LICENSE AGREEMENT
THIS NON-EXCLUSIVE LICENSE AGREEMENT ("AGREEMENT") dated as of
September 20 2000, is by and between GENIUS PRODUCTS, INC., a California
Corporation ("LICENSOR"), c/o GLOBAL ICONS L.L.C. (hereinafter referred to as
("GLOBAL") located at 0000 Xxxxx Xxxxxx, Xxxxx 000, Xxx Xxxxxxx, Xxxxxxxxxx,
00000; telephone # (000) 000-0000; fax # (000) 000-0000; and X. XXXXXX
ENTERPRISES, INC. whose address is 0000 Xxxxx 000xx Xxxxxx, Xxxx, XX 00000,
telephone # (000) 000-0000; fax # (000) 000-0000 an Oregon Corporation
("LICENSEE"). The parties agree as follows:
RECITALS
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LICENSOR owns or otherwise has the rights to license the copyrights and
trademarks listed in SCHEDULE A (the "PROPERTY");
LICENSEE is a manufacturer, marketer and distributor of products which
would benefit from use of the Property;
LICENSEE recognizes the great value of the goodwill associated with the
Property, and recognizes that the Property and associate goodwill are of great
value to LICENSOR; and
LICENSOR desires to grant and LICENSEE desires to acquire a license to
manufacture, distribute and/or sell various products (as specified below)
utilizing the Property under the terms and conditions as set forth below.
1. GRANT OF LICENSE; TERM; LIMITATIONS
(a) LICENSE. Subject to the terms and conditions of this
Agreement, including but not limited to the rights reserved in
Paragraph 1(b), 1(c), 1(d) and 1(e), LICENSOR grants to
LICENSEE a non-exclusive, nontransferable right and license to
use the Property in the manufacture, distribution and sale of
the "LICENSED PRODUCT(S)" (as defined in Paragraph 1(c)) in
the "TERRITORY" (as defined in Paragraph 1(d)) and in the
Channels of Distribution (as defined in Paragraph 1(d)) (the
"LICENSE"). Other than as set forth herein, LICENSEE agrees
not to use the Property, directly or indirectly, in any area
other than the Territory or on any goods other than the
Licensed Products, and agrees not to sell any Licensed
Products with the knowledge or constructive knowledge that the
purchaser intends to resell the Licensed Products outside the
Territory. Further, LICENSEE agrees not to sell any Licensed
Products in the Territory to any party identified by LICENSOR
in a notice to LICENSEE, or known to LICENSEE, as having
previously resold, or reasonably suspected of having
previously resold, any Licensed Products outside the
Territory. Upon knowledge of such intended or actual
unauthorized sale, LICENSEE shall immediately advise LICENSOR
of all details of such sales and shall immediately cease all
sales to such third party.
(b) LIMITATIONS ON LICENSE: No license is granted hereunder for
the use of the Property for any purpose other than on or in
connection with the Licensed Products. LICENSEE shall not sell
Licensed Products to any customers which are disapproved in
writing by LICENSOR. No license is granted hereunder for the
manufacture, sale or distribution of Licensed Products to be
used for the purpose of increasing the sale of another item;
promoting or publicizing any product or service; fund-raising
or as giveaways; or to motivate a sales force, merchant,
consumer, or any other person to perform a specific act. In
the event LICENSEE desires to sell Licensed Products for such
purposes, LICENSEE acknowledges and agrees that it shall first
seek and obtain a separate license from LICENSOR and that the
third party user thereof shall also obtain a separate license
from LICENSOR for such use of Licensed Products.
(c) LICENSED PRODUCTS. The "LICENSED PRODUCTS" are defined as
delineated and categorized in SCHEDULE 1(c) attached hereto
and incorporated herein, manufactured by LICENSEE, approved as
to quality by LICENSOR prior to public exposure as provided by
Paragraph 5, and that bear the LICENSOR's trademarks on the
said products and any labels, in accordance with the
provisions of Paragraph 1(f).
(d) TERRITORY; CHANNELS OF DISTRIBUTION. The License granted in
Paragraph 1(a) above is limited to the United States, its
territories and possessions and Canada ("TERRITORY"). LICENSEE
only shall make sales of Licensed Products through the
Channels of Distribution as defined and delineated in SCHEDULE
1(d) attached hereto and incorporated herein.
(e) OWNERSHIP AND RESERVED RIGHTS. LICENSOR reserves and retains
the right, title and interest in the Property, and reserves
and retains the right to license, design, manufacture,
distribute and sell at wholesale, retail or otherwise all
goods, including the Licensed Products, in the world,
including the Territory. LICENSEE may not use the Property in
any manner other than as expressly licensed under this
Agreement. LICENSEE shall not claim any right, title or
interest in the Property or goodwill associated therewith
other than pursuant to the limited license granted in this
Agreement and hereby waives any right it otherwise might
acquire as a licensee, distributor or holder of a business
opportunity.
(f) PROPERTY USE AND MARKING. LICENSEE shall use the Property in a
manner that does not derogate LICENSOR's rights therein or in
any manner detract from or damage the goodwill associated
therewith. When the Property is used in text, it shall be
distinguished from the surrounding text. When LICENSEE uses
the any trademark on Licensed Products, labels, hang tags,
packaging, or in advertisements or other promotional material,
the trademark shall be designated as such by use of the "TM"
notation or the "(R)" symbol, as directed by LICENSOR, as a
superscript to the xxxx. LICENSEE agrees that the trademark
will appear on each Licensed Product and its packaging, if
any. LICENSEE shall use only those tags, labels and packaging
materials which have been previously approved in writing by
LICENSOR. On all Licensed Products, LICENSEE shall affix such
legends, markings and notices as reasonably required by
LICENSOR and the law. LICENSEE acknowledges that the omission
of the notice shall be considered a material breach of this
Agreement.
(g) LICENSE TERM. Subject to earlier termination as otherwise
provided in this Agreement, the term of the License hereunder
shall commence on November 1, 2000 and will continue until
December 31, 2003 (the "LICENSE TERM").
(h) LICENSE Renewal: Provided that Licensee is in compliance with
all terms and conditions under this Agreement and that the
Royalties, as defined below, reach the minimum of Two Hundred
Thousand Dollars ($200,000) during the Term of the Agreement,
this Agreement shall be automatically renewed for an
additional period of two (2) years under the same terms and
conditions.
(i) NO SUBLICENSE OR ASSIGNMENT.
(i) LICENSEE has no right to, and shall not, transfer or
assign, or grant any sublicense, concession, right or
privilege relating to, the Property or the Licensed
Products either directly, indirectly or by operation
of law. A change of ownership, as defined in
Paragraph 9(c)(1) shall constitute an assignment.
(ii) LICENSEE shall contract for the manufacture of the
Licensed Products by a third party only pursuant to a
written agreement with such third party approved in
writing by LICENSOR.
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2. MANUFACTURING, MARKETING AND PROMOTION
(a) MANUFACTURE. LICENSEE agrees that the Licensed Product shall
equal or exceed all industry and government standards
established in respect of safety and fitness for use. All
applicable government standards of the Territory shall be
followed, whether federal, state or local. If the Territory is
the U.S. or is inclusive of the U.S., such standards shall
include, but not be limited to, the Consumer Product Safety
Act and all appropriate sections of the Code of Federal
Regulations, and to the extent applicable, the Products shall
equal or exceed the standards set forth in the Hazardous
Substances Act, the Flammable Fabrics Act, the Child Safety
Protection Act and the Toy Manufacturers of America Safety
Standards as contained in ASTM F963 and comparable industry
standards. Prior to commencing shipment of each Licensed
Product and on a regular basis thereafter but no less
frequently than annually, or as otherwise requested by
LICENSOR, LICENSEE agrees to provide to LICENSOR at LICENSEE's
expense a certificate of an approved independent testing
laboratory certifying that the Products comply with such
standards and regulations. Each certificate that is provided
must specifically describe the Products that are covered by
the certificate, including the manufacturing source of the
Products being tested.
(b) MARKETING AND PROMOTION. LICENSEE shall use its best efforts
to exploit the License throughout the Territory, including but
not limited to, selling commercial quantities of a
representative sampling of the Licensed Products of the
various styles as approved by LICENSOR; offering for sale the
Licensed Products so that they may be sold to the consumer on
a timely basis; and maintaining a sales force sufficient to
provide effective distribution throughout the Territory; and
cooperating at LICENSEE'S expense with LICENSOR's and any of
its other licensees' marketing, merchandising, sales and
anti-counterfeiting programs. Failure of LICENSEE to commence
marketing the Licensed Products within (9) months of the date
of this Agreement shall be a material breach of this
Agreement.
(c) ADVERTISING AND PROMOTION; APPROVAL. All advertising and
promotion of the Licensed Products must be consistent with the
high quality, image and standards of LICENSOR and shall be
subject to the prior express written approval of LICENSOR. No
advertising or promotional material shall refer to LICENSEE's
name except for advertisements in trade publications and as
required by law.
(d) THIRD PARTIES. No manufacturer engaged by LICENSEE may sell or
ship Licensed Products to any party except LICENSEE; and
LICENSEE shall not contract for the manufacture and/or sale of
the Licensed Products by a third party without the prior
express written approval of LICENSOR and then only pursuant to
a written agreement with such third party approved by
LICENSOR, unless LICENSOR expressly waives such requirement.
The written agreement shall obligate the third party to the
applicable obligations of the LICENSEE under this Agreement
such as, for example, the quality standards, protection and
use of the Property, Confidential Information, right of
inspection of premises, books and records, and prevention of
resale of seconds.
3. ROYALTIES.
(a) GUARANTEE AND ADVANCE. Licensor hereby guarantees Royalties
(as defined in Paragraph 3 (c)) of not less than Forty
Thousand Dollars ($40,000) (the "GUARANTEE"). Upon execution
of this Agreement, LICENSEE shall pay a non-refundable sum of
Twenty Thousand Dollars ($20,000) (the"ADVANCE"), to LICENSOR.
The Advance shall serve as an advance against the Royalties
(as defined in Paragraph 3(b)) payable by LICENSEE hereunder.
Once Royalties owed to LICENSOR surpass the amount of the
Advance, LICENSEE shall make monthly Royalty payments as set
forth herein. The balance of the Guarantee (i.e., Forty
Thousand Dollars ($40,000)), shall be paid in full not later
than December 31, 2003 according to the following schedule,
provided that such balance is not previously remitted in
earned Royalties:
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(i) Ten Thousand Dollars ($10,000) due on or before
November 1, 2001; and
(ii) Ten Thousand Dollars ($10,000) due on or before
November 1, 2003.
(b) "GROSS SALES" for purposes of calculating a Royalty or
Royalties (as defined in this Paragraph), shall be the full
wholesale prices in U.S. dollars of Licensed Products, billed,
invoiced or shipped, whichever is first to occur, by LICENSEE
to its customers within the Territory during the "ROYALTY
PERIOD" (defined in Paragraph 3(b)(i)), less allowances and
less defective merchandise returns actually received by
LICENSEE. Returns on account of defective merchandise shall
not exceed an aggregate of five percent (5%) of Gross Sales
for any three (3) consecutive Royalty Periods. If such returns
do exceed the five percent (5%) threshold, it shall be
considered a material breach of this Agreement by LICENSEE.
LICENSEE agrees to pay a "ROYALTY" to LICENSOR for each
Royalty Period in the following amounts:
(i) PERCENTAGES. LICENSEE, as a Royalty, shall pay
LICENSOR nine percent (9%) of LICENSEE's Gross Sales
in each calendar month no later than the fifteenth
(15th) day of each month following the month during
which Gross Sales were made, for the duration of the
License Term. Each such period is referred to as a
"ROYALTY PERIOD."
(c) TIME OF PAYMENTS OF ROYALTY. On or before the fifteenth (15th)
day after the end of each Royalty Period during the Term, ,
LICENSEE shall pay LICENSOR, in U.S. Dollars by check or in
any other manner designated by LICENSOR in writing, the
greater of the Royalty (applicable for the prior Royalty
Period) less the non-refundable Advance not otherwise
credited. If LICENSEE earns no Royalties during a Royalty
Period or if LICENSEE is in the process of recouping the
advance or the remainder of the Guarantee, LICENSEE shall
still be obligated to submit to LICENSOR a Royalty Report
reflecting the most current financial state of the License
granted herein.
(d) LIQUIDATED DAMAGES, LATE PAYMENTS. LICENSEE acknowledges that
late payment of any sums due to LICENSOR will cause LICENSOR
to incur costs not contemplated by this Agreement and that the
exact amount of such costs are extremely difficult and
impractical to fix. If any payment is not received by LICENSOR
within ten (10) days of the due date, LICENSEE shall pay to
LICENSOR a late charge on all overdue payments calculated at
an annualized rate of eighteen percent (14%) of such overdue
sum. This late charge represents a fair and reasonable
estimate of the costs that LICENSOR will incur by reason of
late payment by LICENSEE.
(e) INDEPENDENT COVENANT. The obligation of LICENSEE to pay
Royalties is absolute notwithstanding any claim which LICENSEE
may assert against LICENSOR. LICENSEE shall not have the right
to set-off, compensate against or make any deduction from
Royalties for any reason whatsoever.
4. DEPOSITS; BOOKS AND RECORDS
(a) STATEMENTS. At the time each Royalty payment is due, LICENSEE
agrees to deliver to LICENSOR a report setting forth: Gross
Sales and Royalty payable for the Royalty Period covered by
the report, the form of which first shall be approved by
LICENSOR and amended as requested by LICENSOR.
(b) SEPARATE BOOKS AND RECORDS. LICENSEE shall maintain separate
and appropriate books of account and records sufficient to
reconcile the number of units manufactured that are Licensed
Products with the number of units sold, separated by the
appropriate Channels of Distribution, all in accordance with
generally accepted accounting principles.
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(c) RIGHT TO EXAMINE. LICENSOR, at all times during and after
termination or expiration of this Agreement, shall have the
right, through any authorized representative of its choice, on
five (5) business days advance notice to LICENSEE, to examine
and copy all of LICENSEE's books and records relating to the
manufacture and sale of the Licensed Products. LICENSOR shall
have the right to examine the books and records of all
companies with common ownership which transact business with
LICENSEE. "COMMON OWNERSHIP" shall mean that one or more of
the principals, partners or shareholders is a principal,
partner or shareholder of LICENSEE. All such examinations
shall be at LICENSEE's principal place of business and during
normal business hours. LICENSEE shall keep all books of
account and records available for at least three (3) years
after the close of each fiscal year to which they relate.
LICENSEE shall maintain its books and records only at its
principal office premises and shall not remove this
information unless it has given LICENSOR thirty (30) days
written notice of the new location (which must be in the
United States). If an examination discloses that LICENSEE has
understated Gross Sales or underpaid any Royalty for any
report period, without prejudice to any of LICENSOR's rights,
LICENSEE shall pay LICENSOR the amount, if any, by which the
actual Royalties exceed Royalties paid within ten (10) days of
receipt of notice by LICENSOR to such effect, together with
the applicable late charge as provided. Further, if LICENSEE
underpays Royalties by more than three percent (3%) or US
$10,000 (whichever is less) for any calendar year, LICENSEE
shall pay all costs, fees and expenses incurred by LICENSOR in
conducting such examination, in addition to any late charges
and interest provided for in this Agreement and reasonable
attorneys' fees. If LICENSEE underpays Royalties by more than
five percent (5%) or US $25,000 (whichever is less) for any
calendar year, LICENSOR may terminate this Agreement at
LICENSOR's sole discretion.
5. QUALITY STANDARDS
(a) STANDARDS. LICENSEE agrees to cause the Licensed Products to
be:
(i) of quality, material, workmanship, condition,
appearance, and image at least equivalent to the
quality, material, workmanship, condition,
appearance, and image of other similar products of
LICENSOR;
(ii) in accordance with this Agreement and all applicable
laws and rules, and within the definition of Licensed
Products, and
(iii) in conformity with designs and samples supplied by
LICENSEE and approved by LICENSOR as provided in this
Paragraph 5.
(b) RIGHT TO APPROVE OR REJECT. All matters requiring approval of
LICENSOR or the exercise of its discretion shall be at the
sole and absolute subjective discretion of LICENSOR. LICENSOR
shall deliver a notice of disapproval or approval within
fifteen (15) business days after transmittal by LICENSEE.
LICENSOR shall have no obligations to approve, review or
consider any items which do not comply with the required
procedures as set forth in this Paragraph 5(c). Approval by
LICENSOR shall not be construed as a determination that the
approved matter complies with all applicable regulations and
laws. No disapproved proposed item shall be manufactured,
sold, used, distributed or advertised. LICENSEE may revise any
disapproved item and resubmit it. LICENSEE must strictly
comply with all of LICENSOR's decisions. Upon a ninety
(90)-day notice to LICENSEE, LICENSOR may withdraw approval of
any previously approved item. LICENSEE bears the entire risk
that any sample or production run Licensed Product does not
meet the standards set forth in this Paragraph 5.
(c) APPROVAL PROCEDURE.
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(i) PRODUCTION SAMPLES AND INSPECTION. Prior to the
production or manufacture of any Licensed Product, if
applicable, LICENSEE shall submit for LICENSOR's
prior written approval all final Licensed Product
designs, specifications and color details. After
receiving written approval of the design,
specification and color details, if applicable, and
prior to production of Licensed Product, LICENSEE
agrees to supply to LICENSOR six (6) samples
(including the proposed Products, packaging,
advertising, display, labeling, trade dress,
merchandising, and all other material of any
character whatsoever) together with a description of
the intended use of the material of each Licensed
Product for its inspection and approval. LICENSEE
shall be responsible for any and all costs of
shipping and handling incurred in providing the
samples. LICENSOR shall have the right to purchase
additional samples for their own personal use at the
actual cost of the Licensed Products.
(ii) REJECTED GOODS. If Licensed Products manufactured do
not conform to previously approved confirmation
samples, LICENSOR shall have the sole right to
withdraw its approval, at which time this Agreement
shall automatically terminate with respect to such
Licensed Products. LICENSEE immediately shall cease
production, advertising, sale and/or distribution of
the rejected goods. This Agreement shall remain in
full force and effect as to Licensed Products not
affected by this Paragraph.
(iii) NONCONFORMING GOODS. If the appearance or quality of
any Licensed Product ceases to be acceptable to
LICENSOR, LICENSOR shall have the right, in the
exercise of its sole subjective discretion, to
withdraw its approval of such Licensed Product. Upon
receipt of written notice from LICENSOR of its
election to withdraw such approval with respect to
any Licensed Product, LICENSEE shall immediately
cease the use of the Property in connection with the
promotion, advertising, sale, manufacture,
distribution or use of such Licensed Product.
LICENSEE may complete all work in process. Notice of
such election by LICENSOR to withdraw approval shall
not relieve LICENSEE from its obligation to pay
Royalties on sales of such Product made by LICENSEE
to the date of disapproval or thereafter as
permitted. LICENSEE agrees to neither sell nor expose
to the public any goods not conforming to the
standards in Paragraph 5(a) unless, and only if, all
Property is completely removed and are not used in
any connection with their sale or distribution.
(d) APPROVAL OF FACILITIES. LICENSEE shall provide the addresses
of all facilities, including third party manufacturers, at
which the Licensed Products are manufactured. LICENSOR shall
have the right to inspect and approve all such facilities of
LICENSEE. LICENSEE's agreements with third party manufacturers
shall provide for the right of LICENSOR to inspect such third
party's facilities. All inspections shall be during regular
business hours upon twenty-four (24) hours notice to LICENSEE
or LICENSEE's third party manufacturers. Inspections may
include any reasonable actions necessary to assure LICENSOR
that the Licensed Products are made and displayed in
accordance with this Agreement, including but not limited to
laboratory testing.
6. CONFIDENTIALITY For purposes of this Agreement, "CONFIDENTIAL
INFORMATION" shall mean information or materials regarded by each party
as its confidential information, including any formula, pattern,
compilation, program, device, method, technique, process, information
related to its past, present or future research, development or
business affairs, and its proprietary products, materials, concepts,
know-how or methodologies and that (i) derives independent economic
value, actual or potential, from not being generally known to the
public or to other persons who can obtain economic value from its
disclosure or use, and (ii) is the subject of efforts that are
reasonable under the circumstances to maintain its secrecy. LICENSEE
agrees to keep all Confidential Information of LICENSOR strictly
confidential and to use such knowledge only to the exercise and
performance of its respective rights and obligations under this
Agreement; except that Licensed Products may be displayed and any
detail evident from examination of a Licensed Product may be disclosed
only at and after the line-break applicable to that Licensed Product
and season. Upon expiration or termination of this Agreement, whichever
first occurs, LICENSEE shall return all designs, patterns, samples and
other embodiments of Confidential Information not yet disclosed as
provided in the preceding sentence.
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7. INTELLECTUAL PROPERTIES
(a) PROPERTY VALUE. LICENSEE acknowledges that the Property has
great value and associated goodwill because the public and the
industry associate the Property with goods having consistently
high quality that are sold primarily by retailers of high
repute who sell primarily high quality goods and who maintain
high merchandising standards. LICENSEE shall use its
commercially reasonable efforts to preserve the value and
goodwill of the Property and to cooperate with LICENSOR's
efforts to preserve their value and goodwill as contemplated
by this Agreement.
(b) PROPERTY OWNERSHIP. LICENSEE acknowledges LICENSOR's ownership
of the Property, and acknowledges that all use of such
Property inures to the exclusive benefit of LICENSOR. LICENSEE
shall not at any time either during or after the Term of this
Agreement:
(i) claim ownership of or attempt to register the
Property;
(ii) do or commit any act which would adversely affect the
validity of the Property;
(iii) infringe LICENSOR's rights in the Property;
(iv) use any business name with the Property in it;
(v) seek to cancel the Property rights; or
(vi) engage in any activity which may contest, dispute,
dilute or otherwise impair the right, title or
interest of LICENSOR in the Property. For the purpose
of protection of rights in the Property only, all
uses of the Property made by or on behalf of the
LICENSEE are deemed to have been made by LICENSOR.
(c) REGISTRATIONS:
(i) LICENSEE shall cooperate with LICENSOR in the
execution, filing and prosecution of trademark,
copyright or patent applications; LICENSEE shall
supply LICENSOR with samples for applications.
LICENSEE shall cooperate with LICENSOR in making and
terminating registered user entries. LICENSOR shall
pay all costs and fees in connection with filing and
prosecution of trademarks, copyrights and patents.
These obligations shall survive termination.
(ii) LICENSOR and LICENSEE shall file applications and
documents with the appropriate government office, as
required by law or as deemed prudent by LICENSOR, at
LICENSOR's sole cost.
(d) INFRINGEMENTS. LICENSEE shall immediately give notice to
LICENSOR, by telephone and in writing, of any infringement or
misuse of any Property by any third party of which LICENSEE
becomes aware. LICENSOR shall have the right, but not the
requirement, to commence legal action regarding any misuse at
its expense. LICENSEE shall cooperate fully and promptly in
any infringement action commenced by LICENSOR as LICENSOR
shall require; provided, however, that any and all costs
incurred by LICENSEE in connection with such litigation shall
be borne by LICENSOR, except nominal or sample costs shall be
borne by LICENSEE.
8. INDEMNITY; INSURANCE ; REPRESENTATIONS
(a) INDEMNITY. LICENSEE agrees to indemnify, defend and hold
harmless LICENSOR, its officers, directors, shareholders, and
employees from and against any and all obligations,
liabilities, claims, demands, suits, actions, causes of
action, damages and expenses (including but not limited to
reasonable attorney's fees) caused by or arising from
LICENSEE's manufacture, labeling, use, sale or distribution of
Licensed Products or any other goods, or from product
liabilities arising from the manufacture, use or sale of any
of the Licensed Products or other goods by LICENSEE, or from
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any alleged defect in a Licensed Product regardless of whether
the action is based upon negligence or strict liability, and
regardless of whether the alleged negligence of LICENSOR is
characterized as "passive" or "active"; or from unauthorized
use by LICENSEE of LICENSOR's rights in the Property, or from
any casualty or other risk of loss, damage or destruction of
the Licensed Products or any materials, supplies or inventory
therefor, or for any violation of any warranty, representation
or agreement made by LICENSEE pertaining to a Licensed
Product.
(b) LICENSOR'S INDEMNITY. LICENSOR agrees to indemnify and hold
haemless LICENSEE, its officers, directors, employees, and
agents from and against all third party claims, damages,
losses, liabilities, suits, and expenses (including reasonable
attorneys' fees) arising out of or by any reason of any breach
by LICENSOR of any od the representations, warranties or
covenants made by it hereunder.
(c) INSURANCE. Without limiting LICENSEE's liability under the
indemnity provisions, LICENSEE shall maintain comprehensive
general liability insurance in the amount of at least One
Million Dollars ($1,000,000) (combined single limit per
occurrence) plus defense costs. This insurance shall include
broad form blanket contractual liability, products and
completed operations liability, including protection for
LICENSOR as a named insured, its officers, agents, and
employees against any claims, damages, liabilities, costs and
expenses (including attorney's fees) arising out of any
alleged defect (whether latent or patent) in any and all
Licensed Products manufactured, distributed, sold or otherwise
disposed of by LICENSEE. LICENSEE shall purchase insurance
against theft and destruction of the Licensed Products which
shall: 1) be written on an "all-risk" basis; 2) provide that
LICENSEE shall be reimbursed for loss in an amount equal to
the manufacturer's selling price for the Licensed Products
(this may be accomplished by either a selling price
endorsement or business interruption insurance); 3) provide
that LICENSOR is added as an additionally named loss payee as
respects loss to Licensed Products; 4) be in effect while
goods are on premises owned, rented and controlled by LICENSEE
and while in transit or storage; and 5) include a brand and
label clause stating that the insurer will pay the cost of
removing LICENSOR's name from damaged merchandise and labeling
goods. The insurance shall include: 1) a cross-liability
endorsement; 2) an endorsement stating that LICENSOR shall
receive at least thirty (30) days written notice prior to
modification, cancellation or non-renewal of coverage; 3) an
endorsement naming LICENSOR as an insured; 4) an endorsement
stating that the insurance purchased by LICENSOR shall only
apply in excess of the insurance purchased by LICENSEE; 5) a
waiver of subrogation in favor of LICENSOR; and 6) an
endorsement stating that LICENSOR may recover for any loss
caused to LICENSOR, its agents or employees by the negligence
(including active, passive and gross negligence) of LICENSEE.
All insurance shall be obtained from an insurance company
Best's rated A, class 10 or better acceptable to LICENSOR.
LICENSEE shall give LICENSOR at least thirty (30) days prior
written notice of the cancellation of, or any modification in,
such insurance policy that would affect LICENSOR's status or
benefits. This insurance may be obtained for LICENSOR by
LICENSEE in conjunction with a policy which covers products
other than the Licensed Products. LICENSEE shall furnish
certificates and endorsements of the required insurance
policies. Upon request, LICENSEE shall provide copies of
policies. The insurance set forth in this section must cover
the entire Territory.
(d) If either party learns of a claim related to this Agreement or
the Licensed Products, it shall immediately notify the other
party by telephone, and in writing transmitted by overnight
courier, of the subject matter, the parties and the nature of
the claim. If the claim pertains to any of LICENSEE's
obligations under this Agreement or the Licensed Products,
LICENSEE shall promptly inform LICENSOR of what steps it is
taking to correct the claim or complaint whether by consumer
or a government body. LICENSOR and LICENSEE shall cooperate in
the resolution of all such claims.
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(e) LICENSOR'S REPRESENTATIONS. LICENSOR represents and warrants
that (1) it has all necessary intellectual property rights to
license the Property to LICENSEE for use in the United States
as authorized hereunder and (2) LICENSEE's use of the Property
in the United States as authorized hereunder will not infringe
on the intellectual property rights of any third party.
Notwithstanding the foregoing, there are no implied waranties
for merchantability or fitness for any partivular purpose.
(f) NO LEGAL IMPEDIMENTS. The parties represent and warrant that:
(i) they have the full right, power and authority to
enter into this Agreement and to perform all
obligations;
(ii) they are financially capable of performing their
obligations.
(g) LICENSEE REPRESENTATIONS. LICENSEE warrants and represents
that it is a Oregon corporation, validly existing and in good
standing under the laws of Oregon. LICENSEE further represents
and warrants that it will use its best efforts to market the
Licensed Products. LICENSEE further represents that entering
into this Agreement will not result in the violation of: (i)
the organizational documents or bylaws of LICENSEE, (ii) any
agreement, contract, lease, license, document or other
commitment, written or oral, to which LICENSEE is a party or
may become bound, or (iii) any applicable law, rule, license
or regulation.
(h) COMPLIANCE WITH LAW. LICENSEE shall take all actions required
by any local, provincial, national or regional agency,
government or commission to carry out the purposes of this
Agreement in compliance with applicable law. LICENSEE shall
immediately provide LICENSOR with copies of any communications
to or from any such agency, government or commission which
relates to or affects this Agreement or the Licensed Products.
9. TERMINATION
(a) OTHER RIGHTS UNAFFECTED. Termination on any ground shall be
without prejudice to any other rights or remedies.
(b) TERMINATION FOR BREACH OR MATERIAL BREACH. If either party
breaches any of its obligations, the other may terminate this
Agreement by transmitting to the breaching party a notice of
termination (the "NOTICE OF TERMINATION"). A material breach
may or may not be specifically designated as such in this
Agreement. Termination will become effective automatically
unless the breaching party completely cures the breach within
three (3) business days of giving the Notice of Termination if
the breach is a failure to pay money or within ten (10)
business days of the giving of such Notice of Termination if
the breach is any other breach except as otherwise herein
provided. If the LICENSEE is the breaching party, pending
cure, the LICENSEE shall ship no Licensed Products. If the
LICENSEE does ship Licensed Products during such period, it
shall automatically forfeit its right to cure and this
Agreement shall be deemed immediately terminated. Upon the
giving of a Notice of Termination for the third time, for any
reason, the breaching party shall no longer have the right to
cure any violation, and termination shall be effective upon
the giving of the Notice of Termination.
(c) GROUNDS FOR IMMEDIATE TERMINATION BY LICENSOR.
(i) CHANGE OF OWNERSHIP: This Agreement is being entered
into based upon LICENSOR's evaluation of and reliance
upon the current ownership, management and control of
LICENSEE. LICENSOR has determined that current
management has the technical, marketing and sales
expertise, business reputation, and sensitivity to
the unique image of the Property, all of which are
necessary to carry out the purposes of this license.
Schedule 9(c) is a list of the current owners and key
executives. The right of LICENSOR to approve or
disapprove any transfer of all or part of the
ownership
9
(ii) LICENSEE (whether by sale of substantially all its
assets or by transfer of shares of its stock) shall
be at the sole subjective discretion of LICENSOR. If
Licensee breaches Paragraph 1(c); if there is a
change in more than fifty percent (50%) of the
ownership of LICENSEE; if LICENSEE sells or otherwise
disposes of fifty percent (50%) or more of its stock
or assets; or, if any of the key executives listed in
Schedule 9(c) leaves the LICENSEE, LICENSOR shall
have the right to immediately terminate.
(iii) FAILURE TO REACH MINIMUM SALES: LICENSOR may
immediately terminate by written notice within
forty-five (45) days of receipt of the last report
(per Paragraph 4) for any year of the License Term,
if LICENSEE fails to reach its Minimum Gross Sales
set forth in Paragraph 3(a)(2) for any two (2)
calendar years. There is no right to cure this
breach. A waiver in one year to terminate this
Agreement shall not constitute a waiver for any other
year.
(iv) INSOLVENCY: LICENSOR may terminate if: a petition for
relief under the Bankruptcy Code is filed by or
against the LICENSEE; LICENSEE makes any assignment
for the benefit of its creditors; LICENSEE becomes
the subject of proceedings under any insolvency,
reorganization or receivership law; LICENSEE defaults
on any obligation which is secured by a security
interest, in whole or in part, in the Licensed
Products; or, a receiver is appointed for LICENSEE or
a substantial part of its business interests.
Termination will become effective automatically sixty
(60) days after LICENSOR gives notice if LICENSEE:
fails to discharge the bankruptcy or terminate the
assignment for the benefit of creditors. The license
and rights granted are personal to LICENSEE. No
assignee for the benefit of creditors, receiver,
debtor in possession, trustee in bankruptcy, sheriff
or any other officer or court charged with taking
over custody of LICENSEE's assets or business, shall
have any right to continue performance of this
Agreement or to exploit or in any way use the
Property if this Agreement is terminated pursuant to
the preceding subparagraph, except as may be required
by law.
(v) QUALITY AND MARKETING DEFAULTS: LICENSOR may
immediately terminate this Agreement with no right of
cure, if:
(1) LICENSEE understates Royalties and/or
payments due for any report by more than
five percent (5%) or US$25,000, whichever is
less, makes any unreported sales or
knowingly misrepresents or misstates
material information in any other report
required or requested under this Agreement;
(2) LICENSEE ceases to do business;
(3) LICENSEE ceases to produce any of the
Licensed Products for more than three (3)
consecutive months;
(4) events occur that call for immediate
termination as expressly provided elsewhere
in this Agreement;
(5) the quality of any Licensed Product is
materially lower (as determined by Licensor
in its absolute subjective discretion) than
those submitted for approval;
(6) LICENSEE markets products not submitted for
approval; or
(7) LICENSEE markets, manufactures and/or sells
any Licensed Product for which LICENSEE
cannot furnish a written approval form
signed by LICENSOR.
(d) Grounds for immediate termination by LICENSEE. LICENSEE shall
have the right to immediately terminate this Agreement in the
event that LICENSOR enters into any non-exclusive licensing
deals with a third party(ies) with the term substantially
similar to the terms of this Agreement.
10. OBLIGATIONS AT EXPIRATION OR TERMINATION
(a) TERMINATION OF RIGHTS. Upon expiration or termination of this
Agreement for any reason, all rights in the Property granted
to LICENSEE shall automatically terminate and LICENSEE shall
cease and desist from any and all manufacture, sale,
distribution or disposal of the Licensed Products, or any use
of the Property or of any Licensed Products or Property which
are substantially or confusingly similar to the Property,
except as specifically provided in this Paragraph.
10
(b) INVENTORY. Upon LICENSOR's request, within ten (10) days after
the expiration of this Agreement or, in the event of its
termination or non-renewal, within ten (10) days after the
receipt of a Notice of Termination or a notice of non-renewal
or the happening of an event which terminates this Agreement
where no notice is required, LICENSEE shall give LICENSOR a
written statement showing: i) the Licensed Products in its
possession or under its control; ii) location of the
inventory; iii) work in process; iv) Licensed Products in
transit; and v) the name, address and telephone number of each
contractor and/or shipper and sales representative. LICENSEE
shall dispose of these goods only pursuant to the specific
written instructions of, and under the terms imposed by,
LICENSOR.
(c) OTHER ITEMS BEARING THE PROPERTY. All items other than the
Licensed Products, bearing the Property, such as stationary,
business cards, etc., shall be destroyed or delivered to
LICENSOR immediately upon termination or expiration.
(d) CONCLUDING SALES. LICENSEE shall accept no order, nor
undertake any new production, that would be delivered after
the date of expiration or termination. Three (3) months prior
to expiration, and monthly until expiration, LICENSEE shall
provide to LICENSOR an inventory, by style or stockkeeping
unit (SKU) number, of all Licensed Products in its possession
or under its control, and all work in process. Three (3)
months prior to expiration and weekly until expiration,
LICENSEE shall provide LICENSOR copies of all orders,
invoices, bills of lading, credit memoranda and statements
provided to the factor (if any). Only if the inventory and all
documents listed above are timely delivered to LICENSOR, shall
LICENSEE be entitled to sell its inventory of the Licensed
Products, until the date of expiration, only to customers
previously sold by LICENSEE. LICENSOR may have a
representative present to confirm any inventory calculated by
LICENSEE or may take its own inventory (or inventories) during
the final three (3) month period. If LICENSEE does not allow
LICENSOR to verify or take an inventory, it shall have no
right to dispose of any remaining Licensed Products. The right
of LICENSEE to sell off inventory under this Paragraph is also
subject to LICENSOR's right of first refusal to buy the
inventory as provided in Paragraph 10(e).
(e) RIGHT TO PURCHASE. LICENSOR or LICENSOR's designee shall have
the option (but not the obligation) to purchase all or any
part of LICENSEE's inventory of Licensed Products upon the
following terms:
(i) LICENSOR shall notify LICENSEE of the intention to
exercise this option within thirty (30) days of
delivery of the inventory and shall specify the
Licensed Products to be purchased;
(ii) The price for Licensed Products shall be LICENSEE's
standard cost (the actual manufacturing cost). The
price for all other Licensed Products which are not
manufactured by LICENSEE shall be LICENSEE'S landed
costs. "LANDED COSTS" means the F.O.B. price of
Licensed Products together with customs, duties, and
brokerage, freight and insurance;
(iii) LICENSEE shall deliver the Licensed Products
purchased within fifteen (15) days of receipt of the
notice to purchase. The purchase price shall be
payable upon delivery; provided that LICENSOR shall
be entitled to deduct any amounts owed it by
LICENSEE.
(f) WAIVER OF GOODWILL. LICENSEE waives any claim which it may
have arising from any alleged goodwill created by LICENSEE
from the alleged creation or increase of a market for Licensed
Products.
(g) DISPOSAL OF INVENTORY. Upon expiration or termination, all
inventory not disposed of in accordance with this Paragraph
shall be destroyed; however, such inventory may be sold
provided that 1) all Property (and all markings of any kind
associated with LICENSOR) are removed subject to inspection
and approval of LICENSOR; and 2) the public is not advised of
any association of the inventory with the Property or
LICENSOR.
11
(h) SUPPLIES BEARING THE PROPERTY. Upon the sooner of termination
or thirty (30) days prior to expiration, LICENSEE shall
provide:
(i) the name, addresses and phone numbers of each
supplier on any item bearing the Property; and
(ii) an inventory of all supplies of any type bearing the
Property, which shall specify the location of such
items.
(i) LICENSEE shall purchase all items bearing the Property held by
any supplier and shall have all such items delivered to
LICENSOR.
11. NOTICE AND APPROVALS Any notice, approval, consent or agreement
required or permitted under this Agreement shall be effective only if
in writing, signed by an officer of the party giving notice, and
delivered in person, or mailed by certified or registered mail return
receipt requested, or transmitted by facsimile transmission with
electronic confirmation of receipt to the addressee's address or
facsimile number set forth below (or such other address or facsimile
number as the party changing its address specifies in a notice to the
other party specifically referring to this Paragraph):
If to LICENSOR:
Genius Products, Inc.
Attention: President
00000 Xx Xxxxxx Xxxx, Xxxxx 000
Xxx Xxxxx, XX 00000
Tel (000) 000-0000, Fax (000) 000-0000
With a copy to:
Global Icons, LLC
Attention: Xxx Xxxxxx
0000 Xxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxxxxx, XX 00000
Tel (000) 000-0000
Fax (000) 000-0000
With a copy to:
Silver & Xxxxxxxx
Attention: Xxxxx X. Silver
0000 Xxxxxxx Xxxx Xxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000-0000
Tel (000) 000-0000
Fax (000) 000-0000
If to LICENSEE:
-------------------------
-------------------------
-------------------------
-------------------------
12
With a copy to:
-------------------------
-------------------------
-------------------------
-------------------------
Notice shall be deemed given as of the date actually received by the last of the
addressee party and that party's copy recipient to receive the notice as
evidenced by acknowledgment of receipt, delivery in person, the date on the
postal return, or electronic confirmation in the case of facsimile
transmissions.
12. TIME Time is of the essence in performing the obligations of this
Agreement.
13. INTERPRETATION The License Agreement shall be interpreted to give
LICENSOR maximum control of its Property and the usage of the Property.
Any uncertainty or ambiguity shall not be construed for or against the
party based on attribution of drafting to either party. The caption
headings of the sections are for convenience only and shall not be used
for interpretation.
14. GOVERNING LAW/ JURISDICTION/ VENUE All questions concerning this
Agreement, the rights and obligations of the parties, its enforcement,
and its validity, effect, interpretation and construction which are
governed by state law shall be determined under the laws of the State
of California. All national law questions shall be governed by the laws
of the United States of America; except that if LICENSOR seeks
provisional relief, the law of the place where the provisional relief
is sought shall apply.
15. ARBITRATION AND FORUM SELECTION CLAUSE. Both parties acknowledge and
consent that any controversy or claim arising out of or relating to
this Agreement, or the breach thereof, shall be settled either by
arbitration in Los Angeles, California or in a court located in the
state of California as follows: (a) Any controversy or claim arising
out of or relating to the Agreement, or breach thereof shall be settled
by arbitration in Los Angeles, California in accordance with the
American Arbitration Association. The judgement upon the award rendered
by the arbitrator(s) may be entered in any court having the
jurisdiction thereof ; and/or (b) LISCENSEE agrees and consents to
venue and jurisdiction within any court located in the State of
California, agreeing that any such court would have exclusive
jurisdiction over any case/controversy arising under or in connection
with this Agreement, and that such any California court shall be a
proper forum in which to adjudicate such dispute, case or controversy.
The prevailing party in any action above (including arbitration) shall
be allowed to recoup any and all attorney fees, interest and costs
therein.
16. ASSIGNABILITY. Neither this Agreement or any rights, duties or
obligations in this Agreement may be assigned or delegated by LICENSEE,
without the prior written consent of LISCENSOR. A change of control of
LICENSEE of the sale of all or substantially all of the assets of
LICENSEE shall constitute an assignment of this Agreement requiring
LICENSOR's written consent. A "change of control" shall be deemed to
have occurred if (1) any corporation, other person or "Group" (as
defined below) becomes the "Beneficial Owner" (as defined below) of
more than 15% of LICENSEE's outstanding common stock. For purposes of
this definition of change in control, the following terms shall have
the following meanings: "Beneficial Owner" shall have the meaning which
that term is given in Rule 13b-3 under the Securities Exchange Act of
1934 as amended (the "Act"). "Group" shall mean persons who act in
concert as described in Section 14(d)(2) of the Act.
17. RELATIONSHIP OF THE PARTIES Nothing in this Agreement shall be
construed to place the parties in the relationship of legal
representatives, partners, joint venturers or agents. LICENSEE shall
have no power to oblige or bind LICENSOR in any manner except as
provided.
13
18. WAIVER AND INTEGRATION; AMENDMENTS The failure of a party to insist
upon strict adherence to any term of this Agreement, or to object to
any failure to comply with any provision of this Agreement, shall not
be a waiver of that term or provision, estop that party from enforcing
that term or provision, or preclude that party from enforcing that term
or provision by estoppel or by laches. The receipt by a party of any
benefit from this Agreement (e.g., Royalty) shall not be construed as a
waiver or estoppel of the right of that party to enforce any section.
None of the terms of this Agreement shall be deemed to be waived or
modified, including all provisions of this Paragraph, except by an
express agreement in writing, signed by an authorized officer of the
party against whom enforcement of the waiver or modification is sought,
supported by a new consideration. This Agreement, including all
attachments, constitutes the entire agreement between the parties, and
supersedes all prior negotiations and agreements between the parties
concerning its subject matter. This writing is intended as the final,
complete and exclusive statement of the terms of the Agreement between
the parties and cannot be changed or terminated orally.
19. INTEGRATION. This Agreement, and all Schedules referenced herein,
constitutes the entire, final and exclusive agreement between the
parties with respect to the matters set forth herein; any and all prior
agreements, whether written or oral, with respect to the matters set
forth herein, are superseded by this Agreement.
20. ATTORNEYS' FEES AND PROFESSIONAL EXPENSES If any legal action or
dispute arises under this Agreement, arises by reason of any asserted
breach of it, or arises between the parties and is related in any way
to the subject matter of the Agreement, the prevailing party shall be
entitled to recover all costs and expenses including reasonable
attorneys' fees, investigative costs, accounting fees and charges for
experts. The "prevailing party" shall be the party who is entitled to
recover its costs of suit, whether or not the suit proceeds to final
judgment; if there is no court action, the prevailing party shall be
the party who wins any dispute. A party need not be awarded money
damages or all relief sought in order to be considered the "prevailing
party" by a court.
21. SURVIVAL All obligations of the parties of a continuing nature shall
survive the termination or expiration of this Agreement.
22. SEVERABILITY If any provision of this Agreement is held by a court of
competent jurisdiction or an arbitrator to be invalid or unenforceable,
the remaining provisions of this Agreement shall remain in full force
and effect.
23. BINDING AGREEMENT This Agreement shall be binding on and inure to the
benefit of the parties and their respective successors, agents,
affiliates, representatives and permitted assigns.
24. EXHIBITS/SCHEDULES All Exhibits or Schedules are incorporated into this
Agreement.
25. REMEDIES All specific remedies provided for in this Agreement shall be
cumulative and shall not be exclusive of one another or of any other
remedies available in law or equity.
26. COUNTERPARTS This Agreement may be executed in two (2) or more
counterparts, each of which together will constitute the same
agreement, whether or not all parties execute each counterpart.
27. MISCELLANEOUS
14
(a) CD HANG-TAGS. LICENSOR shall provide LICENSEE with CD
Hang-Tags at $0.40 ("Set Price") per CD Hang-Tag, provided
that LICENSEE requests such CD Hang-Tags ninety (90) days
prior to the date LICENSEE would require LICENSOR to deliver
such CD Hang-Tags. In the event that Licensee requires
Licensor to deliver such CD Hang Tags within a shorter period
of time, the Set Price shall be adjusted accordingly to cover
LICENSOR's expenses related to the accelerated delivery
schedule of such CD Hang-Tags.
IN WITNESS WHEREOF the parties hereto have executed this License Agreement as of
the day and year first above written.
LICENSOR:
By:
------------------------------------
Its: President
LICENSEE:
By:
------------------------------------
Its: President
15
SCHEDULE A
----------
PROPERTY
1. "Baby Genius"
16
SCHEDULE 1(A)
-------------
DEFINITION OF LICENSED PRODUCTS
A. Diaper Bags and
B. Accessories:
1. Pacifier Pouch
2. Single Zip Mesh Bag
3. Double Zip Mesh Bag
4. Single Zip Wet Pack Mesh Bag
5. 6"x8 1/2 Mesh Bag
6. 12"x8 1/2 Mesh Clothes Bag
7. Baby Wipe Storage Bag
8. Large Storge Bag
9. Bottle Warmer Bag
10. Single Bottle Warmer Bag
11. Juice Cup Bag
12. Small Baby Bottle Bag
13. Double Deck Baby Bottle Bag
14. Sleeping Mat
15. Changing Pad
16. Wet Pack
17. Meal Time Feeding Bags with Xxxx
CONDITIONS:
-----------
(a) Accessories may be sold with diaper bags and/or separately.
(b) Xxxx must be sold with Meal Time Feeding Bags and not separately.
(c) Sleeping Mat and Changing Pad will be marketed as a "replacement" for
original Sleeping Mat and Changing Pad sold with Diaper Bag.
17
SCHEDULE 1(B)
-------------
CHANNELS OF DISTRIBUTION
The following Channels of Distribution apply to this License Agreement only if
initialed by the authorized signatory of Licensor:
1. Distribution to the following tier of retailer commencing upon
execution of this Agreement and ending on May 31, 2002:
o Mid-tier
o Department stores
o Specialty stores
o Mass market
The above defined Channels of Distribution are subject to change based upon
Licensor's "roll-out" plans and Licensee's presentations to retailers, provided
however, that any such change shall be subject to Licensor's final approval.
18
SCHEDULE 1(C)
-------------
LIST OF LICENSEE OWNERS AND KEY MANAGEMENT
OWNERS PERCENT OF OWNERSHIP
------ --------------------
100% Xxxxx X. Xxxxxx
TITLE KEY MANAGEMENT
----- --------------
President Xxxxx X. Xxxxxx
19
