UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) October 1, 2004
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Enesco Group, Inc.
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(Exact name of registrant as specified in its charter)
Illinois 0-1349 04-1864170
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
225 Windsor Drive, Itasca, IL 60143
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (630) 875-5300
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(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2 below):
[ ] Written communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17
CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
Item 1.01 Material Definitive Agreement.
On October 1, 2004 Enesco Group, Inc. (Enesco) entered into a worldwide,
exclusive license agreement with Jim Shore Designs, Inc. (Jim Shore) effective
January 1, 2005. Enesco's existing license agreement with Jim Shore expires at
the end of 2004. The new license agreement has an initial term through December
31, 2012, with renewal options. Under the terms of the license agreement Enesco
has a right of first refusal on new product categories.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Enesco Group, Inc.
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(Registrant)
Date October 5, 2004 By: /s/ George R. Ditomassi
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George R. Ditomassi,
Interim Chief Executive Officer
LICENSE AGREEMENT
THIS LICENSE AGREEMENT, effective as of the 1st day of January 2005, is by
and between the LICENSOR, who is identified in paragraph A below; and the
LICENSEE who is identified in paragraph B below, and comprises: (1) the
provisions stated in the following paragraphs C - J; and (2) the Standard
Provisions and Schedules I - III that are attached as Exhibit A and that are
incorporated herein by reference.
A. LICENSOR: Jim Shore Designs, Inc.
B. LICENSEE
(ENESCO): ENESCO GROUP, INC.
225 Windsor Drive
Itasca, IL 60143
C. LICENSED
PROPERTY:
WORKS: The artwork licensed to ENESCO includes the
original copyrighted artwork(s) owned by LICENSOR
and by Jim Shore and identified in Schedule I.
MARKS: The trademark(s) and name(s) licensed to ENESCO
include the mark(s) and name(s) owned by LICENSOR
and identified in attached Schedule II.
D. PRODUCTS: ENESCO may make, have made, sell, advertise,
import and distribute the products that embody or
display copies of the WORKS; and/or derivative
works based on the WORKS, that are sold,
advertised, and distributed including in
connection with the MARKS; and that are identified
in attached Schedule III.
E. LICENSED
TERRITORY: The territory in which ENESCO may advertise,
distribute and sell PRODUCTS includes worldwide.
F. LICENSED TERM: The license and rights granted to ENESCO commence
on the date first written above and continues to
and including December 31, 2012.
G. ROYALTIES:
ROYALTY
RATE: The royalty rates payable by ENESCO are as
follows: Eight percent (8.0%) for net sales other
than as listed below Three and one half percent
(3.5%) for mass market (including QVC) and direct
import sales (FOB sales) and for direct response
sales. Three percent (3%) for Co-Branded Products
(defined as all products for which Enesco pays
royalties to a second licensor, including for
music and/or other licensed artists).
H. FORM OF
COPYRIGHT AND
TRADEMARK
NOTICE: (C) (year) Jim Shore Designs, Inc.
I. STANDARD
PROVISIONS: As noted, the Standard Provisions and the
Schedules I - III attached as Exhibit A are
incorporated herein by reference thereto.
J. OTHER TERMS: LICENSOR and ENESCO agree to create a mutually
agreeable product development and marketing plan
for the brand each year by September 30 of the
prior year. Such plans will be reviewed by the
parties no less than every six months, and
adjusted by mutual agreement as necessary.
LICENSOR will make the artist Jim Shore available
for personal appearances on at least twelve (12)
weekends per year to be mutually agreed upon for
trade shows or other events to support the retail
trade.
For all international and extended domestic travel
(in excess of three) hours requested or required
by Enesco, Enesco shall provide the same class of
airline tickets that are provided for Enesco's
senior executives in accordance with the then
current Enesco travel policy. All other expenses
for travel requested or required by Enesco will be
reimbursed in accordance with Enesco's travel
policy.
IN WITNESS WHEREOF, LICENSOR and ENESCO have, through their duly
authorized officers, executed this License Agreement as of the date and year
first written above.
JIM SHORE DESIGNS, INC.
/s/ Jim Shore
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By Jim Shore, President
ENESCO GROUP, INC.
/s/ Jeffrey S. Smith
--------------------------------------------
By Jeffrey S. Smith, Senior Vice President
EXHIBIT A
THE STANDARD PROVISIONS FOR THE LICENSE AGREEMENT
The following Standard Provisions shall be deemed fully
incorporated in the License Agreement (hereinafter the "Underlying Agreement")
to which this EXHIBIT A is attached, and these Standard Provisions, the
Underlying Agreement and the attached Schedules I-III shall hereinafter be
collectively referred to as the "Agreement". All terms and conditions included
in these Standard Provisions shall, unless expressly provided to the contrary
herein, have the same respective meanings as set forth in the Underlying
Agreement. Unless expressly provided to the contrary herein, to the extent that
any of these Standard Provisions conflicts with any provision of the Underlying
Agreement, the Underlying Agreement shall control.
1. Grant.
(a) LICENSOR agrees to and does hereby grant to ENESCO the right
and license, under the WORKS, and under derivative works based
on the WORKS, to make, have made, advertise, import,
distribute and sell the PRODUCTS in the LICENSED TERRITORY.
(b) LICENSOR further agrees to and does hereby grant to ENESCO the
right and license to use any of the MARKS as a trademark for
any or all of the PRODUCTS in the LICENSED TERRITORY. The
parties recognize and agree that ENESCO may, at its
discretion, elect to use or not to use the MARKS, or any of
them, at any time or times during the term of this Agreement.
(c) The rights and licenses granted in Paragraph 1(a) and (b)
herein shall be sole and exclusive (other than for certain
non-core product categories as set forth in Schedule III) to
ENESCO for all of the PRODUCTS.
2. Payments.
(a) ENESCO shall pay ROYALTIES to LICENSOR equal to the ROYALTY
RATE of the Net Selling Price of the PRODUCTS sold under this
Agreement.
(b) For wholesales sales, the term, "Net Selling Price", as used
herein, shall mean ENESCO's actual invoice or billing price
for the PRODUCTS sold, less: discounts given to bona fide
customers; sales and other taxes and freight charges, if any,
actually paid; and credits or allowances given on the PRODUCTS
sold.
(c) For direct response sales, the term "Net Selling Price", as
used herein, means the actual billing price to the consumer
for the PRODUCTS sold less sales taxes and any shipping and
handling charges separately itemized on the consumer's
invoice.
3. Time for Making Payments.
Within thirty (30) days following the end of each calendar quarter
during the term of this Agreement, ENESCO shall give a report to
LICENSOR showing the sales of PRODUCTS sold under this Agreement during
the calendar quarter and the basis used in determining the payments of
ROYALTIES due under this Agreement. All such reports shall be
accompanied by a check for the payments of ROYALTIES shown to be due in
the report. With respect to sales by any ENESCO foreign subsidiary or
affiliated company, the sale shall be recorded upon the subsidiary's or
affiliate's sale to the end customer, and the thirty (30) day period
within which to report and to pay ROYALTIES shall be increased to
ninety (90) days, and increased to forty five days (45) for direct
response sales and sales to distributors.
4. Records.
ENESCO shall keep true and complete records relating to the sales of
PRODUCTS sold under this Agreement. Such records shall be available, at
reasonable times during normal business hours, for inspection by an
independent certified public accountant, designated and paid for by
LICENSOR, for the purpose of determining the accuracy of the payments
made and reports given under Paragraph 3 herein; it being understood
that the certified public accountant shall not disclose to the LICENSOR
the details of ENESCO's business revealed by such inspection other than
the information necessary to report on the results of the inspection.
Such records shall be maintained by ENESCO for at least two (2) years
following the end of the calendar quarter to which they pertain.
5. Trademark Quality Assurance.
(a) ENESCO agrees to submit to LICENSOR representative samples of
each of the different PRODUCTS (herein referred to as the
"INITIAL SAMPLES") before production of the PRODUCT commences.
Recognizing that time is very critical in successfully
introducing PRODUCTS into the marketplace, LICENSOR agrees to
inspect expeditiously the INITIAL SAMPLES and to notify ENESCO
whether the quality of the INITIAL SAMPLES is approved within
ten (10) days of receipt of the INITIAL SAMPLES and if not
approved, to advise ENESCO, in writing, of any and all
corrections reasonably required to be made in order for the
INITIAL SAMPLES to be approved. Failure of the LICENSOR to so
notify and advise ENESCO within this ten day period shall be
deemed to constitute approval by LICENSOR of the INITIAL
SAMPLES. LICENSOR further agrees to consult and cooperatively
work with ENESCO in making INITIAL SAMPLES that can be
approved by LICENSOR.
(b) After LICENSOR has approved the quality of the INITIAL
SAMPLES, ENESCO shall have the right to use the MARKS, if it
so elects, for PRODUCTS that meet or exceed the quality of the
corresponding INITIAL SAMPLES. ENESCO agrees that it will not
knowingly use the MARKS for or in connection with the sale of
a PRODUCT whose quality does not meet or exceed the quality of
the corresponding approved INITIAL SAMPLES.
(c) From time to time but not more than once each calendar year,
ENESCO agrees to give LICENSOR, at LICENSOR'S reasonable
request and cost, two (2) additional representative samples of
the PRODUCTS which it is selling under the MARKS for the
purpose of enabling LICENSOR to determine whether the
additional samples meet or exceed the quality of the
corresponding INITIAL SAMPLES. LICENSOR shall promptly notify
ENESCO if such additional samples do not meet the quality of
the corresponding INITIAL SAMPLES.
(d) ENESCO agrees that any advertisements for PRODUCTS sold under
the MARKS shall be done with the same good taste and quality
as ENESCO's advertisements for its other giftware products.
Upon LICENSOR'S reasonable request, ENESCO agrees to give
LICENSOR copies of such advertisements.
6. Artwork Requirements.
LICENSOR agrees to provide ENESCO with the artwork for the WORKS.
Additional artwork, which is required and requested by ENESCO from
LICENSOR, shall be provided by LICENSOR at such time as requested by
ENESCO. To the extent that additional artwork is required and requested
in accordance with the mutually agreed upon marketing and product
development plans, as referenced in Paragraph J of the Agreement,
above, but LICENSOR is unable or unwilling to provide such required
artwork in time to meet requirements or deadlines, ENESCO may create or
retain others to create the artwork and deduct the costs for such
artwork from royalty payments. Any artwork generated by third parties
at ENESCO's direction shall be submitted to LICENSOR for approval, not
to be unreasonably withheld. LICENSOR shall work cooperatively with
ENESCO and such third parties to generate and refine such art to meet
the standards and requirements for the brand(s).
7. Term and Termination.
(a) Unless sooner terminated in accordance with Paragraphs 7(b),
(c), (d), (e) and/or (i) hereof, the term of this Agreement
shall be for the LICENSED TERM stated in Paragraph F of the
Agreement and shall be automatically renewed for additional
one (1) year terms.
(b) If LICENSOR shall fail to provide ENESCO with the artwork,
including due to death or disability of Jim Shore, ENESCO may
terminate this Agreement by giving LICENSOR a notice of
termination.
(c) In the event that ENESCO fails materially to perform any of
its obligations hereunder, including specifically those
obligations in Paragraph 5 herein, LICENSOR may give ENESCO a
notice of default, which also specifies the obligation, which
ENESCO has materially failed to perform. If reasonable
attempts are not taken by ENESCO to cure the specified
material failure to perform within ninety (90) days of receipt
by ENESCO of the notice of default, then the LICENSOR may give
ENESCO a notice of termination upon expiration of such ninety
(90) days stating that the Agreement is terminated effective
as of the date of the notice of termination.
(d) The parties acknowledge that the rights and duties of the
parties may be affected in the event that either party files
for relief under 11 U.S.C. ss. 101 et seq. Therefore the
parties agree to be bound by the following provisions in the
event that either party to this Agreement files for relief
under 11 U.S.C. ss. 101 et seq.
(e) If Licensor shall file for relief under 11 U.S.C. ss. 101 et
seq. during the term of this license, or any extension
thereof, the Licensor shall make the election to assume or
reject this agreement within 30 days of the filing of the
case, unless otherwise extended or reduced by a court of
competent jurisdiction. Until Licensor makes the election,
Licensor shall continue to perform the terms and provisions of
this Agreement. Once Licensor makes the election to assume or
reject this Agreement, Licensee shall have the rights
available to it pursuant to 11 U.S.C. ss. 365.
(f) If Enesco shall file for relief under 11 U.S.C. ss. 101 et
seq. during the term of this license, or any extension
thereof, the Enesco shall make the election to assume or
reject this agreement within 60 days of the filing of the
case, unless otherwise extended or reduced by a court of
competent jurisdiction. Until Enesco makes the election to
assume or reject this Agreement, Licensor shall have the
rights available to it pursuant to 11 U.S.C. ss. 365. If
Enesco makes the election to reject this Agreement, the
Agreement will be considered terminated and the rights and
duties of the parties as defined in this Agreement shall
govern and the Licensor shall have the rights available to it
pursuant to 11 U.S.C. ss. 365.
(g) If either party is ever adjudged insolvent, or makes an
assignment for the benefit of creditors, or if the business of
such party is placed in the hands of a receiver or trustee, or
if by involuntary action which is not dismissed within 90
days, other than pursuant to section 7(e) above, the other
party may terminate this Agreement by giving written a notice
of termination.
(h) Upon termination of this Agreement, ENESCO shall have the
right to sell any PRODUCTS on hand or in the process of
manufacture, as of the date of termination, subject to payment
of royalties to the LICENSOR on any such sales in accordance
with the terms of Paragraph 2(a) herein.
(i) If earned royalties for any given calendar year during the
LICENSED TERM and any renewal terms, are less than thirty five
percent (35%) of the average royalties for the two previous
calendar years ("Rolling Base Royalties"), then Enesco has the
option, in its sole discretion, of making a payment to
LICENSOR within thirty days following the payment of the
fourth quarter royalties for a given year, so that total
payments for the year are equal to thirty five percent (35%)
of the Rolling Base Royalties. If earned royalties are less
than the Rolling Base Royalties, and Enesco elects not to make
a payment to bring total payments up to the amount of the
Rolling Base Royalties, then either party may terminate the
agreement by providing the other party with thirty day written
notice.
8. Indemnity and Representations.
(a) ENESCO hereby agrees to defend (at its own expense) LICENSOR,
indemnify LICENSOR, and hold LICENSOR harmless regarding any
claim asserted against LICENSOR to the extent that the claim
arises out of the manufacture, advertisement, distribution
and/or sale of PRODUCTS under this Agreement and to the extent
that such claim does not relate to ENESCO's exercise of the
rights and licenses granted in Paragraph 1 herein; provided,
however, that ENESCO is notified promptly by LICENSOR of any
such claim; that ENESCO shall have the sole right to control
the defense of and to settle any such claim; and that LICENSOR
shall cooperate and assist ENESCO, at ENESCO's request, in
connection with such defense. Claims arising out of the
advertisement, distribution and/or sale of PRODUCTS by
ENESCO's customers are excluded from this Paragraph.
(b) ENESCO represents that it has obtained and shall maintain, in
accordance with its good business judgment, product liability
insurance for the PRODUCTS applicable to its performance under
this Agreement.
(c) LICENSOR represents and warrants that: the WORKS are original
works authored by LICENSOR and are not a copy of any other
work(s); LICENSOR is the owner of the MARKS; LICENSOR has the
right to enter into this Agreement and to make the grants made
in Paragraph 1 herein; and ENESCO's use of the WORKS and/or
MARKS, as contemplated by this Agreement, will not constitute
an infringement of the rights of others or violate any third
parties' rights of any kind or nature including patent,
trademark, copyright, invasion of privacy or publicity, idea
misappropriation, defamation, libel, slander or moral rights,
piracy, plagiarism or unfair competition. Further, LICENSOR
agrees to not license or grant rights to others to make, have
made, advertise, import, distribute and/or sell products that:
are competitive with the PRODUCTS; incorporate or display
derivative works based on the WORKS; and/or incorporate or
display copies of works such that the products have the same
"look and feel" as and/or are confusingly similar with the
PRODUCTS. LICENSOR shall indemnify, defend and hold harmless
ENESCO, and its successors, assigns, parents, affiliates,
subsidiaries and their respective agents, officers, directors,
shareholders and licensees s as to any damages, claims,
actions, losses, liabilities, demands, and/or suits, including
reasonable attorney's fees and costs, awarded, suffered and/or
incurred by it by reason of the assertion of a claim arising
out of: (i) the exercise by ENESCO of the rights and licenses
granted to ENESCO in Paragraph 1 herein and/or (ii) the breach
of LICENSOR'S representations and warranties herein.
9. Infringement.
(a) ENESCO shall have the right and authority to prosecute and
settle, in its own name and/or in LICENSOR'S name, a claim for
infringement of the rights granted in Paragraph 1 herein where
ENESCO believes, in its sole discretion and after consultation
with LICENSOR (when ENESCO may deem it appropriate to do so)
that the claim should be prosecuted. ENESCO shall bear all
costs and expenses and shall receive all monies awarded and/or
recovered with respect to the prosecution of such claim.
(b) LICENSOR may, at any time with respect to any situation known
to it and believed to involve a claim of infringement of the
rights granted in Paragraph 1 herein, request ENESCO to
prosecute such infringement claim. When so requested, ENESCO
shall promptly either pursue the infringer or notify LICENSOR
in writing that it elects not to pursue the infringer. If
ENESCO elects not to pursue the infringer, then LICENSOR may
prosecute the claim for infringement and shall bear all costs
and expenses and shall receive all monies awarded and/or
recovered with respect to the prosecution of such claim.
(c) Both ENESCO and LICENSOR agree to cooperate with the other (at
the other's request and expense) in the prosecution and
settlement of any infringement claim undertaken by the other.
10. The Marking of PRODUCTS.
(a) ENESCO agrees to affix the copyright notice, as stated in
Paragraph H of the Agreement, to each PRODUCT and to each
piece of PRODUCT packaging that includes the WORKS.
(b) ENESCO agrees to affix the trademark notice, as stated in
Paragraph H of the Agreement, to each PRODUCT and to each
piece of PRODUCT packaging that bears the MARKS.
(c) The parties agree that the affixation of the copyright and
trademark notices, as stated in subparagraphs (a) and (b)
hereof, shall be satisfactory for all purposes, including
quality assurance purposes, under this Agreement. Upon thirty
(30) days prior notice to ENESCO, LICENSOR may amend Paragraph
H to make reasonable changes to one or both of the notices
stated in Paragraph H of the Agreement; provided, that if such
an amendment is made, ENESCO may still distribute and sell
PRODUCTS (and PRODUCT packaging) to which the prior Paragraph
H notice is affixed and which were made prior to the
amendment. (d) All PRODUCTS shall also be appropriately marked
to indicate the national source or origin thereof.
11. Copyright and Trademark Ownership.
A. The copyrights in and to the WORKS, including derivative works
based on the WORKS, and all rights in the MARKS shall be and
shall remain the sole and exclusive property of LICENSOR. Any
and all newly created names or marks created during the Term
and used on or in connection with the PRODUCTS shall be owned
exclusively by ENESCO. LICENSOR hereby appoints ENESCO to
serve as its agent for the filing of copyrights for certain
products in the name of Jim Shore Designs, Inc. ENESCO AND
LICENSOR shall agree for which items and products ENESCO shall
file applications for copyright registrations. ENESCO will
prepare copyright applications and file them with the United
States Copyright office. ENESCO shall deduct $60.00 per
copyright filed from royalty statements and payments. The
parties agree to increase the fee per copyright application by
the amount of any increase in fees charged by the Untied
States Copyright office. Further, the parties agree to
negotiate in good faith equitable adjustments in the fees
charged for such copyright filing services based upon such
factors as the quantity of copyright applications filed each
year and inflation over the LICENSE TERM. ENESCO shall
promptly provide the LICENSOR with a copy of the documents
filed with and received from the applicable governmental
agencies concerning the obtaining of such statutory
protection. LICENSOR agrees to cooperate with ENESCO in
obtaining such statutory protection.
B. Licensor agrees not to use the names Enesco or Enesco Group,
or any of Enesco's trademarks, or any name that is confusingly
similar to any such name or mark in any domain name or uniform
resource location (URL) address, domain name registration,
trademark or trademark registration. Licensor further agrees
that it will only use the names Enesco or Enesco Group, or any
of Enesco's trademarks on its own internet site in accordance
with Enesco's written policy for use of its trademarks
(available on www.enesco.com).
12. Additional PRODUCTS.
In the event that ENESCO desires to include additional giftware and/or
other products as PRODUCTS under this Agreement, ENESCO shall give
LICENSOR a notice describing such additional giftware and/or other
products. If LICENSOR does not object, in writing, within ten (10) days
from the date the notice is given, such additional giftware and/or
other products shall thereafter be considered to be among the PRODUCTS
included within the terms of this Agreement.
13. Independent Contractors.
Both parties to the Agreement are independent contractors, and neither
is authorized to nor shall act as the agent for the other.
14. Communications Between the Parties.
Any communication permitted or required hereunder shall be in writing
and shall be sent or delivered to the receiving party at the address
set forth in Paragraph A or B of the Agreement, until notified
otherwise. Any communication sent to ENESCO shall be also addressed:
"Attention President"; and a further copy shall be sent to its Director
of Licensing. Any such communication (including notices, reports,
payments, and/or deliveries) which is sent, properly addressed, by
prepaid, registered or certified mail shall be effective as of the date
of its postmark; otherwise, such communication shall be effective as of
the date it is received by the party to whom it was given.
15. Transfer.
This Agreement shall be binding upon and shall inure to the benefit of
the parties hereto and their respective heirs, legal representatives,
and successors and assigns; provided, however, that the parties shall
have the right to assign their rights and obligations under this
Agreement with the prior written consent of the other party, which
consent shall not be unreasonably withheld. ENESCO shall have the right
to assign its rights and obligations hereunder, in whole or in part, to
any wholly-owned subsidiary or affiliated company under common control
without the prior written consent of LICENSOR.
16. Confidential Information.
The parties contemplate that LICENSOR may come into contact with the
confidential information of ENESCO, its customers, suppliers, and/or
other consultants, including (1) information of a technical nature,
such as "know-how," secret processes, inventions and research projects;
(2) information of a business nature, such as information about costs,
profits, markets, sales, suppliers, manufacturers, and lists of
customers; (3) plans for future developments and future products, and
(4) other information of a similar nature to the extent not available
to the public. LICENSOR agrees to keep secret all such confidential
information and further agrees not to use such confidential information
for its own benefit nor to disclose it to anyone outside of ENESCO,
either during or after the term of this Agreement except upon the
written consent of ENESCO or as compelled to do so by law.
17. Governing Law and Jurisdiction.
The Agreement shall be deemed to have been entered into in the State of
Illinois, and shall be interpreted and construed in accordance with the
laws of the State of Illinois without regard to conflict of laws
principles. Any dispute under this agreement shall be decided in the
federal or state courts with the State of Illinois, the parties hereby
consent to personal jurisdiction in said courts.
18. Entire Agreement and Amendment.
This Agreement constitutes the full understanding between LICENSOR and
ENESCO, and no statements, or agreements, oral or written, made prior
to or at the signing hereof, shall vary or modify the written terms
hereof. No amendment, modification or release from any provision hereof
shall be effective unless in writing and signed by duly authorized
representatives of both parties specifically stating it to be an
amendment, modification, or release to this Agreement.
THE END OF THE STANDARD PROVISIONS