EXHIBIT 4.3
AGREEMENT OF STRATEGIC RELATIONSHIP
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This AGREEMENT OF STRATEGIC RELATIONSHIP (the "agreement") is made and entered
into as of October 14, 1997, between Lucasfilm Ltd., a California corporation
("Lucasfilm"), on the one hand, located at P. O. ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
and Galoob Toys, Inc., a Delaware Corporation, located at ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ("Galoob"), on the other hand.
WHEREAS:
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A.Lucasfilm is a California corporation engaged in the production of
theatrical motion pictures and the licensing of intellectual property rights
related to such theatrical motion pictures;
B. Lucasfilm owns or controls rights in respect of the Property (as
hereinafter defined);
C. Galoob is engaged in the manufacture, distribution and sale of consumer
products in the form of toys including, without limitation, toys based on
entertainment intellectual properties licensed from third parties;
D. Lucasfilm and Galoob have a long standing relationship with respect to
the licensing of such rights; and.
E. Lucasfilm and Galoob wish to establish a strategic relationship whereby
Galoob would acquire the opportunity to license certain rights in and to
theatrical motion pictures produced by Lucasfilm for the manufacture,
distribution and sale of Products in the Territory, subject to the terms and
conditions of this agreement.
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, the parties agree as follows:
1. GRANT OF RIGHTS.
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Subject to the terms and conditions of this agreement, and in
consideration for all of Galoob's obligations hereunder, including,
without limitation, Galoob's agreement to grant to Lucasfilm a warrant as
provided in Paragraph 4 hereinbelow, Lucasfilm grants to Galoob an
exclusive, non-transferable, non-assignable right of first negotiation
(the "First Negotiation Right") and, as more specifically provided in
Subparagraph 3.3 hereinbelow, right of first refusal (the "First Refusal
Right") during the Term and
NYFS03...:\15\47315\0003\2475\AGRN017P.530
Agreement Between Lucasfilm Ltd. and Galoob Toys, Inc. dated October 14, 1997
throughout the Territory to license the Property as provided in Paragraph
3 hereinbelow:
1.1. to develop, design, manufacture, distribute, advertise, publicize,
market and sell the Products , for sale to retail Customers through all
channels of wholesale and retail distribution permitted hereunder; and
1.2. for reproduction on containers, packaging, display and promotional
material and in Advertising and Advertising Materials for the Products.
The First Negotiation Right and First Refusal Right shall be exercised by
Galoob in accordance with the terms and conditions contained in this
agreement.
2. TERM AND TERRITORY.
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2.1. Term. The term of Galoob's rights pursuant to this agreement with
respect to the First Negotiation Right and First Refusal Right (the
"Term") shall consist of the time period commencing as of the date hereof
and ending on October 14, 2009.
2.2. Territory. The territory of Galoob's rights hereunder (the
"Territory") consists of the world excluding China and India.
3. EXERCISE OF FIRST NEGOTIATION RIGHT AND FIRST REFUSAL RIGHT.
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The First Negotiation Right and in certain situations First Refusal Right
as to each theatrical motion picture which is an element of the Property
shall be exercisable by Galoob in accordance with the following procedure:
3.1. If Lucasfilm desires to license the rights referenced in
Subparagraphs 1.1 and 1.2 hereinabove with respect to any theatrical
motion picture which is an element of the Property, then Lucasfilm shall
notify Galoob in writing. Lucasfilm shall concurrently make available to
Galoob at Lucasfilm's premises all materials then extant regarding such
motion picture, including script, artwork, casting, to the extent
available.
3.2. Galoob shall thereafter have thirty (30) days from the date of such
notice (the "First Negotiation Period") to negotiate and enter into a
written agreement (the "Agreement"), which agreement shall incorporate no
less than all of the terms and conditions of that certain license
agreement between Galoob and ▇▇▇▇▇ Licensing Ltd. dated as of October 14,
1997 (the "Toy Agreement") with the exception of Royalties (Paragraph 8),
Advance (Paragraph 7), Term (Paragraph 2), Staffing/Overhead (Subparagraph
4.3), Minimum Sales Levels (Subparagraph 4.2), and the definition of
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Agreement Between Lucasfilm Ltd. and Galoob Toys, Inc. dated October 14, 1997
Licensed Property (Subparagraph 24.43) (collectively the "Excluded
Terms"); provided, however, that neither party shall be obligated to
conclude an Agreement with respect to a particular theatrical motion
picture which is an element of the Property. During the First Negotiation
Period, the parties shall negotiate with respect to the Excluded Terms,
provided that the Royalty Percentage shall be no less than ten percent
(10%) of Net Sales and no more than the rates specified in Paragraph 8 of
the Toy Agreement.
3.3. If the parties fail to enter into an Agreement with respect to such
theatrical motion picture during the First Negotiation Period, then
Lucasfilm shall be free to negotiate with and conclude an agreement with
any third party with respect to the rights that are incorporated in the
First Negotiation Right provided, that with respect to those theatrical
motion pictures set forth in Subparagraphs 5.2(a)(i), (ii), (iii), and
(iv) ("First Refusal Pictures"), Lucasfilm shall not conclude an agreement
with a third party with respect to such rights on terms that are less
favorable to Lucasfilm than those terms last offered by Galoob without
giving notice of such third party offer to Galoob and providing Galoob
with a ten (10) day period (the "First Refusal Period") within which to
enter into an Agreement with Lucasfilm on the same terms and conditions
contained in the third party offer (the "First Refusal Right"). If Galoob
fails to execute such Agreement within such First Refusal Period with
respect to a First Refusal Picture or within the First Negotiation Period
with respect to all other theatrical motion pictures included within the
Property, then Lucasfilm shall be free to enter into an agreement with
such third party with respect to a First Refusal Picture or with any third
party with respect to all other theatrical motion pictures subject to the
First Negotiation Right and such theatrical motion picture shall be
deleted from the definition of the Property hereunder.
3.4. Lucasfilm makes no representation or warranty that any rights which
otherwise would be subject to the First Negotiation Right and First
Refusal Right as to any theatrical motion picture produced by Lucasfilm
following the date hereof and during the Term will be owned or controlled
by Lucasfilm or that Lucasfilm will retain the right or ability to include
such theatrical motion picture as an element of the Property
notwithstanding the fact that at any point in time, Lucasfilm may have
owned or controlled such rights. In this connection, Galoob acknowledges
that Lucasfilm may enter into an arrangement with respect to a particular
theatrical motion picture (other than a grant of a license for the
Products alone for such theatrical motion picture) in which the grant of
such rights to a third party may be necessary in Lucasfilm's sole judgment
in order to finance, produce, distribute or exploit such theatrical motion
picture or any underlying rights relating to such theatrical motion
picture.
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Agreement Between Lucasfilm Ltd. and Galoob Toys, Inc. dated October 14, 1997
4. WARRANT.
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4.1. General. Concurrently with the execution of this Agreement, Galoob
shall grant to Lucasfilm a warrant (the "Warrant") for the purchase of up
to 1,450,000 fully paid and non-assessable shares of the common stock of
Galoob following exercise of the Warrant at a per share exercise price
equal to $15.00, subject to adjustment as provided in the warrant dated as
of the date hereof between Lucasfilm and Galoob (the "Warrant").
4.2. Additional Warrants. If at any time prior to the termination of the
Warrant, Galoob grants any Common Stock, Convertible Securities or Options
(as defined in the Warrant) to any officer, director, employee or
consultant of Galoob ("EE Stock"), then Galoob shall simultaneously
therewith grant to Lucasfilm a warrant ("Springing Warrant"), on the same
terms and conditions as the Warrant (except that the exercise price per
share of such Springing Warrant shall equal the exercise price per, or the
amount paid for each, share of such EE Stock), to purchase that number of
shares of Common Stock computed using the following formula:
X = .154(B/A)(X+Y)
Where:
X = The number of shares of Common Stock to be issued to Lucasfilm
upon exercise of the Springing Warrant
Y = The number of shares of Common Stock issued or issuable pursuant
to the grant of such EE Stock
A = The original number of Warrant Shares (as defined in the
Warrant)
B = The number of Warrant Shares owned by Lucasfilm on the date of
such grant of Additional Stock (as defined in the Warrant)
5. DEFINITIONS.
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5.1. "Products" means those products, goods and articles, within the
enumerated categories in Schedule II of the Toy Agreement and which are
based on or incorporating elements of the Property.
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Agreement Between Lucasfilm Ltd. and Galoob Toys, Inc. dated October 14, 1997
5.2. "Property" means, subject to the terms, conditions and restrictions
contained in Lucasfilm's or any Lucasfilm Related Entity's agreements with
persons, firms or entities rendering services or granting rights:
(a) the original titles, designs, character names and likenesses,
dialogue, music and sound effects, words, symbols, logographics and
the footage, photographs, artwork, visual representations of the
props, costumes, sets, special effects and any other original
creative elements) which appear in, have become directly associated
with, and as are depicted in, any theatrical motion picture produced
by Lucasfilm prior to or during the Term, as to which Lucasfilm owns
and controls the rights hereunder, subject to Section 3.4,
including, but not limited to:
(i) any theatrical motion picture based on or related to the
character "Indiana ▇▇▇▇▇," including without limitation:
Raiders of the Lost Ark, Indiana ▇▇▇▇▇ and the Temple of Doom,
Indiana ▇▇▇▇▇ and the Last Crusade, and any prequel or sequel
theatrical motion picture based on the "Indiana ▇▇▇▇▇"
character including the sequel theatrical motion picture
currently in development and tentatively entitled "Indiana
▇▇▇▇▇ IV" and intended to star ▇▇▇▇▇▇▇▇ ▇▇▇▇ and be directed
by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇;
(ii) the theatrical motion picture entitled "Willow" and any
sequels, prequels or remakes thereof, including, without
limitation, those based upon the "Shadow Wars" book series
written by ▇▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇;
(iii) any theatrical motion picture based upon the book series
entitled "Lucasfilm's Alien Chronicles" published by Berkeley
Books;
(iv) the theatrical motion pictures entitled "▇▇▇▇▇▇: The Man
and His Dream" and any sequels, prequels or remakes thereof;
and
(b) such original trademarks, tradenames, servicemarks and
servicenames owned by Lucasfilm and arising out of and which become
directly associated with any theatrical motion picture which is an
element of the Property, to the extent of Lucasfilm's rights in each
applicable country of the Territory under such country's applicable
trademark laws.
Notwithstanding anything set forth above, Property shall not include any
theatrical motion picture based on or related to "Star Wars", including
without limitation:
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Agreement Between Lucasfilm Ltd. and Galoob Toys, Inc. dated October 14, 1997
(A) those certain previously released theatrical motion
pictures (and the special editions thereof released
theatrically in 1997) entitled "STAR WARS: EPISODE IV -
A NEW HOPE," "STAR WARS: EPISODE V - THE EMPIRE STRIKES
BACK" and "STAR WARS: EPISODE VI - RETURN OF THE JEDI"
(the "Classic Trilogy"); and
(B) each of the first three succeeding prequel theatrical motion
pictures to the Classic Trilogy tentatively entitled "Episode I,"
"Episode II" and "Episode III," respectively (each such prequel
theatrical motion picture a "Prequel" herein).
In connection with such exclusion, the parties acknowledge that Galoob has
entered into the Toy Agreement with ▇▇▇▇▇ Licensing Ltd., the owner of the
applicable rights related to Star Wars.
6. GENERAL.
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6.1. Assignment. Subject to the other terms and conditions of this
Subparagraph 6.1, this agreement will bind and inure to the benefit of
each party and to their respective successors and assigns. Galoob shall
not voluntarily or by operation of law assign, sub-license, transfer,
encumber or otherwise dispose of all or part of any right or privilege
licensed to Galoob in this agreement, including to a Galoob Affiliate,
without Lucasfilm's prior written approval to be given or withheld in
Lucasfilm's absolute discretion. Lucasfilm shall not voluntarily or by
operation of law assign, transfer or otherwise dispose of all or part of
its rights or obligations under Section 4.2 without Galoob's prior written
approval to be given or withheld in Galoob's absolute discretion, except
that Lucasfilm may assign or otherwise dispose of all or part of such
rights or obligations in connection with a sale or other transfer of all
or substantially all of Lucasfilm's theatrical motion picture business.
For purposes of this Subparagraph 6.1, any change in control of Galoob,
whether through merger, acquisition, reorganization, liquidation,
foreclosure, involuntary sale in bankruptcy, or the purchase of
substantially all of Galoob's assets or otherwise, shall be deemed a
purported assignment subject to Lucasfilm's prior written approval. Any
attempted assignment, sublicense, transfer, encumbrance or other disposal
without such approval will be null and void and constitute a material
default and material breach of this agreement.
6.2. Governing Law. This agreement will be governed by and construed in
accordance with the laws of the federal laws of the United States and the
laws of the State of California applicable to agreements entered into, and
to be performed entirely, within California between California residents
(and excluding the United Nations Convention on Contracts for the
International Sale of Goods) without regard to choice
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Agreement Between Lucasfilm Ltd. and Galoob Toys, Inc. dated October 14, 1997
of law provisions and regardless of the place or places of its actual
execution or performance. Any suit, action or proceeding between or among
any of the parties hereto arising out of or related to this agreement will
be brought solely in the federal or state courts in the Northern District
of California, and Galoob hereby submits to the personal jurisdiction
thereof and agrees to such courts as the appropriate venue.
Notwithstanding the foregoing, Galoob agrees that, for purposes of
collecting monies due pursuant to this agreement, Galoob, at Lucasfilm's
election, may be subject to whatever local laws and courts have
jurisdiction in any country of the Territory over Galoob. Process in any
action or proceeding referenced to in this Subparagraph 6.2 may be served
on Galoob at the address for notices set forth in Subparagraph 6.4
hereinbelow.
6.3. Attorneys' Fees. In the event of any legal proceeding between the
parties arising out of or related to this agreement, the prevailing party
shall be entitled to recover, in addition to any other relief awarded or
granted, its costs and expenses (whether or not in connection with
litigation and including, without limitation, attorneys' fees and costs)
incurred in connection with any such proceeding.
6.4. Notices. Any notice to be given or served under this agreement shall
be in writing and shall be delivered to the parties addressed as set forth
below, or to such other address as either party shall notify the other
party of in writing, as follows: personally or sent by cable, telegram or
telemessage or by facsimile, telex, telecopy or other print out
communication mechanism or by first class, prepaid, registered or
certified mail (if available) post (air mail if posted to another country)
to the party to be served at the address set forth below in this
Subparagraph 6.4 or to such other address as either party may from time to
time notify in writing to the other. Such notice shall be deemed to have
been served: (a) immediately in the case of personal delivery; (b) in the
case of a cable, telegram or telemessage, on the first business day after
the receipt by the relevant service of the order therefor; (c) in the case
of facsimile, telex, telecopy or other print out mechanism, on the
expiration of four (4) hours from the time of transmission subject in the
case of telex or facsimile to proof by the sender that he/she holds an
acknowledgment (whether in mechanical form other otherwise) confirming its
receipt at its destination and subject in the case of facsimile or other
print out transmission in the absence of an acknowledgment to the original
notice being sent by post or by personal delivery in accordance with this
Subparagraph 6.4 not later than the next business day after such
transmission; and (d) in the case of postal delivery, on the second
business day following the date of posting (the fifth business day if
posted to another country) or on acknowledgment of receipt if earlier.
If to Lucasfilm:
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Agreement Between Lucasfilm Ltd. and Galoob Toys, Inc. dated October 14, 1997
For notices to Lucasfilm: P. O. ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇,
Attention: President; with a copy to: General Counsel.
For wire transfers: pursuant to Lucasfilm's written wire transfer
instructions
For deliveries requiring Lucasfilm's street address: ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
If to Galoob:
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Galoob Toys, Inc.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Executive Vice President
6.5. No Waiver. No action taken by either party pursuant to this
agreement, and no waiver by either party, whether express or implied, of
any provision or right in this agreement or any breach thereof, and no
failure of either party to exercise or enforce any of its rights under
this agreement, will constitute a continuing waiver with respect to such
provision or right or as a breach or waiver or any other provision or
right, whether or not similar.
6.6. Independent Contractors. The parties to this agreement are and shall
remain independent contractors. There is no relationship of partnership,
employer, employee, principal, agent, joint venture, employment, franchise
or agency between the parties. Except as expressly provided in this
agreement, neither party will have the power to bind the other or incur
obligations on the other's behalf without the other's prior written
approval and shall not represent that it has such right.
6.7. Nonexclusive Remedy. The exercise by either party of any remedy under
this agreement will be without prejudice to its other remedies under this
agreement or otherwise.
6.8. Severability. This agreement is severable. If any provision of this
agreement is found invalid or unenforceable in any jurisdiction, that
provision, as to that jurisdiction, will be ineffective to the extent of
such invalidity or unenforceability without rendering invalid or
unenforceable the other remaining provisions of this agreement, which
other remaining provisions will not be affected and shall remain in force,
to the maximum extent permissible.
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Agreement Between Lucasfilm Ltd. and Galoob Toys, Inc. dated October 14, 1997
6.9. Headings, Captions and Names. The name of this agreement, and all
headings and captions herein contained, are for reference and convenience
only and do not define, limit or expand the scope or intent of any
provision hereof and shall not be relied upon in or in connection with the
construction or interpretation of this agreement. The words "herein,"
"hereunder," "hereof" and similar terms refer to this entire agreement and
shall not be limited to the specific paragraphs or subparagraphs in which
they are used.
6.10. Capitalized Terms. All capitalized terms contained in this agreement
shall have the same meaning as set forth in the Toy Agreement, except as
otherwise expressly set forth herein.
6.11. Counterparts. This agreement may be executed in one or more
counterparts, and by facsimile, telex, telecopy or other print out
communication mechanism, each copy of which shall be deemed an original
and all of which, when taken together, shall constitute one and the same
instrument, but this agreement shall not be binding upon the parties until
it has been signed by both parties. The parties hereto agree that
facsimile signatures on a copy of this agreement shall be effective and
enforceable as if they were original signatures.
6.12. Further Instruments. Except as otherwise expressly provided in this
agreement, each party shall furnish to the other (and shall deliver and
cause to be executed, acknowledged and delivered to the other) any further
instruments, which such other party may reasonably require or deem
necessary from time to time to evidence, establish, protect, enforce,
defend or secure to such other party any or all of its rights hereunder or
to more effectuate or carry out the purposes, provisions or intent of this
agreement.
6.13. Entire Agreement. This agreement together with the Warrant
constitute the complete and entire agreement between the parties with
respect to the subject matter hereof, superseding and replacing any and
all prior agreements, negotiations, communications, and understandings
(both written and oral) regarding such subject matter. This agreement may
only be modified, or any rights under it waived, by a written document
executed by both parties.
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Agreement Between Lucasfilm Ltd. and Galoob Toys, Inc. dated October 14, 1997
LUCASFILM LTD. ("Lucasfilm"), GALOOB TOYS, INC. ("Galoob"),
a California Corporation a Delaware Corporation, on behalf of
itself and all Galoob Affiliates
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇ By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
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Title: Title: President and CEO
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