MANUFACTURING AND JOINT DISTRIBUTION
MERCHANDISING AGREEMENT
This MANUFACTURING AND JOINT DISTRIBUTION MERCHANDISING AGREEMENT (THIS
"AGREEMENT") is made and entered into as of September 1, 1996 by and between
SONY SIGNATURES INC., A DELAWARE CORPORATION ("SIGNATURES"), and LIBERTY MINT, a
Utah corporation.("Distributor").
RECITALS
A. Signatures is in the business of, among other things, manufacturing
and selling, and licensing others to manufacture and sell, merchandise embodying
the name and/or image of musical artists.
B. Distributor is in the business of, among other things, manufacturing
and selling commemorative coins, primarily through wholesale and catalog
channels of distribution.
C. Signatures has the ability to sell merchandise embodying the name
and/or image of musical artists through unique channels of distribution,
including at venues where such artists are performing (either directly or
through a program insert or handout), CD inserts, and various affiliated
websites.
D. The parties hereto desire to establish terms and conditions of a
manufacturing and joint distribution arrangement under which Signatures and
Distributor will manufacture, use and sell Articles (as defined herein) in the
manner provided herein.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein, the parties hereto agree as follows:
1. DEFINITIONS. Capitalized terms used in this Agreement without
definition shall have the meanings ascribed to them in Paragraph 15, unless the
context indicates otherwise.
2. GRANT OF RIGHTS.
2.1 Signatures hereby grants to Distributor, and Distributor hereby
accepts, the exclusive right in the Domestic Territory and the non-exclusive
right in the International Territory to utilize during the Term the Proprietary
Subject Matter solely on or in connection with the manufacture and sale of
Articles, subject to the terms and conditions hereunder.
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2.2 Distributor's rights and obligations hereunder are personal to
Distributor and shall not be sublicensed, assigned, mortgaged or otherwise
transferred or encumbered by Distributor or by operation of law, unless
otherwise previously agreed in writing by Signatures.
2.3 Specifically, Distributor shall not be entitled to sublicense the
right to manufacture ARTICLES TO ANY THIRD PARTY ("SUPPLIER"), in whole or in
part, without Signatures' prior written consent. If such consent is granted by
Signatures, Distributor represents and warrants that it shall familiarize each
such Supplier with the terms and conditions of this Agreement as they apply to
such Supplier. In addition, Distributor acknowledges and agrees that
Distributor's use of any such Supplier shall in no way derogate from or relieve
Distributor of any of its obligations under this Agreement. Distributor further
acknowledges and agrees that it shall be responsible and primarily liable for
all activities and obligations of all such Suppliers with respect to the
Articles. Furthermore, if Signatures so requests, Distributor shall cause each
such Supplier to sign an agreement with Distributor for the manufacture of the
Articles, in whole or in part, in a form satisfactory to Signatures.
3. TERM.
3.1, THE TERM OF THIS AGREEMENT (THE "TERM") shall commence as of
September 1, 1996 and end on August 31, 1999, unless sooner terminated as
provided herein.
3.2 Notwithstanding anything to the contrary contained in Paragraph
3.1, Signatures shall have the right to terminate this Agreement as of October
1, 1997 if Distributor has not sold a sufficient number of Articles during the
period September 1, 1996 through August 31, 1997 to have generated at least
Three Hundred Thousand Dollars ($300,000) of gross sales. In order to exercise
this right, Signatures must provide Distributor with written notice of its
intention to exercise such right no later than September 30, 1997.
3.3 Notwithstanding anything to the contrary contained in Paragraph
3.1, Signatures shall have the right to terminate this Agreement as of October
1, 1998 if Distributor has not sold a sufficient number of Articles during the
period September 1, 1997 through August 31, 1998 to have generated at least Six
Hundred Thousand Dollars ($600,000) of gross sales. In order to exercise this
right, Signatures must provide Distributor with written notice of its intention
to exercise such right no later than September 30, 1998.
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4. PAYMENTS:
4.l Distributor shall pay Signatures and, as applicable, Signatures shall
pay Distributor, and amount equal to fifty percent (50%) of the Net Profit
therefrom. In no event will Signatures be liable to Distributor for any Net
Losses, and in no event may any Net Losses be used to offset any Licensor
Royalties to be paid hereunder. Notwithstanding the foregoing, Net Losses may be
carried forward by Distributor during the Term to offset Net Profit.
4.2 Signatures' share of the Net Profits as set forth in Paragraphs 4.1
shall be referred to as "ROYALTIES." Royalties hereunder shall accrue when the
Articles are sold, shipped, distributed, billed and/or paid for, whichever
occurs first.
4.3 In addition to the applicable Royalties, under all circumstances,
Distributor shall pay Signatures an amount equal to the applicable Licensor
Royalties.
5. ACCOUNTING; AUDITING.
5.1 DISTRIBUTOR SHALL (I) RENDER ROYALTY REPORTS ("ROYALTY REPORTS") to
Signatures on a quarterly basis within thirty (30) days after the close of each
calendar quarter during the Term hereof, whether or not any payment is shown to
be due to Signatures thereunder, and (ii) remit payments due Signatures, if any,
along with such Royalty Reports. In addition, to Royalties, such payments due
Signatures shall include Licensor Royalties and the reimbursement of expenses
incurred by Signatures which are deducted from the calculation of Net Profits.
If the Territory covers more than one country, Royalty Reports shall be prepared
on a country-by-country basis. Royalties shall be paid in U.S. Dollars and
acceptance thereof by Signatures shall not preclude Signatures from questioning
the correctness of same at any time. All Royalties shall be made without set-off
of any amount whatsoever, whether based upon any claimed debt or liability of
Signatures to Distributor. All Royalties and Royalty Reports (which shall be on
statement forms to be furnished by Signatures to Distributor) shall be sent to:
Sony Signatures Inc., Xxx Xxxxxx Xxxxxx, Xxx Xxxxxxxxx, XX 00000, Attn.:
Accounting.
5.2 Distributor shall keep and maintain accurate books of account and
records covering all transactions relating to this Agreement. Signatures shall
be entitled to (i) audit such books and records once during each calendar year,
upon five (5) days prior written notice to Distributor, and (ii) make copies
arid summaries of such books and records. All such books of account and records
shall be retained
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by Distributor for a minimum of three (3) years after expiration or termination
of this Agreement. If Signatures' duly authorized representative discovers a
deficiency in the Royalties paid to Signatures for ANY PERIOD UNDER AUDIT, (AN
"AUDIT DEFICIENCY"), Distributor shall promptly pay such Audit Deficiency to
Signatures and, if such Audit Deficiency is five percent (5%) or more of the
Royalties paid to SIGNATURES FOR SUCH AUDIT PERIOD, DISTRIBUTOR SHALL ALSO
REIMBURSE SIGNATURES FOR ALL costs and expenses incurred by Signatures in
connection with such audit (including, without limitation, reimbursement of
Signatures' overhead expenses in an amount equal to what the reasonable expenses
would have been if such services were performed by third-party auditors in the
event Signatures uses its in-house auditors to examine Distributor's books and
records).
5.3 Without prejudice to any other rights of Signatures hereunder, time is
of the essence regarding all payments due hereunder and Distributor shall pay
interest on any Audit Deficiency, as well as on all delinquent Royalty payments
hereunder, at two percent plus the "prime rate" established by the Bank of
America in San Francisco, compounded daily at the rate from time to time in
effect and calculated from the date on which such payment was due.
5.4 Royalties shall be credited to Signatures' account and paid to
Signatures in U.S. Dollars at the exchange rate received by Distributor at the
time of conversion. If Distributor is required by law to pay a tax on the
applicable Licensor's behalf due to the earnings or liability of such Licensor
in the Territory, Distributor may deduct the full amount of such tax from any
moneys payable to Signatures. After any such deduction or advance, Distributor
shall provide Signatures with tax certificates in the applicable Licensor's name
for such amount.
6. COPYRIGHT: TRADEMARKS.
6.1 Distributor's use of the Proprietary Subject Matter shall inure
exclusively to the benefit of Signatures and the Licensor for which such
Proprietary Subject Matter relates and Distributor shall not acquire any rights
therein. All ownership, copyrights, trademarks and other rights in the
Proprietary Subject Matter, and in all artwork, packaging, copy, literary text,
advertising material and promotion material of any sort utilizing the
Proprietary Subject Matter, including all such material developed by
Distributor, shall vest with Signatures and title thereof shall be in the name
of Signatures or its designee. All such items and all Articles shall bear the
copyright and trademark notices and any other legal notices which Signatures may
from time to time prescribe.
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6.2 Distributor recognizes the value of the goodwill associated with the
Proprietary Subject Matter, and that the Proprietary Subject Matter has acquired
secondary meaning in the mind of the public. Distributor agrees, during the
T'erm and thereafter, never to contest the rights of any Licensor or Signatures
in such Proprietary Subject Matter or the validity of the license herein granted
to it. DISTRIBUTOR SHALL NOT AT ANY TIME APPLY FOR any registration of any
copyright, trademark or other designation which would affect any Licensor's
ownership of, or Signatures' rights to, the Proprietary Subject Matter nor file
any document with any governmental authority to take any action which would
affect any Licensor's ownership of, or Signatures' rights to, the Proprietary
Subject Matter, or assist anyone else in doing so. Distributor further agrees
that it shall not at any time use and/or authorize the use of any configuration,
trademark, trade name or other designation confusingly similar to the
Proprietary Subject Matter.
6.3 Distributor shall assist Signatures, at Signatures' request and
expense, in the procurement and maintenance of each Licensor's and/or
Signatures' rights in the Proprietary Subject Matter (including trademark and
copyright protection). In connection therewith, Distributor shall, without
limitation, execute and deliver to Signatures in such form as Signatures may
reasonably request, all instruments necessary to (i) effectuate copyright and
trademark protection, (ii) record Distributor as a registered user of any
trademarks pursuant to this Agreement, or (iii) cancel any such registration.
Signatures makes no warranty or representation that trademark or copyright
protection shall be secured in the Proprietary Subject Matter.
6.4 Signatures and Distributor shall cooperate to ensure that third parties
may not unlawfully infringe on or imitate the Proprietary Subject Matter or
engage in any acts of unfair competition involving the Proprietary Subject
Matter. Each party shall promptly notify the other of any such infringements,
imitations, or acts by third parties that comes to its attention. Signatures
shall have the exclusive right, exercisable at its sole discretion, to institute
in its own name and/or Distributor's name and to control, all actions against
third parties relating to a Licensor's copyrights and trademarks in the
Proprietary Subject Matter, at Signatures' expense. Signatures shall be entitled
to receive and retain all amounts awarded, if any, as damages, profits or
otherwise in connection with such suits. If Signatures does not institute such
an action, Distributor may initiate and prosecute any claims or suits in its
name and/or, with Signatures' prior approval, in Signatures' name, to enjoin
such infringement and to recover damages based thereon. Distributor shall keep
Signatures informed of all material developments and events relating to such
action. Signatures shall also have the right to participate in any action
initiated by Distributor. No claim or action instituted by Distributor shall be
settled without the approval of Signatures. In the event- that any sums are
recovered from prosecution
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or settlement of a claim or suit initiated by Distributor, Distributor shall pay
Signatures fifty percent (50%) of the recovery, after deduction of costs and
expenses, including attorneys' fees. To the extent costs and expenses of the
prosecution or settlement of a claim or suit initiated by Distributor exceeds
any recovery, or in the event there is no recovery, then Distributor shall bear
all of such expenses.
7. INDEMNIFICATION
7.1 Signatures shall indemnify and hold harmless Distributor and its
parent, subsidiaries, affiliates, officers, directors, representatives,
employees and agents from and against any and all claims, liabilities, demands,
causes of action, judgments, settlements and expenses (including, but not
limited to, reasonable attorney's fees and court costs) arising solely out of or
in connection with Distributor's use of the Proprietary Subject Matter as
authorized hereunder; provided, however, that Distributor shall notify
Signatures in writing within ten (10) days after Distributor receives
notification of any claim or suit relating to the Proprietary Subject Matter;
provided, further, however, that the failure to so notify Signatures shall not
relieve Signatures from any liability under this Paragraph 7.1 unless, and only
to the extent that, such failure results in prejudice to or forfeiture of,
substantive rights or defenses of Signatures. The foregoing indemnity shall not
be construed to cover any claim with respect to which Distributor has committed
to indemnify Signatures under Paragraph 9.2 below. In no event shall Signatures
be liable for any consequential damages or loss of profits which Distributor may
suffer arising out of same. Signatures shall have the option to undertake and
control the defense and settlement of any such claim or suit and Distributor
shall cooperate fully with Signatures in connection therewith; provided,
however, that in no event shall any such claim affecting the rights of
Distributor be settled without the prior written consent of Distributor, such
consent not to be unreasonably withheld. In the event Signatures does not
exercise its option to undertake and control the defense and settlement of any
such claim or suit, then Distributor shall have the right to defend any such
action with attorneys of its own selections.
7.2 During and after the Term hereof, Distributor shall indemnify and
hold harmless Signatures and each Licensor, and their respective parents,
subsidiaries, affiliates, officers, directors, representatives, employees and
agents, and all persons whose names and/or likenesses are licensed hereunder
from and against any and all claims, liabilities, demands, causes of action,
judgments, settlements and expenses (including, but not limited to, reasonable
attorney's fees and court costs) arising out of or in connection with (i) the
design, manufacture, packaging, distribution, shipment, advertising, promotion,
sale or exploitation of the Articles, and (ii) any breach of any representation
or warranty made by Distributor
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hereunder. Without limiting the generality of the foregoing, Distributor's
indemnity shall specifically apply to claims relating to or based upon defects
in the Articles, ' whether hidden or obvious, and despite Signatures' approval
of the Articles " it being agreed that any governmental order of recall or
injunction against distribution and/or sale (other than any injunction arising
out of Signatures' breach of any warranty hereunder) shall, as between
Distributor and Signatures, be deemed conclusive proof of such defect for
purposes of invoking Distributor's indemnity hereunder. Signatures shall notify
Distributor in writing within ten (10) days after it receives notification of
any claim or suit relating to the Proprietary Subject Matter; provided, however,
that the failure to so notify Distributor shall not relieve Distributor from any
liability under this Paragraph 7.2 unless, and only to the extent that, such
failure results in prejudice to or forfeiture of, substantive rights or defenses
of Distributor. The foregoing indemnity shall not be construed to cover any
claim with respect to which Signatures has committed to indemnify Distributor
under Paragraph 9.1 above. In no event shall any such claim affecting the rights
of Licensor or Signatures be settled without the prior written consent of
Signatures, such consent not to be unreasonably withheld. At Signatures' option
and expense, Signatures shall have the right to defend any such action with
attorneys of its own selection.
8. INSURANCE. Distributor shall at all times while this Agreement is in effect
and for three (3) years thereafter, obtain and maintain at its own expense, from
a qualified insurance carrier, first and third party insurance, including,
without limitation, products and contractual liability coverage, which includes
as additional insureds each Licensor and Signatures, and their respective
parents, subsidiaries, affiliates, officers, directors, employees,
representatives and agents. The amount of coverage shall be a minimum of One
Million ($1,000,000) combined single limit (with no deductible amount) for each
single occurrence for personal injury, bodily injury and/or property damage. The
policy shall provide for thirty (30) days written notice to Signatures from the
insurer by registered or certified mail, return receipt requested, in the event
of any modification, cancellation or termination. tjpon execution of this
Agreement, Distributor shall furnish Signatures with a certificate of insurance
issued by the carrier evidencing same. In no event shall Distributor
manufacture, advertise, distribute or sell any Articles prior to Signatures'
receipt of such certificate of insurance.
9. ARTWORK; APPROVALS; SAMPLES; QUALITY CONTROL.
9.1 For each individual Property, promptly after receipt of promotional
materials and/or photographs, designs, materials, film, and artwork embodying
the Proprietary Subject Matter ("ARTWORK") therefor, Distributor shall notify
Signatures
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if it does not intend to manufacture and Articles embodying such the
Proprietary Subject Matter relating to such Property. In the event Signatures
receives .such notification, then the exclusive right and license granted to
Distributor pursuant to Paragraph 2.1 shall, with respect to such Licensor's
Proprietary Subject Matter and/or product category or categories of Articles,
terminate and Distributor shall have no rights with respect thereto. As a
result, in such event, Signatures shall be entitled to license the same to any
other person or entity without any liability to Distributor whatsoever.
Distributor shall indemnify Signatures for any losses it suffers arising out of
Distributor's failure to timely notify Signatures as hereinabove provided.
9.2 Distributor shall have the right to create, or have a third-party
create, artwork in original form and/or artwork derived from Artwork, which
includes the Proprietary Subject Matter for use on the ARTICLES ("DISTRIBUTOR
ORIGINAL AND DERIVATIVE ARTWORK"). All intellectual property rights (including
but not limited to copyright) in Distributor Original and Derivative Artwk)rk
shall be owned by Signatures; provided, however, that Distributor shall leave a
non-exclusive license to copy and use such Distributor Original and Derivative
Artwork for the purposes specified in this Agreement. If Distributor engages any
third parties who are not employees of Distributor to make any contribution to
the invention or creation of any Distributor Original and Derivative Artwork so
that such third parties might be deemed "authors" or "inventors" of such artwork
or designs (as such terms are used in present or future United States copyright
and or patent statutes or judicial decisions), then Distributor shall obtain
from all such parties, and furnish to Signatures, a full assignment of rights in
and to such artwork and/or designs (free and clear of any and all claims or
rights of any nature) vesting same in Signatures.
9.3 All Articles and all artwork (whether Artwork or Distributor
Original and Derivative Artwork), copy, packaging, literary text and all
promotional material related to the Articles, including the QUALITY AND STYLE
THEREOF (COLLECTIVELY "MATERIALS"), shall be subject to Signatures'
discretionary approval at all stages of development and production. Distributor
may not manufacture, use, offer for sale, sell, advertise, ship or distribute
any Articles or packaging and/or promotional material related thereto, without
Signatures' prior written approval. For each Property, promptly after receipt of
Artwork therefor, Distributor shall, at its own cost, furnish to Signatures for
preliminary approval, one (1) PROTOTYPE OF EACH ARTICLE ("PROTOTYPE") and/or one
(1) drawing or rough cut of each Article and MATERIAL (COLLECTIVELY "PRELIMINARY
ARTWORK"), as applicable. All such Prototypes and/or Preliminary Artwork shall
be sent to: Sony Signatures Inc., Xxx Xxxxxx Xxxxxx, Xxx Xxxxxxxxx, XX 00000,
Attn.: Xxxxxx Xx. In the event that, for any particular Property, Preliminary
Artwork relating thereto is not promptly furnished
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to Signatures, then, the exclusive right and license granted to Distributor
pursuant to Paragraph 2.1 shall, with respect to such Property, become a
non-exclusive right and license. Signatures shall promptly notify Distributor as
to whether Signatures has approved or disapproved such Prototype and/or
Preliminary Artwork, it being understood by Distributor that each Prototype
and/or Preliminary Artwork may be subject to the approval of the applicable
Licensor. Any changes required by Signatures to any such Prototypes and/or
Preliminary Artwork which have been disapproved by Signatures, shall be made by
Distributor. Thereafter, Distributor shall submit final samples of all Articles
and Materials to Signatures for filial approval. With respect to all such
samples which have received Signatures' final approval, Distributor shall not
depart therefrom in any respect, without Signatures' prior written approval.
9.4 Distributor shall furnish to Signatures, at cost, a minimum of six
(6) samples of each finished Article from the first production run, together
with its packaging and promotional materials. Distributor shall permit
Signatures to inspect the production of the Articles on Distributor's premises
at all reasonable times, to ensure that the provisions of this Agreement are
being fully complied with.
9.5 Distributor acknowledges that if the Articles were proven to be
unsafe or were of inferior quality in design, material or workmanship, the
substantial value and goodwill which Licensors and Signatures have built up and
now possess in the Proprietary Subject Matter would be impaired. Accordingly, it
is an essential condition of this Agreement, and Distributor hereby covenants
and agrees: that the Articles shall be safe for use, free of defects in
materials and workmanship, fit for their intended purpose, and of such quality,
style and appearance as the final approved samples submitted to Signatures; that
such Articles will be manufactured, packaged, sold, distributed and advertised
in accordance with all applicable (whether national, federal, state, provincial
or local) laws; and that the policy of sale, distribution and/or exploitation by
Distributor shall be of high standard and to the best advantage of the
Proprietary Subject Matter and that the same shall in no manner reflect
adversely upon the good name of Signatures, any of the Licensors, or the
Proprietary Subject Matter.
10. RESERVED RIGHTS.
10.1 Signatures shall not be prevented from granting third parties the
right to use the Proprietary to use the Proprietary Subject Matter in any manner
whatsoever, except as otherwise provided herein.
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10.2 Signatures reserves all rights not expressly granted to
Distributor hereunder.
10.3 Notwithstanding anything to the contrary contained in this
Agreement, this Agreement is expressly subject and subordinate to any rights
each of the respective Licensors retain pursuant to his/her/its License. Nothing
in this Agreement is intended to conflict with, affect, or diminish the rights
of any Licensor pursuant to his/her/its License. Signatures shall use its
reasonable efforts to :inform Distributor of any restrictions in a License which
would conflict with or affect the rights granted by Signatures hereunder. In
this connection, if Signatures is recluired under its License for a particular
Licensor to stop using the Proprietary Subject Matter of such Licensor,
Distributor sl-iall immediately stop making Articles embodying such Proprietary
Subject Matter and shall immediately, or at the end of any applicable sell-off
period specified in such License, stop offering for sale, using or distributing
any such Articles.
10.4 Notwithstanding anything to the contrary contained in this
Agreement, this Agreement is expressly subject and subordinate to any joint
venture, partnership, or other arrangements Signatures has entered into, or may
enter into in the future, in order to obtain the Merchandising Rights of a
Licensor or with respect to the artwork for a particular Property. Signatures
shall use its reasonable efforts to inform Distributor of any such arrangements
to the extent they would conflict with or affect the rights granted by
Signatures hereunder.
10.5 Notwithstanding anything to the contrary contained in this
Agreement, Distributot, acknowledges that when Signatures acts as the
merchandising licensing agent for a Property, it has a fiduciary duty to the
Licensor thereof to fully exploit the merchandising potential of the Property.
Such duty may require Signatures to grant alternative or additional competing
licenses to other Merchandise manufacturing companies. If Signatures determines
that this action is necessary, then the exclusive right granted in Paragraph 2.1
shall, with respect to such Property, become a non-exclusive xxxxxxx or
terminate altogether as specified by Signatures. The Properties subject to this
Paragraph as set forth on the date hereof are specified on Exhibit A, attached
hereto and incorporated herein by this reference.
11. MANUFACTURE AND DISTRIBUTION
11.1 The Proprietary Subject Matter may only be used in connection with
the manufacture, actual packaging and advertising of the Articles.
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11.2 For each Licensor/ Distributor shall commence distribution,
shipment and sale of substantial quantities of Articles embodying the
Proprietary Subject Matter thereof promptly following Signatures' approval of
the final samples of the Prototype and/or Preliminary Artwork therefor, or such
later time period as may agreed to by Signatures based on the circumstances of
the particular Proprietary Subject Matter, which agreement shall not
unreasonably be withheld. In the event that, for any particular Property's
Proprietary Subject matter, substantial quantities of Articles embodying the
same have not promptly commenced to be distributed, shipped, and sold, then the
exclusive right and license granted to Distributor pursuant to Paragraph 2.1
shall, with respect to such Property, become a nonexclusive right and license.
11.3 The Proprietary Subject Matter of each Licensor shall not be used
in conjunction with any other licensed name, character, symbol, design, likeness
or literary or artistic material, except that actual representations of an
Article and its packaging may be shown in advertising and catalogs showing other
articles sold by Distributor, provided such use is not made in a manner that may
be likely to cause doubt or confusion in the mind of the public as to the
ownership of the Proprietary Subject Matter, and in no event may the Articles be
packaged for sale with other articles.
11.4 During the Term, Distributor shall (i) continue to diligently and
continuously distribute, ship and sell the Articles in the Territory, and (ii)
use its reasonable best efforts to make and maintain adequate arrangements for
the distribution, shipment and sale necessary to meet the demand for such
Articles in the Territory.
12.. REPRESENTATIONS AND WARRANTIES; NONCOMPETITION.
12.1 Signatures represents and warrants to Distributor as follows: (a)
Signatures owns or controls all rights in and to the Proprietary Subject Matter
pursuant to the Licenses; (b) Signatures has the full right, authority and power
to enter into this Agreement and to perform all its obligations hereunder,
subject to any rights of a Licensor in his/her/its Licen,,e.
12.2 During the Term, Signatures shall use its best reasonable efforts
to arrange for the distribution of Articles at or about any of Licensor's live
performances and/or pursuant to an insert in Licensor's CD package or tour
program, it being acknowledged by Distributor that this Agreement is in no way
conditioned on Signatures successfully arranging the same and failure of
Signatures to arrange the same shall not be considered a breach of this
Agreement by Signatures.
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12.3 Distributor represents and warrants to Signatures as follows: (i)
Distributor has full power and authority to enter into this Agreement and
perform its obligations herein; and (ii) Distributor's execution, delivery, and
performance of this Agreement will not infringe upon the rights of any third
party or violate the provisions of any agreement to which Distributor is a
party.
12.4 During the Term, Distributor and Signatures will work together to
round out the collection of Articles by securing rights (on terms to be approved
by both parties) from various other musical artists themselves, as well as from
competitors of Signatures such as GIANT Merchandising, Nice Man Merchandising,
Winterland Productions, GEM (Great Entertainment Merchandising), and Brockum.
Both Distributor and Signatures agree that any agreements entered into by either
Distributor or Signatures with these musical artists or merchandising companies
relating to Merchandise will be used only for purposes of expanding the business
generated from this Agreement. In addition, all profits made from any such
agreements will be considered Net Profits under this Agreement and distributed
accordingly.
13. TERMINATION
13.1 In addition to any and all other remedies available to it
hereunder, Signatures shall have the right to immediately terminate this
Agreement upon written notice to Distributor upon the occurrence of any of the
following:
13.1.1 Distributor makes, sells, offers for sale, uses or distributes
any Article without having the prior written approval of Signatures as specified
in Paragraph 8.4 hereof.
13.1.2 Distributor becomes subject to any voluntary or involuntary
order of any government agency involving the recall of any of the Articles
because of safety, health or other hazards or risks to the public.
13.2 In addition to any and all other remedies available to it
hereunder, Signatures may terminate this Agreement upon the occurrence of any of
the following circumstances which has not been cured within seven days after
written notice thereof from Signatures to Distributor, or if such circumstance
cannot be cured within seven days, then for such period as shall be reasonable,
provided that Distributor is capable of curing such circumstance and has
proceeded diligently to cure spn,,e:
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13.2.1 Distributor fails to immediately discontinue the advertising,
distribution or sale of Articles which do not contain the appropriate copyright,
trademark, or other similar legal legend.
13.2.2 Distributor breaches any provision of the provisions of this
Agreement relating to the unauthorized assertion of rights in the Proprietary
Subject Matter.
13.2.3 Distributor fails to make timely payment of Royalties, Licensor
Royalties, or other applicable payments when due or fails to make timely
submission of Royalty Reports when due.
13.2.4 Distributor breaches any provision of Paragraph 2 hereof.
13.3 In addition to any and all other remedies available to it
hereunder, Signatures may terminate this Agreement upon the occurrence of any of
the following circumstances which has not been cured within thirty days after
written notice thereof from Signatures to Distributor, or if such circumstance
cannot be cured within thirty days, then for such period as shall be reasonable,
provided that Distributor is capable of curing such circumstance and has
proceeded diligently to cure same:
13.3.1 Distributor continues to make, sell, offer for sale, use or
distribute any Article after receipt of notice from Licensor withdrawing
approval of same, pursuant to Paragraph 9.3.
13.3.2 Distributor fails to obtain or maintain insurance as required
under Paragraph 8 hereof.
13.3.3 A petition in bankruptcy is filed by or against Distributor;
Distributor is adjudicated a bankrupt or insolvent, or makes an assignment for
the benefit of creditors or an arrangement pursuant to any bankruptcy law;
Distributor discontinues its business; or a receiver is appointed for
Distributor or Distributor's business and such receiver is not discharged within
thirty (30) days.
13.3.4 Distributor violates any of its other obligations or breaches
any of its representations and warranties hereunder.
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14. EFFECT OF TERMINATION
14.1 On expiration or termination of this Agreement, all Royalties,
Licensor Royalties, and other applicable payments shall be immediately due and
payable without set-off of any kind. Except as noted in Paragraph 14.2 below,
Distributor shall immediately stop the manufacture, sale and distribution of all
Articles and shall send Signatures a complete inventory report and accounting
with full payment due, within thirty (30) days after sucl-i expiration or
termination.
14.2 On expiration of this Agreement only, Distributor shall have a
period of ninety (90) days commencing with the expiration date, in which to
sell-off Articles which are on hand or in process as of the expiration date;
provided, however, (a) Distributor complies with all the terms and conditions of
this Agreement, including, but not limited to, Distributor's obligation to pay
Royalties on and to account to Signatures for such sales (such accounting to be
provided to Signatures within fifteen (15) days after the expiration of the
sell-off period), (b) Distributor has not manufactured Articles solely or
principally for sale during the sell-off period, and (ii) Distributor has given
Signatures the opportunity to purchase such Articles at Distributor's cost of
manufacture thereof, which purchase may be of some or all of such units, in
Signatures' discretion. During the sell-off period., Signatures may use or
license the use of the Proprietary Subject Matter in any manner, at any time,
anywhere in the world.
14.3 On expiration or termination of this Agreement, except as noted in
Paragraph 14.2 above, Distributor shall have no further right to exercise the
rights licensed hereunder or otherwise acquired in relation to this Agreement
and such rights shall forthwith revert to Signatures. All Artwork and other
materials supplied to Distributor by Signatures hereunder, and all Dies, shall
be immediately returned to Signatures. All remaining Articles and component
parts thereof shall be destroyed and Distributor shall promptly deliver to
Signatures a certificate of destruction evidencing same. Distributor agrees that
(i) its failure to cease the manufacture, sale and/or distribution of Articles
upon the expiration or termination of this Agreement will result in immediate
and irreparable damage to Signatures, (ii) there is no adequate remedy at law
for such failure and (iii) in the event of such failure, Signatures shall be
entitled to injunctive relief.
135
15. DEFINITIONS
15.1 The following terms are defined in the Agreement in the Paragraphs
set forth below:
TERM PARAGRAPH
Agreement Preamble
Artwork 9.1
Audit Deficiency 5.2
Distributor Preamble
Distributor Original and
Derivative Artwork 9.2
Materials 9.3
Preliminary Artwork 9.3
Prototype 9.3
Royalties 4.2
Royalty Reports 5.1
Signatures Preamble
Supplier 2.3
Term 3.1
15.2 In addition, the following terms shall have the following meanings
for purposes of this Agreement:
"ARTICLES" shall mean Merchandise utilizing, bearing, or otherwise
relating to the Proprietary Subject Matter.
"DIES" shall mean the devices used to shape or stamp an object or
material to create the Articles.
"DOMESTIC TERRITORY" shall mean the United States of America, its
territories and possessions, and Canada.
"INTERNATIONAL TERRITORY" shall mean tl)e world excluding the Domestic
Territory.
"LICENSE" shall mean a merchandising license agreement, effective
during the Term, by which a Licensor grants Merchandising Rights to Signatures.
136
"LICENSOR" shall mean a musical artist who has granted Merchandising
Rights to Signatures pursuant to a License. In addition, on a case-by-case
basis, Signatures may designate other entertainment properties which it controls
to be included within the definition of Licensor.
"LICENSOR ROYALTIES" shall mean the royalty rate payable by Signatures
to the applicable Licensor pursuant to such Licensor's License.
"MERCHANDISE" shall mean, with respect to each Licensor, commemorative
coins in gold, silver, and non-precious metals, in various sizes and
presentation formats as approved by Signatures, at retail pi- ices ranging from
$10.00 to $500.00, subject to any restrictions specified in such Licensor's
License.
"MERCHANDISING RIGHTS" shall mean the right to utilize the Proprietary
Subject Matter owned by a particular Licensor on or in connection with the
manufacture, distribution, sale, advertisement and/or promotion of Articles.
"NET LOSSES" shall mean the amount by which (b) exceeds (a) in the
definition of Net Profit.
"NET PROFIT" shall mean an amount equal to (a) the total gross revenues
received by Distributor (INCLUDING ANY SHIPPING AND HANDLING CHARGES) OR
SIGNATURES (IF APPLICABLE), LESS (b) the sum of the following expenses: (i)
returns and allowances, (ii) the applicable Licensor Royalties; (iii) actual
shipping, packaging, and handling for the Articles themselves, (iv) Product
Costs; (v) Tariffs and Taxes; (vi) the actual cost of Dies; (vii) actual
out-of-pocket sampling costs incurred pursuant to Paragraph 9.3 and 9.4; and
(viii) fees charged by a venue for the right to sell Articles at a Licensor's
live performances, and all vending expenses associated therewith. No expense
deductions shall be made from revenues for Distributor's finance costs,
warehousing costs, storage costs, distribution costs, corporate overhead
including, but not limited to, management and supervisory personnel, or in-house
direct selling costs. In situations where Distributor is not selling Articles
through its established distribution channels, the parties may mutually agree in
writing upon additional deductions from gross revenues, which may include, for
example, third party catalog development, fulfillment and customer service
support expenses (for example, in the situation of album or program inserts);
third party selling expenses (for example, third party participations), and
direct marketing expenses (for example, for tradeshows or print advertising).
"PRODUCT COSTS" shall mean shall mean the direct manufacturing costs of
the Articles charged to Distributor, as specified on the Schedule attached
hereto, as the same may be amended from time to time. The parties acknowledge
and agree that Distributor solely shall bear the Product Costs of Articles
manufactured but not sold, but that the cost of any unsold inventory may be
deducted for purposes of calculating Net Profit; provided, however, that unsold
inventory which is then reused as other products
137
by Distributor shall not be so deducted (for example, if an Article is melted
down and reused as another product).
"PROPERTY" shall mean, for each License, the musical artist or group
which is the subject of the License.
"PROPRIETARY SUBJECT MATTER" shall mean, for each Property, the name,
symbols, logos, trademarks, designs, copyrights, likenesses and/or images
thereof, subject to the terms and conditions upon which the rights thereto are
owned or controlled by Signatures pursuant to the applicable License.
"TARIFFS AND TAXES" shall mean all sales taxes, tariffs, levies, duties,
assessments, surcharges, ad valorem taxes and other impositions paid or incurred
by Distributor that are directly related to Product Costs. Tariffs and Taxes
specifically excludes income taxes.
"TERRITORY" shall mean the Domestic 'Territory and the International
Territory.
16. NOTICES. All notices, demands, contracts or waivers hereunder shall be given
in writing by mail, messenger, overnight air courier or telecopier addressed as
indicated below or as otherwise indicated in writing by a party hereto. The date
of messengering or telecopying shall be deemed to be the date of service. Three
(3) business days from the date of mailing shall be deemed to be the date of
service for mailed notices. One (1) business day from the date of overnight air
courier handling shall be deemed to be the date of service for courier handled
notices.
IF TO SIGNATURES:
Mail and
Messenger: Sony Signatures !nc.
Xxx Xxxxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
Attention: Senior Vice President, Business
Affairs and General Counsel
Telecopier: (000) 000-0000
138
IF TO DISTRIBUTOR:
Mail and
Messenger: Liberty Mint
000 Xxxxxxxx Xxxx
Xxxxx, Xxxx 00000
Attention: Xx. Xxxxx Xxxx, President
Telecopier: (000) 000-0000
17. NO MODIFICATION; WAIVER. The terms of this Agreement shall not be modified
except by an agreement in writing signed by both parties hereto. No waiver by
either party of a breach or default hereunder shall be deemed a waiver by such
party of a subsequent breach or default of a like or similar nature.
18. ENTIRE AGREEMENT. This Agreements all constitute the entire understanding of
the parties with respect to the subject matter, superseding all prior and
contemporaneous promises, agreements and understandings, whether written or oral
pertaining thereto.
19. RELATIONSHIP OF THE PARTIES. This Agreement does not appoint either party as
the agent of the other party, or create a partnership of joint venture between
the parties.
20. GOVERNING LAW. This Agreement shall be construed and interpreted pursuant to
the laws of the State of California, and the parties hereto submit and consent
to the jurisdiction of the courts of the State of California, including Federal
Courts located therein, should Federal jurisdiction requirements exist, in any
action brought to enforce (or otherwise relating to) this Agreement.
Notwithstanding the preceding sentence, nothing contained in this Agreement
shall preclude Signatures from bringing an action in any appropriate forum to
enforce the terms and provisions of this Agreement. Distributor also consents to
service of process in any manner permitted by the laws of the State of
California.
21. SEVERABILITY. If any provision of this Agreement is held by a court of
competent jurisdiction to be unenforceable, such decision shall not affect the
validity or enforceability of any of the remaining provisions, which remaining
provisions shall continue to have full force and effect.
22. CONFIDENTIALITY. The parties hereto shall keep the terms of this Agreement
confidential and shall not deliberately disclose information regarding but not
limited to Royalties, Advances, and gross sales of Articles, other than to
agents, employees and representatives as necessary for the performance of their
respective obligations herein.
139
23. COUNTERPARTS. This Agreement may be executed in any number of counterparts,
each of which shall be deemed to be an original and all of which together .
shall be deemed to be one and the same Agreement.
24. FURTHER ASSURANCES.. The parties hereto shall execute such further documents
and perform such further acts as may be necessary to comply with the terms of
this Agreement and consummate the transactions herein provided.
25. HEADINGS. The headings contained in this Agreement are for convenience and
reference purposes only. They do not form a part hereof and sl-iall not affect
the meaning or interpretation of this Agreement.
IN WITNESS WHEREOF, the pirties hereto have executed this Agreement or
caused it to be executed on their behalf as of the day first above written.
SONY SIGNATURES INC.
BY: /S/ XXXX X. XXXXXX
--------------------------------
TYPE OR PRINT NAME: XXXX X. XXXXXX
TITLE: SR. VP
LIBERTY MINT
BY: /S/ XXXXX XXXX
--------------------------------
TYPE OR PRINT NAME: XXXXX XXXX
TITLE: PRESIDENT
140
FROM Liberty Mint PHONE N0. : 000 000 0000 Oct. 31 1996 05:09PM P2
EXHIBIT A
PARAGRAPH 10.5 PROPERTIES
The Beatles
The Blues Brothers (House of Blues)
Xxxx Xxxxxx
Grateful Dead utilizing Xxxx Xxxxxxx artwork
Xxxxx Xxxxxx
Sony Signatures by
/s/ Xxxx X. Xxxxxx
-------------------
Liberty Mint by
/s/ Xxxxx Xxxx - President
---------------------
OCT 31 '96 16:09 000 000 0000 PAGE.002
141
FROM : Liberty Mint PHONE NO. : 000 000 0000 Oct. 31 1996 05:10PM P3
EXHIBIT B
Schedule of Product Costs
Minting fees calculated at 3/4 of minimum price schedule
Dies, Metal, packaging, and other product materials will be charged at
actual cost. Sample minting costs based on various quantity runs for
silver one ounce size MINIMUM MINTING FEE PRICING - EFFECTIVE MARCH 1,
1995
Qty. Run 100 500 1,000 2,000 5,000
QUALITY
Minimum Proof 5.96 5.03 4.48 4.36 4.27
Pricing Proof-Like 2.98 2.74 2.43 2.37 2.31
SONY MINTING FEE PRICING (BASED ON 3/4 OF MINIMUM PRICING)
Qty. Run 100 500 1,000 2,000 5,000
QUALITY
Minimum Proof 4.47 3.77 3.36 3.27 3.20
Pricing Proof-Like 2-24 2.06 1.82 1.78 1.73
SELECTED PACKAGING COSTS (BASED ON Current Costs):
One ounce size acrylic airtight capsule 0.19
One coin velvet gift box (standard black) 0.90
One coin velvet gift box (custom color) 0.97
Custom puff silk screening 0.50
Gold Select Plating (per side) 7.50
Four Coin Box 1.75
Cardboard Sleeve for Four Coin Box 0.09
Sony Signatures by
/s/ Xxxx X. Xxxxxx
Liberty Mint by
/s/ Xxxxx Xxxx - President
OCT 31 '96 16:09 10/31196 04:05 PM PRODCOST.WK4 000 000 0000 PAGE.003
142
