UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q/A
(AMENDMENT NO. 1)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended January 31, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _________ to _________
Commission File Number 0-26374
PLAY BY PLAY TOYS & NOVELTIES, INC.
(Exact name of registrant as specified in its charter)
TEXAS 74-2623760
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
4400 TEJASCO, SAN ANTONIO, TEXAS 78218-0267
(Address of principal executive offices)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (210) 829-4666
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes [X] No [ ]
The registrant had 7,253,800 shares of common stock, no par value, outstanding
as of March 12, 1998.
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Part II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.......................................3
Signatures.....................................................................5
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The following item of Play By Play Toys & Novelties, Inc.'s Quarterly Report on
Form 10-Q for the quarter ended January 31, 1998, along with Exhibits 10.13 and
10.14 thereto, are hereby amended. Such item and exhibits are set forth herein
in their entirety, as amended. The other exhibits, which are not being amended,
are not being filed with this Amendment.
PART II
ITEM 6. EXHIBITS AND REPORTS ON FROM 8-K
(a) Exhibits:
3.1 Amended Articles of Incorporation of the Company (filed as Exhibit 3.1
to the Registration Statement on Form S-1 (File No. 33-92204)
incorporated herein by reference).
3.2 Amended and Restated Bylaws of the Company (filed as Exhibit 3.2 to the
Registration Statement on Form S-1 (File No. 33-92204) incorporated
herein by reference).
4.1 Specimen of Common Stock Certificate (filed as Exhibit 4.1 to the
Registration Statement on Form S-1 (File No. 33-92204) incorporated
herein by reference).
4.2 Form of Warrant Agreement and Form of Warrant (filed as Exhibit 4.2 to
the Registration Statement on Form S-1 (File No. 33-92204) incorporated
herein by reference).
4.3 Form of Play By Play Toys & Novelties, Inc. Grant of Incentive Stock
Option (filed as Exhibit 4.3 to the Registration Statement on Form S-1
(File No. 33-92204) incorporated herein by reference).
4.4 Form of Play By Play Toys & Novelties, Inc. Non-qualified Stock Option
Agreement (filed as Exhibit 4.4 to the Registration Statement on Form
S-1 (File No. 33-92204), incorporated herein by reference).
4.5 Warrant to Purchase Common Stock issued by the Registrant to Ace Novelty
Co., Inc. (filed as Exhibit 4 to Form 8-K (Date of Event: May 1, 1996),
incorporated herein by reference).
10.1 Play By Play Toys & Novelties, Inc. 1994 Incentive Plan (filed as
Exhibit 10.1 to the Registration Statement on Form S-1 (File No.
33-92204) incorporated herein by reference).
10.2 Credit Agreement dated June 20, 1996, among the Registrant, Ace Novelty
Acquisition Co., Inc., Newco Novelty, Inc. and Chemical Bank, as agent
for the lenders (filed as Exhibit 10.1 to Form 8-K (Date of Event: May
1, 1996) incorporated herein by reference).
10.3 Promissory Note dated June 20, 1996, of Ace Novelty Acquisition Co.,
Inc. payable to the order of Ace Novelty Co., Inc. in the principal sum
of $2,900,000 (filed as Exhibit 2.1 to Form 8-K (Date of Event: May 1,
1996) incorporated herein by reference).
10.4 Employment agreement dated November 4, 1996, between the Registrant and
Raymond G. Braun, as amended by Amendment No.1 to Employment agreement
dated August 29, 1997 (filed as Exhibit 10.4 to Form 10-K for the year
ended July 31, 1997, and incorporated herein by reference).
10.5 Non-Qualified Stock Option agreement dated November 4, 1996, between the
Registrant and Raymond G. Braun, as amended by Amendment No. 1 dated
August 29, 1997 (filed as Exhibit 10.5 to Form 10-K for the year ended
July 31, 1997, and incorporated herein by reference).
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ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (CONTINUED)
10.6 Employment agreement dated May 2, 1996, between the Registrant and Saul
Gamoran, as amended by Amendment No. 1 dated May 16, 1996 (filed as
Exhibit 10.6 to Form 10-K for the year ended July 31, 1997, and
incorporated herein by reference).
10.7 Employment agreement dated June 20, 1997, between the Registrant and
James A. Weisfield (filed as Exhibit 10.7 to Form 10-K for the year
ended July 31, 1997, and incorporated herein by reference).
10.8 Subordinated Convertible Debenture Agreements dated July 3, 1997,
between the Registrant and each of Renaissance Capital Growth and Income
Fund III, Inc., Renaissance U.S. Growth and Income Trust PLC and Banc
One Capital Partners II, Ltd. (the "Convertible Lenders") (filed as
Exhibit 10.8 to Form 10-K for the year ended July 31, 1997, and
incorporated herein by reference).
10.9 Convertible Loan Agreement dated July 3, 1997, among the Registrant, the
Convertible Lenders and Renaissance Capital Group, Inc (filed as Exhibit
10.9 to Form 10-K for the year ended July 31, 1997, andincorporated
herein by reference).
10.10 License Agreement dated March 22, 1994 by and between Warner Bros., a
division of Time Warner Entertainment, L.P., and the Registrant (as
successor by assignment to Ace Novelty, Inc.) (filed as Exhibit 10.10 to
Form 10-K for the year ended July 31, 1997, and incorporated herein by
reference).
10.11 License Agreement dated March 22, 1996 by and between Warner Bros., a
division of Time Warner Entertainment, L.P., and the Registrant (as
successor by assignment to Ace Novelty, Inc.) (filed as Exhibit 10.11 to
Form 10-K for the year ended July 31, 1997, and incorporated herein by
reference).
10.12 License Agreement dated September 10, 1997 by and between Warner Bros.,
a division of Time Warner Entertainment, L.P., and the Registrant (filed
as Exhibit 10.12 to Form 10-K for the year ended July 31, 1997, and
incorporated herein by reference).
10.13 License Agreement dated January 1, 1998 by and between Warner Bros., a
division of Time Warner Entertainment, L. P. and the Registrant (Certain
portions of this exhibit have been omitted and filed separately with the
Commission based upon a request for confidential treatment).+
10.14 License Agreement dated January 1, 1998 by and between Warner Bros., a
division of Time Warner Entertainment, L. P. and the Registrant (Certain
portions of this exhibit have been omitted and filed separately with the
Commission based upon a request for confidential treatment).+
*10.15 Amendment dated January 14, 1998 to License Agreement dated September
10, 1997 by and between Warner Bros., a division of Time Warner
Entertainment, L.P. and the Registrant (Certain portions of this exhibit
have been omitted and filed separately with the Commission based upon a
request for confidential treatment).+
*27.0 Financial Data Schedule
- ------------
+ Certain portions of this exhibit have been omitted and filed separately with
the Commission based upon a request for confidential treatment.
* Filed previously.
(b) Reports on Form 8-K.
None.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this Amendment to be signed on its behalf by the
undersigned thereunto duly authorized.
PLAY BY PLAY TOYS & NOVELTIES, INC.
Date: July 23, 1998 By:/s/ RAYMOND G. BRAUN
Raymond G. Braun
Chief Financial Officer
(Principal Financial and
Accounting Officer and
Authorized Officer)
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EXHIBIT 10.13
CERTAIN PORTIONS OF THIS EXHIBIT, MARKED AS "*REDACTED*," HAVE
BEEN OMITTED HEREFROM AND FILED SEPARATELY WITH THE
COMMISSION BASED UPON A REQUEST FOR CONFIDENTIAL TREATMENT.
RETAIL LICENSE - EMEA
WARNER BROS. CONSUMER PRODUCTS
#68116
LICENSE AGREEMENT made January 1, 1998 by and between WARNER BROS., A DIVISION
OF TIME WARNER ENTERTAINMENT COMPANY L.P., c/o Warner Bros. Consumer Products, a
Division of Time Warner Entertainment Company L.P., whose address is 4000 Warner
Blvd., Burbank, CA 91522 (hereinafter referred to as "LICENSOR") and
PLAY-BY-PLAY TOYS & NOVELTIES, INC., whose address is 4400 Tejasco, San Antonio,
TX 78218-0267, c/o 1000 2nd Avenue, Suite 1401, Seattle, WA 98104, Attention:
Saul Gamoran (hereinafter referred to as "LICENSEE").
W I T N E S S E T H :
The parties hereto mutually agree as follows:
1. DEFINITIONS: As used in this Agreement, the following terms shall have
the following respective meanings:
(a) "LICENSED PROPERTY": As defined in Schedules A-1 through C-13
(which are *REDACTED*) as set forth below, attached hereto and
incorporated by reference:
(i) PROPERTIES A (ALL ARTICLES):
Schedule A-1 (*REDACTED*): Looney Tunes
Schedule A-2 (*REDACTED*): Animaniacs
(ii) PROPERTIES B (ALL ARTICLES):
Schedule B-3 (*REDACTED*): Scooby Doo
Schedule B-4 (*REDACTED*): Tom & Jerry
Schedule B-5 (*REDACTED*): The Flintstones
Schedule B-6 (*REDACTED*): Yogi Bear
Schedule B-7 (*REDACTED*): Top Cat
Schedule B-8 (*REDACTED*): The Jetsons
Schedule B-9 (*REDACTED*): Wacky Races
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In addition, the Licensed Property shall include use of
the Cartoon Network Logo, to be used only in conjunction
with one (1) or more Properties B and subject to
Licensor's prior written approval on a case-by-case basis.
It is understood and agreed that no additional royalties
shall be paid to Licensor for use of the Cartoon Network
Logo as set forth herein.
(iii) PROPERTIES C (ARTICLES 4 ONLY):
Schedule C-10 (*REDACTED*): Batman Animated
Series/Comics
Schedule C-11 (*REDACTED*): Superman Animated
Series/Comics/
"Superman V" Motion
Picture
Schedule C-12 (*REDACTED*): Baby Looney Tunes
Schedule C-13:(*REDACTED*) Quest for Camelot
(b) "TERRITORY": The regions of Europe, Middle East and
Africa, as defined on the attached Exhibit 3.
(c) "LICENSED PRODUCT(S)":
(i) ARTICLES 1 "STANDARD PLUSH":
*REDACTED*
(ii) ARTICLES 2 "FEATURE PLUSH":
*REDACTED*
(iii)ARTICLES 3 "OTHER PLUSH":
*REDACTED*
(iv) ARTICLES 4 "HOUSEWARES":
*REDACTED*
Articles 1, 2, 3 and 4 as defined above shall be referred to
separately and collectively herein as the "Licensed Product(s)."
*REDACTED*
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(d) "GUARANTEED CONSIDERATION":
(i) The sum of *REDACTED* DOLLARS ($USD *REDACTED*) which
shall be allocated among the Licensed Properties, the
Licensed Products and the Distribution Channels and
payable according to the payment schedules set forth in
Schedules A-1 through D-15 (which are *REDACTED*).
(ii) In addition to the foregoing, the Guaranteed Consideration
shall also include unrecouped balances from Existing
Licenses (as defined below) in the amount of *REDACTED*
DOLLARS ($*REDACTED*) (the "Unrecouped Balances"), which
shall be allocated among the Licensed Properties and the
Articles as follows:
*REDACTED*
The Royalties payable by Licensee hereunder shall offset
the amounts set forth above for such Property and Article.
Licensor acknowledges that the Unrecouped Balances have
been paid by Licensee.
(iii) It is hereby understood and agreed that:
1. Licensee shall provide Licensor a security instrument
in the form of an irrevocable insurance bond in the
amount of *REDACTED* DOLLARS ($*REDACTED) (the
"Security Instrument") of which (a) *REDACTED*
Dollars ($*REDACTED*) shall be security against the
Guaranteed Consideration for this Agreement and (b)
*REDACTED* Dollars ($*REDACTED*) shall be security
against the Guaranteed Consideration for License
Agreement #90248 between Licensor and Licensee for
the region of Latin America (including all Guaranteed
Consideration amounts set forth on Schedules A
through D-15 (which are *REDACTED*) attached
thereto), it being expressly understood that there
shall be only one (1) Security Instrument for the two
(2) Agreements. The Security Instrument shall be in a
form acceptable to Licensor and shall be issued from
an institution acceptable to Licensor, such
acceptances not to be unreasonably withheld. Delivery
of the Security Instrument to Licensor shall be no
later than thirty (30) days after Licensee's
execution of this Agreement. The Security Instrument
shall have a term concurrent with the Term of this
Agreement and shall be self-liquidating to the amount
of the Guaranteed Consideration remaining at the
conclusion of the Term. The Security Instrument shall
be reduced during the Term on a dollar for dollar
basis as Licensee makes payments during the Term.
Upon payment to Licensor of the total amount of the
Guaranteed Consideration, the Security Instrument
shall terminate;
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2. All payments hereunder shall be made in U.S. Dollars;
and
*REDACTED*
(e) "TERM": January 1, 1998 through December 31, 2000.
(f) "MARKETING DATES": "Marketing Date" shall mean the latest date
the Licensed Products shall be made available to the trade or to
the public, whichever applies, as set forth for each Article in
Schedule A, Chart #1 (*REDACTED*).
(g) "ROYALTY RATE": Licensee shall pay to Licensor the following sums
as applicable (the "Royalties"):
*REDACTED*
(h) "DISTRIBUTION CHANNELS": Licensee may distribute the Licensed
Products through the Distribution Channels (as defined below)
applicable to each such Licensed Product as set forth below:
*REDACTED*
The Distribution Channels shall be defined as follows:
*REDACTED*
(i) "AUTHORIZED DISTRIBUTORS": Licensee and Licensor agree that
Licensee shall be permitted to utilize third-party distributors
within specific countries in the Territory ("Authorized
Distributors"), which shall have the right, subject to Paragraph
1.(j) below, to import, manufacture, distribute and/or sell
Licensed Products, subject to Licensor's prior written approval
in each case. Licensee agrees that with each request for such
approval it shall submit a comprehensive annual business plan
relating to the distribution and sales of the Licensed Products.
No approval, rejection and/or modification of such annual
business plan required by Licensor shall constitute a guarantee
for economic benefit to Licensee and/or the Authorized
Distributor or shall constitute liability on the part of Licensor
for any aspect of Licensee's business.
(j) "EXISTING LICENSES": It is agreed that the existing licenses
between Licensor and/or its affiliated companies and Licensee
and/or its subsidiary companies as set forth in Exhibit 5 (which
is *REDACTED*) attached hereto shall be terminated effective
December 31, 1997, including any sell-off periods thereunder, and
that Unrecouped Balances shall be payable under this Agreement as
set forth in Paragraph 1.(d)(ii); however, Licensee agrees that
such termination is contingent upon Licensee's execution of this
Agreement.
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(k) "THIRD PARTY LICENSES": Licensee acknowledges that all rights
hereunder are subject to the rights of preexisting licensees
under third party licenses as listed in Exhibit 4 (which is
*REDACTED*) hereto (the "Third Party Licenses") , including but
not limited to such pre-existing licensees which have been
granted distribution rights in parts of the Territory for
products identical to Articles 1, 2 and 3. Licensee agrees that
it and its affiliated companies shall not distribute and sell
such Articles 1, 2 and 3 in such parts of the Territory, subject
to the terms of Paragraph 10(c) hereof; however Licensee shall
have the right to negotiate with such licensees with the purpose
of acting as the manufacturer for such licensees.
(1) "RECAPTURE RIGHTS": In the event Licensee fails to market any of
the Licensed Products and/or any of the countries in the
Territory and/or any of the Licensed Properties and or any of the
Distribution Channels three (3) months after the Marketing Date,
Licensor shall have the right to recapture such Licensed Product,
country, Licensed Property and/or Distribution Channel from the
rights granted under this Agreement without obligation to
Licensee. Such recapture may take place on a
Property-by-Property, Licensed Product-by-Licensed Product,
country-by-country and/or Distribution Channel-by-Distribution
Channel basis.
(m) "LICENSEE'S COMMITMENTS":
(i) PROMOTIONAL COMMITMENT: Licensee agrees that throughout
the Term it shall spend a minimum of *REDACTED* percent
(*REDACTED*%) of its total Net Sales in each of the
countries in the Territory on promotional and advertising
activities in each such country (the "Promotional
Commitment"). The Promotional Commitment shall include, as
a minimum, television advertising for Articles 2 in the
following countries: *REDACTED*, with a total minimum
value of *REDACTED* percent (*REDACTED*%) of the total
Promotional Commitment for each country. Monies spent by
Licensee for Trade Fairs (as defined below) shall not be
taken into account to determine the Promotional
Commitment. Licensee shall submit reports on a quarterly
basis as set forth in Paragraph 5.(a) with respect to the
Promotional Commitment and Licensor shall have the right
to inspect and/or audit Licensee's books and records with
respect to the Promotional Commitment under the terms and
conditions of Paragraph 6 hereof.
(ii) STAFFING COMMITMENT: Licensee agrees that it shall:
1. appoint dedicated sales and marketing managers to
oversee the sales and marketing of the Licensed
Products in the Territory; and
2. *REDACTED*
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3. appoint dedicated staff to manage and enhance product
development and production control (as such terms are
commonly understood in the industry) of the Licensed
Products.
(iii) TRADE FAIRS: Licensee shall present the Licensed Products
at such trade fairs as are submitted to and approved by
Licensor prior to the Marketing Date (the "Trade Fairs").
Licensee's affiliates and/or Authorized Distributors shall
have sections of its booth solely dedicated to the
Licensed Properties and the Licensed Products at the Trade
Fairs, with the exception of Trade Fairs in Developing
Markets, where Licensee shall dedicate sections of its
booth to the Licensed Properties and the Licensed Products
together with other products. "Developing Markets" shall
be such countries as are submitted to and approved by
Licensor for such definition prior to the Marketing Date.
(n) LICENSOR'S STAFFING COMMITMENT: Licensor shall designate an
employee with primary responsibility for the administration of
this License Agreement.
2. GRANT OF LICENSE:
(a) Subject to the restrictions, limitations, reservations and
conditions and Licensor's approval rights set forth in this
Agreement, and to pre-existing Third Party Licenses in the
Territory, Licensor hereby grants to Licensee and Licensee hereby
accepts for the Term of this Agreement, a license to utilize the
Licensed Property solely on or in connection with the
manufacture, distribution and sale of the Licensed Products as
specified above for the ultimate distribution to the public
throughout the Territory *REDACTED*.
(b) Without limiting any other approval rights of Licensor as
contained herein, no television commercials may be utilized under
this Agreement without the specific prior written approval of
Licensor, such approval not to be unreasonably withheld.
3. RESERVATION OF RIGHTS; PREMIUMS:
(a) Licensor reserves all rights not expressly conveyed to Licensee
hereunder, and Licensor may grant licenses to others to use the
Licensed Property, artwork and textual matter in connection with
other uses, services and products without limitation.
(b) Notwithstanding anything to the contrary stated herein, Licensor
specifically reserves the right, without limitation throughout
the world, to itself use, or license any third party(s) of its
choice to use the Licensed Property for the manufacture,
distribution and sale of products similar or identical to those
licensed herein in Paragraph 1. (c) above for sale through any
catalogue(s) produced or distributed
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by or on behalf of Licensor or its affiliated companies, or for
sale or distribution in any theaters or arenas, or for sale or
distribution in any retail stores operated by or on behalf of
Licensor, its affiliated companies or franchisees, or for sale or
distribution in any theme/amusement parks operated by or on
behalf of Licensor and its affiliated companies, including
without limitation, the Six Flags and Movie World parks. In
addition, Licensor reserves the right to allow Six Flags
Corporation and Movie World to manufacture (or have manufactured
by a third party) products similar or identical to those licensed
herein for distribution or sale in theme and/or amusement parks
owned or operated by both Six Flags Corporation and Movie World.
Further, Licensor reserves the right to use, or license others to
use, and/or manufacture products similar or identical to those
licensed herein for use as premiums.
(c) Licensee specifically understands and agrees that no rights are
granted herein with respect to the Warner Bros. "shield" logo or
trademark, or any other trademark(s), logo (s) or copyrights
owned by Licensor other than those specifically set forth above
in the Licensed Property, it being understood that all rights in
and to said properties are reserved exclusively to Licensor for
use and/or licensing as it deems appropriate to third party(s) of
its choice.
(d) Licensee agrees that it will not use, or knowingly permit the use
of, and will exercise due care that its customers likewise will
refrain from the use of, the Licensed Products as a premium,
except with the prior written consent of Licensor, and that it
shall not actively solicit orders for such use of the Licensed
Products. Notwithstanding the foregoing; Licensor shall notify
Licensee of any opportunities which may arise during the Term for
Licensee to bid on and/or supply a third party promotional
partner of Licensor's with Licensed Products for premium use
within the Territory and Licensee shall have the right to do so
hereunder. Subject to Licensor's prior written approval as
aforesaid, Licensee shall pay to Licensor a sum equal to TWELVE
PERCENT (12%) of all premium sales. For purposes of this
paragraph, the term "premium" shall be defined as including, but
not necessarily limited to, combination sales, free or
self-liquidating items offered to the public in conjunction with
the sale or promotion of a product or service, including traffic
building or continuity visits by the consumer/customer, or any
similar scheme or device, the prime intent of which is to use the
Licensed Products in such a way as to promote, publicize and or
sell the products, services or business image of the user of such
item.
4. CONSIDERATION:
(a) The Guaranteed Consideration paid by Licensee as set forth above
shall be applied against such Royalties as are, or have become,
due to Licensor. No part of such Guaranteed Consideration shall
be repayable to Licensee. Royalties earned in excess of the
Guaranteed Consideration applicable to the Term hereof shall not
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offset any Guaranteed Consideration required in respect of the
succeeding renewal term (if any); likewise, Royalties earned in
excess of the Guaranteed Consideration applicable to the renewal
term (if any) shall not offset any Guaranteed Consideration
applicable to any prior term.
(b) ROYALTY PAYMENTS: Licensee shall pay to Licensor a sum equal to
the Royalty Rate as set forth above of all Net Sales by Licensee
of the Licensed Products covered by this Agreement. The term "Net
Sales" herein shall mean the gross invoice price billed
customers, less
(i) actual quantity discounts and actual returns, but no
deductions shall be made for uncollectible accounts and
deductions for actual returns may not exceed five percent
(5%) of total sales; and
(ii) any sales, excise or value added taxes which are
separately stated and which are required to be collected
from customers and which are payable to tax authorities.
No deduction shall be taken in computing Net Sales for
taxes not described immediately above, including but not
limited to income taxes, withholding taxes or remittance
taxes.
No costs incurred in the manufacture, sale, distribution,
advertisement, or exploitation of the Licensed Products shall be
deducted from any Royalties payable by Licensee.
(c) Royalties shall be reported and paid as set forth in Paragraph
5.(a), except to the extent offset by Guaranteed Consideration
theretofore remitted. It is a material term and condition of this
Agreement that Royalty reports shall be broken down by (1)
Licensed Product, (2) country, (3) Licensed Property and (4)
Distribution Channel. In the event Licensee fails to do so,
Licensor shall have the right to terminate this Agreement.
Licensor shall also have the right to require Licensee to report
on a retailer-by-retailer basis. Without prejudice to any other
rights and remedies that Licensor may have, it is agreed that any
Royalties due by Licensee accruing from sales of the Licensed
Products outside the Territory and/or outside the applicable
Distribution Channels shall not be offset against the Guaranteed
Consideration.
(d) Licensee shall not have the right to cross-collateralize
Royalties earned (1) between the Licensed Properties, (2) between
the Distribution Channels, or (3) between Articles 1, 2 and 3
collectively and Articles 4 (although Licensee may cross-
collateralize between Articles 1, 2 and 3) ; however, Licensee
shall have the right to set off accrued Royalties for a certain
Licensed Property which exceed the portion of the Guaranteed
Consideration allocated to such Licensed Property against the
Unallocated Portion of the Guaranteed Consideration (as set forth
in Schedule A, Chart #1 and in Schedules D-14 and D-15 (which are
*REDACTED*)
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attached hereto). Royalties so accrued under any Licensed
Property A or Licensed Property C may only be offset against the
Unallocated Portion of the Guaranteed Consideration for Licensed
Properties A and C; and Royalties so accrued under any Licensed
Property B may only be offset against the Unallocated Portion of
the Guaranteed Consideration for Licensed Properties B.
(e) Licensee will pay all taxes, customs, duties, assessments, excise
except as provided in Subparagraph 4.(b)(ii) , and other charges
levied upon the importation of or assessed against the Licensed
Product under this Agreement, as well as all Licensee's costs of
doing business and Licensor shall have no liability therefor.
(f) In the event Licensee has earned Royalties in currencies, other
than in U.S. Dollars, then Licensee shall convert said amounts
into U.S. Dollars based upon the exchange rate published by the
Wall Street Journal as of the fifteenth (15th) day of the
applicable month or if such day shall fall on a non-business day
then as of the first business day following said fifteenth (15th)
day.
5. PERIODIC STATEMENTS:
(a) Within thirty (30) days after the initial shipment of the
Licensed Products and promptly on the thirtieth (30th) day of
every quarter thereafter, Licensee shall furnish to Licensor
complete and accurate statements certified to be accurate by
Licensee, or if a corporation, by an officer of Licensee, broken
down into the categories set forth in Paragraph 4. (c) and
showing with respect to all Licensed Products distributed and
sold by Licensee during the preceding calendar quarter the (i)
number of units; (ii) country in which manufactured, sold and/or
to which shipped; (iii) Description (as such term is defined
below) of the Licensed Products; (iv) gross sales price; and (v)
itemized deductions from gross sales price, and net sales price
together with any returns made during the preceding calendar
quarter. Such statements shall be furnished to Licensor whether
or not any of the Licensed Products have been sold during
calendar quarters to which such statements refer. Licensee shall
also include with each quarterly statement a statement which
shows the amounts spent during such quarter with respect to the
Promotional Commitment as defined in Paragraph 1. (m) (i).
Receipt or acceptance by Licensor of any of the statements
furnished pursuant to this Agreement or of any sums paid
hereunder shall not preclude Licensor from questioning the
correctness thereof at any time, and in the event that any
inconsistencies or mistakes are discovered in such statements or
payments, they shall immediately be rectified and the appropriate
payments made by Licensee. Upon demand of Licensor, Licensee
shall at its own expense, but not more than once in any twelve
(12) month period, furnish to Licensor a detailed statement by an
independent certified public accountant showing the (i) number of
units; (ii) country in which manufactured, sold and/or to which
shipped; (iii) Description of the Licensed Products; (iv) gross
sales price; and (v) itemized deductions from gross sales price
and net sales price
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of the Licensed Products covered by this Agreement distributed
and/or sold by Licensee up to and including the date upon which
Licensor has made such demand. For purposes of this subparagraph,
the term "Description" shall mean a detailed description of the
Licensed Products including the nature of each of the Licensed
Products, any and all names and likenesses, whether live actors
or animated characters, from the Licensed Property utilized on
the Licensed Products and/or any related packaging and/or
wrapping material, and any other components of the Licensed
Property utilized on the Licensed Products and/or any related
packaging and/or wrapping material. In the event Licensor is
responsible for the payment of any additional third party
participation based on Licensee not reporting by character name
and likeness as provided above, Licensee shall be responsible for
reimbursing Licensor for the full amount of all such third party
claims, including without limitation, the participation itself,
interest, audit and attorneys' fees. Licensee understands and
agrees that it is a material term and condition of this Agreement
that Licensee include the Description on all statements. In the
event Licensee fails to do so, Licensor shall have the right to
terminate this Agreement, in accordance with the provisions of
Paragraph 14 herein.
(b) The statements and payments required hereunder shall be delivered
to:
WARNER BROS. CONSUMER PRODUCTS
4000 Warner Boulevard
Bridge Building, 4th Floor
Burbank, CA 91522
Attention: Accounting Manager, International Accounting
with a copy to:
WARNER BROS. CONSUMER PRODUCTS (U.K.) LTD.
18 Hanover Square
London W1R 9HG
England
Attention: Director of Operations and Planning
(c) Any payments which are made to Licensor hereunder after the due
date required therefore, shall bear interest at the then current
prime rate plus six percent (6%) (or the maximum rate permissible
by law, if less than the current prime rate) from the date such
payments are due to, the date of payment. Licensor's right
hereunder to interest on late payments shall not preclude
Licensor from exercising any of its other rights or remedies
pursuant to this Agreement or otherwise with regard to Licensee's
failure to make timely remittances.
(d) Any income taxes, withholding taxes, other taxes and/or fees
which local law requires to be levied against Licensor's Royalty
shall be paid by Licensee on behalf
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of Licensor within the period of time required by local law,
provided that Licensee shall not make such payment if Licensor
has advised Licensee in writing not to do so, and has taken
appropriate legal action to contest the propriety of such taxes
and/or fees. In such event, Licensor shall indemnify Licensee
against any interest charges or penalties with respect to such
taxes. Any such taxes or fees which Licensee pays on behalf of
Licensor shall be deducted from the Royalty otherwise payable to
Licensor. The original receipt (or a bona fide copy thereof) for
such taxes as may be deducted from Royalties shall accompany the
statements described in Paragraph 5. (a) above for the accounting
period in which such deduction is made. Licensee shall timely
file all necessary tax returns or other government documents on
Licensor's behalf, as required by local law, at Licensee's cost.
(e) Licensee and Licensor agree that each calendar quarter during the
Term they shall mutually review Licensee's performance hereunder.
Such review shall take place in a format to be submitted by
licensee and approved by Licensor prior to the Marketing Date.
6. BOOKS AND RECORDS:
(a) Licensee shall keep, maintain and preserve (in Licensee's
principal place of business) for at least two (2) years following
termination or expiration of the Term of this Agreement or any
renewal(s) hereof (if applicable), complete and accurate records
of accounts including, without limitation, purchase orders,
inventory records, invoices, correspondence, banking and
financial and other records pertaining to the various items
required to be submitted by Licensee as well as to ensure
Licensee's compliance with its obligations hereunder, including
without limitation (i) Licensee's Commitments as set forth in
Paragraph 1.(m)(ii) local laws as required pursuant to Paragraph
13.(j) hereof and (iii) the terms and conditions of Paragraph 19.
Such records and accounts shall be available for inspection and
audit at any time or times during or after the Term of this
Agreement or any renewal(s) hereof (if applicable) during
reasonable business hours and upon reasonable notice by Licensor
or its nominees. Licensee agrees not to cause or permit any
interference with Licensor or nominees of Licensor in the
performance of their duties. During such inspections and audits,
Licensor shall have the right to take extracts and/or make copies
of Licensee's records as it deems necessary.
(b) The exercise by Licensor in whole or in part, at any time of the
right to audit records and accounts or of any other right herein
granted, or the acceptance by Licensor of any statement or
statements or the receipt and/or deposit by Licensor, of any
payment tendered by or on behalf of Licensee shall be without
prejudice to any rights or remedies of Licensor and such
acceptance, receipt and/or deposit shall not preclude or prevent
Licensor from thereafter disputing the accuracy of any such
statement or payment.
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(c) If pursuant to its right hereunder Licensor causes an audit and
inspection to be instituted which thereafter discloses a
deficiency between the amount found to be due to Licensor and the
amount actually received or credited to Licensor, then Licensee
shall, upon Licensor's demand, promptly pay the deficiency,
together with interest thereon at the then current prime rate
from the date such amount became due until the date of payment,
and, if the deficiency is more than five percent (5%) of all
Royalties paid by Licensee during the period covered by the
audit, then Licensee shall pay the reasonable costs and expenses
of such audit and inspection.
7. INDEMNIFICATIONS:
(a) During the Term, and continuing after the expiration or
termination of this Agreement, Licensor shall indemnify Licensee
and shall hold it harmless from any loss, liability, damage, cost
or expense arising out of any claims or suits which may be
brought or made against Licensee by reason of the breach by
Licensor of the warranties or representations as set forth in
Paragraph 12 hereof, provided that Licensee shall give prompt
written notice, and full cooperation and assistance to Licensor
relative to any such claim or suit and provided, further, that
Licensor shall have the option to undertake and conduct the
defense of any suit so brought. Licensee shall not, however, be
entitled to recover for lost profits. Licensee shall cooperate
fully in all respects with Licensor in the conduct and defense of
said suit and/or proceedings related thereto.
(b) During the Term, and continuing after the expiration or
termination of this Agreement, Licensee shall indemnify Licensor
and shall hold it harmless from any loss, liability, damage, cost
or expense arising out of any claims or suits which may be
brought or made against Licensor by reason of: (i) any breach of
Licensee's covenants and undertakings hereunder; (ii) any
unauthorized use by Licensee of the Licensed Property; (iii) any
use of any trademark, copyright, design, patent, process, method
or device, except for those uses of the Licensed Property that
are specifically approved by Licensor pursuant to the terms of
this Agreement; (iv) Licensee's non-compliance with any
applicable federal, state or local laws or with any other
applicable regulations; and (v) any alleged defects and/or
inherent dangers (whether obvious or hidden) in the Licensed
Products or the use thereof.
(c) With regard to 7(b)(v) above, Licensee agrees to obtain, at its
own expense, product liability insurance providing adequate
protection for Licensor and Licensee against any such claims or
suits in amounts no less than THREE MILLION U.S. DOLLARS ($USD
3,000,000) per occurrence, combined single limits. Simultaneously
with the execution of this Agreement, Licensee undertakes to
submit to Licensor a fully paid policy or certificate of
insurance naming Licensor as an additional insured party and,
requiring that the insurer shall not terminate or materially
modify such
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policy or certificate of insurance without written notice to
Licensor at least twenty (20) days in advance thereof. Such
insurance and delivery of the policy or certificate are material
obligations of Licensee.
8. ARTWORK; COPYRIGHT AND TRADEMARK NOTICES:
(a) The Licensed Property shall be displayed or used only in such
form and in such manner as has been specifically approved in
writing by Licensor in advance and Licensee undertakes to assure
usage of the trademark(s) and character(s) solely as approved
hereunder. Licensee further agrees and acknowledges that any and
all Artwork (defined below) created, utilized, approved and/or
authorized for use hereunder by Licensor in connection with the
Licensed Products or which otherwise features or includes the
Licensed Property shall be owned in its entirety exclusively by
Licensor. "Artwork" as used herein shall include, without
limitation, all pictorial, graphic, visual, audio, audio-visual,
digital, literary, animated, artistic, dramatic, sculptural,
musical or any other type of creations and applications, whether
finished or not, including, but not limited to, animation,
drawings, designs, sketches, images, illustrations, film, video,
electronic, digitized or computerized information, software,
object code, source code, on-line elements, music, text,
dialogue, stories, visuals, effects, scripts, voice overs, logos,
one- sheets, promotional pieces, packaging, display materials,
printed materials, photographs, interstitials, notes, shot logs,
character profiles and translations, produced by Licensee or for
Licensee, pursuant to this Agreement. Licensor reserves for
itself or its designees all rights to use any and all Artwork
created, utilized and/or approved hereunder without limitation.
(b) (i) Licensee acknowledges that, as between Licensor and
Licensee, the Licensed Property and Artwork and all other
depictions expressions and derivations thereof, and all
copyrights, trademarks and other proprietary rights
therein are owned exclusively by Licensor and Licensee
shall have no interest in or claim thereto, except for the
limited right to use the same pursuant to this Agreement
and subject to its terms and conditions.
(ii) Licensee agrees and acknowledges that any Artwork created
by Licensee or for Licensee hereunder is a "work made for
hire" for Licensor under the U.S. Copyright Act, and any
and all similar provisions of law under other
jurisdictions, and that Licensor is the author of such
works for all purposes, and that Licensor is the exclusive
owner of all the rights comprised in the undivided
copyright and all renewals, extensions and reversions
therein, in and to such works in perpetuity and throughout
the universe. Licensee hereby waives and releases in favor
of Licensor all rights (if any) of "droit moral," rental
rights and similar rights in and to the Artwork (the
"Intangible Rights") and agrees that Licensor shall have
the right to revise, condense, abridge, expand, adapt,
change, modify, add to, subtract from,
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<PAGE>
re-title, re-draw, re-color, or otherwise modify the
Artwork, without the consent of Licensee. Licensee hereby
irrevocably grants, transfers and assigns to Licensor all
right, title and interest, including copyrights, trademark
rights, patent rights and other proprietary rights, it may
have in and to the Artwork, in perpetuity and throughout
the universe, and to all proprietary depictions,
expressions or derivations of the Licensed Property
created by or for Licensee. Licensee acknowledges that
Licensor shall have the right to terminate this Agreement
in the event Licensee asserts any rights (other than those
specifically granted pursuant to this Agreement) in or to
the Licensed Property or Artwork.
(iii) Licensee hereby warrants that any and all work created by
Licensee under this Agreement apart from the materials
provided to Licensee by Licensor is and shall be wholly
original with or fully cleared by Licensee and shall not
copy or otherwise infringe the rights of any third
parties, and Licensee hereby indemnifies Licensor and will
hold Licensor harmless from any such claim of infringement
or otherwise involving Licensee's performance hereunder.
At the request of Licensor, Licensee shall execute such
form(s) of assignment of copyright or other papers as
Licensor may reasonably request in order to confirm and
vest in Licensor the rights in the properties as provided
for herein. In addition, Licensee hereby appoints Licensor
as Licensee's Attorney-in-Fact to take such actions and to
make, sign, execute, acknowledge and deliver all such
documents as may from time to time be necessary to confirm
in Licensor, its successors and assigns, all rights
granted herein. If any third party makes or has made any
contribution to the creation of Artwork authorized for use
hereunder, Licensee agrees to obtain from such party a
full confirmation and assignment of rights so that the
foregoing rights shall vest fully in Licensor, in the form
of the Contributor's Agreement attached hereto as Exhibit
2 and by this reference made a part hereof, prior to
commencing work, ensuring that all rights in the Artwork
and Licensed Property arise in and are assigned to
Licensor. Promptly upon entering into each such Agreement,
Licensee shall give Licensor a copy of such Agreement.
Licensee assumes all responsibility for such parties and
agrees that Licensee shall bear any and all risks arising
out of or relating to the performance of services by them
and to the fulfillment of their obligations under the
Contributor's Agreement.
(iv) Upon expiration of termination of this Agreement for any
reason, or upon demand by Licensor at any time, Licensee
shall promptly deliver to Licensor all Artwork or Licensed
Property, whether finished or not, including drawings,
drafts, sketches, illustrations, screens, data, digital
files and information, copies or other items, information
or things created in the course of preparing the Licensed
Property and all materials provided
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<PAGE>
to Licensee by Licensor hereunder, or, at Licensor's
option and instruction, shall destroy some or all of the
foregoing and shall confirm to Licensor in writing that
Licensee has done so. Licensee shall not use such Artwork
or Licensed Property, items, information or things,
material, for any purpose other than is permitted under
this Agreement.
(c) Licensee shall, within thirty (30) days of receiving an invoice,
pay Licensor for artwork executed for Licensee by Licensor (or by
third parties under contract to Licensor) for use in the
development of the Licensed Products and any related packaging,
display and promotional materials at Licensor's prevailing
commercial art rates. The foregoing shall include any artwork
that, in Licensor's opinion, is necessary to modify artwork
initially prepared by Licensee and submitted for approval.
Estimates of artwork charges are available upon request.
(d) Licensee shall cause to be imprinted, irremovably and legibly on
each Licensed Product manufactured, distributed or sold under
this Agreement, and all advertising, promotional, packaging and
wrapping material wherein the Licensed Property appears, the
appropriate Copyright Notice for each such Licensed Property as
set forth on Schedules A-1 through C-13 (*REDACTED*).
(e) In no event shall Licensee use, in respect to the Licensed
Products and/or in relation to any advertising, promotional,
packaging or wrapping material, any copyright or trademark
notices which shall conflict with, be confusing with, or negate,
any notices required hereunder by Licensor in respect to the
Licensed Property.
(f) Licensee agrees to deliver to Licensor free of cost six (6) of
each of the Licensed Products together with their packaging and
wrapping material for trademark registration purposes in
compliance with applicable laws, simultaneously upon distribution
to the public. Any copyrights or trademarks with respect to the
Licensed Products shall be procured by and for the benefit of
Licensor and at Licensor's expense. Licensee further agrees to
provide Licensor with the date of the first use of the Licensed
Products in interstate and intrastate commerce.
(g) Licensee shall assist Licensor, at Licensor's expense, in the
procurement, protection, and maintenance of Licensor's rights to
the Licensed Property. Licensor may, in its sole discretion,
commence or prosecute and effect the disposition of any claims or
suits relative to the imitation, infringement and/or unauthorized
use of the Licensed Property either in its own name, or in the
name of Licensee, or join Licensee as a party in the prosecution
of such claims or suits. Licensee agrees to cooperate fully with
Licensor in connection with any such claims or suits and
undertakes to furnish full assistance to Licensor in the conduct
of all proceedings in regard thereto. Licensee shall promptly
notify Licensor in writing of any infringements or imitations or
unauthorized uses by others of the
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<PAGE>
Licensed Property, on or in relation to products identical to
similar to or related to the Licensed Products. Licensor shall in
its sole discretion have the right to settle or effect
compromises in respect thereof. Licensee shall not institute any
suit or take any action on account of such infringements,
imitations or unauthorized uses.
9. APPROVALS AND QUALITY CONTROLS:
(a) Licensee agrees to strictly comply and maintain compliance with
the quality standards, specifications and rights of approval of
Licensor in respect to any and all usage of the Licensed Property
on or in relation to the Licensed Products throughout the Term of
this Agreement and any renewals or extensions thereof (if
applicable). Licensee agrees to furnish to Licensor free of cost
for its written approval as to quality and style, samples of each
of the Licensed Products, together with their packaging,
hangtags, and wrapping material, as follows in the successive
stages indicated: (i) rough sketches/layout concepts; (ii)
finished artwork or final proofs; (iii) pre-production samples or
strike-offs; and (iv) finished products, including packaged
samples.
(b) No Licensed Products and no material whatever utilizing the
Licensed Property shall be manufactured, sold, distributed or
promoted by Licensee without prior written approval. Licensee
may, subject to Licensor's prior written approval, use textual
and/or pictorial matter pertaining to the Licensed Property on
such promotional, display and advertising material as may, in its
reasonable judgment, promote the sale of the Licensed Products.
All advertising and promotional material relating to the Licensed
Products must be submitted to the Licensor for its written
approval at the following stages appropriate to the medium used:
(i) rough concepts; (ii) layout, storyboard, script; and (iii)
finished materials.
(c) Approval or disapproval shall lie in Licensor's sole discretion.
Any Licensed Products not so approved in writing shall be deemed
unlicensed and shall not be manufactured or sold. If any
unapproved Licensed Products are being sold, Licensor may,
together with other remedies available to it including, but not
limited to, immediate termination of this Agreement, require such
Licensed Products to be immediately withdrawn from the market and
to be destroyed, such destruction to be attested to in a
certificate signed by an officer of Licensee.
(d) Any modification of a Licensed Product must be submitted in
advance for Licensor's written approval as if it were a new
Licensed Product. Approval of a Licensed Product which uses
particular artwork does not imply approval of such artwork for
use with a different Licensed Product.
(e) Licensed Products must conform in all material respects to the
final production samples approved by Licensor. If in Licensor's
reasonable judgement, the quality
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of a Licensed Product originally approved has deteriorated in
later production runs, or if a Licensed Product has otherwise
been altered, Licensor may, in addition to other remedies
available to it, require that such Licensed Product be
Immediately withdrawn from the market.
(f) Licensee shall permit Licensor to inspect Licensee's
manufacturing operations, testing and payroll records (including
those operations and records of any supplier or manufacturer
approved pursuant to Paragraph 10.(b) below) with respect to the
Licensed Products.
(g) If any changes or modifications are required to be made to any
material submitted to Licensor for its written approval in order
to ensure compliance with Licensor's specifications or standards
of quality, Licensee agrees promptly to make such changes or
modifications.
(h) Subsequent to final approval, no fewer than fifty (50) production
samples of Licensed Products will be sent to Licensor, to ensure
quality control simultaneously upon distribution to the public.
In addition, Licensee shall provide Licensor with fifteen (15)
catalogs which display all of Licensee's products, not just the
Licensed Products. Further, Licensor shall have the right to
purchase any and all Licensed Products in any quantity at the
maximum discount price Licensee charges its best customer.
(i) To avoid confusion of the public, Licensee agrees not to
associate other characters or properties with the Licensed
Property on the Licensed Products or in any packaging,
promotional or display materials unless Licensee receives
Licensor's prior written approval. Furthermore, Licensee agrees
not to use the Licensed Property (or any component thereof) on
any business sign, business cards, stationery or forms, nor as
part of the name of Licensee's business or any division thereof.
(j) Licensee shall use its best efforts to notify its customers of
the requirement that Licensor has the right to approve all
promotional, display and advertising material pursuant to this
Agreement.
(k) It is understood and agreed that any animation used in electronic
media, including but not limited to animation for television
commercials and character voices for radio commercials, shall be
produced by Warner Bros. Animation and/or the Warner/Blanc Audio
Library pursuant to a separate agreement between Licensee and
Warner Bros. Animation and/or the Warner/Blanc Audio Library,
subject to Warner Bros. Animation and/or the Warner/Blanc Audio
Library customary rates. Any payment made to Warner Bros.
Animation and/or the Warner/Blanc Audio Library for such
animation or character voices shall be in addition to and shall
not offset the Guaranteed Consideration set forth in Paragraph
1.(d).
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(l) Licensor's approval of Licensed Products (including, without
limitation, the Licensed Products themselves as well as
promotional, display and advertising materials) shall in no way
constitute or be construed as an approval by Licensor of
Licensee's use of any trademark, copyright and/or other
proprietary materials not owned by Licensor.
(m) All Licensed Products must be submitted for approval as set forth
above to Licensor's Brand Assurance Department for the Territory.
Licensor's approval of products licensed under any other
agreement between Licensor and/or its affiliated companies and
Licensee and/or its affiliated companies shall not constitute an
approval of any Licensed Products for distribution in the
Territory hereunder.
10. DISTRIBUTION; SUBLICENSE MANUFACTURE:
(a) Within the Distribution Channels set forth in Paragraph 1.(h)
hereof, Licensee shall sell the Licensed Products either to
jobbers, wholesalers, distributors or retailers for sale or
resale and distribution directly to the public. Unless explicitly
set forth in Paragraph 1.(h) hereof, Licensee shall not sell the
Licensed Products through any cable home shopping service or
through electronic media, including on any on- line network or
service. If Licensee sells or distributes the Licensed Products
at a special price, directly or indirectly, to itself, including
without limitation, any subsidiary of Licensee or to any other
person, firm, or corporation affiliated with Licensee or its
officers, directors or major stockholders, for ultimate sale to
unrelated third parties, Licensee shall pay Royalties with
respect to such sales or distribution, based upon the price
generally charged the trade by Licensee.
(b) Except as specifically permitted hereunder, Licensee shall not be
entitled to sublicense any of its rights under this Agreement. In
the event Licensee is not the manufacturer of the Licensed
Products, Licensee shall, subject to the prior written approval
of Licensor, which approval shall not be unreasonably withheld,
be entitled to utilize a third party manufacturer in connection
with the manufacture and production of the Licensed Products,
provided that such manufacturer shall execute a letter in the
form of Exhibit 1 attached hereto and by this reference made a
part hereof. In such event, Licensee shall remain primarily
obligated under all of the provisions of this Agreement and any
default of this Agreement by such manufacturer shall be deemed a
default by Licensee hereunder. In no event shall any such third
party manufacturer agreement include the right to grant any
rights to subcontractors.
(c) In the event the Territory or part thereof, now or hereafter, is
a member state of the European Economic Area (the "EEA"), nothing
in this Agreement shall prevent Licensee from supplying
unsolicited orders from customers having registered offices
outside the Territory and/or outside the Distribution Channels
but in the EEA, provided that Licensee shall not pursue an active
policy of selling or
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marketing the Licensed Products and/or Licensed Property outside
the Territory and/or Distribution Channels but in the EEA.
11. GOOD WILL: Licensee recognizes the great value of the publicity and good
will associated with the Licensed Property and, acknowledges that: (i)
such good will is exclusively that of Licensor; and (ii) the Licensed
Property has acquired a secondary meaning as Licensor's trademarks
and/or identifications in the mind of the purchasing public. Licensee
further recognizes and acknowledges that a breach by Licensee of any of
its covenants, agreements or undertakings hereunder will cause Licensor
irreparable damage, which cannot be readily remedied in damages in an
action at law, and may, in addition thereto, constitute an infringement
of Licensor's copyrights, trademarks and/other proprietary rights in,
and to the Licensed Property, thereby entitling Licensor to equitable
remedies and costs.
12. LICENSOR'S WARRANTIES AND REPRESENTATIONS:
Licensor represents and warrants to Licensee that:
(a) It has, and will have throughout the Term of this Agreement, the
right to license the Licensed Property to Licensee in accordance
with the terms and provisions of this Agreement; and
(b) The making of this Agreement by Licensor does not violate any
agreements, rights or obligations of any person, firm or
corporation.
13. LICENSEE'S WARRANTIES AND REPRESENTATIONS:
Licensee represents and warrants to Licensor that, during the Term and
thereafter:
(a) It will not attack the title of Licensor (or third parties that
have granted rights to Licensor) in and to the Licensed Property
or any copyright or trademarks pertaining thereto, nor will it
attack the validity of the license granted hereunder;
(b) It will not harm, misuse or bring into disrepute the Licensed
Property, but on the contrary, will maintain the value and
reputation thereof to the best of its ability;
(c) It will manufacture, sell, promote and distribute the Licensed
Products in an ethical manner and in accordance with the terms
and intent of this Agreement, and in compliance with all
applicable government regulations and industry standards;
(d) It will not create any expenses chargeable to Licensor without
the prior written approval of Licensor in each and every
instance. It will not cause or allow any liens or encumbrances to
be placed against the Licensed Property;
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(e) It will protect to the best of its ability its right to
manufacture, sell, promote, and distribute the Licensed Products
hereunder;
(f) It will at all times comply with all government laws and
regulations, including but not limited to product safety, food,
health, drug, cosmetic, sanitary or other similar laws, and all
voluntary industry standards relating or pertaining to the
manufacture, sale, advertising or use of the Licensed Products,
and shall maintain its appropriate customary high quality
standards during the Term hereof. It shall comply with any
regulatory agencies which shall have jurisdiction over the
Licensed Products and shall procure and maintain in force any and
all permissions, certifications and/or other authorizations from
governmental and/or other official authorities that may be
required in response thereto. Each Licensed Product and component
thereof distributed hereunder shall comply with all applicable
laws, regulations and voluntary industry standards. Licensee
shall follow reasonable and proper procedures for testing that
all Licensed Products comply with such laws, regulations and
standards. Licensee shall permit Licensor or its designees to
inspect testing records and procedures with respect to the
Licensed Products for compliance. Licensed Products that do not
comply with all applicable laws, regulations and standards shall
automatically be deemed unapproved and immediately taken off the
market;
(g) It shall, upon Licensor's request, provide credit information to
Licensor including, but not limited to, fiscal year-end financial
statements (profit-and-loss statement and balance sheet) and
operating statements;
(h) It will, pursuant to Licensor's instructions, duly take any and
all necessary steps to secure execution of all necessary
documentation for the recordation of itself as user of the
Licensed Property in any jurisdiction where this is required or
where Licensor reasonably requests that such recordation shall be
effected. Licensee further agrees that it will at its own expense
cooperate with Licensor in cancellation of any such recordation
at the expiration of this Agreement or upon termination of
Licensee's right to use the Licensed Property. Licensee hereby
appoints Licensor its Attorney-in-Fact for such purpose;
(i) It will not deliver or sell Licensed Products outside the
Territory or knowingly sell Licensed Products to a third party
for delivery outside the Territory, subject to Paragraph 10.(c)
hereof;
(j) It will not use any labor that violates any local labor laws,
including all wage and hour laws, laws against discrimination and
that it will not use prison, slave or child labor in connection
with the manufacture of the Licensed Products;
(k) It shall at all times comply with all manufacturing, sales,
distribution, retail and marketing policies and strategies
promulgated by Licensor from time-to-time; and
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(1) If requested by Licensor to do so, it will utilize specific
design elements of the Licensed Property provided to Licensee by
Licensor on hangtags, labels, and other materials.
14. TERMINATION BY LICENSOR:
(a) Licensor shall have the right to terminate this Agreement without
prejudice to any rights which it may have, whether pursuant to
the provisions of this Agreement, or otherwise in law, or in
equity, or otherwise upon the occurrence of any one or more of
the following events (herein called "defaults"):
(i) Licensee defaults in the performance of any of its
obligations provided for in this Agreement; or
(ii) Licensee shall have failed to deliver to Licensor or to
maintain in full force and effect the insurance referred
to in Paragraph 7.(c) hereof; or
(iii) Licensee shall fail to make any payments due hereunder on
the date due; or
(iv) Licensee shall fail to deliver any of the statements
required herein or to give access to the premises and/or
license records pursuant to the provisions hereof to
Licensor's authorized representatives for the purposes
permitted hereunder; or
(v) Licensee shall fail to comply with any laws, regulations
or voluntary industry standards as provided in Paragraph
13.(f) or any governmental agency or other body, office or
official vested with appropriate authority finds that the
Licensed Products are harmful or defective in any way,
manner or form, or are being manufactured, sold or
distributed in contravention of applicable laws,
regulations or standards, or in a manner likely to cause
harm; or
(vi) Licensee shall be unable to pay its debts when due, or
shall make any assignment for the benefit of creditors, or
shall file any petition under the bankruptcy or insolvency
laws of any jurisdiction, county or place, or shall have
or suffer a receiver or trustee to be appointed for its
business or property, or be adjudicated a bankrupt or an
insolvent; or
(vii) Licensee does not commence in good faith to manufacture,
distribute and sell each Licensed Products and utilize
each character set forth in the Licensed Property
("Character") throughout the Territory and the
Distribution Channels on or before the Marketing Date and
thereafter fails to diligently and continuously
manufacture, distribute and sell each of the
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Licensed Products and utilize each Character throughout
the Territory. Such default and Licensor's resultant right
of termination (or recapture) shall only apply to the
specific Character(s), the specific Licensed Products, the
specific country of the Territory and/or the specific
Distribution Channel, which or wherein Licensee fails to
meet said Marketing Date requirement; or
(viii) Licensee shall manufacture, sell or distribute, whichever
first occurs, any of the Licensed Products(s) without the
prior written approval of Licensor as provided in
Paragraph 9 hereof. Notwithstanding the foregoing, in the
event Licensee has manufactured product without Licensor's
approval and has not sold or otherwise distributed such
unapproved product, this Agreement shall not terminate
provided that all such unapproved product is immediately
destroyed and Licensee provides a certificate of
destruction to Licensor; or
(ix) Saul Gamoran is no longer an executive officer of
Licensee; or
(x) A manufacturer approved pursuant to Paragraph 10.(b)
hereof shall sell Licensed Products to parties other than
Licensee or engage in conduct, which conduct if engaged in
by Licensee would entitle Licensor to terminate this
Agreement; or
(xi) Licensee delivers or sells Licensed Products outside the
Territory or knowingly sells Licensed Products(s) to a
third party who Licensee knows intends to, or who Licensee
reasonably should suspect intends to, sell or deliver such
Licensed Products outside the Territory, except as
provided for in Paragraph 10.(c) above; or
(xii) Licensee uses any labor that violates any local labor laws
and/or it uses prison, slave or child labor in connection
with the manufacture of the Licensed Products; or
(xiii) Licensee has made a material misrepresentation or has
omitted to state a material fact necessary to make the
statements not misleading.
(b) In the event any of these defaults occur Licensor shall give
notice of termination in writing to Licensee by facsimile and
certified mail. Licensee shall have the number of days specified
as follows from the date of giving notice in which to correct the
default (except subdivisions (vii), (viii), (xi) and (xiii) above
which are not curable): for subdivisions (iii), (iv) (x) and
(xii): ten (10) days; for subdivisions (ii) , (v) and (vi) :
fifteen (15) days; for all other subdivisions: thirty (30) days;
and failing such, this Agreement shall thereupon immediately
terminate, and any and all payments then or later due from
Licensee hereunder (including Guaranteed
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Consideration) shall then be promptly due and payable in full and
no portion of those prior payments shall be repayable to
Licensee.
15. FINAL STATEMENT UPON TERMINATION OR EXPIRATION: Licensee shall
deliver, as soon as practicable, but not later than thirty (30) days
following expiration or termination of this Agreement, a statement
indicating the number and description of Licensed Products on hand
together with a description of all advertising and promotional materials
relating thereto. Following expiration or termination of this Agreement,
Licensee shall immediately cease any and all manufacturing of the
Licensed Product. However, if Licensee has complied with all the terms
of this Agreement, including, but not limited to, complete and timely
payment of the Guaranteed Consideration and Royalty Payments, then
Licensee may continue to distribute and sell its remaining inventory for
a period not to exceed ninety (90) days following such termination or
expiration (the "Sell-Off Period"), subject to payment of applicable
Royalties thereto. In no event, however, may Licensee distribute and
sell during the Sell-off Period an amount of Licensed Products that
exceeds the average amount of Licensed Products sold during any
consecutive ninety (90) day period during the Term. In the event this
Agreement is terminated by Licensor for any reason under this Agreement,
Licensee shall be deemed to have forfeited its Sell-Off Period. If
Licensee has any remaining inventory of the Licensed Products following
the Sell-Off Period, Licensee shall, at Licensor's option, make
available such inventory to Licensor for purchase at or below cost,
deliver up to Licensor for destruction said remaining inventory or
furnish to Licensor an affidavit attesting to the destruction of said
remaining inventory. Licensor shall have the right to conduct a physical
inventory in order to ascertain or verify such inventory and/or
statement. In the event that Licensee refuses to permit Licensor to
conduct such physical inventory, Licensee shall forfeit its right to the
Sell-Off Period hereunder or any other rights to dispose of such
inventory. In addition to the forfeiture, Licensor shall have recourse
to all other legal remedies available to it.
16. NOTICES: Except as otherwise specifically provided herein, all notices
which either party hereto is required or may desire to give to the other
shall be given by addressing the same to the other at the address set
forth above, with a copy to WBCP (U.K.) LTD. at the address set forth in
Paragraph 5.(b) above, or at such other address as may be designated in
writing by any such party in a notice to the other given in the manner
prescribed in this paragraph. All such notices shall be sufficiently
given when the same shall be deposited so addressed, postage prepaid, in
the United States mail and/or when the same shall have been delivered,
so addressed, by facsimile or by overnight delivery service and the date
of transmission by facsimile, receipt of overnight delivery service or
two business days after mailing shall for the purposes of this Agreement
be deemed the date of the giving of such notice.
17. NO PARTNERSHIP, ETC.: This Agreement does not constitute and shall not
be construed as constitution of a partnership or joint venture between
Licensor and Licensee. Neither party shall have any right to obligate or
bind the other party in any manner
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whatsoever, and nothing herein contained shall give, or is intended to
give, any rights of any kind to any third persons.
18. NO SUBLICENSING/NON-ASSIGNABILITY: This Agreement shall bind and inure
to the benefit of Licensor, its successors and assigns. This Agreement
is personal to Licensee. Licensee shall not sublicense, franchise or
delegate to third parties its rights hereunder (except as set forth in
Paragraph 10.(b) hereof). Neither this Agreement nor any of the rights
of Licensee hereunder shall be sold, transferred or assigned by Licensee
and no rights hereunder shall devolve by operation of law or otherwise
upon any receiver, liquidator, trustee or other party.
19. *REDACTED*
20. CONSTRUCTION: This Agreement shall be construed in accordance with the
laws of the State of California of the United States of America without
regard to its conflicts of laws provisions.
21. WAIVER, MODIFICATION ETC.: No waiver, modification or cancellation of
any term or condition of this Agreement shall be effective unless
executed in writing by the party charged therewith. No written waiver
shall excuse the performance of any acts other than those specifically
referred to therein. The fact that the Licensor has not previously
insisted upon Licensee expressly complying with any provision of this
Agreement shall not be deemed to be a waiver of Licensor's future right
to require compliance in respect thereof and Licensee specifically
acknowledges and agrees that the prior forbearance in respect of any
act, term or condition shall not prevent Licensor from subsequently
requiring full and complete compliance thereafter. If any term or
provision of this Agreement is held to be invalid or unenforceable by
any court of competent jurisdiction or any other authority vested with
jurisdiction, such holding shall not affect the validity or
enforceability of any other term or provision hereto and this Agreement
shall be interpreted and construed as if such term or provision, to the
extent the same shall have been held to be invalid, illegal or
unenforceable, had never been contained herein. Headings of paragraphs
herein are for convenience only and are without substantive
significance.
22. ACCEPTANCE BY LICENSOR: This instrument when signed by Licensee shall be
deemed an application for license and not a binding agreement unless and
until accepted by Warner Bros. Consumer Products by signature of a duly
authorized officer and the delivery of such a signed copy to Licensee.
The receipt by Warner Bros. Consumer Products of any check or other
consideration given by Licensee and/or delivery of any material by
Warner Bros. Consumer Products to Licensee shall not be deemed an
acceptance by Warner Bros. Consumer Products of this application. The
foregoing shall apply to any documents relating to renewals or
modifications hereof.
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<PAGE>
This Agreement shall be of no force or effect unless and until it is signed by
all of the parties listed below:
AGREED AND ACCEPTED: AGREED AND ACCEPTED:
LICENSOR: LICENSEE:
WARNER BROS. CONSUMER PRODUCTS, PLAY-BY-PLAY TOYS
A DIVISION OF TIME WARNER ENTERTAINMENT NOVELTIES, INC.
COMPANY L.P., ON BEHALF OF ITSELF AND AS
AGENT FOR WARNER BROS., A DIVISION OF
TIME WARNER ENTERTAINMENT COMPANY L.P.
By:/S/ GARY R. SIMON By:/S/ SAUL GAMORAN
Gary R. Simon Saul Gamoran
Vice President, Legal Affairs Executive Vice President
and General Counsel
Date: 1/27/98 Date: 1/27/98
25
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SCHEDULE A, CHART #1, SCHEDULE A, CHART #2, AND SCHEDULES A-1
THROUGH D-15, INCLUSIVE, HAVE BEEN OMITTED HEREFROM AND FILED
SEPARATELY WITH THE COMMISSION BASED UPON A REQUEST FOR
CONFIDENTIAL TREATMENT.
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<PAGE>
#68116 - EXHIBIT 1
WARNER BROS. CONSUMER PRODUCTS
4000 Warner Blvd.
Triangle Bldg. - 3rd Floor
Burbank, CA 91522
RE: APPROVAL OF THIRD PARTY MANUFACTURER
Gentlemen:
This letter will serve as notice to you that pursuant to Paragraph 10.(b) of
the License Agreement dated _____________________, between WARNER BROS., A
DIVISION OF TIME WARNER ENTERTAINMENT COMPANY L.P. and PLAY-BY-PLAY TOYS &
NOVELTIES, INC. ("Licensee"), we have been engaged as the manufacturer for
Licensee in connection with the manufacture of Licensed Products as defined in
the aforesaid License Agreement. We hereby acknowledge that we may not
manufacture Licensed Products for, or sell or distribute Licensed Products to,
anyone other than Licensee. We hereby further acknowledge that we have received
a copy and are cognizant of the terms and conditions set forth in said License
Agreement and hereby agree to observe those provisions of said License Agreement
which are applicable to our function as manufacturer of the Licensed Products.
It is expressly understood that we are obligated to comply with all local laws,
including without limitation, labor laws, wage and hour laws and
anti-discrimination laws and that you or your representatives shall, at anytime,
have the right to inspect our facilities and review our records to ensure
compliance therewith. It is understood that this engagement is on a royalty free
basis and that we may not subcontract any of our work without your prior written
approval.
We understand that our engagement as the manufacturer for Licensee is
subject to your written approval. We request, therefore, that you sign in the
space below, thereby showing your acceptance of our engagement as aforesaid.
27
<PAGE>
Very truly yours,
_________________________
Manufacturer/Company Name
By:______________________
signature
_________________________
printed name
AGREED TO AND ACCEPTED: _________________________
address
WARNER BROS. CONSUMER PRODUCTS,
A DIVISION OF TIME WARNER
ENTERTAINMENT COMPANY, L.P. _________________________
dated
_________________________
By:____________________________ product(s) manufacturing
Gary R. Simon
Vice President, Legal Affairs
___________________________
dated
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<PAGE>
#68116 - EXHIBIT 2
CONTRIBUTOR'S AGREEMENT
I, __________________________________, the undersigned ("Contributor"), have
been engaged by _________________________ ("Licensee") to work on or contribute
to the creation of Licensed Products, described as
__________________________________________, by Licensee under an agreement
between Licensee and Warner Bros., a division of Time Warner Entertainment
Company L.P., c/o Warner Bros. Consumer Products, a division of Time Warner
Entertainment Company L.P. ("Warner"), dated ________________________.
I understand and agree that the Licensed Products, and all artwork or other
results of my services for Licensee in connection with such Licensed Products
("Work") is a "work made for hire" for Warner and that all right, title and
interest in and to the Work shall vest and remain with Warner. I reserve no
rights therein. Without limiting the foregoing, I hereby assign and transfer to
Warner all other rights whatsoever, in perpetuity throughout the universe which
I may have or which may arise in me or in connection with the Work. I hereby
waive all moral rights in connection with such Work together with any other
rights which are not capable of assignment. I further agree to execute any
further documentation relating to such transfer or waiver or relating to such
Work at the request of Warner or Licensee, failing which Warner is authorized to
execute same as my Attorney-in-Fact.
CONTRIBUTOR:
By:
Date:
WARNER BROS. CONSUMER PRODUCTS:
By:
Date:
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<PAGE>
EXHIBIT 3
LICENSE AGREEMENT #68116
EUROPE, MIDDLE EAST AND AFRICA:
United Kingdom, Eire, France, Germany, Italy, Spain, Portugal, Belgium, The
Netherlands, Luxembourg, Greece, Denmark, Sweden, Finland, Austria, Norway,
Iceland, Liechtenstein, Switzerland, Turkey, Poland, Czech Republic, Slovak
Republic, Hungary, Bulgaria, Romania, Albania, Croatia, Slovenia,
Bosnia-Herzegovina, Montenegro, Kosovo, Macedonia, Serbia, Vojvodina Latvia,
Estonia, Lithuania, Russia, Armenia, Azerbaijan, Belarus, Georgia, Kazakhstan,
Kyrgystan, Moldova, Tajikistan, Turkmenistan, Ukraine, Uzbekistan, Bahrain,
Cyprus, Egypt, Iran, Iraq, Israel, Jordan, Kuwait, Lebanon, Oman, Qatar,
Republic of Yemen, South Yemen, Saudi Arabia, Syria, United Arab Emirates,
Algeria, Angola, Benin, Botswana, Burkina Faso, Burundi, Cameroon, Central
African Republic, Chad, Congo, Djibouti, Egypt, Equatorial Guinea, Ethiopia,
Gabon, Gambia, Ghana, Guinea, Guinea Bissau, Ivory Coast, Kenya, Lesotho,
Liberia, Libya, Malawi, Mali, Mauritania, Morocco, Mozambique, Namibia, Niger,
Rwanda, Senegal, Sierra Leone, Somalia, South Africa, Sudan, Swaziland,
Tanzania, Togo, Tunisia, Uganda, Western Sahara, Zaire, Zambia, Zimbabwe.
30
<PAGE>
EXHIBITS 4 AND 5 HAVE BEEN OMITTED HEREFROM AND FILED
SEPARATELY WITH THE COMMISSION BASED UPON A REQUEST FOR
CONFIDENTIAL TREATMENT.
31
EXHIBIT 10.14
CERTAIN PORTIONS OF THIS EXHIBIT, MARKED AS "*REDACTED*," HAVE
BEEN OMITTED HEREFROM AND FILED SEPARATELY WITH THE
COMMISSION BASED UPON A REQUEST FOR CONFIDENTIAL TREATMENT.
RETAIL LICENSE - LATIN AMERICA
WARNER BROS. CONSUMER PRODUCTS
#90248
LICENSE AGREEMENT made January 1, 1998 by and between WARNER BROS., A DIVISION
OF TIME WARNER ENTERTAINMENT COMPANY L.P., c/o Warner Bros. Consumer Products, a
Division of Time Warner Entertainment Company L.P., whose address is 4000 Warner
Blvd., Burbank, CA 91522 (hereinafter referred to as "LICENSOR") and
PLAY-BY-PLAY TOYS & NOVELTIES, INC., whose address is 4400 Tejasco, San Antonio,
TX 78218-0267, c/o 1000 2nd Avenue, Suite 1401, Seattle, WA 98104, Attention:
Saul Gamoran (hereinafter referred to as "LICENSEE").
W I T N E S S E T H :
The parties hereto mutually agree as follows:
1. DEFINITIONS: As used in this Agreement, the following terms shall have
the following respective meanings:
(a) "LICENSED PROPERTY": As defined in Schedules A-1 through C-13
(which are *REDACTED*) as set forth below, attached hereto and
incorporated by reference:
(i) PROPERTIES A (ALL ARTICLES):
Schedule A-1 (*REDACTED*): Looney Tunes
Schedule A-2 (*REDACTED*): Animaniacs
(ii) PROPERTIES B (ALL ARTICLES):
Schedule B-3 (*REDACTED*): Scooby Doo
Schedule B-4 (*REDACTED*): Tom & Jerry
Schedule B-5 (*REDACTED*): The Flintstones
Schedule B-6 (*REDACTED*): Yogi Bear
Schedule B-7 (*REDACTED*): Top Cat
Schedule B-8 (*REDACTED*): The Jetsons
Schedule B-9 (*REDACTED*): Wacky Races
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<PAGE>
In addition, the Licensed Property shall include use of
the Cartoon Network Logo, to be used only in conjunction
with one (1) or more Properties B and subject to
Licensor's prior written approval on a case-by-case basis.
It is understood and agreed that no additional royalties
shall be paid to Licensor for use of the Cartoon Network
Logo as set forth herein.
(iii) PROPERTIES C (ARTICLES 4 ONLY):
Schedule C-10 (*REDACTED*): Batman Animated Series/Comics
Schedule C-11 (*REDACTED*): Superman Animated
Series/Comics/
"Superman V" Motion Picture
Schedule C-12 (*REDACTED*): Baby Looney Tunes
Schedule C-13 (*REDACTED*): Quest for Camelot
(b) "TERRITORY": The region of Latin America, as defined on the attached
Exhibit 3.
(c) "LICENSED PRODUCT(S)":
(i) ARTICLES 1 "STANDARD PLUSH":
*REDACTED*
(ii) ARTICLES 2 "FEATURE PLUSH":
*REDACTED*
(iii) ARTICLES 3 "OTHER PLUSH":
*REDACTED*
(iv) ARTICLES 4 "HOUSEWARES":
*REDACTED*
Articles 1, 2, 3 and 4 as defined above shall be referred to
separately and collectively herein as the "Licensed Product(s)."
*REDACTED*
(d) "GUARANTEED CONSIDERATION":
(i) The sum of *REDACTED* U.S. Dollars ($USD *REDACTED*),
which shall be allocated among the Licensed Properties,
the Licensed Products
2
<PAGE>
and the Distribution Channels and payable according to the
payment schedules set forth in Schedules A-1 through D-15
(which are *REDACTED*).
*REDACTED*
The Royalties payable by Licensee hereunder shall offset
the amounts set forth above for such Property and Article.
Licensor acknowledges that the Unrecouped Balances have
been paid by Licensee.
(ii) It is hereby understood and agreed that:
1. Licensee shall provide Licensor a security
instrument in the form of an irrevocable insurance
bond in the amount of *REDACTED* DOLLARS
($*REDACTED*) (the "Security Instrument") of which
(a) *REDACTED* Dollars ($*REDACTED*) shall be
security against the Guaranteed Consideration for
this Agreement and (b) *REDACTED* Dollars
($*REDACTED*) shall be security against the
Guaranteed Consideration for License Agreement
#68116 between Licensor and Licensee for the
region of Europe, Middle East and Africa
(including all Guaranteed Consideration amounts
set forth on Schedules A through D-15 (which are
*REDACTED*) attached thereto), it being expressly
understood that there shall be only one (1)
Security Instrument for the two (2) Agreements.
The Security Instrument shall be in a form
acceptable to Licensor and shall be issued from an
institution acceptable to Licensor, such
acceptances not to be unreasonably withheld.
Delivery of the Security Instrument to Licensor
shall be no later than thirty (30) days after
Licensee's execution of this Agreement. The
Security Instrument shall have a term concurrent
with the Term of this Agreement and shall be
self-liquidating to the amount of the Guaranteed
Consideration remaining at the conclusion of the
Term. The Security Instrument shall be reduced
during the Term on a dollar for dollar basis as
Licensee makes payments during the Term. Upon
payment to Licensor of the total amount of the
Guaranteed Consideration, the Security Instrument
shall terminate;
2. All payments hereunder shall be made in U.S.
Dollars; and
3. *REDACTED*
(e) "TERM": January 1, 1998 through December 31, 2000.
3
<PAGE>
(f) "MARKETING DATES": "Marketing Date" shall mean the latest date
the Licensed Products shall be made available to the trade or to
the public, whichever applies, as set forth for each Article in
Schedules A, Chart #1 (which is *REDACTED*).
(g) "ROYALTY RATE": Licensee shall pay to Licensor the following sums
as applicable (the "Royalties"): *REDACTED*
(h) "DISTRIBUTION CHANNELS": Licensee may distribute the Licensed
Products through the Distribution Channels (as defined below)
applicable to each such Licensed Product as set forth below:
*REDACTED*
The Distribution Channels shall be defined as follows:
*REDACTED*
(i) "AUTHORIZED DISTRIBUTORS": Licensee and Licensor agree that
Licensee shall be permitted to utilize third-party distributors
within specific countries in the Territory ("Authorized
Distributors"), which shall have the right to import,
manufacture, distribute and/or sell Licensed Products, subject to
Licensor's prior written approval in each case. Licensee agrees
that with each request for such approval it shall submit a
comprehensive annual business plan relating to the distribution
and sales of the Licensed Products. No approval, rejection and/or
modification of such annual business plan required by Licensor
shall constitute a guarantee for economic benefit to Licensee
and/or the Authorized Distributor or shall constitute liability
on the part of Licensor for any aspect of Licensee's business.
(j) "THIRD PARTY LICENSES": Licensee acknowledges that all rights
hereunder are subject to the rights of pre-existing licensees
under third party licenses as listed in Exhibit 4 hereto
(*REDACTED*) (the "Third Party Licenses"), including but not
limited to such pre-existing licensees which have been granted
distribution rights in parts of the Territory for products
identical to Articles 1, 2 and 3. Licensee agrees that it and its
affiliated companies shall not distribute and sell such Articles
1, 2 and 3 in such parts of the Territory; however Licensee shall
have the right to negotiate with such licensees with the purpose
of acting as the manufacturer for such licensees.
(k) "RECAPTURE RIGHTS": In the event Licensee fails to market any of
the Licensed Products and/or any of the countries in the
Territory and/or any of the Licensed Properties and or any of the
Distribution Channels three (3) months after the Marketing Date,
Licensor shall have the right to recapture such Licensed Product,
country, Licensed Property and/or Distribution Channel from the
rights granted
4
<PAGE>
under this Agreement without obligation to Licensee. Such
recapture may take place on a Property-by-Property, Licensed
Product-by-Licensed Product, country-by-country and/or
Distribution Channel-by-Distribution Channel basis.
(l) "LICENSEE'S COMMITMENTS":
(i) PROMOTIONAL COMMITMENT: Licensee agrees that throughout
the Term it shall spend a minimum of *REDACTED* percent
(*REDACTED*%) of its total Net Sales in each of the
countries in the Territory on promotional and advertising
activities in each such country (the "Promotional
Commitment"). The Promotional Commitment shall include, as
a minimum, television advertising for Articles 2 in the
following countries: *REDACTED*, with a total minimum
value of *REDACTED* percent (*REDACTED*%) of the total
Promotional Commitment for each country. Monies spent by
Licensee for Trade Fairs (as defined below) shall not be
taken into account to determine the Promotional
Commitment. Licensee shall submit reports on a quarterly
basis as set forth in Paragraph 5.(a) with respect to the
Promotional Commitment and Licensor shall Have the right
to inspect and/or audit Licensee's books and records with
respect to the Promotional Commitment under the terms and
conditions of Paragraph 6 hereof.
(ii) STAFFING COMMITMENT: Licensee agrees that it shall:
1. appoint dedicated sales and marketing managers to
oversee the sales and marketing of the Licensed
Products in the Territory; and
*REDACTED*
3. appoint dedicated staff to manage and enhance
product development and production control (as such
terms are commonly understood in the industry) of
the Licensed Products.
(iii) TRADE FAIRS: Licensee shall present the Licensed Products
at such trade fairs as are submitted to and approved by
Licensor prior to the Marketing Date (the "Trade Fairs").
Licensee's affiliates and/or Authorized Distributors shall
have sections of its booth solely dedicated to the
Licensed Properties and the Licensed Products at the Trade
Fairs, with the exception of Trade Fairs in Developing
Markets, where Licensee shall dedicate sections of its
booth to the Licensed Properties and the Licensed Products
5
<PAGE>
together with other products. "Developing Markets" shall
be such countries as are submitted-to and approved by
Licensor for such definition prior to the Marketing Date.
(m) LICENSOR'S STAFFING COMMITMENT: Licensor shall designate an
employee with primary responsibility for the administration of
this License Agreement.
2. GRANT OF LICENSE:
(a) Subject to the restrictions, limitations, reservations and
conditions and Licensor's approval rights set forth in this
Agreement and to pre-existing Third Party Licenses in the
Territory, Licensor hereby grants to Licensee and Licensee hereby
accepts for the Term of this Agreement, a license to utilize the
Licensed Property solely on or in connection with the
manufacture, distribution and sale of the Licensed Products as
specified above for the ultimate distribution to the public
throughout the Territory *REDACTED*.
(b) Without limiting any other approval rights of Licensor as
contained herein, no television commercials may be utilized under
this Agreement without the specific prior written approval of
Licensor, such approval not to be unreasonably withheld.
3. RESERVATION OF RIGHTS; PREMIUMS:
(a) Licensor reserves all rights not expressly conveyed to Licensee
hereunder, and Licensor may grant licenses to others to use the
Licensed Property, artwork and textual matter in connection with
other uses, services and products without limitation.
(b) Notwithstanding anything to the contrary stated herein, Licensor
specifically reserves the right, without limitation throughout
the world, to itself use, or license any third party(s) of its
choice to use the Licensed Property for the manufacture,
distribution and sale of products similar or identical to those
licensed herein in Paragraph 1.(c) above for sale through any
catalogue(s) produced or distributed by or on behalf of Licensor
or its affiliated companies, or for sale or distribution in any
theaters or arenas, or for sale or distribution in any retail
stores operated by or on behalf of Licensor, its affiliated
companies or franchisees, or for sale or distribution in any
theme/amusement parks operated by or on behalf of Licensor and
its affiliated companies, including without limitation, the Six
Flags and Movie World parks. In addition, Licensor reserves the
right to allow Six Flags Corporation and Movie World to
manufacture (or have manufactured by a third party) products
similar or identical to those licensed herein for distribution or
sale in theme and/or amusement parks owned or operated by both
Six Flags Corporation and Movie World. Further, Licensor reserves
the right to use, or
6
<PAGE>
license others to use, and/or manufacture products similar or
identical to those licensed herein for use as premiums.
(c) Licensee specifically understands and agrees that no rights are
granted herein with respect to the Warner Bros. "shield" logo or
trademark, or any other trademark(s), logo(s) or copyrights owned
by Licensor other than those specifically set forth above in the
Licensed Property, it being understood that all rights in and to
said properties are reserved exclusively to Licensor for use
and/or licensing as it deems appropriate to third party(s) of its
choice.
(d) Licensee agrees that it will not use, or knowingly permit the use
of, and will exercise due care that its customers likewise will
refrain from the use of, the Licensed Products as a premium,
except with the prior written consent of Licensor, and that it
shall not actively solicit orders for such use of the Licensed
Products. Notwithstanding the foregoing, Licensor shall notify
Licensee of any opportunities which may arise during the Term for
Licensee to bid on and/or supply a third party promotional
partner of Licensor's with Licensed Products for premium use
within the Territory and Licensee shall have the right to do so
hereunder. Subject to Licensor's prior written approval as
aforesaid, Licensee shall pay to Licensor a sum equal to TWELVE
PERCENT (12%) of all premium sales. For purposes of this
paragraph, the term "premium" shall be defined as including, but
not necessarily limited to, combination sales, free or
self-liquidating items offered to the public in conjunction with
the sale or promotion of a product or service, including traffic
building or continuity visits by the consumer/customer, or any
similar scheme or device, the prime intent of which is to use the
Licensed Products in such a way as to promote, publicize and or
sell the products, services or business image of the user of such
item.
4. CONSIDERATION:
(a) The Guaranteed Consideration paid by Licensee as set forth above
shall be applied against such Royalties as are, or have become,
due to Licensor. No part of such Guaranteed Consideration shall
be repayable to Licensee. Royalties earned in excess of the
Guaranteed Consideration applicable to the Term hereof shall not
offset any Guaranteed Consideration required in respect of the
succeeding renewal term (if any); likewise, Royalties earned in
excess of the Guaranteed Consideration applicable to the renewal
term (if any) shall not offset any Guaranteed Consideration
applicable to any prior term.
(b) ROYALTY PAYMENTS: Licensee shall pay to Licensor a sum equal to
the Royalty Rate as set forth above of all Net Sales by Licensee
of the Licensed Products covered by this Agreement. The term "Net
Sales" herein shall mean the gross invoice price billed
customers, less
7
<PAGE>
(i) actual quantity discounts and actual returns, but no
deductions shall be made for uncollectible accounts and
deductions for actual returns may not exceed five percent
(5%) of total sales; and
(ii) any sales, excise or value added taxes which are
separately stated and which are required to be collected
from customers and which are payable to tax authorities.
No deduction shall be taken in computing Net Sales for
taxes not described immediately above, including but not
limited to income taxes, withholding taxes or remittance
taxes.
No costs incurred in the manufacture, sale, distribution,
advertisement, or exploitation of the Licensed Products shall be
deducted from any Royalties payable by Licensee.
(c) Royalties shall be reported and paid as set forth in Paragraph
5.(a), except to the extent offset by Guaranteed Consideration
theretofore remitted. It is a material term and condition of this
Agreement that Royalty reports shall be broken down by (1)
Licensed Product, (2) country, (3) Licensed Property and (4)
Distribution Channel. In the event Licensee fails to do so,
Licensor shall have the right to terminate this Agreement.
Licensor shall also have the right to require Licensee to report
on a retailer-by-retailer basis. Without prejudice to any other
rights and remedies that Licensor may have, it is agreed that any
Royalties due by Licensee accruing from sales of the Licensed
Products outside the Territory and/or outside the applicable
Distribution Channels shall not be offset against the Guaranteed
Consideration.
(d) Licensee shall not have the right to cross-collateralize
Royalties earned (1) between the Licensed Properties, (2) between
the Distribution Channels, or (3) between Articles 1, 2 and 3
collectively and Articles 4 (although Licensee may cross-
collateralize between Articles 1, 2 and 3); however, Licensee
shall have the right to set off accrued Royalties for a certain
Licensed Property which exceed the portion of the Guaranteed
Consideration allocated to such Licensed Property against the
Unallocated Portion of the Guaranteed Consideration (as set forth
in Schedule A, Chart #1 and in Schedules D-14 and D-15 (which are
*REDACTED*) attached hereto). Royalties so accrued under any
Licensed Property A or Licensed Property C may only be offset
against the Unallocated Portion of the Guaranteed Consideration
for Licensed Properties A and C; and Royalties so accrued under
any Licensed Property B may only be offset against the
Unallocated Portion of the Guaranteed Consideration for Licensed
Properties B.
(e) Licensee will pay all taxes, customs, duties, assessments, excise
except as provided in Subparagraph 4.(b)(ii), and other charges
levied upon the importation of or
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assessed against the Licensed Product under this Agreement, as
well as all Licensee's costs of doing business and Licensor shall
have no liability therefor.
(f) In the event Licensee has earned Royalties in currencies other
than in U.S. Dollars, then Licensee shall convert said amounts
into U.S. Dollars based upon the exchange rate published by the
Wall Street Journal as of the fifteenth (15th) day of the
applicable month or if such day shall fall on a non-business day
then as of the first business day following said fifteenth (15th)
day.
5. PERIODIC STATEMENTS:
(a) Within thirty (30) days after the initial shipment of the
Licensed Products and promptly on the thirtieth (30th) day of
every quarter thereafter, Licensee shall furnish to Licensor
complete and accurate statements certified to be accurate by
Licensee, or if a corporation, by an officer of Licensee, broken
down into the categories set forth in Paragraph 4.(c) and showing
with respect to all Licensed Products distributed and sold by
Licensee during the preceding calendar quarter the (i) number of
units; (ii) country in which manufactured, sold and/or to which
shipped; (iii) Description (as such term is defined below) of the
Licensed Products; (iv) gross sales price; and (v) itemized
deductions from gross sales price, and net sales price together
with any returns made during the preceding calendar quarter. Such
statements shall be furnished to Licensor whether or not any of
the Licensed Products have been sold during calendar quarters to
which such statements refer. Licensee shall also include with
each quarterly statement a statement which shows the amounts
spent during such quarter with respect to the Promotional
Commitment as defined in Paragraph 1.(m)(i). Receipt or
acceptance by Licensor of any of the statements furnished
pursuant to this Agreement or of any sums paid hereunder shall
not preclude Licensor from questioning the correctness thereof at
any time, and in the event that any inconsistencies or mistakes
are discovered in such statements or payments, they shall
immediately be rectified and the appropriate payments made by
Licensee. Upon demand of Licensor, Licensee shall at its own
expense, but not more than once in any twelve (12) month period,
furnish to Licensor a detailed statement by an independent
certified public accountant showing the (i) number of units; (ii)
country in which manufactured, sold and/or to which shipped;
(iii) Description of the Licensed Products; (iv) gross sales
price; and (v) itemized deductions from gross sales price and net
sales price of the Licensed Products covered by this Agreement
distributed and/or sold by Licensee up to and including the date
upon which Licensor has made such demand. For purposes of this
subparagraph, the term "Description" shall mean a detailed
description of the Licensed Products including the nature of each
of the Licensed Products, any and all names and likenesses,
whether live actors or animated characters, from the Licensed
Property utilized on the Licensed Products and/or any related
packaging and/or wrapping material, and any other components of
the
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Licensed Property utilized on the Licensed Products and/or any
related packaging and/or wrapping material. In the event Licensor
is responsible for the payment of any additional third party
participations based on Licensee not reporting by character name
and likeness as provided above, Licensee shall be responsible for
reimbursing Licensor for the full amount of all such third party
claims, including without limitation, the participation itself,
interest, audit and attorneys, fees. Licensee understands and
agrees that it is a material term and condition of this Agreement
that Licensee include the Description on all statements. In the
event Licensee fails to do so, Licensor shall have the right to
terminate this Agreement, in accordance with the provisions of
Paragraph 14 herein.
(b) The statements and payments required hereunder shall be delivered
to:
WARNER BROS. CONSUMER PRODUCTS
4000 Warner Boulevard
Bridge Building, 4th Floor
Burbank, CA 91522
Attention: Accounting Manager, International Accounting
(c) Any payments which are made to Licensor hereunder after the due
date required therefore, shall bear interest at the then current
prime rate plus six percent (6%) (or the maximum rate permissible
by law, if less than the current prime rate) from the date such
payments are due to the date of payment. Licensor's right
hereunder to interest on late payments shall not preclude
Licensor from exercising any of its other rights or remedies
pursuant to this Agreement or otherwise with regard to Licensee's
failure to make timely remittances.
(d) Any income taxes, withholding taxes, other taxes and/or fees
which local law requires to be levied against Licensor's Royalty
shall be paid by Licensee on behalf of Licensor within the period
of time required by local law, provided that Licensee shall not
make such payment if Licensor has advised Licensee in writing not
to do so, and has taken appropriate legal action to contest the
propriety of such taxes and/or fees. In such event, Licensor
shall indemnify Licensee against any interest charges or
penalties with respect to such taxes. Any such taxes or fees
which Licensee pays on behalf of Licensor shall be deducted from
the Royalty otherwise payable to Licensor. The original receipt
(or a bona fide copy thereof) for such taxes as may be deducted
from Royalties shall accompany the statements described in
Paragraph 5.(a) above for the accounting period in which such
deduction is made. Licensee shall timely file all necessary tax
returns or other government documents on Licensor's behalf, as
required by local law, at Licensee's cost.
(e) Licensee and Licensor agree that each calendar quarter during the
Term they shall mutually review Licensee's performance hereunder.
Such review shall take place
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in a format to be submitted by Licensee and approved by Licensor
prior to the Marketing Date.
6. BOOKS AND RECORDS:
(a) Licensee shall keep, maintain and preserve (in Licensee's
principal place of business) for at least two (2) years following
termination or expiration of the Term of this Agreement or any
renewal(s) hereof (if applicable), complete and accurate records
of accounts including, without limitation, purchase orders,
inventory records, invoices, correspondence, banking and
financial and other records pertaining to the various items
required to be submitted by Licensee as well as to ensure
Licensee's compliance with its obligations hereunder, including
without limitation (i) Licensee's Commitments as set forth in
Paragraph 1.(m), (ii) local laws as required pursuant to
Paragraph 13.(j) hereof and (iii) the terms and conditions of
Paragraph 19. Such records and accounts shall be available for
inspection and audit at any time or times during or after the
Term of this Agreement or any renewal(s) hereof (if applicable)
during reasonable business hours and upon reasonable notice by
Licensor or its nominees. Licensee agrees not to cause or permit
any interference with Licensor or nominees of Licensor in the
performance of their duties. During such inspections and audits,
Licensor shall have the right to take extracts and/or make copies
of Licensee's records as it deems necessary.
(b) The exercise by Licensor in whole or in part, at any time of the
right to audit records and accounts or of any other right herein
granted, or the acceptance by Licensor of any statement or
statements or the receipt and/or deposit by Licensor, of any
payment tendered by or on behalf of Licensee shall be without
prejudice to any rights or remedies of Licensor and such
acceptance, receipt and/or deposit shall not preclude or prevent
Licensor from thereafter disputing the accuracy of any such
statement or payment.
(c) If pursuant to its right hereunder Licensor causes an audit and
inspection to be instituted which thereafter discloses a
deficiency between the amount found to be due to Licensor and the
amount actually received or credited to Licensor, then Licensee
shall, upon Licensor's demand, promptly pay the deficiency,
together with interest thereon at the then current prime rate
from the date such amount became due until the date of payment,
and, if the deficiency is more than five percent (5%) of all
Royalties paid by Licensee during the period covered by the
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audit, then Licensee shall pay the reasonable costs and expenses
of such audit and inspection.
7. INDEMNIFICATIONS:
(a) During the Term, and continuing after the expiration or
termination of this Agreement, Licensor shall indemnify Licensee
and shall hold it harmless from any loss, liability, damage, cost
or expense arising out of any claims or suits which may be
brought or made against Licensee by reason of the breach by
Licensor of the warranties or representations as set forth in
Paragraph 12 hereof, provided that Licensee shall give prompt
written notice, and full cooperation and assistance to Licensor
relative to any such claim or suit and provided, further, that
Licensor shall have the option to undertake and conduct the
defense of any suit so brought. Licensee shall not, however, be
entitled to recover for lost profits. Licensee shall cooperate
fully in all respects with Licensor in the conduct and defense of
said suit and/or proceedings related thereto.
(b) During the Term, and continuing after the expiration or
termination of this Agreement, Licensee shall indemnify Licensor
and shall hold it harmless from any loss, liability, damage, cost
or expense arising out of any claims or suits which may be
brought or made against Licensor by reason of: (i) any breach of
Licensee's covenants and undertakings hereunder; (ii) any
unauthorized use by Licensee of the Licensed Property; (iii) any
use of any trademark, copyright, design, patent, process, method
or device, except for those uses of the Licensed Property that
are specifically approved by Licensor pursuant to the terms of
this Agreement; (iv) Licensee's non-compliance with any
applicable federal, state or local laws or with any other
applicable regulations; and (v) any alleged defects and/or
inherent dangers (whether obvious or hidden) in the Licensed
Products or the use thereof.
(c) With regard to 7(b)(v) above, Licensee agrees to obtain, at its
own expense, product liability insurance providing adequate
protection for Licensor and Licensee against any such claims or
suits in amounts no less than THREE MILLION U.S. DOLLARS ($USD
3,000,000) per occurrence, combined single limits. Simultaneously
with the execution of this Agreement, Licensee undertakes to
submit to Licensor a fully paid policy or certificate of
insurance naming Licensor as an additional insured party and,
requiring that the insurer shall not terminate or materially
modify such policy or certificate of insurance without written
notice to Licensor at least twenty (20) days in advance thereof.
Such insurance and delivery of the policy or certificate are
material obligations of Licensee.
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8. ARTWORK; COPYRIGHT AND TRADEMARK NOTICES:
(a) The Licensed Property shall be displayed or used only in such
form and in such manner as has been specifically approved in
writing by Licensor in advance and Licensee undertakes to assure
usage of the trademark(s) and character(s) solely as approved
hereunder. Licensee further agrees and acknowledges that any and
all Artwork (defined below) created, utilized, approved and/or
authorized for use hereunder by Licensor in connection with the
Licensed Products or which otherwise features or includes the
Licensed Property shall be owned in its entirety exclusively by
Licensor. "Artwork" as used herein shall include, without
limitation, all pictorial, graphic, visual, audio, audio-visual,
digital, literary, animated, artistic, dramatic, sculptural,
musical or any other type of creations and applications, whether
finished or not, including, but not limited to, animation,
drawings, designs, sketches, images, illustrations, film, video,
electronic, digitized or computerized information, software,
object code, source code, on-line elements, music, text,
dialogue, stories, visuals, effects, scripts, voiceovers, logos,
one- sheets, promotional pieces, packaging, display materials,
printed materials, photographs, interstitials, notes, shot logs,
character profiles and translations, produced by Licensee or for
Licensee, pursuant to this Agreement. Licensor reserves for
itself or its designees all rights to use any and all Artwork
created, utilized and/or approved hereunder without limitation.
(b) (i) Licensee acknowledges that, as between Licensor and
Licensee, the Licensed Property and Artwork and all other
depictions expressions and derivations thereof, and all
copyrights, trademarks and other proprietary rights
therein are owned exclusively by Licensor and Licensee
shall have no interest in or claim thereto, except for the
limited right to use the same pursuant to this Agreement
and subject to its terms and conditions.
(ii) Licensee agrees and acknowledges that any Artwork created
by Licensee or for Licensee hereunder is a "work made for
hire" for Licensor under the U.S. Copyright Act, and any
and all similar provisions of law under other
jurisdictions, and that Licensor is the author of such
works for all purposes, and that Licensor is the exclusive
owner of all the rights comprised in the undivided
copyright and all renewals, extensions and reversions
therein, in and to such works in perpetuity and throughout
the universe. Licensee hereby waives and releases in favor
of Licensor all rights (if any) of "droit moral," rental
rights and similar rights in and to the Artwork (the
"Intangible Rights") and agrees that Licensor shall have
the right to revise, condense, abridge, expand, adapt,
change, modify, add to, subtract from, re-title, re-draw,
re-color, or otherwise modify the Artwork, without the
consent of Licensee. Licensee hereby irrevocably grants,
transfers and assigns to Licensor all right, title and
interest, including copyrights,
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<PAGE>
trademark rights, patent rights and other proprietary
rights, it may have in and to the Artwork, in perpetuity
and throughout the universe, and to all proprietary
depictions, expressions or derivations of the Licensed
Property created by or for Licensee. Licensee acknowledges
that Licensor shall have the right to terminate this
Agreement in the event Licensee asserts any rights (other
than those specifically granted pursuant to this
Agreement) in or to the Licensed Property or Artwork.
(iii) Licensee hereby warrants that any and all work created by
Licensee under this Agreement apart from the materials
provided to Licensee by Licensor is and shall be wholly
original with or fully cleared by Licensee and shall not
copy or otherwise infringe the rights of any third
parties, and Licensee hereby indemnifies Licensor and will
hold Licensor harmless from any such claim of infringement
or otherwise involving Licensee's performance hereunder.
At the request of Licensor, Licensee shall execute such
form(s) of assignment of copyright or other papers as
Licensor may reasonably request in order to confirm and
vest in Licensor the rights in the properties as provided
for herein. In addition, Licensee hereby appoints Licensor
as Licensee's Attorney-in-Fact to take such actions and to
make, sign, execute, acknowledge and deliver all such
documents as may from time to time be necessary to confirm
in Licensor, its successors and assigns, all rights
granted herein. If any third party makes or has made any
contribution to the creation of Artwork authorized for use
hereunder, Licensee agrees to obtain from such party a
full confirmation and assignment of rights so that the
foregoing rights shall vest fully in Licensor, in the form
of the Contributor's Agreement attached hereto as Exhibit
2 and by this reference made a part hereof, prior to
commencing work, ensuring that all rights in the Artwork
and Licensed Property arise in and are assigned to
Licensor. Promptly upon entering into each such Agreement,
Licensee shall give Licensor a copy of such Agreement.
Licensee assumes all responsibility for such parties and
agrees that Licensee shall bear any and all risks arising
out of or relating to the performance of services by them
and to the fulfillment of their obligations under the
Contributor's Agreement.
(iv) Upon expiration of termination of this Agreement for any
reason, or upon demand by Licensor at any time, Licensee
shall promptly deliver to Licensor all Artwork or Licensed
Property, whether finished or not, including drawings,
drafts, sketches, illustrations, screens, data, digital
files and information, copies or other items, information
or things created in the course of preparing the Licensed
Property and all materials provided to Licensee by
Licensor hereunder, or, at Licensor's option and
instruction, shall destroy some or all of the foregoing
and shall confirm to Licensor in
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<PAGE>
writing that Licensee has done so. Licensee shall not use
such Artwork or Licensed Property, items, information or
things, material, for any purpose other than is permitted
under this Agreement.
(c) Licensee shall, within thirty (30) days of receiving an invoice,
pay Licensor for artwork executed for Licensee by Licensor (or by
third parties under contract to Licensor) for use in the
development of the Licensed Products and any related packaging,
display and promotional materials at Licensor's prevailing
commercial art rates. The foregoing shall include any artwork
that, in Licensor's opinion, is necessary to modify artwork
initially prepared by Licensee and submitted for approval.
Estimates of artwork charges are available upon request.
(d) Licensee shall cause to be imprinted, irremovably and legibly on
each Licensed Product manufactured, distributed or sold under
this Agreement, and all advertising, promotional, packaging and
wrapping material wherein the Licensed Property appears, the
appropriate Copyright Notice for each such Licensed Property as
set forth on Schedules A-1 through C-13 (which are *REDACTED*).
(e) In no event shall Licensee use, in respect to the Licensed
Products and/or in relation to any advertising, promotional,
packaging or wrapping material, any copyright or trademark
notices which shall conflict with, be confusing with, or negate,
any notices required hereunder by Licensor in respect to the
Licensed Property.
(f) Licensee agrees to deliver to Licensor free of cost six (6) of
each of the Licensed Products together with their packaging and
wrapping material for trademark registration purposes in
compliance with applicable laws, simultaneously upon distribution
to the public. Any copyrights or trademarks with respect to the
Licensed Products shall be procured by and for the benefit of
Licensor and at Licensor's expense. Licensee further agrees to
provide Licensor with the date of the first use of the Licensed
Products in interstate and intrastate commerce.
(g) Licensee shall assist Licensor, at Licensor's expense, in the
procurement, protection, and maintenance of Licensor's rights to
the Licensed Property. Licensor may, in its sole discretion,
commence or prosecute and effect the disposition of any claims or
suits relative to the imitation, infringement and/or unauthorized
use of the Licensed Property either in its own name, or in the
name of Licensee, or join Licensee as a party in the prosecution
of such claims or suits. Licensee agrees to cooperate fully with
Licensor in connection with any such claims or suits and
undertakes to furnish full assistance to Licensor in the conduct
of all proceedings in regard thereto. Licensee shall promptly
notify Licensor in writing of any infringements or imitations or
unauthorized uses by others of the Licensed Property, on or in
relation to products identical to similar to or related
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to the Licensed Products. Licensor shall in its sole discretion
have the right to settle or effect compromises in respect
thereof. Licensee shall not institute any suit or take any action
on account of such infringements, imitations or unauthorized
uses.
9. APPROVALS AND QUALITY CONTROLS:
(a) Licensee agrees to strictly comply and maintain compliance with
the quality standards, specifications and rights of approval of
Licensor in respect to any and all usage of the Licensed Property
on or in relation to the Licensed Products throughout the Term of
this Agreement and any renewals or extensions thereof (if
applicable). Licensee agrees to furnish to Licensor free of cost
for its written approval as to quality and style, samples of each
of the Licensed Products, together with their packaging,
hangtags, and wrapping material, as follows in the successive
stages indicated: (i) rough sketches/layout concepts; (ii)
finished artwork or final proofs; (iii) pre-production samples or
strike-offs; and (iv) finished products, including packaged
samples.
(b) No Licensed Products and no material whatever utilizing the
Licensed Property shall be manufactured, sold, distributed or
promoted by Licensee without prior written approval. Licensee
may, subject to Licensor's prior written approval, use textual
and/or pictorial matter pertaining to the Licensed Property on
such promotional, display and advertising material as may, in its
reasonable judgment, promote the sale of the Licensed Products.
All advertising and promotional material relating to the Licensed
Products must be submitted to the Licensor for its written
approval at the following stages appropriate to the medium used:
(i) rough concepts; (ii) layout, storyboard, script; and (iii)
finished materials.
(c) Approval or disapproval shall lie in Licensor's sole discretion.
Any Licensed Products not so approved in writing shall be deemed
unlicensed and shall not be manufactured or sold. If any
unapproved Licensed Products are being sold, Licensor may,
together with other remedies available to it including, but not
limited to, immediate termination of this Agreement, require such
Licensed Products to be immediately withdrawn from the market and
to be destroyed, such destruction to be attested to in a
certificate signed by an officer of Licensee.
(d) Any modification of a Licensed Product must be submitted in
advance for Licensor's written approval as if it were a new
Licensed Product. Approval of a Licensed Product which uses
particular artwork does not imply approval of such artwork for
use with a different Licensed Product.
(e) Licensed Products must conform in all material respects to the
final production samples approved by Licensor. If in Licensor's
reasonable judgement, the quality
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of a Licensed Product originally approved has deteriorated in
later production runs, or if a Licensed Product has otherwise
been altered, Licensor may, in addition to other remedies
available to it, require that such Licensed Product be
immediately withdrawn from the market.
(f) Licensee shall permit Licensor to inspect Licensee's
manufacturing operations, testing and payroll records (including
those operations and records of any supplier or manufacturer
approved pursuant to Paragraph 10.(b) below) with respect to the
Licensed Products.
(g) If any changes or modifications are required to be made to any
material submitted to Licensor for its written approval in order
to ensure compliance with Licensor's specifications or standards
of quality, Licensee agrees promptly to make such changes or
modifications.
(h) Subsequent to final approval, no fewer than fifty (50) production
samples of Licensed Products will be sent to Licensor, to ensure
quality control simultaneously upon distribution to the public.
In addition, Licensee shall provide Licensor with fifteen (15)
catalogs which display all of Licensee's products, not just the
Licensed Products. Further, Licensor shall have the right to
purchase any and all Licensed Products in any quantity at the
maximum discount price Licensee charges its best customer.
(i) To avoid confusion of the public, Licensee agrees not to
associate other characters or properties with the Licensed
Property on the Licensed Products or in any packaging,
promotional or display materials unless Licensee receives
Licensor's prior written approval. Furthermore, Licensee agrees
not to use the Licensed Property (or any component thereof) on
any business sign, business cards, stationery or forms, nor as
part of the name of Licensee's business or any division thereof.
(j) Licensee shall use its best efforts to notify its customers of
the requirement that Licensor has the right to approve all
promotional, display and advertising material pursuant to this
Agreement.
(k) It is understood and agreed that any animation used in electronic
media, including but not limited to animation for television
commercials and character voices for radio commercials, shall be
produced by Warner Bros. Animation and/or the Warner/Blanc Audio
Library pursuant to a separate agreement between Licensee and
Warner Bros. Animation and/or the Warner/Blanc Audio Library,
subject to Warner Bros. Animation and/or the Warner/Blanc Audio
Library customary rates. Any payment made to Warner Bros.
Animation and/or the Warner/Blanc Audio
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Library for such animation or character voices shall be in
addition to and shall not offset the Guaranteed Consideration set
forth in Paragraph 1.(d).
(l) Licensor's approval of Licensed Products (including, without
limitation, the Licensed Products themselves as well as
promotional, display and advertising materials) shall in no way
constitute or be construed as an approval by Licensor of
Licensee's use of any trademark, copyright and/or other
proprietary materials not owned by Licensor.
(m) All Licensed Products must be submitted for approval as set forth
above to Licensor's Brand Assurance Department for the Territory.
Licensor's approval of products licensed under any other
agreement between Licensor and/or its affiliated companies and
Licensee and/or its affiliated companies shall not constitute an
approval of any Licensed Products for distribution in the
Territory hereunder.
10. DISTRIBUTION; SUBLICENSE MANUFACTURE:
(a) Within the Distribution Channels set forth in Paragraph 1.(h)
hereof, Licensee shall sell the Licensed Products either to
jobbers, wholesalers, distributors or retailers for sale or
resale and distribution directly to the public. Unless explicitly
set forth in Paragraph 1.(h) hereof, Licensee shall not sell the
Licensed Products through any cable home shopping service or
through electronic media, including on any on- line network or
service. If Licensee sells or distributes the Licensed Products
at a special price, directly or indirectly, to itself, including
without limitation, any subsidiary of Licensee or to any other
person, firm, or corporation affiliated with Licensee or its
officers, directors or major stockholders, for ultimate sale to
unrelated third parties, Licensee shall pay Royalties with
respect to such sales or distribution, based upon the price
generally charged the trade by Licensee.
(b) Except as specifically permitted hereunder, Licensee shall not be
entitled to sublicense any of its rights under this Agreement. In
the event Licensee is not the manufacturer of the Licensed
Products, Licensee shall, subject to the prior written approval
of Licensor, which approval shall not be unreasonably withheld,
be entitled to utilize a third party manufacturer in connection
with the manufacture and production of the Licensed Products,
provided that such manufacturer shall execute a letter in the
form of Exhibit 1 attached hereto and by this reference made a
part hereof. In such event, Licensee shall remain primarily
obligated under all of the provisions of this Agreement and any
default of this Agreement by such manufacturer shall be deemed a
default by Licensee hereunder. In no event shall any such third
party manufacturer agreement include the right to grant any
rights to subcontractors.
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11. GOOD WILL: Licensee recognizes the great value of the publicity and good
will associated with the Licensed Property and, acknowledges that:(i)
such good will is exclusively that of Licensor; and (ii) the Licensed
Property has acquired a secondary meaning as Licensor's trademarks
and/or identifications in the mind of the purchasing public. Licensee
further recognizes and acknowledges that a breach by Licensee of any of
its covenants, agreements or undertakings hereunder will cause Licensor
irreparable damage, which cannot be readily remedied in damages in an
action at law, and may, in addition thereto, constitute an infringement
of Licensor's copyrights, trademarks and/other proprietary rights in,
and to the Licensed Property, thereby entitling Licensor to equitable
remedies and costs.
12. LICENSOR'S WARRANTIES AND REPRESENTATIONS:
Licensor represents and warrants to Licensee that:
(a) It has, and will have throughout the Term of this Agreement, the
right to license the Licensed Property to Licensee in accordance
with the terms and provisions of this Agreement; and
(b) The making of this Agreement by Licensor does not violate any
agreements, rights or obligations of any person, firm or
corporation.
13. LICENSEE'S WARRANTIES AND REPRESENTATIONS:
Licensee represents and warrants to Licensor that, during the Term and
thereafter:
(a) It will not attack the title of Licensor (or third parties that
have granted rights to Licensor) in and to the Licensed Property
or any copyright or trademarks pertaining thereto, nor will it
attack the validity of the license granted hereunder;
(b) It will not harm, misuse or bring into disrepute the Licensed
Property, but on the contrary, will maintain the value and
reputation thereof to the best of its ability;
(c) It will manufacture, sell, promote and distribute the Licensed
Products in an ethical manner and in accordance with the terms
and intent of this Agreement, and in compliance with all
applicable government regulations and industry standards;
(d) It will not create any expenses chargeable to Licensor without
the prior written approval of Licensor in each and every
instance. It will not cause or allow any liens or encumbrances to
be placed against the Licensed Property;
(e) It will protect to the best of its ability its right to
manufacture, sell, promote, and distribute the Licensed Products
hereunder;
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(f) It will at all times comply with all government laws and
regulations, including but not limited to product safety, food,
health, drug, cosmetic, sanitary or other similar laws, and all
voluntary industry standards relating or pertaining to the
manufacture, sale, advertising or use of the Licensed Products,
and shall maintain its appropriate customary high quality
standards during the Term hereof. It shall comply with any
regulatory agencies which shall have jurisdiction over the
Licensed Products and shall procure and maintain in force any and
all permissions, certifications and/or other authorizations from
governmental and/or other official authorities that may be
required in response thereto. Each Licensed Product and component
thereof distributed hereunder shall comply with all applicable
laws, regulations and voluntary industry standards. Licensee
shall follow reasonable and proper procedures for testing that
all Licensed Products comply with such laws, regulations and
standards. Licensee shall permit Licensor or its designees to
inspect testing records and procedures with respect to the
Licensed Products for compliance. Licensed Products that do not
comply with all applicable laws, regulations and standards shall
automatically be deemed unapproved and immediately taken off the
market;
(g) It shall, upon Licensor's request, provide credit information to
Licensor including, but not limited to, fiscal year-end financial
statements (profit-and-loss statement and balance sheet) and
operating statements;
(h) It will, pursuant to Licensor's instructions, duly take any and
all necessary steps to secure execution of all necessary
documentation for the recordation of itself as user of the
Licensed Property in any jurisdiction where this is required or
where Licensor reasonably requests that such recordation shall be
effected. Licensee further agrees that it will at its own expense
cooperate with Licensor in cancellation of any such recordation
at the expiration of this Agreement or upon termination of
Licensee's right to use the Licensed Property. Licensee hereby
appoints Licensor its Attorney-in-Fact for such purpose;
(i) It will not deliver or sell Licensed Products outside the
Territory or knowingly sell Licensed Products to a third party
for delivery outside the Territory;
(j) It will not use any labor that violates any local labor laws,
including all wage and hour laws, laws against discrimination and
that it will not use prison, slave or child labor in connection
with the manufacture of the Licensed Products;
(k) It shall at all times comply with all manufacturing, sales,
distribution, retail and marketing policies and strategies
promulgated by Licensor from time-to-time; and
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(l) If requested by Licensor to do so, it will utilize specific
design elements of the Licensed Property provided to Licensee by
Licensor on hangtags, labels, and other materials.
14. TERMINATION BY LICENSOR:
(a) Licensor shall have the right to terminate this Agreement without
prejudice to any rights which it may have, whether pursuant to
the provisions of this Agreement, or otherwise in law, or in
equity, or otherwise, upon the occurrence of any one or more of
the following events (herein called "defaults"):
(i) Licensee defaults in the performance of any of its
obligations provided for in this Agreement; or
(ii) Licensee shall have failed to deliver to Licensor or to
maintain in full force and effect the insurance referred
to in Paragraph 7.(c) hereof; or
(iii) Licensee shall fail to make any payments due hereunder on
the date due; or
(iv) Licensee shall fail to deliver any of the statements
required herein or to give access to the premises and/or
license records pursuant to the provisions hereof to
Licensor's authorized representatives for the purposes
permitted hereunder; or
(v) Licensee shall fail to comply with any laws, regulations
or voluntary industry standards as provided in Paragraph
13.(f) or any governmental agency or other body, office or
official vested with appropriate authority finds that the
Licensed Products are harmful or defective in any way,
manner or form, or are being manufactured, sold or
distributed in contravention of applicable laws,
regulations or standards, or in a manner likely to cause
harm; or
(vi) Licensee shall be unable to pay its debts when due, or
shall make any assignment for the benefit of creditors, or
shall file any petition under the bankruptcy or insolvency
laws of any jurisdiction, county or place, or shall have
or suffer a receiver or trustee to be appointed for its
business or property, or be adjudicated a bankrupt or an
insolvent; or
(vii) Licensee does not commence in good faith to manufacture,
distribute and sell each Licensed Products and utilize
each character set forth in the Licensed Property
("Character") throughout the Territory and the
Distribution Channels on or before the Marketing Date and
thereafter fails
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to diligently and continuously manufacture, distribute and
sell each of the Licensed Products and utilize each
Character throughout the Territory. Such default and
Licensor's resultant right of termination (or recapture)
shall only apply to the specific Character(s), the
specific Licensed Products, the specific country of the
Territory and/or the specific Distribution Channel, which
or wherein Licensee fails to meet said Marketing Date
requirement; or
(viii) Licensee shall manufacture, sell or distribute, whichever
first occurs, any of the Licensed Products(s) without the
prior written approval of Licensor as provided in
Paragraph 9 hereof. Notwithstanding the foregoing, in the
event Licensee has manufactured product without Licensor's
approval and has not sold or otherwise distributed such
unapproved product, this Agreement shall not terminate
provided that all such unapproved product is immediately
destroyed and Licensee provides a certificate of
destruction to Licensor; or
(ix) Saul Gamoran is no longer an executive officer of
Licensee; or
(x) A manufacturer approved pursuant to Paragraph 10.(b)
hereof shall sell Licensed Products to parties other than
Licensee or engage in conduct, which conduct if engaged in
by Licensee would entitle Licensor to terminate this
Agreement; or
(xi) Licensee delivers or sells Licensed Products outside the
Territory or knowingly sells Licensed Products(s) to a
third party who Licensee knows intends to, or who Licensee
reasonably should suspect intends to, sell or deliver such
Licensed Products outside the Territory; or
(xii) Licensee uses any labor that violates any local labor laws
and/or it uses prison, slave or child labor in connection
with the manufacture of the Licensed Products; or
(xiii) Licensee has made a material misrepresentation or has
omitted to state a material fact necessary to make the
statements not misleading.
(b) In the event any of these defaults occur, Licensor shall give
notice of termination in writing to Licensee by facsimile and
certified mail. Licensee shall have the number of days specified
as follows from the date of giving notice in which to correct the
default (except subdivisions (vii), (viii), (xi) and (xiii) above
which are not curable): for subdivisions (iii), (iv) (x) and
(xii): ten (10) days; for subdivisions (ii), (v) and (vi):
fifteen (15) days; for all other subdivisions: thirty (30) days;
and failing such, this Agreement shall thereupon immediately
terminate, and any and
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all payments then or later due from Licensee hereunder (including
Guaranteed Consideration) shall then be promptly due and payable
in full and no portion of those prior payments shall be repayable
to Licensee.
15. FINAL STATEMENT UPON TERMINATION OR EXPIRATION: Licensee shall
deliver, as soon as practicable, but not later than thirty (30) days
following expiration or termination of this Agreement, a statement
indicating the number and description of Licensed Products on hand
together with a description of all advertising and promotional materials
relating thereto. Following expiration or termination of this Agreement,
Licensee shall immediately cease any and all manufacturing of the
Licensed Product. However, if Licensee has complied with all the terms
of this Agreement, including, but not limited to, complete and timely
payment of the Guaranteed Consideration and Royalty Payments, then
Licensee may continue to distribute and sell its remaining inventory for
a period not to exceed ninety (90) days following such termination or
expiration (the "Sell-Off Period"), subject to payment of applicable
Royalties thereto. In no event, however, may Licensee distribute and
sell during the Sell-Off Period an amount of Licensed Products that
exceeds the average amount of Licensed Products sold during any
consecutive ninety (90) day period during the Term. In the event this
Agreement is terminated by Licensor for any reason under this Agreement,
Licensee shall be deemed to have forfeited its Sell-off Period. If
Licensee has any remaining inventory of the Licensed Products following
the Sell-Off Period, Licensee shall, at Licensor's option, make
available such inventory to Licensor for purchase at or below cost,
deliver up to Licensor for destruction said remaining inventory or
furnish to Licensor an affidavit attesting to the destruction of said
remaining inventory. Licensor shall have the right to conduct a physical
inventory in order to ascertain or verify such inventory and/or
statement. In the event that Licensee refuses to permit Licensor to
conduct such physical inventory, Licensee shall forfeit its right to the
Sell-Off Period hereunder or any other rights to dispose of such
inventory. In addition to the forfeiture, Licensor shall have recourse
to all other legal remedies available to it.
16. NOTICES: Except as otherwise specifically provided herein, all notices
which either party hereto is required or may desire to give to the other
shall be given by addressing the same to the other at the address set
forth above, with a copy to WBCP (U.K.) LTD. at the address set forth
above, or at such other address as may be designated in writing by any
such party in a notice to the other given in the manner prescribed in
this paragraph. All such notices shall be sufficiently given when the
same shall be deposited so addressed, postage prepaid, in the United
States mail and/or when the same shall have been delivered, so
addressed, by facsimile or by overnight delivery service and the date of
transmission by facsimile, receipt of overnight delivery service or two
business days after mailing shall for the purposes of this Agreement be
deemed the date of the giving of such notice.
17. NO PARTNERSHIP, ETC.: This Agreement does not constitute and shall not
be construed as constitution of a partnership or joint venture between
Licensor and Licensee. Neither party shall have any right to obligate or
bind the other party in any manner
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whatsoever, and nothing herein contained shall give, or is intended to
give, any rights of any kind to any third persons.
18. NO SUBLICENSING/NON-ASSIGNABILITY: This Agreement shall bind and inure
to the benefit of Licensor, its successors and assigns. This Agreement
is personal to Licensee. Licensee shall not sublicense, franchise or
delegate to third parties its rights hereunder (except as set forth in
Paragraph 10.(b) hereof). Neither this Agreement nor any of the rights
of Licensee hereunder shall be sold, transferred or assigned by Licensee
and no rights hereunder shall devolve by operation of law or otherwise
upon any receiver, liquidator, trustee or other party.
19. *REDACTED*
20. CONSTRUCTION: This Agreement shall be construed in accordance with the
laws of the State of California of the United States of America without
regard to its conflicts of laws provisions.
21. WAIVER, MODIFICATION ETC.: No waiver, modification or cancellation of
any term or condition of this Agreement shall be effective unless
executed in writing by the party charged therewith. No written waiver
shall excuse the performance of any acts other than those specifically
referred to therein. The fact that the Licensor has not previously
insisted upon Licensee expressly complying with any provision of this
Agreement shall not be deemed to be a waiver of Licensor's future right
to require compliance in respect thereof and Licensee specifically
acknowledges and agrees that the prior forbearance in respect of any
act, term or condition shall not prevent Licensor from subsequently
requiring full and complete compliance thereafter. If any term or
provision of this Agreement is held to be invalid or unenforceable by
any court of competent jurisdiction or any other authority vested with
jurisdiction, such holding shall not affect the validity or
enforceability of any other term or provision hereto and this Agreement
shall be interpreted and construed as if such term or provision, to the
extent the same shall have been held to be invalid, illegal or
unenforceable, had never been contained herein. Headings of paragraphs
herein are for convenience only and are without substantive
significance.
22. ACCEPTANCE BY LICENSOR: This instrument when signed by Licensee shall be
deemed an application for license and not a binding agreement unless and
until accepted by Warner Bros. Consumer Products by signature of a duly
authorized officer and the delivery of such a signed copy to Licensee.
The receipt by Warner Bros. Consumer Products of any check or other
consideration given by Licensee and/or delivery of any material by
Warner Bros. Consumer Products to Licensee shall not be deemed an
acceptance by Warner Bros. Consumer Products of this application. The
foregoing shall apply to any documents relating to renewals or
modifications hereof.
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This Agreement shall be of no force or effect unless and until it is signed by
all of the parties listed below:
AGREED AND ACCEPTED: AGREED AND ACCEPTED:
LICENSOR: LICENSEE:
WARNER BROS. CONSUMER PRODUCTS, PLAY-BY-PLAY TOYS &
a Division of Time Warner NOVELTIES, INC.
Entertainment Company L.P., on
behalf of itself and as Agent
for Warner Bros., a Division of
Time Warner Entertainment
Company L.P.
By: /S/ GARY R. SIMON By:/S/ SAUL GAMORAN
Gary R. Simon Saul Gamoran
Vice President, Legal Affairs Executive Vice
President and General
Counsel
Date: 1/27/98 Date: 1/27/98
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SCHEDULE A, CHART #1, SCHEDULE A, CHART #2, AND SCHEDULES A-1
THROUGH D-15, INCLUSIVE, HAVE BEEN OMITTED HEREFROM AND FILED
SEPARATELY WITH THE COMMISSION BASED UPON A REQUEST FOR
CONFIDENTIAL TREATMENT.
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EXHIBIT 1
#90248
WARNER BROS. CONSUMER PRODUCTS
4000 Warner Blvd.
Triangle Bldg. - 3rd Floor
Burbank, CA 91522
RE: APPROVAL OF THIRD PARTY MANUFACTURER
Gentlemen:
This letter will serve as notice to you that pursuant to Paragraph
10.(b) of the License Agreement dated ___________, between WARNER BROS., A
DIVISION OF TIME WARNER ENTERTAINMENT COMPANY L.P. and PLAY-BY-PLAY TOYS &
NOVELTIES, INC. ("Licensee"), we have been engaged as the manufacturer for
Licensee in connection with the manufacture of Licensed Products as defined in
the aforesaid License Agreement. We hereby acknowledge that we may not
manufacture Licensed Products for, or sell or distribute Licensed Products to,
anyone other than Licensee. We hereby further acknowledge that we have received
a copy and are cognizant of the terms and conditions set forth in said License
Agreement and hereby agree to observe those provisions of said License Agreement
which are applicable to our function as manufacturer of the Licensed Products.
It is expressly understood that we are obligated to comply with all local laws,
including without limitation, labor laws, wage and hour laws and
anti-discrimination laws and that you or your representatives shall, at anytime,
have the right to inspect our facilities and review our records to ensure
compliance therewith. It is understood that this engagement is on a royalty free
basis and that we may not subcontract any of our work without your prior written
approval.
We understand that our engagement as the manufacturer for Licensee is
subject to your written approval. We request, therefore, that you sign in the
space below, thereby showing your acceptance of our engagement as aforesaid.
Very truly yours,
__________________________
Manufacturer/Company Name
By:______________________
signature
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__________________________
printed name
__________________________
address
AGREED TO AND ACCEPTED __________________________
dated
WARNER BROS. CONSUMER PRODUCTS,
A DIVISION OF TIME WARNER __________________________
ENTERTAINMENT COMPANY, L.P. product(s) manufacturing
By:________________________________
Gary R. Simon
Vice President, Legal Affairs
____________________________________
dated
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EXHIBIT 2
#90248
CONTRIBUTOR'S AGREEMENT
I, the undersigned ("Contributor"), have been engaged by ("Licensee") to
work on or contribute to the creation of Licensed Products, described as , by
Licensee under an agreement between Licensee and Warner Bros., a division of
Time Warner Entertainment Company L.P., c/o Warner Bros. Consumer Products, a
division of Time Warner Entertainment Company L.P. ("Warner"), dated .
I understand and agree that the Licensed Products, and all artwork or other
results of my services for Licensee in connection with such Licensed Products
("Work") is a "work made for hire" for Warner and that all right, title and
interest in and to the Work shall vest and remain with Warner. I reserve no
rights therein. Without limiting the foregoing, I hereby assign and transfer to
Warner all other rights whatsoever, in perpetuity throughout the universe which
I may have or which may arise in me or in connection with the Work. I hereby
waive all moral rights in connection with such Work together with any other
rights which are not capable of assignment. I further agree to execute any
further documentation relating to such transfer or waiver or relating to such
Work at the request of Warner or Licensee, failing which Warner is authorized to
execute same as my Attorney-in-Fact.
CONTRIBUTOR:
By:
Date:
WARNER BROS. CONSUMER PRODUCTS:
By:
Date:
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EXHIBIT 3
LICENSE AGREEMENT #90248
LATIN AMERICA
NORTH AMERICA:
Mexico
CARIBBEAN ISLANDS:
Bermuda
British West Indies
Cayman
Jamaica
Bahamas
Virgin Islands (British)
Trinidad/Tobago
Dominican Republic/Haiti
French West Indies
Guadalupe
Martinique
Netherland Antilles
Puerto Rico
Aruba
Bonaire
Curacao
CENTRAL AMERICA:
Belize
Costa Rica
El Salvador
Guatemala
Honduras
Nicaragua
Panama
SOUTH AMERICA:
Argentina
Bolivia
Brazil
Chile
Colombia
Ecuador
French Guyana
Guyana
Paraguay
Peru
Suriname
Uruguay
Venezuela
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EXHIBIT 4 HAS BEEN OMITTED HEREFROM AND FILED SEPARATELY WITH
THE COMMISSION BASED UPON A REQUEST FOR CONFIDENTIAL
TREATMENT.
32
