Exhibit 99.1
"PEANUTS"
SUBLICENSE AGREEMENT
THIS AGREEMENT, dated as of April 24, 2006, between ▇▇▇▇▇▇▇
INTERNATIONAL AB, a Swedish company with its principal office at ▇▇▇▇▇▇▇▇▇▇▇▇
▇▇, ▇▇ ▇▇▇ ▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ (the "Licensee"), and THE ▇▇▇▇▇▇▇ COMPANY, a
Florida corporation with its principal office at ▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇., ▇▇.
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ (the "Sublicensee"), is to evidence:
WHEREAS, pursuant to an agreement with United Feature Syndicate,
Inc., the Licensee has been granted a license to manufacture and sell certain
merchandise articles based on material from the syndicated comic strip PEANUTS
by ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇; and
WHEREAS, the Sublicensee desires to obtain from the Licensee a
sublicense to manufacture and sell certain of said merchandise articles;
NOW, THEREFORE, the parties agree as follows:
1. Definitions. For purposes of this Agreement the following
definitions shall apply:
(a) The term "Advertising Materials" shall mean all advertising and
promotional materials and all packaging, wrapping, and labeling materials for
the Licensed Products (including, by way of illustration but not limitation,
catalogs, trade advertisements, television advertisements, flyers, sales sheets,
labels, package inserts, hangtags, displays, and materials designed for
dissemination via the Internet or any other electronic form of dissemination)
which are produced by or for the Sublicensee and which make use of any of the
Copyrights or the Trademarks.
(b) The term "Approved Retail Outlets" shall mean the following:
Direct Mail Catalogs, Duty-Free Shops, High-End Department Stores, Home Shopping
Channels, Mass Market Retailers, Mid-Tier Department Stores, Supermarket/Grocery
Stores. The foregoing outlets shall have the meanings set forth on Schedule A,
attached hereto and made a part hereof.
(c) The term "Characters" shall mean the likenesses of the
characters which have appeared in the Feature prior to the date of execution of
this Agreement.
(d) The term "Copyrights" shall mean all copyrights owned by UFS
prior to the date of execution of this Agreement on installments of the Feature
and on the Characters.
(e) The term "Feature" shall mean the comic feature entitled
PEANUTS, created by ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇.
(f) The term "F.O.B. Sale" shall mean a sale of Licensed Products by
the Sublicensee to a customer located in a country other than the country where
the Licensed Products are manufactured, for which the customer pays any portion
of the costs of shipping the Licensed Products to the Territory (or any other
costs or duties associated with the shipping arrangement), regardless of whether
the parties to the shipping arrangement specifically characterize the sale as an
F.O.B. sale.
S:/Corp/Legal/▇▇▇▇▇▇▇/US Sublicense (USA - Perfume, Bath Foam, Body Spray)v1
(g) The term "Licensed Products" shall mean those items identified
on Schedule B attached hereto and made a part hereof.
(h) The term "Net Sales Price" shall mean the Sublicensee's invoiced
billing price to its customers or distributors for the Licensed Products, less
documented returns, allowances, discounts (excluding cash discounts or any type
of early pay allowance) and uncollectible accounts receivable, which,
collectively, shall not exceed 8% of the Sublicensee's total gross sales of the
Licensed Products in any quarterly accounting period.
(i) The term "Territory" shall mean the United States, its
territories and possessions.
(j) The term "Trademarks" shall mean and include the Characters (to
the extent used as trademarks), the title of the Feature, PEANUTS, the names of
the Characters, and any combinations of the foregoing.
(k) The term "UFS" shall mean United Feature Syndicate, Inc., a New
York corporation with its principal office at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇.
2. Grant of License; Channels of Distribution; Derivative Nature of
Licensee's Rights.
(a) Grant of License. The Licensee grants to the Sublicensee, on the
terms and conditions set forth in this Agreement, the non-exclusive right and
license to use the Copyrights and the Trademarks in connection with the
manufacture, distribution, sale, and advertising of the Licensed Products in the
Territory via the channels of distribution specified in subparagraph 2(b). The
license granted to the Sublicensee under this subparagraph 2(a) shall not extend
to Copyrights and Trademarks that are a part of UFS's SNOOPY BY ▇▇▇▇▇▇▇▇,
SNOOPY, BABY'S BEST FRIEND and BABY SNOOPY licensing programs.
(b) Channels of Distribution. The Sublicensee shall have the right
to offer the Licensed Products directly to or through the following channels of
distribution: Approved Retail Outlets; U.S. military exchanges (including U.S.
military exchanges overseas); the Sublicensee Site (as defined in Section
A(6)(j)); Third Party Sites (as defined in Section A(6)(k)); and theme parks
containing CAMP SNOOPY areas operated by Cedar Fair, L.P., and Magnum Management
Corporation. The Sublicensee shall have no right to distribute the Licensed
Products (or distribute the Licensed Products to any party the Sublicensee has
reason to believe will distribute the Licensed Products) (i) to a theme park or
an amusement park, except as expressly authorized by this subparagraph 2(b);
(ii) via television or other broadcast channels or services (excluding home
shopping channels); or (iii) to discount stores, buyers clubs, jobbers,
liquidators, or any other retailers selling goods at a deep discount.
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(c) Derivative Nature of Licensee's Rights. The Sublicensee
acknowledges that the rights granted to it by the Licensee with the consent of
UFS are based on the rights granted to the Licensee by UFS. Upon the termination
or expiration of the agreement between the Licensee and UFS, this Agreement
shall terminate, subject to payment of accrued royalties on Licensed Products
previously manufactured and sold by the Sublicensee. In the event of a
termination of the agreement between UFS and the Licensee, UFS shall have the
right to require the Sublicensee to enter into an agreement with UFS with
respect to the terminated rights upon substantially the same terms as this
Agreement, with reasonable modifications to reflect the deletion of the Licensee
as a party and the particular rights being licensed. The Licensee represents
that UFS has given its written consent to the Licensee's grant of license to the
Sublicensee to use the Copyrights and Trademarks as set forth in this Agreement.
The parties agree that UFS is an intended third party beneficiary under this
Agreement.
3. Period of Agreement. The period of this Agreement shall commence
on April 1, 2006 and end on March 31, 2009. No extension of this Agreement
beyond March 31, 2009, shall occur except through a formal written amendment to
this Agreement signed by both parties.
4. Royalties; Sales to Subsidiaries or Other Controlled Parties.
(a) Royalties. In consideration for the rights granted to it under
this Agreement, the Sublicensee agrees to pay the Licensee the following
royalties:
(i) Guaranteed Royalties. On or before the dates indicated below,
the Sublicensee agrees to pay to ▇▇▇▇▇▇▇ the following non-refundable Guaranteed
Royalty Amounts (totaling $82,500), which shall be set off as a credit against
the royalties due to ▇▇▇▇▇▇▇ under subparagraph 4(a)(ii):
Due Date Guaranteed Royalty Amount
-------- -------------------------
July 1, 2006 $27,500
July 1, 2007 $27,500
July 1, 2008 $27,500
If ▇▇▇▇▇▇▇ has not received the Guaranteed Royalty Amount due July 1, 2006, by
August 1, 2006, ▇▇▇▇▇▇▇ shall have the right to terminate this Agreement, with
immediate effect, by providing the Sublicensee with written notice of
termination at any time prior to Romella's receipt of said Guaranteed Royalty
Amount payment.
(ii) Percentage Royalties. The Sublicensee shall pay the Licensee a
percentage royalty equal to 12% of the Net Sales Price on all sales of the
Licensed Products by the Sublicensee to its customers; provided, however, that
as to any Licensed Products sold by the Sublicensee via the Sublicensee Site the
Sublicensee shall pay the Licensee a percentage royalty equal to 12% of the
invoiced billing price to the Sublicensee Site customer, less documented
returns, allowances, discounts (excluding cash discounts or any type of early
pay allowance) and uncollectible accounts receivable, which, collectively, shall
not exceed 8% of the Sublicensee's total gross sales of the Licensed Products in
any quarterly accounting period. The Sublicensee shall have no right to make
F.O.B. Sales.
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(b) Sales to Subsidiaries or Other Controlled Parties. If the
Sublicensee sells a Licensed Product to a subsidiary or other party controlled
by the Sublicensee ("Controlled Party"), or a series of Controlled Parties, the
percentage royalty payable by the Sublicensee shall be calculated on the basis
of the Net Sales Price for such Licensed Product charged by such Controlled
Parties on resale of such Licensed Product to a third party or third parties
that are not Controlled Parties. Sales to Controlled Parties shall be
conditioned on such Controlled Parties' agreeing in writing to be bound by all
of the terms and conditions of this Agreement. The Sublicensee agrees to provide
the Licensee and UFS with copies of all such agreements between the Sublicensee
and Controlled Parties.
5. Marketing Plans; Sales Projections.
(a) Marketing Plans. On execution of this Agreement and on or before
each one-year anniversary of the commencement date of this Agreement, the
Sublicensee shall provide the Licensee and UFS with a written marketing plan
with respect to the Licensed Products. Each such marketing plan shall include,
on a Licensed Product-by-Licensed Product basis, a marketing timetable, channels
and methods of distribution, nature and amount of advertising and advertising
expenditures, the top ten existing customers for the Licensed Products (if any),
the top ten targeted customers for the Licensed Products, retail sell-through
information and results in connection with such top ten existing customers, and
any other information which the Licensee or UFS may ask the Sublicensee to
include. Each marketing plan shall contain specific information for the one-year
period immediately succeeding its submission and general estimates or
projections for subsequent periods during which this Agreement remains in
effect. Where available, the Sublicensee will provide on-line retail consumption
information.
(b) Budgets and Sales Projections. On execution of this Agreement
and on or before each September 30 while this Agreement remaining in effect, the
Sublicensee shall provide the Licensee and UFS with a written budget and sales
projection reports with respect to the Licensed Products. On or before each
March 31 and June 30 while this Agreement remains in effect the Sublicensee
shall provide the Licensee and UFS with sales projection reports. Budgets and
sales projection reports shall be provided to the Licensee and UFS using
prescribed forms to be supplied to the Sublicensee by UFS. In addition to the
foregoing, the Sublicensee agrees at the Licensee's or UFS's request to provide
"re-forecasts" of its budgets and sales projections.
6. Availability to Approved Retail Outlets. The Sublicensee shall
make the Licensed Products generally available to Approved Retail Outlets in the
Territory by April 7, 2007, and shall notify the Licensee and UFS in writing
that it has done so. If the Sublicensee fails to meet the foregoing obligations,
the Licensee shall have the right to terminate this Agreement with immediate
effect, by providing the Sublicensee with written notice of termination.
7. Premium Items.
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(a) Rights of Sublicensee with Respect to Premium Items.
Notwithstanding the provisions of Section B(1) of the attached Standard Terms
and Conditions, the Sublicensee shall have the right, subject to the provisions
of this paragraph 7, to use the Copyrights and the Trademarks in connection with
the production and use of Premium Items (as defined below) to promote the
Licensed Products in the Territory. As used herein, the term "Premium Item"
shall mean use or sale of items approved by UFS in connection with the following
kinds of promotional activities: self-liquidator programs; joint merchandising
programs; giveaways; sales incentive programs; door openers; traffic builders;
and any other kinds of promotional programs designed to promote the sale of the
Licensed Products or other goods or services of the Licensee or a third party.
(b) Approval of Premium Items; Copyright Notices. The Sublicensee
shall make no use of any Premium Item until such Premium Item has been approved
in writing by UFS, in accordance with such approval procedures as may be
specified by UFS. The Sublicensee shall place on the Premium Items the copyright
notice or notices in the name of UFS specified by UFS at the time of UFS's
approval of the Premium Items.
(c) Special Provisions Relating to Premium Items. Except as set
forth below, the Sublicensee shall use as Premium Items only items which have
been manufactured or produced by other authorized licensees of UFS, and the
Sublicensee shall obtain a given item only from the licensee of UFS licensed to
manufacture and sell such item. It shall be the responsibility of the
Sublicensee to obtain Premium Items from authorized licensees of UFS upon such
terms as the Sublicensee and such other licensees of UFS agree; UFS shall have
no responsibility to negotiate such terms on behalf of the Sublicensee. Subject
to UFS's prior written consent on a case-by-case basis, the Sublicensee shall
have the right to arrange with a party other than an existing UFS licensee to
manufacture the Premium Items or components thereof for exclusive use and
distribution by the Sublicensee. The Sublicensee agrees to enter into a written
agreement with all such manufacturers, and agrees to incorporate into such
written agreements all of the provisions, for the protection of the rights of
UFS, which are contained in the form manufacturer agreement which has been
prepared by UFS for such purpose, and is available from UFS. The Sublicensee
further agrees to furnish UFS within 30 days of their execution copies of all
agreements with such manufacturers. The Sublicensee agrees strictly to enforce
against its manufacturers all of the provisions which are required to be
included in such agreements for the protection of UFS; to advise UFS of any
violations thereof by manufacturers, and of corrective actions taken by the
Sublicensee and the results thereof; and at the request of UFS to terminate such
an agreement with any manufacturer which violates any of such provisions for the
protection of UFS. If the Sublicensee fails to exercise such termination rights
by giving written notice to the other party within 20 days after being requested
to do so in writing by UFS, the Sublicensee appoints UFS as its irrevocable
attorney-in-fact for the sole-limited purpose of sending a notice of termination
in the name of the Sublicensee to such party for the purpose of terminating the
agreement or any specific rights of the party under such agreement.
8. Sublicensee Acknowledgment. The Sublicensee by executing this
Agreement acknowledges that it has reviewed and understands all provisions of
this Agreement, including the attached Standard Terms and Conditions.
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9. Standard Terms and Conditions. This Agreement is subject to all
of the provisions of the Standard Terms and Conditions which are attached to and
made a part of this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date set forth above.
▇▇▇▇▇▇▇ INTERNATIONAL AB
By______________________________
Name:
Title:
THE ▇▇▇▇▇▇▇ COMPANY
By______________________________
Name:
Title:
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"PEANUTS" SUBLICENSE AGREEMENT
STANDARD TERMS AND CONDITIONS
SECTION A. QUALITY CONTROLS AND APPROVAL PROCEDURES FOR LICENSED
PRODUCTS AND ADVERTISING MATERIALS.
A(1) Warranty of Quality; Employment Practices.
(a) Warranty of Quality. The Sublicensee warrants that the Licensed
Products will be of very good quality in design, material, and workmanship and
suitable for their intended purpose; that no injurious, deleterious, or toxic
substances will be used in or on the Licensed Products; that the Licensed
Products will not cause harm when used as instructed and with ordinary care for
their intended purpose; and that the Licensed Products will be manufactured,
sold, and distributed in strict compliance with all applicable laws and
regulations.
(b) Employment Practices. The Sublicensee warrants that neither the
Sublicensee nor any manufacturer used by the Sublicensee: (i) shall use in
connection with the manufacture, distribution, and sale of the Licensed Products
labor provided by persons younger than the age for completing compulsory
education in the jurisdiction where the relevant activity occurs; (ii) shall use
in connection with the manufacture, distribution, and sale of the Licensed
Products any children younger than 15 years of age; (iii) shall employ any
persons whose labor is provided involuntarily (such as prison laborers); (iv)
shall use corporal punishment or other forms of mental or physical coercion in
disciplining its employees; (v) shall discriminate in hiring and employment
practices on grounds of race, religion, national origin, political affiliation,
sexual preference, or gender; (vi) shall fail to comply with local labor laws
and regulations, including, but not limited to, laws and regulations designed to
provide employees with a safe and healthy workplace and wage and hour laws and
regulations (including those setting minimum wages, maximum overtime, and
maximum daily hours that may be worked).
A(2) Approval Procedures for Licensed Products and Advertising
Materials; Approval Standards; Time for Approval by UFS.
(a) General. The Sublicensee shall comply with all reasonable
procedures which the Licensee and UFS may from time to time adopt regarding the
approval of Licensed Products and Advertising Materials which the Sublicensee
proposes to manufacture, sell, or use under this Agreement. These approval
procedures shall be carried out on prescribed forms to be supplied to the
Sublicensee by the Licensee or UFS, and shall incorporate the basic approval
requirements and steps outlined in the following subsections. The Sublicensee
agrees to retain in its files all materials relating to approvals while this
Agreement remains in effect and for one year thereafter. The Sublicensee
acknowledges that all materials submitted to the Licensee and UFS for approval
under this Agreement shall also require the approval of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Creative Associates, Santa Rosa, California.
(b) Approval of Licensed Products. With respect to each different
Licensed Product which the Sublicensee proposes to manufacture and sell under
this Agreement, the Sublicensee shall submit to the Licensee and UFS for review
and approval the following materials for such Licensed Product, in the order
stated:
(i) a generic sample of the type of Licensed Product in question
(that is, a sample of the kind of merchandise article to which the Sublicensee
proposes to add the Copyrights and the Trademarks in producing the Licensed
Product, showing the general quality standard which will be met by the Licensed
Product), including any mechanical video and sound elements;
(ii) a concept for each design, item, and/or sku of the proposed
Licensed Product, showing by rough artwork and product designs the nature and
appearance of the proposed Licensed Product and describing the operation of any
mechanical, video, and/or sound elements;
(iii) finished artwork or schematics for the Licensed Product,
showing the exact use of the Copyrights and Trademarks on or in connection with
the proposed Licensed Product;
(iv) a preproduction prototype sample of the Licensed Product, where
appropriate, or a preproduction final sample of the Licensed Product, showing in
either case the exact form, finish, features, and quality the Licensed Product
will have when manufactured in production quantities; and
(v) 15 identical production samples of the Licensed Product, to be
submitted immediately upon commencement of production.
The Sublicensee shall comply with all of the foregoing approval steps for each
Licensed Product, obtaining the Licensee's and UFS's written approval at each
step of the procedure, unless by prior written notice from UFS it is exempted
from any such step with respect to a specific Licensed Product. If the
Sublicensee submits to the Licensee and UFS for approval under this Section
A(2)(b) an item which is not contained in the definition of "Licensed Products"
set forth in paragraph 1 of this Agreement, and the Licensee and UFS
inadvertently approve such item, such approval shall not be deemed to add such
item to said definition; in any such circumstance, the Sublicensee shall, upon
receipt of written notice from the Licensee or UFS, immediately and permanently
cease manufacturing, distributing, selling, and advertising the item in
question.
(c) Approval of Advertising Materials. With respect to each
different item of Advertising Material which the Sublicensee (or any party
acting on its behalf) proposes to produce and use under this Agreement, the
Sublicensee shall submit to the Licensee and UFS for review and approval the
following materials, in the order stated:
(i) proposed written copy for the item of Advertising Material, with
attached rough art showing how the Copyrights and Trademarks will be used in
connection with the copy and, where appropriate, a description of all
mechanical, video, and/or sound elements;
(ii) final copy for the item, with finished "lift" art, or other
media, where appropriate, showing the use of the Copyrights and Trademarks;
(iii) finished "mechanicals" or "masters" for the item; and
(iv) 24 final printed samples of the item, where feasible (as, for
example, in the case of packaging, labels, hangtags, printed brochures,
catalogs, and the like), or, in the case of an item of Advertising Material for
use on television, a VHS or DVD copy of such item.
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The Sublicensee shall comply with all of the foregoing approval steps for each
item of Advertising Material, obtaining the Licensee's and UFS's written
approval at each step of the procedure, unless by prior written notice from UFS
it is exempted from any such step with respect to a specific item of Advertising
Material.
(d) Approval Standards. The Licensee and UFS shall have the right to
disapprove any materials submitted under Sections A(2)(b) or A(2)(c) if they
determine, in the exercise of their good faith judgment, that the materials in
question would impair the value and goodwill associated with the Feature, the
Copyrights, the Trademarks, or UFS's licensing program for the Copyrights and
Trademarks, by reason of (i) their failure to satisfy the general quality
standards set forth in Section A(1)(a); (ii) their use of artwork, designs, or
concepts which fail to depict accurately the Characters or the events or themes
portrayed in the Feature; (iii) their use of materials which are unethical,
immoral, or offensive to good taste or would otherwise cause harm to the image
or reputation of the Feature or the Characters; (iv) their failure to carry
proper copyright or trademark notices; or (v) any other reasonable cause.
(e) Time for Approval. The Licensee has been advised by UFS that UFS
will use reasonable efforts to notify the Sublicensee in writing of its approval
or disapproval of any materials submitted to it under Sections A(2)(b) and
A(2)(c) within 20 business days after its receipt of such materials, and will,
in the case of its disapproval, notify the Sublicensee in writing of its reasons
for disapproval.
A(3) Maintenance of Quality of Licensed Products; Inspection of
Production Facilities. The Sublicensee agrees to maintain the quality of each
Licensed Product manufactured under this Agreement up to the specifications,
quality, and finish of the production sample of such Licensed Product which was
approved by the Licensee and UFS under Section A(2)(b), and agrees not to change
the Licensed Product in any material respect without first submitting to the
Licensee and UFS samples showing such proposed changes and obtaining the
Licensee's and UFS's written approval of such samples. From time to time after
it has commenced manufacturing the Licensed Products, the Sublicensee, upon
request, shall furnish free of charge to UFS a reasonable number of random
production samples of any Licensed Product specified by the Licensee or UFS.
Also, upon request, the Sublicensee shall furnish to UFS the addresses of the
production facilities used by the Sublicensee for manufacturing the Licensed
Products, and shall make arrangements for the Licensee or UFS or their
representatives to inspect such production facilities during reasonable business
hours.
A(4) Prohibition Against Manufacture, Sale, or Use of Unapproved
Licensed Products or Advertising Materials; Termination Right. The Sublicensee
shall not have the right to manufacture, offer for sale, distribute, sell, or
use any Licensed Product or item of Advertising Material unless it has complied
with all of the approval procedures and requirements set forth in this Section
A, and has obtained the Licensee's and UFS's prior written approval of such
Licensed Product or item of Advertising Material. Failure by the Sublicensee to
comply with the provisions of this Section A shall constitute a material breach
of the Agreement and shall be grounds for immediate termination of the Agreement
by the Licensee, as provided in Section K(1).
A(5) Use of Address of UFS Site; Link to UFS Site. The Sublicensee
shall place on all Licensed Products and on all Advertising Materials the
address of UFS's web site (the "UFS Site"), as follows: "▇▇▇.▇▇▇▇▇▇.▇▇▇". Any
Advertising Materials in electronic form shall be linked to the UFS Site, using
a link icon supplied by UFS.
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A(6) Miscellaneous.
(a) Artwork. If the Sublicensee requests UFS to furnish it with any
special artwork or copies of material from the Feature, the Sublicensee agrees
to reimburse UFS for its costs of supplying such materials to the Sublicensee,
including, without limitation, travel expenses incurred at the Sublicensee's
request by UFS's in-house art personnel. All Feature-related artwork and any
media created by or for the Sublicensee pursuant to this Agreement shall remain
the property of UFS, and at UFS's request the Sublicensee shall promptly, at the
Sublicensee's expense, deliver to UFS all such media containing Feature-related
artwork. Furthermore, the Sublicensee agrees that all animation cels picturing
the Characters created in order to produce any animated Advertising Materials
under this Agreement (which shall be produced only by animators approved by UFS)
shall remain the property of UFS. If at any time during or following the period
of this Agreement the Sublicensee has any such animation cels in its possession,
custody, or control, the Sublicensee shall, at UFS's request, promptly deliver
such animation cels to UFS.
(b) Translations. All translations of written material used on or in
connection with the Licensed Products or Advertising Materials shall be
accurate, and the Sublicensee, when submitting the Licensed Products and the
Advertising Materials for approval, shall provide the Licensee and UFS with
English translations of all such written materials in a language other than
English.
(c) Use of Characters in Licensed Products and Advertising
Materials. No Character shall be shown in any Licensed Product or item of
Advertising Material endorsing the Sublicensee or the products or services of
the Sublicensee, except that the Sublicensee shall be entitled to depict the
Characters endorsing the Licensed Products. The Characters shall not be combined
in any Licensed Product or Advertising Material with any other comic characters
without UFS's prior written approval.
(d) Transactions with Other Licensees. The Sublicensee shall not,
without UFS's prior written consent, (i) sell or deliver to another UFS licensee
or sublicensee the films or other devices used by the Sublicensee to produce the
Licensed Products, or (ii) print or otherwise produce any items using the
Copyrights or the Trademarks for another UFS licensee or sublicensee.
(e) Duplicate Films or Devices. When requested by UFS to do so, the
Sublicensee shall supply duplicates of the films or other devices used by the
Sublicensee in producing the Licensed Products to other licensees or
sublicensees of UFS outside the Territory, at cost of duplication plus shipping.
(f) Clearances. To the extent that the Sublicensee is permitted
under this Agreement to use any Character voice or music associated with the
Feature, the Sublicensee shall be solely responsible for securing, at the
Sublicensee's sole cost and expense, all licenses necessary for the use,
publication, performance, synchronization and recording of any Character voice
or musical composition. The Sublicensee shall be solely responsible for making
any required report to any applicable union, trade association, music rights
society, or organization in connection with the use of any Character voice or
musical composition.
(g) Right of Licensee and UFS to Acquire Licensed Products.
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(i) UFS Right to Obtain Licensed Products. During each one-year
period while this Agreement remain in effect, UFS shall have the right to obtain
from the Sublicensee Licensed Products having a wholesale value not exceeding
$200. UFS shall notify the Sublicensee in writing of its desire to obtain
Licensed Products from the Sublicensee under this Section A(6)(g)(i),
identifying the specific Licensed Products and the quantity of each such
Licensed Product UFS wishes to acquire. Within 15 business days of its receipt
of any such request from UFS, the Sublicensee shall ship the requested Licensed
Products, to the extent they are then available, to UFS free of charge and at
the Sublicensee's expense. Any Licensed Products acquired by UFS under this
Section A(6)(g)(i) shall be royalty-free.
(ii) Right of Licensee and UFS to Purchase Licensed Products. In
addition to the random production samples of the Licensed Products to be
supplied by the Sublicensee to UFS free of charge under Section A(3) and the
Licensed Products to be supplied by the Sublicensee to UFS free of charge under
Section A(6)(g)(i), the Licensee and UFS shall be entitled at any time while
this Agreement remains in effect to purchase from the Sublicensee, (A) at the
Sublicensee's most favorable wholesale price, any available quantity of the
Licensed Products, which may be resold by the Licensee or UFS, or (B) at the
Sublicensee's cost of manufacture, any available quantity of the Licensed
Products, which may not be resold by the Licensee or UFS. Any such Licensed
Products purchased by the Licensee or UFS shall be royalty-free.
(h) Inclusion of UFS Insert in Packaging of Licensed Products. If
requested by UFS to do so, the Sublicensee shall include in the packaging of the
Licensed Products a UFS insert containing such Feature-related information as
UFS may determine. UFS shall bear all costs incurred in connection with the
design, production, and insertion of such inserts.
(i) Sublicensee Customer Information. If requested by the Licensee
or UFS to do so, the Sublicensee shall provide UFS with customer lists, customer
demographic information, and any other information relating to all parties
purchasing the Licensed Products from the Sublicensee.
(j) Provisions on Web Sales and Web Advertising via Sublicensee
Site. The Sublicensee shall have the right to market the Licensed Products to
customers in the Territory via the main web site of the Sublicensee, used to
market non-Feature-related products of the Sublicensee, in operation as of the
date of execution of this Agreement (the "Sublicensee Site"), subject to the
following conditions and limitations:
(i) The Sublicensee Site shall not in any manner, express or
implied, be identified or promoted as an official Feature-related web site.
(ii) The Sublicensee Site shall offer a full range of retail
services for the Licensed Products offered on the Sublicensee Site, including,
but not limited to, automated order taking, credit card verification, and
customer service.
(iii) Any special promotions on the Sublicensee Site with respect to
the Licensed Products shall be subject to UFS's prior written approval, on a
case-by-case basis.
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(iv) The Sublicensee shall be entitled to promote the presence of
the Licensed Products on the Sublicensee Site via print, on-line, and other
types of Advertising Materials; provided, however, that the use of the
Copyrights and the Trademarks in such Advertising Materials promoting the
presence of the Licensed Products on the Sublicensee Site shall be limited to
depictions of the Licensed Products themselves; and provided further, that such
Advertising Materials shall not be expressly targeted at potential customers
outside the Territory.
(v) The Sublicensee shall not place on the page or pages of the
Sublicensee Site on which the Licensed Products are offered any advertising for
the goods or services of any third party.
(vi) The Sublicensee Site shall not contain images or content that
are unethical, immoral, offensive to good taste, or would otherwise cause harm
to the image or reputation of the Feature or the Characters.
(k) Sales via Third Party Sites. The Sublicensee shall have the
right to sell the Licensed Products to Approved Retail Outlets in the Territory
that intend to resell the Licensed Products via such third parties' own web
sites (the "Third Party Sites"), excluding auction sites and discount sites,
subject to the following conditions and limitations:
(i) UFS shall have the right to revoke at any time the right of the
Sublicensee granted by this Section A(6)(k) by providing the Sublicensee with
written notice of revocation. Any such notice of revocation shall specify an
effective date of revocation, which shall be at least 90 days from the date of
UFS's notice.
(ii) The use of the Copyrights and the Trademarks on the Third Party
Sites shall be limited to depictions of the Licensed Products themselves, and
the Sublicensee shall have no right to authorize any other uses of the
Copyrights and the Trademarks on the Third Party Sites.
A(7) Establishment of Policies and Procedures. The Sublicensee
shall, at its sole expense, establish policies and procedures reasonably
calculated to insure that the Licensed Products are produced in accordance with
this Section A.
SECTION B. RESTRICTIONS ON SALE OF LICENSED PRODUCTS; CONSEQUENCES
OF VIOLATION OF RESTRICTIONS; EFFORTS TO SELL LICENSED PRODUCTS.
B(1) Restrictions on Sale of Licensed Products. The Licensed
Products shall be sold to the public only through the channels of distribution
specified in subparagraph 2(b), and only in the manner in which merchandise
articles of the same general description are customarily merchandised to the
public. The Sublicensee shall not use or sell the Licensed Products as premiums,
or distribute the Licensed Products to parties which the Sublicensee has reason
to believe intend to use or sell the Licensed Products as premiums. Use or sale
of the Licensed Products as "premiums," for purposes of the foregoing provision,
shall mean use or sale of the Licensed Products in connection with the following
kinds of promotional activities: self-liquidator programs; joint merchandising
programs; giveaways; sales incentive programs; door openers; traffic builders;
and any other kinds of promotional programs designed to promote the sale of the
Licensed Products or other goods or services of the Sublicensee or a third
party.
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B(2) Consequences of Violation of Restrictions. If the Sublicensee
breaches the provisions of Section B(1) by using or selling the Licensed
Products as premiums, the provisions of this Section B(2) shall apply, whether
or not the Licensee elects to exercise its rights under Section K with respect
to such breach. On all Licensed Products used or sold by the Sublicensee as
premiums, the Sublicensee shall pay the Licensee a percentage royalty five
percentage points higher than the percentage royalty for regular sales specified
in subparagraph 4(b). Such percentage royalty shall be calculated as if such
Licensed Products used or sold as premiums had been sold by the Sublicensee at a
Net Sales Price equal to the average Net Sales Price for the same Licensed
Products sold by the Sublicensee through its authorized channels of distribution
during the calendar quarter in which the Sublicensee's use or sale of such
Licensed Products as premiums occurred.
B(3) Restriction on Sales to Distributors. The Sublicensee shall not
sell Licensed Products to wholesalers, jobbers, or distributors unless
authorized in writing to do so by the Licensee and UFS on a case-by-case basis.
The contract of sale between the Sublicensee and each approved distributor shall
be subject to the Licensee's and UFS's prior written approval. Such contracts of
sale shall incorporate all conditions and restrictions get forth in this
Agreement governing the sale and distribution of the Licensed Products and shall
authorize the Licensee and UFS to commence actions directly again distributors
to enforce such conditions and restrictions. The Sublicensee agrees strictly to
enforce against its distributors all such terms and conditions, and to cooperate
fully with the Licensee and UFS in connection with actions taken by the Licensee
and UFS to enforce such terms and conditions.
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B(4) Efforts to Sell Licensed Products.
(a) Failure to Submit Prototype. If within three months of the
execution of this Agreement the Sublicensee has failed to submit to the Licensee
a prototype of a particular Licensed Product, the Licensee shall have the right
to delete such Licensed Product from the definition of "Licensed Products," by
giving written notice of such deletion to the Sublicensee and upon the sending
of such notice, all rights to such Licensed Product shall revert to the
Licensee.
(b) Good Faith Effort to Exploit Rights. If within three months of
the execution of this Agreement the Sublicensee has failed to take any good
faith steps to exploit the rights granted to it (for example, by seeking to
obtain the Licensee's and UFS's approval of a proposed Licensed Product, or
commencing to manufacture and sell an approved Licensed Product), the Licensee
shall have the right to terminate this Agreement immediately by giving written
notice of termination to the Sublicensee.
(c) General Obligation as to Manufacture and Sale of Licensed
Products. The Sublicensee agrees to manufacture the Licensed Products at the
Sublicensee's own expense in sufficient quantities to meet the reasonably
anticipated demand. The Sublicensee also agrees to exercise reasonable efforts
to advertise and promote the Licensed Products at its own expense and to use its
best efforts to sell the Licensed Products in the Territory.
(d) Licensee's and UFS's Right to Eliminate Country from Territory.
If at any time during the period of this Agreement the Sublicensee is not making
regular sales of more than a nominal nature of any of the Licensed Products in a
country of the Territory, as determined by the Licensee or UFS, the Licensee or
UFS shall have the right, upon giving 30 days prior written notice to the
Sublicensee, to terminate the Sublicensee's rights for all Licensed Products for
such country.
(e) Licensee's and UFS's Right to Terminate License for Specific
Licensed Product. If at any time during the period of this Agreement the
Sublicensee is not making regular sales of more than a nominal nature of a
particular Licensed Product in a country of the Territory, as determined by the
Licensee or UFS, the Licensee or UFS shall have the right, upon giving 30 days
prior written notice to the Sublicensee, to terminate the Sublicensee's rights
for such Licensed Product for such country. In order to assist the Licensee and
UFS in reviewing its marketing activities, the Sublicensee agrees to furnish the
Licensee and UFS upon request complete information evidencing on a
country-by-country basis the Sublicensee's efforts to market the Licensed
Products in such countries.
(f) Effect of Termination of Rights as to Licensed Product or
Portion of Territory. The Licensee's or UFS's termination, pursuant to Sections
B(4)(d) or B(4)(e), of the Sublicensee's rights with respect to a particular
Licensed Product or a country of the Territory shall not reduce or otherwise
alter the Guaranteed Royalty Amounts due the Licensee from the Sublicensee under
this Agreement.
SECTION C. ROYALTIES; STATEMENTS.
C(1) Basis for Computation of Royalties. All royalties due to the
Licensee shall accrue upon the sale of the Licensed Products, regardless of the
time of collection by the Sublicensee. For purposes of this Agreement, a
Licensed Product shall be considered "sold" as of the date on which such
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Licensed Product is billed, invoiced, shipped, or paid for, whichever event
occurs first. If any Licensed Products are consigned to an approved distributor
by the Sublicensee, the Licensed Products shall be considered "sold" by the
Sublicensee as of the date on which such distributor bills, invoices, ships, or
receives payment for any of the Licensed Products, whichever event occurs first.
Royalties payable by the Sublicensee on sales of the Licensed Products made in
violation of any of the provisions of this Agreement shall not be taken into
consideration in calculating whether the Sublicensee's sales of the Licensed
Products have earned out any Guaranteed Royalty Amounts the Sublicensee is
obligated to pay under this Agreement.
C(2) Time of Payment; Royalty Adjustments.
(a) Time of Payment. The Sublicensee shall pay all royalties owed to
the Licensee under this Agreement for any calendar quarter within 30 days
following the end of the calendar quarter in question. All royalty statements
required to be submitted by the Sublicensee shall be submitted within 30 days
following the end of the calendar quarter to which they relate and shall
accompany the royalty payments made to the Licensee. Copies of all accounting
statements (as required by Section C(5)) and copies of royalty checks shall be
sent by the Sublicensee to UFS at the following addresses:
United Feature Syndicate, Inc.
Attn: Financial Manager, Licensing
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
United Feature Syndicate, Inc.
Attn: Controller, Licensing
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
(b) Royalty Adjustments. The receipt or acceptance by the Licensee
of any royalty statements furnished pursuant to this Agreement, or the receipt
or acceptance of any royalty payments made, or the fact that the Licensee or UFS
has previously audited the periods covered by such royalty statements, shall not
preclude the Licensee or UFS from questioning their accuracy at any time. If any
inconsistencies or mistakes are discovered in such statements or payments,
appropriate adjustments shall be made immediately by the parties. The
Sublicensee shall pay the Licensee interest on a late royalty payment at a rate
of 1.5% per month, compounded monthly.
C(3) Negotiation of Royalty on Discounted Sales. If the Sublicensee
proposes to sell any Licensed Product at a price which is less than 10% above
the Sublicensee's manufactured cost of such Licensed Product, the Sublicensee
shall so notify the Licensee and UFS in writing. The Licensee and UFS shall have
a right of prior approval over any such proposal, and if they approve such a
proposal the parties agree to negotiate in good faith with regard to a
percentage royalty higher than that specified in paragraph 4 to be payable by
the Sublicensee with respect to such sale.
C(4) Deductions; Taxes; Remittance Controls.
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(a) Deductions; Taxes. There shall be no deduction from the
royalties owed to the Licensee for uncollectible accounts, or for taxes, fees,
assessments, or other expenses of any kind which may be incurred or paid by the
Sublicensee in connection with: (i) royalty payments due the Licensee; (ii) the
manufacture, sale, distribution, or advertising of the Licensed Products in the
Territory; or (iii) the transfer of funds or royalties or the conversion of any
currency into U.S. Dollars. It shall be the Sublicensee's sole responsibility at
its expense to obtain the approval of any foreign authorities; to take whatever
steps may be required to effect the payment of funds from abroad; to minimize or
eliminate the incidence of foreign taxes, fees, or assessments which may be
imposed; to protect its investments in foreign territories; to enable it to
commence or continue doing business in any foreign territory; and to comply in
any and all respects with all applicable laws and regulations.
(b) Remittance Controls. If any payment required to be made to the
Licensee pursuant to this Agreement cannot be made when due because of exchange
controls, and such payment remains unpaid for such reason for 180 days, the
Sublicensee shall, recommend to the Licensee and UFS, in writing, either of the
following alternative methods of handling such payment: (i) if local currency
can be converted legally into currencies other than U.S. Dollars for purposes of
foreign remittances, the Sublicensee may recommend that the Licensee receive
such payment in any such currency as the Licensee and UFS may specify, and in
such case the amount payable in foreign currency so selected shall be determined
by reference to the then applicable rate of exchange most favorable to the
Licensee; (ii) the Sublicensee may recommend that the Licensee elect to have
payment made to it in local currency deposited to the credit of the Licensee in
a bank account in the foreign country in question designated by the Licensee,
upon which the Sublicensee shall furnish to the Licensee and UFS evidence of
such deposit. The Licensee and UFS shall have the right, at their sole
discretion, to elect which method of payment they will require the Sublicensee
to adopt.
C(5) Royalty Statements. The Sublicensee shall furnish to the
Licensee, at the same time it makes payment of royalties, a full and complete
statement, duly certified by an officer of the Sublicensee to be true and
accurate, showing the number of each stock keeping unit ("sku") of the Licensed
Products manufactured during the calendar quarter in question, the number of
each sku of the Licensed Products sold during the calendar quarter in question
(including a separate listing for skus of the Licensed Products sold via the
Internet or other electronic sales channels), the bar code for each sku of the
Licensed Products, the total gross sales revenues for each sku of the Licensed
Products, an itemization of all allowable deductions, if any, the Net Sales
Price for each sku of the Licensed Products sold, the amount of royalties due
with respect to such sales, and the names of the five customers that purchased
the highest wholesale value of the Licensed Products from the Sublicensee during
the calendar quarter in question along with the wholesale value of the Licensed
Products purchased by each such customer, and copies of contracts for any sales
to Controlled Parties as required by subparagraph 4(c), together with such other
pertinent information as the Licensee or UFS may reasonably request from time to
time. There shall be a breakdown of sales of skus of the Licensed Products by
country, and all figures and monetary amounts shall first be stated in the
currency in which the sales were actually made. If several currencies are
involved in any reporting category, that category shall be broken down by each
such currency. Next to each currency amount shall be set forth the equivalent
amount stated in U.S. Dollars, and the rate of exchange used in making the
required conversion calculation. The rate of exchange shall be the actual rate
of exchange obtained by the Sublicensee on the date of payment. The Licensee and
UFS shall have the right, on providing the Sublicensee with reasonable prior
written notice, to modify the elements of the information the Sublicensee is
obligated to provide the Licensee in connection with its royalty accounting
statements provided to the Licensee under this Section C(5).
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SECTION D. BOOKS OF ACCOUNT AND OTHER RECORDS.
D(1) Retention of Records. While this Agreement remains in effect,
and for a period of two years thereafter, the Sublicensee shall keep full and
accurate books of account and copies of all documents and other material
relating to this Agreement at the Sublicensee's principal office. Complete
records shall include, but are not limited to: (i) actual individual
consecutively numbered customer invoices for all sales of all products sold by
the Licensee, whether in hard copy paper form or electronic images, showing the
customer, items sold, item numbers, price and quantity; (ii) master list of all
Licensed Products offered to customers showing item number, list price and a
description of the Licensed Product; (iii) all purchase invoices for finished
Licensed Products if the Sublicensee does not manufacture the Licensed Products,
showing by each individual Licensed Product, the vendor, units purchased and
purchase cost; and if the Sublicensee manufactures the Licensed Products, in
lieu of purchase invoices, production records showing a description of each
Licensed Product produced, quantity produced and cost of production, including,
without limitation, labor, raw materials and overhead; (iv) inventory reports as
of each calendar quarter end for all of Sublicensee's products; (v) all physical
inventory counts done by the Sublicensee to the extent the Sublicensee conducts
any such physical counts; (vi) information detailing all returns of Licensed
Products showing customer, reason for return, items returned, item numbers,
price and quantity; and (vii) information detailing all marketing and
advertising expenses expended in connection with the Licensed Products.
D(2) Audits by Licensee and UFS; Scheduling. UFS and the Licensee,
by their duly authorized agents and representatives, shall have the right, on
reasonable prior notice, to audit such records referred to in Section D(1),
shall have access thereto during ordinary business hours, and shall be at
liberty to make copies of such books, documents and other materials. At UFS's or
the Licensee's request, the Sublicensee shall provide an authorized employee to
assist UFS or the Licensee in the examination of the Sublicensee's records. Upon
reasonable notice, the Sublicensee shall agree to accommodate an audit by UFS or
the Licensee at the date requested by UFS or the Licensee, or must reschedule to
a date convenient to UFS or the Licensee, which date shall be no later than 90
days from the date of UFS's or the Licensee's originally requested audit date.
The Sublicensee shall, in advance to any audit, prepare any documents or
schedules as UFS or the Licensee may reasonably request.
D(3) Licensee and UFS Audit Findings. In conducting an audit of the
Sublicensee hereunder, UFS or the Licensee may elect to review a period of the
books and records of the Sublicensee relating to less than the entire audit
period, and if UFS or the Licensee determines that the Sublicensee erred in
reporting during the period reviewed, resulting in underpaid royalties to the
Licensee, the Licensee shall have the right to apply the percentage error during
the period reviewed over the entire audit period. In addition, if any audit of
the Sublicensee's books and records reviewed reveals that the royalties actually
accounted for and paid to the Licensee with respect to the audit period reviewed
were underpaid or overpaid by 5% or more, the Sublicensee shall, in addition to
paying the Licensee any underpaid royalties, reimburse the Licensee or UFS for
professional fees and direct out-of-pocket expenses incurred in conducting such
audit, together with interest on the underpaid royalty amount at a rate of 1.5%
per month.
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D(4) Failure to Provide Adequate Accountings or Maintain Adequate
Records. If the Sublicensee fails to accommodate an audit by UFS or the Licensee
as described in Section D(2), or if the royalty accountings and records
submitted by the Sublicensee to UFS and the Licensee under Section C(5) and
Section D(1) do not contain all information required by the provisions of
Section C(5) and Section D(1), or if UFS or the Licensee schedules an audit of
the Sublicensee's books and records and finds that the Sublicensee's books and
records cannot be audited, the Sublicensee shall, without otherwise affecting
any other rights and remedies available to UFS or the Licensee under this
Agreement, pay the Licensee within 15 days of its receipt of notice from UFS or
the Licensee invoking the provisions of this Section D(4), as liquidated damages
and not as a penalty, an amount equal to twice the highest actual royalties paid
by the Sublicensee pursuant to subparagraph 4(a) of this Agreement during any
calendar quarter during the term of this Agreement with respect to the periods
as to which the Sublicensee fails to accommodate the audit, has provided
inadequate information or UFS or the Licensee was unable to audit.
SECTION E. TRADEMARK PROTECTION.
E(1) Trademark Uses Inure to UFS's Benefit. All trademark uses of
the Trademarks by the Sublicensee shall inure to the benefit of UFS, which shall
own all trademarks and trademark rights created by such uses. The Sublicensee
hereby assigns and transfers to UFS all trademarks and trademark rights created
by such uses of the Trademarks, together with the goodwill of the business in
connection with which such trademarks are used.
E(2) Trademark Registrations. UFS shall have the right, but not the
obligation, to file in the appropriate offices of countries of the Territory, at
its own expense, trademark applications relating to the use or proposed use by
the Sublicensee of any of the Trademarks in connection with the Licensed
Products, such filings to be made in the name of UFS or in the name of any third
party selected by UFS.
E(3) Records Relative to Trademark Uses. The Sublicensee shall keep
appropriate records (including copies of pertinent invoices and correspondence)
relating to the dates when each of the Licensed Products is first placed on sale
or sold in each country of the Territory, and the dates of first use in each
country of each different Trademark on the Licensed Products and Advertising
Materials. If requested to do so by UFS, the Sublicensee also agrees to supply
UFS with samples of the trademark usages in question and other information which
will enable UFS to complete and obtain trademark applications or registrations,
or to evaluate or oppose any trademark applications, registrations, or uses of
third parties.
E(4) Registered User Laws. As to those countries which require
applications to register the Sublicensee as a registered user of a Trademark or
Trademarks used on or in connection with the Licensed Products or which require
the recordation of this Agreement, the Sublicensee agrees to execute and deliver
to UFS such documents as may be necessary and as are furnished by UFS for such
purposes.
E(5) Trademark Notices. The Sublicensee agrees to affix or to cause
its authorized manufacturing sources to affix to the Licensed Products and to
the Advertising Materials such trademark notices as may be supplied by UFS. When
one of the Trademarks is used as a trademark for any Licensed Product, the name
shall be properly used as a trademark in a larger or bolder type than the
Licensed Product (e.g., SNOOPY Toy), and shall not be used as the generic name
of the Licensed Product.
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E(6) Restrictions on Uses of Trademarks. The Sublicensee shall not
make any trademark usage of any Trademark other than the Trademark SNOOPY
without the prior written consent of UFS. Trademark usage of a Trademark means
use of such Trademark as a designation of origin of a Licensed Product.
E(7) No Assertion of Rights. The Sublicensee shall not, during the
period of this Agreement or thereafter, directly or indirectly: (a) assert any
interest or property rights in any of the Trademarks or any word or phrase
confusingly similar with any of the Trademarks or associated with the Feature;
or (b) register, attempt to register, or adopt any of the Trademarks, or any
word or phrase confusingly similar with any of the Trademarks or associated with
the Feature, as a trademark, service ▇▇▇▇, trade name, corporate name, or
Internet domain name; or (c) challenge or deny the validity of the Trademarks or
UFS's ownership of the Trademarks; or (d) permit or acquiesce in any of the
foregoing activities by any of the Sublicensee's subsidiaries, manufacturers,
approved distributors, shareholders or other owners of an equity interest, or
the agents or employees of any of the foregoing, or of the Sublicensee.
SECTION F. COPYRIGHT PROVISIONS.
F(1) Copyright Notices. The authorization of the Licensee and UFS to
the Sublicensee to make public distribution of the Licensed Products and
Advertising Materials is expressly conditioned upon the following agreement of
the Sublicensee. The Sublicensee agrees to place on all Licensed Products and on
all Advertising Materials the copyright notice or notices in the name of UFS
specified in writing by UFS.
F(2) Affixation of Notice; Name of Copyright Owner. The Sublicensee
acknowledges that proper copyright notices must be permanently affixed to all
Licensed Products and Advertising Materials and to any separate portions of
Licensed Products or Advertising Materials which contain the Characters and
which are intended to be used separately by the purchaser or ultimate user. The
Sublicensee agrees that it will not, without UFS's prior written consent, affix
to the Licensed Products or the Advertising Materials a copyright notice in its
name or the name of any person, firm, or corporation other than UFS.
F(3) Assignment by Licensee. The SubLicensee hereby sells, assigns,
and transfers to UFS, the entire right, title, and interest in and to all
intellectual property previously or hereafter created by the Licensee or at the
Licensee's direction based on, featuring, derived from, or incorporating the
Feature or the Characters, including, but not limited to, all copyrights,
patents, trade secrets, and any registrations and applications relating thereto
and any renewals and extensions thereof and in and to all income, royalties,
damages, claims, and payments now or hereafter due or payable with respect
thereto, and in and to all causes of action, either in law or in equity for
past, present, or future infringement based on the intellectual property, and in
and to all rights corresponding to the foregoing throughout the world. The
Sublicensee agrees to execute all papers and to perform such other acts as UFS
may deem necessary to secure for UFS or its designee the rights herein assigned,
including obtaining from all third parties that contribute to any work assigned
to UFS a comparable assignment of rights such that the foregoing assignment by
the Licensee vests in UFS full rights in the intellectual property, free of any
claims, interests, or rights of other parties. The Sublicensee agrees not to
permit any of its employees to obtain or reserve by oral or written employment
agreements any rights in any such intellectual property.
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SECTION G. INDEMNIFICATIONS; PRODUCT LIABILITY INSURANCE.
G(1) Sublicensee's Indemnification. The Sublicensee agrees to
indemnify and hold the Licensee and UFS harmless from any and all claims (and
liabilities, judgments, penalties, losses, costs, damages, and expenses
resulting therefrom, including reasonable attorneys' fees, but excluding lost
profits) (a) made by third parties against the Licensee or UFS or suffered or
incurred by the Licensee or UFS by reason of or in connection with any act under
or in violation of this Agreement by the Sublicensee, its subsidiaries,
manufacturers, approved distributors, or other persons or the employees or
agents of any of the foregoing or of the Sublicensee, including, but not limited
to, the manufacture, distribution, exploitation, advertising, sale, or use of
the Licensed Products by any of them, but excluding any claims based solely upon
the use of the Copyrights or the Trademarks by the Sublicensee in strict
accordance with the terms of this Agreement; (b) suffered or incurred by the
Licensee or UFS as a result of the exercise by UFS of its termination rights
against third parties which are provided for in any agreements entered into
between the Sublicensee and such third parties in accordance with the provisions
of Section J; or (c) suffered or incurred by the Licensee or UFS as a result of:
(i) the sale or distribution of the Licensed Products outside the Territory by
the Sublicensee or any third party; provided that the Sublicensee knew or should
have known of such sale or distribution; (ii) the sale or distribution of the
Licensed Products outside the Sublicensee's authorized channels of distribution
by the Sublicensee or any third party; provided that the Sublicensee knew or
should have known of such sale or distribution; or (iii) the sale or
distribution of the Licensed Products in violation of any other restriction on
the sale or distribution of the Licensed Products, including, but not limited
to, those restrictions set forth in Sections B(1) and B(3).
G(2) Licensee's Indemnification. The Licensee agrees to indemnify
and hold the Sublicensee harmless from any and all claims (and liabilities,
judgments, penalties, losses, costs, damages, and expenses resulting therefrom,
including reasonable attorneys' fees, but excluding lost profits) made by third
parties against the Sublicensee asserting rights in the Characters and based
solely upon the use of the Characters by the Sublicensee in strict accordance
with the terms of this Agreement.
G(3) Claims Procedures. With respect to any claims falling within
the scope of the foregoing indemnifications: (a) each party agrees promptly to
notify the other of and keep the other fully advised with respect to such claims
and the progress of any suits in which the other party is not participating; (b)
each party shall have the right to assume, at its sole expense, the defense of a
claim or suit made or filed against the other party; (c) each party shall have
the right to participate, at its sole expense, in any suit instituted against it
and to approve any attorneys selected by the other party to defend it, which
approval shall not be unreasonably withheld or delayed; and (d) a party assuming
the defense of a claim or suit against the other party shall not settle such
claim or suit without the prior written approval of the other party, which
approval shall not be unreasonably withheld or delayed.
G(4) Product Liability Insurance. The Sublicensee agrees to obtain
and maintain during the period of this Agreement, and for three years following
expiration or termination of this Agreement, at its own expense, product
liability insurance providing protection (at a minimum, in the amount of
$2,000,000 per occurrence/$2,000,000 annual aggregate) applicable to any claims,
liabilities, damages, costs, or expenses arising out of any defects or alleged
defects in the Licensed Products. Such insurance shall include coverage of the
Licensee and UFS, and their directors, officers, agents, employees, assignees,
and successors. Within 30 days after the execution of this Agreement, the
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Sublicensee shall cause the insurance company issuing such policy to add the
Licensee and UFS to such policy as additional insureds and to issue a
certificate to the Licensee and UFS confirming that such policy has been issued
and is in full force and effect and provides coverage of the Licensee and UFS as
required by this Section G(4), and also confirming that before any cancellation,
modification, or reduction in coverage of such policy, the insurance company
shall give the Licensee and UFS 30 days prior written notice of such proposed
cancellation, modification, or reduction. Any insurance carried by the Licensee
or UFS shall be deemed excess insurance, not subject to contribution.
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SECTION H. RESERVATION OF RIGHTS.
All rights in and to the Feature, the Copyrights, and the Trademarks
(including premium rights in the Licensed Products) are retained by UFS for its
own use, except for the specific rights which are granted to the Sublicensee
under this Agreement. UFS has reserved the right to use, and to license other
parties to use, the Copyrights and the Trademarks in the Territory for any
purpose UFS may determine. UFS has reserved the right to use the Copyrights and
the Trademarks in the Territory in connection with the manufacture,
distribution, sale, and advertising of Licensed Products via catalogs produced
and distributed by UFS or any affiliate of UFS and via retail stores operated by
UFS or any affiliate of UFS.
SECTION I. INFRINGEMENTS; CLAIMS.
I(1) Infringements. When the Sublicensee learns that a party is
making unauthorized uses of the Copyrights or Trademarks, the Sublicensee agrees
promptly to give UFS written notice giving full information with respect to the
actions of such party. The Sublicensee agrees not to make any demands or claims,
bring suit, effect any settlements, or take any other action against such party
without the prior written consent of UFS. The Sublicensee agrees to cooperate
with UFS, at no out-of-pocket expense to the Sublicensee, in connection with any
action taken by UFS to terminate infringements. UFS shall retain 100% of all net
amounts recovered from infringers.
I(2) Claims. If claims or suits are made against the Licensee, UFS,
or the Sublicensee by a party asserting the ownership of rights in a name or
design which is the same as or similar to one of the Trademarks, and asserting
further that the use of a particular Trademark by the Sublicensee infringes the
rights of such party, or if the parties hereto learn that another party has or
claims rights in a trademark, name, or design which would or might conflict with
the proposed or actual use of a Trademark by the Sublicensee, the parties agree
in any such case to consult with each other on a suitable course of action. In
no event shall the Sublicensee have the right, without the prior written consent
of UFS, to acknowledge the validity of the claim of such party, to obtain or
seek a license from such party, or to take any other action which might impair
the ability of UFS to contest the claim of such party if UFS so elects. The
Sublicensee agrees at UFS's request to make reasonable modifications requested
by UFS in the Sublicensee's use of the Trademarks in question or to discontinue
their use in the country of the Territory in question on the particular Licensed
Product or Licensed Products which are involved, if UFS, in its sole discretion,
reasonably exercised, determines that such action is necessary or desirable to
resolve or settle the claim or suit or eliminate or reduce the threat of a claim
or suit by such party. The Licensee and UFS shall have the right to participate
fully at their own expense in the defense of any claim or suit instituted
against the Sublicensee with respect to the use by the Sublicensee of a
Trademark.
SECTION J. NO SUBLICENSING; AGREEMENTS WITH MANUFACTURERS.
J(1) Sublicensing. The Sublicensee shall not have the right to
sublicense any of the rights granted to it under this Agreement. For purposes of
this Agreement, "sublicense" means authorizing a third party to use the
Copyrights and the Trademarks in connection with the manufacture, distribution,
sale, and advertising, for such third party's own account, of the Licensed
Products.
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J(2) Manufacturers. The Sublicensee shall have the right to arrange
with another party to manufacture the Licensed Products or components thereof
for exclusive sale, use, and distribution by the Sublicensee. Each such
manufacturer shall be subject to the Licensee's and UFS's prior written
approval. If the Licensee and UFS approve the use by the Sublicensee of a
particular manufacturer, the Sublicensee agrees within ten business days of its
receipt of such approval to enter into a written agreement with such
manufacturer, and agrees to incorporate into such written agreements all of the
provisions, for the protection of the rights of UFS, which are contained in the
form manufacturer agreement which has been prepared by UFS for such purposes,
and which is available from UFS. The Sublicensee further agrees to furnish the
Licensee and UFS within 30 days of their execution copies of all agreements with
such manufacturers.
J(3) Enforcement of Manufacturer Agreements. The Sublicensee agrees
strictly to enforce against its manufacturers all of the provisions which are
required to be included in such agreements for the protection of UFS, as
provided in Section J(2); to advise UFS of any violations thereof by
manufacturers, and of corrective actions taken by the Sublicensee and the
results thereof; and at the request of UFS to terminate such an agreement with
any manufacturer which violates any of such provisions for the protection of
UFS. If the Sublicensee fails to exercise such termination rights by giving
written notice to the manufacturer in question within 20 days after being
requested to do so in writing by UFS, the Sublicensee appoints UFS its
irrevocable attorney-in-fact to send a notice of termination in the name of the
Sublicensee to such manufacturer for the purpose of terminating the agreement or
any specific rights of the manufacturer under such agreement.
SECTION K. BREACH AND TERMINATION.
K(1) Immediate Right of Termination. The Licensee shall have the
right to terminate this Agreement immediately, by giving written notice to the
Sublicensee, in any of the following situations:
(a) If the Sublicensee breaches any of the provisions of Section
A(1)(b).
(b) If the Sublicensee makes, sells, offers for sale, or distributes
or uses any Licensed Product or Advertising Material without having the prior
written approval of the Licensee and UFS, as required by Section A, or makes any
use of the Copyrights or the Trademarks not authorized under this Agreement.
(c) If the Sublicensee fails to make any Guaranteed Royalty Amount
payment by the date such payment is required under the provisions of paragraph
4, or if the Sublicensee fails to submit royalty statements and/or royalty
payments to the Licensee during the time period specified in Section C(2).
(d) If the Sublicensee becomes subject to any voluntary or
involuntary order of any governmental agency involving the recall of any of the
Licensed Products because of safety, health, or other hazards or risks to the
public.
(e) If, other than under Title 11 of the U.S. Code, the Sublicensee
becomes subject to any voluntary or involuntary insolvency, cession, bankruptcy,
or similar proceedings, or an assignment for the benefit of creditors is made by
the Sublicensee, or an agreement between the Sublicensee and its creditors
generally is entered into providing for extension or composition of debt, or a
receiver is appointed to administer the assets of the Sublicensee, or the assets
of the Sublicensee are liquidated, or any distress, execution, or attachment is
levied on such of its manufacturing or other equipment as is used in the
production and distribution of the Licensed Products and remains undischarged
for a period of 30 days.
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(f) If the Sublicensee breaches any of the provisions of Section J.
(g) If the Sublicensee breaches any of the provisions of Section
L(1).
K(2) Assumption and Rejection Pursuant to U.S. Bankruptcy Code.
After any order for relief under the Bankruptcy Code is entered against the
Sublicensee, the Sublicensee shall be required to assume or reject this
Agreement within 60 days after the order for relief is entered. If the
Sublicensee does not assume this Agreement within such 60-day period, the
Licensee may, at its sole option, terminate this Agreement immediately by giving
written notice to the Sublicensee, without further liability on the part of the
Licensee or UFS. If the Sublicensee does not assume this Agreement within such
60-day period, the Licensee may, at its sole option, terminate this Agreement
immediately by giving written notice to the Sublicensee, without further
liability on the part of the Licensee or UFS. The Sublicensee agrees that any
payments due the Licensee under this Agreement after any order for relief under
the Bankruptcy Code is entered against the Sublicensee shall be entitled to
treatment as administrative expenses under Section 503 of the Bankruptcy Code,
and shall be immediately paid when due to the Licensee, without the need for the
Licensee to file an application or motion in the Sublicensee's bankruptcy case
for payment of such administrative expenses.
K(3) Curable Breaches. If either party breaches any of the terms and
provisions of this Agreement, other than those specified in Section K(1), and
the party involved fails to cure the breach within 30 days after receiving
written notice by certified or registered mail or overnight courier from the
other party specifying the particulars of the breach, the nondefaulting party
shall have the right to terminate this Agreement by giving written notice to the
defaulting party by registered or certified mail.
K(4) Effect of Termination. Termination of this Agreement under the
provisions of this Section K or the provisions set forth elsewhere in this
Agreement shall be without prejudice to any rights or claims which the Licensee
and UFS may otherwise have against the Sublicensee. Upon the termination of this
Agreement, all royalties on sales previously made and all Guaranteed Royalty
Amount payments that would have been payable by the Sublicensee following
termination shall become immediately due and payable to the Licensee. Upon the
termination of this Agreement under the provisions of Section K(1)(e) or K(2) of
this Agreement, the Sublicensee, its receivers, trustees, assignees, or other
representatives shall have no right to sell, exploit, or in any way deal with
the Licensed Products, the Advertising Materials, the Copyrights, or the
Trademarks, except with the written consent and instructions of the Licensee and
UFS.
K(5) Discontinuance of Use of Copyrights, Trademarks, Etc. Subject
to the provisions of Section K(6), upon the expiration or earlier termination of
this Agreement, the Sublicensee agrees immediately and permanently to
discontinue manufacturing, selling, advertising, distributing, and using the
Licensed Products and Advertising Materials; immediately and permanently to
discontinue using the Copyrights and the Trademarks; at UFS's option,
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immediately to destroy, in the presence of UFS's representative, any films,
molds, dies, patterns, or similar items from which the Licensed Products and
Advertising Materials were made, where any Copyright or Trademark is an integral
part thereof, or, alternatively, deliver such films, molds, dies, patterns, or
similar items to UFS's designated representative; immediately deliver to the
Licensee or UFS or their designated representative, at the Sublicensee's
expense, all Feature-related materials in the Sublicensee's possession, custody,
or control, whether created by the Sublicensee or supplied to the Sublicensee by
the Licensee or UFS, including, but not limited to, Feature-related art banks,
style guides, and analogous materials; and immediately to terminate all
agreements with manufacturers, approved distributors, and others which relate to
the manufacture, sale, distribution, and use of the Licensed Products. On
termination of this Agreement by the Licensee for cause, the Sublicensee shall,
at the Licensee's and UFS's option and at the Sublicensee's expense, either
deliver its inventory of the Licensed Products to the Licensee or UFS or the
Licensee's or UFS's designated representative, or destroy its inventory of the
Licensed Products and supply the Licensee and UFS with a notarized certificate
of destruction. If the parties negotiate beyond the expiration date of this
Agreement with respect to the terms and conditions of an extension of the period
of this Agreement and then fail to reach agreement on such terms and conditions,
such period of negotiation shall not be deemed to extend the period of this
Agreement beyond its expiration date or to extend the sell-off period provided
for in Section K(6). The Sublicensee shall pay percentage royalties on all
Licensed Products sold by the Sublicensee during any such period of negotiation
even if the Sublicensee has not earned out 100% of any Guaranteed Royalty Amount
payments made by the Sublicensee pursuant to this Agreement.
K(6) Disposition of Inventory upon Expiration. Notwithstanding the
provisions of Section K(5), if this Agreement expires in accordance with its
terms, and is not terminated for cause by the Licensee or UFS, the provisions of
this Section K(6) shall apply. If the Sublicensee delivers to the Licensee and
UFS on or before the date 30 days prior to the expiration of this Agreement a
written inventory listing, on a Licensed Product-by-Licensed Product basis, all
Licensed Products in the Sublicensee's possession, custody, or control as of the
date of such inventory, the Sublicensee shall have the non-exclusive right to
sell any Licensed Products listed on such inventory for a period of 90 days
immediately following such expiration, subject to the payment of royalties to
the Licensee on any such sales in accordance with the terms of this Agreement.
The Sublicensee shall pay percentage royalties on all Licensed Products sold by
the Sublicensee during said sell-off period even if the Sublicensee has not
earned out 100% of any Guaranteed Royalty Amount payments made by the
Sublicensee pursuant to this Agreement. UFS shall have the right (but not the
obligation) to buy any or all of the Licensed Products listed on such inventory
at the Sublicensee's cost of manufacture. The sell-off right granted the
Sublicensee under this Section K(6) shall in no event apply to a quantity of any
Licensed Product exceeding 50% of the Sublicensee's average quarterly unit sales
of such Licensed Product during the one-year period immediately preceding the
expiration of this Agreement. If the Sublicensee breaches the provisions of
Section K(6) by selling the Licensed Products after the sell-off period, the
Sublicensee shall pay the Licensee, as liquidated damages, and not as a penalty,
a percentage royalty three times the percentage royalty specified in
subparagraph 4(b).
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SECTION L. MISCELLANEOUS PROVISIONS.
L(1) Restrictions on Assignments and Encumbrances.
(a) Restriction on Assignments. Without the prior written consent of
the Licensee and UFS, the Sublicensee shall not directly or indirectly assign,
transfer, or sublicense any of its rights under this Agreement. The foregoing
provision shall apply to transfers of ownership interests in the Sublicensee
(including the stock of the Sublicensee) which would result in a change in
control of the Sublicensee. This Agreement shall be binding upon and inure to
the benefit of the successors and assigns of the Licensee.
(b) Restriction on Encumbrances. Without the prior written consent
of the Licensee and UFS, the Sublicensee shall not encumber any of its rights
under this Agreement in any fashion, including but not limited to, the granting
of a security interest in this Agreement or any of the Licensed Products.
L(2) Parties Not Joint Venturers. Nothing contained in this
Agreement shall be construed so as to make the parties partners or joint
venturers or to permit the Sublicensee to bind the Licensee or UFS to any
agreement or purport to act on behalf of the Licensee or UFS in any respect.
L(3) No Inducement. Neither party has been induced to enter into
this Agreement by, nor is either party relying on, any representation not
expressly stated in this Agreement.
L(4) Modifications of Agreement; Remedies. No waiver or modification
of any of the terms of this Agreement shall be valid unless in writing, signed
by both parties. Failure by either party to enforce any rights under this
Agreement shall not be construed as a waiver of such rights, and a waiver by
either party of a default in one or more instances shall not be construed as a
continuing waiver or as a waiver in other instances.
L(5) Invalidity of Separable Provisions. If any term or provision of
this Agreement is for any reason held to be invalid, such invalidity shall not
affect any other term or provision, and this Agreement shall be interpreted as
if such term or provision had never been contained in this Agreement.
L(6) Notices. All notices to be given under this Agreement (which
shall be in writing) shall be given at the respective addresses of the parties
as set forth on page 1, unless notification of a change of address is given in
writing. The date of mailing shall be deemed to be the date the notice is given.
L(7) Headings. The paragraph and section headings of this Agreement
are inserted only for convenience and shall not be construed as a part of this
Agreement.
L(8) Entire Understanding. This Agreement contains the entire
understanding of the parties with respect to its subject matter. Any and all
representations or agreements by any agent or representative of either party to
the contrary shall be of no effect.
L(9) Choice of Law. This Agreement and all disputes arising from or
related to this Agreement or its subject matter shall be governed, resolved, and
remedied in accordance with the laws of the State of New York, applicable to
agreements, acts, omissions, and behavior made, performed, and accomplished
wholly in New York, without resort to conflict of law principles.
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L(10) No Injunctive Relief. The Sublicensee acknowledges that no
breach of this Agreement by the Licensee will result in irreparable harm to the
Sublicensee, and that the Sublicensee will be adequately compensated by monetary
damages for any breach of this Agreement by the Licensee.
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Schedule A--Definitions of Types of
Retailers Included in Approved Retail Outlets
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Direct Mail Catalogs Catalogs that offer products for sale and are directly
mailed to consumers' homes, such as Spiegel and The
Company Store.
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High-End Department Stores that carry several high-end product lines,
Stores with each line operated as a separate department
managed by specialist buyers or merchandisers, such
as Macy's, Neiman Marcus, and Bloomingdale's.
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Home Shopping Channels Television or other broadcast home shopping channels
or services, such as QVC and Shop At Home.
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Mass Market Retailers Retailers with a nationwide distribution that offer
products for sale with an emphasis on price rather than
aesthetics, in a broad assortment of unrelated product
categories, such as Wal-Mart and Target.
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Mid-Tier Department Stores that carry several moderately priced product
Stores lines, with each line operated as a separate
department managed by specialist buyers or
merchandisers, such as ▇. ▇. Penney, Sears, and
Kohl's.
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Supermarket/Grocery Stores that offer for sale primarily packaged food
Stores products, such as Kroger and Safeway.
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Schedule B--Licensed Products
(Scents to include ▇▇▇▇▇ ▇▇▇▇▇, Let's Mango, and Groovy Green, all other scents
to require the prior written approval of UFS on a case-by-case basis; sizes to
include 1 fluid ounce (30 ml), 1.7 fluid ounces (50 ml), 4 fluid ounces (120
ml), and 8 fluid ounces (240 ml), all other sizes to require the prior written
approval of UFS on a case-by-case basis)
BATH FOAM
BODY SPRAY
COSMETIC BAG
EAU DE TOILETTE
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