EXHIBIT 10.18
RETAIL LICENSE
WARNER BROS. CONSUMER PRODUCTS
#7633-SPJ
LICENSE AGREEMENT made 12/03/96, by and between WARNER BROS., A DIVISION OF TIME
WARNER ENTERTAINMENT COMPANY, L.P., c/o WARNER Bros. Consumer Products, a Time
Warner Entertainment Company, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇. ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ (hereinafter
referred to as "LICENSOR") and ARTISAN HOUSE, whose address is ▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇., ▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ Attn.: ▇▇▇▇▇ ▇▇▇▇▇▇▇ (hereinafter referred to as
"LICENSEE").
WITNESSETH:
The parties hereto mutually agree as follows:
1. DEFINITIONS: As used in this Agreement, the following terms shall have
the following respective meanings:
(a) "Channels of Distribution": Licensee may sell the Licensed
Products only through the following channels of distribution:
mid-tier, furniture stores and specialty catalogs (direct
mail to consumer).
(b) "Guaranteed Consideration": The sum of $15,000.00 payable as
follows:
$3,000.00 payable simultaneously with the execution of this
Agreement; and
$4,000.00 payable on or before January 31, 1997; and
$4,000.00 payable on or before April 30, 1997; and
$4,000.00 payable on or before July 31, 1997.
(c) "Licensed Product(s)": Metal Wall Sculptures and tabletop
sculpture
(d) "Licensed Property": Those certain elements depicted in the
theatrical motion picture entitled "SPACE JAM" (the "Motion
Picture"), including all trademarks, copyrights, related
logos, indicia, set and costume designs, and other elements
depicted therein. In addition, the Licensed Property shall
also include the representations, names, logos, movements,
personalities, artwork, photographs and other material in
connection with the animated characters NERDLUCKS, MONSTARS,
▇▇▇▇▇▇▇▇▇▇▇, and LOLA BUNNY as well as the following "Looney
Tunes" animated characters as depicted in the Motion Picture:
BUGS BUNNY, DAFFY DUCK, ▇▇▇▇▇▇▇▇▇, TWEETY, ROAD RUNNER, WILE
E. COYOTE, TASMANIAN DEVIL, ▇▇▇▇▇ ▇▇▇▇, PORKY PIG, YOSEMITE
▇▇▇, ▇▇▇▇ ▇▇ ▇▇▇ and ▇▇▇▇▇▇ THE MARTIAN only. Specifically
excluded herein, however, is the right to reproduce the
likenesses of the performers except to the extent specifically
permitted otherwise in writing by Licensor and then only to
the extent such performers have granted merchandising rights
to Licensor. Notwithstanding the foregoing, all uses of any
of the elements set forth above, including the names and
likenesses of any of the performers afforded hereunder must be
specifically approved in writing by Licensor, pursuant to
Paragraph 9 herein.
Licensee acknowledges that the rights granted herein are
limited only to the elements contained in the Motion Picture
and that any and all rights in, to or associated with any
subsequently produced motion picture, as well as with any
sequels thereto, as well as with any subsequently produced
television series are specifically excluded herefrom.
Further, Licensee specifically understands and agrees that
no rights are granted herein with respect to the Warner Bros.
"LOONEY TUNES" characters not associated with the Motion
Picture, it being understood that all rights in and to said
characters are reserved exclusively to Licensor for use and/or
licensing as it deems appropriate to third party(s) of its
choice.
Licensee understands and agrees that Licensee has no rights in
and to ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ and his name, likeness and voice and
uniform (including, without limitation, the number 23) and
that ▇▇▇▇▇▇▇ ▇▇▇▇▇▇'▇ name, likeness and voice (including,
without limitation, the number 23) and shall not be utilized
or reproduced under any circumstances.
(e) "Marketing Date": February 1, 1997
(f) "Royalty Rate": Licensee shall pay to Licensor the sum equal
to Twelve Percent (12%) of all net sales by Licensee of the
Licensed Product(s).
(g) "Term": December 1, 1996 through December 31, 1997
(h) "Territory": United States (fifty states)
2. GRANT OF LICENSE:
(a) Subject to the restrictions, limitations, reservations and
conditions and Licensor's approval rights set forth in this
Agreement, Licensor hereby grants to Licensee and Licensee
hereby accepts for the Term of this Agreement, a license to
utilize the Licensed Property solely on or in connection with
the manufacture, distribution and sale of the Licensed
Products as specified above for the ultimate retail sale to
the public throughout the Territory on a non-exclusive basis.
(b) Without limiting any other approval rights of Licensor as
contained herein, no television commercials may be utilized
under this Agreement without the specific prior written
approval of Licensor.
3. RESERVATION OF RIGHTS; PREMIUMS:
(a) Licensor reserves all rights not expressly conveyed to
Licensee hereunder, and Licensor may grant licenses to others
to use the Licensed Property, artwork and textual matter in
connection with other uses, services and products without
limitation.
(b) Notwithstanding anything to the contrary stated herein,
Licensor specifically reserves the right, without limitation
throughout the world, to itself use, or license any third
party(s) of its choice to use the Licensed Property for the
manufacture, distribution and sale of products, subjecto
Licensee's proprietary rights, similar to those licensed
herein in Paragraph 1(c) above for sale through any
catalogue(s) produced or distributed by or on behalf of
Licensor or its affiliated companies, or for sale or
distribution in any theaters or arena or for sale or
distribution in any retail stores operated by or on behalf of
Licensor, its affiliated companies or franchises or for sale
or distribution in any theme/amusement parks operated by or on
behalf of Licensor and its affiliated companies, including
without limitation, the Six Flags and Movie World parks. In
addition, Licensor reserves the right to allow Six Flags
Corporation and Movie World to manufacture (or have
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manufactured by a third party) products similar, subject to
Licensee's proprietary rights, to those licensed herein for
distribution or sale in theme and/or amusement parks owned or
operated by both Six Flags Corporation and Movie World.
Further, Licensor reserves the right to use, or license others
to use, and/or manufacture products similar or identical to
those licensed herein for use as premiums.
(c) Licensee specifically understands and agrees that no rights
are granted herein with respect to the Warner Bros. "shield"
logo or trademark, or any other trademark(s), logo(s) or
copyrights owned by Licensor other than those specifically set
forth above in the Licensed Property, it being understood that
all rights in and to said properties are reserved exclusively
to Licensor for use and/or licensing as it deems appropriate
to third party(s) of its choice.
(d) Licensee agrees that it will not use, or knowingly permit the
use of, and will exercise due care that its customers likewise
will refrain from the use of, the Licensed Products as a
premium, except with the prior written consent of Licensor.
Subject to Licensor's prior written approval as aforesaid,
Licensee shall pay to Licensor a sum equal to TWELVE PERCENT
(12%) of all premium sales. For purposes of this paragraph,
the term "premium" shall be defined as including, but not
necessarily limited to, combination sales, free or
self-liquidating items offered to the public in conjunction
with the sale or promotion of a product or service, including
traffic building or continuity visits by the
consumer/customer, or any similar scheme or device, the prime
intent of which is to use the Licensed Products in such a way
as to promote, publicize and or sell the products, services or
business image of the user of such item.
4. CONSIDERATION:
(a) The Guaranteed Consideration paid by Licensee as set forth
above shall be applied against such royalties as are, or have
become, due to Licensor. No part of such Guaranteed
Consideration shall be repayable to Licensee. Royalties earned
in excess of the Guaranteed Consideration applicable to the
Term hereof shall not offset any Guaranteed Consideration
required in respect of the succeeding renewal term (if any);
likewise, royalties earned in excess of the Guaranteed
Consideration applicable to the renewal term (if any) shall
not offset any Guaranteed Consideration applicable to any
prior term.
(b) Royalty Payments: Licensee shall pay to Licensor a sum equal
to the Royalty Rate as set forth above of all net sales by
Licensee of the Licensed Products covered by this Agreement.
The term "net sales" herein shall mean the gross invoice price
billed customers, less actual quantity discounts and actual
returns, but no deductions shall be made for uncollectible
accounts and deductions for actual returns may not exceed 5%
of total sales. No costs incurred in the manufacture, sale,
distribution, advertisement, or exploitation of the Licensed
Products shall be deducted from any royalties payable by
Licensee.
(c) Royalties shall be payable concurrently with the periodic
statements required in Paragraph 5 hereof, except to the
extent offset by Guaranteed Consideration theretofore
remitted.
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5. PERIODIC STATEMENTS.
(a) Within THIRTY (30) days after the initial shipment of the
Licensed Product(s) and promptly on the thirtieth (30th) day
after every 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 Product(s)
distributed and sold by Licensee during the preceding calendar
month the number of units, description of items sold
(specifying the components of the Licensed Property utilized
and specifying the nature of the Licensed Product(s), gross
sales price and itemized deductions from gross sales price,
and net sales price together with any returns made during the
preceding calendar month. Such statements shall be furnished
to Licensor whether or not any of the Licensed Product(s) have
been sold during calendar months to which such statements
refer. 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 number, description of items sold
specifying the components of the Licensed Property utilized
and nature of Licensed Product(s), gross sales price itemized
deductions from gross sales price and net sales price of the
Licensed Product(s) covered by this Agreement distributed
and/or sold by Licensee up to and including the date upon
which Licensor has made such demand.
(b) The statements and payments required hereunder shall be
delivered to:
Warner Bros. Consumer Products
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn.: Asst. Controller, Domestic Accounting
(c) Licensee agrees to provide, in the event of a material default
in payment, 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.
(d) Any payments which are made to Licensor hereunder after the
due date required therefor, shall bear interest at the then
current prime rate (or the maximum rate permissible by law, if
less than the current prime rate) from the date such payments
are due to the date of payment. Licensor's right hereunder to
interest on late payments shall not preclude Licensor from
exercising any of its other rights or remedies pursuant to
this Agreement or otherwise with regard to Licensee's failure
to make timely remittances.
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6. BOOKS AND RECORDS.
(a) Licensee shall keep, maintain and preserve (in Licensee's
principal place of business) for at least two (2) years
following termination or expiration of the term of this
Agreement or any renewal(s) hereof, 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. 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 during reasonable business hours and
upon reasonable notice by Licensor or its nominees. Licensee
agrees not to cause or permit any interference with Licensor
or nominees of Licensor in the performance of their duties.
During such inspections and audits, Licensor shall have the
right to take extracts and/or make copies of Licensee's
records as it deems necessary.
(b) The exercise by Licensor in whole or in part, at any time of
the right to audit records and accounts or of any other right
herein granted, or the acceptance by Licensor of any statement
or statements or the receipt and/or deposit by Licensor, of
any payment tendered by or on behalf of Licensee shall be
without prejudice to any rights or remedies of Licensor and
such acceptance, receipt and/or deposit shall not preclude or
prevent Licensor from thereafter disputing the accuracy of any
such statement or payment.
(c) If pursuant to its rights 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 be responsible for payment of 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 3%, then Licensee
shall pay the reasonable costs and expenses of such audit and
inspection.
7. INDEMNIFICATIONS.
(a) During the Term, and continuing after the expiration or
termination of this Agreement, Licensor shall indemnify
Licensee and shall hold it harmless from any loss, liability,
damage, cost or expense arising out of any claims or suits
which may be brought or made against Licensee by reason of the
breach by Licensor of the warranties or representations as set
forth in Paragraph 12 hereof, provided that Licensee shall
give prompt written notice, and full cooperation and
assistance to Licensor relative to any such claim or suit and
provided, further, that Licensor shall have the option to
undertake and conduct the defense of any suit so brought.
Licensee shall not, however, be entitled to recover for lost
profits. Licensee shall cooperate fully in all respects with
Licensor in the conduct and defense of said suit and/or
proceedings related thereto.
(b) During the Term, and continuing after the expiration or
termination of this Agreement, Licensee shall indemnify
Licensor and shall hold it harmless from any loss, liability,
damage, cost or expense arising out of any claims or suits
which may be brought or made against Licensor by reason of:
(i) any breach of Licensee's covenants and undertakings
hereunder, including those set
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forth in Paragraph 13 hereof; (ii) any unauthorized use of the
Licensed Property; (iii) any use of any trademark, copyright,
design, patent, process, method or device, except for those
uses of the Licensed Property that are specifically approved
by Licensor pursuant to the terms of this Agreement; (iv)
Licensee's non-compliance with any applicable federal, state
or local laws or with any other applicable regulations; and
(v) any alleged defects and/or inherent dangers (whether
obvious or hidden) in the Licensed Product(s) or the use
thereof.
(c) With regard to 7(b) above, Licensee agrees to obtain, at its
own expense, product liability insurance providing adequate
protection for Licensor and Licensee against any such claims
or suits in amounts no less than two million dollars
($2,000,000) per occurrence, combined single limits.
Simultaneously with the execution of this Agreement, Licensee
undertakes to submit to Licensor a fully paid policy or
certificate of insurance naming Licensor as an additional
insured party and, requiring that the insurer shall not
terminate or materially modify such without written notice to
Licensor at least twenty (20) days in advance thereof.
8. ARTWORK; COPYRIGHT AND TRADEMARK NOTICES.
(a) The Licensed Property shall be displayed or used only in such
form and in such manner as has been specifically approved in
writing by Licensor in advance and Licensee undertakes to
assure usage of the Trademark(s) and the License Property
solely as approved hereunder. Licensee further agrees and
acknowledges that any and all artwork authorized for use
hereunder by Licensor in connection with the Licensed
Product(s) or which otherwise features or includes the
Licensed Property shall be owned in its entirety exclusively
by Licensor. Licensor reserves for itself or its designees all
rights to use any and all artwork created, utilized and/or
approved hereunder without limitation.
(b) Licensee acknowledges that, as between Licensor and Licensee,
the Licensed Property and all copyrights, trademarks and other
proprietary rights in and to the Licensed Property are owned
exclusively by Licensor. Licensee acknowledges that Licensor
shall have the right to terminate this Agreement in the event
Licensee asserts any rights (other than those granted pursuant
to the Agreement) in or to the Licensed Property. Licensee
further agrees and acknowledges that Licensor shall own the
copyright and other proprietary rights in any and all artwork
authorized for use hereunder that incorporates the Licensed
Property. At the request of Licensor, Licensee shall execute
such form(s) of assignment of copyright in any amendments or
derivative works based in whole or part on the Licensed
Property as Licensor may reasonably request. 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 assignment of rights so that the
foregoing assignment by Licensee shall vest full rights in
Licensor.
(c) Licensee shall, within thirty (30) days of receiving an
invoice, pay Licensor. for artwork executed by Licensor (or by
third parties under contract to Licensor) for use in the
development of the Licensed Product(s) 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
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prepared by Licensee and submitted for approval. Estimates of
artwork charges are available upon request.
(d) Licensee shall cause to be imprinted, irremovably and legibly
on each Licensed Product(s) manufactured, distributed or sold
under this Agreement, and all advertising, promotional,
packaging and wrapping material wherein the Licensed Property
appears, the following as directed by Licensor:
(i) The appropriate Copyright Notices, as directed and in
each instance specified by Licensor, including an
encircled c, the name of Licensor, year date of first
publication of the art and/or textual material
generally in the following form:
TM & (c) l996 Warner Bros.
(ii) The appropriate Trademark Notices with respect to the
Trademark(s) and Character(s) (and any component
thereof) as specified in each instance by Licensor,
including the initials "TM", or the letter "R"
encircled or "* "(asterisk), and/or such legend(s) as
may be required by Licensor, including but not
limited to a legend indicating that the Licensed
Property (and any component thereof) are trademarks
of Licensor used under license by Licensee.
(e) In no event shall Licensee use, in respect to the Licensed
Product(s) and/or in relation to any advertising, promotional,
packaging or wrapping material, any copyright or trademark
notices which shall conflict with, be confusing with, or
negate, any notices required hereunder by Licensor in respect
to the Licensed Property.
(f) Licensee agrees to deliver to Licensor free of cost three (3)
of each of the Licensed Product(s) together with their
packaging and wrapping material for trademark registration
purposes in compliance with applicable laws, simultaneously
upon distribution to the public. Any copyrights or trademarks
with respect to the Licensed Property shall be procured by and
for the benefit of Licensor and at Licensor's expense.
Licensee further agrees to provide Licensor with the date of
the first use of the Licensed Product(s) in interstate and
intrastate commerce.
(g) Licensee shall assist Licensor, at Licensor's expense, in the
procurement, protection, and maintenance of Licensor's rights
to the Licensed Property. Licensor may, in its sole
discretion, commence or prosecute and effect the disposition
of any claims or suits relative to the imitation, infringement
and/or unauthorized use of the Licensed Property either in its
own name, or in the name of Licensee, or join Licensee as a
party in the prosecution of such claims or suits. Licensee
agrees to cooperate fully with Licensor in connection with any
such claims or suits and undertakes to furnish full assistance
to Licensor in the conduct of all proceedings in regard
thereto. Licensee shall promptly notify Licensor in writing of
any infringements or imitations or unauthorized uses by others
of the Licensed Property, on or in relation to products
identical or similar to or related to the Licensed Product(s).
Licensor shall in its sole discretion have the right to settle
or effect compromises in respect thereof. Licensee shall not
institute any suit or take any action on account of such
infringements, imitaions or unauthorized uses.
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9. APPROVALS AND QUALITY CONTROLS.
(a) Licensee agrees to comply and maintain compliance with the
quality standards and specifications of Licensor in respect to
all usage of the Licensed Property on or in relation to the
Licensed Product(s) throughout the Term of this Agreement and
any renewals or extensions thereof. Licensee agrees to furnish
to Licensor free of cost for its written approval as to
quality and style, samples of each of the Licensed Product(s)
together with their packaging, hangtags, and wrapping
material, as follows in the successive stages indicated (a)
rough sketches/layout concepts; (b) finished artwork or final
proofs; (c) preproduction samples or strike-offs; (d) finished
products, including packaged samples.
(b) No Licensed Product(s) and no material whatever utilizing the
Licensed Property shall be manufactured, sold, distributed or
promoted by Licensee without prior written approval. Licensee
may, subject to Licensor's prior written approval, use textual
and/or pictorial matter pertaining to the Licensed Property on
such promotional, display and advertising material as may, in
its reasonable judgment, promote the sale of the Licensed
Product(s). All advertising and promotional material relating
to the Licensed Product(s) must be submitted to the Licensor
for its written approval at the following stages appropriate
to the medium used: (a) rough concepts (b) layout, storyboard,
script; and (c) finished materials.
(c) Approval or disappoval shall lie in Licensor's sole
discretion. Any Licensed Product(s) not approved in writing
shall be deemed unlicensed and shall not be manufactured or
sold. If any unapproved Licensed Product(s) are being sold,
Licensor may, together with other remedies available to it
including, but not limited to, immediate termination of this
Agreement, require such Licensed Product(s) to be immediately
withdrawn from the market and to be destroyed, such
destruction to be attested to in a certificate signed by an
officer of Licensee.
(d) Any modification of a Licensed Product must be submitted in
advance for Licensor's written approval as if it were a new
Licensed Product. Approval of a Licensed Product which uses
particular artwork does not imply approval of such artwork for
use with a different Licensed Product.
(e) Licensed Product(s) must conform in all material respects to
the final production samples approved by Licensor. If in
Licensor's reasonable judgement, 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.
(f) Licensee shall permit Licensor, upon reasonable notice, to
inspect Licensee's manufacturing operations and testing
records (including those operations and records of any
supplier or manufacturer approved pursuant to Paragraph 10
below) with respect to the Licensed Product(s).
(g) If any changes or modifications are required to be made to any
material submitted to Licensor for its written approval in
order to ensure compliance with Licensor's specifications or
standards of quality, Licensee agrees
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promptly to make such changes or modifications. Subsequent to
final approval, fewer than three (3) production samples of
Licensed Product(s) will be sent to Licensor, to ensure
quality control simultaneously upon distribution to the
public. In addition, Licensor shall have the right to purchase
any and all Licensed Product(s) in any quantity at the price
Licensee charges its best customer at the maximum discount
price.
(h) To avoid confusion of the public, Licensee agrees not to
associate other characters or licensed properties with the
Licensed Property on the Licensed Product(s) 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 to use the Licensed Property as part
of the name of Licensee's business or any division thereof.
(i) 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.
(j) It is understood and agreed that any animation used in
electronic media, including but not limited to animation for
television commercials and character voices for radio
commercials, shall be produced by Warner Bros. Animation
pursuant to a separate agreement between Licensee and Warner
Bros. Animation, subject to Warner Bros. Animation customary
rates. Any payment made to Warner Bros. Animation for such
animation shall be in addition to and shall not offset the
Consideration set forth in Paragraph 4.
(k) Licensor's approval of Licensed Product(s) (including without
limitation, the Licensed Product(s) 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.
10. DISTRIBUTION: SUB-LICENSE MANUFACTURE.
(a) Within the Channels of Distribution as set forth in Paragraph
1(a) hereof, Licensee shall sell the Licensed Product(s)
either to jobbers, wholesalers, distributors or retailers for
sale or resale and distribution directly to the public. Unless
explicitly set forth in Paragraph 1(a) hereof, Licensee shall
not sell the Licensed Product(s) through any cable home
shopping service without the prior written consent of
Licensor, it being expressly understood that Licensor will
consent to the sale of individual Licensed Products, but will
not consent to a "full show" dedicated to the sale of a line
of the Licensed Products. If Licensee sells or distributes the
Licensed Product(s) at a special price, directly or
indirectly, to itself, including without limitation, any
subsidiary of Licensee or to any other person, firm, or
corporation affiliated with Licensee or its officers,
directors or major stockholders, for ultimate sale to
unrelated third parties, Licensee shall pay royalties with
respect to such sales or distribution, based upon the price
generally charged to the trade by Licensee.
(b) Licensee shall not be entitled to sub-license any of its
rights under this Agreement. In the event Licensee is not the
manufacturer of the Licensed Product(s), Licensee
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shall be, 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 Product(s)
provided that such manufacturer shall execute a letter in the
form of Exhibit 1 attached hereto and by this reference made a
part hereof. In such event, Licensee shall remain primarily
obligated under all of the provisions of this Agreement. In no
event shall any such sublicense agreement include the right to
grant any further sublicenses.
11. 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 have 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 seek equitable remedies and costs.
12. LICENSOR'S WARRANTIES AND REPRESENTATIONS.
Licensor represents and warrants to Licensee that:
(a) It has, and will have throughout the Term of this Agreement,
the right to license the Licensed Property to Licensee in
accordance with the terms and provisions of this Agreement;
and
(b) The making of this Agreement by Licensor does not violate any
agreements, rights or obligations existing between Licensor
and any other person, firm or corporation.
13. LICENSEE'S WARRANTIES AND REPRESENTATIONS.
Licensee represents and warrants to Licensor that, during the Term and
thereafter:
(a) It will not attack the title of Licensor or its Grantors in
and to the Licensed Property or any copyright or trademark
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
Product(s) in an ethical manner and in accordance with the
terms and intent of this Agreement, and in compliance with all
applicable government regulations and industry standards;
(d) It will not create any expenses chargeable to Licensor without
the prior written approval of Licensor;
(e) It will protect to the best of its ability its right to
manufacture, sell, promote, and distribute the Licensed
Product(s) hereunder;
#7633-SPJ - Page 10
(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
Product(s), and shall maintain its appropriate customary high
quality standards. It shall comply with any regulatory
agencies which shall have jurisdiction over the Licensed
Product(s) 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 relation 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 Product(s) comply with such laws,
regulations and standards. Upon reasonable notice, Licensee
shall permit Licensor or its designees to inspect testing
records and procedures with respect to the Licensed Product(s)
for compliance. Licensed Product(s) that do not comply with
all applicable laws, regulations and standards shall
automatically be deemed unapproved;
(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 Product(s) 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; and
(j) It will not deliver or sell Licensed Products outside the
Territory or knowingly sell Licensed Products to a third party
for delivery outside the Territory.
14. TERMINATION BY LICENSOR.
(a) Licensor shall have the right to terminate this Agreement
without prejudice to any rights which it may have in the
premises, whether pursuant to the provisions of this
Agreement, in law, or in equity, or otherwise, upon the
occurrence of any one or more of the following events (herein
called "defaults"):
(i) If Licensee defaults in the performance of any of its
obligations provided for in this Agreement; or
(ii) Licensee shall have failed to deliver to Licensor or
to maintain in full force and effect the insurance
referred to in Paragraph 7(c) hereof; or
(iii) If Licensee shall fail to make any payments due
hereunder on the date due; or
#7633-SPJ - Page 11
(iv) If 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;
or
(v) If Licensee shall fail to comply with any laws,
regulations or voluntary industry standards as
provided in Paragraph 13(f) or if any governmental
agency or other body, office or official vested with
appropriate authority finds that the Licensed
Product(s) 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) If Licensee shall be unable to pay its debts when
due, or shall make any assignment for the benefit of
creditors, or shall file any petition under the
bankruptcy or insolvency laws of any jurisdiction,
county or place, or shall have or suffer a receiver
or trustee to be appointed for its business or
property, or be adjudicated a bankrupt or an
insolvent; or
(vii) In the event that Licensee does not commence in good
faith to manufacture, distribute and sell the
Licensed Product(s) and utilize the Characters set
forth in the Licensed Property within the Territory
on or before the Marketing Date and thereafter fails
to diligently and continuously manufacture,
distribute and sell the Licensed Products and utilize
the Characters within the Territory. Such default and
Licensor's resultant right of termination (or
recapture) shall only apply to the specific
Character(s) and/or the specific Licensed Product(s),
which or wherein Licensee fails to meet said
Marketing Date requirement; or
(viii) If Licensee shall manufacture, sell or distribute,
whichever first occurs, any of the Licensed
Products(s) without the prior written approval of
Licensor as provided in Paragraph 9 hereof; or
(ix) If Licensee undergoes a substantial change of
management; or
(x) If a manufacturer approved pursuant to Paragraph
10(b) hereof shall engage in conduct, which conduct
if engaged in by Licensee would entitle Licensor to
terminate this Agreement; or
(xi) If Licensee delivers or sells Licensed Product(s)
outside the Territory or knowingly sells Licensed
Products(s) to a third party for delivery outside the
Territory; or
(xii) If Licensee has made a material misrepresentation or
has omitted to state a material fact necessary to
make the statements not misleading; or
(xiii) If Licensee shall breach any other agreement in
effect between Licensee and Licensor.
(b) In the event any of these defaults occur, Licensor shall give
notice of termination in writing to Licensee by certified
mail. Licensee shall have ten (10) days from the date of
receiving notice in which to correct any of
#7633-SPJ - Page 12
these defaults (except subdivisions (vii), (viii), (xi) and
(xii) 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 and no portion of prior payments shall be
repayable to Licensee.
15. FINAL STATEMENT UPON TERMINATION OR EXPIRATION.
Licensee shall deliver, as soon as practicable, but not later
than thirty (30) days following expiration or termination, a statement
indicating the number and description of Licensed Product(s) on hand
together with a description of all advertising and promotional
materials relating thereto. Following expiration or termination,
Licensee shall not continue to manufacture the Licensed Product(s).
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 then, Licensee may continue to distribute and
sell its remaining inventory on a non-exclusive basis for a period not
to exceed SIXTY (60) days following such termination or expiration,
subject to payment of applicable royalties thereto. In no event,
however, may Licensee distribute and sell during such period an amount
of Licensed Product(s) that exceeds the average amount of Licensed
Product(s) sold during a consecutive SIXTY (60) day period during the
Term. If Licensee has any remaining inventory of the Licensed
Product(s) following such SIXTY (60) day period, Licensee shall, at
Licensor's option, make available such inventory to Licensor for
purchase at 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 physical inventory. In the event this Agreement is
terminated by Licensor for cause, Licensee shall be deemed to have
forfeited its sell-off rights hereunder. In addition to the forfeiture,
Licensor shall have recourse to all other legal remedies available to
it.
16. NOTICES.
Except as otherwise specifically provided herein, all notices
which either party hereto is required or may desire to give to the
other shall be given by addressing the same to the other at the address
set forth above, or at such other address as may be designated in
writing by any such party in a notice to the other given in the manner
prescribed in this paragraph. All such notices shall be sufficiently
given when the same shall be deposited so addressed, postage prepaid,
in the United States mail and/or when the same shall have been
delivered, so addressed, to a facsimile or over-night delivery service
and the date of said mailing shall be the date of the giving of such
notice and/or transmitted via facsimile with receipt of a confirming
copy.
17. NO PARTNERSHIP, ETC.
This Agreement does not constitute and shall not be construed
as constitution of a partnership or joint venture between Licensor and
Licensee. Neither party shall have any right to obligate or bind the
other party in any manner whatsoever, and nothing contained herein
shall give, or is intended to give, any rights of any kind to any third
persons.
#7633-SPJ - Page 13
18. NON-ASSIGNABILITY.
This Agreement shall bind and inure to the benefit of
Licensor, its successors and assigns. This Agreement is personal to
Licensee, and Licensee shall not sub-license nor franchise its rights
hereunder, and neither this Agreement nor any of the rights of Licensee
hereunder shall be sold, transferred or assigned by Licensee and no
rights hereunder shall devolve by operation of law or otherwise upon
any receiver, liquidator, trustee or other party.
19. CONSTRUCTION.
This Agreement shall be construed in accordance with the laws
of the State of California of the United States of America.
20. WAIVER, MODIFICATION ETC.
No waiver, modification or cancellation of any term or
condition of this Agreement shall be effective unless executed in
writing by the party charged therewith. No written waiver shall excuse
the performance of any acts other than those specifically referred to
therein. The fact that the Licensor has not previously insisted upon
Licensee expressly complying with any provision of this Agreement shall
not be deemed to be a waiver of Licensor's future right to require
compliance in respect thereof and Licensee specifically acknowledges
and agrees that the prior forbearance in respect of any act, term or
condition shall not prevent Licensor from subsequently requiring full
and complete compliance thereafter. If any term or provision of this
Agreement is held to be invalid or unenforceable by any court of
competent jurisdiction or any other authority vested with jurisdiction,
such holding shall not affect the validity or enforceability of any
other term or provision hereto and this Agreement shall be interpreted
and construed as if such term or provision, to the extent the same
shall have been held to be invalid, illegal or unenforceable, had never
been contained herein. Headings of paragraphs herein are for
convenience only and are without substantive significance.
21. ACCEPTANCE BY LICENSOR;
This instrument, when signed by Licensee shall be deemed an
application for license and not a binding agreement unless and until
accepted by Warner Bros. Consumer Products by signature of a duly
authorized officer and the delivery of such a signed copy to Licensee.
The receipt 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.
#7633-SPJ - Page 14
This Agreement shall be of no force or effect unless and until it is signed by
all of the parties listed below:
AGREED AND ACCEPTED: AGREED AND ACCEPTED:
LICENSOR: LICENSEE:
WARNER BROS. CONSUMER PRODUCTS, A ARTISAN HOUSE
TIME WARNER ENTERTAINMENT COMPANY
as Agent for Warner Bros., a division of Time
Warner Entertainment Company, L.P.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇ By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
-------------------------------- ---------------------------
▇▇▇▇ ▇. ▇▇▇▇▇
Vice President, Legal Affairs
Date: 12/3/96 Date: 11/22/96
#7633-SPJ - Page 15
EXHIBIT 1 #7633-SPJ
Dated
Warner Bros. Consumer Products
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
RE: Approval for Third Party Manufacturer
Gentlemen:
This letter will serve as notice to you that pursuant to Paragraph
10(b) of the License Agreement dated _____________, 199_ between your client
WARNER BROS. and ARTISAN HOUSE ("Licensee"), we have been engaged as the
manufacturer for LICENSEE in connection with the manufacture of the Licensed
Product(s) as defined in the aforesaid License Agreement. We hereby acknowledge
that we may not manufacture Licensed Product(s) for, or sell or distribute
Licensed Product(s) 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 Product(s). It is understood that this engagement
is on a royalty free basis.
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.
Sincerely,
/s/ Artisan House, Inc.
-----------------------------------
MANUFACTURER/COMPANY NAME
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
--------------------------------
signature
▇▇▇▇▇ ▇▇▇▇▇▇▇
--------------------------------
printed name
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇.
--------------------------------
address
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
--------------------------------
11/22/96
--------------------------------
dated
AGREED TO AND ACCEPTED:
WARNER BROS. CONSUMER PRODUCTS
By:
------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇
Vice President, Legal Affairs
Date:
----------------------------
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