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