"Confidential material omitted and filed separately with the Securities and
Exchange Commission. Asterisk denotes such omission."
L I C E N S E A G R E E M E N T
042095DR01
THIS AGREEMENT is hereby made effective as of April 1, 1995 ("Effective
Date") between MATTEL, INC. ("Licensor"), a Delaware corporation, having its
principal place of business in El Segundo, California, U.S.A and the party
identified as "Licensee" in Paragraph A below (hereinafter the "Agreement").
R E C I T A L S
WHEREAS, Licensor represents and acknowledges that it:
1) owns or has acquired the rights to the property identified under
Paragraph B below, which rights, to the extent such rights are recognized in the
Territory (as defined below) include, copyrights, trademarks and other rights in
the design, style, character, likeness, and appearance of the material,
packaging, and accessories related thereto (the "Property"), and
2) is willing to grant a license to Licensee in accordance with the
terms and conditions set forth herein;
WHEREAS, Licensee represents and acknowledges that it:
1) possesses experience and skill in the business of the manufacture,
sale and distribution of the product or products identified under Paragraph C
below ("Products"), and
2) desires to obtain a license to use the Property of Licensor in
connection with the manufacture, sale and distribution of the Products in
accordance with the terms and conditions set forth herein.
The provisions in this Recitals Section do not reflect the entire
agreement between the parties hereto. This section only serves as a summary of
the Agreement between the parties and should not be construed as a contract
alone but only as a part of this Agreement. References in this Recitals Section
to the sections of this Agreement are not intended to be inclusive of all uses
of the defined term in this Agreement.
A. LICENSEE: BROOKFIELD ATHLETIC COMPANY, INC.
A Subsidiary of Hyde Athletic Industries, Inc.
Located at: 13 Centennial Drive, Peabody, MA 01961
A corporation of Massachusetts, U.S.A.
B. PROPERTY is defined as: BARBIE. Excluded from the license granted to Licensee
is "NOSTALGIC BARBIE" and "CONTEMPORARY/COLLECTIBLE BARBIE", which Licensor
reserves and with respect to which Licensor has the full and exclusive right to
exploit and license others to exploit, not withstanding the foregoing.
"NOSTALGIC BARBIE" refers to the depictions of the "BARBIE" doll as used
originally for the line, i.e., the early versions of the "BARBIE" doll,
particularly for the 1959-1964 era and accompanying "KEN", "MIDGE", and "ALAN"
dolls. "CONTEMPORARY/COLLECTIBLE BARBIE" refers to high-end collectible,
specialty BARBIE dolls, such as BARBIE dolls currently depicted in Licensor's
Timeless Creations(R) catalog.
C. PRODUCTS is defined as: Adjustable roller skate, adjustable in-line skate,
traditional roller skate, molded in-line skate, knee and elbow pads, wrist
guards and skate bag.
D. TERRITORY is defined as: Mexico, Guatemala, Panama, Costa Rica, Colombia,
Venezuela, Argentina, Brazil, Chile, Bolivia, Ecuador, Paraguay, Uruguay, Peru,
Central America, Suriname, Guyana, French Guiana.
E. This License is:
{ ) exclusive as to all Products (1.2)
{X) non-exclusive as to all Products
{ ) other as follows:
F. MANUFACTURER'S AGREEMENT Attach Exhibit A (Manufacturer's Agreement) for each
manufacturing source (i.e. plant), including each subcontractor. In addition,
the form is to be submitted for each new manufacturing source during the term of
this Agreement.
2
"Confidential material omitted and filed separately with the Securities and
Exchange Commission. Asterisk denotes such omission."
G. Channels of Distribution are defined as:
{X) Mass Market
{ ) Gifts
{ ) Specialty
{X) Direct Mail (All)
{ ) Direct Mail (Catalog only)
{ ) Direct Mail (Excluding Catalog)
{X) Department Store
{X) Supermarket
{ ) Book Club
{ ) Stationery
{ ) Drug Store
{X) Warehouse Club
{ ) Duty-Free Shops
{X) Interactive Shopping (e.g.: Television Home Shopping)
{X) Other Special Market as follows: Discount Stores and Sporting Goods.
H. ENDING DATE is defined as: ***** (3.1)
MARKETING DATE is defined as: June 1995, which shall be the date(s) by
which the Products shall be available for purchase by the public at retail
outlets pursuant to Section 6.2.
I. ROYALTY RATE is defined as: *****. (4.1)
J. ADVANCE GUARANTEED ROYALTY is defined as: ***** (4.1, 4.2)
K. MINIMUM GUARANTEED ROYALTY is defined as: ***** (4.1, 4.2)
3
L. MANDATORY MINIMUM ADVERTISING EXPENDITURE is defined as actual media
expenditures for advertising of the Products by the Licensee in the following
media and time periods:
Type of Media: {N/A) Print to Consumers
{N/A) Trade Print
{N/A) Trade Co-Op
{N/A) Television
{N/A) Direct Mail
{N/A) Other as follows:
Advertising Time Period: N/A
Minimum Amount Expended: N/A
M. Periodic Statements are due thirty (30) days after the close of each calendar
quarter sent with royalties to:
Mattel, Inc.
333 Continental Boulevard
El Segundo, California 90245
Attn: Mattel Consumer Products, M1-1116
N. INSURANCE: Licensee shall maintain comprehensive liability insurance,
including product and contractual liability insurance in an amount of not less
than Two Million Dollars ($2,000,000.00), naming Licensor as an additional
insured, during the term of this Agreement (11).
O. ADDITIONAL PROVISIONS: Please see Exhibit B for a listing of approved
Distributors for each country.
4
NOW, THEREFORE, based on the foregoing premises and the covenants
contained herein, the parties hereto agree as follows:
1. RIGHTS
1.1 In accordance with the terms set forth herein, Licensor consents to
use of the Property by Licensee in the Territory for the life of this Agreement
solely and only upon and in connection with the manufacture, sale and
distribution of Products through the Channels of Distribution. Licensee shall
have no right to use of Licensor's corporate name or logo at any time, except as
permitted under Section 7.2.
1.2 For Products that are specifically covered by an exclusive license,
as identified in Paragraph E of the Recitals Section, Licensor agrees not to
expressly grant a license to a third party of the right to use the Property on
or in connection with said Products through the Channels of Distribution in the
Territory; PROVIDED, HOWEVER that Licensor itself use or may permit the use by
third parties of Products that are distributed solely as premium items. All
Products not specifically designated as exclusive in Paragraph E of the Recitals
Section are considered non-exclusive and, therefore, Licensor is free to license
third parties to use the Property on or in connection with the Products through
the Channels of Distribution in the Territory. Regardless of exclusivity
provisions contained herein, distribution through FAO Schwarz stores and
catalogs if applicable hereto remain non-exclusive. Licensor reserves and
retains the full right to use the Property on or in connection with any and all
Products through the Channels of Distribution in the Territory at all times. In
the event of any possible conflict in the definition of Products in this
Agreement and with the corresponding definition in any other license agreement
to which Licensor is a party, Licensor reserves the right to interpret the
language in such a manner as to resolve the conflict, and the Licensor's
decision in resolving any such conflict shall be final and binding upon the
Licensee.
1.3 Licensee agrees not to enter into any agreement relating to the
Property for commercial tie-ins or promotions with any party engaged in whole or
in part in the production of motion pictures or television shows, nor to sell
the Products for premium use or other use involving promotion of any third party
or other products or properties without the prior written consent of Licensor.
5
1.4 As an exception to the scope of the rights of Licensee under this
Section 1, Licensee does not have the right to display or sell the Products at
entertainment events and shows, excluding trade shows. Licensor reserves and has
the right to grant licenses to third parties to use the Property on and in
connection with the manufacture and/or sale of the Products for sale to members
of the audience at any show or other entertainment event, including but not
limited to stage and arena shows.
1.5 With respect to each vendor or other manufacturing source, Licensee
shall have the attached Manufacturer's Agreement executed prior to manufacture
of such Products and promptly provide a fully executed copy of any such
agreement(s) to Licensor. Licensee agrees to follow the same procedures for any
additional manufacturing source used during the term of this Agreement.
1.6 Licensee agrees to meet or exceed the Mandatory Minimum
Advertising Expenditure.
1.7 Licensee agrees to sell the Products, exclusive of required free
samples specified in Section 2.3 hereof, to Licensor at as low a price as the
Licensee sells similar quantities of the same to any third party.
1.8 To the extent that the Territory is included within the European
Economic Community ("EEC") and with respect to permitted activities of the
Licensee within the EEC, the following provisions shall apply:
(a) Notwithstanding anything to the contrary herein contained,
Licensor and Licensee agree that the rights granted herein and the restrictions
herein contained shall be subject to the laws of the Territory and the Treaty of
Rome (if applicable) and all rules, regulations, directives, laws and
legislation associated therewith as the same may be in force from time to time.
(b) Nothing in this Agreement shall be construed as preventing
Licensee from accepting bona fide unsolicited orders for the Product (a) for
sale otherwise than through Licensee's permitted Channels of Distribution within
the EEC, or (b) from customers or potential customers outside the Territory but
within the EEC.
6
(c) However, it is agreed that Licensee shall not establish an
office, advertise or otherwise actively seek customers for the Products outside
of the Territory or the permitted Channels of Distribution.
(d) If this Agreement is exclusive, it will not be an
infringement of Licensee's rights for Licensor to permit the sale in the
Territory or in the Channels of Distribution of Products made by licensees of
other territories in the EEC or other Channels of Distribution in the Territory.
2. CONTROL BY LICENSOR
2.1 Licensor shall have the right to control all uses of the Property on
or in connection with the Products, including but not limited to advertising,
and also have the right to control the nature and quality of the Products
associated with the Property.
2.2 Pursuant to this right of control, Licensor, through such agents or
representatives as it may designate, shall have free access to Licensee's
facilities, upon reasonable notice, at all times during business hours with the
right to full disclosure of all apparatus, methods, and materials used by
Licensee in the production of the Products and shall have the right to take
reasonable free samples of Licensee's Products and all of the materials used in
the manufacture thereof for the purpose of examination or testing. If requested
by Licensee, Licensor agrees to sign a non-disclosure agreement as necessary to
protect the secrecy of such apparatus, methods, and material.
2.3 At least one (1) representative copy or sample of all proposed
material using the Property (including the proposed Products, packaging,
advertising and all other material of any character whatsoever) together with a
description of the intended use of the material shall be submitted to Licensor
without cost for written approval prior to using the same. Licensee agrees not
to display or offer for sale to any third party any Products or sample thereof
using the Property without Licensor's prior written approval of such Products or
sample thereof. Licensor shall make every reasonable attempt to provide written
approval/disapproval of any copy or sample, submitted by Licensee for
7
review, by the end of fifteen (15) business days after actual receipt of such
copy or sample by Licensor. Failure by Licensor to provide written
approval/disapproval within the specified time period shall not be deemed
approval of any copy or sample. Failure by the Licensee to comply with the
approval process identified in this Section 2.3 is grounds for immediate
termination by Licensor. The copies, sample and description may be retained by
Licensor at its option. Licensee shall not manufacture, sell or distribute any
Products or other materials that depart from Licensor-approved samples in any
material respect without a separate submission of samples with respect to such
modification and separate written approval from the Licensor. Licensor shall not
withdraw its approval of the approved samples without good cause. Licensee shall
thereafter submit to Licensor's Licensing Department, without cost to Licensor,
ten (10) samples of finished Products, as approved, upon commencement of
production and sale, and annually thereafter. Licensor reserves the right to
request additional samples of the Products at no cost to the Licensor on a
regular basis, but not more frequently than quarterly, to verify compliance of
the Products with the provisions of this Agreement. Except where Licensor's
request for samples is to monitor compliance after a prior non-conformity,
Licensee shall not be obligated to provide more than twenty (20) samples of a
Product on an annual basis without charge to the Licensor.
2.4 Licensee agrees that the Products covered by this Agreement shall be
of high standard and of such style, appearance, and quality as to be adequate
and suited to its exploitation to the best advantage and to the protection and
enhancement of the Property and the good will pertaining thereto; that such
Products will be manufactured, advertised, sold and distributed in accordance
with all applicable laws; and that the policies of sale and distribution by
Licensee shall be of high standard and to the best advantage and shall in no
manner reflect adversely upon the good will of Licensor or the Property.
2.5 Licensee agrees that the Products shall equal or exceed all industry
and government standards established in respect of safety and fitness for use.
All applicable government standards of the Territory shall apply, whether
federal, state or local. If the Territory is the U.S. or is inclusive of the
U.S., such standards shall include, but not be limited to, the Consumer Product
Safety Act and all appropriate sections of the Code of Federal Regulations, and
to the extent applicable, the Products shall equal or exceed the standards set
forth in the Hazardous Substances Act, the Flammable Fabrics Act, the Child
Safety Protection Act and the Toy Manufacturers of America Safety Standards as
contained in ASTM F963 and comparable industry standards. Prior to commencing
shipment of each Products and on a regular basis thereafter but
8
no less frequently than annually, or as otherwise requested by Licensor,
Licensee agrees to provide to Licensor at Licensee's expense a certificate of an
approved independent testing laboratory certifying that the Products comply with
such standards and regulations. Each certificate that is provided must
specifically describe the Products that are covered by the certificate,
including the manufacturing source of the Products being tested. Products that
are shipped into more than one country must be certified separately with respect
to the applicable requirements of each such country. Additional certificates
shall be supplied with respect to any design or manufacturing change that may
affect the Product's compliance with applicable standards. If there is any
disagreement between Licensee and Licensor regarding compliance with safety
standards, the Licensor's decision shall be final and Licensee agrees to fully
comply with such decision.
2.6 Licensee agrees that it shall not contract with a third party
distributor for the marketing, distribution or sale of the Products without the
prior written consent of the Licensor.
3. TERM
3.1 The term of this Agreement will commence as of the Effective Date
and terminate automatically on the Ending Date, unless terminated sooner under
the other provisions of this Agreement.
3.2 Unless express renewal rights are granted herein, Licensee shall
have no right to renew this Agreement, regardless of its performance during the
term hereof. Further, Licensor shall not be required to give any notice to
Licensee of Licensor's intention not to extend the term of this Agreement. No
promise or expressed intention to renew this Agreement shall be binding upon the
Licensor unless stated in a written document, signed by the Licensor.
3.3 Nothing stated in this Agreement shall prevent the Licensor from
negotiating or entering into an agreement with any other party on or before the
expiration date of this Agreement, provided that no Products which are exclusive
under this Agreement shall be marketed or shipped under such other agreement
prior to the expiration date of this Agreement.
9
"Confidential material omitted and filed separately with the Securities and
Exchange Commission. Asterisk denotes such omission."
4. ROYALTIES
4.1 In consideration for the license granted herein, Licensee agrees to
pay royalties to Licensor. Royalties will be calculated by applying the Royalty
Rate to the "Gross Sales" of all Products sold or otherwise disposed of by
Licensee under this Agreement except that, in the event Licensee sells or
otherwise disposes of Products on an F.O.B. place of manufacture outside of the
Territory basis, the F.O.B. Royalty Rate shall be applied to the "Gross Sales"
of such Products. "Gross Sales" herein employed shall mean the gross sales
billed by Licensee *****, and sales and excise taxes separately stated, but
***** whether or not stated on invoice. No other costs incurred in the
manufacture, sale, distribution, or marketing of the Products shall be deducted
from gross sales in determining the royalty payable by Licensee. For purposes of
this Agreement, Products shall be considered sold on the date of shipment or the
date that the shipment is invoiced by the Licensee, whichever is earlier.
4.2 Licensee agrees to pay to Licensor the non-refundable Advance
Guaranteed Royalty at the time of execution of this Agreement. Licensee may
offset the Advance Guaranteed Royalty against royalties payable under Section
4.1 as they become due. Payment of the Advance Guaranteed Royalty by Licensee is
a condition precedent to Licensee's right to exercise any rights hereunder, and
Licensee's failure to promptly tender such payment shall entitle Licensor to
unilaterally and immediately rescind this Agreement.
4.3 If the Minimum Guaranteed Royalty is not otherwise paid pursuant to
Section 4.1 hereof, the balance of said Minimum Guaranteed Royalty shall be paid
to Licensor with Licensee's final quarterly royalty payment for the applicable
year or period. Licensee's failure to achieve sales of the Products for the
applicable year or period that will cause Licensor to earn royalties equal to or
greater than the Minimum Guaranteed Royalty shall give Licensor the right to
terminate this Agreement, which right shall be exercisable within sixty (60)
days after Licensee's receipt of the final royalty report for such year or
period.
4.4 If Licensee does not meet or exceed the Mandatory Minimum
Advertising Expenditure, Licensee shall pay to Licensor, within thirty (30) days
after the earlier of (a) the Ending Date or (b) the date of termination of this
Agreement, the difference between said Minimum Amount required to be expended
under Paragraph L of the Recitals Section and the actual amount expended by
Licensee.
10
4.5 Royalties shall be paid to Licensor on any Products conveyed for any
purpose whatsoever by Licensee to a third party free of charge or for which only
nominal consideration was paid, including samples (other than those samples
referred to in Section 2.3 hereof, and other than sales samples, not to exceed
five percent (5%) of total production). The royalty on such Products shall be
calculated by applying the Royalty Rate or F.O.B. Royalty Rate, whichever is
higher, to the customary Gross Sales price of the Products as defined by Section
4.1.
4.6 If Licensee sells the Products to any of its subsidiaries or
affiliated organizations or companies for subsequent resale by such subsidiary
or affiliated organization or company to customary trade buyers, or sells the
Products in any way other than at arm's length, Licensee agrees that the Royalty
Rate or F.O.B. Royalty Rate, whichever is higher, will be based on the Gross
Sales, as defined above, charged by the subsidiary, affiliated organization or
company to such buyers.
4.7 Any payment not paid when due in accordance with the terms of this
Agreement, including any deficit disclosed through the audit procedures provided
for in Section 5, shall bear interest from the due date until received by
Licensor at the maximum interest rate permitted by law. The obligation to pay,
and the payment of, such interest will not operate to extend any payment due
date, and Licensor waives no rights by accepting late payment with interest.
Interest under this Section 4.8 will be due and payable on the date the
outstanding balance is paid to Licensor.
4.8 If Licensee requests and Licensor provides finished artwork for
Licensee's use, Licensee agrees to remit to Licensor its then normal and
customary charge for providing such artwork.
5. RECORDS AND REPORTS
5.1 Licensee agrees to keep such full and accurate records as are
necessary to verify Licensee's compliance with its obligations under this
Agreement, including without limitation the safety requirements of Section 2.5
and the royalty payment requirements of Section 4.1. Licensee shall maintain all
records necessary to determine the royalties payable hereunder including, but
not limited to, financial statements; general ledgers; and production, sales,
purchases and inventory records; promotional activity reports and other records
reflecting the transfer of Products whether or not full price was paid. Licensee
also agrees to keep such full and accurate
11
records as are necessary to determine Licensee's compliance with the Mandatory
Minimum Advertising Expenditure required hereunder including, but not limited
to, receipts or other proof of placement of ads. Licensee agrees to permit
Licensor or its authorized representative to have full access to such records
required under this Section 5, to examine them, and to make copies of them
during normal business hours upon reasonable notice. Licensee agrees to preserve
and keep available to Licensor all such records for a period of three (3) years
after the termination of this Agreement, including any renewals thereof. If any
underpayment is identified as a result of this examination, Licensee shall pay
to Licensor within ten (10) days of demand the amount of the underpayment,
together with interest as provided under Section 4.7, which shall accrue from
the original due date. In addition, if the amount of the underpayment discovered
as a result of the examination equals or exceeds five percent (5%) of the
royalties reported and paid over the period covered by the examination,
Licensee's payment shall include the Licensor's reasonable cost of such
examination. Such costs shall include, in the case of Licensor's internal
auditors, travel expenses and the full labor costs attributable to the man-hours
related to the examination.
5.2 Licensee agrees to provide to the Licensor, at the address specified
in Paragraph M of the Recitals Section, within thirty (30) days after the close
of each calendar quarter: (1) a true and full report of advertising expenditures
during said quarter pursuant to this Agreement and (2) a true and full report in
triplicate of royalties accrued during said quarter under this Agreement.
Licensee agrees to make payment in the amount of said reported royalties with
submission of such royalty report. Such royalty reports shall show the Property
licensed, the specific Channel of Distribution, the stock number and
descriptions, and, for each country in which sold, the total Gross Sales as
calculated, showing the quantity sold and returned, the unit price of the
Products sold and all permitted deductions as set forth in Section 4.1. Each
such report shall be certified to be accurate by the Licensee. Such royalty
reports shall also include a list of sales to subsidiaries and affiliates and
all transactions not at arm's length. For this purpose, Licensee shall use the
royalty report form or forms attached hereto, additional copies of which may be
obtained by Licensee from Licensor. All quarterly reports shall be furnished to
Licensor whether or not any of the Products has been sold or advertised during
the preceding calendar quarter.
5.3 Receipt or acceptance by Licensor of any of the statements furnished
pursuant to this Agreement or of any sums paid hereunder shall not preclude
Licensor from questioning the correctness thereof at any time. In the event that
any inconsistencies or mistakes are discovered in such statements or payments,
Licensee shall immediately notify Licensor, correct such inconsistencies or
mistakes, and render the appropriate payments due, if any.
12
5.4 Upon demand of Licensor, but not more than once in any twelve (12)
month period, Licensee shall furnish to Licensor at Licensee's expense a
detailed audit statement certified by an independent certified public accountant
restating or verifying the accuracy of the reports described in Section 5.2. up
to the date of Licensor's demand.
5.5 Licensee agrees to provide to the Licensor, at the address specified
in Paragraph M of the Recitals Section and for each country included in the
Territory: (1) within thirty (30) days prior to the beginning of each calendar
quarter, a forecast of the expected gross sales and royalties for the succeeding
quarter; and (2) within ninety (90) days prior to the beginning of each calendar
year, a forecast of the expected gross sales and royalties for each calendar
quarter of the succeeding year.
6. DILIGENCE AND GOOD WILL
6.1 Licensee agrees to exercise its best efforts in the performance of
this Agreement and, especially, in developing a market for the Products in
connection with the Property and supplying such market demand.
6.2 If Licensee does not commence in good faith to manufacture and
distribute all of the Products in commercially substantial quantities through
each of the Channels of Distribution in each country in the Territory by the
Marketing Date, or if at any time thereafter in any calendar quarter Licensee
fails to manufacture and distribute any of the Products through each of the
Channels of Distribution in each country in the Territory, Licensor, in addition
to all other remedies available to it, may terminate this Agreement in its
entirety, or may terminate Licensee's rights under this Agreement in the
particular Products that were not manufactured and/or distributed during such
quarter, or may terminate Licensee's rights under this Agreement for the
particular Channels of Distribution through which Products were not distributed
during such quarter, or may terminate Licensee's rights under this Agreement
with respect to the country in which the Products were not manufactured and/or
distributed during such quarter by giving written notice of such termination to
Licensee.
6.3 Licensee acknowledges the importance and great value of the good
will associated with Licensor and the Property. Licensee shall uphold Licensor's
good name and protect Licensor's Property rights and associated rights or
interests during the term of this Agreement and thereafter. Licensor shall have
the right to immediately terminate this Agreement in the event that Licensee
engages in any illegal, indecent, immoral, harmful or scandalous behavior or
activities that may directly or indirectly damage Licensor's reputation or good
will.
13
7. INTELLECTUAL PROPERTY
7.1 Licensee hereby acknowledges the validity of the Property and of any
copyright or trademark pertaining thereto and Licensor's exclusive rights
therein. Licensee will not make any representation or do any act which may be
taken to indicate that it has any right, title or interest in or to the
ownership or use of any of the Property except as licensed under the terms of
this Agreement, and acknowledges that nothing contained in this Agreement shall
give Licensee any continuing right, title or interest in or to the Property.
Licensee agrees not to contest the validity of Licensor's rights or perform any
act or omission adverse to the Property or to said exclusive rights, and agrees
that any use of the Property by Licensee hereunder shall inure to the benefit of
Licensor.
7.2 Licensee agrees to take whatever action is appropriate or necessary
to protect Licensor's rights in the Property including, but not limited to:
cooperating in any new domestic or foreign applications for intellectual
property registration pursued by Licensor, at Licensor's expense (including
registration of any of Licensor's trademarks to be used on the Products);
registering as a licensee of the Licensor's trademark on the Products upon
request by Licensor, at Licensor's expense; and permanently affixing on the
Products and all materials used in the advertising, packaging, sale, marketing
and distribution thereof, or other materials utilizing the Property, the
following language, and any other notice requested by Licensor:
[Name of each Property appearing on the Products]
and associated trademarks are owned by and used under
license from Mattel, Inc. (C) 19__ [year of first publication
by Licensee] Mattel, Inc. All Rights Reserved.
7.3 During and after the term of this Agreement, Licensee agrees and
warrants that it will not reproduce or use, or cause or enable another to
reproduce or use, either within or outside the Territory, any trademarks or
other related rights derived from or confusingly similar to the Property.
14
7.4 Licensee agrees to promptly notify Licensor of conflicting
activities by third parties of which Licensee becomes aware. On written notice
from Licensee of such activities, Licensor may, but is not required to, take
appropriate legal action. Licensee shall take no legal action, however, without
Licensor's prior written consent. Licensee agrees to cooperate fully in any
action taken by Licensor, at Licensor's expense. Licensor may, but is not
required to, control any legal action undertaken pursuant to this provision. If
Licensor takes legal action, any settlement proceeds, damage or other recovery
shall be for the sole benefit and account of the Licensor. If Licensee takes
legal action with written permission from Licensor, any settlement proceeds,
damage or other recovery remaining, after attorneys' fees and costs are
deducted, shall be for the sole benefit and account of the Licensee.
7.5 Licensee agrees that all artwork and designs, and all copyrights
pertaining thereto, involving the Property, or derived from the Property,
created or produced by the Licensee shall be and remain the sole property of
Licensor. Licensee further agrees that it will provide to Licensor a full
assignment in favor of the Licensor of all rights, free of any claim, interest
or right, from any third party who shall have created or produced under contract
with Licensee any artwork involving the Property or derived from the Property.
All costs and expenses for the creation or production of artwork under this
Section 7.5 shall be paid by Licensee, and Licensor shall not be liable to
Licensee or any third party for any costs or expenses incurred in the creation
or production of such artwork. Licensor shall be entitled to use, and license
others to use, all artwork created or produced pursuant to this Section 7.5.
7.6 Except with respect to the rights to the Property licensed
hereunder, the Licensee shall ensure that all Products as marketed, sold and
distributed do not infringe the rights of any third party and are distributed in
compliance with all relevant copyright, trademark, design right, registered
design and other relevant laws in the Territory.
8. CONFIDENTIALITY
During and subsequent to the term of this Agreement, Licensee, its
agents and employees shall not make any unauthorized use or disclosure of any
knowledge or information of a confidential or proprietary nature concerning the
Products, or other private or confidential matters of Licensor, and shall
refrain from any acts or omissions that would reduce the value of such
confidential matters to Licensor or that would deprive or tend to deprive
Licensor of trade secret or other intellectual property protection with respect
to such confidential matters.
15
9. TRANSFERABILITY
9.1 Licensor shall have the right to assign its rights and obligations
under this Agreement.
9.2 The rights and obligations of the Licensee under this Agreement are
of a personal nature, and Licensee may not assign, sublicense or otherwise
transfer any or all of its rights and/or obligations hereunder without prior
written consent of Licensor.
10. WARRANTY AND INDEMNIFICATION
10.1 Licensee warrants and represents that:
(a) Licensee is free to enter into this Agreement and has
the capability to fully perform its obligations under this Agreement;
(b) all ideas, creations, materials and intellectual property
furnished by Licensee in connection with the Products will be Licensee's own and
original creation (except for matters in the public domain or material which
Licensee is fully licensed to use); and
(c) the Products and the manufacture, advertisement, distribution
and sale thereof pursuant to this Agreement will not infringe or violate any
rights of any third party of any nature whatsoever.
10.2 Licensee agrees to indemnify Licensor, its officers, agents and employees
and to undertake to defend and hold them and each of them harmless from and
against any and all claims, demands, causes of action, damages, liabilities,
costs and expenses, including reasonable attorneys' fees, arising from the
activities of Licensee under this Agreement, or out of any breach by Licensee of
any warranty or agreement made by Licensee herein, including but not limited to
any product liability claims or actions or to the unauthorized use of any
trademark, copyright, design, patent, process, method or device by Licensee.
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10.3 Licensor warrants and represents that:
(a) Licensor is free to enter into this Agreement and has
the capability to fully perform its obligations under this Agreement; and
(b) Licensor has acquired such rights to the Property stated
in the Recitals Section of this Agreement.
10.4 Licensor agrees to indemnify Licensee, its officers, agents and
employees and to undertake to defend and hold them and each of them harmless
from and against any and all claims, demands, causes of action, damages,
liabilities, costs and expenses, including reasonable attorneys' fees, arising
from use of the Property in connection with Products under this Agreement in the
manner approved by Licensor, or arising out of any breach by Licensor of any
warranty or agreement made by Licensor herein.
11. INSURANCE
11.1 Licensee will obtain and maintain a comprehensive liability
insurance policy, including coverage for product and contractual liability,
providing, but not limited to, protection for Licensor, its officers, agents and
employees against any claims, damages, liabilities, costs and expenses
(including counsel fees) arising out of any alleged defects (whether latent or
patent) in the Products manufactured, distributed, sold or otherwise disposed of
by Licensee.
11.2 Such policy shall have a combined single coverage in the amount of
Two Million Dollars ($2,000,000.00), shall be with a qualified insurance company
currently rated A - V or better with Best's Key Rating Guide for Property
Casualty Insurers, and shall be kept in force for twelve (12) months after final
disposal of inventory.
11.3 As proof of such insurance, a fully paid certificate of insurance
naming Licensor as an insured party and indicating thereon that the insurance
may not be changed, cancelled, or allowed to lapse through non-renewal or
failure to pay the premium therefor except upon not less than thirty (30) days
written notice to Licensor will be submitted to Licensor by the Licensee within
thirty (30) days after the Effective Date of this Agreement. The Licensee's
failure to comply with the provisions regarding insurance set forth in this
Section will constitute a default giving the Licensor the right to terminate
this Agreement in accordance with the terms of Section 13.1.
17
11.4 If Licensee fails to furnish proof of such insurance as required
above, or if at any time during the life of this Agreement Licensor is notified
of the change, cancellation or lapse of such insurance, which change,
cancellation or lapse Licensee does not rectify within ten (10) days of the
insurance status change, Licensor, in addition to all other remedies available
to it hereunder, may at its option obtain such insurance coverage and bill the
Licensee for the premium cost thereof. Licensee agrees to remit such premium to
Licensor within ten (10) days of receipt of notice from Licensor of the amount
of such premium cost. Such premium cost is in addition to any other payments due
under this Agreement.
12. BANKRUPTCY
In the event that Licensee makes any assignment for the benefit of
creditors, or files a petition in bankruptcy (whether voluntary or involuntary),
or becomes insolvent, or is similarly prevented from or unable to fulfill its
duties hereunder, Licensor may terminate this Agreement immediately upon giving
notice to Licensee. In the event of actual bankruptcy or receivership of
Licensee, this Agreement shall automatically terminate.
13. TERMINATION
13.1 Licensor may terminate this Agreement pursuant to any provision of
this Agreement providing for termination or in the event of any default of any
provision of this Agreement by Licensee, such as failure to make a report or a
payment required hereunder, which default Licensee does not rectify within ten
(10) days after notice thereof from Licensor.
13.2 Licensor may terminate this Agreement if there is a transfer of
twenty-five percent (25%) or more of the common capital stock of the Licensee,
in a single transaction or a series of transactions; or if there is a transfer
of the business and/or substantially all of the assets of the Licensee, subject
to the following provisions. If the Licensee has reason to believe that such a
stock transfer has occurred, or will occur in the reasonably foreseeable future,
or if the Licensee proposes to make a transfer of its business and/or
substantially all of its assets, it shall give written notice thereof to the
Licensor. Within a reasonable time after receiving such notice, the Licensor
shall give
18
the Licensee written notice stating whether it approves or disapproves any such
transfer or proposed transfer, and, in the case of its disapproval thereof,
whether it exercises its right of termination hereunder if the transfer has
already occurred or will exercise its right of termination if the proposed
transfer is subsequently made. The foregoing shall not limit in any way the
right of the Licensor under Section 9.2 to disapprove assignments and other
transfers of this Agreement and the rights hereunder.
14. EFFECT OF TERMINATION
14.1 In the event of termination of this Agreement under any of its
provisions, Licensee is not relieved of its liabilities accruing up to the time
of termination. Any and all patents, trademarks, copyrights or related rights
accruing to Licensee by virtue of its activities under this Agreement shall vest
automatically at the time of accrual solely and exclusively in Licensor, and
Licensor may execute documents on behalf of Licensee to secure or effectuate
such rights; Licensee shall assist Licensor in securing and effectuating such
rights after termination as well as before termination.
14.2 Licensee agrees that upon termination of this Agreement based on
default of Licensee and provided Licensor has given the termination notice in
accordance with Section 13 hereof, Licensee shall forthwith cease and desist in
the manufacture and sale of Products.
14.3 Licensor agrees that at the termination of this Agreement for any
reason other than the default of the Licensee (including, but not limited to,
termination by reason of a variance by Licensee from the quality and style
approved by Licensor pursuant to Section 2), the Licensee shall have the
non-exclusive right for a period of not more than ninety (90) days thereafter to
dispose of all of the unsold Products that has been completed by it prior to
such termination. It is further provided under this Section 14.3 that Licensee
shall, prior to disposing of said unsold Products, give Licensor a true itemized
statement of all such unsold Products in inventory and sufficient detailed
manufacturing information to substantiate the applicability of this Section 14.3
to said Products. Licensor shall have the option to conduct a physical inventory
in order to verify such inventory statement.
19
14.4 Nothing in Section 14.3 shall be construed as authorizing the
Licensee to (a) sell Products not approved by Licensor, or to sell Products in
job lots at reduced prices or otherwise than set forth or contemplated in this
Agreement or (b) manufacture, sell or dispose of any Products covered by this
Agreement after its expiration or its termination based on the failure of
Licensee to affix notice of copyright, trademark or service mark registration or
any other notice to the Products cartons, containers, packing or wrapping
material or advertising, promotional or display material.
14.5 Licensee agrees that upon termination of this Agreement under any
of its provisions, Licensee shall deliver to Licensor without cost all plates,
molds, preprints, matrices and other devices using the Property.
14.6 Licensee agrees that in the event that it engaged in any
unauthorized use of the Property in violation of any of the provisions of this
Agreement, Licensor may recover all profits derived by Licensee from such
unauthorized use, in addition to any other remedies available to Licensor.
15. REMEDIES
15.1 Licensee acknowledges that its failure (except as otherwise
provided herein) to cease the manufacture, sale or distribution of the Products
covered by this Agreement at the termination or expiration of this Agreement
will result in immediate and irreparable harm to Licensor and to the rights of
any subsequent licensee. Licensee agrees that in the event of such failure to
cease manufacture, sale, or distribution, Licensor shall be entitled to
equitable relief by way of temporary and permanent injunctions and such other
further relief as any court with jurisdiction may deem just and proper.
15.2 In the event Licensor is required to take legal action against
Licensee to recover royalties or other amounts payable to the Licensor or to
enforce the provisions of this Agreement, Licensee agrees to pay Licensor's
attorneys' fees, expenses and court costs.
15.3 Licensee agrees not to hold Licensor liable for any indirect,
punitive, special, incidental or consequential damages, including lost profits,
caused by any breach of this Agreement by Licensor.
20
16. GENERAL PROVISIONS
16.1 ENTIRE AGREEMENT. This writing represents and expresses the entire
agreement of the parties hereto. It replaces and supersedes all prior contracts,
representations and understandings (written or oral) between the parties
concerning the within subject matter.
16.2 WAIVER. Any waiver, modification, or cancellation of any term or
condition of this Agreement must be in writing. Licensee further understands and
agrees that any oral representations, which have not been reduced to a formal
writing signed by both parties, cannot be construed as a promise or obligation
by Licensor to renew or extend this Agreement. No waiver by either party,
whether express or implied, of any provisions of this Agreement or of any breach
or default of either party shall constitute a continuing waiver of any other
provision of this Agreement, and no such waiver by either party shall prevent
such party from enforcing any and all provisions of this Agreement or from
acting upon the same on any subsequent breach or default of the other party.
16.3 HEADINGS. Captions and headings to sections are included solely for
convenience and are not intended to affect interpretation of any provision of
this Agreement.
16.4 FORCE MAJEURE. In the event an act of the government, war
conditions, fire, flood, or other act of God prevents either party from
performing in accordance with the provisions of this Agreement, such
nonperformance shall be excused and shall not be considered a breach or default
for so long as the said conditions prevail. However, at any time after a six (6)
month period of such nonperformance, either party may terminate this Agreement
on thirty (30) days written notice thereof to the other party.
16.5 FORM OF NOTICES AND PAYMENTS. All notices and statements shall be
in writing and, together with all payments provided for herein, shall be given
at the respective addresses of the parties set forth above, or at such changed
address as the recipient shall have provided in writing. All notices to Licensee
required hereunder shall be deemed given when mailed by certified mail, return
receipt requested, by courier or overnight delivery service, or by telex or
telecopier and addressed to Licensee at the address specified in Paragraph A of
the Recitals Section.
21
16.6 GOVERNING LAW. This Agreement and the relationship of the parties
will be governed by, and interpreted in accordance with, the laws of the State
of California, U.S.A., excluding its conflict of laws rules.
16.7 JURISDICTION. With respect to any disputes arising out of this
Agreement that pertain to sales within the United States of America, the parties
hereby submit exclusively to the personal jurisdiction of the federal and state
courts located in Los Angeles County, California, U.S.A. The parties consent and
agree that each such court is a convenient forum for and has proper venue over
the resolution of all legal actions, proceedings and disputes arising out of or
relating to this Agreement. Licensee does by this Agreement appoint the
Secretary of the State of California as its agent for service of process, or in
the alternative consents to accept service of process during and after the term
of this Agreement by regular mail or any other method in accordance with
California law. Each party agrees that if so served it will raise no objection
to the personal jurisdiction of the court on any matter connected with this
Agreement that is within the court's subject matter jurisdiction. Each party
hereby waives all rights it has or which may hereafter arise to contest such
exclusive jurisdiction or venue.
16.8 SEVERABILITY. If any provision of this Agreement is found to be
illegal or unenforceable, then such provision will be deemed severable from the
remainder of this Agreement, and the remaining provisions will continue in full
force and effect. If any such unenforceability causes or may cause an injustice
to a party, then that party may terminate this Agreement upon notice to the
other party.
IN WITNESS WHEREOF, the parties hereto intending to be bound hereby execute this
Agreement by their duly authorized representatives on or about the date
indicated below in El Segundo, California.
MATTEL, INC. BROOKFIELD ATHLETIC COMPANY
By: /s/ Chris Willson-White By: /s/ James A. Buchanan
Name: Chris Willson-White Name: James A. Buchanan
Title: V.P., International Mktg. Title:President, CEO
Date: 9/2/95 Date: 6/23/95
22
EXHIBIT A
MANUFACTURER'S AGREEMENT
FOR TRADEMARK LICENSE
LICENSOR: MATTEL, INC.
LICENSEE:
TERRITORY OF
MANUFACTURE:
PRODUCTS:
PROPERTY:
TO: MATTEL, INC. 333 Continental Blvd.,
El Segundo, California 90245, U.S.A.
Attn: Director of Licensing
The undersigned understands that MATTEL, INC., ("MATTEL"), has
licensed the above-named Licensee to manufacture or have manufactured for it the
above-named products (the "Products") utilizing certain designs and names owned
by MATTEL identified as ("the Property"). In order to induce MATTEL to consent
to the manufacture of the Products by the undersigned, the undersigned agrees
that it will not manufacture the Products using the Property for anyone but the
Licensee; that it will not manufacture the Products in any territory other than
the above-named Territory; that it will not (unless MATTEL otherwise consents in
writing) manufacture any other merchandise utilizing any of the Property; that
it will permit such representative as MATTEL may from time to time (but not more
than twice annually for each of the Products) designate to inspect the
activities of the undersigned with relation to its manufacture of the Products;
and that whenever the Licensee ceases to require the undersigned to manufacture
the Products, the undersigned will deliver to MATTEL or the Licensee any molds,
plates, engravings or other devices used to reproduce the said designs and
Property or will give satisfactory evidence of the destruction thereof. MATTEL
shall be entitled to invoke any remedy permitted by law for violation of this
Agreement by the undersigned.
MANUFACTURER:______________________________
Address:_____________________________________________
By:_____________________
Name:___________________
Title:__________________
Date:___________________
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Exhibit B
LIST OF DISTRIBUTORS
--------------------
1. Argentina: To be determined.
2. Brazil: Brinquedos Estrela
Rua Cabo Norberto E. Weber 222
CEP 02147-900
PQ Novo Mundo
Sao Paulo, Brazil
Contact: Adriana Adler
Tel: 55-11-951-8759 / (8803)
Fax: 55-11-951-8032 / (1080)
3. Chile: Confecciones Infantiles (Osito)
Gran Avenida 4250
Santiago, Chile
Contact: Rodrigo Vines
Tel: 56-2-556-9210 / (6343)
Fax: 56-2-556-6343
4. Colombia: SMB
Via 40 N. 76-266
Baranquilla, Colombia
Contact: Mike Bigio
Tel: 57-58-582-842
Fax: 57-58-582-842 (same)
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5. Costa Rica: Castillo de la Fantasia
Calle 30 Altos Floristeria
Natura, San Jose
Costa Rica
Contact: Carlos Acuna
Tel: 506-221-1070
Fax: 506-221-3015
6. Mexico: Hecht Comercializadora
Malagon 56
Cerro de la Estrella
D.F. Mexico 09880
Contact: Horacio Chaparro
Tel: 525-608-1798
Fax: 525-608-2198
7. Panama: Importadora Maduro, S.A.
Apartado 1078 Zona 1
Panama, Rep de Panama
Contact: Guillermo Maduro
Tel: ###-##-#### / ###-##-####
Fax: ###-##-#### / ###-##-####
8. Venezuela: Industrias Rotoplast de Venezuela
Pelota a Abanico, Edif. Don Joaquin
Mezzanina
Caracas 1010, Venezuela
Contact: Miriam Vaisman
Tel: 58-2-564-6221
Fax: 58-1-564-6855
25
"Confidential material omitted and filed separately with the Securities and
Exchange Commission. Asterisk denotes such omission."
ADDENDUM
THIS ADDENDUM ("Addendum") dated May 15, 1995 to the License Agreement
dated April 1, 1995 ("Agreement") is entered into by and between MATTEL, INC.
("Licensor") and BROOKFIELD ATHLETIC COMPANY ("Licensee").
NOW, THEREFORE, the Licensor and Licensee agree as follows:
I. Recitals, Section D. Territory, is amended to add: Singapore
Toys R Us stores only.
II. Recitals, Section H., is amended to add: The term for the
Territories Singapore and Hong Kong is: Beginning date: *****
and Ending date: *****.
III. Recitals Section J. Advanced Guaranteed Royalty, is deleted and
replaced with:
J. Advanced Guaranteed Royalty is defined as: *****.
IV. Recitals, Section K. Minimum Guaranteed Royalty, is deleted and
replaced with:
X. Minimum Guaranteed Royalty is defined as: *****.
V. Except as expressly provided herein, all other terms and conditions
of the Agreement remain unchanged and in full force and effect.
IN WITNESS WHEREOF, this Addendum is entered into as of the above written
date.
MATTEL, INC. BROOKFIELD ATHLETIC COMPANY
By: /s/ Chris Willson-White By: /s/ James A. Buchanan
Name: Chris Willson-White Name: James A. Buchanan