"Confidential material omitted and filed separately with the Securities and
Exchange Commission. Asterisk denotes such omission."
LICENSE AGREEMENT SUMMARY
LICENSED PROPERTY: NERF
This Summary is hereby incorporated into and made a part of the
attached License Agreement. The specifics detailed below, where numbered as
paragraphs or subparagraphs, relate to similarly numbered paragraphs or
subparagraphs in the attached License Agreement.
The License Agreement is between:
Licensor and Licensee
TONKA CORPORATION,
a subsidiary of Hasbro, Inc. BROOKFIELD ATHLETIC COMPANY
1027 Newport Avenue 13 Centennial Drive
Pawtucket, Rhode Island 02862 Peabody, Massachusetts 01961
l. GRANT OF LICENSE.
(a) Licensed Articles. In-line roller skates; protective equipment
including elbow, knee, and wrist pads; and street hockey equipment including
shin pads, elbow pads, gloves, helmets, goalie equipment, nets/goals, street
hockey balls, pucks and sticks.
(b) Territory. United States, its territories and possessions,
including Puerto Rico.
(c) Term.
Initial Term: April 1, 1995 through *****
2. TERMS OF PAYMENT
(a) Royalty Rate. ***** (***** of sales made F.O.B. shipping point
outside the Territory).
(b) Terms of Payment: Total
Royalty Advance Balance
Guarantee Payment Due Dates
--------- ------- ---------
Initial Term: ***** ***** *****
*****
*****
*****
*****
The advance royalty payment is due and payable upon Licensee's signing
hereof and the balance of royalty guarantee is due and payable as set forth
above.
1
"Confidential material omitted and filed separately with the Securities and
Exchange Commission. Asterisk denotes such omission."
(c) Periodic Statements: Within thirty (30) days after the initial
shipment of the Licensed Articles, and promptly on the twenty-fifth (25th) day
of the month following each calendar quarter thereafter, Licensee shall furnish
to Licensor complete and accurate statements. The attached form must be used for
reporting royalties.
(d) Royalty Payments: Royalties in excess of the aforementioned advance
payment shall be due on the twenty-fifth (25th) day of the month following the
calendar quarter in which earned, and payment shall accompany statements.
Licensee shall not be permitted to reduce royalty payments for any reason
without prior written approval from Licensor. The Licensee shall pay the
Licensor interest on a late royalty payment at an interest rate of 1-3/4% per
month, or the highest rate permitted by law, from the date the royalty should
have been received by the Licensor.
8. (a) Labeling: As a condition to the grant of rights hereunder, Licensee
agrees that it will cause to appear on or within each Licensed Article sold by
it and on or within all advertising, promotional or display material bearing the
Name, the notice: "(C) (year) Tonka Corporation, a subsidiary of Hasbro Inc. All
rights reserved." and any other notice desired by Licensor, and where such
article or advertising, promotional or display material bears a trademark or
service mark, appropriate statutory notice of registration thereof.
(b) Approvals: Each and every tag, label, imprint, storyboard, copy and
layout or other device containing any such notice and all advertising,
promotional or display material bearing the Name, shall be submitted by Licensee
to Licensor for its written approval prior to use by Licensee. It is imperative
that Licensee use Licensor's approval form with each submission for Licensor's
approval. Otherwise, Licensor is not under any obligation to review Licensee's
submission.
10. (b) Distribution Channels: Mass Market
12. (a) Initial on Sale Date: *****
14. Sell-off Period: Sixty (60) days.
The aforesaid terms and conditions and those set forth in the attached
License Agreement shall only be binding upon Licensor provided that Licensee
signs and returns the License Agreement Summary and License Agreement and
Licensor countersigns same.
AGREED TO AND ACCEPTED:
TONKA CORPORATION,
a subsidiary of Hasbro, Inc. BROOKFIELD ATHLETIC COMPANY
By: /s/ Tom McGrath By: /s/ James A. Buchanan
Title: Sr. V.P. - Boys Toys Title: President, CEO
Date: 9/5/95 Date: 7/27/95
2
LICENSE AGREEMENT
This AGREEMENT made this 1st day of April, l995, by and between TONKA
CORPORATION, a subsidiary of Hasbro, Inc., with its principal place of business
at l027 Newport Avenue, Pawtucket, Rhode Island 02862 (hereinafter called
"Licensor") and BROOKFIELD ATHLETIC COMPANY, with its principal place of
business at 13 Centennial Drive, Peabody, Massachusetts 01961 (hereinafter
called "Licensee").
WITNESSETH:
WHEREAS, Licensor has rights to the name, characters, symbols, designs,
likenesses and visual representations of NERF, and the copyrights and trademarks
thereon, as set forth on Schedule "A" hereunto annexed (which names, characters,
symbols, designs, likenesses and visual representations and each of the
individual components thereof shall hereinafter jointly be called the "Name");
and
WHEREAS, Licensee desires to utilize the Name upon and in connection with
the manufacture, sale and distribution of articles hereinafter described.
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
and for other good and valuable consideration, the parties do hereby agree as
follows:
l. GRANT OF LICENSE
(a) Licensed Articles. Upon the terms and conditions hereinafter set
forth, Licensor hereby grants to Licensee and Licensee hereby accepts the right,
license and privilege of utilizing the Name solely upon and in connection with
the manufacture, sale and distribution of the articles listed in the License
Agreement Summary, Paragraph l(a), (hereinafter referred to as the "Licensed
Articles"), and no other articles of any kind. Licensor further grants to
Licensee, upon the terms and conditions hereinafter set forth, the right to use
the said trademarks only on or in connection with the Licensed Articles, but
only such trademarks and uses thereof as may be approved when the Licensed
Articles are approved and only on or in connection with the Licensed Articles.
(b) (i) Territory. The license hereby granted extends only to the
area listed in the License Agreement Summary, Paragraph l(b). Licensee agrees
that it will not make or authorize any use, direct or indirect, of the Name in
any other area, and that it will not knowingly sell Licensed Articles to persons
who intend or are likely to resell them in any other area. Notwithstanding this
territorial limitation however, Licensee shall have the right to manufacture the
Licensed Articles (or have the Licensed Articles manufactured for it as provided
in Paragraph 20 hereof) outside the licensed territory, provided, however, that
the Licensed Articles are sold and distributed only within such licensed
territory.
(ii) Licensor's Right to Eliminate Country from Territory. If
at any time during the period of this Agreement the Licensee or its subsidiaries
or affiliates are not making regular sales of more than a nominal nature of any
of the Licensed Articles in a country of the Territory, then the Licensor shall
have the right, upon giving 30 days prior written notice to the Licensee to
terminate the Licensee's rights hereunder for all Licensed Articles for said
country.
(c) Term. The Initial Term of the license hereby granted shall be
effective as shown in the License Agreement Summary, Paragraph l(c), unless
sooner terminated in accordance with the provisions hereof.
3
"Confidential material omitted and filed separately with the Securities and
Exchange Commission. Asterisk denotes such omission."
2. TERMS OF PAYMENT
(a) Rate. Licensee agrees to pay to Licensor as royalty, a sum equal
to that shown in the License Agreement Summary, Paragraph 2(a), on all net sales
by Licensee or any of its affiliated, associated or subsidiary companies of the
Licensed Articles. The term "net sales" shall mean gross sales less quantity
discounts, sales taxes and returns for damaged goods only, but no deductions
shall be made for cash or other discounts or uncollectible accounts. All costs
and expenses incurred in the manufacture, sale, distribution or exploitation of
the Licensed Articles, or otherwise incurred by Licensee, shall be paid by
Licensee, and no such costs or expenses shall be deducted from any royalty
payable to Licensor. With respect, however, to all sales made hereunder direct
to customers within the Territory where the terms of the sales are f.o.b.
shipping point a place outside the United States, the said royalty shall instead
be ***** of the net selling price, unless a different rate is specifically
indicated for such f.o.b. sales on the License Agreement summary attached
hereto.
(b) Terms of Payment: Initial Term. Licensee agrees to pay as a
minimum guarantee against royalties to be paid Licensor during the Initial Term
hereof, and as an advance payment applicable to said minimum guarantee, the sums
as shown in the License Agreement Summary, Paragraph 2(b). The advance and the
balance of the minimum guarantee against royalties shall be payable as shown in
the License Agreement Summary, Paragraph 2(b). No part of such minimum royalty
shall in any event be repayable to Licensee.
(c) Periodic Statements. Within thirty (30) days after the initial
shipment of the Licensed Articles, and promptly on the twenty-fifth (25th) day
of the month following each calendar quarter thereafter, Licensee shall furnish
to Licensor complete and accurate statements certified to be accurate by
Licensee, or if a corporation, by an officer of Licensee, showing the number,
country in which manufactured, country in which sold or to which shipped,
description, gross sales price, itemized deductions from gross sales price and
net sales price of the Licensed Articles distributed and/or sold by Licensee
during the preceding calendar quarter, together with any returns made during the
preceding quarter. Such statements shall be furnished to Licensor whether or not
any of the Licensed Articles have been sold during the quarter to which such
statements refer. The form attached to this agreement must be used for reporting
royalties. Upon demand of Licensor, Licensee shall, at its own expense, furnish
to Licensor a detailed statement by an independent certified public accountant
or an officer of Licensee, showing the number, country in which manufactured,
country in which sold or to which shipped, description, gross sales price,
itemized deductions from gross sales price and net sales price of the Licensed
Articles distributed and/or sold by Licensee to the date of Licensor's demand.
(d) Royalty Payments. Royalties in excess of the aforementioned
advance payment shall be due on the 25th day of the month following the calendar
quarter in which earned, and payment shall accompany the statements furnished as
required above. The receipt or acceptance by Licensor of any of the statements
furnished pursuant to this agreement, or of any royalties paid hereunder (or the
cashing of any royalty checks paid hereunder) shall not preclude Licensor from
questioning the correctness thereof at any time within two (2) years after the
expiration and/or termination of this License Agreement, and in the event that
any inconsistencies or mistakes are discovered in such statements or payments,
they shall immediately be rectified and the appropriate payment made by
Licensee. Licensee shall not be permitted to reduce royalty payments for any
reason without prior written approval from Licensor. The Licensee shall pay the
Licensor interest on a late royalty payment at an interest rate of 1-3/4% per
month, or the highest rate permitted by law, from the date the royalty payment
should have been received by the Licensor.
3. NONEXCLUSIVITY
Nothing in this agreement shall be construed to prevent Licensor
from granting any other licenses for the use of the Name or from utilizing the
Name in any manner whatsoever.
4
4. GOOD WILL
Licensee recognizes the great value of the good will associated with
the Name, and acknowledges that the Name and all rights therein, including
copyright and trademark rights and good will pertaining thereto, belong
exclusively to Licensor, and that the Name has a secondary meaning in the mind
of the public. Licensee further recognizes and acknowledges that a breach by
Licensee of any of its covenants, agreements or undertakings hereunder will
cause Licensor irreparable damage, which cannot be readily remedied in damages
in an action at law, and may, in addition thereto, constitute an infringement of
Licensor's copyrights in or trademarks of the Name, thereby entitling Licensor
to equitable remedies, costs and reasonable attorney's fees.
5. LICENSOR'S TITLE AND PROTECTION OF LICENSOR'S RIGHTS
(a) Licensee agrees to assist Licensor to the extent necessary or
desirable in the procurement of any protection or to protect any of Licensor's
rights to the Name, and Licensor, if it so desires, may commence or prosecute
any claims or suits in its own name or in the name of Licensee, or join Licensee
as a party thereto. Licensee shall notify Licensor in writing of any
infringements or imitations by others of the Name on articles similar to those
covered by this agreement which may come to Licensee's attention, and Licensor
shall have the sole right to determine whether or not any action shall be taken
on account of any such infringements or imitations. Licensee shall not institute
any suit or take any action on account of any such infringements or imitations,
or otherwise institute any suit or take any action relating to the Name, without
first obtaining the written consent of the Licensor to do so.
(b) Except with Licensor's written consent, neither Licensee, its
parent or any of its subsidiaries or affiliates, will register or attempt to
register copyrights in any country or to register as a trademark, service mark,
design patent or industrial design, any of the Licensed Articles, trademarks or
derivations or adaptations thereof, or any word, symbol or design which is so
similar thereto as to suggest association with or sponsorship by Licensor or any
of its subsidiaries. In the event of breach of the foregoing, Licensee agrees,
at its expense and at Licensor's request, immediately to terminate the
unauthorized registration activity and promptly to execute and deliver, or cause
to be delivered to Licensor, such assignments and other documents as Licensor
may require to transfer to Licensor all rights to the registrations, patents or
applications involved.
6. INDEMNIFICATION BY LICENSEE AND PRODUCT LIABILITY INSURANCE
Licensee hereby indemnifies Licensor and undertakes to defend
Licensee and/or Licensor against and hold Licensor harmless from any claims,
suits, loss and damage arising out of any allegedly unauthorized use of the
Licensed Articles, the Name or any patent, process, idea, method or device by
Licensee in connection with the Licensed Articles or any other alleged action by
Licensee, and also from any claims, suits, loss and damage arising out of actual
or alleged defects in the Licensed Articles, whether defects in design,
manufacture, or otherwise. Licensee agrees that it will obtain, at its own
expense, product liability insurance from a recognized insurance company,
providing adequate product liability insurance protection (at least in the
amount of $2,000,000 combined single limit of Bodily Injury Liability and
Property Damage Liability for each occurrence and annual aggregate), naming the
Licensee as named insured and Licensor as additional named insured against any
claims, suits, loss or damage arising out of any such actual or alleged defects
in the Licensed Articles. As proof of such insurance, a certificate of insurance
naming Licensor as an additional named insured will be submitted to Licensor by
Licensee for Licensor's prior approval before any Licensed Article is
distributed or sold, and at the latest, within thirty (30) days after the date
first written above. Any proposed change in such certificate of insurance shall
be submitted to Licensor for its approval. Licensor shall be entitled to a copy
of the then prevailing certificate of insurance, which shall be furnished
Licensor by Licensee. As used in the first two sentences of this Paragraph 6,
"Licensor" shall also include the officers, directors, agents and employees of
the Licensor, or any of its subsidiaries or affiliates. The certificate of
insurance shall include a provision to notify the Licensor in writing, prior to
the effective date, of any cancellation of such insurance before the expiration
date thereof.
5
7. QUALITY OF MERCHANDISE
(a) Licensee agrees that the Licensed Articles shall be of
satisfactory quality sufficient to meet consumer expectations. The Licensed
Articles will be of such style and appearance as to be appropriate for and
suited to their exploitation to the best advantage and to the protection and
enhancement of the Name and the good will pertaining thereto. The Licensee
warrants that the Licensed Articles will be designed, produced, sold and
distributed in accordance with all applicable United States laws, rules and
regulations, including, without limiting the generality of the foregoing, the
Federal Food, Drug and Cosmetic Act, the Federal Hazardous Substance Act (FHSA),
the Flammable Fabrics Act, the Consumers Products Safety Act, with all other
state and local laws and with the ASTM Standard Consumer Safety Specifications
on Toy Safety (Toy Manufacturers of America Voluntary Toy Safety Standard)
(collectively, the "Acts and Standards").
In order to insure that the Licensed Articles meet the above
standards, Licensee shall, prior to the date of first distribution of the
Licensed Articles, submit to the Licensor a "test plan" which lists all of the
applicable Acts and Standards and which contains a certification by the Licensee
that no other Acts and Standards apply to the Licensed Articles. The test plan
shall describe in detail the procedures used to test the Licensed Articles, and
Licensee shall submit certificates in writing that the Licensed Articles conform
to the applicable Acts and Standards. Upon request by the Licensor, Licensee
shall provide Licensor with specific test data or laboratory reports.
Without limiting the generality of the foregoing, all Licensed
Articles must conform to the following standards: General: Materials are not to
be toxic or corrosive, or be an irritant or strong sensitizer as defined in
Paragraph 1500.3 of the FHSA, when tested in accordance with Paragraphs 1500.40,
1500.41 and 1500.42.
Solid parts of materials, including plastic parts, are not to be
flammable as defined in Paragraph 1500.3 of the FHSA, when tested in accordance
with Paragraph 1500.44. Fabrics must pass the requirements of the Flammable
Fabrics Act 16 C.F.LR. 1610.
Lead content of surface coatings must be in accordance with
Paragraph 1500.17 of the FHSA. Heavy materials in surface coatings on toys must
be in accordance with the requirements of the ASTM Standard Consumer Safety
Specification on Toy Safety.
Licensor shall approve the test plan in writing, prior to the date
of first distribution. Tests on Licensed Articles must be performed by a
national testing laboratory or an independent laboratory that is nationally
approved unless another laboratory is otherwise approved by the Licensor. Such
testing laboratory or independent laboratory will provide written test reports
indicating that the Licensed Articles conform to the applicable Acts and
Standards.
To this end, Licensee shall, before selling and distributing any of
the Licensed Articles, furnish to Licensor free of cost for its written
approval, a reasonable number of samples of each Licensed Article, its cartons,
containers and packing and wrapping material. The quality and style of such
Licensed Articles as well as of any carton, container or packing or wrapping
material, shall be subject to the approval of Licensor. After samples have been
approved pursuant to this paragraph, Licensee shall not depart therefrom in any
material respect without Licensor's prior written consent, and Licensor shall
not withdraw its approval of the approved samples except on sixty (60) days'
prior written notice to Licensee, unless the same shall be defective or harmful,
in which event, no such prior notice shall be required. Licensee shall, without
charge, furnish Licensor with thirty-six (36) samples of each article
manufactured hereunder upon completion of the first production run thereof, and
Licensee shall not distribute same until it receives Licensor's written
approval. Any item submitted to Licensor shall not be deemed approved unless and
until the same shall be approved by Licensor in writing. From time to
6
time after Licensee has commenced selling the Licensed Articles, and upon
Licensor's written request, Licensee shall furnish without cost to Licensor, not
more than ten (l0) additional random samples of each Licensed Article being
manufactured or sold by Licensee hereunder, together with any cartons,
containers and packing and wrapping material used in connection therewith.
Should Licensor require additional samples for any reason, Licensor may purchase
such at Licensee's cost. Sale of any Licensed Article by Licensee, the quality
of which has not been specifically approved by Licensor as hereinabove provided,
shall be deemed to constitute a material breach of this agreement.
(b) Manufacturing Ethics. Licensee acknowledges that Licensor has a
significant interest in ensuring that the Licensed Articles are manufactured,
distributed, and sold in accordance with the highest ethical and business
standards, and therefore confirms that its strict compliance with the following
standards and requirements shall be deemed material to this License Agreement.
(i) Licensee, as well as any third party manufacturer of the
Licensed Articles (as permitted under Paragraph 20 hereinbelow), will comply
with the national laws of any country in which the Licensed Articles, or any
component thereof, are manufactured, any local laws, regulations, or standards
applicable to such manufacturing, and any industry standards which have been
established in said location (hereinafter, collectively, "Local Manufacturing
Laws and Standards"). The Local Manufacturing Laws and Standards should include,
but not be limited to, laws concerning import, export, certificate licenses,
quota allocations, country of origin, safety (including fire code rules),
employment standards, wages and benefits, and employee health and safety.
(ii) The employment or use by Licensee, or by any Paragraph 20
third party manufacturer, of children for the manufacture, assembly, or
conversion of the Licensed Articles, or any components thereof, either directly
or indirectly, will not be permitted hereunder, except in accordance with Local
Manufacturing Laws and Standards with respect to child labor. In countries where
there are no existing Local Manufacturing Laws and Standards for child labor a
manufacturer's suitability hereunder should be evaluated carefully, taking into
account regional and United States standards.
(iii) No manufacturer of the Licensed Articles will use forced
or prison labor. Manufacturers must maintain a strict policy of employment on a
voluntary basis.
(iv) All manufacturers of the Licensed Articles shall comply
with Local Manufacturing Laws and Standards concerning working hours and
compensation. In countries where there are no such existing Manufacturing Laws
and Standards, a manufacturer's suitability hereunder should be evaluated
carefully, taking into account regional and United States standards.
(v) All manufacturers of the Licensed Articles shall ensure
that all employees have a healthy, safe working environment. All manufacturing
locations should be well-ventilated, comfortable and well lit. Fire exits should
be well-identified and training in emergency evacuation must be provided by
manufacturers to all employees. Manufacturers should maintain a written safety
policy which should be available for review by Licensor. Provision of
appropriate safety equipment and instruction in its use is strongly encouraged.
Manufacturers will provide adequate medical assistance in the case of
emergencies, and, to the extent practicable, shall train employees in first aid,
health, and hygiene. Manufacturers shall not employ unreasonable mental or
physical disciplinary practices, and shall provide employee benefits, such as
living quarters and meals which are adequate to meet the standards of the job,
if appropriate.
(vi) Manufacturers of Licensed Articles must behave and
conduct business in an ethical and proper manner, and shall not use gifts or
favors to influence employees of either Licensor or Licensee or to influence
government officials or customs agents.
7
(vii) Licensee shall make best efforts to choose only
manufacturers for the production of the Licensed Articles that seek to minimize
waste, recycle raw materials, properly and safely dispose of toxic material, and
otherwise maintain sound environmental programs and practices. Furthermore,
Licensee shall make best efforts to achieve all such goals in its own
manufacturing operations, if any.
(viii) In order to assure Licensor of Licensee's compliance
with the foregoing, within six (6) months of the execution of this Agreement,
and within three (3) months of the execution of any third party Manufacturer's
Agreement pursuant to Paragraph 20 hereinbelow, Licensee agrees to supply
Licensor with a notarized certification as to such compliance substantially in
the form of Exhibit 2, attached hereto.
8. TRADEMARK AND COPYRIGHT PROTECTION
(a) Labeling. As a condition to the grant of the rights hereunder,
Licensee agrees that it will cause to appear on or within each Licensed Article
sold by it and on or within all advertising, promotional or display material
bearing the Name, the notice as set forth in the License Agreement Summary,
Paragraph 8(a). In the event that any Licensed Article is marketed in a carton,
container and/or packing or wrapping material bearing the Name, such notice
shall also appear upon the said carton, container and/or packing or wrapping
material.
(b) Approval. Each and every tag, label, storyboard, copy and layout
imprint or other device containing any such notice, and all advertising,
promotional or display material bearing the Name, shall be submitted by Licensee
to Licensor for its written approval prior to use by Licensee. Approval by
Licensor shall not constitute a waiver of Licensor's rights or Licensee's duties
under any provision of this agreement. It is imperative that Licensee use
Licensor's approval form with each submission for Licensor's approval.
Otherwise, Licensor is not under any obligation to review Licensee's submission.
(c) Ownership. All right, title and interest in and to all
copyrights and trademarks embodying the Name or derived from the creation,
manufacture or sale by Licensee of the Licensed Articles, and all copyright and
trademark registrations based thereon, shall be in Licensor's name and shall be
owned exclusively by Licensor, and Licensee covenants and agrees that it shall
have no interest in or claim to the Name or to any of the copyrights and
trademarks associated therewith, except to the limited extent of the license to
use same pursuant to this agreement, and subject to its terms and conditions.
Licensee further agrees to provide Licensor with the date of the first use of
the Licensed Articles in interstate and in intrastate commerce and to provide
Licensor with all necessary documents, assignments and signatures which Licensor
may request for the purpose of perfecting Licensor's title to all such copyright
and trademark registrations. All uses of the trademarks by Licensee hereunder
shall inure to Licensor's benefit. Licensee acknowledges that Licensor is the
exclusive owner of all of the trademarks and the trademark rights created by
such uses. Without limiting the foregoing, Licensee hereby assigns to Licensor
all the trademarks and trademark rights created by such uses, together with the
good will attaching to that part of the business in connection with which the
trademarks are used. Licensee agrees to execute and deliver to Licensor, such
documents as Licensor requires to register Licensee as a Registered User or
Permitted User of the trademarks and to follow Licensor's instructions for
proper use thereof in order that protection and/or registrations for the
trademarks may be obtained or maintained.
9. PROMOTIONAL MATERIAL
(a) In all cases where Licensee desires artwork involving Licensed
Articles to be executed, the cost of such artwork and the time for the
production thereof shall be borne by Licensee. All artwork and designs involving
the Name, or any reproduction thereof, shall be subject to prior written
approval of Licensor, and notwithstanding their invention or use by Licensee, be
and remain the property of Licensor, and Licensor shall be entitled to use the
same and to license the use of the same by others.
8
(b) Licensor shall have the right, but shall not be under any
obligation, to use the Name and/or the name of Licensee so as to give the Name,
Licensee, Licensor and/or Licensor's programs full and favorable prominence and
publicity.
(c) Licensee agrees not to offer for sale or advertise or publicize
any of the Licensed Articles on radio, broadcast, print or television without
the prior written approval of Licensor. Licensee also agrees to submit to
Licensor for advance approval, for the purpose of licensed character design
evaluation, designed sketches of all advertising and other publicity material
which Licensee proposes to use in connection with the promotion and sale of the
Licensed Articles.
10. DISTRIBUTION
(a) Licensee agrees that during the term of this license it will
diligently and/or continuously manufacture, distribute and sell the Licensed
Articles in Substantial Quantities and that it will make and maintain proper and
adequate arrangements for the distribution of the Licensed Articles. For
purposes of this Agreement, "Substantial Quantities" shall mean sufficient
quantities to meet at least Licensee's average order level for its regular
distributors and/or customers for similar articles of the type licensed
hereunder.
(b) Licensee agrees that it will sell and distribute the Licensed
Articles outright at a competitive price and at not more than the price
generally and customarily charged the trade by Licensee, and not on an approval,
consignment or sale or return basis, and only to jobbers, wholesalers and
distributors for sale and distribution to mass market retail stores, and to mass
market retail stores for sale and distribution direct to the public and through
no other distribution channel. Licensee shall not, without the prior written
consent of Licensor, sell or distribute Licensed Articles to jobbers,
wholesalers, distributors, retail stores or merchants whose sales or
distribution are or will be made for publicity or promotional tie-in purposes,
combination sales, premiums, give-aways, or similar methods of merchandising, or
whose business methods are questionable. Licensee is expressly prohibited from
making door to door sales. In the event any sale is made at a special price to
any of Licensee's subsidiaries or to any other person, firm or corporation
related in any manner to Licensee or its officers, directors or major
stockholders, there shall be a royalty paid on such sales based upon the price
generally charged the trade by Licensee.
(c) Licensee agrees to sell to Licensor such quantities of the
Licensed Articles at as low a rate and on as good terms as Licensee sells
similar quantities of the Licensed Articles to the general trade.
11. RECORDS
Licensee agrees to keep accurate books of account and records
covering all transactions relating to the license hereby granted, and Licensor
and its duly authorized representatives shall have the right at all reasonable
hours of the day to an examination of said books of account and records and of
all other documents and materials in the possession or under the control of
Licensee with respect to the subject matter and terms of this agreement, and
shall have free and full access thereto for said purposes and for the purpose of
making extracts therefrom. All books of account and records shall be kept
available for at least two (2) years after the termination of this license. In
the event that Licensor's duly authorized representatives shall discover a
discrepancy of 5% or more pursuant to any such examination, Licensee shall pay
to Licensor the cost of such examination. The fee for said examination shall be
One Thousand United States Dollars ($1,000.00) per day, but in no event shall
Licensee be charged in excess of Four Thousand United States Dollars ($4,000.00)
for any individual examination. Royalties found to be due as a result of
Licensor's examination of the Licensee's books of accounts should be paid
immediately with interest at an interest rate of 1-3/4% per month, or the
highest rate permitted by law, from the date the royalty amount should have been
paid to the Licensor.
9
12. BANKRUPTCY, VIOLATION, ETC.
(a) If Licensee shall not have commenced in good faith to
manufacture and distribute in Substantial Quantities all the Licensed Articles
by the initial on sale date, as defined in Paragraph 12(a) of the License
Agreement Summary, or if at any time thereafter in any calendar quarter Licensee
fails to sell any of the Licensed Articles (or any class or category of the
Licensed Articles), Licensor, in addition to all other remedies available to it
hereunder, may terminate this license with respect to any Licensed Articles or
class or category thereof which have not been manufactured and distributed
during such calendar quarter, by giving notice of termination to Licensee. Such
notice shall be effective when mailed by Licensor.
(b) If Licensee becomes insolvent, or if a petition in bankruptcy or
for reorganization is filed by or against it, or if any insolvency proceedings
are instituted by or against it under any state or federal law, or if it makes
an assignment for the benefit of its creditors, or if a receiver is appointed
for its property and business and remains undischarged for a period of fifteen
(l5) days, or if it liquidates its business in any manner whatsoever, or if any
distress, execution or attachment is levied on any of its assets and remains
undischarged for a period of fifteen (l5) days, or if Licensee abandons the
manufacture of the Licensed Articles, Licensor shall have the right, if it so
elects, to terminate this agreement and the license hereby granted, upon ten
(l0) days' notice in writing to Licensee. Upon the expiration of such ten (l0)
days, this agreement and the license hereby granted shall cease and terminate,
but Licensee shall nevertheless continue to be liable to Licensor by reason of
its said default.
(c) If Licensee shall violate any of its other obligations under the
terms of this agreement, and each of such obligations shall be deemed to be
material, Licensor shall have the right to terminate the license hereby granted
upon ten (l0) days' notice in writing, and such notice of termination shall
become effective unless Licensee shall completely remedy the violation within
the ten-day period and satisfy Licensor that such violation has been remedied.
(d) Termination of the license under the provisions of Paragraph l2
shall be without prejudice to any rights which Licensor may otherwise have
against Licensee, including the right to recover for damages caused it by
Licensee's breach. Upon the termination of this license, notwithstanding
anything to the contrary herein, all royalties on sales theretofore made and all
unpaid balances of all minimum guarantees shall become immediately due and
payable and no minimum royalties shall be repayable.
13. FINAL STATEMENT UPON TERMINATION OR EXPIRATION
Sixty (60) days before the expiration of this license and again,
within ten (l0) days after such expiration (or, in the event of termination of
this license, ten (l0) days after receipt of notice of termination or the
happening of the event which terminates this agreement where no notice is
required), a statement showing the number and description of articles covered by
this agreement on hand or in process shall be furnished by Licensee to Licensor.
Licensor shall have the right to take a physical inventory to ascertain or
verify such inventory and statement, and refusal by Licensee to submit to such
physical inventory by Licensor shall forfeit Licensee's right to dispose of such
inventory as provided in Paragraph l4 hereof, Licensor retaining all other legal
and equitable rights Licensor may have in the circumstances.
14. DISPOSAL OF STOCK UPON EXPIRATION
After expiration of this agreement, Licensee, except as otherwise
provided in this agreement, may dispose of Licensed Articles which are on hand
or in process at the time of expiration, for a period of sixty (60) days after
expiration, provided advances and royalties with respect to that period are paid
and statements are furnished for that period in accordance with Paragraph 2.
Notwithstanding anything to the contrary herein, Licensee shall not manufacture,
sell or dispose of any Licensed Articles after termination hereof, based on the
failure of Licensee to affix notice of copyright, trademark or service mark
registration or any other notice to the Licensed Articles, cartons, containers,
or packing or wrapping material, or advertising, promotional or display
10
material, or because of the departure by Licensee from the quality and style
approved by Licensor pursuant to Paragraph 7, or by reason of termination for
any other causes set forth in Paragraph 12 above. In the event of such
termination by Licensor by reason of any cause contained in Paragraph l2,
Licensee, its receivers, representatives, trustees, agents, administrators and
successors shall have no further right to sell, exploit or in any way deal in or
with any of the Licensed Articles or any advertising matter, packing material,
boxes, cartons or other documentation relating thereto, except after having
obtained express written consent of and instructions with reference thereto from
Licensor.
15. EFFECT OF TERMINATION OR EXPIRATION
Upon and after the expiration or termination of this license, all
rights granted to Licensee hereunder shall forthwith revert to Licensor and
Licensee will refrain from further use of the Name or any further reference to
it, direct or indirect, or anything deemed by Licensor to be similar to the Name
in connection with the manufacture, sale or distribution of Licensee's products,
except as provided in Paragraph l4.
16. LICENSOR'S REMEDIES
(a) Licensee acknowledges that its failure (except as otherwise
provided herein) to commence in good faith to manufacture, distribute and sell
in Substantial Quantities any one or more of the Licensed Articles by the
initial on sale date, and to continue during the term hereof to diligently and
continuously manufacture, distribute and sell the Licensed Articles or any class
or category thereof, will result in immediate damages to Licensor.
(b) Licensee acknowledges that its failure (except as otherwise
provided herein) to cease the manufacture, sale or distribution of the Licensed
Articles or any class or category thereof at the termination or expiration of
this agreement will result in immediate and irremediable damage to Licensor and
to the rights of any subsequent licensee. Licensee acknowledges and admits that
there is no adequate remedy at law for such failure to cease manufacture, sale
or distribution, and Licensee agrees that in the event of such failure, 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.
(c) Resort to any remedies referred to herein shall not be construed
as a waiver of any other rights and remedies to which Licensor is under this
agreement or otherwise.
17. EXCUSE FOR NONPERFORMANCE
Licensee shall be released from its obligations hereunder and this
license shall terminate in the event that governmental regulations or other
causes arising out of a state of national emergency or war or causes beyond the
control of the parties render performance impossible and one party so informs
the other in writing of such causes and its desire to be so released. In such
events, all royalties on sales theretofore made shall become immediately due and
payable, and no minimum royalties shall be repayable.
18. NOTICES
All notices and statements to be given, and all payments to be made
hereunder shall be given or made at the respective addresses of the parties as
set forth above, unless notification of change of address is given in writing
and the date of mailing shall be deemed the date the notice or statement is
given.
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19. NO JOINT VENTURE
Licensee shall not use the name or credit of Licensor in any manner
whatsoever, nor incur any obligation in Licensor's name. Nothing herein
contained shall be construed to constitute the parties joint venturers, nor
shall any similar relationship be deemed to exist between them. Nothing herein
contained shall be construed as constituting Licensee as Licensor's agent or as
authorizing Licensee to incur financial or other obligations in Licensor's name
without Licensor's special authorization in writing; and it is specifically
understood and agreed that under no circumstances shall any power granted, or
which may be deemed to be granted to Licensee, be deemed to be coupled with an
interest. It is specifically understood that the rights and powers retained by
Licensor to supervise or otherwise intervene in Licensee's activities and to
determine all matters of policy, all as hereinabove provided, are retained
because of the necessity of protecting Licensor's copyrights, trademarks,
properties and property rights generally, and specifically to conserve the good
will and good name of Licensor's company and of the Name.
20. NO ASSIGNMENT OR SUBLICENSE BY LICENSEE
This agreement and all rights and duties hereunder are personal to
Licensee and shall not, without the written consent of Licensor, be assigned,
mortgaged, sublicensed or otherwise encumbered by Licensee or by operation of
law. For purposes of this agreement, the term "assignment" shall, in addition to
the transfer of this agreement or the rights or obligations thereunder, whether
voluntarily, involuntarily, by operation of law or otherwise, be deemed to
include (i) a sale or other transfer by Licensee of all or substantially all of
its assets; (ii) the liquidation or dissolution of Licensee; (iii) the merger,
amalgamation, consolidation or reorganization of Licensee into or with another
corporation or other entity as a result of which Licensee is not the surviving
corporation; or (iv) any transaction (including any of the foregoing
transactions, as well as any in which Licensee is the surviving corporation)
which, whether by way of sale, gift or other transfer, whether involving the
Licensee or the record or beneficial owners of equity interests in the Licensee,
results in more than a twenty (20%) percent change in the voting control of
Licensee. Licensee shall not be entitled to sublicense any of its rights under
this agreement, except in the event Licensee is not a manufacturer of the
Licensed Articles, Licensee shall be, subject to the prior written approval of
Licensor, entitled to utilize a third-party manufacturer in connection with the
manufacture and production of the Licensed Articles, provided that such
manufacturer shall execute a letter in the form of Exhibit 1 attached hereto and
made a part hereof. In such event, Licensee shall remain primarily obligated
under all of the provisions of this agreement. In no event shall any sublicense
agreement include the right to grant any further sublicenses.
21. NO WAIVER
No waiver or modification of any of the terms of this agreement
shall be valid unless in writing and signed by the party to be charged. No
waiver by either party of a breach hereof or a default hereunder shall be deemed
a waiver by such party of a subsequent breach or default of like or similar
nature. Any approval or consent given by Licensor shall not constitute a waiver
of any of Licensor's rights or Licensee's duties under any provision of this
agreement. There are no representations, promises, warranties, covenants or
undertakings other than those contained in this agreement, which represents the
entire understanding of the parties. The failure of either party to enforce, or
the delay by either party in enforcing any of its rights under this agreement
shall not be deemed a continuing waiver or a modification thereof, and either
party may, within the time provided by applicable law, commence appropriate
legal proceedings to enforce any or all of such rights. No person, firm, group
or corporation (whether included in the Name or otherwise), other than Licensee
and Licensor, shall be deemed to have acquired any rights by reason of anything
contained in this agreement, except as provided in Paragraphs 5 and 20.
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22. GOVERNING LAW
This agreement shall be construed in accordance with the internal
laws of the State of Rhode Island. The parties agree that any dispute arising
hereunder shall be subject to the exclusive jurisdiction of the courts of such
State, including the United States District Court for the District of Rhode
Island, and consent to the jurisdiction thereof.
The aforesaid terms and conditions as set forth above shall only be
binding upon Licensor provided that Licensee signs and returns the License
Agreement Summary and License Agreement and Licensor countersigns same.
IN WITNESS WHEREOF, the parties hereto have caused this instrument
to be duly executed as of the day and year first above written.
TONKA CORPORATION,
a subsidiary of Hasbro, Inc. BROOKFIELD ATHLETIC COMPANY
By: /s/ Tom McGrath By: /s/ James A. Buchanan
Title: Sr. V.P.- Boys Toys Title: President, CEO
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EXHIBIT 1
CERTIFICATION
The undersigned, on behalf of BROOKFIELD ATHLETIC COMPANY (hereinafter,
"Licensee"), hereby certifies and affirms that Licensee has complied with all
obligations and requirements of Paragraph 7(b) of its Agreement, dated April 1,
1995, with Tonka Corporation regarding Manufacturing Ethics, and that Licensee
has taken sufficient steps reasonably calculated to ensure that any third party
manufacturers which it may have engaged pursuant to the Agreement are also in
compliance with said Paragraph 7(b).
AFFIRMED:
BROOKFIELD ATHLETIC COMPANY
By: /s/ James A. Buchanan
President / CEO
Subscribed and affirmed before me this 28th day of July, 1995
/s/ Meredith A. White
Notary Public
Meredith A. White
Notary Public
My Commission exp. Apr. 1, 1999
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SCHEDULE A
"Nerf" and its associated logo *
Max Force
Turbo Crusher
Liquidator
Dontcha get it
Nerf or Nothin
Get It
Get a Grip
Nothin Soft About It
Zerf Zone
Team Nerf
Nerf Gear
One Earth One Nerf
*and subsequent logos, product names and advertising/promotion phrases
as approved in writing from time to time by Licensor.
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