\nUpon execution of this Agreement $[*]<\/p>\nOn or before December 1, 2000 $[*]<\/p>\n
On or before April 1, 2001 $[*]<\/p>\n
On or before August 1, 2001 $[*]<\/p>\n
On or before December 1, 2001 $[*]
\n<\/c><\/s><\/caption>\n<\/table>\n
All Guaranteed Consideration paid by Licensee pursuant to this Subparagraph
\n(a) shall be applied against such royalties as are or have become due Licensor
\nunder Subparagraph (b). No part of the Guaranteed Consideration shall be
\nrepayable to Licensee.<\/p>\n
*Confidential Portions Omitted and Filed Separately with the Commission.<\/p>\n
Page 2
\n 3<\/p>\n
(b) ROYALTY PAYMENTS: With respect to the Licensed Product(s) referred to above,
\nLicensee shall pay to Licensor a sum equal to [*] of all net sales (as such term
\n“net sales” is defined herein) by Licensee or any of its affiliated, associated
\nor subsidiary companies of the Licensed Product(s) covered by this Agreement.<\/p>\n
The term “Net Sales” shall mean all monies billed or billable by
\nLicensee, from the exercise of its rights to distribute and sell Licensed
\nProduct(s) in the Territory before any allowances or discounts which have been
\ndeducted from the normal selling price, and any other payment charges
\nwhatsoever, less the following items only:<\/p>\n
(i) any sales, excise or value added taxes, which are separately
\n stated, and which are required to be collected from customers as
\n part of Net Sales, and which are payable to taxing authorities;<\/p>\n
(ii) quantity discounts; and<\/p>\n
(iii) actual returns not exceeding 10% of total sales.<\/p>\n
It is specifically understood and agreed that no deduction may be made
\nfor any bad debts, or any reserves therefor, any manufacturing costs, importing
\ncosts, selling costs, advertising costs, any real estate taxes, business license
\ntaxes, net income taxes, franchise taxes, withholding taxes or any other taxes
\nnot billed as part of net sales.<\/p>\n
Net Sales shall not include any sales by Licensee or its affiliated
\ncompanies to Licensee or its affiliated companies, the primary purpose of which
\nis the transfer of Licensed Product for eventual resale. Royalties as a result
\nof such sales shall be based upon and paid when the Licensed Product is
\nultimately sold to the distributor, retailer, consumer or other unaffiliated
\nthird party.<\/p>\n
Licensee will pay all taxes, customs, duties, assessments, excise
\nexcept as provided in sub-paragraph (i), and other charges levied upon the
\nimportation of or assessed against the Licensed Product under this Agreement, as
\nwell as all Licensees costs of doing business and Licensor shall have no
\nliability therefor.<\/p>\n
Royalties shall be payable concurrently with the periodic statements
\nrequired in Paragraph 6 hereof except to the extent offset by Guaranteed
\nConsideration theretofore remitted. It is a material term and condition of this
\nAgreement that Licensee report net sales and report and pay royalties on a
\ncountry-by-country basis. In the event Licensee fails to do so, Licensor shall
\nhave the right to terminate this Agreement, in accordance with the provisions of
\nParagraph 15 herein.<\/p>\n
Royalties earned in excess of the Guaranteed Consideration applicable to
\nthe Term hereof shall not offset any Guaranteed Consideration required in
\nrespect of the succeeding renewal term (if any); likewise, royalties earned in
\nexcess of the Guaranteed consideration applicable to the renewal term shall not
\noffset any Guaranteed Consideration applicable to any prior term.<\/p>\n
5. RESERVATION OF RIGHTS; PREMIUMS.<\/p>\n
(a) Licensor reserves all rights not expressly conveyed to Licensee hereunder,
\nand Licensor may grant licenses to others to use the Licensed Property, artwork
\nand textual matter in connection with other uses, services and products without
\nlimitation.<\/p>\n
(b) Notwithstanding anything to the contrary stated herein, Licensor, for itself
\nand its affiliates, specifically reserves the right, without limitation
\nthroughout the world, to use, or license any third party(s) of its or their
\nchoice to use the Licensed Property for the marketing, promotion, manufacture,
\ndistribution and sale of products similar or identical to those licensed herein<\/p>\n
*Confidential Portions Omitted and Filed Separately with the Commission.<\/p>\n
Page 3
\n 4<\/p>\n
in Paragraph 1(c) above including without limitation for sale through any
\ncatalogue(s) or online website produced or distributed by or on behalf of
\nLicensor or its affiliated companies, or for sale or distribution in any
\ntheaters, arenas or restaurants, or for sale or distribution in connection with
\nany home video product, including DVD or other formats, or for sale or
\ndistribution in any retail stores operated by or on behalf of Licensor, its
\naffiliated companies or franchisees, or for sale or distribution in any
\ntheme\/amusement parks operated by or on behalf of Licensor or its licensees, Six
\nFlags, Premier Parks, Movie World, or, their affiliated companies. In addition,
\nLicensor reserves the right to allow Six Flags, Premier Parks and Movie World to
\nmanufacture (or have manufactured by a third party) products similar or
\nidentical to those licensed herein for distribution or sale in theme and\/or
\namusement parks owned or operated by six Flags, Premier Parks and\/or Movie
\nWorld. Further, Licensor reserves the right to use, or license others to use,
\nand\/or manufacture products similar or identical to those licensed herein for
\nuse as premiums.<\/p>\n
(c) Licensee agrees that it will not use, or knowingly permit the use of, and
\nwill exercise due care that its customers likewise will refrain from the use of,
\nthe Licensed Products as a premium, except with the prior written consent of
\nLicensor. Subject to Licensor’s prior written approval as aforesaid, Licensee
\nshall pay to Licensor a sum equal to [*] of all premium sales. Any such
\nroyalties on premium sales shall not offset the Guaranteed Consideration
\nhereunder. For purposes of this paragraph, the term “premium” shall be defined
\nas including, but not necessarily limited to, combination sales, free or
\nself-liquidating items offered to the public in conjunction with the sale or
\npromotion of a product or service, including traffic building or continuity
\nvisits by the consumer\/customer, or any similar scheme or device, the prime
\nintent of which is to use the Licensed Products in such a way as to promote,
\npublicize and or sell the products, services or business image of the user of
\nsuch item.<\/p>\n
6. PERIODIC STATEMENTS.<\/p>\n
Within thirty (30) days after the end of the first calendar quarter after the
\ndate of execution of the License Agreement and promptly on the 15th day after
\nthe end of each calendar month thereafter, Licensee shall furnish to Licensor
\ncomplete and accurate statements certified to be accurate by Licensee, or if a
\ncorporation, by an officer of Licensee, showing with respect to all Licensed
\nProducts distributed and sold by Licensee during the preceding calendar month
\nthe (i) number of units; (ii) country in which manufactured, sold and\/or to
\nwhich shipped; (iii) description (as such term is defined below) of the Licensed
\nProducts; (iv) gross sales price; and (v) itemized deductions from gross sales
\nprice, and net sales price together with any returns made during the preceding
\ncalendar month. Such statements shall be in such formats as Licensor shall
\nrequire (which formats may be amended by Licensor from time to time), and shall
\nbe furnished to Licensor whether or not any of the Licensed Products have been
\nsold during calendar month to which such statements refer. In the event Licensee
\nhas Royalties earned in currencies other than in U.S. Dollars, then Licensee
\nshall convert said amounts into U.S. Dollars based upon the exchange rate
\npublished by the Wall Street Journal as of the fifteenth day of the applicable
\nmonth or if such day shall fall on a non-business day then as of the first
\nbusiness day following said fifteenth day. Receipt or acceptance by Licensor of
\nany of the statements furnished pursuant to this Agreement or of any sums paid
\nhereunder shall not preclude Licensor from questioning the correctness thereof
\nat any time, and in the event that any inconsistencies or mistakes are
\ndiscovered in such statements or payments, they shall immediately be rectified
\nand the appropriate payments made by Licensee. Upon demand of Licensor, Licensee
\nshall at its own expense, but not more than once in any twelve (12) month
\nperiod, furnish to Licensor a detailed statement by an independent certified
\npublic accountant showing the (i) number of units; (ii) country in which
\nmanufactured, sold and\/or to which shipped; (iii) description of<\/p>\n
*Confidential Portions Omitted and Filed Separately with the Commission.<\/p>\n
Page 4
\n 5<\/p>\n
the Licensed Products; (iv) gross sales price; and (v) itemized deductions from
\ngross sales price and net sales price of the Licensed Products covered by this
\nAgreement distributed and\/or sold by Licensee up to and including the date upon
\nwhich Licensor has made such demand. For purposes of this Subparagraph, the term
\n“Description” shall mean a detailed description of the Licensed Products
\nincluding the nature of each of the Licensed Products, any and all names and
\nlikenesses, whether live actors or animated characters, from the Licensed
\nProperty utilized on the Licensed Products and\/or any related packaging and\/or
\nwrapping material, and any other components of the Licensed Property utilized on
\nthe Licensed Products and\/or any related packaging and\/or wrapping material. In
\nthe event Licensor is responsible for the payment of any additional third party
\nparticipations based on Licensee not reporting by character name and likeness as
\nprovided above, Licensee shall be responsible for reimbursing Licensor for the
\nfull amount of all such third party claims, including without limitation, the
\nparticipation itself, interest, audit and attorneys’ fees. Licensee understands
\nand agrees that it is a material term and condition of this Agreement that
\nLicensee include the Description on all statements. In the event Licensee fails
\nto do so, Licensor shall have the right to terminate this Agreement, in
\naccordance with the provisions of Paragraph 15 herein.<\/p>\n
(b) For the statements and payments required hereunder (please reference the
\ncontract number(s) on all statements and payments) if the United States Postal
\nService is used deliver to the following:<\/p>\n
WARNER BROS. CONSUMER PRODUCTS
\n 21477 Network Place
\n Chicago, IL 60673-1214<\/p>\n
For the statements and payments required hereunder (please reference the
\ncontract number(s) on all statements and payments) if sent by Federal Express
\nor any other Courier Service deliver to the following:<\/p>\n
BANK ONE
\n Attention WBCP lockbox #21477
\n 525 West Monroe
\n 8th Floor Mail Room
\n Chicago, IL 60661
\n Telephone Number 312-732-5500<\/p>\n
(c) Any payments which are made to Licensor hereunder after the due date
\nrequired therefor, shall bear interest at the then current prime rate plus six
\n(6%) percent (or the maximum rate permissible by law, if less) from the date
\nsuch payments are due to the date of payment. Licensor’s right hereunder to
\ninterest on late payments shall not preclude Licensor from exercising any of its
\nother rights or remedies pursuant to this Agreement or otherwise with regard to
\nLicensee’s failure to make timely remittances.<\/p>\n
(d) Licensee hereby grants to Licensor (subject to any liens or security
\ninterests granted by Licensee which are approved in writing by Licensor) a
\nfirst-priority lien and security interest in Licensee’s inventory, contract
\nrights and accounts receivable, and all proceeds thereof, with respect to the
\nLicensed Products only. Licensee further agrees to provide, at Licensor’s
\nrequest: (i) a letter of credit issued in favor of Licensor from a financial
\ninstitution as approved by Licensor in an amount up to the Guaranteed
\nConsideration; and\/or (ii) such other form of security acceptable to Licensor.
\nLicensee agrees to execute all documentation as Licensor may require in
\nconnection with perfecting such security interests.<\/p>\n
7. BOOKS AND RECORDS.<\/p>\n
(a) Licensee shall keep, maintain and preserve (in Licensee’s principal place of
\nbusiness) for at least two (2) years following termination or expiration of the
\nTerm of this Agreement or any<\/p>\n
Page 5
\n 6
\nrenewal(s) hereof (if applicable), complete and accurate records of accounts
\nincluding, without limitation, purchase orders, inventory records, invoices,
\ncorrespondence, banking and financial and other records pertaining to the
\nvarious items required to be submitted by Licensee as well as to ensure
\nLicensee’s compliance with local laws as required pursuant to Paragraph 13(k)
\nhereof. Such records and accounts shall be available for inspection and audit at
\nany time or times during or after the Term of this Agreement or any renewal(s)
\nhereof (if applicable) during reasonable business hours and upon reasonable
\nnotice by Licensor or its nominees. Licensee agrees not to cause or permit any
\ninterference with Licensor or nominees of Licensor in the performance of their
\nduties. During such inspections and audits, Licensor shall have the right to
\ntake extracts and\/or make copies of Licensee’s records as it deems necessary.<\/p>\n
(b) The exercise by Licensor in whole or in part, at any time of the right to
\naudit records and accounts or of any other right herein granted, or the
\nacceptance by Licensor of any statement or statements or the receipt and\/or
\ndeposit by Licensor, of any payment tendered by or on behalf of Licensee shall
\nbe without prejudice to any rights or remedies of Licensor and such acceptance,
\nreceipt and\/or deposit shall not preclude or prevent Licensor from thereafter
\ndisputing the accuracy of any such statement or payment.<\/p>\n
(c) If pursuant to its right hereunder Licensor causes an audit and inspection
\nto be instituted which thereafter discloses a deficiency between the amount
\nfound to be due to Licensor and the amount actually received or credited to
\nLicensor, then Licensee shall, upon Licensor’s demand, promptly pay the
\ndeficiency, together with interest thereon at the then current prime rate from
\nthe date such amount became due until the date of payment, and, if the
\ndeficiency is more than [*] of all royalties paid by Licensee during the period
\ncovered by the audit, then Licensee shall pay the reasonable costs and expenses
\nof such audit and inspection.<\/p>\n
8. INDEMNIFICATIONS.<\/p>\n
(a) During the Term, and continuing after the expiration or termination of this
\nAgreement, Licensor shall indemnify Licensee and shall hold it harmless from any
\nloss, liability, damage, cost or expense, arising out of any claims or suits
\nwhich may be brought or made against Licensee by reason of the breach by
\nLicensor of the warranties or representations as set forth in Paragraph 12
\nhereof, provided that Licensee shall give prompt written notice, and full
\ncooperation and assistance to Licensor relative to any such claim or suit and
\nprovided, further, that Licensor shall have the option to undertake and conduct
\nthe defense of any suit so brought. Licensee shall not, however, be entitled to
\nrecover for lost profits. Licensee shall cooperate fully in all respects with
\nLicensor in the conduct and defense of said suit and\/or proceedings related
\nthereto. <\/p>\n
(b) During the Term, and continuing after the expiration or termination of this
\nAgreement, Licensee shall indemnify Licensor, Time Warner Entertainment Company,
\nL.P. (“TWE”) and each of its affiliates and shall hold them harmless from any
\nloss, liability, damage, cost or expense arising out of any claims or suits
\nwhich may be brought or made against Licensor, TWE or any of its affiliates, by
\nreason of: (i) any breach of Licensee’s covenants and undertakings hereunder;
\n(ii) any unauthorized use by Licensee of the Licensed Property; (iii) any use of
\nany trademark, or copyright (except trademarks or copyrights in the Licensed
\nProperty used in accordance with the terms of this Agreement), design, patent,
\nprocess, method or device; (iv) Licensee’s noncompliance with any applicable
\nfederal, state or local laws or with any other applicable regulations; and (v)
\nany alleged defects and\/or inherent dangers (whether obvious or hidden) in the
\nLicensed Products or the use thereof.<\/p>\n
(c) With regard to 8(b) above, Licensee agrees to obtain, at its own expense,
\nComprehensive Commercial General Liability Insurance, including product
\nliability and contractual liability coverage<\/p>\n
*Confidential Portions Omitted and Filed Separately with the Commission.<\/p>\n
Page 6
\n 7
\nproviding adequate protection for Licensor and Licensee against any such claims
\nor suits in amounts no less than three million dollars ($3,000,000) per
\noccurrence, combined single limits. Simultaneously with the execution of this
\nAgreement, Licensee undertakes to submit to Licensor a fully paid policy or
\ncertificate of insurance naming Licensor, TWE and each of its affiliates as
\nadditional insured parties and, requiring that the insurer shall not terminate
\nor materially modify such policy or certificate of insurance without written
\nnotice to Licensor at least twenty (20) days in advance thereof. Such insurance
\nshall at all times be primary and not contributory with any insurance carried by
\nLicensor, TWE or any of their affiliates. Further the delivery of the policy or
\ncertificate, as provided in this Paragraph 8(c) are material obligations of
\nLicensee.<\/p>\n
9. ARTWORK; TRADEMARKS AND COPYRIGHTS.<\/p>\n
Licensee shall, within thirty (30) days of receiving an invoice, pay
\nLicensor for artwork executed for Licensee by Licensor (or by third parties
\nunder contract to Licensor) for use in the development of the Licensed Products
\nand any related packaging, display and promotional materials at Licensor’s
\nprevailing commercial art rates. The foregoing shall include any artwork that,
\nin Licensor’s opinion, is necessary to modify artwork initially prepared by
\nLicensee and submitted for approval. Estimates of artwork charges are available
\nupon request.<\/p>\n
(a) TRADEMARKS:<\/p>\n
(i) Licensee agrees that it will cause to appear indelibly and legibly on each
\nof the Licensed Product(s) and all advertising material, tags, labels and
\ndevices bearing the Licensed Property, the following notice or such other notice
\nas may be approved by Licensor:<\/p>\n
DEXTER’S LABORATORY AND ALL RELATED CHARACTERS AND ELEMENTS ARE
\n TRADEMARKS OF CARTOON NETWORK (C) 200X.<\/p>\n
(The year date shall be as instructed by Licensor)<\/p>\n
(ii) Licensee further agrees that it will not apply for or seek to
\nobtain trademark registration for the Licensed Property and that Licensor may,
\nat its option, apply for and obtain in its own name trademark registrations for
\nthe Licensed Product(s), and that, upon request, Licensee will furnish necessary
\nspecimens or facsimiles for such purpose free of cost, as well as evidence of
\nthe date of first shipment or sale of each Licensed Product in interstate or
\nforeign or other federally regulable U.S. commerce and, if earlier, also in
\nintrastate commerce.<\/p>\n
(iii) Licensee agrees that if Licensee receives knowledge of the use of
\nthe Licensed Property by anyone other than Licensee on Licensed Product(s) or
\nproducts confusingly similar thereto, Licensee will call such fact to the
\nattention of Licensor. Licensor shall then have the option to institute legal
\nproceedings to prevent such use, and Licensee shall cooperate and assist in the
\nprosecution of any such action. If demanded by Licensor, Licensee shall join in
\nor cooperate in the prosecution of any such legal proceeding as may be
\ninstituted by Licensor. Any such legal proceedings shall be solely at Licensor’s
\nexpense. If Licensee is joined in such proceeding, Licensor shall indemnify and
\nhold harmless Licensee from and against any claim, sanction, liability, damages,
\nattorney’s fees, judgments or orders of any kind arising out of such proceeding.<\/p>\n
(b) COPYRIGHTS:<\/p>\n
(i) GAME PROGRAM: The copyright in and to the computer program (object
\nand source code) for any game which is incorporated in the Licensed Product
\n(herein the “Program”) shall be owned as follows:<\/p>\n
Page 7
\n 8<\/p>\n
(a) If a program is created solely by Licensee or an
\n approved sublicensee under license or authority of
\n Licensee without any contribution by Licensor to the
\n creation of that Program in the form of programming
\n effort, then the copyright in and to such Program shall
\n be owned solely by Licensee;<\/p>\n
(b) If a Program is created jointly by Licensee and
\n Licensor, then the copyright in and to such Program
\n shall be owned jointly by Licensor and Licensee.<\/p>\n
(ii) AUDIO-VISUAL DISPLAY: The copyright in and to the images displayed
\non the screen and the sounds produced during the course of the game play,
\nincluding all possible combinations and sequences thereof, in both the “attract
\nmode” and the “play mode” and the underlying script for therefor (herein the
\n“Audio-Visual Display”) shall be owned as follows:<\/p>\n
(a) The copyright in and to all elements of the Audio-Visual
\n Display constituting pre-existing material of Licensor
\n from Licensor’s fictional cartoon characters as set
\n forth in Paragraph 1(a) “Licensed Property” such as,
\n without limitation, the characters portrayed in such
\n television series or any reproductions thereof
\n (hereinafter “Pre-Existing Material”), are acknowledged
\n to be the sole and exclusive property of Licensor and
\n shall remain the sole and exclusive property of
\n Licensor;<\/p>\n
(b) The copyright in and to all elements of the Audio-Visual
\n Display constituting original material created by
\n Licensee shall be the sole and exclusive property of
\n Licensee. Licensee retains sole and exclusive ownership
\n of all of Licensee’s inventions, whether patented or
\n not, trade secrets and similar information and processes
\n of a confidential nature, and works of authorship,
\n whether copyrighted or not, whether manifested in the
\n Audio-Visual Display or not, and whether embodied in
\n hardware or software used to create the Audio-Visual
\n Display. Licensee shall be free to use and license
\n others to use elements of the Audio-Visual Display owned
\n by Licensee.<\/p>\n
(iii) PACKAGING, ADVERTISING AND PROMOTIONAL MATERIALS: Except as
\notherwise provided herein, the copyrights in and to any original material, other
\nthan the Programs and the Audio-Visual Displays, which is created by or for
\nLicensee for the purpose of packaging, advertising or promoting the Licensed
\nProduct(s), including but not limited to the enclosure for the Licensed
\nProduct(s), all cartons, containers, packing and wrapping material, tags,
\nlabels, imprints or other devices, and all advertising and promotional materials
\n(all such material hereinafter referred to as the “Other Materials”), shall be
\nowned solely and exclusively by Licensee. Providing that the copyright in and to
\nall elements of the Other Materials that constitute Licensor’s Pre-Existing
\nMaterial, material furnished to Licensee by or on behalf of Licensor or any
\nmaterial that is derivative of the foregoing, is acknowledged to be owned solely
\nand exclusively by Licensor and shall remain the sole and exclusive property of
\nLicensor.<\/p>\n
(iv) LIMITATIONS ON OWNERSHIP RIGHTS: The parties agree and acknowledge
\nthat each shall have the same right as any person or party with regard to any
\nmaterial incorporated in the Licensed Product(s), Other Materials, Programs, or
\nAudio-Visual Displays which is in the public domain (provided that it has not
\nentered into the public domain as the result of an act or omission in breach of
\nthis Agreement or any other written agreement by or between the parties hereto).<\/p>\n
Page 8
\n 9<\/p>\n
(v) ARTWORK: The Licensed Property shall be displayed or used only in
\nsuch form and in such manner as has been specifically approved in writing by
\nLicensor in advance and Licensee undertakes to assure usage of the trademark(s)
\nand characters) solely as approved hereunder. Licensee further agrees and
\nacknowledges that any and all Artwork (defined below) created, utilized,
\napproved and\/or authorized for use hereunder by Licensor in connection with the
\nLicensed Products or which otherwise features or includes the Licensed Property
\nshall be owned in its entirety exclusively by Licensor, “Artwork” as need herein
\nshall include, without limitation, all pictorial, graphic, visual, audio,
\naudio-visual, digital, literary, animated, artistic, dramatic, sculptural,
\nmusical or any other type of creations and applications, whether finished or
\nnot, including, but not limited to, animation, drawings, designs, sketches,
\nimages, tooling and tooling aids, illustrations, film, video, electronic,
\ndigitized or computerized information, software, object code, source code,
\non-line elements, music, text, dialogue, stories, visuals, effects, scripts,
\nvoiceovers, logos, one-sheets, promotional pieces, packaging, display materials,
\nprinted materials, photographs, interstitials, notes, shot logs, character
\nprofiles and translations, produced by Licensee or for Licensee, pursuant to
\nthis Agreement. Licensor reserves for itself or its designees all rights to use
\nany and all Artwork created, utilized and\/or approved hereunder without
\nlimitation. Licensee acknowledges that, as between Licensor and Licensee, the
\nLicensed Property and Artwork and all other depictions expressions and
\nderivations thereof, and all copyrights, trademarks and other proprietary rights
\ntherein are owned exclusively by Licensor and Licensee shall have no interest in
\nor claim thereto, except for the limited right to use the same pursuant to this
\nAgreement and subject to its terms and conditions.<\/p>\n
(vi) WORK-MADE-FOR-HIRE: Licensee agrees and acknowledges that any
\nArtwork created by Licensee or for Licensee hereunder is a “work made for hire”
\nfor Cartoon Network under the U.S. Copyright Act, and any and all similar
\nprovisions of law under other jurisdictions, and that Cartoon Network is the
\nauthor of such works for all purposes, and that Cartoon Network is the exclusive
\nowner of all the rights comprised in the undivided copyright and all renewals,
\nextensions and reversions therein, in and to such works in perpetuity and
\nthroughout the universe. Licensee hereby waives and releases in favor of Cartoon
\nNetwork all rights (if any) of “droit moral,” rental rights and similar rights
\nin and to the Artwork (the “Intangible Rights”) and agrees that Cartoon Network
\nshall have the right to revise, condense, abridge, expand, adapt, change,
\nmodify, add to, subtract from, re-title, re-draw, re-color, or otherwise modify
\nthe Artwork, without the consent of Licensee. Licensee hereby irrevocably
\ngrants, transfers and assigns to Licensor all right, title and interest,
\nincluding copyrights, trademark rights, patent rights and other proprietary
\nrights, it may have in and to the Artwork, in perpetuity and throughout the
\nuniverse, and to all proprietary depictions, expressions or derivations of the
\nLicensed Property created by or for Licensee. Licensee acknowledges that
\nLicensor shall have the right to terminate this Agreement in the event Licensee
\nasserts any rights (other than those specifically granted pursuant to this
\nAgreement) in or to the Licensed Property or Artwork.<\/p>\n
Licensee hereby warrants that any and all work created by Licensee under
\nthis Agreement apart from the materials provided to Licensee by Licensor is and
\nshall be wholly original with or fully cleared by Licensee and shall not copy or
\notherwise infringe the rights of any third parties, and Licensee hereby
\nindemnifies Licensor and will hold Licensor harmless from, any such claim of
\ninfringement ox otherwise involving Licensee’s performance hereunder. At the
\nrequest of Licensor, Licensee shall execute such form (a) of assignment of
\ncopyright or other papers as Licensor may reasonably request in order to confirm
\nand vest in Licensor the rights in the properties as provided for herein. In
\naddition, Licensee hereby appoints Licensor as Licensee’s<\/p>\n
Page 9
\n 10<\/p>\n
Attorney-in-Fact to take such actions and to make, sign, execute, acknowledge
\nand deliver all such documents as may from time to time be necessary to confirm
\nin Licensor, its successors and assigns, all rights granted herein. If any third
\nparty makes or has made any contribution to the creation of Artwork authorized
\nfor use hereunder, Licensee agrees to obtain from such party a full confirmation
\nand assignment of rights so that the foregoing rights shall vest fully in
\nLicensor, in the form of the Contributor’s Agreement attached hereto as Exhibit
\n1 and by this reference made a part hereof, prior to commencing work, and
\nsubject to the prior written approval of Licensor, and subject to the prior
\nwritten approval of Licensor ensuring that all rights in the Artwork and
\nLicensed Property arise in and are assigned to Licensor. Promptly upon entering
\ninto each such Contributor’s Agreement, Licensee shall give Licensor a copy of
\nsuch Contributor’s Agreement. Licensee assumes all responsibility for such
\nparties and agrees that Licensee shall bear any and all risks arising out of or
\nrelating to the performance of services by them and to the fulfillment of their
\nobligations under the Contributor’s Agreement.<\/p>\n
(vii) USE OF THIRD PARTY CONTENT: Licensee shall not use any third party
\ncontent or technology in the Licensed Product(s), including without limitation
\nany audio elements from the soundtracks of any motion picture or television
\nseries based upon the Licensed Property without Licensor’s prior written
\napproval, and unless: (i) Licensee is expressly permitted to use such third
\nparty content or technology pursuant to written agreements with all third party
\nrights holders; and (ii) Licensee has acquired for Licensee and Licensor all
\nrights, permissions, clearances, releases or other authorizations necessary to
\nuse such third party content or technology in conjunction with the development
\nand exploitation of the Licensed Products(s) anywhere in the Territory by
\nLicensee or Licensor or by either party’s licensees, successors or assigns in
\nperpetuity. Licensee shall be responsible, in perpetuity, for all payments in
\nconnection with the use of third party content or technology, except as the
\nparties mutually agree upon at such time as Licensor approves of the use of
\nsuch third party content or technology. Licensee shall have the right to review
\nall Licensee agreements with third parties to ensure their acceptability and
\nLicensee shall deliver such agreements to Licensor within fourteen (14) business
\ndays of Licensor’s request therefor.<\/p>\n
10. QUALITY OF LICENSED PRODUCT(S).<\/p>\n
(a) Licensee agrees that the Licensed Product(s) shall be of high standard and
\nof such style, appearance and quality as shall be adequate and suitable to their
\npromotion, distribution and sale to the best advantage of Licensee and Licensor.
\nThe quality and style of such product and its cartons and containers shall be
\nsubject to Licensor’s approval. To this end Licensee shall, before selling or
\ndistributing any of the Licensed Product(s), furnish to Licensor free of cost
\nfor its written approval as to quality and style, the materials specified in the
\n“MILESTONES” set forth on Exhibit 2 attached hereto. In the event that any
\nMilestone deliverable shall not have been approved, disapproved, or otherwise
\ncommented upon within ten (10) business days after receipt thereof by Licensor,
\nthen Licensee shall have the right to so notify Licensor of such fact by
\nfacsimile or by overnight delivery service. In the event that Licensor fails to
\nthen approve, disapprove or otherwise comment upon the submitted items within
\nseven (7) business days after receipt by it of such communication, any items so
\nsubmitted shall be deemed to have been approved. Licensee shall, in addition,
\nthereafter furnish to Licensor free of cost, for its written approval, [*]
\nproduction samples of each such Licensed Product(s) together with their cartons
\nand containers including packaging and wrapping material, to ensure quality
\ncontrol simultaneously upon distribution to the public. In addition, Licensee
\nshall provide Licensor with six (6) catalogs which display all of Licensee’s
\nproducts, not just the Licensed Products, if such catalogs exist. Further,
\nLicensor shall have the right to purchase any and all Licensed Products in any
\nquantity at the maximum discount price Licensee charges its best<\/p>\n
*Confidential Portions Omitted and Filed Separately with the Commission.<\/p>\n
Page 10
\n 11<\/p>\n
customer purchasing the same quantity of Licensed Products under the same terms
\nand conditions for delivery during the same period of time in the same general
\ngeographical area for sales throughout the same sales channel.<\/p>\n
After samples of Licensed Product(s) have been approved pursuant to this
\nparagraph, Licensee shall not depart therefrom in any material respect without
\nLicensor’s prior written consent or add any additional element(s) such as
\nin-pack flyers, business reply cards and so on without Licensor’s approval in
\neach case.<\/p>\n
Licensor shall have the right to withdraw its approval of samples if the
\nquality of any Licensed Product ceases to be acceptable.<\/p>\n
(b) Any modification of a Licensed Product must be submitted in advance for
\nLicensor’s written approval as if it were a new Licensed Product. Approval of a
\nLicensed Product which uses particular artwork does not imply approval of such
\nartwork for use with a different Licensed Product.<\/p>\n
(c) Licensed Products must conform in all material respects to the final
\nproduction samples approved by Licensor. If in Licensor’s reasonable judgement,
\nthe quality of a Licensed Product originally approved has deteriorated in later
\nproduction runs, or if a Licensed Product has otherwise been altered, Licensor
\nmay, in addition to other remedies available to it, require that such Licensed
\nProduct be immediately withdrawn from the market.<\/p>\n
(d) If any changes or modifications are required to be made to any material
\nsubmitted to Licensor for its written approval in order to ensure compliance
\nwith Licensor’s specifications or standards of quality, Licensee agrees promptly
\nto make such changes or modifications.<\/p>\n
(e) Licensee shall permit Licensor to inspect Licensee’s manufacturing
\noperations, testing and payroll records (including those operations and records
\nof any supplier or manufacturer approved pursuant to Paragraph 10(b) hereof)
\nwith respect to the Licensed Products.<\/p>\n
(f) Subject to the terms hereof, Licensee may utilize the Licensed Property for
\nsuch advertising, promotional and display materials for the Licensed Product(s)
\nas in its judgment will best promote the sale of said Licensed Product(s).
\nLicensee agrees that it will not use the Licensed Property or any reproduction
\nthereof in any advertising, promotional or display material or in any other
\nmanner without Licensor’s prior written approval. Without limiting the foregoing
\nno television commercials may be utilized under this License without the
\nspecific prior approval of Licensor. In the event that any advertising,
\npromotional or display material submitted to Licensor shall not have been
\napproved, disapproved or otherwise commented upon within thirty (30) days after
\nreceipt thereof by Licensor, then Licensee shall have the right to so notify
\nLicensor of such fact by facsimile or by overnight delivery service. In the
\nevent that Licensor fails to then approve, disapprove or otherwise comment upon
\nthe submitted items within ten (10) business days after receipt by it of such
\nfacsimile or overnight delivery service any items so submitted shall be deemed
\nto have been approved. A reasonable number of production copies of all such
\nadvertising, promotional and display materials will be furnished to Licensor
\nfree of charge.<\/p>\n
(g) To avoid confusion of the public, Licensee agrees not to associate other
\ncharacters or properties with the Licensed Property on the Licensed Products or
\nin any packaging, promotional or display materials unless Licensee receives
\nLicensor’s prior written approval. Furthermore, Licensee agrees not to use the
\nLicensed Property (or any component thereof) on any business sign, business
\ncards, stationery or forms, nor as part of the name of Licensee’s business or
\nany division thereof.<\/p>\n
Page 11
\n 12<\/p>\n
(h) Licensee shall use its best efforts to notify its customers of the
\nrequirement that Licensor has the right to approve all promotional, display and
\nadvertising material pursuant to this Agreement.<\/p>\n
(i) It is understood and agreed that any animation used in electronic media,
\nincluding but not limited to animation for television commercials and character
\nvoices for radio commercials, shall be produced by Warner Bros. Animation
\npursuant to a separate agreement between Licensee and Warner Bros. Animation,
\nsubject to Warner Bros. Animation customary rates. Any payments made to Warner
\nBros. Animation for such animation shall be in addition to and shall not offset
\nthe Consideration set forth in Paragraph 4 above.<\/p>\n
(j) Licensor’s approval of Licensed Product(s) (including without limitation,
\nthe Licensed Products) themselves as well as promotional, display, and
\nadvertising materials) shall in no way constitute or be construed as an approval
\nby Licensor of Licensee’s use of any trademark, copyright and\/or other
\nproprietary materials, not owned by Licensor.<\/p>\n
11. DISTRIBUTION; SUBLICENSE\/MANUFACTURE.<\/p>\n
(a) Licensee shall sell the Licensed Products either to jobbers, wholesalers,
\ndistributors or retailers for sale or resale and distribution directly to the
\npublic. Licensee shall not sell the Licensed Products through any cable home
\nshopping service or through electronic media, including on any on-line network
\nor service. If Licensee sells or distributes the Licensed Products at a special
\nprice, directly or indirectly, to itself, including without limitation, any
\nsubsidiary of Licensee (including any affiliated distributors) or to any other
\nperson, firm, or corporation affiliated with Licensee or its officers, directors
\nor major stockholders, for ultimate sale to unrelated third parties, Licensee
\nshall pay royalties with respect to such sales or distribution, based upon the
\nprice generally charged the trade by Licensee.<\/p>\n
(b) Except as to materials set forth in Paragraph 9(b)(ii)(b), Licensee shall
\nnot be entitled to sublicense any of the Computer Program or Audio-Visual
\nDisplay developed by Licensee pursuant to this Agreement. In the event Licensee
\nis not the manufacturer of the Licensed Products, Licensee shall, subject to the
\nprior written approval of Licensor, which approval shall not be unreasonably
\nwithheld, be entitled to utilize a third party manufacturer in connection with
\nthe manufacture and production of the Licensed Products, provided that such
\nmanufacturer shall execute a letter in the form of Exhibit 3 attached hereto and
\nby this reference made a part hereof. In such event, Licensee shall remain
\nprimarily obligated under all of the provisions of this Agreement and any
\ndefault of this Agreement by such manufacturer shall be deemed a default by
\nLicensee hereunder. In no event shall any such third party manufacturer
\nagreement include the right to grant any rights to subcontractors.<\/p>\n
12. GOODWILL.<\/p>\n
Licensee recognizes the great value of the publicity and goodwill
\nassociated with the Licensed Property and acknowledges: (i) such goodwill is
\nexclusively that of Licensor; and (ii) that the Licensed Property has acquired a
\nsecondary meaning as Licensor’s trademarks and\/or identifications in the mind of
\nthe purchasing public. Licensee further recognizes and acknowledges that a
\nbreach by Licensee of any of its covenants, agreements or undertakings hereunder
\nwill cause Licensor irreparable damage, which cannot be readily remedied in
\ndamages in an action at law, and may, in addition thereto, constitute an
\ninfringement of Licensor’s copyrights, trademarks and\/other proprietary rights
\nin, and to the Licensed Property, thereby entitling Licensor to equitable
\nremedies, and costs.<\/p>\n
Page 12
\n 13<\/p>\n
13. LICENSOR’S WARRANTIES AND REPRESENTATIONS.<\/p>\n
Licensor represents and warrants to Licensee that:<\/p>\n
(a) It has, and will have throughout the Term of this Agreement, the right to
\nlicense the Licensed Property to Licensee in accordance with the terms and
\nprovisions of this Agreement; and<\/p>\n
(b) The making of this Agreement by Licensor does not violate any agreements,
\nrights or obligations of any person, firm or corporation.<\/p>\n
14. LICENSEE’S WARRANTIES AND REPRESENTATIONS. Licensee represents and warrants
\nto Licensor that, during the Term and thereafter:<\/p>\n
(a) It will not attack the title of Licensor (or third parties that have granted
\nrights to Licensor) in and to the Licensed Property or any copyright or
\ntrademarks pertaining thereto, nor will it attack the validity of the license
\ngranted hereunder;<\/p>\n
(b) It will not harm, misuse or bring into disrepute the Licensed property, but
\non the contrary, will maintain the value and reputation thereof to the best of
\nits ability;<\/p>\n
(c) It will manufacture, sell, promote and distribute the Licensed Products in
\naccordance with the terms and intent of this Agreement, and in compliance with
\nall applicable government regulations and industry standards;<\/p>\n
(d) It will not create any expenses chargeable to Licensor without the prior
\nwritten approval of Licensor in each and every instance. It will not cause or
\nallow any liens or encumbrances to be placed against, or grant any security
\ninterest (except to Licensor as provided hereunder) in, the Licensed Property
\nand\/or Licensee’s inventory, contract rights and\/or accounts receivables, and\/or
\nproceeds thereof, with respect to the Licensed Products without Licensor’s prior
\nwritten consent;<\/p>\n
(e) It will protect to the best of its ability its right to manufacture, sell,
\npromote, and distribute the Licensed Products hereunder;<\/p>\n
(f) It will at all times comply with all government laws and regulations,
\nincluding but not limited to product safety, food, health, drug, cosmetic,
\nsanitary or other similar laws, and all voluntary industry standards relating or
\npertaining to the manufacture, sale, advertising or use of the Licensed
\nProducts, and shall maintain its appropriate customary high quality standards
\nduring the Term hereof. It shall comply with any regulatory agencies which shall
\nhave jurisdiction over the Licensed Products and shall procure and maintain in
\nforce any and all permissions, certifications and\/or other authorizations from
\ngovernmental and\/or other official authorities that may be required in response
\nthereto. Each Licensed Product and component thereof distributed hereunder shall
\ncomply with all applicable laws, regulations and voluntary industry standards.
\nLicensee shall follow reasonable and proper procedures for testing that all
\nLicensed Products comply with such laws, regulations and standards. Licensee
\nshall permit Licensor or its designees to inspect testing records and procedures
\nwith respect to the Licensed Products for compliance. Licensed Products that do
\nnot comply with all applicable laws, regulations and standards shall
\nautomatically be deemed unapproved and immediately taken off the market;<\/p>\n
(g) It shall, upon Licensor’s request, provide credit information to Licensor
\nincluding, but not limited to, fiscal year-end financial statements
\n(profit-and-loss statement and balance sheet) and operating statements;<\/p>\n
Page 13
\n 14
\n(h) It will provide Licensor with the date(s) of first use of the Licensed
\nProducts in interstate and intrastate commerce, where appropriate;<\/p>\n
(i) it will, pursuant to Licensor’s instructions, duly take any and all,
\nnecessary steps to secure execution of all necessary documentation for the
\nrecordation of itself as user of the Licensed Property in any jurisdiction where
\nthis is required or where Licensor reasonably requests that such recordation
\nshall be effected. Licensee further agrees that it will at its own expense
\ncooperate with Licensor in cancellation of any such recordation at the
\nexpiration of this Agreement or upon termination of Licensee’s right to use the
\nLicensed Property. Licensee hereby appoints Licensor its Attorney-in-Fact for
\nsuch purpose;<\/p>\n
(j) It will use its best efforts to manufacture, distribute and sell the
\nLicensed Product(s) throughout the Territory;<\/p>\n
(k) It will not deliver or sell Licensed Product(s) outside the Territory or
\nknowingly sell Licensed Product(s) to a third party for delivery outside the
\nTerritory;<\/p>\n
(l) It shall at all times comply with all manufacturing, sales, distribution,
\nretail and marketing policies and strategies promulgated by Licensor from
\ntime-to-time;<\/p>\n
(m) If requested by Licensor to do so, it will utilize specific design elements
\nof the Licensed Property provided to Licensee by Licensor on hangtags, labels,
\nand other materials.<\/p>\n
15. TERMINATION BY LICENSOR.<\/p>\n
(a) Licensor shall have the right to terminate this Agreement without prejudice
\nto any rights which it may have, whether pursuant to the provisions of this
\nAgreement, or otherwise in law, or in equity, or otherwise, upon the occurrence
\nof any one or more of the following events (herein called “defaults”):<\/p>\n
(i) Licensee defaults in the performance of any of its obligations
\nprovided for in this Agreement; or<\/p>\n
(ii) Licensee shall have failed to deliver to Licensor or to maintain in
\nfull force and effect the insurance referred to in Paragraph 8(b) hereof; or<\/p>\n
(iii) Licensee shall fail to make any payment due hereunder on the date
\ndue; or<\/p>\n
(iv) Licensee shall fail to deliver any of the statements hereinabove
\nreferred to or to give access to the premises and\/or license records pursuant to
\nthe provisions hereof to Licensor’s authorized representatives for the purposes
\npermitted hereunder, and such failure shall continue for ten (10) days after
\nwritten notice thereof is sent by Licensor to the Licensee; or<\/p>\n
(v) Licensee shall fail to comply with any laws, regulations or
\nvoluntary industry standards as provided in Paragraph 14(f) hereof or any
\ngovernmental agency or other body, office or official vested with appropriate
\nauthority finds that the Licensed Products are harmful or defective in any way,
\nmanner or form, or are being manufactured, sold-or distributed in contravention
\nof applicable laws, regulations or standards, or in a manner likely to cause
\nharm; or<\/p>\n
(vi) Licensee shall be unable to pay its debts when due, or shall make
\nany assignment for the benefit of creditors, or shall file any petition under
\nthe bankruptcy or insolvency laws of any nation, jurisdiction, county or place,
\nor shall have or suffer a receiver or trustee to be appointed for its business
\nor property, or be adjudicated a bankrupt or an insolvent; or<\/p>\n
Page 14
\n 15
\n (vii) Licensee does not commence in good faith to manufacture,
\ndistribute and sell a Licensed Product throughout the Territory on or before the
\nMarketing Date as defined in Paragraph 1(c). Such default and Licensor’s
\nresultant right of termination (or recapture) shall only apply to the specific
\nregions\/countries within the Territory in which or wherein Licensee fails to
\nmeet said Marketing Date requirement; or<\/p>\n
(viii) Licensee shall manufacture, sell or distribute, whichever first
\noccurs, any of the Licensed Product(s) without the prior written approval of
\nLicensor as provided in Paragraph 10 hereof; or<\/p>\n
(ix) Licensee undergoes a substantial change of management or control.
\nThe term “control” as used in the preceding sentence shall mean the right to
\nexercise, directly or indirectly, more than fifty percent (50%) of the voting
\nrights attributable to the shares of the controlled entity; or<\/p>\n
(x) Licensee uses Artwork which has not been approved by Licensor in
\ncompliance with the provisions of Paragraph 9 hereof; or<\/p>\n
(xi) A manufacturer approved pursuant to Paragraph 11(b) hereof shall
\nsell Licensed Products to parties other than Licensee or engage in conduct,
\nwhich conduct if engaged in by Licensee would entitle Licensor to terminate this
\nAgreement; or<\/p>\n
(xii) Licensee delivers or sells Licensed Products outside the Territory
\nor knowingly sells Licensed Products(s) to a third party who Licensee knows
\nintends to, or who Licensee reasonably should suspect intends to, sell or
\ndeliver such Licensed Products outside the Territory; or<\/p>\n
(xiii) Licensee uses any labor that violates any local labor laws and\/or
\nit uses prison, slave or child labor in connection with the manufacture of the
\nLicensed Products; or<\/p>\n
(xiv) Licensee has made a material misrepresentation or has omitted to
\nstate a material fact necessary to make the statements not misleading; or<\/p>\n
(xvi) Licensee shall breach any other agreement in effect between
\nLicensee on the one hand and Licensor on the other.<\/p>\n
(b) In the event any of these defaults occur, Licensor shall give notice of
\ntermination in writing to Licensee by facsimile and certified mail. Licensee
\nshall have ten (10) days from the date of giving notice in which to correct any
\nof these defaults (except subdivisions (vii), (viii), (xii) and (xiv) above
\nwhich are not curable), and failing such, this Agreement shall thereupon
\nimmediately terminate, and any and all payments then or later due from Licensee
\nhereunder (including Guaranteed Consideration) shall then be promptly due and
\npayable in full and no portion of those prior payments shall be repayable to
\nLicensee.<\/p>\n
16. FINAL STATEMENT UPON TERMINATION OR EXPIRATION.<\/p>\n
Licensee shall deliver, as soon as practicable, but not later than
\nthirty (30) days following expiration or termination of this Agreement, a
\nstatement indicating the number and description of Licensed Products on hand
\ntogether with a description of all advertising and promotional materials
\nrelating thereto. Following expiration or termination of this Agreement,
\nLicensee shall immediately cease any and all manufacturing of the Licensed
\nProduct. However, if Licensee has complied with all the terms of this Agreement,
\nincluding, but not limited to, complete and timely payment of the Guaranteed
\nConsideration and Royalty Payments, then Licensee may continue to distribute and
\nsell its remaining inventory, on a non-exclusive basis only, for a period not to
\nexceed sixty (60) days following such termination or expiration (the “Sell-Off
\nPeriod”), subject to payment of applicable royalties thereto. In no event,
\nhowever, may Licensee distribute and sell during the Sell-Off Period an amount
\nof Licensed Products<\/p>\n
Page 15
\n 16
\nthat exceeds the average amount of Licensed Products sold during any consecutive
\nsixty (60) day period during the Term. In the event this Agreement is terminated
\nby Licensor for any reason under this Agreement, Licensee shall be deemed to
\nhave forfeited its Sell-Off Period. if Licensee has any remaining inventory of
\nthe Licensed Products following the sell-Off Period, Licensee shall, at
\nLicensor’s option, make available such inventory to Licensor for purchase at or
\nbelow cost, deliver up to Licensor for destruction said remaining inventory or
\nfurnish to Licensor an affidavit attesting to the destruction of said remaining
\ninventory. Licensor shall have the right to conduct a physical inventory in
\norder to ascertain or verify such inventory and\/or statement. In the event that
\nLicensee refuses to permit Licensor to conduct such physical inventory, Licensee
\nshall forfeit its right to the Sell-Off Period hereunder or any other rights to
\ndispose of such inventory. In addition to the forfeiture, Licensor shall have
\nrecourse to all other legal remedies available to it.<\/p>\n
17. PAYMENTS AND NOTICES.<\/p>\n
Except as otherwise specifically provided herein, all notices which
\neither party hereto is required or may desire to give to the other shall be
\ngiven by addressing the same to the other at the address set forth above, or at
\nsuch other address as may be designated in writing by any such party in a notice
\nto the other given in the manner prescribed in this paragraph. All such notices
\nshall be sufficiently given when the same shall be deposited so addressed,
\npostage prepaid, in the United states mail and\/or when the same shall have been
\ndelivered, so addressed, by facsimile or by overnight delivery service and the
\ndate of transmission by facsimile, receipt of overnight delivery service or two
\nbusiness days after mailing shall for the purposes of this Agreement be deemed
\nthe date of the giving of such notice.<\/p>\n
18. NO PARTNERSHIP, ETC.<\/p>\n
This Agreement does not constitute and shall not be construed as
\nconstitution of a partnership or joint venture between Licensor and Licensee.
\nNeither party shall have any right to obligate or bind the other party in any
\nmanner whatsoever, and nothing herein contained shall give, or is intended to
\ngive, any rights of any kind to any third persons.<\/p>\n
19. NO SUBLICENSING\/NON-ASSIGNABILITY.<\/p>\n
This Agreement shall bind and inure to the benefit of Licensor, its
\nsuccessors and assigns. This Agreement is personal to Licensee. Licensee shall
\nnot sublicense, franchise or delegate to third parties its rights hereunder
\n(except as set forth “in Paragraph 11(b) hereof). Neither this Agreement nor any
\nof the rights of Licensee hereunder shall be sold, transferred or assigned by
\nLicensee and no rights hereunder shall devolve by operation of law or otherwise
\nupon any receiver, liquidator, trustee or other party.<\/p>\n
20. BANKRUPTCY RELATED PROVISIONS.<\/p>\n
(a) The parties hereby agree and intend that this Agreement is an
\nexecutory contract governed by Section 365 of the Bankruptcy Code.<\/p>\n
(b) In the event of Licensee’s bankruptcy, the parties intend that any
\nroyalties payable under this Agreement during the bankruptcy period be deemed
\nadministrative claims under the Bankruptcy Code because the parties recognize
\nand agree that the bankruptcy estate’s enjoyment of this Agreement will (i)
\nprovide a material benefit to the bankruptcy estate during its reorganization.
\nand (ii) deny Licensor the benefit of the exploitation of the rights through
\nalternate means during the bankruptcy reorganization.<\/p>\n
(c) The parties acknowledge and agree that any delay in the decision of
\ntrustee of the bankruptcy estate to assume or reject the Agreement (the
\n“Decision Period”) materially harms Licensor by<\/p>\n
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\n 17
\ninterfering with Licensor’s ability to alternatively exploit the rights granted
\nunder this Agreement during a Decision Period of uncertain duration. The parties
\nrecognize that arranging appropriate alternative exploitation would be a time
\nconsuming and expensive process and that it is unreasonable for Licensor to
\nendure a Decision Period of extended uncertainty. Therefore, the parties agree
\nthat the Decision Period shall not exceed sixty (60) days.<\/p>\n
(d) Licensor, in its interest to safeguard its valuable interests
\n(including, without limitation, its intellectual property rights in the Licensed
\nproperty), has relied on the particular skill and knowledge base of Licensee.
\nTherefore, the parties acknowledge and agree that in a bankruptcy context this
\nAgreement is a license of the type described by Section 365(c)(1) of the
\nBankruptcy Code and may not be assigned without the prior written consent of the
\nLicensor.<\/p>\n
21. CONSTRUCTION.<\/p>\n
This Agreement shall be construed in accordance with the laws of the
\nState of California of the United States of America without regard to its
\nconflicts of laws provisions.<\/p>\n
22. WAIVER, MODIFICATION, ETC.<\/p>\n
No waiver, modification or cancellation of any term or condition of this
\nAgreement shall be effective unless executed in writing by the party charged
\ntherewith. No written waiver shall excuse the performance of any acts other than
\nthose specifically referred to therein. The fact that the Licensor has not
\npreviously insisted upon Licensee expressly complying with any provision of this
\nAgreement shall not be deemed to be a waiver of Licensor’s future right to
\nrequire compliance in respect thereof and Licensee specifically acknowledges and
\nagrees that the prior forbearance in respect of any act, term or condition shall
\nnot prevent Licensor from subsequently requiring full and complete compliance
\nthereafter. If any term or provision of this Agreement is held to be invalid or
\nunenforceable by any court of competent jurisdiction or any other authority
\nvested with jurisdiction, such holding shall not affect the validity or
\nenforceability of any other term or provision hereto and this Agreement shall be
\ninterpreted and construed as if such term or provision, to the extent the same
\nshall have been held to be invalid, illegal or unenforceable, had never been
\ncontained herein. Headings of paragraphs herein are for convenience only and are
\nwithout substantive significance.<\/p>\n
23. CONFIDENTIALITY.<\/p>\n
The Artwork and the materials and information supplied to one party by
\nthe other hereunder constitute, relate to, contain and form a part of
\nconfidential and proprietary information of the disclosing party, including, but
\nnot limited to, Style Guides, design elements, character profiles, unpublished
\ncopyrighted material, release dates, marketing and promotional strategies,
\ninformation about new products, properties and characters, the terms and
\nconditions of this Agreement, and other information which is proprietary in
\nnature or is a trade secret (collectively, the “Proprietary Information”). The
\nparties acknowledge and agree that the Proprietary Information is highly
\nconfidential and that disclosure of the Proprietary Information will result in
\nserious harm to the owner thereof. Among other damage, unauthorized disclosure
\nof the Proprietary Information will (i) damage carefully planned marketing
\nstrategies, (ii) reduce interest in the Licensed Property, (iii) make unique or
\nnovel elements of the Licensed Property susceptible to imitation or copying by
\ncompetitors, infringers or third parties prior to Licensor’s release of the
\ninformation or materials, (iv) damage proprietary protection in undisclosed or
\nunpublished information or materials, and (v) provide unauthorized third parties
\nwith materials capable of being used to create counterfeit and unauthorized
\nmerchandise, audio-visual products or other products, all of which will
\nseriously damage the parties’ rights and business. Except as<\/p>\n
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\n 18
\nexpressly approved in writing by the owner of the Proprietary Information, the
\nother party shall not reproduce or use the Proprietary Information of the other
\nparty and shall not discuss, distribute, disseminate or otherwise disclose the
\nProprietary Information or the substance or contents thereof, in whole or in
\npart, in its original form or in any other form, with or to any other person or
\nentity other than employees of the parties and, in the case of Licensee, third
\nparties who have executed a Contributor’s Agreement (as provided in Paragraph
\n8(b)) or third party manufacturer’s agreement (as provided in paragraph 10(b))
\nand been approved by Licensor as provided hereunder, and such employees and
\nthird parties shall be given access to the Proprietary Information only on a
\n“need-to-know” basis. The foregoing restrictions shall not apply to any
\ninformation which, (i) at the time of disclosure, is in the public domain or
\nwhich, after disclosure, becomes part of the public domain by publication or
\notherwise through no action or fault of the receiving party; (ii) information
\nwhich the receiving party can show was in its possession at the time of
\ndisclosure and was not acquired, directly or indirectly, from the other party;
\n(iii) information which was received from a third party having the legal right
\nto transmit the same; (iv) information which is independently developed,
\nconceived, or created without use of or reference to any Proprietary Information
\nof the other party; or (v) information which is disclosed pursuant to valid
\ncourt order or other legal process.<\/p>\n
24. ENTIRE AGREEMENT.<\/p>\n
This Agreement constitutes the entire Agreement between the parties
\nconcerning the subject matter hereof and cancels and supersedes any prior
\nunderstandings and agreements between the parties hereto with respect thereto.
\nThere are no representations, warranties, terms, conditions, undertakings or
\ncollateral agreements, expressed, implied or statutory, between the parties
\nother than as expressly set forth in this Agreement.<\/p>\n
25. ACCEPTANCE BY LICENSOR.<\/p>\n
This instrument, when signed by Licensee, shall be deemed an application
\nfor license and not a binding agreement unless and until accepted by Warner
\nBros. Consumer Products by signature of a duly authorized officer and the
\ndelivery of such a signed copy to Licensee. The receipt and\/or deposit by Warner
\nBros. Consumer Products of any check or other consideration given by Licensee
\nand\/or delivery of any material by Warner Bros. Consumer Products to Licensee
\nshall not be deemed an acceptance by Warner Bros. Consumer Products of this
\napplication. The foregoing shall apply to any documents relating to renewals or
\nmodifications hereof.<\/p>\n
IN WITNESS WHEREOF, the parties hereto have signed this Agreement as of
\nthe day and year first above written.<\/p>\n
AGREED AND ACCEPTED: AGREED AND ACCEPTED:<\/p>\n
LICENSOR: LICENSEE:<\/p>\n
WARNER BROS. CONSUMER PRODUCTS, BAY AREA MULTIMEDIA (BAM)
\na Division of Time Warner
\nEntertainment Company, L.P.<\/p>\n
By: \/s\/ GARY R. SIMON By: \/S\/ RAYMOND C. MUSCI
\n ——————————- ———————————
\n Gary R. Simon Raymond C. Musci
\n Senior Vice President, Business
\n and Legal Affairs<\/p>\n
Date: 10\/4\/00 Date: 10\/3\/00
\n —————————– ——————————-<\/p>\n
Page 18
\n 19<\/p>\n
EXHIBIT 1 #12697-DEX<\/p>\n
CONTRIBUTOR’S AGREEMENT<\/p>\n
I, __________________________, the undersigned (“Contributor”), have been
\nengaged by BAY AREA MULTIMEDIA (BAM) (“Licensee”) to work on or contribute to
\nthe creation of Licensed Products, described as _______________________, by
\nLicensee under an agreement between Licensee and Warner Bros., a division of
\nTime Warner Entertainment Company, L.P., c\/o Warner Bros. Consumer Products, a
\ndivision of Time Warner Entertainment Company, L.P. (“Warner”) dated
\n___________________.<\/p>\n
I understand and agree that the Licensed Products, and all artwork or other
\nresults of my services for Licensee in connection with such Licensed Products
\n(“Work”) is a “work made for hire” for Cartoon Network and that all right, title
\nand interest in and to the work shall vest and remain with Cartoon Network I
\nreserve no rights therein. Without limiting the foregoing, I hereby assign and
\ntransfer to Cartoon Network all other rights whatsoever, in perpetuity
\nthroughout the universe which I may have or which may arise in me or in
\nconnection with the Work. I hereby waive all moral rights in connection with
\nsuch Work together with any other rights which are not capable of assignment. I
\nfurther agree to execute any further documentation relating to such transfer or
\nwaiver or relating to such Work at the request of Cartoon Network or Licensee,
\nfailing which Cartoon Network is authorized to execute same as my
\nAttorney-in-Fact.<\/p>\n
By:
\n ———————————
\n signature<\/p>\n
———————————
\n print name <\/p>\n
———————————
\n address<\/p>\n
———————————<\/p>\n
———————————<\/p>\n
———————————<\/p>\n
———————————
\n country <\/p>\n
———————————
\n date<\/p>\n
Warner Bros. Consumer Products:<\/p>\n
By:
\n ——————————-<\/p>\n
Date:
\n —————————–<\/p>\n
Page 19
\n 20<\/p>\n
EXHIBIT 2 #12697-DEX<\/p>\n
Milestone 1 CONCEPT DESIGN: General description of proposed program, game
\n play and overall look and feel. Includes user interface, list of
\n characters and time line for production and release,<\/p>\n
Milestone 2 FUNCTIONAL DESIGN SPECIFICATION\/DESIGN DOCUMENT: Detailed
\n description of the program including: synopsis, overview and
\n logic flowchart.<\/p>\n
Milestone 3 SCRIPT: Dialogue script.<\/p>\n
Milestone 4 GAME PLAY AND CHARACTER ANIMATION:<\/p>\n
Milestone 5 ALPHA: Initial combination of all product elements and art in a
\n usable working prototype.<\/p>\n
Milestone 6 BETA: Almost final version of the License Product(s) that is a
\n fully functional, nearly bug-free disk that incorporates
\n finalized art and game play.<\/p>\n
Milestone 7 GOLDEN MASTER: Final disk that results from Milestone 6 which
\n includes a fully tested program containing all elements and game
\n play.<\/p>\n
Page 20
\n 21<\/p>\n
EXHIBIT 3 #12697-DEX<\/p>\n
WARNER BROS. CONSUMER PRODUCTS
\n4000 Warner Boulevard
\nBridge Building 156 South – 4th Floor
\nBurbank, CA 91522<\/p>\n
Re: Approval of Third Party Manufacturer<\/p>\n
Gentlemen:<\/p>\n
This letter will serve as notice to you that pursuant to Paragraph 11(b) of the
\nLicense Agreement dated ______________, 2000 between you and BAY AREA MULTIMEDIA
\n(BAM), we have been engaged as the manufacturer for Licensee in connection with
\nthe manufacture of the Licensed Products as defined in the aforesaid License
\nAgreement. We hereby acknowledge that we may not manufacture Licensed Products
\nfor, or sell or distribute Licensed Products to, anyone other than Licensee. We
\nhereby further acknowledge that we have received a copy and are cognizant of the
\nterms and conditions set forth in said License Agreement and hereby agree to
\nobserve those provisions of said License Agreement which are applicable to our
\nfunction as manufacturer of the Licensed Products. It is expressly understood
\nthat we are obligated to comply with all local laws, including without
\nlimitation, labor laws, wage and hour laws and anti-discrimination laws and that
\nyou or your representatives shall, at anytime, have the right to inspect our
\nfacilities and review our records to ensure compliance therewith. It is
\nunderstood that this engagement is on a royalty free basis and that we may not
\nsubcontract any of our work without your prior written approval.<\/p>\n
We understand that our engagement as the manufacturer for Licensee is
\nsubject to your written approval. We request, therefore, that you sign in the
\nspace below, thereby showing your acceptance of our engagement as aforesaid.<\/p>\n
Very truly yours,<\/p>\n
——————————–
\n manufacturer\/company name<\/p>\n
By:<\/p>\n
——————————–
\n signature<\/p>\n
——————————–
\n print name<\/p>\n
——————————–
\n address<\/p>\n
——————————–<\/p>\n
——————————–<\/p>\n
——————————–
\n country<\/p>\n
——————————–
\n date <\/p>\n
——————————–
\n product(s) manufacturing<\/p>\n
AGREED TO AND ACCEPTED:<\/p>\n
WARNER BROS. CONSUMER PRODUCTS,
\na Division of Time Warner
\nEntertainment company, L.P.<\/p>\n
By:
\n ——————————-
\n Gary R. Simon
\n Senior Vice President, Business
\n and Legal Affairs<\/p>\n
Date:
\n —————————–<\/p>\n
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