EXHIBIT 7k
LICENSE AGREEMENT
Warner Bros. Division of Time Warner Entertainment Company, L.P., c/o
Warner Bros. Consumer Products, a Time Warner Entertainment Company
("Licensor") whose address is 0000 Xxxxxx Xxxxxxxxx, Xxxxxxx, XX 00000,
X.X.X. and China Peregrine Food Corporation ("Licensee") whose address is
777 X. Xxxxxxx Drive, Ste. 1113, Xxxxxxxx Point-West Tower, West Palm
Beach, FL 33401, U.S.A., agree as follows:
As of the Effective Date (as defined below), and subject to the
Standard Terms and Conditions attached hereto, all of which are
incorporated herein by reference and made a part hereof, Licensor grants to
Licensee a non-exclusive license to utilize the Licensed Material solely
upon or in connection with the manufacture, distribution, and sale of
Licensed Articles throughout the Territory, as defined and specified as
follows:
Licensed Material: The representations, names, logos, movements,
personalities, artwork, photographs and other material in connection with
the following "LOONEY TUNES" characters: BUGS BUNNY, TWEETY, XXXXXXXXX
DAFFY DUCK, TASMANIAN DEVIL, WILE E. COYOTE, ROAD RUNNER, LOLA BUNNY and
XXXXXX THE MARTIAN only. Licensee acknowledges that the rights granted
herein are limited only to the cartoon characters set forth above and that
any and all rights in, to or associated with the theatrical motion picture
entitled "Space Jam", as well as with any sequels thereto or subsequently
produced television series, are specifically excluded herefrom.
Licensed Articles: Beverages branded using the Licensed Material as set
forth in Exhibit A attached hereto.
Territory: Municipalities of Shanghai and Hangzhou in the People's Republic
of China as detailed in Exhibit B attached hereto.
Distribution Channels:
Shanghai: Supermarkets, hypermarkets, convenience stores and school meal
programs; and
Hangzhou: Supermarkets, hypermarkets, convenience stores, school meal
programs and through the reserve system.
Terms: January 1, 1999 to June 30, 2002, of which January 1, 1999 to June
30, 2000 shall be Contract Year 1, July 1, 2000 to June 30, 2001 shall be
Contract Year 2, and July 1, 2001 to June 30, 2002 shall be Contract Year
3.
Effective Date: The date of full execution of this Agreement.
Royalty Rate: Three percent (3%) of the net invoiced price of each Licensed
Article.
Guaranteed Consideration: Three Hundred Thousand (300,000) U.S. dollars, of
which US$45,000 shall be payable upon Licensee signing this Agreement and
the balance paid by ten (10) instalments of US$21,250 per instalment
payable on or before each of the following dates: (i) September 30, 1999;
(ii) December 31, 1999; (iii) March 31, 2000; (iv) June 30, 2000; (v)
September 30, 2000; (vi) December 31, 2000; (vii) March 31, 2001; (viii)
June 30, 2001; (ix) September 30, 2001; (x) December 31, 2001, as well as
one final instalment of US$42,500 payable on or before March 31, 2002. All
payments made pursuant to this Agreement shall be effected by wire transfer
from Licensee to Licensor's account at Bank of America, 0000 Xxxxxxx Xxxx.
#0000, Xxxxxxx, Xxxxxxxxxx 00000, X.X.X. Account number: 1257-000503,
account name: WARNER BROS. Reference: WBCP Hong Kong, China Peregrine Food
Corporation, #93085-WBLT.
Marketing Date: July 1, 1999. Initial marketing plan to be mutually agreed
on or before March 31, 1999.
First Statement Date: August 15, 1999.
Promotional Commitment: Licensee shall devote an amount equal to three
percent (3%) of the wholesale sales revenues derived from the Licensed
Articles for retail and consumer promotion and advertising expenditure for
sales promotion purposes.
Proof of Fulfilment of Promotional Commitment: Every six (6) months from
the Marketing Date.
Trademark/Copyright Notice: LOONEY TUNES, characters, names and all related
indicia are trademarks of Warner Bros. (C) 199- (or as otherwise required
by Licensor from time to time).
Samples: Six (6) sets for each SKU to be sent at no cost to Licensor.
Insurance: Licensee shall cause each of Green Food Peregrine Children's
Food Co., Ltd. and Hangzhou Meilijian Dairy Products Co., Ltd. to maintain
product liability insurance in an amount not less than RMB2,000,000 per
occurrence.
Name and address of intended manufacturers:
Shanghai: Dairy production facilities owned and operated by Green Food
Peregrine Children's Food Co., Ltd.
Hangzhou: Dairy production facilities owned and operated by Hangzhou
Meilijian Dairy Products Co., Ltd.
Special Terms:
(1) In conjunction to this License Agreement, each of Green Food
Peregrine Children's Food Co., Ltd. and Hangzhou Meilijian Dairy
Products Co., Ltd. will also enter into a co-license agreement with
Licensor and Licensee.
(2) Payments of Guaranteed Consideration shall be secured by a letter of
credit in form and substance satisfactory to Licensor in the amount
of US$170,000 established with a bank approved by Licensor upon
Licensee signing this Agreement. The amount secured by the letter of
credit may be reduced, provided that the amount secured shall at any
time not be less than the lesser of: (i) $170,000, and (ii) the
difference between $300,000 and the total Royalties (including
Guaranteed Consideration) paid to date. Letter of credit shall not
expire prior to June 30, 2002.
(3) Licensee acknowledges that the rights granted to Licensee hereunder
are on a non-exclusive basis. However, Licensor agrees that it will
not grant to any third party the right to distribute and sell in the
Territory during the Term fresh milk, aseptic UHT treated milk, fresh
yogurt drinks or reconstituted fruit flavoured juices/beverages
incorporating the Licensed Material without prior consultation with
Licensee. Licensor agrees to discuss any such proposal with
Licensee, and to consider in good faith Licensee's views in respect
thereof.
By signing below, Licensee affirms that it is in agreement with the
foregoing and that it has read and understands and agrees to be bound by
the Standard Terms and Conditions set forth and attached hereto. Licensee
further agrees that this Agreement shall also serve as an invoice to
Licensee with respect to the amounts payable as set forth above and
Licensee agrees to pay such amounts to Licensor as specified above.
This Agreement shall be of no force and effect unless and until
signed by each signatory hereto as specified below:
AGREED AND ACCEPTED: AGREED AND ACCEPTED:
LICENSEE: LICENSOR:
China Peregrine Food Corporation Warner Bros. Consumer Products, on
behalf of itself and as Agent for
Warner Bros. Division of Time Warner
Entertainment Company, L.P.
----------------------------------- ------------------------------------
By: By: Xxxx Xxxxx
------------------------------- --------------------------------
Title: Title: Vice President -Legal Affairs
---------------------------- -----------------------------
Date: Date.
----------------------------- ------------------------------
Original-Loca1/Green-Regional Contract File/Yellow-Central Contract
File/Pink-Finance/Gold-Licensee
2
EXHIBIT A
Licensed Articles for distribution in Shanghai:
-----------------------------------------------
1. Fresh white milk packaged in xxxxx top cartons (sizes 240, 500 and
950 ml).
2. Fresh flavoured milk packaged in xxxxx top cartons (sizes 240, 500
and 950 ml). Flavours: chocolate, vanilla, orange, pineapple and
strawberry.
3. Fresh flavoured yogurt drinks packaged in xxxxx top cartons (sizes
500 and 950 ml). Flavours: vanilla, strawberry and orange; other
flavours as approved by Licensor.
4. Aseptic (boxed) UHT treated white milk and flavoured milk in size 225
ml. Flavours: chocolate, vanilla, orange, pineapple and strawberry.
5. Reconstituted fruit flavoured juices/beverages packaged in xxxxx top
cartons (sizes 240, 500 and 950 ml) or aseptic packaging in 225 ml
size. Fruit flavours: orange, apple, peach, pineapple, strawberry,
grape, orange/banana blend and apple/grape blend.
Licensed Articles for distribution in Hangzhou:
-----------------------------------------------
1. Fresh white milk packaged in xxxxx top cartons (sizes 250, 500 and
1000 ml) and baggies in size 200 ml. Baggies for distribution only
through reserve system in Hangzhou.
2. Fresh flavoured milk packaged in xxxxx top cartons (sizes 250, 500
and 1000 ml) and baggies in size 200 ml. Flavours: chocolate,
vanilla, orange, pineapple and strawberry.
3. Fresh flavoured yogurt drinks packaged in xxxxx top cartons (sizes
500 and 950 ml) and in glass bottles in size 350 ml. Flavours:
vanilla, strawberry and orange; other flavours as approved by
Licensor.
4. Aseptic (boxed) UHT treated white milk and flavoured milk in size 225
ml. Flavours: chocolate, vanilla, orange, pineapple and strawberry
5. Reconstituted fruit flavoured juices/beverages packaged in xxxxx top
cartons (sizes 250, 500 and 1000 ml) or aseptic packaging in 225 ml
size. Fruit flavours: orange, apple, peach, pineapple, strawberry,
grape, orange/banana blend and apple/grape blend.
A-1
EXHIBIT B
1. Map detailing geographic scope of Shanghai Municipality covered under
this Agreement.
2. The geographic scope of the Hangzhou Municipality covered under this
Agreement shall be the area that is within a 50km radius of West
Lake.
B-1
EXHIBIT C
TRADEMARK REGISTRATIONS
1. Licensee acknowledges that Licensor has informed Licensee of the
existence of trademark applications and/or registrations made by third
parties in China which are identical or similar to certain of Licensor's
trademarks associated with the Licensed Material in China. Licensee
acknowledges that such existing third party trademark applications and/or
registrations may raise problems or liability for trademark infringement in
connection with Licensee's use of Licensor's trademarks associated with the
Licensed Material in China (the "China Trademarks") as contemplated in this
Agreement. Such identical or similar trademark applications and/or
registrations include:
(i) Trademark: Bugs Bunny name in Mandarin (Tu Ba Ge)
Application No. 98064045
Preliminary Approval No. 1324203
Applicant: Zibo Xingbang Chemical Co., Ltd.
Class 29
(ii) Trademark: Bugs Bunny name in Mandarin (Tu Ba Ge)
Registration No. 1139039
Registrant: Zibo Municipality Linzi Guangfeng Food & Beverage
Factory
Class 32
(iii) Trademark: Looney Tunes name in Mandarin (Le Xx Xxxx)
Registration No. 335882
Registrant: Guangxi Lipuxian Licheng Food Co. Ltd.
Class 32
(iv) Trademark: Looney Tunes name in Mandarin (Le Xx Xxxx)
Registration No. 766236
Registrant: Huizhoushi Lehui Shiye Co. Ltd.
Class 32
(v) Trademark: Tasmanian Devil name in Mandarin (Da Zui Guai)
Registration No. 739985
Registrant: Nanqishi Gongtong Food Co. Ltd.
Class 29
(vi) Trademark: Tasmanian Devil name in Mandarin (Da Zui Guai)
Registration No. 741218
Registrant: Nanqishi Gongtong Food Co. Ltd.
Class 32
C-1
2. Licensee acknowledges that Licensor makes no representation or
warranty with respect to Licensor's ownership or state of registration of
the China Trademarks, or the potential problems or liability with respect
to Licensee's use of the China Trademarks. Licensee further acknowledges
that it is not relying on information provided by Licensor in respect
thereof, and that Licensee is responsible for conducting its own
investigations and making its own assessment of the risks associated with
Licensee's use of the China Trademarks.
3. Except as provided for in Subsection 5(b) of this Agreement, Licensee
hereby remises, releases and forever discharges Licensor and its affiliates
of and from all actions, causes of actions, claims and demands whatsoever
which Licensee shall or may have at any time for or by reason of or in any
way in connection with claims of trademark infringement arising from
Licensee's use of the China Trademarks or Licensee's inability to use any
or all of the China Trademarks. Without limiting the generality of
Subsection 13(a) of this Agreement, during the Term, and continuing after
expiration or termination of this Agreement, Licensee shall indemnify
Licensor against all claims, liabilities (including settlements entered
into in good faith) and expenses (including reasonable attorney's fees)
arising out of claims of Licensee's infringement of any rights of any third
party by Licensee's use of the China Trademarks. The parties indemnified
hereunder shall include Licensor, its parent, affiliates, subsidiaries and
their respective officers, directors, shareholders, employees and agents.
4. From time to time during the Term of this Agreement, and during any
extended Term, Licensee shall have the right to request Licensor to supply
Licensee with the results of any trademark search performed by Licensor
with respect to the China Trademarks and any updates of such searches. The
results of such searches shall be provided to Licensee, subject to a
confidentiality agreement, which shall be executed by Licensee, if so
requested by Licensor. Licensee shall use said search results only for the
purposes set forth in paragraph 2 of this Exhibit C, with respect to
Licensee's assessment of the risks associated with Licensee's use of the
China Trademarks. The parties acknowledge and agree that, in connection
with the aforesaid assessment process, Licensee may disclose the search
results to counsel of its choice for an opinion concerning the risks of
Licensee's use of the China Trademarks, and that such counsel shall be
bound by the terms of any confidentially agreement executed by the parties
as provided in this paragraph.
5. Licensee shall be entitled to refuse to use any element of the
Licensed Material if it has a bona fide reason to believe that its use of
such material may expose Licensee to liability for the violation of any
applicable law, regulation or the rights of a third party. Licensee shall,
upon Licensor's request, provide Licensor with a detailed explanation of
its reasons for such refusal.
C-2
STANDARD TERMS AND CONDITIONS
1. RIGHTS GRANTED TO LICENSEE
--------------------------
(a) During the Term and any extension thereof, Licensor grants to
Licensee the non-exclusive right in the Territory to use and
reproduce the Licensed Material only on and in connection with the
manufacture, advertising, distribution and sale of the Licensed
Articles. Licensee specifically understands and agrees that no rights
are granted herein in respect of the Warner Bros. "shield" name or
logo, the Warner Bros. Consumer Products name or logo, or the Warner
Bros. Studio Store name or logo.
(b) The rights granted to Licensee hereunder are solely rights to
manufacture the Licensed Articles and distribute them in the
Territory only through the Distribution Channels. Licensee shall have
no right to establish or operate retail stores, store-in-stores,
retail outlets or any form of service establishment utilizing any
indicia of the Licensed Material, including all or any part of any
trademark, copyright or other property forming part of the Licensed
Material.
(c) Licensor further grants to Licensee the non-exclusive right to
reproduce, with Licensor's prior written approval, the Licensed
Material only within the Territory on containers, packaging, display
material and in advertising for the Licensed Articles, subject to the
provisions of this Agreement. It is specifically understood that no
television, radio and/or theatrical commercials may be utilized under
this Agreement without Licensor's prior written approval.
(d) Licensee shall be free to sell Licensed Articles to Licensor or
to any subsidiary of Licensor's, subject to the payment to Licensor
of Royalties on such sales. Licensee agrees that sales of Licensed
Articles to Licensor shall be at cost, or at a reduced price or at
the best price available to the trade.
(e) Licensee and its customers shall be free to sell the Licensed
Articles at such prices as Licensee or its customers shall determine.
However, Licensee agrees that any proposed sales of Licensed Articles
at a liquidation price cannot occur without Licensee first offering
Licensor the opportunity to purchase said Licensed Articles.
2. CONSIDERATION
-------------
(a) Licensee agrees to pay each installment of the Guaranteed
Consideration as set forth above to Licensor, which shall be on
account of Royalties to accrue during the Term only and only with
respect to sales in the Territory. However, if any part of the
Guaranteed Consideration as specified hereinabove applies to any
period less than the Term, such part shall be on account of Royalties
to accrue during such lesser period only. No part of Guaranteed
Consideration shall be repayable to Licensee in any circumstances.
(b) Royalties accruing from any sales of Licensed Articles during
the Sell-Off Period described in Paragraph 17(c), during an extension
of the Term or after the expiration or termination of the Agreement
as provided in Paragraph 16, shall not be offset against the
Guaranteed Consideration unless otherwise agreed in writing.
(c) Royalty Payments:
(i) Licensee shall pay to Licensor a sum equal to the Royalty
Rate as set forth above of all Net Invoiced Xxxxxxxx (as
defined below) by Licensee of the Licensed Articles covered by
this Agreement. Royalties shall be payable concurrently with
the statements required in Paragraph 10 hereof, except to the
extent offset by Guaranteed Consideration theretofore remitted.
The credit shall be taken in the Monthly Accounting Period in
which the refund is given or credit memo issued. Unused credits
may be carried forward from one Contract Year to another. In no
event shall Licensee be entitled to a refund of Royalties.
1
(ii) The term "Net Invoiced Xxxxxxxx" shall mean all monies
billed or billable by Licensee from the exercise of its rights
to distribute and sell Licensed Articles in the Territory
before any allowances or discounts, which have been deducted
from the normal selling price, inclusive of interest, monetary
correction, and any other payment charges whatsoever, less the
following items only:
(A) any sales, excise or value added taxes payable in
the Territory, which are separately stated, and which are
required to be collected from customers as part of Net
Invoiced Xxxxxxxx, and which are payable to taxing
authorities, and
(B) actual defective returns.
(iii) It is specifically understood and agreed that no
deduction may be made for any actual returns (except for
defective returns), or any reserves therefor, any bad debts, or
any reserves therefor, any manufacturing costs, importing
costs, selling costs, advertising costs, any real estate taxes,
business license taxes, net income taxes, franchise taxes,
consumption taxes or any other taxes not billed as part of Net
Invoiced Xxxxxxxx. It is also understood and agreed that all
sums billed in respect of Licensed Articles lost and/or
unaccounted for shall also be included in Net Invoiced
Xxxxxxxx. The sums which Licensor is paid as Royalties on any
sales to Affiliated Customers of Licensee (as defined below),
shall be no less than the sums paid as Royalties on sales to
unaffiliated customers. For purposes of this agreement,
Affiliated Customers of Licensee shall mean any entity which
owns or controls, is owned or controlled by, is under common
ownership or control with, or is otherwise related in whole or
in part by way of ownership or control with, Licensee,
including but not limited to parent companies, subsidiary
companies, sister companies, partnerships, and joint ventures
of Licensee. The word "control" (including "controlled by" and
"controls"), as used in the preceding sentence shall be deemed
to mean possession, directly or indirectly, of the power to
command the course of management, policy making and business
activity of the entity or of Licensee, as the case may be,
regardless of equity, debt, or voting securities position.
(iv) No Royalties are payable on the mere manufacture of
Licensed Articles to the extent all manufactured Licensed
Articles are accounted for as required by Paragraph 10 below.
3. APPROVALS
---------
(a) (i) Licensee shall submit to Licensor for its prior review
and written approval all preliminary and proposed final artwork
and three-dimensional models which are to appear on or in the
Licensed Articles and Licensee's proposed use of such materials
in preparing a pre-production sample. Licensee shall submit
such material as early as possible, and in any case at least
twenty (20) business days prior to commercial production of any
Licensed Article. Thereafter, Licensee shall submit to Licensor
for its written approval a pre-production sample of each
Licensed Article.
(ii) All containers, packaging, display material, hangtags,
promotional material, catalogs and advertising for Licensed
Articles which utilize or incorporate the Licensed Material
must be submitted to Licensor and receive its written approval
before use. Licensor's approval thereof should be procured when
same is still in rough or storyboard format. Licensor shall
endeavor to respond to requests for approval without undue
delay. Approval shall lie in Licensor's sole discretion, and
the use of containers, packaging, display material, promotional
material, catalogs or advertising not approved by Licensor in
writing is strictly prohibited. Whenever Licensee shall prepare
catalog sheets or other printed matter containing illustrations
of Licensed Articles, it will furnish to Licensor five (5)
copies of same.
(iii) Before shipping a Licensed Article to any customer,
Licensee shall furnish to Licensor, for its approval of all
aspects of the Licensed Article in question, from the first
production run of each supplier or manufacturer of each of the
Licensed Articles, the number of samples, with packaging, which
is set forth hereinabove. Such samples shall conform to the
approved artwork, three-dimensional models and pre-production
sample previously approved by Licensor hereunder.
2
(iv) Approval or disapproval of the artwork utilizing or
incorporating Licensed Material as it appears on the Licensed
Articles, as well as of the quality of the Licensed Articles,
shall lie in Licensor's sole discretion. If any Licensed
Article or item not approved hereunder by Licensor in writing
is being sold, distributed, published or otherwise used,
Licensor may at its sole election require, together with other
remedies available to it including but not limited to immediate
termination of this Agreement by written notice, such Licensed
Article or item to be immediately withdrawn from the market, or
from distribution, publication or other dissemination by
Licensee, and Licensee agrees to so withdraw such Licensed
Article or item within the period so stated by Licensor.
Licensed Articles and items so withdrawn shall be immediately
destroyed and such destruction shall be attested to in a
certificate signed by an independent third party, firm, or
agency approved by Licensor and delivered forthwith to
Licensor.
(v) Any modification of a Licensed Article, including but not
limited to change of materials, color, design or size of the
representation of Licensed Material, must be submitted in
advance for Licensor's prior written approval as if it were a
new Licensed Article. Approval of a Licensed Article which
uses particular artwork does not constitute approval of such
artwork for use with a different Licensed Article. The fact
that artwork has been taken from a publication or article
previously approved by Licensor does not mean that its use will
be approved in connection with a Licensed Article licensed
hereunder. Licensor shall endeavor to respond to requests for
approval within a reasonable time, but Licensee shall seek such
approvals as early as possible in case of delays. Licensor's
failure to respond shall be deemed disapproval.
(b) (i) If Licensee submits for approval artwork from an article
or book manufactured or published by another licensee of
Licensor or of any subsidiary of Licensor, Licensee must advise
Licensor in writing of the source of such artwork. It is
specifically understood that Licensee may not, in certain
cases, be permitted to utilize any previously published artwork
or artwork not specifically provided by Licensor, it being
understood by Licensee that any and all uses of artwork
featuring the Licensed Material shall be entirely subject to
Licensor's approval as provided herein.
(ii) If Licensee fails to advise Licensor as required in (i)
above, any approval which Licensor may give for use by Licensee
of such artwork may be withdrawn at any time by giving Licensee
written notice thereof, and upon receipt of such written notice
Licensee shall be prohibited by Licensor from selling any
Licensed Articles using such artwork.
(iii) If Licensor has supplied Licensee with forms for use in
applying for approval of artwork, models, pre-production and
production samples of Licensed Articles, Licensee shall use
such forms when submitting anything for Licensor's approval as
provided for hereunder.
(c) Licensee shall make available to Licensor as directed by
Licensor at no charge six (6) additional samples of representative
Licensed Articles on an annual basis or more frequently as Licensor
may from time to time reasonably request for the purpose of
comparison with earlier samples.
(d) Licensee shall permit Licensor, upon reasonable request, to
inspect Licensee's manufacturing operations (and those of its
suppliers) for the Licensed Articles.
(e) It is specifically understood that Licensor may in its sole
discretion inter alia disapprove a Licensed Article or a production
run of a Licensed Article because the quality is unacceptable to
Licensor. Accordingly, Licensor recommends that Licensee submit
production samples to it for approval before committing to any
original production run or any purchase of a shipment from a new
supplier.
(f) No modification of an approved production sample shall be made
without Licensor's prior written approval. Licensed Articles being
sold must conform in all respects to the approved production sample.
It is understood that if in Licensor's reasonable judgement the
quality of a Licensed Article originally approved has deteriorated in
later production runs, or if the Licensed Article has otherwise been
altered, Licensor may, in addition to other remedies available to it,
require
3
by written notice such Licensed Article to be immediately withdrawn
from the market, and Licensee agrees to withdraw such Licensed
Article within the period so stated by Licensor. Licensed Articles so
withdrawn shall be immediately destroyed, and such destruction shall
be attested to in a certificate signed by an independent third party,
firm or agency approved by Licensor and delivered forthwith to
Licensor.
(g) The rights granted hereunder do not permit the sale of
"seconds" or "irregulars." All Licensed Articles not meeting the
standard of approved samples shall be destroyed, pursuant to
Subparagraph (f) above, unless otherwise directed by Licensor.
4. SPECIFIC UNDERTAKINGS OF LICENSEE
---------------------------------
During the Term and any renewal period and thereafter, Licensee
warrants, represents, and agrees that:
(a) It shall not sell Licensed Articles for use as premiums
(including those in purchase-with-purchase promotions), promotions,
giveaways, fund raisers or entries in sweepstakes or to customers for
resale only by direct mail or other resale through direct marketing
methods without the prior written approval of Licensor. Nor shall
Licensee conduct any premium-based sales promotion without the
express prior written consent of Licensor.
(b) It shall obtain all necessary approvals and bear all expenses
from any third party(s) in connection with any print and/or broadcast
advertising that Licensor authorizes. Licensee shall submit all
proposed advertising materials and concepts to Licensor as set forth
in Paragraph 3 and Licensor's approval of copy or storyboards for
such advertising will not constitute a representation or belief by
Licensor that such copy or storyboards as contained therein are
sufficient to meet any code, standard, or other obligation imposed by
any third party(s). No media commercials incorporating any character
voices may be utilized under this Agreement without Licensor's
specific prior written approval.
(c) It shall cause Licensee's name, trade name (or a trademark of
Licensee's which it has advised Licensor in writing that it is using)
and the country of manufacture of the Licensed Articles to appear on
the permanently affixed labeling on each Licensed Article and, if the
Licensed Article is sold to the public in packaging or a container,
printed on such packaging or container along with Licensee's address
so that the public can identify the supplier of the Licensed Article.
On soft goods "permanently affixed" shall mean sewn on.
(d) It shall advise Licensor in writing of all trade names or
trademarks it is using on or in connection with Licensed Articles
being sold under this Agreement if such names or marks differ from
its corporate name as indicated herein.
(e) It shall insure that each Licensed Article distributed
hereunder shall be of high quality and shall comply with all
applicable laws, regulations and established industry standards of
the country of origin and the country of destination and conform to
the sample thereof approved by Licensor.
(f) It shall not associate other characters or other properties
with the Licensed Material, either on the Licensed Articles or in
their packaging, or on advertising, promotional or display materials
without Licensor's prior written permission.
(g) It shall manufacture (or have manufactured for it) and offer
for sale all of the Licensed Articles and exercise the rights granted
herein. Licensee agrees that not later than by the Marketing Date
applicable to a particular Licensed Article, shipments to customers
of Licensed Articles in quantities sufficient to meet reasonably and
anticipated demand will have taken place and that Licensed Articles
shall be available for purchase and prompt delivery to customers. Any
Licensed Article as to which such sales have not taken place or which
are not then available for purchase and prompt delivery may be
recaptured from the scope of this Agreement without obligation to
Licensee, other than to provide it with written notice thereof.
Licensee further agrees to use its best endeavors to promote sales of
the Licensed Articles.
4
(h) It shall carry out the Promotional Commitment, which shall be
defined as the sum set forth on the cover page of this Agreement,
which Licensee shall budget and expend on advertising of the Licensed
Articles in the Territory. Accordingly, every six months from the
Marketing Date, Licensee shall submit to Licensor a statement which
shall include total Net Invoiced Xxxxxxxx and total sums expended on
advertising the Licensed Articles, together with the resulting
percentage. In the event Licensee fails to expend in full the sum
specified herein within the required time period, upon submission of
the statement required in Paragraph 10(a)(i), Licensee shall pay to
Licensor an amount equal to such shortfall.
(i) Its parent or any subsidiary or affiliate of it shall not
register or attempt to register, in any country, copyrights, or to
register as a trademark, service xxxx, design patent or industrial
design any of the Licensed Material or derivations or adaptations
thereof, or any word, symbol or design which is so similar thereto as
to suggest association with or sponsorship by Licensor or any
subsidiary of Licensor's. In the event of a breach of the foregoing,
Licensee agrees, at its expense and at Licensor's request, to
immediately terminate the unauthorized registration activity and to
promptly execute and deliver or cause to be delivered to Licensor
such assignments and other documents as it may require to transfer to
it all rights to the registrations, patents or applications involved.
(j) It shall not use either the Licensed Material, any registered
material of Licensor or any other material, the copyright or
trademark to which is owned or controlled by Licensor, in any way
other than as herein authorized (or as authorized in such other
written contract signed by both Licensee and Licensor as may be in
effect). In addition to any other remedy Licensor may have, Licensee
agrees that the total revenues to Licensee from any use of such
material in any manner not expressly authorized herein, including on
products other than the Licensed Articles (unless authorized by
Licensor in writing), shall be payable to Licensor.
(k) It shall give Licensor prompt written notice of any unlicensed
use by third parties of Licensed Material or material which infringes
any rights in the Licensed Material due to its similarity thereto,
and Licensee shall not bring or cause to be brought any criminal
prosecution, lawsuit or administrative action for infringement,
interference with or violation of any rights to Licensed Material or
violation of any rights granted herein. Licensee shall cooperate and,
if Licensor deems appropriate, be named by Licensor as a sole
plaintiff or co-plaintiff in any action against an infringer of
Licensor's or Licensee's rights hereunder, provided it gives Licensee
prior written notice of such action and bears the expense thereof.
Any and all settlements, penalties, damages, and recoveries arising
from or in connection with such action shall be the sole property of
Licensor.
(l) It shall not use any Licensed Material on any business sign,
business cards, stationery or forms (except as licensed herein) or
use any Licensed Material as the name of its business or any division
thereof.
(m) It shall not attack the title of Licensor or the owner(s) in
and to the Licensed Material or any copyright and trademark
pertaining thereto, nor shall it attack the validity of the license
granted hereunder.
(n) It will not sub-license to any third party any of the rights
granted pursuant to this Agreement; furthermore, any sub-
manufacturing arrangements shall be carried out strictly in
accordance with Paragraph 11 of this Agreement.
(o) It shall not export any of the Licensed Articles outside of the
Territory, nor shall it sell any Licensed Articles to any third party
that Licensee knows, or may reasonably be expected to know, intends
to, is likely to or is suspected to export such items. In all of its
contracts and purchase orders with sub-contractors, retailers and
other third parties governing the manufacture, distribution and sale
of any of the Licensed Articles, Licensee shall include the foregoing
prohibitions on export. Licensee agrees that any appearance of any of
the Licensed Articles in a wholesale or retail sales venue anywhere
outside of the Territory shall be grounds for the Licensor to
immediately terminate this Agreement.
5
5. RIGHTS RESERVED BY LICENSOR
---------------------------
(a) Licensor reserves all rights not expressly conveyed to Licensee
hereunder. Notwithstanding anything to the contrary in the foregoing
paragraph or elsewhere set forth in this Agreement, Licensee hereby
acknowledges that the rights granted hereunder are subject to the
rights of Licensor, and the owner of the Licensed Material, to use or
license without limitation throughout the world any third party(s) of
its choice for the manufacture, distribution, advertising and sale of
products similar or identical to those set forth above for sale
through any catalog(s) produced or distributed by or on Licensor's
behalf, or for sale or distribution in any motion picture theaters,
or for sale or distribution in any retail stores (or portion thereof)
operated by Licensor or on Licensor's behalf.
(b) Licensor reserves the right to withdraw any Licensed Material
or Licensed Articles, the use or sale of which under this Agreement
would infringe or reasonably be claimed to infringe the rights of a
third party(s). In such case Licensor's obligations to Licensee shall
be limited to the purchase, at cost without overhead, of Licensed
Articles and other materials utilizing such withdrawn Licensed
Material which cannot be sold or used.
6. ARTWORK
-------
Should Licensee wish to use Licensor's services in developing artwork
for the creation of Licensed Articles, display packaging or promotional
material (including any artwork which, in Licensor's opinion, is necessary
to modify artwork initially prepared by Licensee and submitted to Licensor
for approval) Licensee shall pay Licensor, whithin thirty (30) days
following the date of Licensor's invoice therefore the amounts due, based
upon Licensor's prevailing commercial art rates, including any delivery
charges incurred by Licensor in connection therewith. Estimates of artwork
charges are available upon request. Licensee acknowledges that in certain
cases it may be required by Licensor to utilize artwork or renditions of
the Licensed Material as specifically provided by Licensor, and Licensee
agrees to so utilize such renditions. In those instances where Licensee is
unable or unwilling to use such renditions, and if Licensor approves in
writing, Licensee may create or procure the creation of artwork to be
submitted for approval as required herein. Nonetheless, in those instances
where Licensee is not obligated to utilize Licensor's services, Licensee is
encouraged to do so in order to minimize delays which may occur if outside
artists do renditions of Licensed Material which Licensor does not approve.
7. LICENSOR'S OWNERSHIP OF ALL RIGHTS IN LICENSED MATERIAL
-------------------------------------------------------
Licensee acknowledges that, as between Licensee and Licensor, the
Licensed Material and all copyrights and other proprietary rights in and to
the Licensed Material are exclusively owned, reserved and/or controlled by
Licensor. Licensee acknowledges that Licensor shall have the right to
terminate this Agreement in the event Licensee asserts any rights in or to
the Licensed Material. Licensee further agrees and acknowledges that all
rights in and to any and all artwork created (including if created in whole
or in part by Licensee) and authorized for use hereunder by Licensor in
connection with the Licensed Articles or otherwise which utilizes or
incorporates any of the Licensed Material shall, as between Licensee and
Licensor, be owned, reserved, and/or controlled in its entirety exclusively
by Licensor, who shall be the author at law and copyright proprietor
thereof. Licensor reserves for itself or its designees all rights to use
any and all artwork created, utilized and/or approved hereunder without
limitation in the Territory, or otherwise, during or after the Term. At the
request of Licensor, Licensee shall execute such form of assignment to
Licensor of the copyright in any amendments to or derivative works based in
whole or in part upon the Licensed Material and all other proprietary,
rights in and to the Licensed Material as Licensor may reasonably request,
8. LEGAL NOTICES
-------------
As a condition to the grant of rights hereunder, each Licensed
Article and any other matter containing Licensed Material shall bear one or
more properly located legal notice in the form as set forth above or as
otherwise prescribed by Licensor. Licensee will comply with such
instructions as to form, location and content of the notice as Licensor may
give from time to time. Licensee will not affix to any Licensed Article or
any other matter containing Licensed Material a legal notice in any other
name. If by inadvertence a proper legal notice in Licensor's name is
omitted from any Licensed Article or other matter containing Licensed
Material,
6
Licensee agrees, at its expense, to immediately use all possible efforts to
correct the omission on all such Licensed Articles or other matter in
process of manufacture or in distribution. Licensee agrees to advise
Licensor promptly and in writing of the steps being taken to correct any
such omission and to cooperate fully with Licensor in making the
corrections on all existing Licensed Articles which can be located.
9. GOODWILL
--------
Licensee recognizes and acknowledges the great value of the publicity
and goodwill associated with the Licensed Material and in such connection,
it acknowledges that such goodwill exclusively belongs to Licensor and that
the Licensed Material has acquired a secondary meaning in the mind of the
purchasing public. Licensee further recognizes and acknowledges that a
breach by it of any of its covenants, agreements or undertakings hereunder
will cause Licensor irreparable harm, which cannot be readily remedied in
damages in an action at law, and will, in addition thereto, constitute an
infringement of Licensor's rights in and to the Licensed Material, thereby
entitling Licensor to injunctive relief and other equitable remedies, costs
and reasonable attorney's fees.
10. STATEMENTS, PAYMENTS AND AUDITS
-------------------------------
(a) Within fifteen (15) days following the end of each calendar
month during the Term ("Monthly Accounting Period"), Licensee shall
submit to Licensor:
(i) With respect to cumulative Net Invoiced Xxxxxxxx, a
"Royalty Statement and Promotional Expenditures Report" which
shall include, at a minimum, the information listed on the
format to be provided by Licensor upon execution of this
Agreement.
(ii) With respect to Licensed Articles manufactured and sold
and defective sales returns, an "Inventory Movement Report"
which shall include, at a minimum, the information listed on
the format to be provided by Licensor upon execution of this
Agreement.
Licensor will provide the formats for the above-referenced
reports and reserves the right to review and amend the minimum
requirements referred to above, from time to time, and in such event
Licensee shall duly complete and return to Licensor any such amended
version in accordance herewith.
(b) Licensee shall provide Licensor at the beginning of the Term
and thereafter within seven (7) days of the close of each financial
quarter ("Quarterly Accounting Period") with a completed revenue
forecast projected forward to a date twelve (12) months from the
beginning of said quarter (the "Forecast"). The Forecast shall be
completed by Licensee in a format which Licensor shall provide.
Licensor reserves the right to review and amend the format of the
Forecast from time to time and in such event Licensee shall duly
complete and return to Licensor any such amended version in
accordance herewith.
(c) Within thirty (30) days following the end of each Contract
Year, Licensee shall conduct at its own expense a physical inventory
of all Licensed Articles in Licensee's possession or control and
submit to Licensor a written statement detailing the results of such
physical inventory.
(d) Licensee shall utilize its best efforts to comply on a timely
basis with all reasonable requests of Licensor for supplementary
accounting information and reports in addition to the statements
specifically required by this Agreement.
(e) (i) Within fifteen (15) days following the end of each
Monthly Accounting Period, Licensee shall pay Licensor in U.S.
dollars the amount shown on the Royalty Statement and
Promotional Expenditures Report to be due to Licensor. All sums
due Licensor shall be deposited in a bank account to be
designated by Licensor. In calculating the amount of U.S.
dollars to be paid to Licensor, Licensee shall calculate the
Royalties due in the national currency of the country of the
Territory and then convert it into U.S. dollars based upon the
exchange rate published by the national bank in the country of
the Territory, and Licensee shall furnish Licensor with
external evidence with respect to the authenticity of the
exchange
7
rates used, such as a bank statement. Exchange rates in respect
of each Monthly Accounting Period shall be determined as of the
15th day of the applicable month, or if such 15th day shall
fall on a non-business day then as of the first business day
following said 15th day.
(ii) In no event shall any remittance restrictions in a
particular country as comprises the Territory relieve Licensee
of the obligation of reporting, and ultimately remitting, all
Guaranteed Consideration and Royalties as required hereunder.
(iii) In the event that amounts payable to Licensor are not
remitted in full within the required payment period (which in
the case of Royalties shall be fifteen (15) days following the
end of a Monthly Accounting Period, or, in the case of
Guaranteed Consideration shall be the date due), and Licensee
has not provided evidence to Licensor that because of laws and
restrictions in a country or countries of the Territory,
amounts payable could not be remitted, then Licensee shall pay
to Licensor as liquidated damages and not as a penalty an
amount equal to five percent (5%) per month, without any
deductions for tax or other purposes, on the outstanding
balance. Interest will become due on the first day the payment
is not made beyond the said fifteen (15) days as aforesaid, and
an additional month will be deemed to have passed for the
purposes hereof on the first day of each subsequent calendar
month until the delinquent amounts are paid.
(iv) In the event Licensor shall suffer any exchange losses
arising from late payments, including those late payments
arising as a result of understated amounts due discovered as a
result of an audit, such losses shall be determined by
deducting the U.S. dollars actually received by Licensor from
the U.S. dollars which would have been received if the
delinquent balance had been paid on the last due date at the
exchange rate on that date (plus interest calculated in
accordance with this Agreement from such last due date), as
published by the national bank in the country of the Territory.
Any resulting shortfall will be paid immediately by Licensee to
Licensor in U.S. dollars. This exchange loss protection
described above will also apply to all liquidated damages
described above, and the last due date, for purposes of
determining the exchange rate, shall be deemed to be the first
day a payment becomes delinquent.
(v) If remittance restrictions shall remain in effect for six
(6) months or more, Licensor shall have the right and option,
exercisable by the service of a written notice to such effect
upon Licensee, to terminate this Agreement. Licensee will use
its best efforts at all times to obtain government approval for
remittance of all sums due to Licensor at the earliest possible
date.
(f) Licensee shall keep true and accurate books and records of all
transactions relating to the manufacture, distribution, and
exploitation of Licensed Articles hereunder, which shall include but
not be limited to the following minimum requirements:
(i) inventory records showing the receipt, dispatch, return
and balance of Licensed Articles stocked by Licensee;
(ii) billing records that are capable of being traced to the
above inventory records; and
(iii) an overall reconciliation showing the total number of
Licensed Articles received and/or manufactured in connection
with the exploitation of Licensee's rights hereunder and
showing their actual disposition, i.e., whether with customers,
damaged, destroyed, lost, or in stock.
(g) Licensor shall have the right from time to time during normal
business hours at reasonable intervals to inspect, audit and make
extracts of the books and records of Licensee insofar as said books
and records relate to the manufacture, distribution, and exploitation
of Licensed Articles licensed hereunder and as said books and records
relate to Licensee's fulfillment of the Promotional Commitment and
such right of audit shall continue for a period of two (2) years
following either expiry or termination of this Agreement. Should an
inspection or audit carried out pursuant hereto reveal any shortfall,
Licensee shall pay to Licensor an amount equal to such shortfall
together with interest thereon from the respective dates that same
should have been payable hereunder until the date
8
of payment of such shortfall at a rate equal to the lesser of (i)
five percent (5%) per month, without any deductions for tax or other
purposes, and (ii) the maximum legal rate in such country of the
Territory. Should an inspection or audit carried out pursuant hereto
reveal a shortfall of more than one percent (1%) of the total amount
due to Licensor for the periods reviewed, the costs of such audit or
inspection shall be reimbursed by Licensee to Licensor within thirty
(30) days of Licensor's invoice therefor. Licensor shall also have
the right to inspect or audit, under the same terms described in this
Paragraph, the books and records of any of Licensee's affiliated
companies which charged expenses to Licensee, including bills,
invoices, and overhead charges.
(h) Each character or element of the Licensed Material licensed
hereunder shall constitute a separate unit for purposes of accounting
statements and remittance to Licensor hereunder.
(i) Any income taxes, other taxes, and/or fees which local law
requires to be levied against Licensor's Guaranteed Consideration or
Royalties shall, in order to avoid any interest charges or other
penalties, be advanced by Licensee on behalf of Licensor within the
period of time required by local law; provided that Licensee shall
not make such advance if Licensor has advised Licensee in writing not
to do so, and has taken appropriate legal action to contest the
propriety of such taxes and/or fees and legally withhold payment, and
in such event Licensor shall indemnify Licensee against any interest
charges or other penalties with respect to such taxes. Any such taxes
or fees which Licensee advances shall be deducted from the total
amount of Guaranteed Consideration and Royalties otherwise payable to
Licensor. In the event that new or revised law(s) establishing fees,
taxes or other impositions are promulgated in the Territory, Licensee
must notify Licensor immediately and in ample time to afford Licensor
an opportunity to contest such impositions through the appropriate
legal channels. Licensee shall file all necessary tax returns or
other government documents on Licensor's behalf which are required by
local law, within the time period required by local law. The original
receipt, and the computations for such taxes as may be deducted from
the Guaranteed Consideration and Royalties, must accompany the
remittance of the Guaranteed Consideration or the monthly Royalty
Statement and Promotional Expenditures Report (referred to in
Subparagraph 10(a)(i) above) in the Monthly Accounting Period in
which such tax deduction is made. If local law stipulates that the
original tax receipt must be retained by the Licensee, a bonafide
copy thereof must be attached to the Royalty Statement and
Promotional Expenditures Report.
11. MANUFACTURE OF LICENSED ARTICLES BY THIRD PARTY MANUFACTURERS
-------------------------------------------------------------
(a) Prior to entering into this Agreement, Licensee shall advise
Licensor in writing of the place of manufacture of the Licensed
Articles. If Licensee at any time desires to have Licensed Articles
or components thereof containing Licensed Material manufactured by a
third party, it must, as a condition to the continuation of this
Agreement, notify Licensor of the name and address of such
manufacturer and the Licensed Articles or components involved and
obtain Licensor's prior written permission to do so. The granting of
said permission, if Licensor is prepared to grant the same, will be
conditional upon:
(i) Licensee's signing a consent agreement in a form to be
provided by Licensor; and
(ii) Licensee causing each such manufacturer and any
submanufacturer to sign such an agreement; and
(iii) Licensor's receipt of such agreements properly signed.
(b) Notwithstanding the above subparagraph (a), Licensee
acknowledges and agrees that in the event Licensor shall request
Licensee to have Licensed Articles or components thereof containing
Licensed Material manufactured by Licensor's designee or source,
Licensee shall comply with such request.
(c) Licensee's purchase of Licensed Articles from a third party
manufacturer without such an agreement as required hereunder being
signed and delivered to Licensor shall be a violation of this
Agreement.
9
(d) Licensee shall monitor the activity of each third party
manufacturer under its respective consent agreement, and shall make
its best efforts to ensure that such third party manufacturer
complies with its respective consent agreement. If any such
manufacturer utilizes Licensed Material for any unauthorized purpose,
Licensee shall cooperate fully in bringing such utilization to an
immediate halt. If, by reason of Licensee not having supplied the
above-mentioned agreements to Licensor or not having given Licensor
the name of any supplier, Licensor makes any representation or takes
any action and is thereby subjected to any penalty or expense,
Licensee will indemnify Licensor for any cost or loss Licensor
sustains.
12. LICENSOR'S WARRANTIES AND REPRESENTATIONS
-----------------------------------------
Licensor warrants and represents to Licensee that:
(a) It has, and will have throughout the Term of this Agreement,
the right to license the Licensed Material to Licensee in accordance
with the terms and provisions of this Agreement; and
(b) The entering into of this Agreement by Licensor does not
violate any Agreement, rights or obligations existing between
Licensor and any other person, firm or corporation.
Except as expressly stated in this Section 12, Licensor makes no
other representation or warranty with respect to the subject matter hereof.
13. INDEMNITY
---------
(a) During the Term, and continuing after expiration or termination
of this Agreement, Licensee shall indemnify Licensor against all
claims, liabilities (including settlements entered into in good
faith) and expenses (including reasonable attorney's fees) arising
out of Licensee's activities hereunder or out of any alleged defect
(whether obvious or hidden) in a Licensed Article or arising from
personal injury or any infringement of any rights of Licensor's or of
any third party by the manufacture, sale, possession or use of
Licensed Articles (or the advertising therefor) or their failure to
comply with applicable laws. The parties indemnified hereunder shall
include Licensor, its parent, affiliates, subsidiaries and their
respective officers, directors, shareholders, employees and agents.
(b) No warranty or indemnity is given by Licensor with respect to
any liability or expense arising from any claim that use of the
Licensed Material on or in connection with the Licensed Articles
hereunder or any packaging, advertising or promotional material
infringes upon any trademark right of any third party or otherwise
constitutes unfair competition by reason of any prior rights acquired
by such third party.
13A. TRADEMARK REGISTRATIONS
-----------------------
See attached Exhibit C which shall form part of this Agreement.
14. INSURANCE
---------
To the extent consistent with Licensee's normal business practices,
Licensee shall maintain in full force and effect at all times while this
Agreement is in effect comprehensive general liability insurance, including
product liability coverage with broad form vendor's endorsement. Licensee
shall deliver to Licensor a certificate or certificates of insurance
evidencing any such insurance coverage.
10
15. CREDIT AND SECURITY INTERESTS
-----------------------------
(a) Licensee agrees to provide credit information and other
documentation as Licensor may request including, but not limited to,
fiscal year-end financial statements (profit and loss statement and
balance sheet), and operating statements.
(b) Licensee agrees to provide Licensor at Licensor's request a
letter of credit issued in favor of Licensor from a financial
institution as approved by Licensor in an amount and form approved
by Licensor and/or such other form of security as may be acceptable
to Licensor. Licensee agrees to execute all documentation as Licensor
may require in connection with perfection of such security interests.
16. TERMINATION
-----------
Without prejudice to any other right or remedy available to it and in
addition to any other termination rights specified throughout this
Agreement, Licensor shall have the right at any time to terminate this
Agreement forthwith (and, unless specified hereunder, without written
notice) under any of the following circumstances:
(a) If Licensee defaults in the performance of any of its material
obligations provided for in this Agreement and any such default is
not corrected within ten (10) days after written notice to Licensee
from Licensor thereof; or
(b) If Licensee does not commence in good faith to manufacture,
distribute and sell each Licensed Article throughout the Territory on
or before the Marketing Date and thereafter fails to diligently and
continuously manufacture, distribute and sell each of the Licensed
Articles throughout the Territory. Such default, and Licensor's
resultant right of termination, shall apply only to the specific
characters, elements and logos of the Licensed Material and/or the
specific Licensed Article(s) and/or the specific country or region of
the Territory of which or wherein Licensee fails to meet said
marketing requirements, and if any such failure is not corrected
within ten (10) days after written notice to Licensee from Licensor
thereof; or
(c) If Licensee fails in its obligations to furnish all statements
and accounts required by this Agreement and to pay any amount
provided for herein, and in particular all Royalties and Guaranteed
Consideration, and if any such failure is not corrected within ten
(10) days after written notice to Licensee from Licensor thereof; or
(d) If Licensee delivers to anyone without Licensor's written
authorization merchandise containing representations of Licensed
Material or other material, the copyright or other proprietary rights
to which are owned or controlled by Licensor, other than the Licensed
Articles approved in accordance with the provisions hereof; or
(e) If Licensee or its affiliate shall breach any other agreement
in effect between Licensee or its affiliate on the one hand and
Licensor or any other company in the Time Warner Entertainment
Company, L.P, group or Time Warner Inc. group on the other, including
the license agreements between (1) Licensor and Green Food Peregrine
Children's Food Co., Ltd., and (2) Licensor and Hangzhou Meilijian
Dairy Products Co., Ltd.; or
(f) If Licensee shall make any assignment for the benefit of
creditors or file a petition in bankruptcy or is adjudged bankrupt or
becomes insolvent or generally unable to pay its debts as and when
due or is placed in the hands of a receiver or if the equivalent of
any such proceedings or acts occurs though known by some other name
or term; or
(g) If Licensee is unable or not permitted to operate its business
in the usual manner or is not permitted or is unable to provide
Licensor with assurance satisfactory to it that Licensee will so
operate its business as debtor in possession or its equivalent, or is
not permitted or is unable to otherwise meet its obligations under
this Agreement or to provide Licensor with assurance satisfactory to
it that Licensee will meet such obligations; or
11
(h) If Licensee fails to make any two or more consecutive monthly
payments of Royalties when due; or
(i) If Licensee undergoes a substantial change of management or
ownership.
17. RIGHTS AND OBLIGATIONS UPON EXPIRATION OR TERMINATION
-----------------------------------------------------
(a) Upon the expiration or termination of this Agreement, all
rights herein granted to Licensee shall immediately revert to
Licensor, Licensor shall be entitled to retain all Royalties and
other things of value paid or delivered to Licensor, and any
Guaranteed Consideration not theretofore paid shall become
immediately due and payable to Licensor.
(b) Licensee agrees that from and after the expiration or
termination of this Agreement Licensee shall neither manufacture nor
have manufactured for it Licensed Articles, that Licensee shall
destroy or deface any molds, plates or other items used to reproduce
Licensed Material and that, except as hereinafter provided, it shall
cease selling Licensed Articles.
(c) Except as otherwise agreed by Licensor in writing, any
inventory of Licensed Articles in Licensee's possession or control
upon the expiration or termination of this Agreement shall be
destroyed forthwith. Such destruction shall be attested to in a
certificate signed by an independent third party, firm, or agency
approved by Licensor and delivered forthwith to Licensor.
18. WAIVERS
-------
A waiver by either party at any time of a breach of any provision of
this Agreement shall not apply to any breach of any other provision of this
Agreement or imply that a breach of the same provision at any other time
has been or will be waived.
19. NO SUB-LICENSING; ASSIGNABILITY
-------------------------------
(a) Licensee shall have no right to sub-license any third party to
perform any of Licensee's obligations under this Agreement.
(b) This Agreement does not provide for a joint venture between the
parties. Licensee's rights as granted hereunder cannot be assigned,
disposed of or transferred, voluntarily or involuntarily, to anyone
else without Licensor's prior written consent. Without limiting the
foregoing, a merger of Licensee's company into another company or the
transfer of a controlling interest in Licensee's company shall be
deemed a disposal of Licensee's rights hereunder which, to be
effective hereunder, would require Licensor's written consent.
(c) Licensor shall have the right to assign this Agreement or any
of its rights and obligations or interests hereunder to any
subsidiary, affiliate, or successor in interest by merger or
acquisition or otherwise, of Licensor, or of Time Warner
Entertainment Company, L.P. or Time Warner Inc., or to, any person or
entity succeeding to substantially all of the assets of Licensor or
of Time Warner Entertainment Company, L.P. or Time Warner Inc., and
such assignment shall not require the consent of Licensee.
20. CONFIDENTIALITY
---------------
Licensee hereby agrees that, both during the term of this Agreement
and after the expiration or termination hereof, it shall maintain in strict
confidence all information, including but not limited to the Licensed
Material, books of account, inventories, production and sales records,
reports, correspondence and any other materials relating to this Agreement,
and shall not disclose such information to third parties without the prior
written consent of Licensor.
12
21. ETHICS
------
Licensee agrees that, in the course of its implementation of this
Agreement, no monies shall be offered, paid or promised, directly or
indirectly, by Licensee to any governmental official, political party or
official thereof, or any candidate for political office, for the purpose of
influencing any act or decision of such person or party or inducing such
person or party to use his or its influence to affect or influence any act
or decision of any national, state or local government or instrumentality
thereof. For the purposes of this paragraph, the term "governmental
official" shall include any officer or employee of a national, state or
local government, or any department, agency or instrumentality thereof, or
any person acting in an official capacity of or on behalf of such
government or department, agency or instrumentality. In the performance of
its obligations hereunder, Licensee agrees to comply with all applicable
laws, rules and regulations, including, without limitation, the Food
Hygiene Law of the People's Republic of China, and shall conduit its
business in accordance with sound and generally accepted business
practices.
22. HEADINGS
--------
Headings of paragraphs herein are for convenience of reference only
and are without substantive significance.
23. NOTICES/PAYMENTS
----------------
All notices which either party is required or may desire to serve
upon the other party shall be in writing, addressed to the party to be
served at the address set forth above and may be served personally or by
facsimile. Such notice shall be deemed served upon personal delivery or, if
sent by facsimile, on receipt by the addressee (as confirmed by a fax
transmission confirmation slip).
24. FORCE MAJEURE
-------------
The parties shall be excused from performance under this Agreement
while and to the extent they are unable to perform by reason of war, fire,
storm, flood, earthquake, explosion, rebellion, labor dispute,
insurrection, action of the elements, or other acts of God. It is
understood, however, that excuse from performance does not extend the Term
of this Agreement. It is further understood that Licensor's inability to
perform for any of the above enumerated causes shall not excuse Licensee's
obligation to pay to Licensor the Guaranteed Consideration. Additionally,
if the circumstance of a force majeure continues for a period of six months
or longer, then either party shall have the right to terminate this
Agreement forthwith on written notice to the other party.
25. CONSTRUCTION
------------
This Agreement shall be enforced, construed and interpreted in
accordance with the laws of the State of California applicable to contracts
executed and performed therein. This Agreement is being executed in the
English language.
26. MISCELLANEOUS
-------------
(a) Each of the parties acknowledges and agrees that the other has
not made any representations, warranties or agreements of any kind
relating to the subject matter hereof, except as may be expressly set
forth herein.
(b) This Agreement constitutes and contains the entire agreement
between the parties with respect to the subject matter hereof and
supersedes any prior or contemporaneous agreements, oral or written.
Nothing herein contained shall be binding upon the parties until this
Agreement has been executed by an officer of each party. This
Agreement may not be changed, modified, amended or supplemented,
except in a writing signed by both parties.
13
(c) If any part of this Agreement shall be declared invalid or
unenforceable by a court of competent jurisdiction, it shall not
affect the validity of the balance of this Agreement, provided,
however, that if any provision of this Agreement pertaining to the
payment of monies to Licensor shall be declared invalid or
unenforceable, Licensor shall have the right, at its option, to
terminate the Term of this Agreement upon giving written notice to
Licensee of its election to do so.
(d) In the event of any action, suit, or proceeding hereunder, the
prevailing party shall be entitled to recover its attorneys' fees and
the costs of said action, suit, or proceeding.
