Exhibit 10.35
RETAIL AND PROMOTIONAL
LICENSE
WARNER BROS. CONSUMER PRODUCTS INC.
#14559-SCOO
RETAIL AND PROMOTIONAL LICENSE AGREEMENT made
November 10, 2003, by and between Warner Bros. Consumer
Products Inc., whose address is 4000 Warner Blvd., Burbank, CA
91522 (hereinafter referred to as “LICENSOR”) and Poore
Brothers, Inc., whose address is 3500 S. La Cometa Drive, Goodyear,
AZ 85338, Attention: Eric Kufel (hereinafter referred to as
“LICENSEE”).
WITNESSETH: The parties hereto mutually agree as
follows:
1.
DEFINITIONS:
As used in this Agreement, the
following terms shall have the following respective
meanings:
(a)
“Channels of
Distribution”: Licensee may conduct the Licensed Promotion and
shall sell and distribute the Licensed Products and/or the Licensed
Premiums through the following Channels of Distribution only (as
such channels are defined and numbered in Exhibit I attached hereto
and incorporated herein by reference):
[*]
All other Channels of Distribution
defined in Exhibit I which are not specified above in this
Paragraph 1(a) are specifically excluded from this
Agreement.
[*]
(b)
“Guaranteed
Consideration”: [*]
(c)
“Licensed
Premium(s)”: Licensee shall have the right to include
premiums incorporating the Licensed Property in association with
the Licensed Promotion.
Any and all such premiums shall be
determined by the parties at a later date and shall be added to
this License Agreement pursuant to a written amendment, provided,
however, that Licensor shall have the absolute right to approve in
writing all the elements (i.e. all premiums as well as all product
packaging, advertising, etc.) prior to manufacture of said
premiums.
For purposes of this subparagraph,
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
premiums in such a way as to promote, publicize and or sell the
products, services or business image of the user of such
item.
(d)
“Licensed
Products”: Salted
Snacks Category (incorporating the Licensed Property in its
packaging and in the shapes of the individual snack items within
each package) defined as: Potato Chips, Potato Crisps, 2-D Potato
or Corn Snacks, 3-D Potato or Corn Snacks, Pretzels, Cheese Puffs,
Tortilla Chips, Pellet Fried Snacks, Extruded Fried
Snacks.
It is understood and agreed that for
the purposes of this Agreement, Salted Snacks Category shall
exclude the following: pre-popped popcorn, nuts, crackers, and
cookies.
(e)
“Licensed
Promotion”: The
right to utilize the Licensed Property in connection with the
advertising and promotion of the Licensed Products and with the
manufacture, distribution and advertisement of Licensed Premiums as
set forth below:
(i)
Licensee shall invest [*] of its
annual Net Sales (as defined in Paragraph 4(b) below) of the
Licensed Products towards trade and consumer marketing support
(“Annual Marketing Support”). [*] of such Annual
Marketing Support investment shall be allocated towards television
media commitments (the “TV Commitment”) on Time Warner
networks each calendar year to support the Licensed Products. In
the event, Licensor is no longer affiliated with
television
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED
IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION (“SEC”)
PURSUANT TO SEC RULE 24b-2 UNDER THE SECURITIES EXCHANGE ACT OF
1934, AS AMENDED.
media outlets during the Term,
Licensee may utilize other television networks to fulfill the TV
Commitment.
It is understood and agreed that the
Annual Marketing Support set forth above may include the Annual FSI
Requirement set forth in separate license agreement #13770-WBLT
between Licensee and Licensor.
(ii)
Licensee shall support the launch of
the Licensed Product with a FSI during the 2004 calendar
year.
(iii)
Licensor shall allow Licensee to run
a :05 to : 07 second tag at Licensee’s option themed with the
Licensed Property on its existing television commercial spot
featuring the Looney Tunes Property licensed to Licensee
under separate license agreement #13770-WBLT.
(f)
“Licensed
Property”: The
fictional cartoon characters as they appear in the animated
television series entitled “SCOOBY-DOO” as follows:
SCOOBY-DOO, FRED JONES, DAPHNE BLAKE, VELMA DINKLY, SHAGGY
ROGERS, MYSTERY MACHINE including said characters’
representations, names, likenesses and all environmental settings,
artwork and other materials associated therewith. Licensee
further understands and agrees that the rights granted herein are
limited only to the cartoon characters set forth above and that any
and all rights in, to or associated with any theatrical motion
picture, movie of the week, television special or direct to video
containing the “SCOOBY-DOO” cartoon characters, whether
live action, animation or both, as well as with any sequels
thereto, are specifically excluded herefrom, it being understood
that all rights in and to said property are reserved exclusively to
Licensor for use and/or licensing as it deems appropriate to third
parties of its choice at Licensor’s sole discretion.
Furthermore, no film clips, stills, sound bites, voices, music or
other audio clips are 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.
(g)
“Marketing
Date”: Date
Licensed Products first shipped to customer, but not later than
March 30, 2004.
(h)
“Royalty
Rate”: Licensee
shall pay to Licensor the following sums:
(i)
[*] of Net Sales (as defined in
Paragraph 4(b) below) of all Licensed Products; and
(ii)
[*] of Net Purchase Price of all
Licensed Premiums distributed by Licensee hereunder. The term
“Net Purchase Price” herein shall mean the price
actually paid by Licensee for any Licensed Premium(s) authorized
and distributed hereunder. It is understood and agreed that any
Royalties paid to Licensor on Net Purchase Price of Premiums shall
be in addition to and shall not offset the Guaranteed Consideration
hereunder.
(g)
“Style
Guide”: Any
materials provided by Licensor to Licensee which sets forth the
style, format, characterization and any artwork depicting the
Licensed Property which has been approved by Licensor in
writing.
(i)
“Term”:
October 2, 2003 through
[*].
(j)
“Territory”: United States (fifty states), Puerto Rico,
United States Virgin Islands, and United States Military
Bases.
2.
GRANT OF LICENSE:
(a)
Subject to the restrictions,
1imitations, reservations and conditions and Licensor’s
approval rights set forth in this Agreement, Licensor hereby grants
to Licensee and Licensee hereby accepts for the Term of this
Agreement, a license to utilize the Licensed Property solely on or
in connection with the Licensed Promotion and the Licensed Products
and/or Licensed Premiums throughout the Territory on an exclusive
basis in the Salted Snack Category as defined in Paragraph 1(d),
except that sales of Licensed Products and Licensed Premiums sold
through Airport Gift and Other Airport Stores shall be on a
non-exclusive basis.
(b)
Without limiting any other approval
rights of Licensor as contained herein, no television commercials
(animated or live action) may be utilized under this Agreement
without the specific prior written approval of Licensor.
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED
IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION (“SEC”)
PURSUANT TO SEC RULE 24b-2 UNDER THE SECURITIES EXCHANGE ACT OF
1934, AS AMENDED.
3.
RESERVATION OF RIGHTS;
PREMIUMS:
(a)
Licensor reserves all rights not
expressly conveyed to Licensee hereunder, and Licensor may grant
licenses to others to use the Licensed Property, artwork and
textual matter in connection with other uses, services and products
without limitation.
(b)
Notwithstanding anything to the
contrary stated herein, Licensor, for itself and its affiliates,
specifically reserves the right, without limitation throughout the
world, to itself use, or license any third party(s) of its choice
to use the Licensed Property for the marketing, manufacture,
distribution and sale of products and/or the promotion of services
similar or identical to those licensed herein in Paragraphs l(c)
and 1(d) above for sale through any catalogue(s) or online website
produced or distributed by or on behalf of Licensor or its
affiliated companies, or for sale or distribution in any theaters,
arenas or restaurants or for sale or distribution in connection
with any home video product, including DVD or other formats, or for
sale or distribution in the retail stores known as “Warner
Bros. Studio Stores” and any other retail stores operated by
or on behalf of Licensor or its affiliated companies, or for sale
or distribution in any theme/amusement parks operated by or on
behalf of Licensor and its affiliated companies, including without
limitation, the Six Flags and Movie World parks or its licensees,
Six Flags, Movie World, or their affiliated companies. In addition,
Licensor reserves the right to allow Six Flags and Movie World to
manufacture (or have manufactured by a third party) products
similar or identical to those licensed herein for distribution or
sale in theme and/or amusement parks owned or operated by Six Flags
and/or Movie World. Further, Licensor reserves the right to use, or
license others to use, and/or manufacture products similar or
identical to those licensed herein for use as premiums. Nothing
contained herein shall be construed to mean that Licensee is
granting a license to Licensor to utilize Licensee’s
proprietary and/or patented technology.
(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.
Notwithstanding the foregoing Licensee may use the Warner Bros.
shield logo in connection with the legal line referenced in
Paragraph 8(d) below as instructed by Licensor’s Brand
Assurance Department.
(d)
Licensee agrees that it will not
use, or knowingly permit the use of, and will exercise due care
that its customers likewise will refrain from the use of, the
Licensed Products as premiums or the Licensed Premiums as products
for retail sale, except with the prior written consent of
Licensor.
4.
CONSIDERATION:
(a)
The Guaranteed Consideration paid by
Licensee as set forth above shall be applied against such royalties
as are, or have become, due to Licensor. No part of such Guaranteed
Consideration shall be repayable to Licensee. Royalties earned in
excess of the Guaranteed Consideration applicable to the Term
hereof shall not offset any Guaranteed Consideration required in
respect of the succeeding renewal term (if any); likewise,
royalties earned in excess of the Guaranteed Consideration
applicable to the renewal term (if any) shall not offset any
Guaranteed Consideration applicable to any prior term.
(b)
Royalty Payments: Licensee shall pay
to Licensor a sum equal to the Royalty Rate as set forth above of
(i) all Net Sales by Licensee of the Licensed Products and/or (ii)
Net Purchase Price of the Licensed Premiums covered by this
Agreement. The term “net sales” herein shall mean [*].
No costs incurred in the manufacture, sale, distribution,
advertisement, or exploitation of the Licensed Products shall be
deducted from any royalties payable by Licensee.
(c)
Royalties shall be payable
concurrently with the periodic statements required in Paragraph
5(a) hereof, except to the extent offset by the Guaranteed
Consideration theretofore remitted.
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED
IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION (“SEC”)
PURSUANT TO SEC RULE 24b-2 UNDER THE SECURITIES EXCHANGE ACT OF
1934, AS AMENDED.
5.
PERIODIC
STATEMENTS:
(a)
Within thirty (30) days after the
end of the first fiscal quarter after the date of execution of the
License Agreement and promptly on the 25th day after the end of
each fiscal quarter 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
the (i) number of units; (ii) country in which manufactured, sold,
distributed and/or to which shipped; (iii) Description (as such
term is defined below) of the Licensed Products and/or Licensed
Premiums; (iv) gross sales price or Net Purchase Price (if
applicable); and (v) itemized deductions from gross sales price and
net sales price (if applicable) together with any returns made
during the preceding fiscal quarter. Such statements shall be in
such formats as Licensor shall reasonably require (which formats
may be amended by Licensor from time to time) and shall be
furnished to Licensor whether or not any of the Licensed Products
and/or Licensed Premiums have been distributed during fiscal
quarters to which such statements refer. Receipt or acceptance by
Licensor of any of the statements furnished pursuant to this
Agreement or of any sums paid hereunder shall not preclude Licensor
from questioning the correctness thereof at any time, and in the
event that any inconsistencies or mistakes are discovered in such
statements or payments, they shall immediately be rectified and the
appropriate payments made by Licensee. Upon demand of Licensor,
Licensee shall at its own expense, but not more than once in any
twelve (12) month period, furnish to Licensor a detailed statement
by an officer of Licensee showing the (i) number of units; (ii)
country in which manufactured, sold, distributed and/or to which
shipped; (iii) Description of the Licensed Products and/or Licensed
Premiums; (iv) gross sales price or Net Purchase Price (if
applicable); and (v) itemized deductions from gross sales price and
net sales price (if applicable) of the Licensed Products and/or
Licensed Premiums 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 Paragraph 5(a), the term
“Description” shall mean a detailed description of the
Licensed Products and/or Licensed Premiums including the nature of
each of the Licensed Products and/or Licensed Premiums, any and all
names and likenesses, whether live actors or animated characters,
from the Licensed Property utilized on the Licensed Products and/or
Licensed Premiums and/or any related packaging and/or wrapping
material, and any other components of the Licensed Property
utilized on the Licensed Products and/or Licensed Premiums 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 reasonable 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 14 herein.
(b)
On all statements and payments
required hereunder, Licensee will reference the contract number(s)
set forth on the first page of this Agreement (and/or such other
contract number(s) designated by Licensor in a written notice to
Licensee). If Licensee chooses to deliver statements by e-mail,
Licensee will deliver such statements to the following e-mail
address: wbcproyrep@warnerbros.com.
If Licensee chooses to deliver
payments by wire transfer, Licensee will deliver such payments as
follows:
BANK OF AMERICA
1850 Gateway Blvd. #5693
Concord, CA 94520
USA
Account Number:
1257-000503
ABA #: 121000358
Swift Code: BofA US 6S
Account Name: Warner
Bros.
Reference: WBCP / Licensee Name /
Contract Number
If the United States Postal Service
is used to deliver statements and/or payments, Licensee will
deliver such statements and/or payments to the
following:
WARNER BROS. CONSUMER PRODUCTS
INC.
21477 Network Place
Chicago, IL 60673-1214
USA
If Federal Express or any other
courier service is used to deliver statements and/or payments,
Licensee will deliver such statements and/or payments to the
following:
BANK ONE
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 therefore, shall
bear interest at the then current prime rate, as published in The
Wall Street Journal (New York edition), plus three (3%) percent (or
the maximum rate permissible by law, if less) 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.
6.
BOOKS AND RECORDS:
(a)
Licensee shall keep, maintain and
preserve (in Licensee’s principal place of business) for at
least two (2) years following expiration or termination 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 up to two (2)
times per year 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 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 relevant records as
it deems reasonably necessary. Licensor agrees to keep confidential
all information and copies obtained by Licensor pursuant to this
Paragraph other than with respect to required disclosures in
connection with disputes between the parties or as otherwise
required by law, court order or governmental process.
(b)
The exercise by Licensor in whole or
in part, at any time of the right to audit records and accounts or
of any other right herein granted, or the acceptance by Licensor of
any statement or statements or the receipt and/or deposit by
Licensor, of any payment tendered by or on behalf of Licensee shall
be without prejudice to any rights or remedies of Licensor and such
acceptance, receipt and/or deposit shall not preclude or prevent
Licensor from thereafter disputing the accuracy of any such
statement or payment.
(c)
If pursuant to its right hereunder
Licensor causes an audit and inspection to be instituted which
thereafter discloses a deficiency between the amount found to be
due to Licensor and the amount actually received or credited to
Licensor, then Licensee shall, upon Licensor’s demand,
promptly pay the deficiency, together with interest thereon at the
then current prime rate from the date such amount became due until
the date of payment, and, if the deficiency is more than five
percent (5%) of all payments made by Licensee during the period
covered by
the audit, then Licensee shall pay
the reasonable costs and expenses of such audit and
inspection.
7.
INDEMNIFICATIONS:
(a)
During the Term, and continuing
after the expiration or termination of this Agreement, Licensor
shall indemnify Licensee and its affiliates and shall hold them
harmless from any loss, liability, damage, cost or expense,
including reasonable attorneys’ fees, arising out of any
claims or suits which may be brought or made against Licensee and
its affiliates by reason of the breach by Licensor of the
warranties or representations as set forth in Paragraph 12 hereof,
provided that Licensee shall give prompt written notice, and full
cooperation and assistance to Licensor relative to any such claim
or suit and provided, further, that Licensor shall have the option
to undertake and conduct the defense of any suit so brought.
Licensee shall not, however, be entitled to recover for lost
profits. Licensee shall cooperate fully in all respects with
Licensor in the conduct and defense of said suit and/or proceedings
related thereto.
(b)
During the Term, and continuing
after the expiration or termination of this Agreement, Licensee
shall indemnify Licensor and each of its affiliates, and shall hold
them harmless from any loss, liability, damage, cost or expense
including reasonable attorneys fees, arising out of any claims or
suits which may be brought or made against Licensor 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 on or in connection with the Licensed Products, the
Licensed Premiums or the Licensed Promotion (except trademarks or
copyrights in the Licensed Property used in accordance with the
terms of this Agreement), design, patent, process, method or device
on or in connection with the Licensed Products, the Licensed
Premiums or the Licensed Promotion; (iv) Licensee’s
non-compliance with any applicable federal, state or local laws or
with any other applicable regulations; and (v) any alleged defects
and/or inherent dangers (whether obvious or hidden) in the Licensed
Products and/or Licensed Premiums, or the use thereof. Provided,
however, that Licensor shall give prompt written notice, and full
cooperation and assistance to Licensee relative to any claim or
suit and provided, further, that Licensee shall have the option to
undertake and conduct the defense of any suit so brought. Licensor
shall cooperate fully in all respects with Licensee in the conduct
and defense of said suit and/or proceedings related thereto.
Provided, however, that Licensor shall give prompt written notice,
and full cooperation and assistance to Licensee relative to any
such claim or suit and provided, further, that Licensee shall have
the option to undertake and conduct the defense of any suit so
brought. Licensor shall cooperate fully in all respects with
Licensee in the conduct and defense of said suit and/or proceedings
related thereto.
(c)
With regard to Paragraph 7(b) above,
Licensee agrees to obtain, at its own expense, Commercial General
Liability Insurance, including product liability and contractual
liability coverage providing adequate protection for Licensor and
each of its affiliates 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 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 thirty (30) days in advance thereof.
Such insurance shall at all times be primary and not contributory
with any insurance carried by Licensor or any of their affiliates.
Further the delivery of the policy or certificate, as provided in
this Paragraph 7(c) are material obligations of
Licensee.
8.
ARTWORK; COPYRIGHT AND TRADEMARK
NOTICES:
(a)
The Licensed Property shall be
displayed or used only in such form and in such manner as has been
specifically approved in writing by Licensor in advance and
Licensee undertakes to assure usage of the trademark(s) and
character(s) solely as approved hereunder. Licensee further agrees
and acknowledges that any and all Artwork (defined below) created,
utilized, approved and/or authorized for use hereunder by Licensor
which otherwise features or includes the Licensed Property shall be
owned in its entirety exclusively by Licensor excluding
intellectual property rights in and to any elements that are owned
by Licensee or
licensed by Licensee from a third
party and do not include the Licensed Property.
“Artwork” as used herein shall include, without
limitation, all pictorial, graphic, visual, audio, audio-visual,
digital, literary, animated, artistic, dramatic, sculptural,
musical or any other type of creations and applications, whether
finished or not, including, but not limited to, animation
(including, without limitation, animation produced by Warner Bros.
Animation), drawings, designs, sketches, images, tooling and
tooling aids, illustrations, film, video, electronic, digitized or
computerized information, software, object code, source code,
on-line elements, music, text, dialogue, stories, visuals, effects,
scripts, voiceovers, logos, one-sheets, promotional pieces,
packaging, display materials, printed materials, photographs,
interstitials, notes, shot logs, character profiles and
translations, produced by Licensee or for Licensee, pursuant to
this Agreement. Licensor reserves for itself or its designees all
rights to use any and all Artwork created, utilized and/or approved
hereunder without limitation excluding intellectual property rights
in and to any elements that are owned by Licensee or licensed by
Licensee from a third party and do no include the Licensed
Property. Nothing contained herein shall be construed to mean that
Licensee is granting a license to Licensor to utilize
Licensee’s proprietary, patented technology, and/or
intellectual property rights whether alone or in combination with
the Licensed Property. Notwithstanding the foregoing, the
parties agree that the term “Artwork” excludes any
elements of the Licensed Products and other materials created in
connection herewith, and all related intellectual property rights,
independently created by Licensee, solely or jointly with any third
party, or licensed to Licensee from a third party, that do not use,
exploit or derive from any of the Licensed Property, including, for
example, any original, independently created Licensee artwork used
in Licensee’s packaging, advertising, and products that does
not use, exploit or derive from any of the Licensed
Property.
(b)
Licensee acknowledges that, as
between Licensor and Licensee, the Licensed Property, Artwork and
all derivative works thereof, and all other depictions, expressions
and derivations thereof, excluding intellectual property rights in
and to any elements that are owned by Licensee or licensed by
Licensee from a third party and do not include the Licensed
Property, and all copyrights, trademarks and other proprietary
rights therein are owned exclusively by Licensor and Licensee shall
have no interest in or claim thereto, except for the limited right
to use the same pursuant to this Agreement and subject to its terms
and conditions.
Licensor acknowledges that, as
between Licensor and Licensee, the Licensee’s intellectual
property and all derivative works thereof, and all copyrights,
trademarks and other proprietary rights therein are owned
exclusively by Licensee and Licensor shall have not interest in or
claim thereto.
Licensee agrees and acknowledges
that any Artwork created by Licensee or for Licensee hereunder is a
“work made for hire” for Licensor under the U.S.
Copyright Act, and any and all similar provisions of law under
other jurisdictions, and that Licensor is the author of such works
for all purposes, and that Licensor 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 Licensor all rights (if any) of “droit
moral,” rental rights and similar rights in and to the
Artwork (the “Intangible Rights”) and agrees that
Licensor shall have the right to revise, condense, abridge, expand,
adapt, change, modify, add to, subtract from, re-title, re-draw,
recolor, or otherwise modify the Artwork, without the consent of
Licensee. Licensee hereby irrevocably grants, transfers and assigns
to Licensor all right, title and interest, including copyrights,
trademark rights, patent rights and other proprietary rights, it
may have in and to the Artwork and all derivative works, in
perpetuity and throughout the universe. 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, under the terms of
Paragraph 7(b). 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 2 and by
this reference made a part hereof, prior to commencing work, 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.
(c)
Upon expiration or termination of
this Agreement for any reason, or upon demand by Licensor at any
time, Licensee shall promptly deliver to Licensor all Artwork or
Licensed Property, whether finished or not, including drawings,
drafts, sketches, illustrations, screens, data, digital files and
information, copies or other items, information or things created
in the course of preparing the Licensed Property, excluding any
elements that are owned by Licensee or licensed by Licensee from a
third party and all materials provided to Licensee by Licensor
hereunder, or, at Licensor’s option and instruction, shall
destroy some or all of the foregoing and shall confirm to Licensor
in writing that Licensee has done so. Licensee shall not use such
Artwork or Licensed Property, items, information or things,
material, for any purpose other than is permitted under this
Agreement. For any Licensee elements and/or intellectual property
that utilize Licensed Property or Artwork in whole or in part,
Licensee shall destroy such elements and/or intellectual property
upon expiration or termination of this Agreement for any reason and
shall confirm to Licensor in writing that Licensee has done
so.
(d)
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/or Licensed Premiums and any related packaging, display and
promotional materials at Licensor’s prevailing commercial art
rates. The foregoing shall include any Artwork that, in
Licensor’s opinion, and subject to Licensee’s written
approval, is necessary to modify Artwork initially prepared by
Licensee and submitted for approval. Estimates of Artwork charges
are available upon request. Licensor shall submit to Licensee, for
Licensee’s prior approval, any increases of ten percent (10%)
or more above the estimate originally approved by Licensee, and
Licensee shall not be obligated to pay for such increased cost if
Licensee has not provided its approval thereof.
(e)
Licensee shall cause to be
imprinted, irremovably and legibly on the packaging of each
Licensed Product and/or Licensed Premium manufactured, distributed
or sold under this Agreement, and all printed and/or televised
advertising, promotional, packaging and wrapping material wherein
the Licensed Property appears, the following copyright and/or
trademark notice(s) or such other notice as may be approved by
Licensor:
TM & © Hanna-Barbera.
(s03)
(The year date shall be as
instructed by Licensor.)
(f)
In no event shall Licensee use, in
respect to the Licensed Products and/or Licensed Premiums and/or in
relation to any advertising, promotional, packaging or wrapping
material, any copyright or trademark notices which shall conflict
with, be confusing with, or negate, any notices required hereunder
by Licensor in respect to the Licensed Property.
(g)
Licensee agrees to deliver to
Licensor free of cost six (6) of each of the Licensed Products
and/or Licensed Premiums together with their packaging and wrapping
material for trademark registration purposes in compliance with
applicable laws, simultaneously upon distribution to the public.
Any copyrights or trademarks with respect to the Licensed Promotion
or Licensed Products and/or Licensed Premiums shall be procured by
and for the benefit of Licensor and
at Licensor’s expense.
Licensee further agrees to provide Licensor with the date of the
first use of the Licensed Products and/or Licensed Premiums in
interstate and intrastate commerce.
(h)
Licensee shall assist Licensor, at
Licensor’s expense, in the procurement, protection, and
maintenance of Licensor’s rights to the Licensed Property.
Licensor may, in its sole discretion, commence or prosecute and
effect the disposition of any claims or suits relative to the
imitation, infringement and/or unauthorized use of the Licensed
Property either in its own name, or in the name of Licensee, or
join Licensee as a party in the prosecution of such claims or
suits. Licensee agrees to cooperate fully with Licensor in
connection with any such claims or suits and undertakes to furnish
full assistance to Licensor in the conduct of all proceedings in
regard thereto. Licensee shall promptly notify Licensor in writing
of any known infringements or imitations or unauthorized uses by
others of the Licensed Property, on or in relation to promotions
similar to the Licensed Promotion or products identical to similar
to or related to the Licensed Products and/or Licensed Premiums.
Licensor shall in its sole discretion have the right to settle or
effect compromises in respect thereof. Licensee shall not institute
any suit or take any action on account of such infringements,
imitations or unauthorized uses.
(i)
Licensee acknowledges receipt of
Licensor’s Style Guide and undertakes to utilize the
depictions of the Licensed Property (and, if authorized by
Licensor, any emblems and/or devices associated therewith) in the
form as set forth therein on all Licensed Products as well as
advertising, promotional, packaging or wrapping materials. In the
event that Licensee desires to utilize renditions which vary from
those as set forth in the Style Guide, Licensee shall make a
request to Licensor in that connection, and if the request is
approved, Licensor shall prepare appropriate Artwork and deliver
same to Licensee. Licensee shall utilize such Artwork solely in the
form furnished by Licensor, if Licensee decides to use such Artwork
in Licensee’s sole discretion, shall pay a reasonable fee to
Licensor in respect thereof not later than one month after delivery
thereof by Licensor to Licensee, and such fee shall be additional
to and not offset by any Guaranteed Consideration referred to in
Paragraph 1(b) hereinabove.
(j)
If Licensee is unable or unwilling
to use artwork from the Licensor’s Style Guide and if
Licensor is unable or unwilling to provide Licensee with Artwork as
described in subparagraph (h) above and if Licensor expressly
consents in writing, which consent shall not be unreasonably
withheld, but may be subject to such conditions as Licensor may
elect in its sole discretion, then and only then may the Licensee
create or procure the creation of Artwork. In any event, Licensee
shall assign or procure the assignment in writing of all rights,
copyright and otherwise, in and to any Artwork, and it is intended
that this provision shall take effect as an assignment of
prospective copyrights in Artwork yet to be created by or for. The
Licensee further undertakes to take all and any steps necessary for
the recordal or registration of the assignment(s) referred to
hereinabove.
9.
APPROVALS AND QUALITY
CONTROLS:
(a)
Licensee agrees to strictly comply
and maintain compliance with the quality standards, specifications
and rights of approval of Licensor in respect to any and all usage
of the Licensed Property on or in relation to the Licensed Products
and/or Licensed Premiums throughout the Term of this Agreement and
any renewals or extensions thereof (if applicable). Licensee agrees
to furnish to Licensor free of cost for its written approval as to
quality and style, samples of each of the Licensed Products and/or
Licensed Premiums, together with their packaging, hangtags, and
wrapping material, as follows in the successive stages indicated:
(i) rough sketches/layout concepts; (ii) finished artwork or final
proofs; (iii) pre-production samples or strike-offs; and (iv)
finished products, including packaged samples.
(b)
No Licensed Products and/or Licensed
Premiums and no material utilizing the Licensed Property shall be
manufactured, sold, distributed or promoted by Licensee without
prior written approval. In addition to the foregoing, Licensee
understands that it shall furnish to Licensor, scripts and
storyboards of any proposed media use of the Licensed Property as
may be authorized hereunder, in sufficient time for Licensee to
make all revisions which Licensor in its sole discretion may
request. Licensee may, subject to Licensor’s prior written
approval, use textual and/or pictorial matter pertaining to the
Licensed Property on promotional, display and advertising material
as may, in its reasonable judgment, promote the sale of the
Licensed
Products and/or Licensed Premiums.
All advertising and promotional materials relating to the Licensed
Promotion and Licensed Products and/or Licensed Premiums must be
submitted to the Licensor for its written approval at the following
stages appropriate to the medium used. For print materials,
submissions are to be made at the following stages: (a) rough
sketches or layout concepts; (b) finished artwork or final proofs;
and (c) finished materials. For television commercials, if approved
by Licensor, submissions are to be made at the following stages:
(a) initial concept; (b) storyboard, including written text; (c)
pencil tests and voice-overs for animation and/or selection of
performers for live action; and (d) a cassette of the finished
commercial prior to air date. For radio or other audio materials,
if approved by Licensor, submissions are to be made at the
following stages: (a) initial concept; (b) script; (c) voice-overs;
and (d) a cassette of the finished commercial prior to the air
date.
(c)
Approval or disapproval shall lie in
Licensor’s sole discretion. Licensor shall use its best
efforts to approve, disapprove or otherwise comment upon any items
submitted to it for approval as may be required hereunder within
ten (10) business days after receipt by it of such item(s). In the
event that Licensor fails to approve, disapprove or otherwise
comment upon the item(s) so submitted within said ten (10) business
days, then Licensee shall have the right to notify Licensor of such
failure by facsimile (evidenced by written confirmation of
facsimile transmittal) and Licensor shall thereafter be required to
approve, disapprove or otherwise comment upon the item(s) so
submitted within seven (7) business days after receipt by it of
said facsimile and failure to do so shall be deemed approval of any
item(s) so submitted. Any Licensed Products and/or Licensed
Premiums not so approved in writing shall be deemed unlicensed and
shall not be manufactured, distributed or sold. If any unapproved
Licensed Products and/or Licensed Premiums are being distributed or
sold, Licensor may, together with other remedies available to it
including, but not limited to, immediate termination of this
Agreement, require such Licensed Products and/or Licensed Premiums
to be promptly withdrawn from the market and to be destroyed, such
destruction to be attested to in a certificate signed by an officer
of Licensee.
(d)
Any material modification of a
Licensed Product and/or Licensed Premium must be submitted in
advance for Licensor’s written approval as if it were a new
Licensed Product and/or Licensed Premium. Any change involving the
Artwork appearing on a Licensed Product shall constitute a material
modification of such Licensed Product. Approval of a Licensed
Product and/or Licensed Premium which uses particular artwork does
not imply approval of such artwork for use with a different
Licensed Product and/or Licensed Premium.
(e)
Licensed Products and/or Licensed
Premiums 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 and/or
Licensed Premium originally approved has deteriorated in later
production runs, or if a Licensed Product and/or Licensed Premium
has otherwise been altered, Licensor may, in addition to other
remedies available to it, require that such Licensed Product and/or
Licensed Premium be immediately withdrawn from the
market.
(f)
Licensee shall permit Licensor to
inspect Licensee’s manufacturing operations, testing and
manufacturing payroll records (including those operations and
relevant records of any supplier or manufacturer approved pursuant
to Paragraph 10 (b) below) with respect to the Licensed Products
and/or Licensed Premiums.
(g)
If any changes or modifications are
required to be made to any material submitted to Licensor for its
written approval in order to ensure compliance with
Licensor’s specifications or standards of quality, Licensee
agrees promptly to make such changes or modifications.
(h)
Subsequent to final approval, no
fewer than twenty-four (24) production samples of Licensed Products
and/or Licensed Premiums will be sent to Licensor, to ensure
quality control simultaneously upon distribution to the public. In
addition, Licensor shall have the right to purchase any and all
Licensed Products and/or Licensed Premiums in any quantity at the
maximum discount price Licensee charges its best customer, assuming
similar quantities and shipment terms.
(i)
To avoid confusion of the public,
Licensee agrees not to associate other characters or properties
with the Licensed Property on the Licensed Products and/or Licensed
Premiums 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.
(j)
Pursuant to this Agreement, Licensee
shall use its reasonable commercial efforts to notify its customers
of the requirement that Licensor has the right to approve all
promotional, display and advertising materials that incorporate the
Licensed Property. It is understood and agreed that the use of
images featuring the Licensed Product and its approved packaging in
promotional, display and advertising materials is excluded from
this requirement, provided, however, none of the Licensed Property
is utilized separately from the Licensed Product and its
packaging.
(k)
Any request by Licensee to use
animation or animated character voices in Licensed Products or
related packaging or advertising materials (including, without
limitation, television or radio commercials) is subject to
Licensor’s prior written approval. If the requested use is so
approved by Licensor, such animation or character voices will be
produced for or provided to Licensee by Warner Bros. Animation or
other third parties identified and approved by Licensor, and will
be subject to such additional fees and other terms set forth in a
separate agreement (or agreements) between Licensee and Warner
Bros. Animation and/or other third parties identified and approved
by Licensor. In the event any video or sound clips
(“Clips”) or stills shots (“Stills”) from
any television series or motion picture are approved by Licensor in
writing for use by Licensee in Licensed Products or related
packaging or advertising materials (including, without limitation,
television or radio commercials), such Clips or Stills will be
provided by Warner Bros. Television and/or Warner Bros. Theatrical,
as applicable, subject to the terms set forth in Paragraph 9 (1)
below and, if required by Licensor, pursuant to such additional
fees and other terms set forth in a separate agreement (or
agreements) between Licensee and Warner Bros. Television and/or
Warner Bros. Theatrical. Any payment made or payable to third
parties (including, without limitation, Warner Bros. Animation,
Warner Bros. Television and Warner Bros. Theatrical) with respect
to such animation, character voices, Clips or Stills will be in
addition to and will not offset the Guaranteed Consideration
required to be paid by Licensee hereunder.
(l)
Licensee will not make or authorize
any reproduction whatsoever of any Clips or Stills, in whole or in
part, except in connection with the Licensed Products and/or
related packaging or advertising materials as such may be approved
for use by Licensor as set forth above in Paragraph 9(k). Licensee
will not have the right to edit or otherwise alter the Clips or
Stills, or any portion thereof, except as specifically approved in
writing by Licensor. Licensee will be solely respon
