Exhibit 10.1
(CONFIDENTIAL PORTIONS OMITTED)
RETAIL LICENSE
WARNER BROS. CONSUMER PRODUCTS
#13247-SJ
LICENSE AGREEMENT made December 12, 2001, by and between Warner Bros. Consumer
Products, a Division of Time Warner Entertainment Company, L.P., whose address
is ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ (hereinafter referred to as "LICENSOR")
and BAM Entertainment, whose address is ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇,
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ Attention: ▇▇▇ ▇▇▇▇▇ hereinafter referred to as "LICENSEE").
WITNESSETH:
The parties hereto hereby agree as follows:
1. DEFINITIONS.
As used in this Agreement the following terms shall have the following
respective meanings:
(a) "BRAND TEAM": Licensee shall appoint a group of individuals (the "Brand
Team"), who shall be dedicated to the development, marketing and sale of the
Licensed Products. The Brand Team shall include a "Brand Captain" who shall be
the primary contact for day-to-day communications with Licensor regarding the
Licensed Products. Within sixty (60) days after the execution of this Agreement,
Licensee shall submit to Licensor organizational charts showing the positions
and reporting structure of the key employees in Licensee's business prior to the
appointment of the proposed Brand Team. The lead members of the Brand Team shall
be appointed by no later than January 1, 2002. Licensor shall use good faith
efforts to appoint a specific contact person for the Brand Team and Licensed
Product review.
(b) "BUSINESS PLAN": Licensee shall, no later than January 15, 2002 for the U.S.
and no later than January 31, 2002 for all Regions outside U.S., submit to
Licensor for Licensor's prior written approval (based on commercially reasonable
standards), a business plan (the "Business Plan") for Licensee's activities
during the Term in connection with this Agreement. The Business Plan shall,
without limitation, address the following areas for each of the following
geographic regions ("Region(s)"): (1) United States, (2) Canada, (3) Argentina,
(4) Brazil, (5) Chile, (6) Mexico, (7) Rest of South and Central America and the
Caribbean, (8) UK, (9) ▇▇▇▇▇▇, (▇▇), ▇▇▇▇▇, (11) Spain and Portugal, (12)
Germany, Austria and Switzerland, (13) Benelux, (14) Rest of Europe, Middle East
and Africa, (15) Southeast Asia:
(i) Projected sales of the Licensed Products (in units) categorized
by Licensed Product, by Region;
(ii) Projected sales price of each Licensed Product for each Region
(For countries outside of the United States, such sales price
shall be provided in both US Dollars and in local currency);
(iii) Projected revenue forecast in US Dollars of each Licensed Product
and each Region (For countries outside of the United States, such
forecast shall be provided in both US Dollars and in local
currency);
(iv) Projected market share of the Licensed Products for each Region;
(v) Overall marketing strategy and specific marketing strategies for
each Region;
(vi) Overall promotional plans and specific promotional plans for each
Region;
(vii) Plans for participation in trade shows for each Region;
(viii) Advertising and promotional budgets for each Licensed Product for
each Region; and
(ix) Planned product development schedule and ship dates for each
Licensed Product for each Region.
On or before September 30 of each calendar year during the Term, Licensee shall
submit for Licensor's prior written approval, not to be unreasonably withheld,
an updated version of the Business Plan addressing the above items for the
remainder of the Term. Any significant deviation during the Term from the most
recently approved Business Plan must be submitted to Licensor for prior written
approval. Licensor will use good faith efforts to provide marketing and
promotions updates to Licensee for the Licensed Property.
(c) "BUSINESS REVIEW": Licensee's Brand Team (as defined above) shall meet with
Licensor on a QUARTERLY BASIS (with more frequent meetings on an "as-needed"
basis) to discuss the implementation of the Business Plan, and results of the
business relating to the Licensed Products. Licensee shall initiate the Business
Review meetings by contacting the individual appointed by Licensor to act as
Licensor's primary contact ("Licensor Primary Contact") for communications with
Licensee regarding this Agreement. In the event the Licensor is unavailable,
Licensor shall appoint a second senior executive who shall act as the secondary
contact for communications with Licensee regarding this Agreement. Should
Licensor's Primary Contact or second senior executive not respond within ten
(10) business days, Licensor will forfeit the meeting for that quarter. At such
quarterly Business Reviews (and at such other times during the Term as Licensor
shall reasonably request), Licensee shall provide to Licensor:
(i) copies of all market research results relating to the Licensed
Products or advertising therefor, including, without limitation,
viability tests, commercial tests and line tests. Licensee shall
also provide to Licensor access to Licensee's head of market
research for purposes of interpretation of such market research
results;
(ii) information, to the extent extractable from Licensee's computer
systems on an automated basis, and in such form as Licensor shall
reasonably request, regarding inventory movement, inventory
on-hand, and sales results for each Licensed Product on a
Region-by-Region and key retailer-by-key retailer basis;
(iii) market share data, in such form as Licensor shall reasonably
request, including, without limitation, applicable PC data;
(iv) proposed development team for each title of the Licensed
Products;
(v) proposed meetings or communications between Licensee and
Licensor;
(vi) proposed co-marketing efforts to promote the sale of the Licensed
Products;
(vii) right to visit developer at any time. Should Licensor want to
review the Licensed Products currently being developed by the
approved Developer, Licensor shall do so with approval of
Licensee, which shall not be unreasonably withheld; and
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(viii) detailed report outlining the marketing dollars spent and the
total units sold in the given regions fro the previous quarter.
(d) CONTRACTUAL MARKETING COMMITMENT: Licensee shall spend $[*] in advertising
on the Cartoon Network Television and On-line mediums; $[*] of which will be
spent no later than December 21, 2002 and the remainder being spent over the
Term of this Agreement.
(e) "DEVELOPMENT TEAM": Licensee shall appoint a group of individuals (the
"Development Team") who shall be dedicated to the development of the Licensed
Products. Licensee must submit a minimum of three candidates and Licensor must
approve of one of these candidates with the final Development Team subject to
the prior written approval of Licensor in its sole discretion. The term
"Developer" shall be defined as an individual or team who individually or
together have extensive experience in developing entertainment software on the
relevant platforms that they are presenting for and have worked on at least two
development projects for game titles that have shipped.
(f) "LICENSED PRODUCT(S)": Line of video game products for the following
platforms:
(i) GameBoy Color
(ii) GameBoy Advance
(iii) Nintendo GameCube
(iv) Sony Playstation 2
(v) Sega DreamCast
(vi) MicroSoft Xbox
(vii) Palm O/S (cartridge based)
It is understood and agreed that Licensee may create a maximum of three (3)
original console products and five (5) original handheld products (not including
direct ports of each product) for each platform as set forth above. Any
additional products are subject to the prior written approval of Licensor.
(g) "LICENSED PROPERTY": The fictional cartoon characters as they appear in the
animated television series entitled "SAMURAI ▇▇▇▇" as follows: SAMURAI ▇▇▇▇ and
AKU and including said characters' representations, names, likenesses and all
environmental settings, artwork and other materials associated therewith.
Without limitation to any other reservations, terms and conditions herein,
specifically excluded herefrom are rights to any and all other versions
including without limitation sequels, spin-offs or live action versions of said
series. Furthermore, no sound bites, voices, music or other audio is included
herein. If Licensee wishes to use any such elements, Licensee must separately
procure the necessary rights and any rights clearance or related fees arising
from same shall be at Licensee's sole expense.
(h) "MARKETING DATE": For purposes of subdivision 15(a)(vii), the Marketing Date
for the first GameBoy Advance product shall be no later than September 1, 2002
and for console platforms shall be no later than November 1, 2003.
(i) PRODUCTION DEVELOPMENT BUDGETS AND TIMEFRAMES: Licensee must submit
production development budgets and timelines by Licensed Product platforms as
set forth above in Paragraph (f) for Licensor's prior written approval.
Furthermore, Licensee must budget a minimum of $[*] for development for each
original console title with a development cycle of no less than eleven (11)
months. Licensee must budget a minimum of $[*] for development for each original
handheld title with a development defined as the time between submission of
Milestone 1 through submission of Milestone 11 (as set forth on Exhibit 2).
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(j) "SKU COMMITMENT": Licensee shall make and distribute no less than five (5)
original Licensed Products over the term of the agreement.
(k) "STYLE GUIDE": Any materials provided by Licensor to Licensee which sets
forth the style, format, characterization and any artwork depicting the Licensed
Property which has been approved by Licensor in writing.
(l) "TERRITORY":
(i) Worldwide excluding Brunei, China, Indonesia, Japan, Korea, Guam,
Malaysia, Singapore, Thailand and Saipan;
(ii) In the event Licensee submits a distribution candidate for Japan
by January 1, 2002, Licensor will in its sole discretion approve
such partner and add Japan to the Territory. Licensee must also
simultaneously submit a business plan to be approved by Licensor
for the Territory including but not limited to the points
referenced in Paragraph 1(a) above; and
(iii) In the event Licensee submits a distribution candidate for Korea
by January 1, 2002, Licensor will in its sole discretion approve
such partner and add Korea to the Territory. Licensee must also
simultaneously submit a business plan to be approved by Licensor
for the Territory including but not limited to the points
referenced in Paragraph 1(a) above.
2. GRANT OF LICENSE.
(a) Upon the terms and conditions hereinafter set forth, Licensor hereby grants
to Licensee and Licensee hereby accepts for the Term of this Agreement, as
hereinafter defined, a license to utilize the Licensed Property solely upon or
in connection with the manufacture, distribution and sale of the Licensed
Products solely for retail sale throughout the Territory; no license is granted
hereunder for the manufacture, distribution or sale of the Licensed Product(s)
for publicity purposes, for sale or gift in combination with other products or
services, as giveaways, as premiums used for the purpose of publicizing,
promoting or increasing sales of any other product(s) or service(s), or in
connection with any similar method of merchandising. Notwithstanding anything to
the contrary contained herein, Licensee may, i) distribute up to [*] units for
each game in the United States and [*] units for each game in International
territories of each Licensed Product for publicity purposes, as well as [*]
"time limited" or reduced feature "demo" versions, subject to Licensor's
approval rights set forth in Paragraph 10; and ii) on a case-by-case basis, with
prior written approval by Licensor, bundle Licensed Products with other
products.
(b) EXCLUSIVITY: The License granted herein shall be nonexclusive for the
Licensed Property with respect to the Licensed Product(s) in the Territory
during the Term, as hereinafter defined.
(c) Licensee specifically understands and agrees that no rights are granted
herein with respect to the Warner Bros. "shield" logo or trademark, or any other
trademark(s), logo(s) or copyrights owned by Licensor other than those
specifically set forth above in the Licensed Property, it being understood that
all rights in and to said properties are reserved exclusively to Licensor for
use and/or licensing as it deems appropriate to third party(s) of its choice.
(d) Notwithstanding anything to the contrary contained herein, including the
general prohibition on use of the Warner Bros.
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Shield, the Licensed Property shall also include the Warner Bros. Interactive
Entertainment Name/Logo (the "Name/Logo") as shall be provided by Licensor and
as such may be changed by Licensor from time to time. Licensee shall utilize the
Name/Logo on such Licensed Products and in such manner as Licensor shall
designate. The parties agree that, notwithstanding anything to the contrary
contained elsewhere in this Agreement, Licensee's use of the Name/Logo shall be
on a non-exclusive basis.
(e) Without limiting any other approval rights of Licensor as contained herein,
no television commercials may be utilized under this Agreement without the
specific prior written approval of Licensor.
(f) [*]
3. TERM.
The term ("Term") of the Agreement with respect to Licensed Product(s)
referred to above shall commence on July 1, 2001 and terminate on October 31,
2005.
4. CONSIDERATION.
In full consideration for the rights, licensed and privileges herein
grated to Licensee, Licensee shall pay to Licensor the following royalty
payments:
(a) GUARANTEED CONSIDERATION: For the rights herein granted the sum of $[*]
payable as follows:
DATE AMOUNT
---- ------
Upon execution of this Agreement $[*]
On or before March 1, 2002 $[*]
On or before July 1, 2002 $[*]
On or before November 1, 2002 $[*]
On or before March 1, 2003 $[*]
On or before July 1, 2003 $[*]
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All Guaranteed Consideration paid by Licensee pursuant to this
Subparagraph (a) shall be applied against such royalties as are or have become
due Licensor under Subparagraph (b). No part of the Guaranteed Consideration
shall be repayable to Licensee.
(b) ROYALTY PAYMENTS: With respect to the Licensed Product(s) manufactured and
distributed during the term hereof, Licensee shall pay to Licensor a sum equal
to the following per Licensed Products title:
For Licensed Products i) - ii) [*]% of Net Sales;
For Licensed Products iii) - vi) [*]% of Net Sales for unit sales from 1 to
500,000; [*]% from 500,001 to 1,000,000; and [*]% from 1,000,001 and beyond; and
For Licensed Products vii) [*]% of Net Sales.
It is understood and agreed that for console products Licensee shall pay the
greater of the percent of net sales as set forth above, not to go below $[*] per
unit for the first four (4) months and $[*] thereafter.
It is understood and agreed that for handheld products Licensee shall pay the
greater of the percent of net sales as set forth above, not to go below $[*] per
unit for the first four (4) months and $[*] thereafter.
The term "Net Sales" shall mean all monies billed or billable by
Licensee, from the exercise of its rights to distribute and sell Licensed
Product(s) in the Territory before any allowances or discounts which have been
deducted from the normal selling price, and any other payment charges
whatsoever, less the following items only:
(i) any sales, excise or value added taxes, which are separately
stated, and which are required to be collected from customers as
part of Net Sales, and which are payable to taxing authorities;
(ii) freight from retailers if separately invoiced;
(iii) quantity discounts; and
(iv) actual returns not exceeding [*]% of total sales.
It is specifically understood and agreed that no deduction may be made
for any bad debts, or any reserves therefor, any manufacturing costs, importing
costs, selling costs, advertising costs, any real estate taxes, business license
taxes, net income taxes, franchise taxes, withholding taxes or any other taxes
not billed as part of net sales.
Net Sales shall not include any sales by Licensee or its affiliated
companies to Licensee or its affiliated companies, the primary purpose of which
is the transfer of Licensed Product for eventual resale. Royalties as a result
of such sales shall be based upon and paid when the Licensed Product is
ultimately sold to the distributor, retailer, consumer or other unaffiliated
third party.
Licensee will pay all taxes, customs, duties, assessments, excise except
as provided in sub-paragraph (i), and other charges levied upon the importation
of or assessed against the Licensed Product under this Agreement, as well as all
Licensees costs of doing business and Licensor shall have no liability therefor.
Royalties shall be payable concurrently with the periodic statements
required in Paragraph 6 hereof except to the extent offset by Guaranteed
Consideration theretofore remitted. It is a material term and condition of this
Agreement that Licensee report net sales and report and pay royalties on a
country-by-country
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basis. In the event Licensee fails to do so, Licensor shall have the right to
terminate this Agreement, in accordance with the provisions of Paragraph 15
herein.
Royalties earned in excess of the Guaranteed Consideration applicable to
the Term hereof shall not offset any Guaranteed Consideration required in
respect of the succeeding renewal term (if any); likewise, royalties earned in
excess of the Guaranteed consideration applicable to the renewal term shall not
offset any Guaranteed Consideration applicable to any prior term.
5. RESERVATION OF RIGHTS; PREMIUMS.
(a) Licensor reserves all rights not expressly conveyed to Licensee hereunder,
and Licensor may grant licenses to others to use the Licensed Property, artwork
and textual matter in connection with other uses, services and products without
limitation.
(b) Notwithstanding anything to the contrary stated herein, Licensor, for itself
and its affiliates, specifically reserves the right, without limitation
throughout the world, to use, or license any third party(s) of its or their
choice to use the Licensed Property for the marketing, promotion, manufacture,
distribution and sale of products similar or identical to those licensed herein
in Paragraph 1(f) above including without limitation for sale through any
catalogue(s) or online website produced or distributed by or on behalf of
Licensor or its affiliated companies, or for sale or distribution in any
theaters, arenas or restaurants, or for sale or distribution in connection with
any home video product, including DVD or other formats, or for sale or
distribution in any retail stores operated by or on behalf of Licensor, its
affiliated companies or franchisees, or for sale or distribution in any
theme/amusement parks operated by or on behalf of Licensor or its licensees, Six
Flags, Movie World, or, their affiliated companies. In addition, Licensor
reserves the right to allow Six Flags and Movie World to manufacture (or have
manufactured by a third party) products similar or identical to those licensed
herein for distribution or sale in theme and/or amusement parks owned or
operated by Six Flags and/or Movie World. Further, Licensor reserves the right
to use, or license others to use, and/or manufacture products similar or
identical to those licensed herein for use as premiums.
(c) Licensee agrees that it will not use, or knowingly permit the use of, and
will exercise due care that its customers likewise will refrain from the use of,
the Licensed Products as a premium, except with the prior written consent of
Licensor. Subject to Licensor's prior written approval as aforesaid, Licensee
shall pay to Licensor a sum equal to [*]% of all premium sales. Any such
royalties on premium sales shall not offset the Guaranteed Consideration
hereunder. For purposes of this paragraph, the term "premium" shall be defined
as including, but not necessarily limited to, combination sales, free or
self-liquidating items offered to the public in conjunction with the sale or
promotion of a product or service, including traffic building or continuity
visits by the consumer/customer, or any similar scheme or device, the prime
intent of which is to use the Licensed Products in such a way as to promote,
publicize and or sell the products, services or business image of the user of
such item.
6. PERIODIC STATEMENTS.
(a) Within thirty (30) days after the end of the first calendar quarter after
the date of execution of the License Agreement and promptly on the 15th day
after the end of each calendar month thereafter, Licensee shall furnish to
Licensor complete and accurate statements certified to be accurate by Licensee,
or if a corporation, by an officer of Licensee, showing with respect to all
Licensed Products distributed and sold by Licensee during the preceding calendar
month the (i) number of units; (ii) country in which manufactured, sold and/or
to which shipped; (iii) description (as such term is defined below) of the
Licensed
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Products; (iv) gross sales price; and (v) itemized deductions from gross sales
price, and net sales price together with any returns made during the preceding
calendar month. Such statements shall be in such formats as Licensor shall
require (which formats may be amended by Licensor from time to time), and shall
be furnished to Licensor whether or not any of the Licensed Products have been
sold during calendar month to which such statements refer. In the event Licensee
has Royalties earned in currencies other than in U.S. Dollars, then Licensee
shall convert said amounts into U.S. Dollars based upon the exchange rate
published by the Wall Street Journal as of the fifteenth day of the applicable
month or if such day shall fall on a non-business day then as of the first
business day following said fifteenth day. Receipt or acceptance by Licensor of
any of the statements furnished pursuant to this Agreement or of any sums paid
hereunder shall not preclude Licensor from questioning the correctness thereof
at any time, and in the event that any inconsistencies or mistakes are
discovered in such statements or payments, they shall immediately be rectified
and the appropriate payments made by Licensee. Upon demand of Licensor, Licensee
shall at its own expense, but not more than once in any twelve (12) month
period, furnish to Licensor a detailed statement by an independent certified
public accountant showing the (i) number of units; (ii) country in which
manufactured, sold and/or to which shipped; (iii) description of the Licensed
Products; (iv) gross sales price; and (v) itemized deductions from gross sales
price and net sales price of the Licensed Products covered by this Agreement
distributed and/or sold by Licensee up to and including the date upon which
Licensor has made such demand. For purposes of this Subparagraph, the term
"Description" shall mean a detailed description of the Licensed Products
including the nature of each of the Licensed Products, any and all names and
likenesses, whether live actors or animated characters, from the Licensed
Property utilized on the Licensed Products and/or any related packaging and/or
wrapping material, and any other components of the Licensed Property utilized on
the Licensed Products and/or any related packaging and/or wrapping material. In
the event Licensor is responsible for the payment of any additional third party
participations based on Licensee not reporting by character name and likeness as
provided above, Licensee shall be responsible for reimbursing Licensor for the
full amount of all such third party claims, including without limitation, the
participation itself, interest, audit and attorneys' fees. Licensee understands
and agrees that it is a material term and condition of this Agreement that
Licensee include the Description on all statements. In the event Licensee fails
to do so, Licensor shall have the right to terminate this Agreement, in
accordance with the provisions of Paragraph 15 herein.
(b) For the statements and payments required hereunder (please reference the
contract number(s) on all statements and payments) if the United States Postal
Service is used deliver to the following:
WARNER BROS. CONSUMER PRODUCTS
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
For the statements and payments required hereunder (please reference the
contract number(s) on all statements and payments) if sent by Federal Express or
any other Courier Service deliver to the following:
BANK ONE
Attention WBCP lockbox #21477
525 West Monroe, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone Number ▇▇▇-▇▇▇-▇▇▇▇
(c) Any payments which are made to Licensor hereunder after the due date
required therefor, shall bear interest at the then current prime rate as
published in the Wall Street Journal (New York edition), plus six (6%) percent
(or the maximum rate permissible by law, if less) from the date such payments
are due
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to the date of payment. Licensor's right hereunder to interest on late payments
shall not preclude Licensor from exercising any of its other rights or remedies
pursuant to this Agreement or otherwise with regard to Licensee's failure to
make timely remittances.
(d) Licensee hereby grants to Licensor (subject to any liens or security
interests granted by Licensee which are approved in writing by Licensor) a
first-priority lien and security interest in Licensee's inventory, contract
rights and accounts receivable, and all proceeds thereof, with respect to the
Licensed Products only. In the event of default, Licensee further agrees to
provide, at Licensor's request: (i) a letter of credit issued in favor of
Licensor from a financial institution as approved by Licensor in an amount up to
the Guaranteed Consideration; and/or (ii) such other form of security acceptable
to Licensor. Licensee agrees to execute all documentation as Licensor may
require in connection with perfecting such security interests.
7. BOOKS AND RECORDS.
(a) Licensee shall keep, maintain and preserve (in Licensee's principal place of
business) for at least two (2) years following termination or expiration of the
Term of this Agreement or any renewal(s) hereof (if applicable), complete and
accurate records of accounts including, without limitation, purchase orders,
inventory records, invoices, correspondence, banking and financial and other
records pertaining to the various items required to be submitted by Licensee as
well as to ensure Licensee's compliance with local laws as required pursuant to
Paragraph 14(k) hereof. Such records and accounts shall be available for
inspection and audit at any time or times during or after the Term of this
Agreement or any renewal(s) hereof (if applicable) during reasonable business
hours and upon reasonable notice by Licensor or its nominees. Licensee agrees
not to cause or permit any interference with Licensor or nominees of Licensor in
the performance of their duties. During such inspections and audits, Licensor
shall have the right to take extracts and/or make copies of Licensee's records
as it deems necessary. Licensor agrees to keep confidential all information and
copies obtained by Licensor pursuant to this Paragraph other than with respect
to required disclosures in connection with disputes between the parties or as
otherwise required by law, court order or governmental process.
(b) The exercise by Licensor in whole or in part, at any time of the right to
audit records and accounts or of any other right herein granted, or the
acceptance by Licensor of any statement or statements or the receipt and/or
deposit by Licensor, of any payment tendered by or on behalf of Licensee shall
be without prejudice to any rights or remedies of Licensor and such acceptance,
receipt and/or deposit shall not preclude or prevent Licensor from thereafter
disputing the accuracy of any such statement or payment.
(c) If pursuant to its right hereunder Licensor causes an audit and inspection
to be instituted which thereafter discloses a deficiency between the amount
found to be due to Licensor and the amount actually received or credited to
Licensor, then Licensee shall, upon Licensor's demand, promptly pay the
deficiency, together with interest thereon at the then current prime rate from
the date such amount became due until the date of payment, and, if the
deficiency is more than [*]% of all royalties paid by Licensee during the period
covered by the audit, then Licensee shall pay the reasonable costs and expenses
of such audit and inspection.
8. INDEMNIFICATIONS.
(a) During the Term, and continuing after the expiration or termination of this
Agreement, Licensor shall indemnify Licensee, BAM Entertainment Ltd and BAM
Studios (Europe) Ltd. (collectively, the "Licensee Parties") and shall hold
Licensee Parties harmless from any loss, liability, damage, cost or expense,
arising out of any claims or suits which may be brought or made against Licensee
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Parties by reason of the breach by Licensor of the warranties or representations
as set forth in Paragraph 13 hereof, provided that Licensee Parties shall give
prompt written notice, and full cooperation and assistance to Licensor relative
to any such claim or suit and provided, further, that Licensor shall have the
option to undertake and conduct the defense of any suit so brought. Licensee
Parties shall not, however, be entitled to recover for lost profits. Licensee
Parties shall cooperate fully in all respect with Licensor in the conduct and
defense of said suit and/or proceedings related thereto.
(b) During the Term, and continuing after the expiration or termination of this
Agreement, Licensee shall indemnify Licensor, Time Warner Entertainment Company,
L.P. ("TWE") and each of its affiliates and shall hold them harmless from any
loss, liability, damage, cost or expense arising out of any claims or suits
which may be brought or made against Licensor, TWE or any of its affiliates, by
reason of: (i) any breach of Licensee's covenants and undertakings hereunder;
(ii) any unauthorized use by Licensee of the Licensed Property; (iii) any use of
any trademark, or copyright, design, patent, process, method or device (except
to the extent such rights are granted in the Licensed Property used in
accordance with the terms of this Agreement); (iv) Licensee's non-compliance
with any applicable federal, state or local laws or with any other applicable
regulations; and (v) any alleged defects and/or inherent dangers (whether
obvious or hidden) in the Licensed Products or the use thereof.
(c) With regard to 8(b) above, Licensee agrees to obtain, at its own expense,
Comprehensive Commercial General Liability Insurance, including product
liability and contractual liability coverage providing adequate protection for
Licensor and Licensee against any such claims or suits in amounts no less than
three million dollars ($3,000,000) per occurrence, combined single limits.
Simultaneously with the execution of this Agreement, Licensee undertakes to
submit to Licensor a fully paid policy or certificate of insurance naming
Licensor, TWE and each of its affiliates as additional insured parties and,
requiring that the insurer shall not terminate or materially modify such policy
or certificate of insurance without written notice to Licensor at least twenty
(20) days in advance thereof. Such insurance shall at all times be primary and
not contributory with any insurance carried by Licensor, TWE or any of their
affiliates. Further the delivery of the policy or certificate, as provided in
this Paragraph 8(c) are material obligations of Licensee.
9. ARTWORK; TRADEMARKS AND COPYRIGHTS.
Licensee shall, within thirty (30) days of receiving an invoice, pay
Licensor for artwork executed for Licensee by Licensor (or by third parties
under contract to Licensor) for use in the development of the Licensed Products
and any related packaging, display and promotional materials at Licensor's
prevailing commercial art rates. The foregoing shall include any artwork that,
in Licensor's opinion, is necessary to modify artwork initially prepared by
Licensee and submitted for approval. Estimates of artwork charges are available
upon request.
(a) TRADEMARKS:
(i) Licensee agrees that it will cause to appear indelibly and
legibly on each of the Licensed Product(s) and all advertising
material, tags, labels and devices bearing the Licensed Property,
the following notice or such other notice as may be approved by
Licensor:
SAMURAI ▇▇▇▇ AND ALL RELATED CHARACTERS AND ELEMENTS ARE
TRADEMARKS OF AND (C) CARTOON NETWORK (s01)
(The year date shall be as instructed by Licensor)
10
(ii) Licensee further agrees that it will not apply for or seek to
obtain trademark registration for the Licensed Property and that
Licensor may, at its option, apply for and obtain in its own name
trademark registrations for the Licensed Product(s), and that,
upon request, Licensee will furnish necessary specimens or
facsimiles for such purpose free of cost, as well as evidence of
the date of first shipment or sale of each Licensed Product in
interstate or foreign or other federally regulable U.S. commerce
and, if earlier, also in intrastate commerce.
(iii) Licensee agrees that if Licensee receives knowledge of the use of
the Licensed Property by anyone other than Licensee on Licensed
Product(s) or products confusingly similar thereto, Licensee will
call such fact to the attention of Licensor. Licensor shall then
have the option to institute legal proceedings to prevent such
use, and Licensee shall cooperate and assist in the prosecution
of any such action. If demanded by Licensor, Licensee shall join
in or cooperate in the prosecution of any such legal proceeding
as may be instituted by Licensor. Any such legal proceedings
shall be solely at Licensor's expense. If Licensee is joined in
such proceeding, Licensor shall indemnify and hold harmless
Licensee from and against any claim, sanction, liability,
damages, attorney's fees, judgments or orders of any kind arising
out of such proceeding.
(b) COPYRIGHTS:
(i) GAME PROGRAM: The copyright in and to the computer program
(object and source code) for any game which is incorporated in
the Licensed Product (herein the "Program") shall be owned as
follows:
(a) If a program is created solely by Licensee or an approved
sublicensee under license or authority of Licensee without
any contribution by Licensor to the creation of that
Program in the form of programming effort, then the
copyright in and to such Program shall be owned solely by
Licensee;
(b) If a Program is created jointly by Licensee and Licensor,
then the copyright in and to such Program shall be owned
jointly by Licensor and Licensee.
(ii) AUDIO-VISUAL DISPLAY: The copyright in and to the images
displayed on the screen and the sounds produced during the course
of the game play, including all possible combinations and
sequences thereof, in both the "attract mode" and the "play mode"
and the underlying script for therefor (herein the "Audio-Visual
Display") shall be owned as follows:
(a) The copyright in and to all elements of the Audio-Visual
Display constituting pre-existing material of Licensor
from Licensor's fictional cartoon characters as set forth
in Paragraph 1(a) "Licensed Property" such as, without
limitation, the characters portrayed in such television
series or any reproductions thereof (hereinafter
"Pre-Existing Material"), are acknowledged to be the sole
and exclusive property of Licensor and shall remain the
sole and exclusive property of Licensor;
(b) The copyright in and to all elements of the Audio-Visual
Display constituting original material created by Licensee
shall be the sole and exclusive property of Licensee.
Licensee retains sole and exclusive ownership of all of
Licensee's inventions, whether patented or not, trade
secrets and similar information and processes of a
confidential nature, and works of authorship,
11
whether copyrighted or not, whether manifested in the
Audio-Visual Display or not, and whether embodied in
hardware or software used to create the Audio-Visual
Display. Licensee shall be free to use and license others
to use elements of the Audio-Visual Display owned by
Licensee.
(iii) PACKAGING, ADVERTISING AND PROMOTIONAL MATERIALS: Except as
otherwise provided herein, the copyrights in and to any original
material, other than the Programs and the Audio-Visual Displays,
which is created by or for Licensee for the purpose of packaging,
advertising or promoting the Licensed Product(s), including but
not limited to the enclosure for the Licensed Product(s), all
cartons, containers, packing and wrapping material, tags, labels,
imprints or other devices, and all advertising and promotional
materials (all such material hereinafter referred to as the
"Other Materials"), shall be owned solely and exclusively by
Licensee. Providing that the copyright in and to all elements of
the Other Materials that constitute Licensor's Pre-Existing
Material, material furnished to Licensee by or on behalf of
Licensor or any material that is derivative of the foregoing, is
acknowledged to be owned solely and exclusively by Licensor and
shall remain the sole and exclusive property of Licensor.
(iv) LIMITATIONS ON OWNERSHIP RIGHTS: The parties agree and
acknowledge that each shall have the same right as any person or
party with regard to any material incorporated in the Licensed
Product(s), Other Materials, Programs, or Audio-Visual Displays
which is in the public domain (provided that it has not entered
into the public domain as the result of an act or omission in
breach of this Agreement or any other written agreement by or
between the parties hereto).
(v) ARTWORK: The Licensed Property shall be displayed or used only in
such form and in such manner as has been specifically approved in
writing by Licensor in advance and Licensee undertakes to assure
usage of the trademark(s) and characters) solely as approved
hereunder. Licensee further agrees and acknowledges that any and
all Artwork (defined below) created, utilized, approved and/or
authorized for use hereunder by Licensor in connection with the
Licensed Products or which otherwise features or includes the
Licensed Property shall be owned in its entirety exclusively by
Licensor, excluding intellectual property rights in and to any
elements that are wholly owned by Licensee and do not include the
Licensed Property and what was not specifically created for the
Licensed Product. "Artwork" as used herein shall include, without
limitation, all pictorial, graphic, visual, audio, audio-visual,
digital, literary, animated, artistic, dramatic, sculptural,
musical or any other type of creations and applications, whether
finished or not, including, but not limited to, animation,
drawings, designs, sketches, images, tooling and tooling aids,
illustrations, film, video, electronic, digitized or computerized
information, software, object code, source code, on-line
elements, music, text, dialogue, stories, visuals, effects,
scripts, voiceovers, logos, one-sheets, promotional pieces,
packaging, display materials, printed materials, photographs,
interstitials, notes, shot logs, character profiles and
translations, produced by Licensee or for Licensee, pursuant to
this Agreement. Licensor reserves for itself or its designees all
rights to use any and all Artwork created, utilized and/or
approved hereunder without limitation. Licensee acknowledges
that, as between Licensor and Licensee, the Licensed Property and
Artwork and all other depictions expressions and derivations
thereof, and all copyrights, trademarks and other proprietary
rights therein are owned exclusively by Licensor and Licensee
shall have no interest in or claim thereto, except for the
limited right to use the same pursuant to this Agreement and
subject to its terms and conditions.
(vi) WORK-MADE-FOR-HIRE: Licensee agrees and acknowledges that any
Artwork created by Licensee or for Licensee hereunder is a "work
made for hire" for Cartoon Network under the U.S. Copyright Act,
and any and all similar provisions of law under
12
other jurisdictions, and that Cartoon Network is the author of
such works for all purposes, and that Cartoon Network is the
exclusive owner of all the rights comprised in the undivided
copyright and all renewals, extensions and reversions therein, in
and to such works in perpetuity and throughout the universe.
Licensee hereby waives and releases in favor of Cartoon Network
all rights (if any) of "droit moral," rental rights and similar
rights in and to the Artwork (the "Intangible Rights") and agrees
that Cartoon Network shall have the right to revise, condense,
abridge, expand, adapt, change, modify, add to, subtract from,
re-title, re-draw, re-color, or otherwise modify the Artwork,
without the consent of Licensee. Licensee hereby irrevocably
grants, transfers and assigns to Licensor all right, title and
interest, including copyrights, trademark rights, patent rights
and other proprietary rights, it may have in and to the Artwork,
in perpetuity and throughout the universe, and to all proprietary
depictions, expressions or derivations of the Licensed Property
created by or for Licensee. Licensee acknowledges that Licensor
shall have the right to terminate this Agreement in the event
Licensee asserts any rights (other than those specifically
granted pursuant to this Agreement) in or to the Licensed
Property or Artwork.
Licensee hereby warrants that any and all work created by Licensee under
this Agreement apart from the materials provided to Licensee by Licensor is and
shall be wholly original with or fully cleared by Licensee and shall not copy or
otherwise infringe the rights of any third parties, and Licensee hereby
indemnifies Licensor and will hold Licensor harmless from, any such claim of
infringement or otherwise involving Licensee's performance hereunder. At the
request of Licensor, Licensee shall execute such form(s) of assignment of
copyright or other papers as Licensor may reasonably request in order to confirm
and vest in Licensor the rights in the properties as provided for herein. In
addition, Licensee hereby appoints Licensor as Licensee's Attorney-in-Fact to
take such actions and to make, sign, execute, acknowledge and deliver all such
documents as may from time to time be necessary to confirm in Licensor, its
successors and assigns, all rights granted herein. If any third party makes or
has made any contribution to the creation of Artwork authorized for use
hereunder, Licensee agrees to obtain from such party a full confirmation and
assignment of rights so that the foregoing rights shall vest fully in Licensor,
in the form of the Contributor's Agreement attached hereto as Exhibit 1 and by
this reference made a part hereof, prior to commencing work, and subject to the
prior written approval of Licensor, and subject to the prior written approval of
Licensor ensuring that all rights in the Artwork and Licensed Property arise in
and are assigned to Licensor. Promptly upon entering into each such
Contributor's Agreement, Licensee shall give Licensor a copy of such
Contributor's Agreement. Licensee assumes all responsibility for such parties
and agrees that Licensee shall bear any and all risks arising out of or relating
to the performance of services by them and to the fulfillment of their
obligations under the Contributor's Agreement.
(vii) USE OF THIRD PARTY CONTENT: Licensee shall not use any third
party content or technology in the Licensed Product(s), including
without limitation any audio elements from the soundtracks of any
motion picture or television series based upon the Licensed
Property without Licensor's prior written approval, and unless:
(i) Licensee is expressly permitted to use such third party
content or technology pursuant to written agreements with all
third party rights holders; and (ii) Licensee has acquired for
Licensee and Licensor all rights, permissions, clearances,
releases or other authorizations necessary to use such third
party content or technology in conjunction with the development
and exploitation of the Licensed Products(s) anywhere in the
Territory by Licensee or Licensor or by either party's licensees,
successors or assigns in perpetuity. Licensee shall be
responsible, in perpetuity, for all payments in connection with
the use of third party content or technology, except as the
parties mutually agree upon at such time as Licensor approves of
the use of such third party content or technology. Licensee shall
have the right to
13
review all Licensee agreements with third parties to ensure their
acceptability and Licensee shall deliver such agreements to
Licensor within fourteen (14) business days of Licensor's request
therefor. All such agreements provided to Licensor shall be
considered Confidential Information pursuant to the provisions of
Section 23 below.
10. QUALITY OF LICENSED PRODUCT(S).
(a) Licensee agrees that the Licensed Product(s) shall be of high standard and
of such style, appearance and quality as shall be adequate and suitable to their
promotion, distribution and sale to the best advantage of Licensee and Licensor.
The quality and style of such product and its cartons and containers shall be
subject to Licensor's approval. To this end Licensee shall, before selling or
distributing any of the Licensed Product(s), furnish to Licensor free of cost
for its written approval as to quality and style, the materials specified in the
"MILESTONES" set forth on Exhibit 2 attached hereto. In the event that any
Milestone deliverable shall not have been approved, disapproved, or otherwise
commented upon within ten (10) business days after receipt thereof by Licensor,
then Licensee shall have the right to so notify Licensor of such fact by
facsimile or by overnight delivery service. In the event that Licensor fails to
then approve, disapprove or otherwise comment upon the submitted items within
five (5) business days after receipt by it of such communication, any items so
submitted shall be deemed to have been approved. Licensee shall, in addition,
thereafter furnish to Licensor free of cost, for its written approval, [*]
production samples of each such Licensed Product(s) together with their cartons
and containers including packaging and wrapping material, to ensure quality
control simultaneously upon distribution to the public. In addition, Licensee
shall provide Licensor with [*] catalogs which display all of Licensee's
products, not just the Licensed Products, if such catalogs exist. Further,
Licensor shall have the right to purchase any and all Licensed Products in any
quantity at the maximum discount price Licensee charges its best customer
purchasing the same quantity of Licensed Products under the same terms and
conditions for delivery during the same period of time in the same general
geographical area for sales throughout the same sales channel.
After samples of Licensed Product(s) have been approved pursuant to this
paragraph, Licensee shall not depart therefrom in any material respect without
Licensor's prior written consent or add any additional element(s) such as
in-pack flyers, business reply cards and so on without Licensor's approval in
each case.
Licensor shall have the right to withdraw its approval of samples if the
quality of any Licensed Product ceases to be acceptable.
(b) Any modification of a Licensed Product must be submitted in advance for
Licensor's written approval as if it were a new Licensed Product. Approval of a
Licensed Product which uses particular artwork does not imply approval of such
artwork for use with a different Licensed Product.
(c) Licensed Products must conform in all material respects to the final
production samples approved by Licensor. If in Licensor's reasonable judgment,
the quality of a Licensed Product originally approved has deteriorated in later
production runs, or if a Licensed Product has otherwise been altered, Licensor
may, in addition to other remedies available to it, require that such Licensed
Product be immediately withdrawn from the market.
(d) If any changes or modifications are required to be made to any material
submitted to Licensor for its written approval in order to ensure compliance
with Licensor's specifications or standards of quality, Licensee agrees promptly
to make such changes or modifications.
----------
[*] Confidential portions omitted and filed separately with the Commission.
14
(e) Licensee shall permit Licensor to inspect Licensee's manufacturing
operations, testing and payroll records (including those operations and records
of any supplier or manufacturer approved pursuant to Paragraph 11(b) hereof)
with respect to the Licensed Products.
(f) Subject to the terms hereof, Licensee may utilize the Licensed Property for
such advertising, promotional and display materials for the Licensed Product(s)
as in its judgment will best promote the sale of said Licensed Product(s).
Licensee agrees that it will not use the Licensed Property or any reproduction
thereof in any advertising, promotional or display material or in any other
manner without Licensor's prior written approval. Without limiting the foregoing
no television commercials may be utilized under this License without the
specific prior approval of Licensor. In the event that any advertising,
promotional or display material submitted to Licensor shall not have been
approved, disapproved or otherwise commented upon within thirty (30) days after
receipt thereof by Licensor, then Licensee shall have the right to so notify
Licensor of such fact by facsimile or by overnight delivery service. In the
event that Licensor fails to then approve, disapprove or otherwise comment upon
the submitted items within ten (10) business days after receipt by it of such
facsimile or overnight delivery service any items so submitted shall be deemed
to have been approved. A reasonable number of production copies of all such
advertising, promotional and display materials will be furnished to Licensor
free of charge.
(g) To avoid confusion of the public, Licensee agrees not to associate other
characters or properties with the Licensed Property on the Licensed Products or
in any packaging, promotional or display materials unless Licensee receives
Licensor's prior written approval. Furthermore, Licensee agrees not to use the
Licensed Property (or any component thereof) on any business sign, business
cards, stationery or forms, nor as part of the name of Licensee's business or
any division thereof.
(h) Licensee shall use its best efforts to notify its customers of the
requirement that Licensor has the right to approve all promotional, display and
advertising material pursuant to this Agreement.
(i) It is understood and agreed that any animation used in electronic media,
including but not limited to animation for television commercials and character
voices for radio commercials, shall be produced by Cartoon Network pursuant to a
separate agreement between Licensee and Cartoon Network, subject to Cartoon
Network customary rates. Any payments made to Cartoon Network for such animation
shall be in addition to and shall not offset the Consideration set forth in
Paragraph 4 above.
(j) Licensor's approval of Licensed Product(s) (including without limitation,
the Licensed Products) themselves as well as promotional, display, and
advertising materials) shall in no way constitute or be construed as an approval
by Licensor of Licensee's use of any trademark, copyright and/or other
proprietary materials, not owned by Licensor.
11. DISTRIBUTION; SUBLICENSE/MANUFACTURE.
(a) Licensee shall sell the Licensed Products either to jobbers, wholesalers,
distributors or retailers for sale or resale and distribution directly to the
public. Licensee shall not sell the Licensed Products through any cable home
shopping service or through electronic media, including on any on-line network
or service. If Licensee sells or distributes the Licensed Products at a special
price, directly or indirectly, to itself, including without limitation, any
subsidiary of Licensee (including any affiliated distributors) or to any other
person, firm, or corporation affiliated with Licensee or its officers, directors
or major stockholders, for ultimate sale to unrelated third parties,
15
Licensee shall pay royalties with respect to such sales or distribution, based
upon the price generally charged the trade by Licensee.
(b) Except as to materials set forth in Paragraph 9(b)(ii)(b), Licensee, BAM
Entertainment Ltd and BAM Studios (Europe) Ltd. (collectively, the "Licensee
Parties") shall not be entitled to sublicense any of the Computer Program or
Audio-Visual Display developed by Licensee pursuant to this Agreement. In the
event Licensee is not the manufacturer of the Licensed Products, Licensee
Parties shall, subject to the prior written approval of Licensor, which approval
shall not be unreasonably withheld, be entitled to utilize a third party
manufacturer in connection with the manufacture and production of the Licensed
Products, provided that such manufacturer shall execute a letter in the form of
Exhibit 3 attached hereto and by this reference made a part hereof. In such
event, Licensee Parties shall remain primarily obligated under all of the
provisions of this Agreement and any default of this Agreement by such
manufacturer shall be deemed a default by Licensee Parties hereunder. In no
event shall any such third party manufacturer agreement include the right to
grant any rights to subcontractors. Notwithstanding the foregoing, Licensor has
approved Microsoft, Nintendo and Sony as third party manufacturers and
Microsoft, Nintendo and Sony shall not be required to execute Exhibit 3.
12. GOODWILL.
Licensee recognizes the great value of the publicity and goodwill
associated with the Licensed Property and acknowledges: (i) such goodwill is
exclusively that of Licensor; and (ii) that the Licensed Property has acquired a
secondary meaning as Licensor's trademarks and/or identifications in the mind of
the purchasing public. Licensee further recognizes and acknowledges that a
breach by Licensee of any of its covenants, agreements or undertakings hereunder
will cause Licensor irreparable damage, which cannot be readily remedied in
damages in an action at law, and may, in addition thereto, constitute an
infringement of Licensor's copyrights, trademarks and/other proprietary rights
in, and to the Licensed Property, thereby entitling Licensor to equitable
remedies, and costs.
13. LICENSOR'S WARRANTIES AND REPRESENTATIONS.
Licensor represents and warrants to Licensee that:
(a) It has, and will have throughout the Term of this Agreement, the right to
license the Licensed Property to Licensee in accordance with the terms and
provisions of this Agreement; and
(b) The making of this Agreement by Licensor does not violate any agreements,
rights or obligations of any person, firm or corporation.
14. LICENSEE'S WARRANTIES AND REPRESENTATIONS.
Licensee represents and warrants to Licensor that, during the Term and
thereafter:
(a) It will not attack the title of Licensor (or third parties that have granted
rights to Licensor) in and to the Licensed Property or any copyright or
trademarks pertaining thereto, nor will it attack the validity of the license
granted hereunder;
(b) It will not harm, misuse or bring into disrepute the Licensed property, but
on the contrary, will maintain the value and reputation thereof to the best of
its ability;
(c) It will manufacture, sell, promote and distribute the Licensed Products in
accordance with the terms and intent of this Agreement, and in compliance with
all applicable government regulations and industry standards;
16
(d) It will not create any expenses chargeable to Licensor without the prior
written approval of Licensor in each and every instance. It will not cause or
allow any liens or encumbrances to be placed against, or grant any security
interest (except to Licensor as provided hereunder) in, the Licensed Property
and/or Licensee's inventory, contract rights and/or accounts receivables, and/or
proceeds thereof, with respect to the Licensed Products without Licensor's prior
written consent;
(e) It will protect to the best of its ability its right to manufacture, sell,
promote, and distribute the Licensed Products hereunder;
(f) It will at all times comply with all government laws and regulations,
including but not limited to product safety, food, health, drug, cosmetic,
sanitary or other similar laws, and all voluntary industry standards relating or
pertaining to the manufacture, sale, advertising or use of the Licensed
Products, and shall maintain its appropriate customary high quality standards
during the Term hereof. It shall comply with any regulatory agencies which shall
have jurisdiction over the Licensed Products and shall procure and maintain in
force any and all permissions, certifications and/or other authorizations from
governmental and/or other official authorities that may be required in response
thereto. Each Licensed Product and component thereof distributed hereunder shall
comply with all applicable laws, regulations and voluntary industry standards.
Licensee shall follow reasonable and proper procedures for testing that all
Licensed Products comply with such laws, regulations and standards. Licensee
shall permit Licensor or its designees to inspect testing records and procedures
with respect to the Licensed Products for compliance. Licensed Products that do
not comply with all applicable laws, regulations and standards shall
automatically be deemed unapproved and immediately taken off the market;
(g) It shall, upon Licensor's request, provide credit information to Licensor
including, but not limited to, fiscal year-end financial statements
(profit-and-loss statement and balance sheet) and operating statements;
(h) It will provide Licensor with the date(s) of first use of the Licensed
Products in interstate and intrastate commerce, where appropriate;
(i) It will, pursuant to Licensor's instructions, duly take any and all,
necessary steps to secure execution of all necessary documentation for the
recordation of itself as user of the Licensed Property in any jurisdiction where
this is required or where Licensor reasonably requests that such recordation
shall be effected. Licensee further agrees that it will at its own expense
cooperate with Licensor in cancellation of any such recordation at the
expiration of this Agreement or upon termination of Licensee's right to use the
Licensed Property. Licensee hereby appoints Licensor its Attorney-in-Fact for
such purpose;
(j) It will use its best efforts to manufacture, distribute and sell the
Licensed Product(s) throughout the Territory;
(k) It will not deliver or sell Licensed Product(s) outside the Territory or
knowingly sell Licensed Product(s) to a third party for delivery outside the
Territory;
(l) It shall at all times comply with all manufacturing, sales, distribution,
retail and marketing policies and strategies promulgated by Licensor from
time-to-time and of which Licensee has been notified;
(m) If requested by Licensor and such request can be filled in a commercially
reasonable manner, it will utilize specific design elements of the Licensed
Property provided to Licensee by Licensor on hangtags, labels, and other
materials.
17
15. TERMINATION BY LICENSOR.
(a) Licensor shall have the right to terminate this Agreement without prejudice
to any rights which it may have, whether pursuant to the provisions of this
Agreement, or otherwise in law, or in equity, or otherwise, upon the occurrence
of any one or more of the following events (herein called "defaults"):
(i) Licensee defaults in the performance of any of its obligations
provided for in this Agreement; or
(ii) Licensee shall have failed to deliver to Licensor or to maintain
in full force and effect the insurance referred to in Paragraph
8(b) hereof; or
(iii) Licensee shall fail to make any payment due hereunder on the date
due; or
(iv) Licensee shall fail to deliver any of the statements hereinabove
referred to or to give access to the premises and/or license
records pursuant to the provisions hereof to Licensor's
authorized representatives for the purposes permitted hereunder,
and such failure shall continue for ten (10) days after written
notice thereof is sent by Licensor to the Licensee; or
(v) Licensee shall fail to comply with any laws, regulations or
voluntary industry standards as provided in Paragraph 14(f)
hereof or any governmental agency or other body, office or
official vested with appropriate authority finds that the
Licensed Products are harmful or defective in any way, manner or
form, or are being manufactured, sold-or distributed in
contravention of applicable laws, regulations or standards, or in
a manner likely to cause harm; or
(vi) Licensee shall be unable to pay its debts when due, or shall make
any assignment for the benefit of creditors, or shall file any
petition under the bankruptcy or insolvency laws of any nation,
jurisdiction, county or place, or shall have or suffer a receiver
or trustee to be appointed for its business or property, or be
adjudicated a bankrupt or an insolvent; or
(vii) Licensee does not commence in good faith to manufacture,
distribute and sell a Licensed Product throughout the Territory
on or before the Marketing Date as defined in Paragraph 1(h).
Such default and Licensor's resultant right of termination (or
recapture) shall only apply to the specific regions/countries
within the Territory in which or wherein Licensee fails to meet
said Marketing Date requirement. Licensor shall also have the
right to recapture rights hereunder with respect to any Regions
as set forth in Paragraph 1(b) which do not have approved
distributors in place six (6) months after the date of execution
of this agreement; or
(viii) Licensee shall manufacture, sell or distribute, whichever first
occurs, any of the Licensed Product(s) without the prior written
approval of Licensor as provided in Paragraph 10 hereof; or
(ix) Licensee undergoes a substantial change of management or control.
The term "control" as used in the preceding sentence shall mean
the right to exercise, directly or indirectly, more than fifty
percent (50%) of the voting rights attributable to the shares of
the controlled entity; or
(x) Licensee uses Artwork which has not been approved by Licensor in
compliance with the provisions of Paragraph 9 hereof; or
(xi) A manufacturer approved pursuant to Paragraph 11(b) hereof shall
sell Licensed Products to parties other than Licensee or engage
in conduct, which conduct if engaged in by Licensee would entitle
Licensor to terminate this Agreement; or
18
(xii) Licensee delivers or sells Licensed Products outside the
Territory or knowingly sells Licensed Products(s) to a third
party who Licensee knows intends to, or who Licensee reasonably
should suspect intends to, sell or deliver such Licensed Products
outside the Territory; or
(xiii) Licensee uses any labor that violates any local labor laws and/or
it uses prison, slave or child labor in connection with the
manufacture of the Licensed Products; or
(xiv) Licensee has made a material misrepresentation or has omitted to
state a material fact necessary to make the statements not
misleading; or
(xv) Licensee shall breach any other agreement in effect between
Licensee on the one hand and Licensor on the other.
Notwithstanding the foregoing, excluded from this breach are
Paragraphs 1(a) - (e) and (i) as set forth above.
(b) In the event any of these defaults occur, Licensor shall give notice of
termination in writing to Licensee by facsimile and certified mail. Licensee
shall have ten (10) days from the date of giving notice in which to correct any
of these defaults (except subdivisions (vii), (viii), (xii) and (xiv) above
which are not curable), and failing such, this Agreement shall thereupon
immediately terminate, and any and all payments then or later due from Licensee
hereunder (including Guaranteed Consideration) shall then be promptly due and
payable in full and no portion of those prior payments shall be repayable to
Licensee.
16. FINAL STATEMENT UPON TERMINATION OR EXPIRATION.
Licensee shall deliver, as soon as practicable, but not later than
thirty (30) days following expiration or termination of this Agreement, a
statement indicating the number and description of Licensed Products on hand
together with a description of all advertising and promotional materials
relating thereto. Following expiration or termination of this Agreement,
Licensee shall immediately cease any and all manufacturing of the Licensed
Product. However, if Licensee has complied with all the terms of this Agreement,
including, but not limited to, complete and timely payment of the Guaranteed
Consideration and Royalty Payments, then Licensee may continue to distribute and
sell its remaining inventory, on a non-exclusive basis only, for a period not to
exceed sixty (60) days following such termination or expiration (the "Sell-Off
Period"), subject to payment of applicable royalties thereto. In no event,
however, may Licensee distribute and sell during the Sell-Off Period an amount
of Licensed Products that exceeds the average amount of Licensed Products sold
during any consecutive sixty (60) day period during the Term. In the event this
Agreement is terminated by Licensor for any reason under this Agreement,
Licensee shall be deemed to have forfeited its Sell-Off Period. If Licensee has
any remaining inventory of the Licensed Products following the Sell-Off Period,
Licensee shall, at Licensor's option, make available such inventory to Licensor
for purchase at or below cost, deliver up to Licensor for destruction said
remaining inventory or furnish to Licensor an affidavit attesting to the
destruction of said remaining inventory. Licensor shall have the right to
conduct a physical inventory in order to ascertain or verify such inventory
and/or statement. In the event that Licensee refuses to permit Licensor to
conduct such physical inventory, Licensee shall forfeit its right to the
Sell-Off Period hereunder or any other rights to dispose of such inventory. In
addition to the forfeiture, Licensor shall have recourse to all other legal
remedies available to it.
17. PAYMENTS AND NOTICES.
Except as otherwise specifically provided herein, all notices which
either party hereto is required or may desire to give to the other shall be
given by addressing the same to the other at the address set forth above, or at
such other address as may be designated in writing by any such party in a notice
to the other given in the manner prescribed in this paragraph. All such
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notices shall be sufficiently given when the same shall be deposited so
addressed, postage prepaid, in the United states mail and/or when the same shall
have been delivered, so addressed, by facsimile or by overnight delivery service
and the date of transmission by facsimile, receipt of overnight delivery service
or two business days after mailing shall for the purposes of this Agreement be
deemed the date of the giving of such notice.
18. NO PARTNERSHIP, ETC.
This Agreement does not constitute and shall not be construed as
constitution of a partnership or joint venture between Licensor and Licensee.
Neither party shall have any right to obligate or bind the other party in any
manner whatsoever, and nothing herein contained shall give, or is intended to
give, any rights of any kind to any third persons.
19. NO SUBLICENSING/NON-ASSIGNABILITY.
This Agreement shall bind and inure to the benefit of Licensor, its
successors and assigns. This Agreement is personal to Licensee. Licensee shall
not sublicense, franchise or delegate to third parties its rights hereunder
(except as set forth "in Paragraph 11(b) hereof). Neither this Agreement nor any
of the rights of Licensee hereunder shall be sold, transferred or assigned by
Licensee and no rights hereunder shall devolve by operation of law or otherwise
upon any receiver, liquidator, trustee or other party.
20. BANKRUPTCY RELATED PROVISIONS.
(a) The parties hereby agree and intend that this Agreement is an executory
contract governed by Section 365 of the U.S. Bankruptcy Code (the "Bankruptcy
Code").
(b) In the event of Licensee's bankruptcy, the parties intend that any royalties
payable under this Agreement during the bankruptcy period be deemed
administrative claims under the Bankruptcy Code because the parties recognize
and agree that the bankruptcy estate's enjoyment of this Agreement will (i)
provide a material benefit to the bankruptcy estate during its reorganization
and (ii) deny Licensor the benefit of the exploitation of the rights through
alternate means during the bankruptcy reorganization.
(c) The parties acknowledge and agree that any delay in the decision of trustee
of the bankruptcy estate to assume or reject the Agreement (the "Decision
Period") materially ▇▇▇▇▇ Licensor by interfering with Licensor's ability to
alternatively exploit the rights granted under this Agreement during a Decision
Period of uncertain duration. The parties recognize that arranging appropriate
alternative exploitation would be a time consuming and expensive process and
that it is unreasonable for Licensor to endure a Decision Period of extended
uncertainty. Therefore, the parties agree that the Decision Period shall not
exceed sixty (60) days.
(d) Licensor, in its interest to safeguard its valuable interests (including,
without limitation, its intellectual property rights in the Licensed property),
has relied on the particular skill and knowledge base of Licensee. Therefore,
the parties acknowledge and agree that in a bankruptcy context this Agreement is
a license of the type described by Section 365(c)(1) of the Bankruptcy Code and
may not be assigned without the prior written consent of the Licensor.
21. CONSTRUCTION AND DISPUTE RESOLUTION.
This Agreement shall be construed in accordance with the laws of the
State of California of the United States of America without regard to its
conflicts of laws provisions. Any and all controversies, claims or disputes
arising out of or related to this Agreement or the interpretation, performance
or breach thereof, including, but not limited to, alleged violations of
20
state or federal statutory or common law rights or duties, and the determination
of the scope or applicability of this agreement to arbitrate ("Dispute"), except
as set forth in subparagraphs (b) and (c), below, shall be resolved according to
the procedures set forth in subparagraph (a), below, which shall constitute the
sole dispute resolution mechanism hereunder:
(a) ARBITRATION: In the event that the parties are unable to resolve any Dispute
informally, then such Dispute shall be submitted to final and binding
arbitration. The arbitration shall be initiated and conducted according to
either the JAMS Streamlined (for claims under $250,000) or the JAMS
Comprehensive (for claims over $250,000) Arbitration Rules and Procedures,
except as modified herein, including the Optional Appeal Procedure, at the Los
Angeles office of JAMS, or its successor ("JAMS") in effect at the time the
request for arbitration is made (the "Arbitration Rules"). The arbitration shall
be conducted in Los Angeles County before a single neutral arbitrator appointed
in accordance with the Arbitration Rules. The arbitrator shall follow California
law and the Federal Rules of Evidence in adjudicating the Dispute. The parties
waive the right to seek punitive damages and the arbitrator shall have no
authority to award such damages. The arbitrator will provide a detailed written
statement of decision, which will be part of the arbitration award and
admissible in any judicial proceeding to confirm, correct or vacate the award.
Unless the parties agree otherwise, the neutral arbitrator and the members of
any appeal panel shall be former or retired judges or justices of any California
state or federal court with experience in matters involving the entertainment
industry. If either party refuses to perform any or all of its obligations under
the final arbitration award (following appeal, if applicable) within thirty (30)
days of such award being rendered, then the other party may enforce the final
award in any court of competent jurisdiction in Los Angeles County. The party
seeking enforcement shall be entitled to an award of all costs, fees and
expenses, including attorneys' fees, incurred in enforcing the award, to be paid
by the party against whom enforcement is ordered.
(b) INJUNCTIVE RELIEF: Notwithstanding the foregoing, either party shall be
entitled to seek injunctive relief (unless otherwise precluded by any other
provision of this Agreement) in the state and federal courts of Los Angeles
County.
(c) OTHER MATTERS: Any Dispute or portion thereof, or any claim for a particular
form of relief (not otherwise precluded by any other provision of this
Agreement), that may not be arbitrated pursuant to applicable state or federal
law may be heard only in a court of competent jurisdiction in Los Angeles
County.
22. WAIVER, MODIFICATION, ETC.
No waiver, modification or cancellation of any term or condition of this
Agreement shall be effective unless executed in writing by the party charged
therewith. No written waiver shall excuse the performance of any acts other than
those specifically referred to therein. The fact that the Licensor has not
previously insisted upon Licensee expressly complying with any provision of this
Agreement shall not be deemed to be a waiver of Licensor's future right to
require compliance in respect thereof and Licensee specifically acknowledges and
agrees that the prior forbearance in respect of any act, term or condition shall
not prevent Licensor from subsequently requiring full and complete compliance
thereafter. If any term or provision of this Agreement is held to be invalid or
unenforceable by any court of competent jurisdiction or any other authority
vested with jurisdiction, such holding shall not affect the validity or
enforceability of any other term or provision hereto and this Agreement shall be
interpreted and construed as if such term or provision, to the
21
extent the same shall have been held to be invalid, illegal or unenforceable,
had never been contained herein. Headings of paragraphs herein are for
convenience only and are without substantive significance.
23. CONFIDENTIALITY.
The Artwork and the materials and information supplied to one party by
the other hereunder constitute, relate to, contain and form a part of
confidential and proprietary information of the disclosing party, including, but
not limited to, Style Guides, design elements, character profiles, unpublished
copyrighted material, release dates, marketing and promotional strategies,
information about new products, properties and characters, the terms and
conditions of this Agreement, and other information which is proprietary in
nature or is a trade secret (collectively, the "Proprietary Information"). The
parties acknowledge and agree that the Proprietary Information is highly
confidential and that disclosure of the Proprietary Information will result in
serious harm to the owner thereof. Among other damage, unauthorized disclosure
of the Proprietary Information will (i) damage carefully planned marketing
strategies, (ii) reduce interest in the Licensed Property, (iii) make unique or
novel elements of the Licensed Property susceptible to imitation or copying by
competitors, infringers or third parties prior to Licensor's release of the
information or materials, (iv) damage proprietary protection in undisclosed or
unpublished information or materials, and (v) provide unauthorized third parties
with materials capable of being used to create counterfeit and unauthorized
merchandise, audio-visual products or other products, all of which will
seriously damage the parties' rights and business. Except as expressly approved
in writing by the owner of the Proprietary Information, the other party shall
not reproduce or use the Proprietary Information of the other party and shall
not discuss, distribute, disseminate or otherwise disclose the Proprietary
Information or the substance or contents thereof, in whole or in part, in its
original form or in any other form, with or to any other person or entity other
than employees of the parties and, in the case of Licensee, third parties who
have executed a Contributor's Agreement (as provided in Paragraph 9(b)) or third
party manufacturer's agreement (as provided in paragraph 11(b)) and been
approved by Licensor as provided hereunder, and such employees and third parties
shall be given access to the Proprietary Information only on a "need-to-know"
basis. The foregoing restrictions shall not apply to any information which, (i)
at the time of disclosure, is in the public domain or which, after disclosure,
becomes part of the public domain by publication or otherwise through no action
or fault of the receiving party; (ii) information which the receiving party can
show was in its possession at the time of disclosure and was not acquired,
directly or indirectly, from the other party; (iii) information which was
received from a third party having the legal right to transmit the same; (iv)
information which is independently developed, conceived, or created without use
of or reference to any Proprietary Information of the other party; or (v)
information which is disclosed pursuant to valid court order or other legal
process.
24. ENTIRE AGREEMENT.
This Agreement constitutes the entire Agreement between the parties
concerning the subject matter hereof and cancels and supersedes any prior
understandings and agreements between the parties hereto with respect thereto.
There are no representations, warranties, terms, conditions, undertakings or
collateral agreements, expressed, implied or statutory, between the parties
other than as expressly set forth in this Agreement.
25. ACCEPTANCE BY LICENSOR.
This instrument, when signed by Licensee, shall be deemed an application
for license and not a binding agreement unless and until accepted by Warner
Bros. Consumer Products by signature of a duly authorized officer and the
delivery of such a signed copy to
22
Licensee. The receipt and/or deposit by Warner Bros. Consumer Products of any
check or other consideration given by Licensee and/or delivery of any material
by Warner Bros. Consumer Products to Licensee shall not be deemed an acceptance
by Warner Bros. Consumer Products of this application. The foregoing shall apply
to any documents relating to renewals or modifications hereof.
IN WITNESS WHEREOF, the parties hereto have signed this Agreement as of
the day and year first above written.
AGREED AND ACCEPTED: AGREED AND ACCEPTED:
LICENSOR: LICENSEE:
WARNER BROS. CONSUMER PRODUCTS, BAM ENTERTAINMENT
a Division of Time Warner
Entertainment Company, L.P.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------- ------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇
Senior Vice President, Business
and Legal Affairs
Date: 12/12/01 Date: Nov. 20, 2001
------------------------------- -----------------------------
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EXHIBIT 1 #13247-SJ
CONTRIBUTOR'S AGREEMENT
I, __________________________, the undersigned ("Contributor"), have been
engaged by BAM ENTERTAINMENT ("Licensee") to work on or contribute to the
creation of Licensed Products, described as _______________________, by Licensee
under an agreement between Licensee and Warner Bros., a division of Time Warner
Entertainment Company, L.P., c/o Warner Bros. Consumer Products, a division of
Time Warner Entertainment Company, L.P. ("Warner") dated ___________________.
I understand and agree that the Licensed Products, and all artwork or other
results of my services for Licensee in connection with such Licensed Products
("Work") is a "work made for hire" for Cartoon Network and that all right, title
and interest in and to the work shall vest and remain with Cartoon Network I
reserve no rights therein. Without limiting the foregoing, I hereby assign and
transfer to Cartoon Network all other rights whatsoever, in perpetuity
throughout the universe which I may have or which may arise in me or in
connection with the Work. I hereby waive all moral rights in connection with
such Work together with any other rights which are not capable of assignment. I
further agree to execute any further documentation relating to such transfer or
waiver or relating to such Work at the request of Cartoon Network or Licensee,
failing which Cartoon Network is authorized to execute same as my
Attorney-in-Fact.
By:
--------------------------------
signature
-----------------------------------
print name
-----------------------------------
address
-----------------------------------
-----------------------------------
-----------------------------------
country
-----------------------------------
date
Warner Bros. Consumer Products:
By:
--------------------------------
Date:
------------------------------
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EXHIBIT 2 #132477-SJ
MILESTONE 1 CONCEPT DESIGN: General description of proposed program,
game play and overall look and feel. Includes user
interface, list of characters to be used; game engine and
limitations; and competitive analysis.
MILESTONE 2 PRODUCTION SCHEDULE: Schedule of delivery dates for all
major milestones, including localization and manufacturing
dates.
MILESTONE 3 FUNCTIONAL DESIGN SPECIFICATION/DESIGN DOCUMENT AND
TECHNICAL DOCUMENT: Detailed description of the program
including: synopsis; interface, navigation and logic
flowchart; level designs and maps; and art style/design.
Technical Document should include bios/details about the
team working on the project, description of tools used to
complete the project, and risk/contingency analysis.
MILESTONE 4 SCRIPT: Dialogue script.
MILESTONE 5 TECHNOLOGY DEMO (PRE-ALPHA): First look at prelim models and
gameplay elements in the game engine.
MILESTONE 6 CHARACTER ART AND ANIMATION:
MILESTONE 7 INTERFACE, BACKGROUND, ENVIRONMENTAL ART
MILESTONE 8 MUSIC AND AUDIO: All music and sound effects to be used in
product must be submitted separately for approval.
MILESTONE 9 ALPHA: Initial combination of all product elements and art
in a usable working prototype.
MILESTONE 10 BETA: Almost final version of the License Product(s) that is
a fully functional, nearly bug-free disk that incorporates
finalized art and game play.
MILESTONE 11 GOLDEN MASTER CANDIDATE: Final disk that results from
Milestone 10 which includes a fully tested program
containing all elements and game play.
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EXHIBIT 3 #13247-▇▇
▇▇▇▇▇▇ BROS. CONSUMER PRODUCTS
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇ - ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Re: Approval of Third Party Manufacturer
Gentlemen:
This letter will serve as notice to you that pursuant to Paragraph 11(b)
of the License Agreement dated ______________, 2000 between you and BAM
ENTERTAINMENT, we have been engaged as the manufacturer for Licensee in
connection with the manufacture of the Licensed Products as defined in the
aforesaid License Agreement. We hereby acknowledge that we may not manufacture
Licensed Products for, or sell or distribute Licensed Products to, anyone other
than Licensee. We hereby further acknowledge that we have received a copy and
are cognizant of the terms and conditions set forth in said License Agreement
and hereby agree to observe those provisions of said License Agreement which are
applicable to our function as manufacturer of the Licensed Products. It is
expressly understood that we are obligated to comply with all local laws,
including without limitation, labor laws, wage and hour laws and
anti-discrimination laws and that you or your representatives shall, at anytime,
have the right to inspect our facilities and review our records to ensure
compliance therewith. It is understood that this engagement is on a royalty free
basis and that we may not subcontract any of our work without your prior written
approval.
We understand that our engagement as the manufacturer for Licensee is
subject to your written approval. We request, therefore, that you sign in the
space below, thereby showing your acceptance of our engagement as aforesaid.
Very truly yours,
-------------------------------
manufacturer/company name
By:
-------------------------------
signature
-------------------------------
print name
-------------------------------
address
-------------------------------
-------------------------------
-------------------------------
country
-------------------------------
date
-------------------------------
product(s) manufacturing
AGREED TO AND ACCEPTED:
WARNER BROS. CONSUMER PRODUCTS,
a Division of Time Warner
Entertainment Company, L.P.
By:
--------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇
Senior Vice President, Business
and Legal Affairs
-----------------------------------
Date
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