts occurs, though known by
some other name or term;
(6) if Licensee is not permitted or is unable to operate
Licensee's business in the usual manner, or is not
permitted or is unable to provide Disney with
assurance satisfactory to Disney that Licensee will
so operate Licensee's business, as debtor in
possession or its equivalent, or is not permitted, or
is unable to otherwise meet Licensee's obligations
under this Agreement or to provide Disney with
assurance satisfactory to Disney that Licensee will
meet such obligations; and/or
(7) if Licensee breaches any covenant set forth in
Paragraph 11 of this Agreement.
29. RIGHTS AND OBLIGATIONS UPON EXPIRATION OR TERMINATION
A. Upon the expiration or termination of this Agreement, all
rights herein granted to Licensee shall revert to Disney, any
unpaid portion of the Guarantee shall be immediately due and
payable, and Disney shall be entitled to retain all Royalties
and other things of value paid or delivered to Disney.
Licensee agrees that the Articles shall be manufactured during
the Principal Term in quantities consistent with anticipated
demand therefor so as not to result in an excessive inventory
build-up immediately prior to the end of the Principal Term.
Licensee agrees that from the expiration or termination of
this Agreement Licensee shall neither manufacture nor have
manufactured for Licensee any Articles, that Licensee will
deliver to Disney any and all artwork (including Style Guides,
animation cels and drawings) which may have been used or
created by Licensee in connection with this Agreement, that
Licensee ,will at Disney's option either sell to Disney at
cost or destroy or efface any molds, plates and other items
used to reproduce Licensed Material or Trademarks, and that,
except as hereinafter provided, Licensee will cease selling
Articles. Any unauthorized distribution of Articles
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Page 29
after the expiration or termination of this Agreement shall
constitute copyright infringement.
B. If Licensee has any unsold Articles in inventory on the
expiration or termination date, Licensee shall provide Disney
with a full statement of the kinds and numbers of such unsold
Articles. If such statement has been provided to Disney and if
Licensee has fully complied with the terms of this Agreement,
including the payment of all Royalties due and the Guarantee,
upon notice from Disney Licensee shall have the right for a
limited period of three (3) calendar months from such
expiration or earlier termination date to sell off and deliver
such Articles as authorized under Subparagraph 2.A. Licensee
shall furnish Disney statements covering such sales and pay
Disney Royalties in respect of such sales. Such Royalties
shall not be applied against the Advance or towards meeting
the Guarantee. If the sell-off period is extended by Disney
to a date which is not a quarter end month, Licensee's
statement and Royalties for such sell-off period shall be due
thirty (30) days after the last day of the sell-off period.
C. In recognition of Disney's interest in maintaining a stable
and viable market for the Articles during and after the
Principal Term and any sell-off period, Licensee agrees to
refrain from "dumping" the Articles in the market during any
sell-off period granted to Licensee. "Dumping" shall mean the
distribution of product at volume levels significantly above
Licensee's prior sales practices with respect to the Articles,
and at price levels so far below Licensee's prior sales
practices with respect to the Articles as to disparage the
Articles; provided, however, that nothing contained herein
shall be deemed to restrict Licensee's ability to set product
prices at Licensee's discretion.
D. Except as otherwise agreed by Disney in writing, any inventory
of Articles in Licensee's possession or control after the
expiration or termination hereof and of any sell-off period
granted hereunder shall be destroyed, or all Licensed Material
and Trademarks removed or obliterated therefrom.
E. If Disney supplies Licensee with forms regarding compliance
with this Paragraph 29, Licensee agrees to complete, execute
and return such forms to Disney expeditiously.
F. Notwithstanding any provision to the contrary, in the case of
termination under Paragraph 28.B. (5) or (6), in order to
protect the value of the Articles and to avoid any
disparagement of the Articles which could occur as a result of
the
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Agreement dated December 13, 1996
Page 30
circumstances of termination, Disney shall have the option, in
Disney's absolute discretion, to purchase any or all unsold
Articles in Licensee's inventory on the termination date at
20% over Licensee's cost of goods for such Articles (not
including overhead).
30. WAIVERS
A waiver by either party at any time of a breach of any provision of
this Agreement shall not apply to any breach of any other provision of
this Agreement, or imply that a breach of the same provision at any
other time has been or will be waived, or that this Agreement has been
in any way amended, nor shall any failure by either party to object to
conduct of the other be deemed to waive such party's right to claim
that a repetition of such conduct is a breach hereof.
31. PURCHASE OF ARTICLES BY DISNEY
If Disney wishes to purchase Articles, Licensee agrees to sell such
Articles to Disney or any of Disney's Affiliates at as low a price as
Licensee charges for similar quantities sold to Licensee's regular
customers and to pay Disney Royalties on any such sales.
32. NON-ASSIGNABILITY
A. Licensee shall not voluntarily or by operation of law assign,
sub-license, transfer, encumber or otherwise dispose of all or
any part of Licensee's interest in this Agreement without
Disney's prior written consent, to be granted or withheld in
Disney's absolute discretion. Any attempted assignment,
sub-license, transfer, encumbrance or other disposal without
such consent shall be void and shall constitute a material
default and breach of this Agreement. "Transfer" within the
meaning of this Paragraph 32 shall include any merger or
consolidation involving Licensee or any directly or indirectly
controlling Affiliate(s) of Licensee ("Controlling
Affiliate"), any sale or transfer of all or substantially all
of Licensee's or its Controlling Affiliate(s)' assets; any
transfer of Licensee's rights hereunder to a division,
business segment or other entity different from the one
specifically referenced on page I hereof (or any sale or
attempted sale of Articles under a trademark or trade name of
such division, business segment or other entity); any public
offering, or series of public offerings, whereby a cumulative
total of thirty-three and one-third percent (33-1/3%) or more
of the voting stock of Licensee or its Controlling
Affiliate(s) is offered for purchase, and any acquisition or
series of acquisitions, by any person or entity, or group of
related persons or entities, of a cumulative total of
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Agreement dated December 13, 1996
Page 31
thirty-three and one-third percent (33-1/3%) or more of the
voting stock of Licensee or its Controlling Affiliate(s), or
the right to vote such percentage (or, if Licensee is a
partnership, resulting in the transfer of thirty-three and
one-third percent (33-1/3%) or more of the profit and loss
participation in Licensee, or the occurrence of any of the
foregoing with respect to any general partner of Licensee).
B. Licensee agrees to provide Disney with at least two (2) weeks
prior written notice of any desired assignment of this
Agreement or other transfer as defined in Subparagraph 32.A.
At the time Licensee gives such notice, Licensee shall provide
Disney with the information and documentation necessary to
evaluate the contemplated transaction. Disney's consent (if
given) to any assignment of this Agreement or other transfer
as defined in Subparagraph 32.A. shall be subject to such
terms and conditions as Disney deems appropriate, including
but not limited to, payment of a transfer fee. The amount of
the transfer fee shall be determined by Disney based upon the
circumstances of the particular assignment or transfer, taking
into account such factors as the estimated value of the
license being assigned or otherwise transferred, the risk of
business interruption or loss of quality, production or
control Disney may suffer as a result of the assignment or
other transfer; the identity, reputation, creditworthiness,
financial condition and business capabilities of the proposed
assignee or transferee; and Disney's internal costs related to
the assignment or other transfer, provided, however, in no
event shall the transfer fee be less than $100,000,00. The
foregoing transfer fee shall not apply if this Agreement is
assigned to one of Licensee's Affiliates as part of a
corporate reorganization exclusively among some or all of the
entities existing in Licensee's corporate structure when this
Agreement is signed; provided, however, that Licensee must
give Disney written notice of such assignment and a
description of the reorganization. The provisions of this
Subparagraph 32.B. shall supersede any conflicting provisions
on this subject in any merchandise license agreement
previously entered into between the parties for this
Territory.
C. Notwithstanding Subparagraph's 32.A. and B., Licensee may,
upon written notice to Disney, unless Disney has objected
'within thirty (30) days of receipt of such notice, sublicense
Licensee's rights hereunder to Licensee's Affiliates. Licensee
hereby irrevocably and unconditionally guarantees that they
will observe and perform all of Licensee's obligations
hereunder, including, without limitation, the provisions
governing approvals, and compliance with approved samples,
applicable Laws, and all other provisions hereof, and that
they will otherwise adhere strictly to all of the terms hereof
and act in accordance with
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Page 32
Licensee's obligations hereunder. Any involvement of an
Affiliate in the activities which are the subject of this
Agreement shall be deemed carried on pursuant to such a
sublicense and thus covered by such guarantee; however such
involvement may be treated by Disney as a breach of this
Agreement, unless Licensee has notified Disney of Licensee's
intent to sublicense an Affiliate in each instance, and Disney
has failed to object within thirty (30) days of receipt of
such notice.
33. RELATIONSHIP
This Agreement does not provide for a joint venture, partnership,
agency or employment relationship between the parties, or any other
relationship than that of licensor and licensee.
34. CONSTRUCTION
The language of all parts of this Agreement shall in all cases be
construed as a whole, according to its fair meaning and not strictly
for or against any of the parties. Headings of paragraphs herein are
for convenience of reference only and are without substantive
significance.
35. MODIFICATIONS OR EXTENSIONS OF THIS AGREEMENT
Except as otherwise provided herein, this Agreement can only be
extended or modified by a writing signed by both parties; provided,
however, that certain modifications shall be effective if signed by
the party to be charged and communicated to the other party.
36. NOTICES
All notices which either party is required or may desire to serve upon
the other party shall be in writing, addressed to the party to be
served at the address set forth on page 1 of this Agreement, and may
be served personally or by depositing the same addressed as herein
provided (unless and until otherwise notified), postage prepaid, in
the United States mail. Such notice shall be deemed served upon
personal delivery or upon the date of mailing; provided, however, that
Disney shall be deemed to have been served with a notice of a request
for approval of materials under this Agreement only upon Disney's
actual receipt of the request and of any required accompanying
materials. Any notice sent to Disney hereunder shall be sent to the
attention of "Vice President, Licensing", unless Disney advises
Licensee in writing otherwise.
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Page 33
37. MUSIC
Music is not licensed hereunder. Any charges, fees or royalties
payable for music rights or any other tights not covered by this
Agreement shall be additional to the Royalties and covered by separate
agreement.
38. PREVIOUS AGREEMENTS
This Agreement, and any confidentiality agreement Licensee may have
signed pertaining to any of the Licensed Material, contains the entire
agreement between the parties concerning the subject matter hereof and
supersedes any pre-existing or contemporaneous agreement and any oral
or written communications between the parties.
39. CHOICE OF LAW AND FORUM
This Agreement shall be deemed to be entered into in California and
shall be governed and interpreted according to the laws of the State
of California. Any legal actions pertaining to this Agreement shall be
commenced within the State of California and within either Los Angeles
or Orange Counties.
40. EQUITABLE RELIEF
Licensee acknowledges that Disney will have no adequate remedy at law
if Licensee continues to manufacture, sell, advertise, promote or
distribute the Articles upon the expiration or termination of this
Agreement. Licensee acknowledges and agrees that, in addition to any
and all other remedies available to Disney, Disney shall have the
right to have any such activity by Licensee restrained by equitable
relief, including, but not limited to, a temporary restraining order,
a preliminary injunction, a permanent injunction, or such other
alternative relief as may be appropriate, without the necessity of
Disney posting any bond.
41. GOODWILL
Licensee acknowledges that the rights and powers retained by Disney
hereunder are necessary to protect Disney's or its licensor's
copyrights and property rights, and, specifically, to conserve
Disney's and its licensor's goodwill and good name, and the name
"Disney", and therefore Licensee agrees that Licensee will not allow
the same to become involved in matters which will, or could, detract
from or impugn the public acceptance and popularity thereof, or impair
their legal status.
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42. POWER TO SIGN
The parties warrant and represent that their respective
representatives signing this Agreement have full power and proper
authority to sign this Agreement and to bind the parties.
43. SURVIVAL OF OBLIGATIONS
The respective obligations of the parties under this Agreement, which
by their nature would continue beyond the termination, cancellation or
expiration of this Agreement, including but not limited to
indemnification, insurance, payment of Royalties, and Paragraph 29,
shall survive termination, cancellation or expiration of this
Agreement.
Please sign below under the word "Agreed". When signed by both parties this
shall constitute an agreement between Disney and Licensee.
AGREED:
DISNEY ENTERPRISES, INC.
By: /s/ [ILLEGIBLE]
------------------------------------------------
Title:
---------------------------------------------
Date:
----------------------------------------------
IMPACT, INC.
By: /s/ [ILLEGIBLE]
------------------------------------------------
Title:
---------------------------------------------
35
CATALOG SCHEDULE
(LIST OF PRE-APPROVED CATALOGS)
STATIONERY
MASS
Currents
Fingerhut
Lillian Vernon
The Right Start
Troll Learn and Play
Viewers Edge
This Catalog Schedule is subject to change, Disney reserves the right to add
catalogs to or delete catalogs from the Catalog Schedule without prior notice
to Licensee. Licensee agrees to cease selling Articles to a deleted catalog
within sixty (60) days after written notice of the deletion. Disney will
consider new catalogs requested by Licensee on a case-by-case basis,
6/15/96
36
SCHEDULE OF DISNEY LICENSES
The license agreement to which this schedule is attached has
been filed as a specimen of all Disney license agreements to which Hedstrom
Corporation and its subsidiaries are parties. It has been filed as a specimen
because it is substantially similar in all material respects to each of the
Disney license agreements listed below, except, perhaps, with respect to the
information that has been redacted from the specimen and filed with the
Securities and Exchange Commission pursuant to a request for confidential
treatment under Rule 406 under the Securities Act of 1933, as amended.
LICENSOR PROPERTY LICENSEE TERM TERRITORY
-------- -------- -------- ---- ---------
Disney Mickey's Stuff for Kids Amav 12/31/99 US
Disney Mickey's Stuff for Kids Amav 12/31/99 Canada
Disney 101 Dalmatians/Live ERO 6/30/98 US
Action #57
Disney 101 Dalmatians/Live ERO 12/31/97 US
Action #56
Disney Cinderella ERO 12/31/97 US
Disney Hercules ERO 12/31/98 US
Disney Hunchback of Notre Dame ERO 12/31/97 US
Disney Little Mermaid #65 ERO 7/31/99 US
Disney Mickey's Stuff for ERO 12/31/98 US
Kids/Babies
Disney Mulan ERO 12/31/99 USTP
Disney Toy Story ERO 12/31/97 US
Disney Winnie The Pooh ERO 12/31/97 US
37
LICENSOR PROPERTY LICENSEE TERM TERRITORY
-------- -------- -------- ---- ---------
Disney 101 Dalmatians/Live ERO Canada 6/30/98 Canada
Action
Disney Hercules ERO-Canada 12/31/98 Canada
Disney Hunchback of Notre Dame ERO-Canada 12/31/97 Canada
Disney Hunchback of Notre Dame ERO-Canada 12/31/97 Canada
Disney Little Mermaid ERO-Canada 8/30/99 Canada
Disney Mickey's Stuff for Kids ERO-Canada 12/31/97 Canada
Disney Toy Story ERO-Canada 12/31/97 Canada
Disney Toy Story ERO-Canada 12/31/97 Canada
Disney Winnie the Pooh ERO-Canada 12/31/97 Canada
Disney Mickey for Kids Hedstrom 12/31/97 US
Disney Hunchback of Notre Dame Hedstrom 12/31/97 US
Disney 101 Dalmatians Hedstrom 12/31/97 US
Disney Hercules Hedstrom 12/31/98 US
Disney The Little Mermaid Hedstrom 11/30/98 US
Disney Mulan Hedstrom 10/30/99 US
Disney Simba's Pride Hedstrom 12/30/99 US
Disney A Bug's Life Hedstrom 12/30/99 US
Disney 101 Dalmatians Hedstrom 12/31/97 Canada
Disney 101 Dalmatians/Live Impact 6/30/98 US
Action
2
38
LICENSOR PROPERTY LICENSEE TERM TERRITORY
-------- -------- -------- ---- ---------
Disney 101 Dalmatians/Live Impact 12/31/97 Canada
Action
Disney Brand Spanking New Doug Impact 12/31/99 US
Disney Hercules Impact 12/31/98 US
Disney Hercules Impact 12/31/98 Canada
Disney Hunchback of Notre Dame Impact 12/31/96 US
Disney Little Mermaid Impact 6/30/99 US
Disney Little Mermaid Impact 6/30/99 (or Canada
12/31/99?)
Disney Mickey's Stuff for Kids Impact 12/31/98 US
Disney Mickey's Stuff for Kids Impact 12/31/98 US
Disney Mighty Ducks Impact 6/30/98 US
Disney Mighty Ducks Impact 6/30/98 Canada
Disney Mulan Impact 12/31/99 USTP
Disney Toy Story Impact 12/31/97 US
Disney Winnie The Pooh Impact 12/31/98 US
Disney Winnie The Pooh Impact 12/31/98 Canada
Disney 101 Dalmatians/Live Priss 12/31/97 Canada
Action
Disney Cinderella Priss 12/31/97 Canada
Disney Disney Babies Priss 12/31/98 US
Disney Hercules Priss 12/31/98 US
3
39
LICENSOR PROPERTY LICENSEE TERM TERRITORY
-------- -------- -------- ---- ---------
Disney Hercules Priss 12/31/98 Canada
Disney Hunchback of Notre Dame Priss 12/31/97 US
Disney Lion King Priss 12/31/97 Canada
Disney Little Mermaid Priss 12/31/98 Canada
Disney Little Mermaid Priss 12/31/99 US
Disney Mickey's Stuff for Kids Priss 12/31/98 US
Disney Mickey's Stuff for Priss 12/31/98 Canada
Kids/Disney Babies
Disney Toy Story Priss 12/31/98 US
Disney Winnie the Pooh Priss 12/31/98 US
Disney Winnie the Pooh Priss 12/31/98 Canada
Disney 101 Dalmations/Live Priss 12/31/98 US
Action
DCPLA DALLA, STAND, POOH, ERO 4/30/98 PR & Carib
LMERM. HERCD
DCPLA DALLA, HUNCH, LIONK, ERO 3/31/98 CR, Guat, El Sal,
POCAH, STAND, TOYS, POOH Pan, Nic, Hond,
Bel
DCPLA HUNCH, LIONK, POCAH, Priss 4/30/97 Cent. Am & Carib
STAND, POOH, TOYS,
HERCD, BABY, BABYN,
CINDR, DALLA
4
40
LICENSOR PROPERTY LICENSEE TERM TERRITORY
DCPLA STAND, LIONK, POCAH, ERO Priss 4/30/1997 (new Colombia &
HUNCH, GARGO & for Priss contract Equador
BABYN, POOH, DALLA coming)
DCPLA HUNCH, TOYS Impact 1/31/98 PR
DCPLA DALLA, BABYN, LIONK, Priss 2/28/98 Brazil
HERCD, HUNCH, LMERM,
TOYS, POOH, STAND
Disney-Europe, DALLA, DALMA, TOYS, ERO Priss 6/30/96 Middle East
Mid. East & Africa POOH, STAND, HERCD,
LMERM Impact
Disney-Mexico DALLA, HERCD, STAND, ERO 4/30/98 Mexico
POOH
5