Merchandise License Agreement
"Agent for Licensor" American Champion Marketing Group, Inc.
1694 The Alameda, Suite #100
San Jose, CA 95126
Contact: Joy Tashjian
Phone: (408) 288-8199 Fax: (408) 288-8098
"Licensor" Mainframe Entertainment, Inc.
2025 West Broadway, Suite 500
Vancouver, BC
Canada, V6J 1Z6
Contact: Helen Chapman
Phone: (604) 714-2600 Fax: (604) 714-2641
"Licensee": Cutting Edge Industries
150 Martinvale Lane
San Jose, CA 95119
Contact: Michael Applebaum
Phone: (408) 574-7900 Fax: (408) 226-4199
"Effective Date" of the Agreement is upon signing.
"Properties" are the following Characters or other trademarks: ReBoot
and all related characters seen in the ReBoot television program.
"Products" that Licensee is authorized to produce is stickers and
tattoos in all sizes and types, including static cling and decals.
"Trademarks" being licensed to Licensee are ReBoot and all related
characters.
"Territory" where Licensee can sell products is The United States it's
possessions and territories and Canada.
"Distribution" is vending machines.
" Advance Royalty" is $2,500 (Two Thousand Five Dollars) due upon
signing.
"Earned Royalty" is 8% of net sales (including sales made FOB shipping
point outside territory).
"Guaranteed Royalty" is $6,000 (Six Thousand Dollars).
"Scope" is exclusive.
"Initial Sale Date" is January 1, 2001, or sooner.
"Term" of this agreement is from the Effective Date until December 31,
2003.
All products and Advertising materials will bear this notice in
complete form: ReBoot r
LICENSING AGREEMENT
This Licensing Agreement (this "Agreement") is made and entered
into as of this 19th day of May, 2000 by and between Maineframe
Entertainment Inc. a Canadian Corporation with offices at 2025 West
Broadway, Suite 500, Vancouver, British Columbia, Canada V6J-1Z6
(Licensor) and American Champion Media Inc., a corporation duly
organized and existing under the laws of the State of Deleware, located
at 1694 The Alameda, Suite 100, San Jose, California 95126 ("Agent for
Licensor") and Cutting Edge Industries, Inc. a corporation duly
organized and existing under the laws of the state of Delaware located
at 150 Martinvale Lane, San Jose, CA 95119.
The Licensor is the owner of and/or has the exclusive right to
license the ReBoot character and all related characters included in the
television program entitled " ReBoot" (collectively the "Characters")
and all the names, symbols, likeness, designs and other indicia
comprised in or associated with the Characters, and all copyrights,
including all derivative works, and trademarks which exist in the
Characters and the names and likeness of the characters ("Properties");
in the Territory
The Licensor desires to grant and the Licensee desires to obtain
a license to manufacture and sell certain Products using or based upon
the Properties;
In consideration of the mutual covenants contained herein the
parties agree as follows.
1. License To Use Properties.
(a) Grant of License. Licensor grants to Licensee a non-
transferable, license to use the Properties in connection with the
development, manufacture, marketing, distribution and sale of the
Products in the Territory and to manufacture the Products using all
present and future Characters and Properties, and the exclusive right
during the Term to distribute and sell such Products through the
Distribution Channels throughout the Territory. Except for the specific
rights, which are granted to Licensee under this Agreement, all rights
in and to the Properties are retained by Licensor. Except to the
extent set forth in paragraph 10(a) below, Licensee shall not have the
right to sublicense any of the rights granted to it under this
Agreement.
(b) Use of Licensed Properties. The Licensee will: (i) use the
Properties only on Products and Advertising Materials, as defined
below; (ii) package and sell Products only in packaging approved by
Licensor, said approval not to be unreasonably refused; (iii) refrain
from use of the Properties except under the terms of this Agreement;
(iv) notify Licensor in writing of any conflicting uses, applications
for registration or registrations of the properties or marks similar
thereto of which it has knowledge; (v) execute any documentation as may
be reasonably requested by Licensor relating to the Properties; (vi)
indicate on the Products and/or their labeling or packaging that the
Products are manufactured by Licensee, or a manufacturer as described
in paragraph 10(a), and that such manufacture is pursuant to license
from Licensor; and (vii) comply with all of Licensor's reasonable
instructions relating to the use and display of the properties.
(c) Restriction on Use of Properties. The Properties, either in
whole or in part, will not be shown endorsing the Licensee or products
(including the Products) or services of Licensee or others, without the
prior written approval of Licensor
(d) Method of Sale. Licensee agrees that the products will be
sold at a competitive price that does not exceed the price customarily
charged the trade by Licensee. License agrees to offer a warranty to
purchasers of the Products substantially similar to that offered for
products competitive with Products, and in no event shorter or less
comprehensive than the warranty offered by Licensee for other similar
items produced by it.
2. Product Quality.
(a) Quality Standards. Licensee therefore agrees that prior to
the release of any Product, it will submit (3) samples of the Product
to Licensor for approval, as provided in Section 3. Once Licensor's
approval has been obtained, Licensee agrees that it will not deviate in
a material manner from the approved samples. Failure by Licensee to
materially conform its Products to the approved samples will be
considered a breach of this Agreement and upon notice of such, Licensee
agrees that it will immediately stop the manufacture, distribution and
sale of the nonconforming Products.
(b) Provision of Samples. Licensee will furnish free of charge
to Licensor twenty-four (24) samples of each Product. Upon written
request, Licensor may annually request an additional twelve (12)
samples of each Product.
(c) Inspections. Upon reasonable notice from Licensor but no
more often than once a year, Licensee shall permit representatives of
Licensor to enter Licensee's premises and plant(s) during normal
business hours for the purpose of inspecting Licensee's plant(s),
equipment, records, operation and supplies which relate to the
manufacture, distribution and sale of the Products.
(d) Product Warranty. Licensee represents and warrants that the
Products will be of good quality in design, material and workmanship
and will be suitable for their intended purpose; that no injuries,
deleterious, or toxic substances will be used in or on the Products;
that the Products will not cause harm when used in a foreseeable
manner; and that Licensee will, at its own expense, comply with all
known laws and regulations, including those relating to the operation
of Licensee's plants, the manufacture, sale and distribution of the
Products, including the labeling thereof and including safety standards
and testing of the Products, as may be required by applicable law.
3. Approval Procedures.
(a) Approval of Products. Prior to producing Product for sale,
Licensee will submit to Agent for its review and written approval,
three (3) identical production samples of the Product, and the address
of the production facilities where the Product will be produced all
information of which will be kept confidential.
(b) Approval of Advertising Materials. With respect to all
advertising and promotional materials and all packaging wrapping, and
labeling materials for the Products (including, but not limited to,
catalogs, sales shoots, package inserts, hang tags, and displays) which
make any use of or reference to the Properties ("Advertising
Materials"), Licensee will submit three (3) prior to the final printed
samples of the Advertising Materials where feasible (as for example, in
the case of labels, hang tags, printed brochures, catalogs, and the
like) to Licensor for its review and written approval.
(c) Approval Standards. Licensor shall have the right, acting
reasonably, to approve or disapprove any Products or Advertising
Materials.
(d) Time for Approval. Licensor agrees to inform Licensee of its
approval or refusal of each Product, Advertising Material or other item
within ten (10) business days of receipt of same. Any refusal must be
accompanied by clear and specific written explanations as to the
corrective measures that Licensor reasonably requires for Licensor to
subsequently approve the relevant item. In the event that Licensor
does not inform Licensee of its refusal or does not provide such
written explanations within such ten (10) business day period, Licensor
shall be deemed to have not approved that particular item. However,
after such ten (10) business day period, Licensee will implement
corrective measures requested by Licensor provided that Licensee is
able to effect such corrective measures without delaying development of
any of the items.
(e) Artwork for Properties. If Licensee requests Licensor to
furnish it with any artwork or copies of material other than the style
guide relating to the Properties, Licensee agrees to reimburse Licensor
for its costs of supplying such materials to Licensee, to the extent
Licensor is able to furnish such materials.
(f) Translations. All translations of written material used on
or in connection with the Products or Advertising Materials shall be
accurate.
4. Sale of Products.
(a) Exploitation of Rights. Licensee agrees that during this
Agreement, it will diligently distribute, ship and sell all of the
Products in the Territory and that it will use its best efforts to
manufacture the Products in sufficient quantities to meet the
reasonably anticipated demand in the Territory. Licensee agrees to use
commercially reasonable efforts to promote and sell the Products..
(b) Sale to Licensor. Licensee agrees to sell to Licensor, on
request Product at Licensee's cost for such Product. No royalties will
be due on sales to Licensor and the Licensor shall not be entitled to
resell any such Products.
5. Protection of the Properties.
(a) Registrations. Licensor shall have the right, in its sole
discretion, to file trademark, design, patent or other applications in
the Territory, relating to the use or proposed use by Licensee of any
of the Properties and/or to record this Agreement. Such filings will
be made in the name of the Licensor or in the name of any third party
selected by Licensor, provided any dealings with the Properties by
Licensor or third parties does not in any way diminish the rights
herein granted to the Licensee.
(b) Trademark Use For Licensor's Benefit. All uses of the
names, symbols, designs and other works comprised in Properties
("Trademarks") by Licensee shall inure to the benefit of the Licensor,
which shall own all trademarks and trademark rights and all copyrights
created by such uses. To the extent Licensee acquires any rights to
any of the Copyrights and Trademarks, Licensee hereby assigns and
transfers to Licensor and agrees to execute any documentation relating
to such assignment.
(c) Other Uses of Trademarks. Licensee shall not use any of the
Trademarks in combination with any other trademark, word, symbol,
letter, or design, or as part of its company name or in connection with
any product other than the Products. Further, Licensee agrees not to
adopt any trademark, trade name, design, logo or symbol which, in
Licensor's opinion, is similar to or likely to be confused with any of
the Trademarks. Licensee shall be entitled to use its trademarks and
shall be entitled to permit its authorized subcontractors' to use their
trademarks on the Products and on their various related packaging,
promotional and advertising materials, subject to reasonable approval
of the Licensor.
(d) Copyright Protection. Licensee recognizes the importance to
Licensor of preserving copyright protection and registrations therefor
on the Properties and all works relating to the Properties, including
new works and derivative works ("Copyrights"), and the importance of
securing copyright protection for the products and Advertising
Materials which constitute "new works" or derivative works" for
copyright law purposes, and for all reproductions of the Properties
which appear on the Products or in the Advertising Materials.
Therefore, Licensee's license to manufacture, distribute and sell
products and to display Advertising Materials is expressly conditioned
upon Licensee's agreeing to place a copyright notice(s) in the name(s)
specified by Licensor on all Products and Advertising Materials. Save
and except for the copyright notices of the Licensee or its third party
licensors pertaining to the software programs and source code included
in the Products, which software programs and source codes shall be
owned by the Licensee or its third party licensors, as the case may be,
Licensee agrees that it will not affix to the Products or the
Advertising Materials any other copyright notice in its name or the
name of any other person, firm, or corporation, except as may be
reasonable approved by Licensor. Licensee acknowledges that proper
copyright notices must be permanently affixed to all products and
Advertising Materials and to any portions of products or Advertising
Materials intended to be used separately by the ultimate purchaser or
user. Such notices will be sufficient in size, legibility, form,
location, and permanency to comply with both the United States
copyright laws and also the copyright notice requirements of the
Universal Copyright Convention.
(e) Assignment by Licensee The Licensee hereby sells, assigns,
and transfers to Licensor its entire worldwide right, title, and
interest in and to all "new works", derivative and/or "joint works"
heretofore or hereafter created using all or any portion of the
Properties including, but not limited to the Copyrights and renewal
copyrights thereon. If parties who are not employees of Licensee
living in the United States make or have made any contribution to the
creation of a work, so that such parties might be deemed to be
"authors" as that term us used in present or future United States
copyright statutes, Licensee agrees to obtain from such parties a full
assignment of rights so that the foregoing assignment by Licensee shall
vest in Licensor full rights in the work, free of any claims,
interests, or rights of other parties. Licensee will not permit any of
its employees to obtain or reserve any rights as "authors" of such
works and agrees to furnish Licensor with full information concerning
the creation of new works and/or derivative works and with copies of
assignments of rights obtained from other parties, and to execute,
without charge, any documents requested by Licensor for such purposes.
(f) Notices. The Licensee agrees to affix or to cause its
authorized manufacturing sources to affix to both the Products and
Advertising Materials notices in the format shown on Page 1 or as
otherwise reasonably requested by Licensor in relation to Licensor's
trademark, copyright, patent or other protection. The Licensee agrees
that it will not distribute or sell, not authorize others to distribute
or sell, any Products or Advertising Materials which do not carry
copyright and other notices meeting the requirements of this section.
If product is approved by Licensor and trade mark and/or copyright
changes requested result in Licensee incurring expenses due to
production costs Licensor agrees to pay these costs.
(g) Acknowledgement of Validity. Subject to the rights granted
to the Licensee pursuant to this Agreement, Licensee shall not,
directly or indirectly, in any way dispute or impugn the validity of
the Trademarks, Copyrights or Properties, or Licensor's sole ownership
and right to use and control the use of the Trademarks, Copyrights and
Properties during the term of this Agreement and thereafter. Licensee
will not do or knowingly permit to be done and action or thing which
will in any way impair Licensor's rights in and to the Trademarks,
Copyrights and Properties.
6. Infringements.
(a) Infringement by Third Parties. When Licensee learns that a
party is making unauthorized use of the rights granted to the Licensee
hereunder, Licensee agrees promptly to give Licensor written notice
containing full information of which it is aware with respect to the
actions of such party. Licensor shall immediately take all actions
which are necessary to defend and assert the rights granted to the
Licensee hereunder. If Licensor fails to take the required actions,
Licensee shall be entitled but not obligated to take such actions and
all costs and expenses involved in same shall be borne by Licensor and
may be set off against payments owed to Licensor. Licensee agrees to
cooperate with Licensor, at Licensor's expense, in connection with any
action taken by Licensor to terminate infringements.
(b) Claims. If a claim is made or suit is brought against
Licensor or Licensee by a party asserting rights in the Properties, or
names or designs similar thereto, or if either party hereto learns that
another party has or claims rights which would or might conflict with
the proposed or actual use of some or all of the Properties by
Licensee, Licensee agrees either to make responsible modifications at,
in its use of the Properties as requested by Licensor, at Licensors
expense or to discontinue the use of the allegedly infringing part of
the Properties in the country of the Territory in question on the
particular Products which are involved, if Licensor, in its sole
discretion, considers such action necessary or desirable to resolve or
settle the claim or suit to eliminate or reduce the threat of a claim
or suit by such party. In no event shall Licensee have the right to
acknowledge the validity of such a claim, to obtain or seek a license
from such party, or to take any other action which might impair the
ability of Licensor to contest the claim. Licensor shall have the
right to participate fully at its own expense in the defense of any
claim or suit instituted against Licensee with respect to the use of
the Properties by Licensee.
7. Indemnifications.
(a) Licensee's Indemnification. Licensee agrees to indemnify
and hold Licensor harmless, from any and all claims, liabilities,
judgements, penalties, losses, costs, damages, and expenses resulting
therefrom excluding lost profits, made, claimed or obtained by third
parties and arising out of (i) the warranted exercise by Licensor of
its termination rights in Section 10. (b) against third parties
appointed by Licensee to manufacture or distribute the Products; and
(ii) Licensee's material failure to comply with the material terms
hereof. Claims based upon the use of the Properties by Licensee in
manner which had been previously approved by Licensor or which is in
material compliance with the terms of this Agreement are expressly
excluded from Licensee's indemnity of Licensor.
(b) Licensor's Indemnification. Licensor agrees to indemnify
and hold Licensee harmless from any and all claims, liabilities,
judgements, penalties, losses, costs, damages, and expenses resulting
therefrom excluding lost profits, incurred by Licensee or made by third
parties asserting rights in the Properties as used on Products, when
use of the Properties by Licensee has been in strict accordance with
the terms of this Agreement.
(c) Claims Procedures. With respect to the forgoing
indemnification's; (i) each party agrees promptly to notify and keep
the other fully advised with respect to such claims and the progress
suits in which the other party is not participating; (ii) each party
shall have the right to assume, at its sole expense, in any suit
instituted against it and to approve any attorney's selected by the
other party at their sole expense to defend it, which approval shall
not be unreasonably withheld or delayed; and (iii) a party assuming the
defense of a claim or suit against the other party shall not settle
such a claim or suit without the prior or written approval of the other
party, which shall not be unreasonably withheld.
8. Insurance.
(a) Insurance Required. The Licensee agrees during the term
hereof and for as long as Products are sold by Licensee to end users or
to intermediaries for sale to end users, to obtain and maintain at its
own cost from an insurance company acceptable to Licensor, standard
Product Liability Insurance, and Advertising Insurance, the form of
which must be acceptable to Licensor, naming Licensor, its subsidiaries
and affiliates, and their directors, officers, agents, employees,
assignees, and successors as additional named insureds.
(b) Products Liability Insurance. Licensee's product and
contractual liability insurance policy shall provide coverage for any
and all losses, expenses, claims, demands, causes of action and
settlements, including attorney's fees, allegedly arising out of any
contractual liability or any defects in the Products or any material
used in connection therewith, their failure to perform, or any use
thereof. The amount of coverage shall be a minimum of $1,000,000
combined single limit with no deductible amount, for each single
occurrence for bodily injury and/or for property damage or contractual
liability.
(c) Certificate of Insurance. Within thirty (30) days after the
execution of this Agreement, Licensee will provide a certificate to
Licensor issued by Licensee's carrier confirming that such policy has
been issued and is in full force and effect and provides coverage as
required by this Section 8., and also confirming that before any
cancellation, modification, or reduction in coverage of such policy,
the insurance company will give Licensor thirty (30) days prior written
notice thereof. The policy (s) will include a provision that it will
be deemed primary insurance and any insurance obtained by Licensor will
be excess insurance. In no event will Licensee manufacture, offer for
sale, sell, advertise, promote, ship and/or distribute Products prior
to the receipt by Licensor of such evidence of insurance.
9. Royalties.
(a) Guaranteed and Advance Royalties. Licensee agrees to pay
Licensor a Guaranteed Royalty (as described in Section 1 of Schedule A
attached hereto), and on execution of this Agreement to pay Licensor
the nonrefundable Advances (as described in Section 2 of Schedule A
attached hereto) which shall be recouped against royalties. No portion
of the Advance or Guaranteed Royalty will be refundable to Licensee on
termination or expiration of this Agreement.
(b) Earned Royalty. Licensee agrees to pay Licensor the Earned
Royalty of eight percent (8%) on Net Revenues of the Products. "Net
Revenues" as used herein shall mean the total revenue actually received
by Licensee from sales of the Product itself. Royalties will nor be
paid on any taxes.
Licensee's total invoice price less actual returns, of the Net
Revenues being reported. Whenever Products are transferred in whole or
in part in transactions in which some or all of the consideration is
non-monetary, or where the transferee is affiliated with: Licensee, the
transferee shall be deemed to be made at the fair market price for the
distribution channel during the quarter in which the shipments to such
persons are made.
(c) Reports. Licensee shall pay the advances in the amounts and
on the dates and upon the terms and conditions specified in Section 2
of Schedule A. Licensee shall account to Licensor with regard to
royalties due within thirty (30) days following the conclusion of each
calendar quarter in which the Product is distributed. Each such
accounting ("Statement(s)") shall contain the appropriate calculations
relating to the computation of payments payable to Licensor under this
Agreement and such payments shall be remitted and paid to Licensor with
the particular Statement indicating such amount due. All Statements
hereunder shall be deemed rendered when deposited, postage prepaid, in
the United States mail, addressed to Licensor attention Joy Tashjian
at: American Champion Entertainment, Inc. Each Statement and all items
contained therein shall be deemed correct and shall be conclusive and
binding upon Licensor upon the expiration of one year (1) year from the
date rendered, unless, within such one (1) year period, Licensor
delivers written notice to Licensee objecting to one or more items of
such Statement and such notice specifies in reasonable detail the items
to which Licensor objects and the nature of and reason for Licensor 's
objection thereto. In such event Licensor may exercise its audit
rights under this Section, provided said audit commences within three
(3) months from the date Licensee receives written notice objecting to
the Statement. Licensee shall keep books of account relating to
licensing and distribution of the Products on the same basis and in the
same manner and for the same periods as such records are customarily
kept by Licensee. Licensor may, upon reasonable notice and at its own
expense, audit the applicable records at Licensee's office, in order to
verify any Statements rendered hereunder. Any such audit shall be
conducted only by a certified public accountant whom is not held on
retainer by Licensor nor working on a contingency fee and shall take
place only during reasonable business. All of the information contained
in Licensee's books and records shall be kept confidential except to
the extent necessary to permit enforcement of Licensor 's rights
hereunder, and Licensor agrees that such information inspected and/or
copied on behalf of Licensor hereunder shall be used only for the
purposes of determining the accuracy of the Statements, and shall be
revealed only to such employees, agents and/or representatives of
Licensor as necessary to verify the accuracy of the Statements except
to the extent necessary to permit enforcement of Licensor 's rights
hereunder. Licensee shall be furnished with a copy of Licensor 's
auditor report within thirty (30) days after the completion of such
report. In no event shall an audit with respect to any Statement
rendered hereunder commence after one year after the date of the
relevant Statement nor shall audits be made hereunder more frequently
than one (1) time annually nor shall the records supporting any such
Statements be audited more than once. In addition, Licensee shall be
responsible for all reasonable documented costs incurred by Licensor to
conduct such an examination should an underpayment of ten (10%) percent
or greater be proven discovered. All royalties will be due and payable
in US dollars, unless otherwise specified by Licensor.
(d) Taxes. If any taxes imposed by governments other than the
U.S based on funds remitted to Licensor are required to be paid by
Licensee on behalf of Licensor and Licensee in fact pays such taxes,
Licensee may deduct these from the royalties due, provided that
Licensee furnishes Licensor with documentation sufficient to enable
Licensor to receive a credit for such taxes from the U.S government and
that Licensor is able to claim the benefit of such credit. Licensee
agrees to reimburse Licensor for any taxes withheld from royalties for
which Licensor does nor receive such a credit.
(e) Retention of Records. Licensee shall keep full and accurate
books of account relating to licensing and distribution of the Products
on the same basis and in the same manner and for the same periods as
such records are customarily kept by Licensee. Licensor may, upon
reasonable notice and at its own expense, audit the applicable records
at Licensee's office, in order to verify any Statements rendered
hereunder. Any such audit shall be conducted only by a certified
public accountant whom is not held on retainer by Licensor nor working
on a contingency fee and shall take place only during reasonable
business. All of the information contained in Licensee's books and
records shall be kept confidential except to the extent necessary to
permit enforcement of Licensor 's rights hereunder, and Licensor agrees
that such information inspected and/or copied on behalf of Licensor
hereunder shall be used only for the purposes of determining the
accuracy of the Statements, and shall be revealed only to such
employees, agents and/or representatives of Licensor as necessary to
verify the accuracy of the Statements except to the extent necessary to
permit enforcement of Licensor 's rights hereunder. Licensee shall be
furnished with a copy of Licensor 's auditor report within thirty (30)
days after the completion of such report. In no event shall an audit
with respect to any Statement rendered hereunder commence after one
year after the date of the relevant Statement nor shall audits be made
hereunder more frequently than one (1) time annually nor shall the
records supporting any such Statements be audited more than once.
(f) Audits. If any audit of Licensee's books and records proves
that License has failed properly to account and pay royalties owing to
Licensor hereunder, and the amount of any royalties which Licensee has
failed properly to account for and pay for any quarterly accounting
period exceeds, by ten percent (10%) or more, the royalties actually
accounted for and paid to Licensor for such period, Licensee shall, in
addition to paying Licensor such past due royalties, reimburse Licensor
for its reasonable documented costs incurred in conducting the audit,
together with interest on the overdue royalty amount at an annual rate
of two percent (2%) over the prevailing prime interest rate fixed and
published by The First National Bank of Chicago, Illinois in effect as
of the date on which such overdue royalty amount should have been paid
to Licensor.
10. Agreements with Manufactures and Distributors.
(a) Manufacturers and Distributors. Licensee shall have the
right to arrange with others to manufacture the Products or components
thereof for the exclusive sale, use, and distribution by Licensee, or
to serve as a distributor, localizer, translator promoter or sales
representative for the Products. Licensee agrees to enter into written
agreements with all manufactures and distributors and agrees to
incorporate into such written agreements all of the provisions
contained herein which relate to the production, distribution and sale
of the Products or are otherwise relevant to the third party's
performance as distributor or manufacturer, including an express
agreement by the parties that Licensor is a third party beneficiary of
the agreement. Licensee further agrees, upon request, to furnish
Licensor within thirty (30) days of execution, copies of all agreements
with such manufactures and distributors.
(b) Enforcement of Agreements. Licensee agrees strictly to
enforce its manufactures and distributors all of the provisions in such
agreements which protect Licensor's rights, to advise Licensor of any
material violations thereof which may have a detrimental effect on the
Licensor's rights to the Properties and of corrective actions taken by
the Licensee and the results thereof, and, at the request of Licensor,
to terminate such agreements if any manufacturer or distributor is in
material violation of any provisions identical or similar to the
obligations undertaken by Licensee herein.
11. Term and Termination.
(a) Term. Except as otherwise provided herein, the term of this
Agreement shall be the Term set forth in Section 3 of Schedule A of
this Agreement (the "Term"). Failure to comply with the terms set
forth in schedule A will result in Licensor's immediate termination of
this Agreement.
(b) Termination on Forty Five Days Notice. If Licensee breaches
any of the terms of this Agreement other than those specified in (a)
above, and fails to cure the breach within forty-five (45) days after
receiving written notice thereof or fails to undertake, within such
forty-five (45) day period, the necessary steps so that the breach may
be cured within a reasonable time, this Agreement will terminate at the
end of the relevant forty-five (45) day notice period.
(c) Bankruptcy or Insolvency. Licensor may terminate this
Agreement if: (i) Licensee becomes insolvent, or a petition in
bankruptcy or for reorganization is filed by or against it, or any
insolvency proceedings are instituted by or against it, which petition
or proceedings are not contested in good faith by Licensee or (ii)
Licensee makes an assignment for the benefit of its creditors, is
placed in the hands of a receiver, or liquidates its business. If
Licensor terminates this Agreement under any of the foregoing
provisions, the Licensee, its receivers, trustees, or other
representatives shall have no right to sell, exploit, or in any way
deal with the Products, Properties or the Advertising Materials, except
with the express written consent of Licensor.
(d) Effect of Termination. Termination of this Agreement shall
be without prejudice to any rights or claims which Licensor or
Licensee, as the case may be, may otherwise have against the other.
Upon termination of this Agreement, notwithstanding anything to the
contrary herein, all royalties on sales thereto made shall become
immediately due and payable to Licensor, including the Guaranteed
Royalty set forth in Schedule A
(e) Discontinuance of Use of Trademarks. upon the
expiration or termination of this Agreement, Licensee agrees
immediately to discontinue manufacturing selling, advertising.
distributing, and using the Products and Advertising Materials; to turn
over to Licensor or to destroy any molds, dies, patterns, or similar
items in its possession or under its control from which the Products
and Advertising Materials were made, as requested by Licensor, unless
it is possible to completely obliterate all references to Licensor and
the Properties, and to terminate all agreements with manufactures,
distributors, and others which relate to the manufacture, sale,
distribution, and use of the Products. If Licensor has granted rights
to another party manufacturing the same product and same channels of
distribution and Licensor requires Licensee to discontinue use of
properties and trademarks Licensee is entitled to recover monies paid
to Licensor to date
(f) Disposition of Inventory Upon Expiration. Notwithstanding
the provisions of subsection 11.(e), if this Agreement expires in
accordance with its terms and is not terminated for a breach by
Licensee, Licensee shall have the right to sell Products on hand or in
the process of manufacture as of such expiration or termination for a
period of ninety (90) days immediately following expiration, subject to
payment of royalties to Licensee on any such sales and compliance with
all the terms of this Agreement. The sell-off right granted to
Licensee is expressly conditioned on Licensee's providing Licensor with
an accurate total of all inventory of Products on hand and on
Licensor's having the right to conduct a physical inventory in order to
verify such inventory. In the event Licensee fails to provide such
inventory to Licensor, and/or refuses to permit Licensor to conduct a
physical inventory, will control. Upon expiration of the sell-off
period, all remaining Products shall upon Licensor's option be sold to
Licensor at Licensee's direct cost of manufacture, excluding overhead,
or Licensee shall destroy the Products and furnish Licensor with a
sworn certificate of destruction.
12. General Provisions.
(a) No Liability. Neither party will be liable to the other for
any loss or injury incurred or damages sustained
by the other party due to a failure on the part of a party to perform
under this Agreement, except Licensee's failure to
make payments to Licensor as provided herein, if such failure to
perform is a result of war, not labor strike or
lock-out, shortages, fire, flood, wind, storm, Act of God, governmental
control or regulation or other similar condition
beyond the party's control.
(b) Representations and Warranties. Licensor warrants and
represents that: (i) Licensor has full right and power to enter into
this Agreement and to grant the rights set forth herein; (ii) the
Characters and Properties and all associated materials will be original
or under license by Licensor; (iii) the Characters and Properties and
all associated materials will not contain any libelous or otherwise
unlawful material or violate any personal, proprietary or contractual
right of any person or entity; (iv) all third party tools used to
create the Characters and Properties and all associated materials do
not infringe on the intellectual property rights of any third parties.
Licensee warrants and represents that: (i) Licensee has full right and
power to enter into this Agreement; (ii) the packaging and marketing
materials will be original or under license by Licensee; (iii) the
packaging and marketing materials will not contain any known libelous
or otherwise unlawful material or violate any personal, proprietary or
contractual right of any person or entity; and (v) all third party
tools used to create the packaging and marketing materials do not
infringe on the intellectual property rights of any third parties.
(c) Relationship of the Parties. Nothing contained in this
Agreement and no action taken by either party to this Agreement will be
deemed to constitute any party or any of such party's employees,
agents, or representatives to be an employee, agent or representative
of any other party or will be deemed to create any partnership, joint
venture, association or syndication among or between any of the
parties, or will be deemed to confer on any party any express or
implied right, power or authority to enter into any agreement or
commitment, express or implied, or to incur any obligation or liability
on behalf of any other.
(d) Final Agreement. This Agreement sets forth the entire and
final agreement and understanding of the parties with respect to the
matter hereof. Any and all prior agreements or understandings, whether
written or oral, with respect to the subject matter of this Agreement
are terminated. This Agreement may not be modified or amended except by
an instrument in writing specifically referring to this Agreement and
executed by the parties hereto.
(e) No Waiver. No waiver, forbearance or failure by any party
of its rig ht to enforce any provision of this Agreement will
constitute a waiver or estoppel of such party's right to enforce any
other provision of this Agreement or such party's right to enforce such
provision in the future.
(f) Remedies. The right of or to be indemnified and held
harmless under Section 7. will not be exclusive, but will be in
addition to any and all other rights and remedies to which Licensor may
be entitled under this Agreement or otherwise.
(g) Notice. Any notice or other communication will be and
effective only if given in writing, evidenced by a delivery receipt,
and personally delivered or sent by facsimile, overnight courier, or
mail, postage prepaid to the addresses shown on page 1. Any notice or
other communication if given personally will be effective upon the date
shown or the delivery if given receipt. Notices directed to Licensor
will be given to both Agent and Licensor.
(h) Assignment. This Agreement will be binding upon and inure to
the benefit of the successors and assigns of the parties hereto.
Licensee and Licensor may not assign or otherwise transfer by operation
of law or otherwise, this Agreement to any entity without the express
written consent of the other party, which consent shall not be
unreasonably withheld and any attempt to do so will be null and void.
Notwithstanding the foregoing, either party may assign this Agreement
pursuant to the sale of a significant portion of its assets or
undertaking.
(i) Governing Law. This Agreement will be constructed and
enforced in accordance with the laws of the State of California, USA.
The parties agree that the exclusive jurisdiction and venue of any
action between the parties arising out of this relationship, including
disputes that may arise following termination of this Agreement, shall
be the Superior Court of California for the County of Santa Clara or
the United States District court for the Northern District of
California and each of the parties hereby submits itself to the
exclusive jurisdiction and venue of such courts for the purpose of such
an action.
(j) Submission to Jurisdiction. The Licensee hereby consents
to the jurisdiction of the courts specified above and waives any
objection based on improper venue or forum non conveniences to the
court of any proceeding in such court and waives personal service of
any and all process upon it, and consents that all such service of
process be made by mail directed to it at the address set forth on page
one of the Agreement and that service so made shall be deemed to be
completed upon the earlier of actual receipt or three (3) days after
the same shall have been sent to Licensee by Licensee's agent as set
forth below.
(k) Captions. The captions in this Agreement are for
convenience only and will not be considered a part of or be deemed to
affect the construction or interpretation of, any provision of this
Agreement.
(l) Attorney Fees. If Licensor initiates action to collect monies
due to Section 9., or to obtain Licensee's compliance with provisions
of Section 5., Licensee will pay all of Licensor's costs, including
attorney's fees, incurred in relation to such action.
13) RESERVATION OF RIGHTS
(a) The Licensor hereby reserves for itself, without restriction,
all rights not specifically granted to the Licensee herein, including
but not limited to all rights with respect to the Articles for any and
all channels of trade and/or modes of distribution and/or delivery
other than those specifically licensed hereunder, including but not
limited to premiums, giveaways, home television shopping, in-theater,
promotional arrangements or fan clubs. All rights not specifically
granted to Licensee herein are reserved to Licensor without
restriction. Without limiting the foregoing, Licensor reserves unto
itself and/or its assignees and/or designees the right to manufacture,
distribute, offer for sale, sell, advertise, promote, display and
otherwise exploit articles similar and/or identical to the Articles for
use in connection with premium sales or giveaways, promotional
giveaways, in-theater sales and sales outlet immediately adjacent to
motion picture theaters, sales at or adjacent to them parks, amusement
parks, entertainment centers or other amusement attractions, sales
through catalogue houses, home television sales (eg. home shopping
clubs), radio sales, electronic sales, by or through fan clubs and
conventions, sales through home video retail outlets, and/or sales in
or in connection with facilities owned, operated and/or controlled by
Licensor and its affiliated and/or subsidiary companies.
(b) Licensee agrees to furnish to Licensor, at its best wholesale
distributor price, any number of Articles ordered by Licensor for sale
in or in connection with any of the foregoing reserved rights.
The parties have agreed to the terms of this license contained above.
Mainframe Entertainment, Inc. Cutting Edge Industries
By: /s/ Joy Tashjian By: /s/ Michael Applebaum
President & CEO President
American Champion Marketing Group Cutting Edge Industries
Agent for Mainframe Entertainment, Inc.
Date: September 21, 2000 Date: September 21, 2000