LICENSING AGREEMENT
AGREEMENT dated this twenty-sixth day of March, 1996, between THE ▇▇▇▇▇▇
PUBLISHING COMPANY, LICENSING DIVISION, (hereinafter referred to as "licensor"),
located ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, and AMERICAN ROYAL ARTS
CORPORATION, (hereinafter referred to as "licensee") located at ▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇.
WITNESSETH:
WHEREAS, Licensor was engaged in publishing the magazine The Saturday Evening
Post;
WHEREAS, Licensor is the owner of a library of distinctive and well-know
copyrighted magazine illustrations produced for The Sunday Evening Post.
WHEREAS, Licensee desires to utilize certain of said illustrations for its
merchandise upon the terms and conditions set forth below.
NOW THEREFORE, in consideration of the mutual promises and undertakings herein
contained and for other good and valuable considerations, intending to be
legally bound, the parties agree as follows:
1. DEFINITION OF TERMS
(a) "Customer Sales" shall mean sales of Goods by Licensee
directly or through its authorized wholesalers,
representatives or distributors to retail establishments for
eventual resale to the consumer.
(b) "Mail Order Sales" shall mean sales of Goods by Licensee
directly to the consumer through direct mail solicitation or
catalogues.
(c) "Original Term" shall mean the period beginning on April 1,
1996 and ending on March 31, 1998.
(d) "Contract Year" shall mean the period commencing on January
1st and ending on December 31st of the same year.
(e) A "Premium" shall mean any article used for the purposes of
increasing the sale of another item, promoting or publicizing
any product or service, or used to motivate a sales force,
merchant, consumer, or any other person to perform any act.
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(f) "Net Wholesale Selling Price" as used herein shall be defined
as meaning the price at which the Goods are sold to Licensee's
customers net of all returns actually made or allowed.
2. GRANT OF LICENSE
Subject to the limitations set forth in Paragraph 2(d) below, and the other
conditions of this Agreement, for the original term of this contract the
Licensor hereby grants to Licensee the rights to use the illustrations listed
under Schedule A below, (hereinafter referred to as "the Materials") on the
following merchandise (hereinafter referred to as "goods"):
(a) Description of Goods: A series of four (4) limited edition
lithographs of "Garfield Visits
Rockwell". Print run of 750 each plus 7
Artist's proofs of the four
illustrations to be marketed at
approximately $400 retail. Each piece
to be signed by ▇▇▇ ▇▇▇▇▇ of Paws,
Incorporated.
(b) Schedule A: Images for Schedule A to be selected.
(c) Market and Territory: Licensees shall only make sales of Goods
as described in Paragraph 1(a) and (b) above. The license
hereby granted extends to the United States, its territories,
and Canada.
(d) Limitations on License: No license is granted hereunder for
the use of Material for any purpose other than upon or in
connection with the Goods. No license is granted hereunder
for the manufacture, sale or distribution of Goods to be
used as premiums, for publicity purposes, in combination
sales, as giveaways, or to be disposed of under similar
methods of merchandising. In the event Licensee desires to
sell Goods for such purposes, Licensee acknowledges and
agrees that it must first seek and obtain a separate license
therefore from Licensor and that the user therefor must also
obtain a separate license from Licensor for such use of the
Goods.
(e) Exclusivity: For the Original Term of this Agreement, Licensor
shall not license any other person to use, in the Territory,
the Materials listed under Schedule A on the Goods listed in
Paragraph 2(a) and (b) above.
3. ROYALTIES
(a) Rate: In consideration of this license, the Licensee shall pay
the Licensor, during the Original Term of this Agreement and
any extension thereof, a royalty in the amount of eight
percent (8%) of the Net Selling Price of Goods sold. In
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computing Net Selling Price, no costs incurred in other
advertising and promoting allowances, or distributing the
Goods or any indirect expenses shall be deducted.
4. ACCOUNTING
Not later than the fifteenth day after every quarter during the Original Term
and any extension thereof, and thereafter so long as any sales are made by the
Licensee pursuant to this Agreement, the Licensee shall furnish to the Licensor
a full, complete and accurate statement showing the number of Goods, which have
been sold by the Licensee and the selling price thereof during the preceding
month. For the purposes of this Agreement, an item is considered to be sold when
it is ordered and invoiced or shipped, whichever is sooner.
5. PAYMENT
Simultaneous with the rendition of the statement as aforesaid in Paragraph 4
above, the Licensee shall pay to the Licensor, subject to the provisions of
Paragraph 3, such royalties as the statement indicated are due the Licensor.
6. DURATION
Except as otherwise provided in the following paragraphs, upon completion of the
Original Term, all rights granted the Licensee shall automatically terminate.
7. QUALITY
Licensee acknowledges that if the Goods manufactured and sold by it are of
inferior quality in material and workmanship, the substantial good will which
the Licensor has built up and now possesses in the Material will be impaired.
Accordingly, Licensee warrants that the Goods will be of high standard and of
such appearance and quality as shall be reasonably adequate and suited to their
exploitation to best advantage. Licensee shall submit to Licensor finished art
work and/or a facsimile of all Goods to be manufactured, together with its
cartons and containers, including packaging and wrapping material, which shall
be approved in writing by the Licensor before the Goods are advertised,
distributed or sold. Any article submitted and not disapproved within fourteen
(14) days of the receipt of same by Licensor shall be deemed to have been
approved. After samples of the Goods have been approved pursuant to this
paragraph, Licensee shall not depart therefrom without written consent of the
Licensor. In the event there is a departure from the approved sample of Goods
made or distributed by Licensee, or in the event there is an occurrence
connected with any such Goods or Licensee which reflects unfavorably upon
Licensor, the Licensor shall have the right in the reasonable exercise of its
sole discretion to withdraw its approval of such Goods, at which time this
Agreement shall automatically terminate with respect to such Goods.
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8. SAMPLES
Licensee shall supply Licensor with 1 sample of each of the complete Goods.
9. BOOKS AND RECORDS
The Licensee shall keep full, complete and accurate books of account and records
covering all transactions relating to the subject matter of this Agreement.
Licensor, through its authorized representative shall have the right to examine
such books of account and records and other documents and material in Licensee's
possession or under its control insofar as they relate to the manufacture and
sale of Goods. The Licensor shall have free and full access therefrom at any
reasonable hour of the day during which the Licensee's offices are open and in
any reasonable manner. Licensee need only retain such books of account and
records for a two-year period following the termination of this Agreement.
10. GOODWILL
The License acknowledges that the Material is unique and original and that the
Licensor is the owner thereof. The Licensee shall not, during the Original Term
of this Agreement or any time thereafter, dispute or contest, directly or
indirectly; the Licensor's ownership of the Material; The Licensor's exclusive
right (subject to this license) to use the Material; the validity of any of the
copyrights or trademarks pertaining thereto or the Licensor's ownership thereof.
Nor shall the Licensee assist or aid others in doing so. At the Licensor's
request, the Licensee shall cooperate with the Licensor in preventing or
stopping any infringement or unfair use by any third party of the Goods or the
Material. The Licensor shall bear the costs of preventing or stopping any such
infringement or unfair use, which it elects to pursue, and the Licensee's
obligation will be limited to providing full cooperation to Licensor.
11. LICENSEE'S EFFORTS
Licensee agrees that it will exercise its best efforts to manufacture,
distribute and sell the Goods within the territory. It is also agreed that
Licensee will use its best efforts to fulfill orders for Goods in a timely and
reasonable manner. Should there be an unforeseen delay in fulfilling customers'
order for Goods, Licensee will exercise all possible diligence in informing
those customers of the delay, and complying totally with Federal Trade
Commission regulations and all other relevant state and federal laws. In the
event of an unforeseen delay in fulfilling orders to customers, Licensee also
agrees that it will refrain from advertising or promoting Goods, or soliciting
orders from consumers until such problems are cured.
12. COPYRIGHT, ETC.
(a) The Licensor shall apply to register trademarks and claims to
copyright, and apply for design patents on the Goods and/or
the Material as may be reasonably necessary, in the Licensor's
sole discretion, to protect the Licensor's interests.
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All applications for registration of claims to copyright shall
identify the Licensor as the copyright proprietor; all
applications to register trademarks shall identify the
Licensor as the trademark owner; and all applications for
design patents shall correctly identify the inventor and shall
be assigned to the Licensor.
(b) If the Licensor requires any specimens of the Goods, or any
photographic reproductions of the same, for use in filing
copyright, trademark or patent applications, the Licensee
shall provide the Licensor with the same at Licensee's
expense.
(c) At the Licensor's request, the Licensee shall execute
assignments in favor of the Licensor of any and all
copyrights, trademarks or other property rights of whatever
kind relating to the Goods and/or the Material without further
consideration.
(d) Licensee shall ensure and warrant that it will provide a
legally sufficient copyright notice on the Goods and/or the
packaging, wrapping, advertising and promotional material
bearing any reproductions of the Goods or the Material, in the
following format designated by Licensor:
(C) 19** The ▇▇▇▇▇▇ Publishing Company
or such other format as Licensor shall from time to time
direct. The Licensee further warrants that it will take such
precautions as necessary to insure that any reproductions made
by its customers also bear the Licensor's legal copyright
notice.
13. ADVERTISING/STYLE GUIDELINES
All advertisements and promotional materials which Licensee intends to use to
promote Goods shall be submitted to Licensor for its written approval prior to
publication. Licensor shall have fourteen (14) days from the date of receipt of
said material in which to approve or disapprove it. Such approval shall not be
unreasonably withheld by Licensor.
To the fullest extent possible, the style guidelines of the Licensor will be
followed in advertising, labeling and promotion.
14. RIGHT OF TERMINATION
Without prejudice to any other rights, Licensor shall have the right to
terminate this Agreement upon written notice to Licensee, sent by certified
mail, return receipt requested, at any time that any of the following may occur:
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(a) If Licensee shall not have begun the bona fide manufacture or
production of the Goods licensed hereunder within ninety (90)
days from the commencement of the term hereof.
(b) If Licensee shall be unable to fulfill or obtain valid
purchase orders for the Goods throughout the territory hereof
for any reason for a period of six (6) months or more.
(c) If Licensee shall fail to make any payment due hereunder or to
deliver any of the statements herein referred to, and if such
default shall continue for a period of sixty (60) days.
(d) If Licensee shall be unable to pay its liabilities when due,
or shall make any assignment for the benefit of creditors, or
shall file any petition under Chapter 10, 11 or 12 of ▇▇▇▇▇
▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇ Code, or file a voluntary petition in
bankruptcy or be adjudicated as bankrupt or insolvent, or if
any receiver is appointed for its business or property, or if
any trustee in United States government or of the several
states, Licensor shall have the right to terminate this
Agreement. Notwithstanding the foregoing, the Licensor shall,
at any time during the term of this contract, have the option
of demanding an assurance from Licensee of Licensee's ongoing
ability to perform the provisions of this contract, if, in the
reasonable opinion of Licensor, Licensee is unable to
adequately fulfill its requirements. If reasonable and
adequate assurance is not received by Licensor regarding
Licensee's ability to perform, Licensor shall have the right
to terminate this Agreement.
15. SALES AND AFTER EXPIRATION
Should this Agreement terminate for any reason or expire, Licensee may, at the
sole discretion of the Licensor, be permitted to sell its remaining inventory of
Goods for a period not to exceed one hundred and twenty (120) days following the
termination or expiration of this Agreement. Said request to sell remaining
inventory shall be sent to the Licensor within thirty (30) days before
expiration or from Licensee's receipt of any notice terminating the license
herein. However, the Licensee shall not, without prior written consent of the
Licensor, sell any such remaining Goods as distress merchandise or otherwise
than in the ordinary course of business. For the purpose of this Agreement, a
distress sale shall be defined as one in which the merchandise is sold for less
than fifty percent (50%) of the normal wholesale selling price. Licensee shall
pay royalties on all such sales in the manner provided for in this Agreement.
16. CESSATION OF USE
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Except as otherwise provided in Paragraph 15, the Licensee shall, forthwith
upon the expiration of this Agreement or any extension thereof, or upon its
sooner termination, discontinue the manufacturing, printing, promotion,
advertising, sale and distribution of Goods.
17. RIGHTS RESERVED BY LICENSOR
Any and all rights in and to said Material which are not expressly granted to
the Licensee are hereby reserved by the Licensor. Any one or more of such
reserved rights may be exercised or enjoyed by the Licensor, directly or
indirectly, at any and all times.
18. REIMBURSEMENT OF EXPENSES
Licensee agrees to reimburse Licensor for all labor, material and other expenses
incurred by Licensor at the direct request of Licensee.
Licensee further agrees to reimburse Licensor for the cost of any royalties
audit deemed necessary and proper by Licensor, provided such audit finds a
discrepancy of five percent (5%) or more.
19. LICENSOR'S CLAIM
Whatever claim Licensor may have against Licensee hereunder for royalties and/or
for damages shall become a first lien upon all of said Goods manufactured or
produced pursuant to the terms of this Agreement in the possession or under the
control of Licensee or its agents upon the expiration or termination of this
Agreement.
20. REMEDIES
All specific remedies provided for in this Agreement shall be cumulative and
shall not be exclusive of one another or any of any other remedies available in
law or equity. The failure of the Licensor to insist upon the strict performance
of any of the convenants or terms hereof to be performed by the Licensee shall
not be construed as a waiver of such covenants of terms.
21. LICENSEE'S WARRANTY
Licensee hereby agrees to be solely responsible for, to defend and indemnify
Licensor and its respective officers, agents and employees, and to hold each of
them harmless from any claims, demand, causes or action or damages, including
reasonable attorney's fees arising out of the distribution or use of the Goods,
other than those based solely on Licensee's use of the Material authorized by
this Agreement. Licensee will obtain and maintain product liability insurance in
the minimum amount of five hundred thousand dollars ($500,000) providing
protection for Licensor and its respective officers, agents and employees
against any attorney's fees arising out of any alleged defects in Goods or any
use thereof, in an amount and providing coverage
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satisfactory to Licensor. Such insurance policy shall provide that it may not be
canceled without at least ten days written notice by Licensor. Further, Licensor
will be furnished with a certificate of such insurance issued by the insuring
company.
22. LICENSOR'S WARRANTY
Licensor represents and warrants to Licensee that it is the sole owner and
proprietor of Material and has the power to enter into this Agreement. Licensor
hereby agrees to indemnify Licensee, its officers, agents and employees and to
hold them harmless against claims, demands, causes of action or damages, for
trademark or copyright infringement arising out of the use of the Material as
authorized by this Agreement, provided that Licensor is given immediate notice
of and shall have the option to undertake and conduct the defense of any such
claim, demand or cause of action. Licensee may, but shall not be obligated to,
join in such defense and be represented by its own counsel. All liabilities,
expenses, losses, damages and reasonable attorney's fees in connection with any
such claim shall be paid by the Licensor, except that if Licensee elects to be
represented by its own counsel, Licensee will pay its own attorney's fees.
Licensee agrees that while it may counsel Licensor concerning the disposition of
any such action, Licensor shall have the sole final decision concerning the
disposition of any action and the right to dispose of inventory and works in
progress as it sees fit.
23. NO PARTNERSHIP OR JOINT VENTURE
This Agreement does not constitute and shall not be construed as constituting a
partnership or joint venture between Licensor and Licensee. The Licensee shall
have no right to obligate or bind Licensor in any manner whatsoever and nothing
herein contained shall give or is intended to give any rights of any kind to any
third party.
24. NO ASSIGNMENT
The license hereby granted is and shall be personal to the Licensee and shall
not be assignable by any action of the Licensee or by operation of the law, and
any attempt at such assignment shall be null and void. The Licensee shall have
no right to grant any sub-licenses. Material change in ownership or corporate
firm of the Licensee shall render this Agreement null and void. This Agreement
shall inure to the benefit of and shall be binding upon the Licensor's
successors and assigns.
25. WAIVER AND MODIFICATION
No waiver or modification of any of the terms of this Agreement shall be valid
unless in writing and signed by the party against whom such modification or
waiver is sought to be enforced. No waiver by either party of a breach hereof of
a default hereunder shall be deemed a waiver by such party of a subsequent
breach or default of like or similar nature.
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26. NOTICE
Whenever notice is required to be given under this Agreement, it shall be deemed
to be good and sufficient notice if in writing, signed by an officer or an
authorized agent of the party serving such notice and sent by telegram, telex or
mailed by registered or certified mail, return receipt requested, to the other
party at the address stated above unless notification of a change of address is
given in writing.
27. CONSTRUCTION
This Agreement has been executed in the State of Indiana and shall be construed
in accordance with the laws of said State, irrespective of the forum in which
the Agreement or any part of it may come up for construction, interpretation, or
enforcement.
28. ENTIRE AGREEMENT
This Agreement contains the entire understanding of the parties. There are no
representations, warranties, promises, covenants or understandings other than
those herein contained.
IN WITNESS WHEREOF, the parties hereto have caused these presents to be signed
by their duly authorized officers as of the day and year first above written.
THE ▇▇▇▇▇▇ PUBLISHING COMPANY AMERICAN ROYAL ARTS CORPORATION
LICENSING DIVISION
By: /s/ Illegible By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
--------------------------------- --------------------------------
Title: President Title: President
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Date: March 28, 1996 Date: April 10, 1996
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ADDENDUM TO LICENSING AGREEMENT
NO. 1
ADDENDUM TO THE LICENSING AGREEMENT DATED MARCH 26, 1996 BETWEEN THE ▇▇▇▇▇▇
PUBLISHING COMPANY, LICENSING DIVISION, HEREINAFTER REFERRED TO AS "LICENSOR"
AND AMERICAN ROYAL ARTS CORPORATION HEREINAFTER REFERRED TO AS "LICENSEE".
Paragraph 24 "No Assignment" shall be amended to state the following:
(a) The license hereby granted is and shall be personal to the Licensee
and shall not be assignable by any action of the Licensee or by
operation of law, and any attempt at such assignment shall be null and
void. The Licensee shall have no right to grant any sub-licenses.
Material change in ownership or corporate firm of the Licensee shall
render this Agreement null and void. This Agreement shall inure to the
benefit of and shall be binding upon the Licensor's successors and
assigns.
(b) Notwithstanding subsection (a) of this paragraph 24, Licensor
hereby consents and agrees to the acquisition by merger of all of the
outstanding shares of Licensee by Collectibles U.S.A., Inc., a Delaware
corporation residing at ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇
All other language and terms of the original agreement shall remain unchanged
and in effect.
IN WITNESS WHEREOF, the parties hereto have caused these presents to be signed
by their duly authorized officers as of the day and year first above written.
THE ▇▇▇▇▇▇ PUBLISHING COMPANY AMERICAN ROYAL ARTS CORPORATION
LICENSING DIVISION
By: /s/ Illegible By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
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Title: Senior Vice President Title: President
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Date: May 23, 1997 Date: June 2, 1997
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Contract ID #: AMERI 96-1G
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