License Agreement for Powerpuff Girls - Warner Bros. Consumer Products and Bay Area Multimedia Inc.
RETAIL LICENSE
WARNER BROS. CONSUMER PRODUCTS
#12177-PPG
LICENSE AGREEMENT made March 8, 2000, by and between Warner Bros. Consumer
Products, a Division of Time Warner Entertainment Company, L.P., whose address
is 4000 Warner Blvd., Burbank, CA 91522 (hereinafter referred to as "LICENSOR")
and Bay Area Multimedia, whose address is 333 West Santa Clara Avenue, Suite
930, San Jose, CA 95113 Attention: Ray Musci 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) 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 31, 2000 and the remainder being spent over the
Term of this Agreement.
(b) LICENSED PROPERTY: The fictional cartoon characters as they appear in the
animated television series entitled "THE POWERPUFF GIRLS" as follows: BLOSSOM,
BUBBLES, BUTTERCUP, PROFESSOR UTONIUM, MS. KEANE, MAYOR, SARA BELLUM, TALKING
DOG, MOJO JOJO, FUZZY LUMPKINS, HIM, THE AMOEBA BOYS, SEDUCA/"IMA GOODLAD", THE
FLYING SQUIRREL, ROWDY ROUGH BOYS, BRATTY LITTLE PRINCESS, BROCCOLI ALIENS,
PASTE MONSTER, GANG GREEN GANG and ROACH COACH 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.
(c) LICENSED PRODUCT(S): Line of action/adventure products for the following
platforms:
i) Nintendo 64
ii) GameBoy Color (three titles)
iii) GameBoy Advance
IT IS UNDERSTOOD AND AGREED THAT NINTENDO DOLPHIN MAY BE ADDED AS AN
ADDITIONAL PLATFORM UPON THIRTY (30) DAYS PRIOR WRITTEN NOTICE FROM LICENSEE TO
LICENSOR. THE ADDITIONAL GUARANTEED CONSIDERATION FOR SUCH PLATFORM SHALL BE
$[*], PAYMENT TO BE MADE WITH THE NOTICE.
(d) MARKETING DATE: For purposes of subdivision 15(a)(vii), the Marketing Date
for the first Licensed Product(s) set forth above shall be no later than March
31, 2001. It is understood and agreed that all Licensed Product(s) must be
marketed no later than August 1, 2002.
* Confidential Portions Omitted and Filed Separately with the Commission.
<PAGE> 2
(e) TERRITORY: Worldwide excluding China, Guam and Saipan and for purposes of
this Agreement will be described as the following Regions:
NORTH AMERICA (UNITED STATES AND CANADA)
LATIN AMERICA
EUROPE
JAPAN
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. 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.
3. TERM.
The term ("Term") of the Agreement with respect to Licensed Product(s) referred
to above shall commence on March 1, 2000 and terminate on March 15, 2003.
Page 2
* Confidential Portions Omitted and Filed Separately with the Commission.
<PAGE> 3
4. CONSIDERATION.
In full consideration for the rights, licenses and privileges herein
granted 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:
<TABLE>
<CAPTION>
DATE AMOUNT
---- -----------
<S> <C>
Upon execution of this Agreement $[*]
On or before August 1, 2000 $[*]
On or before December 1, 2000 $[*]
On or before March 1, 2001 $[*]
</TABLE>
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) referred to above,
Licensee shall pay to Licensor a sum equal to [*] of all net sales
(as such term "net sales" is defined herein) by Licensee or any of its
affiliated, associated or subsidiary companies of the Licensed Product(s)
covered by this Agreement.
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) quantity discounts; and
(iii) actual returns not exceeding 10% 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
Licensee's costs of doing business and Licensor shall have no liability
therefor.
Page 3
* Confidential Portions Omitted and Filed Separately with the Commission.
<PAGE> 4
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 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(c) above including without limitation 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 arenas, 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, Premier Parks, Movie World, or their
affiliated companies. In addition, Licensor reserves the right to allow Six
Flags, Premier Parks 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, Premier Parks 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. 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
Page 4
* Confidential Portions Omitted and Filed Separately with the Commission.
<PAGE> 5
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 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 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
21477 Network Place
Chicago, IL 60673-1214
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:
Page 5
<PAGE> 6
FIRST CHICAGO NATIONAL BANK
Attention WBCP lockbox #21477
525 West Monroe
8th Floor Mail Room
Chicago, IL 60661
Telephone Number 312-732-5500
(c) Any payments which are made to Licensor hereunder after the due date
required therefor, shall bear interest at the then current prime rate plus six
(6%) percent (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.
(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 Licensee defaults in any of its obligations
under this Agreement, 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 13(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.
(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.
Page 6
<PAGE> 7
(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 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, 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 (except trademarks or copyrights in the Licensed
Property used in accordance with the terms of this Agreement), design, patent,
process, method or device; (iv) Licensee's noncompliance 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
Page 7
* Confidential Portions Omitted and Filed Separately with the Commission.
<PAGE> 8
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:
THE POWERPUFF GIRLS AND ALL RELATED CHARACTERS AND ELEMENTS ARE
TRADEMARKS OF CARTOON NETWORK(C) 20XX.
(The year date shall be as instructed by Licensor)
(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:
Page 8
<PAGE> 9
(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,
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) 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 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
Page 9
<PAGE> 10
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.
(vi) 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 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.
10. QUALITY OF LICENSED PRODUCT(S).
(a) Licensee agrees that the Licensed Product(s) shall be of high
Page 10
<PAGE> 11
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 seven (7) 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 six (6) 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 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.
(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.
(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 10(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
Page 11
* Confidential Portions Omitted and Filed Separately with the Commission.
<PAGE> 12
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 not to be unreasonably withheld. 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 Warner Bros. Animation
pursuant to a separate agreement between Licensee and Warner Bros. Animation,
subject to Warner Bros. Animation customary rates. Any payments made to Warner
Bros. Animation 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 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.
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 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 the trade by
Licensee.
(b) Except as to materials set forth in Paragraph 9(b)(ii)(b), Licensee shall
not be entitled to sublicense any of the Computer
Page 12
<PAGE> 13
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 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 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 hereunder. In no event shall
any such third party manufacturer agreement include the right to grant any
rights to subcontractors.
12. GOOD WILL.
Licensee recognizes the great value of the publicity and good will
associated with the Licensed Property and acknowledges: (i) such good will 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
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 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;
Page 13
<PAGE> 14
(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; specifically, it shall:
(i) Manufacture, distribute and sell the Licensed Product (s) in such
price and quality brackets as are required to meet competition by reputable
manufacturers of similar articles;
(ii) Make and maintain adequate arrangements for the distribution of the
Licensed Product(s) throughout the Territory;
(iii) Supply said retail outlets with the necessary types of the
Licensed Product(s) during the first and final thirds of each calendar year; and
(iv) 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.
(k) It shall at all times comply with all manufacturing, sales, distribution,
retail and marketing policies and strategies promulgated by Licensor from
time-to-time;
Page 14
<PAGE> 15
(1) If requested by Licensor to do so, it will utilize specific design elements
of the Licensed Property provided to Licensee by Licensor on hangtags, labels,
and other materials;
(m) It will participate in a maximum of two (2) Warner Bros. Consumer Products'
sponsored creative programs per contract year.
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 each Licensed Products and utilize each character set forth
in the Licensed Property ("Character") throughout the Territory on or before the
Marketing Date and thereafter fails to diligently and continuously manufacture,
distribute and sell each of the Licensed Products and utilize each Character
throughout 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 Products, which or wherein Licensee fails to meet said
Marketing Date requirement; 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:
or
(x) A manufacturer approved pursuant to Paragraph 11(b) hereof shall
sell Licensed Products to parties other than Licensee
Page 15
<PAGE> 16
or engage in conduct, which conduct if engaged in by Licensee would entitle
Licensor to terminate this Agreement; or
(xi) 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
(xii) 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
(xiii) Licensee has made a material misrepresentation or has omitted to
state a material fact necessary to make the statements not misleading; or
(xiv) Licensee shall breach any other agreement in effect between
Licensee on the one hand and Licensor on the other.
(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), (xi) and (xiii) 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 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.
Page 16
<PAGE> 17
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 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 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 harms 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.
(c) 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
Page 17
<PAGE> 18
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.
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.
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 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 Licensee
hereunder constitute, relate to, contain and form a part of confidential and
proprietary information of Licensor, 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"). Licensee acknowledges and agrees
that the Proprietary Information is highly confidential and that disclosure of
the Proprietary Information will result in serious harm to Licensor. Among other
damage, unauthorized disclosure of the Proprietary Information will (i) damage
Licensor's 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
Licensor's 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 Licensor's rights
and business. Except as expressly approved in writing by Licensor, Licensee
shall not reproduce or use the Proprietary Information 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 Licensee's
employees and third parties who have executed a Contributor's Agreement (as
provided in paragraph 8(b)) or third party manufacturer's agreement (as provided
in paragraph 10(b)) and been approved by
Page 18
<PAGE> 19
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.
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 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, BAY AREA MULTIMEDIA
a Division of Time Warner
Entertainment Company, L.P.
By: /s/ GARY R. SIMON By: /s/ RAY MUSCI
------------------------------ -------------------------------------
Gary R. Simon
Vice President & General Counsel
Date: 3/8/00 Date: 3/7/00
----------------------------- -----------------------------------
Page 19
<PAGE> 20
EXHIBIT 1 #12177-PPG
CONTRIBUTOR'S AGREEMENT
I, ___________________________________ , the undersigned ("Contributor"), have
been engaged by BAY AREA MULTIMEDIA ("Licensee") to work on or contribute to the
creation of Licensed Products, described as _______________________________, by
Licensee under an agreement between Licensee and 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.
Contributor:
BY:
-------------------------------------
signature
-------------------------------------
print name
-------------------------------------
address
-------------------------------------
-------------------------------------
country
-------------------------------------
date
Warner Bros. Consumer Products:
By:
----------------------------
Date:
--------------------------
Page 20
<PAGE> 21
EXHIBIT 2 #12177-PPG
<TABLE>
<S> <C>
MILESTONE 1 CONCEPT DESIGN: General description of proposed program, game
play and overall look and feel. Includes user interface, list
of characters and time line for production and release.
MILESTONE 2 FUNCTIONAL DESIGN SPECIFICATION/DESIGN DOCUMENT: Detailed
description of the program including: synopsis, overview and
logic flowchart.
MILESTONE 3 SCRIPT: Dialogue script.
MILESTONE 4 GAME PLAY AND CHARACTER ANIMATION:
MILESTONE 5 ALPHA: Initial combination of all product elements and art in
a usable working prototype.
MILESTONE 6 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 7 GOLDEN, MASTER: Final disk that results from Milestone 6 which
includes a fully tested program containing all elements
and game play.
</TABLE>
Page 21
<PAGE> 22
EXHIBIT 3 #12177-PPG
WARNER BROS. CONSUMER PRODUCTS
4000 Warner Boulevard
Bridge Building 156 South - 4th Floor
Burbank, CA 91522
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 BAY AREA
MULTIMEDIA ("Licensee"), 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:
--------------------------------
Gary R. Simon
Vice President & General Counsel
Date:
--------------------------------
Page 22