Exhibit 10.36
Portions of this exhibit have been deleted and filed separately with the
Securities and Exchange Commission pursuant to a request for confidential
treatment. The redacted portions are identified by brackets with the character
"x" indicating deleted information.
EXHIBIT 10.36
MEMORANDUM OF AGREEMENT
Agreement made as of January 19, 1996, between Saban Merchandising, Inc.
("Saban"), and Ventura Film Distributors, B.V. ("Ventura"), on the one hand, and
Bandai America Incorporated ("Bandai"), on the other hand. Saban and Ventura are
sometimes collectively referred to herein as "Licensor".
The parties hereto hereby agree that, in consideration of Bandai's payment
to Licensor of the Advances and Royalties set forth hereinbelow, Licensor hereby
licenses Bandai the exclusive rights, during the Term and in the Territory, as
set forth hereinbelow, to manufacture, market, and sell Products using the
Licensed Items, as set forth hereinbelow.
1. Property: "Property" means "Beetle Fighter", and such sequels thereto
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acquired by Saban Entertainment, Inc. ("SEI"), and Saban International N.V.
("SINV") or any affiliate thereof, each of which is produced by Toei Company,
Limited ("Toei"), and all or parts of which are used in any children's
television series tentatively entitled "Big Bad Beetleborgs" ("Series") and
theatrical features based thereon (collectively, "Works"). "Property" also
includes any materials created by Saban and which are included in the Works.
2. Licensed Items: "Licensed Items" means the fictional characters and
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additional fictional characters and the names, likenesses, designs, creations,
and personae thereof (collectively, "Series Characters"), and all fictional
places, props, and materials (collectively, "Series Elements") which appear in
the Property and any feature film (live action or animated) and any other
television programs or feature films based on the Property which Saban or any
affiliate of Saban obtains the right to exploit together with any products or
line of products based upon the Series Characters and/or Series Elements,
including any trademarks and copyrights Licensor may own or have the right to
license with regard to all of the foregoing.
3. Products: "Products" are set forth in Schedule "A" attached hereto and by
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this reference made a part hereof.
4. Territory: "Territory" means the universe, excluding Brunei, Burma,
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Cambodia, China, Hong Kong, Indonesia, Japan, Korea, Laos, Macao, Malaysia, the
Philippines, Singapore, Taiwan, Thailand, and Vietnam. Rights granted to Bandai
herein for exercise in the United States of America ("U.S.") are granted by
Saban, and rights granted to Bandai herein for exercise in the balance of the
Territory are granted by Ventura.
5. Advance: "Advance" means the fully-recoupable and (except as set forth
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hereinbelow) [XXXXXXXXXXXXXXXXXXXXXX] which Bandai shall pay to Licensor in the
following installments:
a. [XXXXXXXX] on signing of this memorandum of agreement;
b. [XXXXXXXX] on February 15, 1996;
c. [XXXXXXXX] on May 15, 1996;
d. [XXXXXXXX] on August 15, 1996;
e. [XXXXXXXX] on October 15, 1996; and
f. [XXXXXXXX] on December 15, 1996.
[XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX] Any unearned portion
of the Advance paid to Licensor shall be refunded if the Series based on the
Property is not broadcast in the U.S. over the Fox Children's Network ("FCN")
Mondays through Fridays between 3 p.m. and 5 p.m. during a three and one-half
month period beginning September 1, 1996, and ending December 31, 1996 ("Fourth
Quarter 1996"). FCN may occasionally substitute a Saturday morning exhibition
for one weekday exhibition, which nonetheless will be deemed to meet the
requirements set forth in the preceding sentence. Bandai acknowledges and
agrees that the above-mentioned requirement that the Series be broadcast between
3 p.m. and 5 p.m. will be satisfied if at least [X] of FCN's clearance for the
Series falls within such time period; provided, however, that if during Fourth
Quarter 1996 the average FCN clearance for the Series is less than [X]
("clearance shortfall"), the Advance shall be reduced by [XXXXXXXXXXXXXX] for
each percentage point of clearance shortfall. By way of example, if the average
FCN clearance for the Series is [X], the Advance shall be reduced by
[XXXXXXXXXXXXXXXXXXXXXXXX XXXXXX]; if the average FCN clearance is [X] the
Advance shall be reduced by [XXXXXXXXXXXXXXXXXXXXX]; or if the average FCN
clearance is [X] or less, the Advance shall be reduced by [X], resulting in
elimination of the Advance. [XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX] If fewer than [X],
but at least [X] new Series episodes are broadcast during Fourth Quarter 1996,
the Advance shall be reduced pro-rata [XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX] If fewer
than [X] new Series episodes are broadcast during Fourth Quarter 1996, if the
Series is broadcast in U.S. syndicated television rather than over FCN during
Fourth Quarter 1996, the [XXXXXXXXXXXXXXXX] and [XXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX]
6. Royalties: "Royalties" means the following percentages of sales throughout
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the Territory of Products (except "Apparel" as set forth in Schedule "B" hereto)
by Bandai and its affiliates, which Bandai shall pay to Saban with respect to
the U.S. and to Ventura with respect to the balance of the Territory:
2
a. On aggregate worldwide sales of up to [XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XX]
b. On aggregate worldwide sales of more than [XXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXX]
c. On aggregate worldwide sales of more than [XXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXX]
d. On aggregate worldwide sales of more than [XXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX]; and,
e. On aggregate worldwide sales of more than [XXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXX]
Bandai will account quarterly. Licensor will have customary audit rights.
Advances paid by Bandai to Licensor shall be recoupable from Royalties due and
payable to Licensor.
7. Term: "Term" means the period for which Licensor (or any of its affiliates)
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has obtained exploitation rights in the Property from Toei (Licensor presently
has rights in the Property which run concurrently with Licensor's rights in the
Toei property Che Xx Xx Ranger a/k/a Galaxy Rangers).
8. Copyright and Trademark Notices; Approvals: As between Saban and Bandai, all
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copyrights, trademarks, trade dress, and related intellectual property rights in
the Property and Products shall belong to Saban. Bandai and its affiliates
shall include Saban's copyright and trademark notices, in the form(s) specified
by Saban, on all Products and advertising, promotion, POP materials, packaging,
hang tags, and other materials used in connection with the Products. The size of
such notices and other identifications of Saban shall be substantially the same
as those appearing on Mighty Morphin Power Rangers and Saban's Masked Rider
products. Saban will have the right of prior approval, not to be unreasonably
withheld, of all packaging, advertising, publicity, promotion, and commercials
for all Products. With respect to interactive software Products described in
Schedule "A", Saban will have the right of prior approval, not to be
unreasonably withheld, of all creative elements (including without limitation
game concept and design) and content. Approval shall be deemed given if Licensor
has not given its disapproval within ten (10) business days (or, with respect to
video games, within fifteen [15] business days) after its receipt of materials
for approval.
9. Scripts: Saban shall furnish all scripts for Series episodes to Bandai.
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10. Screen Credits: Licensee accepts the designation by Licensor of an "in
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association with" production credit for Renaissance Atlantic Films ("RAF") and a
personal production credit for Xxxxx Xxxx is appropriate.
3
11. Provision of Documentation: Subject to confidentiality requirements imposed
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on Licensor, Licensor will provide Bandai with a copy of the agreements between
Saban International Services, Inc., and Saban International N.V., on the one
hand, and Toei Company, Ltd., on the other hand, with respect to the Property,
and between Saban Entertainment, Inc., and Fox Children's Network, Inc., with
respect to broadcast of the Series.
12. Sublicensing: Bandai shall not sublicense any rights licensed herein except
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to Bandai's affiliates and subsidiaries, Apple Computer (with respect to the
Apple PowerPlayer game system), Nintendo, Sega, and Sony (each with respect to
its proprietary video game systems), and licensees of coin-operated arcade game
rights.
The parties agree that forthwith they will negotiate in good faith in order
to reach a more formal agreement containing the terms and conditions set forth
herein together with such other terms and conditions as are customarily found in
agreements of this nature and which are consistent with the terms and conditions
set forth in the agreement between Saban and Renaissance Atlantic Entertainment
Fund dated November 1, 1992. However, until a more formal agreement has been
fully executed, this Agreement shall constitute the understanding of the parties
and shall be binding upon the parties hereto and the successors and assigns of
each of them.
AGREED TO AND ACCEPTED:
BANDAI AMERICA INCORPORATED
By /s/ Xxxx Xxxxxx
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Its Xxxx Xxxxxx
President
SABAN MERCHANDISING, INC. VENTURA FILM DISTRIBUTORS, B.V.
By /s/ Xxxxxxx Xxxxx By /s/ Xxxxxx Xxxx
------------------------- ------------------------
Its SR. VICE PRESIDENT Its XXXXXX XXXX
ATTORNEY-IN-FACT
4
Schedule "A"
"Products" means only:
1. Articulated and non-articulated figures, action figures, and bendables in
all sizes and materials;
2. Dolls and doll fashions in all sizes and materials;
3. Vehicles, environments, playsets, and other accessories scaled to figures,
action figures, bendables, and dolls, and (on a non-exclusive basis) collector
cards and mini-comic books only when packaged with such figures, action figures,
bendables, and dolls;
4. Non-powered vehicles, excluding (i) bicycles, tricycles, unicycles,
skateboards, and scooters and (ii) model kits with 20 or more pieces;
5. Role-playing toys, excluding (i) walkie-talkies and (ii) Halloween costumes
and masks;
6. Sidewalk chalk;
7. Collector trading cards sold only through vending machines; and,
8. Apparel, in accordance with the provisions of Schedule "B" attached hereto.
9. The following forms of interactive software:
(i) video games designed for play only on the Apple "Xxxxxx" and Bandai
PowerPlayer video game systems;
(ii) all platforms of Nintendo-video game systems whether now in
existence, or hereafter created;
(iii) coin-operated arcade games and, on a non-exclusive basis, prizes (in
the nature of toys) for on-site redemption for coin-operated arcade games;
provided, however, that if Bandai has not entered into any agreement for
the exploitation of the coin-operated arcade game rights within one (1)
year after the initial U.S. broadcast of the Series, such coin-operated
arcade game rights will revert to Licensor ;
(iv) video games designed for play only on the Sega video game systems and
Sony Playstation video game systems, provided, however, that Bandai shall
pay Licensor [X XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX]
of units of such video games; provided, however, that if active development
of Sega video games and/or Playstation video games has not commenced by
January
A-1
1997 or if Sega video games and/or Playstation video games are not
released in the U.S. by November 1997, those individual Sega platforms
and/or Playstation platforms, as applicable, for which such video games
have not been developed or released thereupon will revert to Saban.
As used herein, "video game" and "arcade game" means an electronic game,
embodied in any electronic form (including without limitation cartridge,
computer chip, magnetic media, or optical disc), the distinguishing feature of
which is a competition between human players or between the game software and
one or more human players (the "Distinguishing Feature"), played by means of
images on a video screen. All other forms of software, multimedia, and
interactive media without the Distinguishing Feature (including without
limitation storytelling software, informational software, and so-called "screen
savers") are reserved to Licensor.
Notwithstanding anything to the contrary set forth herein, "Products" does
not mean or include:
A. Premium and promotional items distributed through customary premium
and promotional channels (such as fast-food restaurants and packaged foods and
drinks), provided, however, that such premium and promotional items shall not
consist of standalone figures and/or vehicles offered for sale to the consumer
individually or in combination with other figures and/or vehicles (but figures
and/or vehicles that are given to the consumer "free" or sold in combination
with other products are permitted) and Bandai shall have a right of consultation
with regard to the timing of distribution of such premium and promotional items;
B. Gift items distributed through customary gift channels;
C. Rack toys retailing at not more than US$4.00 or the equivalent
(adjusted annually for inflation), provided, however, that such rack toys shall
not consist of standalone figures and/or vehicles which have no usefulness other
than as toys;
D. Radio-controlled, remote-controlled, and racing track vehicles and
kid-sized ride-ons and ride-ins (regardless whether or not powered);
E. Arts and crafts;
F. Puzzles and games, including handheld tabletop pinball games, but
excluding coin-operated arcade games; and,
G. Musical instruments, sporting goods, and inflatables.
If, after January 15, 1997, Licensor desires to license any Product (other
than action figures, toy vehicles, transforming toys [similar to Zords], and
Nintendo video games) that is not then marketed by Bandai or its permitted
sublicensees, Licensor may notify Bandai in writing
A-2
with respect thereto, and, Bandai will have sixty (60) days thereafter to notify
Licensor in writing whether or not Bandai intends to market such item. If Bandai
(i) fails to give notice within such sixty (60) day period, (ii) gives notice of
its intention not to market such Product, or (iii) fails to commence significant
marketing of such Product within one (1) year after its giving notice of its
intention to so market such item, upon the earlier occurrence thereof, Licensor
will have the right to manufacture and market and/or license any third party the
right to manufacture and market such item and such item shall be deemed excluded
from the definition of Product, and Licensor shall have no financial or other
obligation to in connection therewith.
A-3
Schedule "B"
Apparel
Notwithstanding anything to the contrary set forth elsewhere in this
Agreement, the following terms and conditions shall apply to Apparel:
"Apparel" means only the following clothing categories:
T-shirts; and,
fleece sweat shirts and sweat pants.
The Term for Licensee's rights in Apparel terminates on December 31, 1997;
the parties shall negotiate renewal terms in good faith.
Licensee's rights in Apparel are for exercise only in the U.S.; provided,
however, that Licensee shall have a 90 day right of first negotiation,
subject to Licensor's (or its sublicensees') current licenses, to acquire
the right to manufacture, market, and sell Apparel in countries in Europe.
Licensee's rights in Apparel are limited to the following distribution
channels:
Mass merchandisers, such as K-Mart, Target, and Walmart; mid-tier
retailers, such as Sears, JCPenney, Wards, and Mervyns; and, so-called
"upstairs" department stores, such as Xxxxxxxx-May, Macy's, and
Bloomingdales.
Licensee's rights in Apparel during the Term therefor are non-exclusive in
the mass merchandiser and mid-tier retailer distribution channels and
exclusive in the "upstairs" department store distribution channel.
[XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX] that Licensor currently
receives from any third party for a non-exclusive U.S. license for T-shirts
and fleece sweat shirts and sweat pants. [XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXX] Such royalty for Apparel shall be in lieu of
any other royalty rate set forth in paragraph 6 of this Agreement. All
royalties payable for Apparel are fully recoupable from Advances set forth
in paragraph 5 hereof.
Licensee's affiliate in Europe shall have a 90 day right of first
negotiation, subject to Licensor's (or its sublicensees') current licenses,
to acquire the non-exclusive right to manufacture, market, and sell
backpacks based on the Property in the U.K. and Europe.
B-1
Licensee, or its designee shall have a right of first negotiation to
acquire Apparel as part of the grant of rights for the next Saban property
for which Licensee or its designee acquires a master toy license.
B-2
