Exhibit 4.3
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LICENSE AGREEMENT
Date: June 4, 2002
Re: CONSUMER PRODUCTS LICENSE -- DISNEY PROPERTIES
This license agreement, including one or more schedules ("Schedule") attached
hereto (such agreement and each such Schedule, individually and collectively,
depending on context, referred to herein as "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 The First Years
Inc. ("Licensee"), with its principal place of business at 1 Kiddie Drive, Avon,
MA 02322. Disney and Licensee agree as follows:
1. MEANING OF TERMS
For purposes of this Agreement, the following terms shall have the meaning
ascribed to them below:
A. "ADVANCE" means the non-refundable sum(s), not reduced by any
applicable goods and services tax or other value added tax
(collectively, "VAT"), stated in each Schedule, payable by the date(s)
indicated therein, as an advance on Royalties to accrue in the
period(s) stated in the applicable Schedule (as defined below.
B. "AFFILIATE" means, with regard to either party, any
corporation or other entity which directly or indirectly controls, is
controlled by, or is under common control with the party. "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.
C. "ARTICLES" means the items on or in connection with which the
Licensed Material, the Trademarks, or both, are permitted to be
reproduced or used, and includes each and every stock keeping unit
("SKU") of each Article as is specified on each Schedule attached
hereto.
D. "ETAILER" means internet-based retailers that sell products to
consumers and which have few or no physical store locations.
E. "GUARANTEE" means the sum(s), not reduced by any VAT, if
applicable, which Licensee guarantees to pay as minimum Royalties on
Licensee's cumulative sales of Articles, as stated in the applicable
Schedule attached hereto, in the increments stated in the subject
Schedule. Any shortfall shall be payable with the Royalty statement due
at the end of the applicable Guarantee period. The Guarantee may be
broken down into separate Guarantees for each of the Properties or
individual product lines licensed thereunder, or as otherwise stated on
the applicable Schedule.
F. "INTELLECTUAL PROPERTY" means:
(1) "LICENSED MATERIAL", consisting of the graphic
representations of the following:
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Such characters and depictions of such characters, and such still
scenes and accompanying design elements, as may be designated by
Disney, from those Disney properties as are licensed hereunder (the
"Properties") and are the subject of a written Schedule(s) attached
hereto and incorporated herein by this reference, pursuant to such
specifications as are set forth in the applicable Schedule(s) for the
Properties licensed hereunder. At the time of execution of this
Agreement, there is one (1) Schedule attached hereto; and
(2) "TRADEMARKS" (which is deemed to read "Trade marks"
if applicable) consisting of "WALT DISNEY", "DISNEY", the brand name(s)
(if any) and logo(s) (if any) of the Properties in which Licensed
Material included in Paragraph 1.F.(1) above appears, and such other
marks as are licensed hereunder, pursuant to the specifications stated
in the applicable Schedule. Licensee acknowledges and agrees that the
"Disney" name may only be used as expressly approved by Disney under
this Agreement.
G. "LAWS" means any and all applicable laws, rules, and
regulations, including but not limited to, local and national laws,
rules and regulations, treaties, voluntary industry standards,
association laws, codes or other obligations pertaining to the grant
and exercise of the license granted herein and to any of Licensee's
activities under this Agreement, including but not limited to, those
applicable to any tax, and to the manufacture, pricing, sale, or
distribution of the Articles.
H. "MANUFACTURER" means any of Licensee's third-party
manufacturers, factories, suppliers and facilities (and their
sub-manufacturers, factories, suppliers and facilities), which
reproduce or use the Licensed Material, the Trademarks, or both, on
Articles, components of Articles, labels, hang-tags, packaging, or any
other item related to the Articles, or which assemble the Articles, or
which assemble a final product which includes one or more Articles.
I. "MARKETING DATE" means the date(s) specified on the applicable
Schedule by which the specified Article(s) shall be available for
purchase in commercial quantities by the public at the retail outlets
authorized pursuant to Paragraph 2.A.
J. "NET INVOICED BILLINGS" constitute the basis upon which
Royalties (as defined below) are calculated under this Agreement. Net
Invoiced Billings do not include invoiced charges for transportation of
Articles within the Territory which are separately identified on the
sales invoice, or sales taxes, or any applicable VAT. Net Invoiced
Billings is defined as actual invoiced billings (i.e., sales quantity
multiplied by Licensee's selling price) for Articles sold, less
Allowable Deductions. "Allowable Deductions" means:
(1) volume discounts, defined as a lower initial selling
price given solely in exchange for the purchase of Articles over a
specified volume level; and
(2) 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 unilateral discount (or credit) is taken with respect to
combined
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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 referenced below
in Paragraph 1.J.(3). Returns are not covered under this Paragraph 1.J.
(see Paragraph 1.N.(6)).
(3) No other discounts or allowances are permitted under
this Agreement. The following list illustrates the types of discounts
and allowances that 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; shrinkage
allowances, costs and expenses incurred, and allowances or discounts
voluntarily given, in connection with manufacturing, importing, selling
or advertising Articles; listing/slotting fees or allowances; retailer
partnership agreements; promotion allowances; freight costs
incorporated in the selling price; and uncollectible accounts. The
foregoing is not an exhaustive list of disallowed deductions, and other
allowances or discounts that are in the nature of, or similar to, the
foregoing examples likewise shall not qualify as Allowable Deductions.
The only Allowable Deductions are those set forth in Paragraphs 1.J.(1)
and (2). If Licensee wishes to take a deduction not identified above,
it is Licensee's obligation to obtain Disney's prior written approval
of such item before taking it as a deduction under Paragraph 1.J.
K. "PROMOTION COMMITMENT" means the following sum(s) which
Licensee agrees to spend in the following way(s), in accordance with
the provisions of Paragraph 18.A.:
[ ]
L. "RENEWAL OPTION" means the option to extend this Agreement for
a consecutive [ ] period, in accordance with Paragraph 2.F.
M. "RETAILER" means independent and chain retail outlets which
have storefronts and business licenses, and which customers walk into,
not up to. 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.
N. "ROYALTIES" means a copyright royalty (no royalty is
chargeable for use of the Trademarks) in the amounts set forth below in
Paragraphs 1.N.(l)(a) and (b), and Royalties shall be further governed
by the provisions contained in Paragraphs 1.N.(2)-(8):
(1) (a) Licensee agrees to pay Royalties at the rate set
forth on the applicable Schedule based on Net Invoiced Billings for
"Landed Sales" of Articles. Landed Sales occur when Licensee bears the
cost of transportation and, if applicable, importation, of the Articles
to and within the country of sale; and
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(b) Licensee agrees to pay Royalties at the rate
set forth on the applicable Schedule based on Net Invoiced Billings for
"F.O.B. Sales" of Articles. F.O.B. Sales occur when Licensee's customer
bears the cost of transportation and, if applicable, importation, of
the Articles to and within the country of sale (e.g., the customer buys
the Articles "F.O.B. Hong Kong", or "F.O.B. Manufacturer"); F.O.B.
Sales also occur when the customer bears most of such cost, and
Licensee bears a portion of such cost.
(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; however, if the Affiliate is
authorized to sell and is selling the Article to consumers, or for
resale to consumers, Disney's Royalties shall be calculated on the
Affiliate's Net Invoiced Billings to customers.
(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. Sales. However, sales of Articles to
Disney's Affiliates outside the Territory shall bear a Royalty at the
rate for Landed 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.
(7) "ROYALTY PAYMENT PERIOD" means each calendar
quarterly period during the Term and during the sell-off period, if
granted.
(8) Licensee shall report sales of Articles to Disney's
licensees or Disney's Affiliates' licensees on Licensee's statement but
Licensee will not be required to pay Disney Royalties on such sales, so
long as the purchasing licensees are licensed to sell the Articles and
are paying Disney royalties on the resales on such Articles. Double
royalties are not owed to Disney on these sales.
O. "SAMPLES" means the number of samples stated in the applicable
Schedule from the first production run of each supplier of each SKU of
each Article.
P. "SCHEDULE" means each separate "Schedule to License Agreement"
entered into between Disney and Licensee, the terms of each of which
are hereby incorporated herein by reference and made a part hereof as
though fully set forth. Each Schedule attached hereto shall state any
and all contract terms as are specific to the Property(ies), Articles,
Territory, or other matter set forth on each such Schedule.
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Q. "TERM" of this Agreement means the period commencing as of
January 1, 2003, and ending upon the expiration of the latest Schedule
entered into hereunder. The term applicable for each specific Schedule
attached hereto shall be the period commencing as of the Effective Date
and ending on the Termination Date stated on the applicable Schedule.
R. "TERRITORY" means the countries, regions or other geographic
designations specified on each applicable Schedule.
S. "WHOLESALER" means a seller of products to retailers, not
consumers, and includes the term "distributor".
2. RIGHTS GRANTED
A. (1) In consideration for Licensee's promise to pay and
Licensee's payment of all monetary obligations required hereunder, and
Licensee's performance of all obligations required of Licensee
hereunder for each Schedule entered into between Disney and Licensee,
Disney grants Licensee the non-exclusive rights during the term of the
relevant Schedule, and only within the Territory to:
(a) reproduce the subject Licensed Material only
on or in connection with the Articles;
(b) use the specified Trademarks in such manner
as may be approved when each SKU of the Articles is approved hereunder,
and only on or in connection with the Articles;
(c) manufacture, distribute for sale and sell
the Articles as authorized by this Paragraph 2; and
(d) reproduce and use the approved Intellectual
Property on containers, packaging and display material for the
Articles, and in advertising for the Articles.
(2) Licensee is authorized to sell the Articles only to
authorized customers in the Territory as specified herein or in the
relevant Schedule, as applicable.
(a) Licensee also may sell the Articles to
authorized customers for resale through the pre-approved mail order
catalogs listed on the Catalog List(s) attached to this Agreement, and
Licensee shall pay Royalties on such sales at the rate specified for
Retailers in the applicable Schedule. If Licensee wishes to sell the
Articles to customers for resale through mail order catalogs other than
those listed on the Catalog List attached hereto, Licensee must obtain
Disney's prior written consent in each instance. However, Licensee may
sell to Retailers which sell predominantly at retail, but which include
the Articles in their mail order catalogs.
(b) Licensee also may sell the Articles to
authorized Etailers for resale to consumers by computer online selling,
and Licensee shall pay Royalties on such sales at the rate specified
for Retailers in the applicable Schedule. From time to time, Licensee
may request from Disney the then current list of pre-approved Etailers,
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which are the only Etailers to which Licensee is automatically
authorized to sell Articles. Authorized Etailers may display, promote
and sell Articles on their online venues, subject to Disney's
"eCommerce Guidelines", attached hereto and incorporated herein by this
reference. Sales may only be made to consumers physically located in
the Territory. Any Etailer which violates Disney's eCommerce Guidelines
shall be deleted from the list of approved Etailers, and Licensee may
not sell Articles to such Etailer after notice from Disney.
(c) In addition to the online selling permitted
by authorized Etailers, Articles approved by Disney may be displayed
and promoted on Disney-controlled online venues, only within the
Territory. Articles approved by Disney also may be displayed and
promoted on Licensee's own online venue, and may be displayed, promoted
and sold on authorized Retailers' online venues, subject to Disney's
eCommerce Guidelines.
(d) Licensee is expressly prohibited from
selling, using or providing the Articles as follows:
(i) Licensee shall not sell the
Articles by direct marketing methods, which includes but is not limited
to, direct mail and door-to-door solicitation. Licensee shall 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.
(ii) Licensee shall not sell or
otherwise provide Articles for use as premiums (including those in
purchase-with-purchase promotions), promotions, giveaways,
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.
(iii) Licensee shall not sell Articles to
any customer which Licensee knows or reasonably should know engages in
illegal business practices or ethically questionable distribution
methods.
(iv) 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, and in any case never exceed
one-tenth of a percent (0.1%) of all Articles sold on an annual basis.
B. All rights not expressly granted to Licensee herein are
reserved to Disney. Without limitation of the generality of the
foregoing reservation of rights, and by way of example for the
avoidance of doubt, nothing in this Agreement shall be deemed to
restrict in any way (i) Disney's or its Affiliates' right to enter into
promotional license agreements with third-party promotion partners for
the manufacture, sale or distribution of premium items of merchandise
that promote the Properties, and (ii) the rights of Disney's or its
Affiliates' owned, operated or licensed retail stores and theme
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parks to source and sell items of merchandise which may be similar or
identical to the Articles licensed under this Agreement.
C. 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.
D. 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.
E. 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 efforts to preserve and maintain that value, Licensee
agrees that, during the 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.
F. Provided that Royalties earned and paid to Disney during the
period commencing January 1, 2003 through [ ], meet or exceed $[ ], and
further provided that Licensee has complied with all terms and
conditions of the Agreement, this Agreement shall be extended for [ ]
commencing [ ] and ending [ ] (the "Renewal Period"), unless Licensee
notifies Disney in writing by [ ] that it declines the Renewal Period.
Certain of the terms and conditions for the Renewal Period are already
set forth in this Paragraph 2.F. and sections 8 and 9 of Schedule 1;
any new terms and conditions mutually agreed upon will be negotiated in
a commercially reasonable manner and specified by amendment to the
Agreement.
3. ADVANCE
A. Licensee agrees to pay the Advance, which shall be on account
of Royalties to accrue during the term for the relevant Schedule only,
and only with respect to sales in the Territory; provided, however,
that if any part of the Advance is specified as applying to any period
less than the entire term of the subject Schedule, 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 Term or any term of any relevant Schedule shall not be offset
against the Advance unless otherwise agreed in writing. Royalties
accruing during any extension of the 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 for any given Schedule or any subsequent advance.
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4. GUARANTEE
A. Licensee shall, with Licensee's statement for each Royalty
Payment Period ending on a date indicated in Paragraph 1.E, hereof
defining "Guarantee" and in each relevant Schedule, or upon termination
if the Agreement or the relevant Schedule specifying a Guarantee is
terminated prior to the end of the Term or the stated term of such
Schedule, as applicable, 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 subject 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. On each Schedule, Advances applicable to Royalties due on
sales in the period to which the Guarantee relates shall apply towards
meeting the Guarantee for that Schedule.
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 any Guarantee or any subsequent guarantee. If
any sell-off period is granted under this Agreement, Royalties
generated from sales during such period may not be applied towards the
meeting of any 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 of the Intellectual Property, 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
shall 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 internal
purposes, a mock-up, prototype or pre-production sample of each SKU of
each Article on or in connection with which the Intellectual Property
is used. Licensee acknowledges that Disney may not approve concepts or
artwork submitted near the end of the term of the relevant Schedule, or
concepts or artwork perceived to be for selling periods beyond the
applicable Termination Date. 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
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Article to be immediately withdrawn from the market. Any modification
of any approved SKU of an Article, including, but not limited to,
change of materials, color, design or size of the representation of the
Intellectual Property 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 from 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. 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.
E. If and as applicable, the likenesses and product application
of the characters used on or in connection with 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 set
forth on the Schedule(s) attached hereto, 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. One of Licensee's officers shall attest to such
destruction in a certificate, and shall provide Disney with a copy of
each such certificate. Production samples of Articles for which Disney
has approved a pre-production 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 by Disney will 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
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the purpose of comparison with earlier samples, or for Disney's
anti-piracy efforts, or to test for compliance with applicable Laws.
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 committing 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. All SKUs of Articles
being sold must conform in all respects to the approved production
sample. It is understood that 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 Intellectual Property 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 the
Intellectual Property. Likewise, if the Term of this Agreement is
extended by mutual agreement, Disney shall have the right, 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
Paragraph 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 or are
alleged to be violative of any third party rights, as determined by
Disney).
I. Upon Disney's request, Licensee agrees to give Disney written
notice of the first ship date for each Article.
J. 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 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 further
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 press releases relating to the Articles, and
all advertising relating to the Articles, including but not limited to,
television, radio, or internet advertising, 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, advertising or press releases is prohibited.
Disney's approval of any containers, packaging, display material,
promotional material, catalogs, advertising or press releases under
this Agreement will not constitute or imply a representation or belief
by Disney that such materials comply with any applicable Laws, which
compliance shall be solely Licensee's responsibility. 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 materials for Disney's approval.
C. Disney has designed character artwork or a brand name logo(s),
or both, to be used by all licensees in connection with the packaging
of all merchandise using the Intellectual Property, 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 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 preapproved 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 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. The
packaging may be different for different distribution channels, and
Licensee agrees to use the packaging designated by Disney for the
applicable distribution channel.
8. ARTWORK
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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 for
the modification to be done by Disney) at Disney's then prevailing
commercial art rates, not reduced by any VAT, if applicable. 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 maximize the attractiveness of the
Articles and to minimize delays which may occur if outside artists do
renditions of which Disney cannot approve. Artwork will be returned to
Licensee by overnight courier, at Licensee's cost (unless other
arrangements are made).
9. PRINT, RADIO, INTERNET OR TV ADVERTISING
Licensee will obtain all approvals necessary in connection with print,
radio, internet 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; ensuring their
compliance with all applicable Laws shall be solely Licensee's
responsibility. This Agreement does not grant Licensee any rights to
use the Intellectual Property in animation. Licensee may not use any
animation or live action footage from the Property from which the
Intellectual Property comes without Disney's prior written approval in
each instance. In the event Disney approves the use of film clips of
the Property from which the Intellectual Property 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, billboards, or both.
Such right shall be exercised within Disney's absolute discretion,
including without limitation for reasons of overexposure of the
Licensed Material.
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 or province) will appear on
permanently affixed labeling on each Article and, 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 or CA numbers do not constitute a sufficient label under this
paragraph. Licensee also must ensure that the Articles comply with any
labeling required by any applicable Customs Agency (e.g., country of
origin).
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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. Licensee covenants
that it will comply with all applicable Laws in performing this
Agreement, including but not limited to, those pertaining to the
manufacture, pricing, sale and distribution of the Articles.
(1) Both before and after Licensee puts Articles on the
market, Licensee shall follow reasonable and proper procedures for
testing that Articles comply with all applicable product safety Laws,
and shall permit Disney's designees to inspect testing and quality
control records and procedures, and to test the Articles for compliance
with product safety and other applicable Laws; however, Disney shall
not be required to conduct any such testing. Licensee agrees to
promptly reimburse Disney for the actual 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.
B. Without limiting the foregoing, Licensee covenants on behalf
of Licensee's own manufacturing facilities to comply with the Code of
Conduct for Manufacturers, attached hereto and incorporated herein by
this reference, in the manufacturing, packaging and distribution of the
Articles. Licensee further agrees to require all Manufacturers to
covenant to comply with the Code of Conduct for Manufacturers in the
manufacturing, packaging and distribution of the Articles, by signing
the Manufacturer's Agreement (referenced in Paragraph 12).
(1) The Code of Conduct for Manufacturers shall not be
interpreted to require Licensee or its Manufacturers to violate any
applicable Law.
(2) As provided in the Code of Conduct for Manufacturers,
Licensee and the Manufacturers agree that Disney and its designated
agents (including third parties) may engage in monitoring activities to
confirm compliance with this Paragraph 11. Licensee agrees to promptly
reimburse Disney for the reasonable cost of inspections performed
pursuant to this Paragraph 11 when any of Licensee's manufacturing
facilities or any Manufacturer does not pass the inspection(s). The
amount reimbursed will not be prorated in the event the Manufacturer is
also used by other licensees or vendors.
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(3) Licensee agrees to be bound by the Code of Conduct
for Licensees, attached hereto and incorporated herein by this
reference. This includes, but is not limited to, taking appropriate
steps, in consultation with Disney, and as required by Disney's
Compliance Program for licensees, to develop, implement and maintain
procedures to evaluate and monitor the Manufacturers it uses to
manufacture the Articles or components thereof, and to ensure
compliance with Paragraph 11. B., including but not limited to,
unannounced on-site inspections of manufacturing, packaging and
distribution facilities and employer-provided housing, reviews of books
and records relating to employment matters and private interviews with
employees. Licensee acknowledges that Disney may require a pre-approval
compliance inspection of any Manufacturers Licensee wishes to use to
produce the Articles, components, or related items.
12. MANUFACTURE OF ARTICLES BY THIRD PARTY MANUFACTURERS
A. Licensee agrees to supply Disney with the names and addresses
of all of its own manufacturing facilities for the Articles. If
Licensee at any time desires to use a third-party Manufacturer to
produce the Articles, components of Articles, or related items bearing
Licensed Material, Trademarks, or both, whether the third party is
located within or outside the Territory, Licensee must, as a condition
to the continuation of this Agreement, notify Disney of the accurate
name and complete address of such Manufacturer and the Articles,
components, or related items, and obtain Disney's prior written
permission to do so. If Disney is prepared to grant permission, Disney
will do so if each of Licensee's Manufacturers signs a Manufacturer's
Agreement in a form which Disney will furnish to Licensee, and Disney
receives all such agreements properly signed. Disney also may require a
pre-approval compliance inspection of a Manufacturer prior to the
production of any Articles, components, or other items involved.
Licensee must immediately notify Disney if Licensee is no longer using
a Manufacturer to manufacture the Articles, components, or related
items.
B. 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 Manufacturer, 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).
C. If any Manufacturer fails to pass a compliance inspection as
referenced in Paragraph 11, and thereafter fails to remedy the cited
failure(s) within the time designated by Disney, or if the Manufacturer
otherwise breaches the Manufacturer's Agreement, the Manufacturer's
Agreement for such Manufacturer may be terminated immediately by
Disney, and Licensee shall not thereafter use such Manufacturer to
manufacture Articles, components, or related items. In the case of a
pre-approval compliance inspection, if a Manufacturer fails to pass the
compliance inspection, and thereafter fails to remedy the cited
failure(s) within the time designated by Disney, Licensee shall not use
such Manufacturer to produce Articles, components or related items. If
Licensee fails to notify Disney that it has ceased using a particular
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Manufacturer, and Disney or its designated agent conducts a compliance
inspection of such Manufacturer, Licensee remains obligated to work
with the Manufacturer to remedy any cited failure(s), or, in the
alternative, the Manufacturer's Agreement shall be deemed terminated
for purposes of Paragraph 28.B. (11), and Licensee shall promptly
reimburse Disney for the reasonable cost of the compliance inspection.
13. 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 licensors, if applicable to any Property.
Licensee shall neither acquire nor assert copyright ownership or any
other proprietary rights in the Licensed Material or in any derivation,
adaptation, or variation thereof. Without limiting the foregoing,
Licensee hereby assigns to Disney all of Licensee's worldwide right,
title and interest in the Licensed Material and in any material objects
containing, consisting of, or to the extent that they incorporate
Licensed Material, or other adaptations, compilations, collective
works, derivative works, or variations 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. 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. 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 13, 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. With
regard to any molds, plates and other items used to reproduce the
Intellectual Property, Licensee agrees that it will never sell or
transfer such molds, plates, or other items to any third party without
Disney's prior written consent.
14. 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"), 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 Disney of
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whatever documents are necessary to convey to Disney that copyright
represented by any such improper copyright notice. If by inadvertence
or otherwise, an improper copyright notice appears on, or if 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 error on all 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 error and to make the corrections on existing
Articles which can be located.
15. 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
licensors, if applicable) is the exclusive owner of all the Trademarks,
and of any trademark incorporating 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 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 follow
Disney's instructions for proper use of the Trademarks and trademarks,
and to execute and deliver to Disney such documents as Disney requires
to protect and register the Trademarks and trademarks.
B. Licensee agrees not to use any Licensed Material or
Trademarks, or any trademark incorporating 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 (as mutually agreed with Disney) 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 owned by
Licensee or used by Licensee under license in connection with the
Articles which is not derived or adapted from Licensed Material,
Trademarks, or other materials owned by Disney (or its licensors, if
applicable).
16. NON-ASSOCIATION OF OTHER MATERIAL WITH LICENSED MATERIAL
To preserve Disney's identification with Disney's Licensed Material 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.
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17. ACTIVE MARKETING OF ARTICLES
Licensee agrees to manufacture (or have manufactured for Licensee) and
actively offer for sale all the Articles and to actively 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 Paragraph 1.I., by six (6) months from the commencement of the term
of the applicable Schedule 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 in all
distribution channels authorized pursuant to Paragraph 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, or withdraw the applicable distribution channel, or withdraw
such Article from the applicable Schedule, without obligation to
Licensee other than to give Licensee written notice thereof.
18. PROMOTION COMMITMENT
A. Licensee agrees to carry out the Promotion Commitment, as
defined in Paragraph 1.K. The advertising and promotion activities
required thereunder to promote the sale of the Articles shall include
one or more of the following activities:
- point of purchase displays (not including packaging
or other individual product costs)
- media advertising
- measurable public relations programs
- sampling
- contests and games approved in advance in writing by
Disney
- trade shows, catalog or trade activities, fashion
shows
- participation in group promotions organized by Disney
- other activities as agreed in advance in writing with
Disney
All promotional material is subject to the approval provisions
of Paragraph 7 hereof.
B. For purposes of determining Licensee's satisfaction of the
Promotion Commitment, all consumer advertising and merchandising costs
associated with the above-listed activities for the Articles, but not
including packaging or other individual product costs, will be counted
toward the requirement; provided, however, that any advertising
discounts given in connection with cooperative advertising may not be
included in the calculation.
C. One time during each twelve (12) month period during the Term,
Licensee also shall provide Disney with a statement describing the
funds theretofore spent and consumer exposure provided as required in
this Paragraph, together with a description of the manner in which such
funds were spent, all of which information shall be broken down by
country within the Territory, and provided in such detail as Disney may
specify from time to time. Amounts spent in excess of the Promotion
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Commitment during any Royalty Payment Period may be credited against
the Promotion Commitment for any other Royalty Payment Period occurring
in the same twelve month period during the Term. If in any Royalty
Payment Period Licensee has not satisfied the Promotion Commitment,
Licensee (i) may carry forward such shortfall into the next succeeding
Royalty Payment Period (other than in the case of a shortfall in the
final Royalty Payment Period hereunder, in which case no carry forwards
shall be permitted), or (ii) shall pay Disney the amount of such
shortfall as liquidated damages; provided, however, no shortfall (or
fraction thereof) may be carried forward more than twelve months.
Licensee acknowledges that its expenditure of the Promotion Commitment
as provided for herein increases the value of the business from which
Disney benefits as licensor. Licensee and Disney agree that it is
impracticable and extremely difficult to fix the actual damages which
may proximately result from Licensee's failure to fulfill its
obligation as provided for herein, and Licensee's liability for failure
to do so shall, for each Royalty Payment Period, be limited to and
fixed at the sum of an amount equal to the shortfall between the amount
Licensee actually spends on the Promotion Commitment during such
Royalty Payment Period as theretofore reported to Disney and the amount
required to be expended hereunder. Such cumulative amount shall be
considered liquidated damages and not a penalty.
19. 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
Intellectual Property 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 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.
20. 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 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 unauthorized use thereof, and all
revenues from the use of any other copyrighted material of Disney's (or
its licensors, if applicable), without written authorization from
Disney, shall be immediately payable to Disney.
B. Licensee agrees that it will give Disney prompt written notice
of any unlicensed use by third parties of the Intellectual Property,
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
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violation of any rights to the Intellectual Property. 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 Intellectual Property 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.
21. STATEMENTS AND PAYMENTS OF ROYALTIES
A. Licensee agrees to furnish to Disney by the 25th day after
each Royalty Payment Period full and accurate statements on statement
forms Disney designates for Licensee's use, showing all information
requested by such forms separately for each Property licensed
hereunder, including but not limited to, the name of the subject
Property, the quantities, Net Invoiced Billings (reported in U.S.
Dollars and, if the Territory includes any country other than the U.S.,
Net Invoiced Billings also should be reported in the currency invoiced
to customers) and applicable Royalty rate(s) of Articles using
Intellectual Property from such Property invoiced during the preceding
Royalty Payment Period, and the quantities and invoice value of
Articles returned for credit or refund in such period, as well as sales
forecasts (if requested), and the country of sale. At the same time
Licensee will pay Disney all Royalties not reduced by any VAT (if
applicable) due on billings shown by such statements. All monies owed
to Disney shall be sent to the address identified in Paragraph 21.D.,
or, if requested by Disney, by electronic transfer to such account as
Disney may designate. To the extent that any monies owed to Disney
under this Agreement are not paid, Licensee authorizes Disney to offset
any amount(s) which is due at any time 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. All payments are to be made in U.S. Dollars. In the event
that an exchange rate is necessary, Licensee shall use the official
buying rate of exchange as published in the Wall Street Journal, New
York Edition, on the last business day of the applicable Royalty
Payment Period, and Licensee shall identify such exchange rate on the
Royalty reporting forms.
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 designated by Disney (including, for example, forms to be
sent by electronic transmission). If it is necessary for Licensee to
adapt its system to be able to report statements by electronic
transmission, or to make payments by electronic transfer, all costs of
such adaptation shall be borne entirely by Licensee. Licensee agrees to
fully comply with all instructions supplied by Disney for completing
any reporting forms, or adhering to any required format.
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C. 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.
D. Licensee's payments, including all Royalties, shall be wire
transferred to [ ]; or delivered to such address as Disney designates;
currently, Disney designates the following address: Disney Enterprises,
Inc., [ ] Los Angeles, California 90074-5988. If Licensee wire
transfers payments, including Royalties, Licensee shall send the
corresponding statement to the foregoing address. If Licensee wishes to
send statements and payments by overnight courier, the current address
is: Bank of America Lockbox Services, [ ], Ground Level, 1000 W. Temple
Street, Los Angeles, California 90012. However, Advances should be
mailed directly to Disney at 500 South Buena Vista Street, Burbank,
California 91521-6835, to the attention of the Contract Administrator
or Legal Department, Consumer Products Division. Acceptance of any
payment from Licensee, whether by wire transfer or otherwise, is not a
waiver of any rights on the part of Disney.
E. From time to time, upon request by Disney, Licensee shall
furnish to Disney's Credit Department, no later than seven days after
such request, such financial reports, including balance sheets,
statements of income and cash flows, as Disney deems necessary to
evaluate Licensee's ongoing creditworthiness and ability to perform
this Agreement.
22. INTEREST
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. 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 not to issue any press
release regarding this Agreement or Disney without obtaining Disney's
prior written consent. 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. In
addition, Licensee may have access to information concerning Disney's
or its Affiliates' business and operations, or information concerning
works in progress, artwork, plots, characters or other matters relating
to Disney's or its Affiliates' artistic creations, which information
may not be accessible or known to the general public. Licensee agrees
not to use or disclose such information to any third party without
obtaining Disney's prior written consent. In the event Licensee is
required to disclose this Agreement, or any part thereof, pursuant to
any law, court order or process, the rules and regulations of any
governmental department, agency or authority (including, but not
limited to, the Securities and Exchange Commission) or any generally
accepted accounting rules mandating disclosure in Licensee's financial
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statements, Licensee agrees to give Disney prior written notice and to
use its best efforts to obtain confidential treatment of this
Agreement. Upon Disney's request, Licensee agrees to incorporate
Disney's comments into Licensee's request for confidential treatment,
provided such request and comments are received in writing by Licensee
within five (5) business days after Disney's receipt of the notice
referred to in the preceding sentence.
24. 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 two (2) years
after the expiration or termination of this Agreement or a period of
seven (7) years.
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 and photocopies 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 and unaffiliated sublicensees or other subcontractors 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. Licensee
acknowledges that an audit conducted by Disney or its representatives,
may involve one or more license agreements at a time.
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 U.S. $100 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 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.
25. INDEMNITY
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A. Licensee shall indemnify Disney during and after the term
hereof against all claims, demands, suits, judgments, losses,
liabilities and expenses of any nature (including reasonable attorneys'
fees) 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, representation or
warranty 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 licensors, if
applicable, and its and their 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 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 13.
B. Disney shall indemnify Licensee during and after the term
hereof against all claims, demands, suits, judgments, losses,
liabilities 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 and 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
13. Licensee shall not, in any case, be entitled to recover for lost
profits.
C. Additionally, if by reason of any claims referred to in
Paragraph 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
Intellectual Property 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 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 Intellectual Property
therewith, do not infringe such right of any third party, and Disney
shall not be liable to Licensee if such infringement occurs.
E. With regard to any indemnified claims under this Paragraph 25,
the party entitled to indemnification shall give written notice to the
other party of the claim. The indemnifying party shall select mutually
agreeable counsel, and shall consult in a
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meaningful fashion with the indemnified party in the conduct of the
defense of the claim. Promptly upon request, the indemnified party
shall provide reasonable assistance in the defense of such claims at
the expense of the indemnifying party. If the indemnified party desires
to be represented by separate counsel, it shall be responsible for all
fees and costs associated therewith. Alternatively, the indemnified
party may choose to be represented by the indemnifying party's counsel,
in which case the indemnifying party shall be entirely and solely
responsible for all fees and costs associated therewith. The
indemnifying party and the indemnified party may enter into good faith
settlement(s) of the claim, with the consent of the other party, not to
be unreasonably withheld.
F. 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 U.S. Consumer Product Safety Commission ("CPSC")
or other federal, state, provincial, 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
fourteen (14) 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 and any Schedule(s) entered into hereunder are 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 an additional "insured"
each party indemnified in Paragraph 25 hereof. Licensee also agrees to
maintain in full force and effect at all times while this Agreement and
any Schedule(s) entered into hereunder are in effect such Worker's
Compensation Insurance as is required by applicable provincial or state
law and, if Licensee is a U.S.-based licensee, 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.
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 Paragraph 1.I., by six (6) months
from the commencement of the term of the
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applicable Schedule 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
term of the affected Schedule(s), or the number of Articles remaining
under such Schedule(s), 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 (or any Schedule(s) entered into hereunder) by giving
Licensee written notice thereof, if Licensee (i) fails to manufacture,
sell or distribute the Articles in accordance with this Agreement, (ii)
fails to timely furnish statements and timely pay Royalties or any
other amounts due to Disney hereunder, (iii) fails to notify Disney of
the accurate name and complete address of Licensee's manufacturing
facilities or any Manufacturer of the Articles, (iv) fails to have any
such Manufacturer execute the Manufacturer's Agreement, or (v)
otherwise fails to comply with or perform any other obligation or
covenant hereunder or breaches any other term of this Agreement (other
than those set forth in Paragraph 28.B. below); provided that Licensee
shall have thirty (30) days (or, in the case of non-payment of any
monetary obligations due Disney under the Agreement within fifteen (15)
days) after Disney sends Licensee written notice of termination to
correct any such failure or breach capable of being corrected and avoid
termination.
B. Disney shall have the right at any time to terminate this
Agreement immediately upon giving Licensee written notice thereof if
one or more of the following events occur (provided, however, that with
respect to clause (6) below such termination shall occur automatically
and immediately without the need for any notice):
(1) if Licensee delivers to any customer without Disney's
written authorization merchandise containing representations of
Intellectual Property or other material the copyright or other
proprietary rights to which are owned by Disney other than Articles
licensed 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 when Licensee knows or
should know in the exercise of prudent business judgment that such
sales ultimately will result in 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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(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 breaches any surviving obligation under
any other license agreement between the parties, even if such agreement
has expired;
(6) if Licensee shall generally not pay its debts as such
debts become due, or shall make a general assignment for the benefit of
creditors; or any proceeding shall be instituted by or against Licensee
seeking to adjudicate it as bankrupt or insolvent, or seeking
liquidation, winding up, reorganization, arrangement, adjustment,
protection, relief or composition of it or its debts under any law
relating to bankruptcy, insolvency or reorganization or relief of
debtors, or seeking the entry of any order for relief or the
appointment of a receiver, trustee or other similar official for all or
for any substantial part of its property or assets;
(7) 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;
(8) if any event shall occur or condition shall exist
under any agreement or instrument relating to institutional
indebtedness or financial obligations owed by Licensee, including the
failure to pay principal or interest thereon, and such event or
condition shall continue after any applicable grace period specified in
such agreement or instrument, and the effect of such event or condition
is to accelerate, or to permit the acceleration of, the maturity of
such indebtedness or obligations or otherwise cause, or to permit the
holder thereof to cause, such indebtedness or obligations to mature;
(9) if Licensee, due to material changes in its financial
position, or for other reasons, is unable to meet Licensee's
obligations under this Agreement, or is unable to provide Disney with
assurance satisfactory to Disney that Licensee will be able to meet
such obligations;
(10) if Licensee breaches any covenant set forth in
Paragraph 11 of this Agreement; or
(11) if more than three Manufacturer's Agreements are
terminated in any twelve-month period by Disney for the Manufacturers'
failure to pass compliance inspections as referenced in Paragraphs 11
and 12; or
(12) if Licensee breaches any material term of this
Agreement and the breach is not reasonably capable of being cured or
otherwise corrected to Disney's satisfaction.
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C. If Disney terminates this Agreement pursuant to this Paragraph
28, Licensee shall not be permitted to seek injunctive relief to
contest Disney's determination that a termination event has occurred or
to otherwise affect Disney's full and absolute control of the Licensed
Material and the Trademarks; provided however, Licensee may bring an
action for damages, but prior to and during any such action, Disney
shall have full and absolute control over the Licensed Material and the
Trademarks.
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 for the entire Term shall be immediately due
and payable (together with the Royalty statement due at such time), and
Disney shall be entitled to retain all Royalties and other things of
value paid or delivered to Disney. Notwithstanding the foregoing, if
this Agreement expires or terminates prior to the renewal period, no
portion of the Guarantee applicable to the Renewal Period shall be
payable to Disney. Licensee agrees that the Articles shall be
manufactured during the term of each applicable Schedule 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 term
thereof. 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 cells 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 the Intellectual Property, and that, except as hereinafter
provided, Licensee will cease selling Articles. Any unauthorized
distribution of Articles after the expiration or termination of this
Agreement or any applicable Schedule shall constitute copyright
infringement.
B. If Licensee has any unsold Articles in inventory on the
expiration or termination date of the applicable Schedule, 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 two (2) calendar months from such expiration or earlier termination
date to sell off and deliver such Articles as authorized under
Paragraph 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 applicable Advance or towards meeting
the applicable Guarantee. If the sell-off period is extended by Disney
to a date which is not the last day of the Royalty Payment Period,
Licensee's statement and Royalties for such sell-off period shall be
due twenty-five (25) days after the last day of the sell-off period.
All rights and remedies available to Disney during the Term shall be
equally available to Disney during 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 Term and any
sell-off period, Licensee agrees to refrain from "dumping" the Articles
in the market during the Term and any sell-off
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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 of the term of the applicable Schedule 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. Licensee acknowledges that this
will be necessary at the end of the term of each Schedule entered into
under this Agreement.
F. Notwithstanding any provision to the contrary, in the case of
termination under Paragraph 28.B. (6) or (7), 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 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. This Agreement, and the rights granted hereunder to Licensee,
are personal to Licensee, who was specifically chosen by Disney to be
licensed hereunder because of Licensee's and certain employees'
particular expertise and ability to design, produce and sell the
Articles in ways which maximize the value of the Articles, and to
otherwise perform the Agreement. Licensee shall not voluntarily or by
operation of law assign, sub-license, transfer, encumber or otherwise
dispose of all or any part of
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Licensee's interest in this Agreement (including, but not limited to,
any encumbrance of the Articles) 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, obligations,
or both, under this Agreement, to a division, business segment or other
entity different from the one specifically referenced on page 1 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 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; or,
if Licensee is a legal entity other than a corporation or partnership,
resulting in the transfer of thirty-three and one-third percent
(33-1/3%) or more of the control of Licensee, or the occurrence of any
of the foregoing with respect to any manager or administrator of the
legal entity).
B. Licensee agrees to provide Disney with at least thirty (30)
days prior written notice of any desired assignment of this Agreement
or other transfer as defined in Paragraph 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 Paragraph 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 other entity involved in the transfer; and Disney's internal costs
related to the assignment or other transfer; provided, however, in no
event shall the transfer fee be in an amount less than U.S. $[ ] for
each Disney license (or Schedule), brands and/or Property(ies) (as
applicable) involved in an assignment or other transfer, up to a
maximum total fee of U.S. $[ ] per transfer for all affected Disney
licenses (or Schedules), brands and/or Properties (as applicable)
within the Territory and Canada at the time of the subject transfer.
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,
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that Licensee must give Disney written notice of such assignment and a
description of the reorganization. Notwithstanding the foregoing, a
transfer fee will not be triggered by any of the following transfers of
voting stock or other beneficial interest in Licensee, unless occurring
as part of or in conjunction with a transaction that would trigger a
transfer fee: (1) distribution(s) in the ordinary course of Licensee's
business on employee or director stock option plans; or (2) transfers
for estate planning purposes among the current shareholders of Licensee
who are members of the Sidman family (including their spouses and
children) as their interests appear when this Agreement is signed; or
(3) repurchases of its own stock by Licensee as part of a corporate
stock repurchase program but not including any issuer tender offer
which exceeds thirty-three and one-third percent (33-1/3%) of the then
outstanding stock or exchange offer; provided, however, that Licensee
shall maintain substantially the same management and continue to
operate in substantially the same fashion as prior to any of the
transfers described above, and provided further, that in any event, any
of the transfers described above shall remain subject to Disney's
consent as set forth in Paragraph 32.A. The provisions of this
Paragraph 32 shall supersede any conflicting provisions on this subject
in any merchandise license agreement previously entered into between
the parties for this Territory.
C. Licensee acknowledges that it has read and understands the
Transfer Fee Policy attached hereto, which governs transfer fee
procedures under this Agreement. The Transfer Fee Policy is
incorporated herein by this reference.
D. Licensee may, upon Disney's prior written consent, sublicense
Licensee's rights, obligations, or both, under this Agreement, to any
of Licensee's Affiliates, provided that each such Affiliate agrees to
be bound by all of the terms and conditions of this Agreement, and
further provided that Licensee and each such Affiliate agree to provide
Disney with satisfactory documentation of such agreement(s),
guarantee(s), and indemnification upon Disney's request therefor, and
in a form satisfactory to Disney. Licensee hereby represents and
irrevocably and unconditionally guarantees that any and all Affiliates
sublicensed hereunder will observe and perform all of Licensee's
obligations under this Agreement, including, but not limited to, the
provisions governing approvals, and compliance with approved samples,
applicable Laws, indemnification and all other provisions hereof, and
that they will otherwise adhere strictly to all of the terms hereof and
act in accordance with 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, unless Licensee has obtained
Disney's consent to sublicense an Affiliate in each instance, such
Affiliate shall be deemed to be included in the term "Licensee" for all
purposes under this Agreement, and Disney may treat such unapproved
involvement of the Affiliate as a breach of the Agreement.
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.
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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 authorized representatives
of 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
"President, Consumer Products Licensing", with a copy to "Corporate
Legal, Consumer Products," unless Disney advises Licensee in writing
otherwise.
37. MUSIC
Music is not licensed hereunder. Any charges, fees or royalties payable
for music rights or any other rights 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 Intellectual Property, 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 an executory agreement entered
into in California and shall be governed and interpreted according to
the laws of the State of California applicable to contracts made and to
be fully performed in California. Any legal actions pertaining to this
Agreement shall be commenced within the State of
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California and within either Los Angeles or Orange Counties, and
Licensee consents to the jurisdiction of the courts located in 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 the term
of any applicable Schedule under 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 licensors', if
applicable) copyrights and property rights, and, specifically, to
conserve Disney's (and its licensors', if applicable) 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.
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, audits, and Paragraph
29, shall survive termination, cancellation or expiration of this
Agreement.
44. SEVERABILITY OF PROVISIONS
The terms of this Agreement are severable and the invalidity of any
term of this Agreement shall not affect the validity of any other term.
Please sign below under the word "Agreed". When signed by both parties, when any
required security (e.g., a letter of credit) has been posted, and when the fully
executed contract has been delivered to Licensee, this shall constitute an
agreement between Disney and Licensee.
AGREED:
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DISNEY ENTERPRISES, INC.
By: /s/ J.D. Edwards
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Title: Vice President
Date: 9/18/02
THE FIRST YEARS, INC.
By: /s/ Ronald J. Sidman
---------------------------
Title: President
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Schedule #1 to License Agreement
1. Schedule #1 to License Agreement Dated June 4, 2002 between Disney
Enterprises, Inc. and THE FIRST YEARS, INC. ("Agreement").
2. Effective date of this Schedule: January 1, 2003.
3. Termination date of this Schedule: [ ] of the Agreement.
4. Properties:
A. Disney Standard Characters (i.e., MICKEY MOUSE, MINNIE MOUSE,
DONALD DUCK, DAISY DUCK, PLUTO and GOOFY), but only depictions of such
characters, and accompanying design elements, as may be designated by Disney.
B. Winnie the Pooh characters (i.e., WINNIE THE POOH, CHRISTOPHER
ROBIN, PIGLET, RABBIT, EEYORE, TIGGER, OWL, GOPHER, KANGA AND ROO), all
in the style as designed by Disney, but only depictions of such
characters, and accompanying design elements, as may be designated by
Disney.
C. DISNEY CLASSICS, comprised of the following individual
Properties (collectively, the "Disney Classics Properties"):
(1) WALT DISNEY'S BAMBI characters, but only such
characters and depictions of such characters, and accompanying design
elements, as may be designated by Disney;
(2) WALT DISNEY'S SLEEPING BEAUTY characters, but only
such characters and depictions of such characters, and accompanying
design elements, as may be designated by Disney;
(3) WALT DISNEY'S SNOW WHITE AND THE SEVEN DWARFS
characters, but only such characters and depictions of such characters,
and accompanying design elements, as may be designated by Disney;
(4) WALT DISNEY'S THE JUNGLE BOOK characters, but only
such characters and depictions of such characters, and accompanying
design elements, as may be designated by Disney;
(5) WALT DISNEY'S CINDERELLA characters, but only such
characters and depictions of such characters, and accompanying design
elements, as may be designated by Disney;
(6) WALT DISNEY'S DUMBO characters, but only such
characters and depictions of such characters, and accompanying design
elements, as may be designated by Disney;
(7) WALT DISNEY'S LADY AND THE TRAMP characters, but only
such characters and depictions of such characters, and accompanying
design elements, as may be designated by Disney;
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(8) WALT DISNEY'S PINOCCHIO characters, but only such
characters and depictions of such characters, and accompanying design
elements, as may be designated by Disney;
(9) WALT DISNEY'S ALICE IN WONDERLAND characters, but
only such characters and depictions of such characters, and
accompanying design elements, as may be designated by Disney;
(10) WALT DISNEY'S PETER PAN characters, but only such
characters and depictions of such characters, and accompanying design
elements, as may be designated by Disney;
(11) WALT DISNEY'S THE ARISTOCATS characters, but only
such characters and depictions of such characters, and accompanying
design elements, as may be designated by Disney;
(12) DISNEY'S ALADDIN characters, but only such characters
and depictions of such characters, and accompanying design elements, as
may be designated by Disney;
(13) DISNEY'S BEAUTY AND THE BEAST characters, but only
such characters and depictions of such characters, and accompanying
design elements, as may be designated by Disney.
5. Articles:
A. FEEDING AND SOOTHING:
(1) Bottles
(2) Bibs (vinyl only)
(3) Cups
(4) Pacifiers and attachers
(5) Bowls
(6) Dishes
(7) Feeding utensils
(8) Placemats
(9) Floor mats
(10) Toddler sports bottles
B. CARE AND SAFETY:
(1) Carriers (front and back)
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(2) Handheld showers
(3) Spout guards
(4) Shampoo visors
(5) Non-activity crib lights
(6) Combs and brushes
(7) Night lights
(8) Car shades
(9) Tub thermometers
(10) Tub organizers
(11) Infant bath tubs
(12) Baby bathers (fits in sink or tub to cradle newborns)
(13) Step stools
(14) Bed rails
(15) Booster seats
(16) Monitors
(17) Scratch mitts
(18) Hampers
(19) Hot and cold packs
(20) Infant support cushions
(21) Plush with soothing womb sounds
(22) Infant toothbrushes and toothcare organizers
(23) Sleep positioners
(24) Changing pads
C. PLAYTHINGS:
(1) Hand-held rattles
(2) Teethers
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(3) Suction toys
(4) Linking toys
(5) Electronic hand-held toys (with rattles or squeaker
functions)
(6) Bath toys
(7) Crib toys
(8) Foot rattles and wrist rattles
(9) Squeeze toys
(10) Infant rings
(11) Chime balls
(12) Jumpster harness
No graphic design may be kept in the product line for longer than two
years without prior written consent by Disney.
All three dimensional SKUs of the Articles shall be refreshed or
renewed based on a two-year cycle as mutually agreed upon by Disney and
Licensee during their mutually designated planning meetings, to be held
on a quarterly basis during the term of this Schedule.
6. Territory: The United States, United States PX's wherever located, and
United States territories and possessions, excluding Puerto Rico. However, if
sales are made to chain stores in the United States which have stores in Puerto
Rico, such chain stores also may supply Articles to such stores in Puerto Rico.
7. Royalty rate:
LANDED SALES:
A. [ ] percent ([ ]%) of Licensee's Net Invoiced Billings
to authorized customers for sales of Articles B.11, B.13 through B.16,
B.18, B.20, B.21 and C.12;
B. [ ] percent ([ ]%) of Licensee's Net Invoiced Billings to
authorized customers for sales of Articles B.23;
C. [ ] percent ([ ]%) of Licensee's Net Invoiced Billings to
authorized customers for sales of Articles A.1 through A.10, B.l
through B.4, B.9, B.10, B.l2, B.17, B.l9, B.24, C.l, and C.3 through
C.l 1;
D. [ ] percent ([ ]%) of Licensee's Net Invoiced Billings to
authorized customers for sales of Articles B.5 through B.8, B.22, and
C.2.
FOB SALES:
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A. [ ] percent ([ ]%) of Licensee's Net Invoiced Billings to
authorized customers for sales of Articles B.11, B.13 through B.16,
B.18, B.20, B.21 and C.12;
B. [ ] percent ([ ]%) of Licensee's Net Invoiced Billings to
authorized customers for sales of Articles B.23;
C. [ ] percent ([ ]%) of Licensee's Net Invoiced Billings to
authorized customers for sales of Articles A.l through A.l0, B.1
through B.4, B.9, B.10, B.l2, B.l7, B.l9, B. 24, C.1, and C.3 through
C.l1;
D. [ ] percent ([ ]%) of Licensee's Net Invoiced Billings to
authorized customers for sales of Articles B.5 through B.8, B.22, and
C.2.
8. Advance payment(s) and due date(s):
A. [ ]
B. [ ]
C. [ ]
9. Guarantee increments during the term of this Schedule:
A. [ ]
B. [ ]
C. [ ]
10. Samples: Six (6) of each SKU of each Article.
11. Marketing Date(s): By January 1, 2003 for all Articles except A.8, B.2,
B.5, B.9, B.13, B.15, B.18, B.19, B.20, B.23, C.3, C4, C.5, C.9, C.10 and C.12;
by March 31, 2003, for Articles Numbers B.19, B23, and C.12; by June 1, 2003 for
Articles Number B.18; and by December 31, 2003 for Articles Numbers A.8, B.2.,
B.5, B.9., B.13, B.15, B.20, C.3, C.4, C.5, C.9 and C.10.
12. Distribution Channels:
A. 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 to such 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 and Mervyn's), (3) value-oriented specialty
stores, (4) drug store chains, (5) supermarkets and food chains, and
(6) warehouse clubs. Articles Numbers A.1 through A.4, A.10, B.l, B.3,
B.10, B.22, C.1, C.2, C.5 through C.8 and C.l1 also may be sold to the
following Retailers in the Territory for resale to the public in the
Territory, or to Wholesalers in the Territory for resale to such
Retailers: (1) upscale Retailers (including such Retailers as
Robinsons-May, Nordstrom's and Bloomingdale's), (2) better specialty
stores, and (3) mid-tier department stores (including such Retailers as
J.C. Penney and Kohl's). Licensee will not sell the
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Articles to unauthorized Retailers or Wholesalers, or to convenience
stores or gas stations. If there is a question as to whether a
particular customer falls within any of the categories specified
herein, Disney's determination shall be binding. Licensee may sell the
Articles utilizing the Property set forth in section 4 above to
customers for resale through the mass catalogs listed on the Mass
Catalog List to the Agreement, subject to Paragraph 2.A.(2)(a) of the
Agreement and this Schedule 1. In addition, Articles Numbers A.l
through A.4, A.10, B.1, B.3, B.10, B.22, C.l, C.2, C.5 through C.8 and
C.11 may be sold to customers for resale through the upscale catalogs
listed on the Upscale Catalog List to the Agreement, subject to
Paragraph 2.A.(2)(a) of the Agreement and this Schedule 1.
13. Special provisions:
Without limiting the provisions of Paragraph 14 of the Agreement, for
Articles utilizing the Winnie the Pooh Property, Licensee agrees to
include on such Articles, or the packaging for such Articles, or the
hang tag for such Articles (if applicable), the following language:
Based on the "Winnie the Pooh" works by A.A. Milne and E.H. Shepard.
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CATALOG SCHEDULE
(LIST OF PRE-APPROVED CATALOGS)
HOME FURNISHINGS/HOUSEWARES
UPSCALE
Ballard Design
Casual Living
Celebration Fantastic
Chambers
Charles Keath
Chef's Catalog
Faith Mountain
Garnett Hill
Hand-in-Hand
Horchow
Kitchen & Home
Kitchen Kaboodle
Linda Anderson
Metropolitan Museum of Art
Museum of Fine Arts, Boston
Norm Thompson
Nursery Works
One Step Ahead
Potpourri
Reader's Digest Home Life
Ross-Simons
Seasons
Sensational Beginnings
Signals
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.
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CATALOG SCHEDULE
(LIST OF PRE-APPROVED CATALOGS)
HOME FURNISHINGS/HOUSEWARES
UPSCALE
(CONTINUED)
Smithsonian
Spiegel
Sugar Hill
The Cotton Gin
The Linen Source
The Paragon
The Right Start
The Wish List
Touch of Class
Touchstone
Trifles
Wireless
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.
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CATALOG SCHEDULE
(LIST OF PRE-APPROVED CATALOGS)
HOME FURNISHINGS/HOUSEWARES
MASS
Apple Creek
Armchair Shopper
Avon (EXCL. PERSONAL CARE)
Domestications
Fingerhut
Lillian Vernon
Miles Kimball
Popular Club
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.
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DISNEY LICENSING
E COMMERCE GUIDELINES
GENERAL POLICIES:
- ----------------
- - Disney licensed product ("Articles") may not be sold on a Licensee's
Website. (Articles being sold by Licensee may, however, be sold through
a Retailer's or Etailer's Website.)
- - Licensee Websites may be used for promotion of Articles only, and not
to promote any Disney characters or any film property.
- - When initially developing Website pages containing the use of any
Disney Articles, marketing, or promotional material, review and
written approval must be obtained from Disney Licensing prior to
publication on the Website. (Please refer to your approval process
guidelines.)
- - Websites cannot feature or advertise any Disney Articles, brands,
properties, characters or logos as the sole means to drive visitors to
the Website. The Website should contain content balance so that the
consumer knows it is the Licensees' Website and not a Disney Website.
However, creating a Disney section within the Website is encouraged.
- - A Retailer's or Etailer's Website cannot position Disney Articles for
sale on a "limited availability" or "last time available" basis, of by
other similar descriptions that may imply collectibility, deep
discounting or closeouts.
- - Disney Articles, brands or logos should not be featured on your "Home
Page" without prior written consent from Disney.
- - You must adhere to all Disney copyright and trademark notice
requirements (i.e., (C) Disney, or as otherwise designated). Please
note: when showing any Disney Articles, Disney logos, art, or other
Disney design elements, you must always include (C) Disney on each Web
page (or such other copyright or trademark as Disney designates).
- - Disney character art, likeness, animation, or music may not be used.
- - Any content or pages related to Disney should "hot-link" to
www.Disney.com. Please utilize the Disney.com icon provided for this
link.
- - Disney Articles cannot be distributed or re-purposed for sale or resale
outside of the territory set forth in the license agreement.
COPY AND LAYOUT:
- - All copy and layout must be approved in accordance with the approval
process guidelines.
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- - When using any Disney brand or property, correct titles and logo
identification must be used.
- - When referring to any Disney film property, always use "Disney's" in
reference to each film. For example, "Disney's The Little Mermaid."
- - The character's name or the film title should not be used in the
possessive form when referring to a product. For example, do not use,
"Lilo's Shoes" or "Shoes from Disney's Lilo & Stitch." When referring
to product, always use, "Inspired by Disney's Lilo & Stitch" or
"Featuring characters from Disney's Lilo & Stitch."
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LICENSEE APPROVAL PROCESS
FOR RETAILER OR ETAILER WEBSITES
To gain initial approval for Disney content on a Retailer's or Etailer's
Website, submit the below information on a `Standard Disney Approval Form' to
your Product Development Coordinator.
Retailers and Etailers should provide Disney with:
- - Directory of Website content
- - Site map or flow chart where the Disney pages/section will be featured
within the Website. Creating a separate Disney section within the
Website is encouraged.
Each Licensee will be responsible for ensuring adherence to the following simple
guidelines:
1. The eCommerce Guidelines must be observed when developing
Website pages with a Retailer or Etailer.
2. Each Disney Licensee will be responsible for providing the
Retailer or Etailer with the following:
- Disney approved product samples/photography and
product descriptions/copy.
- Disney brand logos and property identification. These
may be obtained through your Product Development
Coordinator.
- Utilize the Disney Online icon to hot-link all pages
related to Disney to Disney.com.
3. Retailer or Etailer should work with their designated contact
in developing and approving marketing and promotional related
events and information. Disney promoted marketing
events/information cannot be used without prior written
consent.
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LICENSEE APPROVAL PROCESS
FOR LICENSEE'S WEBSITE
Licensees are not permitted to sell Disney Articles on their Websites. The main
focus is to promote Disney Articles on the Website of a Retailer or Etailer, or
on Disney.com.
To gain initial approval for any Disney content on a Licensee's Website, the
Licensee must strictly adhere to the eCommerce Guidelines in developing Website
pages containing Disney product, and submit the following information on a
standard Disney approval form to the Product Development Coordinator:
1. A synopsis/overview of Website content and pages.
2. A site map or flow chart to show where the Disney Articles
will be featured within the Website and include proposed
launch date. A separate Disney section within the Website is
encouraged.
3. A list of each Article that will be featured.
4. Proposed page layout.
5. Headlines.
6. Product samples or photography of product to be featured. (All
Articles must be approved through the product approval
process).
7. Product descriptions and copy to be featured.
8. Brand and property logos or any property related icons/artwork
that will be featured.
The correct brand logos and proper property identification may be
obtained through your Product Development Coordinator.
All pages related to Disney should hot-link to Disney.com. Utilize the
Disney Online icon provided for this link.
Disney promoted marketing events/information cannot be used without
prior written consent. Please contact your Category Manager to discuss
proposed marketing and promotional content.
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TRANSFER FEE POLICY
As provided in Paragraph 32.B. of the License Agreement, it is Disney's policy
to charge a transfer fee in connection with any permitted assignment of the
license or other "transfer," as that term is defined in Paragraph 32.A. The
amount of the transfer fee is based on the circumstances of the particular
assignment or transfer, taking into account such factors as:
- the estimated value of the license being assigned or involved
in the transfer
- the risk of business interruption
- the risk of loss of quality, production or control
- the identity, reputation, creditworthiness, financial
condition and business capabilities of the proposed assignee
or entity involved in the transfer
- Disney's internal costs related to the assignment or transfer
At a minimum, the transfer fee will be U.S. $[ ] for each license or Schedule
(or Property, where a given Schedule includes more than one Property), and it
could be as high as [ ] depending on the circumstances of the
particular case. No Licensee or any company involved with a Licensee in an
assignment or transfer situation should rely upon any express or implied verbal
representations that are purported to be made on Disney `s behalf as to the
amount of any given fee to be assessed. Disney Licensing's Finance Department
will communicate the actual amount of the fee calculated in each approved
transaction.
In any prospective assignment or transfer situations, Licensees must inform the
persons and companies with which they are dealing that no assignment or transfer
may occur without Disney `s prior written consent, to be granted or withheld in
Disney's absolute discretion, and that any approved transaction will also entail
a transfer fee. Licensees must give Disney at least 30 days prior written notice
of any desired assignment or other transfer, together with any information and
documentation necessary to evaluate the contemplated transaction. Licensees
should not endanger the closing of their desired transactions by failing to
comply with these provisions of the License Agreement.
If Disney grants consent to a proposed transaction subject to the payment of a
transfer fee, and the transaction is concluded but the transfer fee is not paid
within the designated time, the subject License Agreement(s) shall automatically
terminate and any Guarantee shortfall(s) shall be immediately due and payable to
Disney. If Disney does not grant consent to a proposed assignment or transfer
and the Licensee nevertheless closes the transaction, the subject License
Agreement(s) shall automatically terminate and any Guarantee shortfall(s) shall
be immediately due and payable to Disney.
Disney `s consent to any assignment or other transfer should in no way be
understood to be a guarantee or promise by Disney of a grant of any future
license(s), as those determinations will continue to be made on a contract by
contract basis.
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Licensees must keep confidential all of the terms and conditions of Disney `s
determinations regarding any transfer, including but not limited to, the amount
of any transfer fee required.
CODE OF CONDUCT FOR MANUFACTURERS
At The Walt Disney Company, we are committed to:
- a standard of excellence in every aspect of our business and
in every corner of the world;
- ethical and responsible conduct in all of our operations;
- respect for the rights of all individuals; and
- respect for the environment.
We expect these same commitments to be shared by all manufacturers of Disney
merchandise. At a minimum, we require that all manufacturers of Disney
merchandise meet the following standards:
CHILD LABOR Manufacturers will not use child labor.
The term "child" refers to a person younger than 15
(or 14 where local law allows) or, if higher, the
local legal minimum age for employment or the age for
completing compulsory education.
Manufacturers employing young persons who do not fall
within the definition of "children" will also comply
with any laws and regulations applicable to such
persons.
INVOLUNTARY LABOR Manufacturers will not use any forced or involuntary
labor, whether prison, bonded, indentured or
otherwise.
COERCION AND Manufacturers will treat each employee with dignity
HARASSMENT and respect, and will not use corporal punishment,
threats of violence or other forms of physical,
sexual, psychological or verbal harassment or abuse.
NONDISCRIMINATION Manufacturers will not discriminate in hiring and
employment practices, including salary, benefits,
advancement, discipline, termination or retirement,
on the basis of race, religion, age, nationality,
social or ethnic origin, sexual orientation, gender,
political opinion or disability.
ASSOCIATION Manufacturers will respect the rights of employees to
associate, organize and bargain collectively in a
lawful and peaceful manner, without penalty or
interference.
HEALTH AND SAFETY Manufacturers will provide employees with a safe and
healthy workplace in compliance with all applicable
laws and
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regulations, ensuring at a minimum, reasonable access
to potable water and sanitary facilities, fire
safety, and adequate lighting and ventilation.
Manufacturers will also ensure that the same
standards of health and safety are applied in any
housing that they provide for employees.
COMPENSATION We expect manufacturers to recognize that wages are
essential to meeting employees' basic needs.
Manufacturers will, at a minimum, comply with all
applicable wage and hour laws and regulations,
including those relating to minimum wages, overtime,
maximum hours, piece rates and other elements of
compensation, and provide legally mandated benefits.
If local laws do not provide for overtime pay,
manufacturers will pay at least regular wages for
overtime work. Except in extraordinary business
circumstances, manufacturers will not require
employees to work more than the lesser of (a) 48
hours per week and 12 hours overtime or (b) the
limits on regular and overtime hours allowed by local
law or, where local law does not limit the hours of
work, the regular work week in such country plus 12
hours overtime. In addition, except in extraordinary
business circumstances, employees will be entitled to
at least one day off in every seven-day period.
Where local industry standards are higher than
applicable legal requirements, we expect
manufacturers to meet the higher standards.
PROTECTION OF THE Manufacturers will comply with all applicable
ENVIRONMENT environmental laws and regulations.
OTHER LAWS Manufacturers will comply with all applicable laws
and regulations, including those pertaining to the
manufacture, pricing, sale and distribution of
merchandise.
All references to "applicable laws and regulations"
in this Code of Conduct include local and national
codes, rules and regulations as well as applicable
treaties and voluntary industry standards.
SUBCONTRACTING Manufacturers will not use subcontractors for the
manufacture of Disney merchandise or components
thereof without Disney's express written consent, and
only after the subcontractor has entered into a
written commitment with Disney to comply with this
Code of Conduct.
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MONITORING AND Manufacturers will authorize Disney and its
COMPLIANCE designated agents (including third parties) to engage
in monitoring activities to confirm compliance with
this Code of Conduct, including unannounced on-site
inspections of manufacturing facilities and
employer-provided housing; reviews of books and
records relating to employment matters; and private
interviews with employees. Manufacturers will
maintain on site all documentation that may be needed
to demonstrate compliance with this Code of Conduct.
PUBLICATION Manufacturers will take appropriate steps to ensure
that the provisions of this Code of Conduct are
communicated to employees, including the prominent
posting of a copy of this Code of Conduct, in the
local language and in a place readily accessible to
employees, at all times.
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CODE OF CONDUCT FOR LICENSEES
At The Walt Disney Company, we are committed to:
- a standard of excellence in every aspect of our business and
in every corner of the world;
- ethical and responsible conduct in all of our operations;
- respect for the rights of all individuals; and
- respect for the environment.
We expect these same commitments to be shared by all Disney licensees and the
manufacturers with which they work in the production of Disney merchandise. At a
minimum, we require that all Disney licensees meet the following standards:
CONDUCT OF Licensees that engage directly in the manufacturing
MANUFACTURING of Disney merchandise will comply with all of the
standards set forth in Disney's Code of Conduct for
Manufacturers, a copy of which is attached.
Licensees will ensure that each manufacturer other
than the licensee also enters into a written
commitment with Disney to comply with the standards
set forth in Disney's Code of Conduct for
Manufacturers.
Licensees will prohibit manufacturers from
subcontracting the manufacture of Disney merchandise
or components thereof without Disney's express
written consent, and only after the subcontractor has
entered into a written commitment with Disney to
comply with Disney's Code of Conduct for
Manufacturers.
MONITORING AND Licensees will take appropriate steps, in
COMPLIANCE consultation with Disney, to develop, implement and
maintain procedures to evaluate and monitor
manufacturers of Disney merchandise and ensure
compliance with Disney's Code of Conduct for
Manufacturers, including unannounced on-site
inspections of manufacturing facilities and
employer-provided housing; review of books and
records relating to employment matters; and private
interviews with employees.
Licensees will authorize Disney and its designated
agents (including third parties) to engage in similar
monitoring activities to confirm Licensees'
compliance with this Code of Conduct. Licensees will
maintain on site all documentation that may be needed
to demonstrate such compliance.