EXHIBIT 10.27
MERCHANDISING LICENSE AGREEMENT
Dated as of October 16, 1996
1. PARTIES: VIACOM CONSUMER PRODUCTS, INC. ("VCP")
0000 Xxxxxxx Xxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
SEL-LEB MARKETING, INC. ("Licensee")
0000 00xx Xxxxxx
Xxxxx Xxxxxx, XX 00000
Attn: Xxx Xxxxxxxxx
2. PROPERTY:
As used herein, the term "Property" shall mean the characters,
characterizations,designs and visual representations which appear, and only
as they appear, in the television series entitled "CLUELESS" (the "Series")
including the names and likenesses of only those performers approved in
writing by VCP, and only as they appear as characters in the Series; but
not including, without the prior written consent of VCP, any actual
material from the Series, such as footage (Film, tape, disc or other
medium), outtakes, music, effects track, voice track or sound track of the
Series.
3. LICENSED ARTICLES:
Licensee shall use the Property in connection with the manufacture and
distribution of the following items (the below listed items will be
referred to individually and collectively as the "Licensed Articles"):
(a) Nail Care Products including polishes, top coats, removers, hardeners
and quick-drys as well as artificial nail sets, nail files/clipper
sets.
(b) Lip Stick Products including sticks, glosses and liners.
(c) Cologne Fragrances including bottled cologne sprays and body sprays.
(d) Mass Market Gift Set/Bags including combinations of the items listed
in 3(a), (b) and (C), which will be targeted to the mass market.
(e) Signature Gift Set/Bags including combinations of the items listed in
3(a), (b) and (c), which will be targeted to the "upstairs" market.
(f) Specialty "kid-tween" Gift Set/bags including combinations of the
items listed in 3(a), (b) and (c), which will be targeted for toy
distribution.
(g) Licensee shall have the option until December 10, 1996 to add bath
products (including bath gels, bubble baths and bath lotions). If
Licensee exercises such option, it must give VCP written notice by
December 10, 1996 and pay any and all amounts as shall be due to VCP
in respect of such bath products as provided hereinbelow no later than
December 15, 1996, and all applicable terms and conditions of this
Agreement shall apply. Moreover, Licensee shall pay VCP an additional
15% on any amounts due hereunder, as applicable. A "*" shall indicate
each payment which may be affected by the exercising of this option.
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4. TERRITORY:
United States, its territories and possessions, including Puerto Rico.
5. TERM:
(a) The initial term hereof shall commence on October 15, 1996 and shall
continue until October 31, 1999, unless sooner terminated or extended
as provided in this Agreement ("Initial Term").
(b) If Licensee earns in Royalties (as defined in Paragraph 9(b) below)
and pays to VCP a minimum of $500,000.00 by August 1, 1999, then
Licensee shall have the option to extend this Agreement for a period
of two (2) years ("Extended Term"). In order to exercise this option,
License must give VCP written notice ninety (90) days prior to the
expiration of the Initial Term. If Licensee does exercise such
option, Licensee shall pay VCP an additional Advance ("Additional
Advance") of $90,000.00* upon the execution of the option and an
additional Guarantee ("Additional Guarantee") of $270,000.00* payable
$90,000.00* as the Additional Advance, $90,000.00* on or before
November 1, 2000 and $90,000.00* upon the expiration of the Extended
Term payable to the extent not earned out by the Additional Advance
and Royalties.
(c) Wherever the word "Term" is used in this Agreement, it refers
generally to the Initial Term and any and all Extended Terms, if
applicable.
6. LICENSE:
(a) VCP hereby grants to Licensee and Licensee hereby accepts, the
exclusive (subject to Paragraphs 7 and 8(d) below) right, license and
privilege to manufacture the designated Licensed Articles based upon
and incorporating the Property, and to distribute, offer for sale,
sell, promote and advertise the Licensed Articles in the Territory
during the Term, subject to the provisions of this Agreement.
(b) The license granted herein includes the non-exclusive right to use, in
the Territory and for the Term, subject to all the terms and
conditions hereof, the title of the Series and the trade and service
marks and names, and the logos and art work, if any, used in
connection with the Series (all of which are, except where dealt with
individually, referred to hereinafter as the "Trademarks"). Inclusion
of artwork is contingent upon VCP's right to grant permission for the
use thereof without payment of any nature to any third party in
connection therewith.
(c) Licensee shall not use the Property or the Trademarks in any manner
not specifically authorized by this Agreement, except with VCP's prior
written consent.
7. RESERVATION OF RIGHTS:
(a) All rights in and to the Property, the Trademarks and the Series not
expressly granted herein to Licensee are hereby expressly reserved to
VCP or its designees without restriction.
(b) Licensee acknowledges that the license granted herein does not include
any right, title or interest in or to the Property or the Series, nor
to any copyrights, patents, and/or trademarks therein or associated
therewith. Furthermore, this Agreement relates solely to the Series.
Licensee is not, by virtue of this Agreement, acquiring any right
whatsoever in any motion picture or television production or other
endeavor which is based upon,
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derivative of inspired by or otherwise related to the Series,
including without limitation, remakes, sequels, sound recordings,
publications, or other endeavors in which the characters,
characterizations, designs and/or visual representations contained in
the Series may appear; as between VCP and Licensee, all right, title
and interest in and to the foregoing is retained by VCP.
(c) VCP reserves unto itself and/or its designees the right to
manufacture, distribute, offer for sale, sell, advertise, promote,
display and otherwise exploit articles similar and/or identical to the
Licensed Articles (and articles directly or indirectly competitive
with the Licensed Articles), for use in connection with premium sales
or give-aways, promotional give-aways, in-theater sales and sales
outlets immediately adjacent to motion picture theaters, sales at or
adjacent to theme parks, amusement parks, entertainment centers or
other amusement attractions, sales through cable delivery systems and
on line services, mail/telephone order sales, sales through catalogue
houses, vending machine sales, home television sales (e.g. home
shopping club), radio sales, computer shopping services, sales by or
through fan clubs and conventions, sales through home video retail
outlets, and/or sales in or in connection with facilities owned,
operated and/or controlled by VCP, its parent, affiliated and/or
subsidiary companies. Notwithstanding the foregoing, VCP agrees to
use all reasonable efforts to cause its parent, affiliates or
designees to source such items from Licensee, subject to Licensee's
ability to meet the required specifications and requirements of any
such project. Licensee agrees to furnish to VCP, at its best
wholesale distribution price, any number of Licensed Articles ordered
by VCP for sale in or in connection with any of the foregoing reserved
activities. For purposes hereof, "cable delivery systems" shall mean
those systems which deliver through home television set top
converters; "on-line services" shall mean those systems which deliver
through telephone, cable and/or satellite delivery channels to
consumers' personal computers. If the Property licensed hereunder is
a Series, this Agreement applies to the Series only and not to any
sequels, motion pictures or any other production based on, derived
from or inspired by the Series.
8. MANUFACTURING AND DISTRIBUTION OBLIGATIONS/MARKETING DATE:
(a) Licensee shall manufacture, distribute and commence the marketing of a
substantial number of items of the Licensed Articles by the Spring of
1997 ("Marketing Date").
(b) If Licensee fails to meet the Marketing Date for any Licensed Article,
VCP may terminate the rights granted to Licensee with respect to such
Licensed Article on thirty (30) days prior written notice, provided
Licensee shall not have commenced distribution of such Licensed
Article within such thirty day period. If, subsequent to the
commencement of marketing and distribution of any Licensed Article,
Licensee fails to actively continue marketing and distributing any
units of said Licensed Article in any country or substantial portion
of the Territory, VCP may terminate the rights granted to Licensee
with respect to that particular country or portion of the Territory on
thirty (30) days prior written notice, provided licensee shall not
have recommenced distribution of such Licensed Article within such
country or portion of the Territory within such thirty day period.
Termination of this Agreement, or any portion thereof, by VCP pursuant
to this subparagraph 8(b) shall in no way reduce, proportionally or
otherwise, the Guarantee required to be paid to VCP hereunder.
(c) Licensee acknowledges that VCP is entering into this Agreement not
only in consideration of the payments to be made to it hereunder, but
also in consideration of the promotional value to it and to the Series
of the widespread distribution, sale, advertising and promotion of
each of the Licensed Articles. Accordingly, Licensee shall procure
the greatest volume of sales of the Licensed Articles consistent with
high quality and shall make and maintain timely and adequate
arrangements for their manufacture, distribution, advertising and
promotion. Additionally, Licensee must commit to a minimum advertising
expenditure of not less than
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$50,000.00 per year. If Licensee fails to make any such minimum
annual advertising expenditure, then any deficiencies shall be paid
directly to VCP.
(d) Licensee shall distribute and sell the Licensed Articles outright at a
competitive price, and not on approval, consignment, sale-or-return,
or any similar basis, and further, only to the mass market, toy
stores, grocery stores, drug stores, beauty stores, beauty supply
outlets and department stores. Licensee shall not sell or distribute
the Licensed Articles for publicity or promotional tie-in purposes,
premium give-aways, or any other means of distributing, marketing or
merchandising reserved to VCP under Paragraph 7. Subject to
Paragraphs 6(b) and 7 above, Licensee's rights shall be exclusive in
the mass market, grocery stores, drug stores, beauty outlets, discount
chain stores and wholesale club/membership stores and non-exclusive
for toy stores and department stores. However, this shall not limit
Licensee's commitments under Paragraph 3 above. Moreover, Licensee's
exclusive rights shall revert to non-exclusive in the event that:
(i) Licensee is late on a scheduled Royalty (as defined in Paragraph
9(b) below) or cash installment payment, and is unable to correct
the problem within ten (10) business days; or
(ii) Licensee sells less than:
$1,000,000.00 in wholesale sales for the period beginning with
the Market Date through March 31, 1998;
$2,000,000.00 in wholesale sales for the period April 1, 1998
through March 31, 1999;
$2,000,000.00 in wholesale sales for the period April 1, 1999
through March 31, 2000;
$2,000,000.00 in wholesale sales for the period April 1, 2000
through Xxxxx 00, 0000 (xx applicable); or
$1,000,000.00 in wholesale sales for the period April 1, 2000
through October 31, 2001 (if applicable).
(e) Licensee may not enter into any agreement with any third party for the
manufacturing or distribution of any of the Licensed Articles without
VCP's prior written consent, not to be unreasonably withheld.
Licensee shall manufacture the Licensed Articles in the United States
and Canada.
(f) Licensee further agrees and acknowledges that any and all lists of
names and addresses compiled by Licensee in connection with Licensee's
marketing of the Licensed Articles hereunder as customers or potential
customers thereof, including but not limited to any so-called
registration cards as completed and sent to Licensee by purchasers of
the Licensed Articles hereunder, shall be deemed for purposes of this
Agreement, the joint property of VCP and Licensee shall be provided to
VCP upon its request therefor. VCP acknowledges that Licensee shall
be permitted to maintain and update such list (without purging any
names included therein) at the address set forth above throughout the
Term of this Agreement.
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9. PAYMENT:
Licensee shall pay VCP the following:
(a) A non-returnable advance ("Advance") of Ninety Thousand Dollars
*($90,000.00) payable upon the earlier of the execution hereof by
Licensee or November 4,1996, to be applied against royalties payable
pursuant to Paragraph 9(b) below. Notwithstanding the above, if the
back nine (9) episodes of the Series are not picked-up for broadcast
for the 1996/1997 season, then Licensee Shall have the option to
terminate this Agreement within five (5) business days of VCP giving
Licensee notice that the Series has not been picked-up. If Licensee
exercise this option, Forty Thousand Dollars *($40,000.00) of the
Advance shall be refunded to Licensee (such refund shall not be
payable earlier than January 1,1997 nor later than January 15, 1997)
and this Agreement shall terminate as of April 31, 1998. At such
time, all rights granted hereunder shall immediately revert to VCP and
no further Guarantee payments (as defined in Paragraph 9(c) below)
shall be due. However, the termination of this Agreement and the
refund of such Forty Thousand Dollars *($40,000.00) shall in no way
reduce any Royalties (as defined in Paragraph 9(b) below) which may be
payable to VCP pursuant to this Agreement. If Licensee does not
exercise this option, then this Agreement shall continue according to
the terms set forth herein.
(b) A royalty ("Royalty") of Ten Percent (10%) of the greater of
Licensee's published gross wholesale price, or such amount as Licensee
may actually receive for each Licensed Article, except that Licensee
may deduct from its receipts hereunder: (i) returns for defective or
damaged goods; (ii) actual deductions for customary trade discounts,
except that the aggregate amount of such deductions shall not exceed
Twelve Percent (12%) of the total gross wholesale price (during the
same accounting period, as specified in Xxxxxxxxx 00 xxxxx); (xxx)
actual deductions for returns of sale-or-return goods, except that the
aggregate amount of such deductions may not exceed Twelve Percent
(12%) of the total number of units distributed annually; and (iv)
actual freight charges incurred in shipping the Licensed Articles to
customers. Said Royalty shall be paid to VCP on all Licensed Articles
as if sold by Licensee at its customary price without discount
Further, where the billed price for any Licensed Article is less than
Licensee's customary price, or if Licensee sells any Licensed Articles
to any person, firm or corporation related to or affiliated with
Licensee for a price which is less than Licensee's customary price,
then the Royalty payable to VCP on such Licensed Articles shall be
computed as if sold by Licensee at its customary price without
discount. VCP agrees and acknowledges that Licensee shall be
permitted to distribute a reasonable amount of Licensed Articles to
its trade customers free of charge for purposes of promoting sales of
same, such reasonable amount to be determined in keeping with
Licensee's sound business judgment
(c) A guarantee of Two Hundred and Twenty Five Thousand Dollars
*($225,000.00) ("Guarantee") payable, to the extent not then already
paid to VCP under subparagraphs 9(a) and 9(b), above, by March 31,
1998 or earlier termination of this Agreement.
(d) Notwithstanding the above, upon VCP's confirmation to Licensee that
the Series has been picked-up for the 199711998 season, an additional
Forty Five Thousand Dollars ($45,000.00) shall be added to the
Guarantee to be payable not later than March 31, 1999 or the earlier
termination of this Agreement. Notwithstanding the above, if VCP
informs Licensee that the Series has not been picked-up for the
199711998 season, the Licensee shall have the option, to be exercised
within ninety (90) days of such notice, to terminate this Agreement If
Licensee exercises such option, all rights granted hereunder shall
revert to VCP as of October 31, 1998. The exercising of such option
shall in no way decrease the amounts payable pursuant to subparagraphs
3(g), (if applicable) 9(a) and 9(c) above.
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10. ACCOUNTING AND AUDIT:
(a) Licensee shall render accounting statements (in the form of Exhibit
"A" attached hereto and made a part hereof) to VCP on a quarterly
(calendar year) basis within 25 days of the end of each quarter,
whether or not any payment is shown to be due to VCP thereunder, and
remit payments due VCP along with such statements, addressed as
follows: Via regular mail to Paramount Merchandising, X.X. Xxx 000000,
Xxxxxxxx, XX 00000-0000 and via overnight courier to First Chicago
National Processing Corporation, Xxxxxx Xxxxxxx Xxxxx, Xxxxx 000, 0000
Xxxxx Xxxxxx Xxxxxxx, Xxxxxxxx, XX 00000, Attn: Paramount
Merchandising, Box 100590, with copies to CONTROLLER, FINANCE AND
ADMINISTRATION, Viacom Consumer Products, 0000 Xxxxxxx Xxxxxx, Xxx
Xxxxxxx, XX 00000. If the Territory of the Agreement covers more than
one country, accounting statements shall be separated on a country-by-
country basis. All payments shall be made without setoff of any
amount or nature whatsoever, whether based upon any claimed debt or
liability of VCP to Licensee. All sums not paid when due shall bear
interest at the rate of ten percent (10%) per annum without prejudice
to any other rights of VCP in connection therewith. The receipt and
deposit of monies by VCP shall not prevent or limit VCP's right to
contest the accuracy and/or correctness of any statement in respect of
such monies.
(b) Licensee shall keep accurate books of account and records covering all
transactions relating to this Agreement and shall retain all other
documents and materials in its possession or under its control
relating to the subject matter hereof, at Licensee's principal place
of business for not less than two (2) years after the expiration of
the Term or earlier termination of the Agreement and shall allow VCP
and its representatives, upon prior written notice, and no more than
once per calendar year, to audit said books of account and records and
to make copies thereof at VCP's expense. If any such audit reveals
Royalties due to VCP in excess of ten percent (10%) of the Royalties
paid to VCP for the period covered by such audit, all reasonable
auditing fees, costs and expenses shall be borne by Licensee, in
addition to which interest (at the rate provided above in subparagraph
(a)) shall be added to the amount discovered to be due, to be computed
from the first day of the first accounting period covered by the
audit. If the services of attorneys are engaged by VCP in collection
of the monies due to it hereunder, their reasonable fees, expenses and
costs shall be borne by Licensee or, if paid by VCP, promptly
reimbursed to It by Licensee. If any such audit reveals Royalty
payments due to VCP in excess of twenty percent (20%) of the Royalties
paid to VCP for the period covered by such audit, then, in addition to
any and all other rights, legal and/or equitable, of VCP, VCP shall
have the right, effective immediately upon giving notice to such
effect to Licensee, to terminate the Term of this Agreement
11. APPROVALS/ARTWORK:
(a) The quality of the Licensed Articles as well as the quality of all
packaging, hang-tags, labels, press releases, advertising,
promotional, display and any other material prepared in connection
with the Licensed Articles (collectively, "Packaging and Promotional
Material") which includes the Property and/or Trademarks shall be of
the highest standard, no less than the best quality of similar
articles, packaging, advertising, promotional and display materials
presently manufactured, distributed, sold and/or used by Licensee in
the Territory and shall be in full conformity with all applicable laws
and regulations.
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(b) VCP SHALL HAVE ABSOLUTE APPROVAL OF THE LICENSED ARTICLES AND ALL
PACKAGING AND PROMOTIONAL MATERIAL AT ALL STAGES OF THE DEVELOPMENT
AND APPLICATION THEREOF. LICENSEE MAY NOT MANUFACTURE, USE, OFFER FOR
SALE, SELL, ADVERTISE, PROMOTE, SHIP OR DISTRIBUTE ANY LICENSED
ARTICLES NOR ANY PACKAGING AND PROMOTIONAL MATERIAL UNTIL AND UNLESS
LICENSEE HAS RECEIVED VCP'S APPROVAL THEREFOR IN THE MANNER PRESCRIBED
HEREINBELOW AND IN EXHIBIT "B" HERETO. ANY ACTS BY LICENSEE CONTRARY
TO THE TERMS OF THIS PARAGRAPH AND/OR EXHIBIT "B" SHALL BE DEEMED A
MATERIAL BREACH OF THIS AGREEMENT, ENTITLING VCP, IN ADDITION TO ANY
AND ALL REMEDIES IT MAY HAVE AT LAW AND IN EQUITY, TO TERMINATE THIS
AGREEMENT.
(c) Licensee shall, in an timely manner and in sufficient time for review
and consideration, submit for VCP's discretional approval all
materials relating to the Licensed Articles, including, without
limitation, drawings, plans, blueprints, models, computer graphics,
prototype samples and component parts of the Licensed Articles and all
Packaging and Promotional Material in connection therewith prior to
any use thereof by Licensee; the same shall be submitted as required
by Exhibit "B". All submissions shall be made prior to any use
thereof, or public disclosure thereof, by or on behalf of Licensee.
ANY SUBMISSION NOT APPROVED IN WRITING BY VCP WITHIN FOURTEEN (14)
DAYS SHALL BE DEEMED DISAPPROVED (SEE EXHIBIT "B" (APPROVAL
GUIDELINES) WHICH IS ATTACHED HERETO AND MADE A PART HEREOF). All
approvals requested of VCP under this Agreement may be granted or
withheld by VCP in its sole and absolute discretion.
(d) VCP shall furnish to Licensee, at Licensee's cost, such artwork as may
be reasonably necessary for the manufacture, advertising and promotion
of the Licensed Articles, subject to availability and to VCP's
absolute right of approval (the "Artwork"); all such Artwork shall be
and remain the property of VCP, notwithstanding its creation or
modification (which is also subject to VCP's absolute approval) by
Licensee, and shall be returned to VCP after its use by Licensee.
Licensee shall not use the Artwork in any other manner.
(e) In order that VCP may be assured that the provisions of this Agreement
are being observed, Licensee shall allow VCP or its designee to enter
upon Licensee's premises during regular business hours, upon prior
notice, for the purpose of inspecting the Licensed Articles, Packaging
and Promotional Material and the facilities in which they are
manufactured and packaged. In the event that the quality standards
hereinabove referred to are not met, or in the event that said quality
standards are not maintained throughout the period of manufacture of
any Licensed Articles hereunder, then, upon written notice from VCP,
Licensee shall immediately discontinue the manufacture and
distribution of such Licensed Articles that do not meet VCP's quality
standards, and/or the Packaging and Promotional Material related
thereto, unless Licensee shall have remedied such failure of quality
to VCP's satisfaction within thirty (30) days after Licensee's receipt
of notice thereof; failure to effect such remedial measures shall
entitle VCP to terminate this Agreement upon notice to Licensee.
12. SAMPLES:
Licensee shall furnish to VCP sixty (60) samples of each Licensed Article,
i.e. each product type, as opposed to each SKU, at the commencement of
distribution thereof. Upon VCP's request, Licensee shall furnish
additional samples, at cost, such samples not to be resold by VCP.
13. GOODWILL, PATENTS, TRADEMARKS AND COPYRIGHT:
(a) Licensee recognizes and acknowledges that:
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(i) the title of the Property and/or Series (and, if the Series is a
sequel to a prior work, or if there are now or are later
developed sequels to the Series, the titles of such prior work
and of such sequels) and the logos and/or artwork (including
artwork developed for advertising and promotional use) embodying
such title or titles are, as between VCP and Licensee, trademarks
of VCP on behalf of Paramount Pictures Corporation ("PPC"),
whether or not registered as such;
(ii) the good will associated with the Property and the Trademarks
inures solely and exclusively to VCP on behalf of PPC; and
(iii) the Property and the Trademarks have acquired, and will
continue indefinitely to have and to acquire, a secondary
meaning in the minds of the public.
(b) Licensee shall not acquire any rights in the Property and/or
Trademarks as a result of Licensee's use thereof, and all use by
Licensee shall inure to VCP's benefit Licensee shall not, directly or
indirectly, during the Term or thereafter, attack PPC's ownership of
the Property, the Trademarks or the validity thereof or attack the
validity of the license granted herein, or apply for any registration
or file any document or take any action which would affect PPC's
ownership of the Property or Trademarks or aid or abet anyone else in
doing so, or use or authorize the use of any trademark, trade name or
words, symbols or combination thereof or other designation identical
with or confusingly similar to the Trademarks or to any element of the
Property, whether or not such element shall have been protected by
patent, trademark or copyright.
(c) Ownership of all copyright, patent and trademark rights in the
Licensed Articles and Packaging and Promotional Material shall be in
PPC's name. Licensee shall cause such copyright, patent and trademark
notices to appear on or within each unit of the Licensed Articles
and/or the Packaging and Promotional Material as may be designated and
approved by VCP. Any and all additions to, and new renderings,
modifications or embellishments of, the artwork shall, notwithstanding
their invention, creation and use by Licensee or its agents, be and
remain the property of PPC, and VCP and PPC may use, and license
others to use, the same, subject only to the provisions of this
Agreement. Licensee shall enter into written agreements with all of
its employees and independent contractors (i) providing that all
artwork and designs created by them in the course of Licensee's
performance under this Agreement shall be the property of PPC either
as works for hire under U.S. copyright law or otherwise; and (ii)
obligating them to assign all rights in such artwork and designs to
PPC. Licensee shall submit to VCP for VCP's approval copies of all
such agreements prior to use thereof. Licensee shall not permit any
of its employees or independent contractors to obtain or reserve, by
written or oral agreement or otherwise, any rights as "authors" or
"inventors" of any such artwork or designs (as such terms are used in
present or future U.S. copyright and/or patent statutes or judicial
decisions). Licensee shall furnish to VCP, at VCP's request, full
information concerning the invention and creation of such artwork and
designs, together with the originals of assignments of all rights
therein obtained from all such third parties to VCP (free and clear of
any and all claims, encumbrances, interests or rights of any nature of
such third parties, of licensee, or of any and all third parties).
(d) Licensee shall cooperate with VCP and/or PPC in the prosecution and
defense of the Property and/or the Trademarks, the filing and
prosecution of any patent, trademark or copyright application or other
applications, the recording of this Agreement or any other agreements,
and the publication of any notices or the doing of any other act or
acts with respect to the Property and/or Trademarks, including the
prevention of the use thereof by any unauthorized person, firm or
corporation, that in VCP's or PPC's judgment may be necessary or
desirable under any law, regulation or decree of the Territory. In
connection with any of the foregoing, Licensee shall arrange for VCP
to be promptly
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supplied with any such information or materials as VCP may reasonably
require. In the event that Licensee learns of any unauthorized use of
the Property and/or Trademarks in the Territory, Licensee shall
promptly advise VCP in writing of the nature and extent of same. VCP
and/or PPC may, in its sole discretion, take, or elect not to take,
such action as it deems advisable against any infringing party, in its
own name and/or Licensee's name, and may prosecute, settle or
otherwise dispose of such action without consultation with, or
responsibility to, Licensee. VCP and/or PPC shall incur no liability
to Licensee by reason of VCP's and/or PPC's failure or refusal to
prosecute, or failure or refusal to permit Licensee to prosecute, any
alleged infringement or imitation by third parties, nor by reason of
any settlement to which VCP and/or PPC may agree.
(e) If the Territory covers countries outside of the United States,
Licensee shall not use the Trademarks or other trademarks or service
marks included in the Property in any such country without first
requesting, and receiving, a Notification of Availability from VCP;
failing which, VCP's indemnification obligation as provided under
subparagraph 14(d), below, shall not apply to the use of the
Trademark, trademarks or service marks in such country for such goods
or services.
14. WARRANTIES AND INDEMNIFICATION:
(a) Licensee represents and warrants that it is duly organized under
applicable law; that it has the unencumbered right and authority to
enter into and perform its obligations under this Agreement and under
all collateral agreements to be entered into by it in furtherance of
the provisions hereof Licensee further represents and warrants that it
will comply with all applicable governmental laws, rules and
regulations in connection with its manufacture, distribution, or use
of the Licensed Articles and its activities pursuant to this
Agreement.
(b) VCP represents and warrants that it is duly organized under applicable
law; that it has the right and authority to enter into and perform
this Agreement and to grant the rights granted hereunder. VCP makes
no representation or warranty as to the amount of receipts Licensee
will derive hereunder or as to the quality or success of the Series or
Property or reception it will receive by the public, nor shall VCP be
obligated to continue the exhibition, distribution or other
exploitation of the Series or continue the use of any element of the
Property.
(c) Licensee shall indemnify, hold harmless, and defend VCP, its parent,
affiliated and subsidiary companies, and its and their officers,
directors, agents and employees ("Indemnitees") from and against any
and all liabilities, claims, causes of action, suits, losses, damages,
fines, judgments, settlements and expenses (including any and all
attorneys' fees and court costs) which may be suffered, made or
incurred by any of such Indemnitees arising out of any breach or
alleged breach of any of the covenants, warranties, representations
and agreements made by Licensee herein, including without limitation,
claims relating to or based upon:
(i) unauthorized use of, or infringement of any patent, trademark,
design, copyright or other proprietary or privacy right of any
third party by Licensee;
(ii) libel or slander against, or invasion of the right of privacy,
publicity or property of, or violation or misappropriation of
any other right of any third party, unless such claim arises
from Licensee's use of material provided to it by VCP and is
used by Licensee in such manner as is expressly approved by
VCP hereunder;
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(iii) artwork or other material relating to the Property created,
modified and/or used by Licensee in connection with the
Licensed Articles without VCP's approval; and/or
(iv) defects in the Licensed Articles, despite VCP's approval
thereof, it being understood and agreed that any governmental
order of recall or injunction against distribution and/or sale
shall, as between VCP and Licensee, be deemed conclusive proof
of such defect for the purpose of invoking the
indemnifications set forth herein; and/or
(v) agreements or alleged agreements made or entered into by
Licensee to effectuate the terms of this Agreement.
VCP and Licensee shall give the other prompt written notice of the
institution of any action or the making of any claim alleging a breach
hereunder. VCP shall have the right to control all aspects of the
disposition of such claim, and Licensee shall cooperate with VCP in
connection therewith.
(d) VCP shall indemnify, hold harmless and defend Licensee from and
against any and all liabilities, claims, causes of action, suits,
losses, damages, fines, judgments and expenses (including reasonable
attorneys' fees and court costs) which may be suffered, made or
incurred by Licensee arising solely out of use by Licensee of the
Property as authorized in this Agreement. Licensee shall give VCP
prompt written notice of the institution of any action or the making
of any such claims. VCP shall control all aspects of the disposition
of such claims and Licensee shall cooperate fully with VCP in
connection therewith.
15. INSURANCE:
Licensee shall obtain and maintain throughout the Term, at Licensee's sole
expense, standard Product Liability Insurance, Advertiser's Liability
Insurance and Errors and Omission Insurance from a reputable insurance
company qualified to do business in the State of California, naming VCP,
its parent company, and their respective subsidiaries and affiliated
companies, including all directors, officers, employees, agents and
representatives, as additional insureds. Coverage under each policy will
be a minimum of One Million Dollars ($1,000,000) for each instance and
Three Million Dollars ($3,000,000) in the aggregate. Each such policy
shall require that VCP receive at least thirty (30) days written notice of
the cancellation, amendment or endorsement of each such policy. Licensee
shall furnish VCP upon execution of this Agreement by Licensee with
certificates of insurance and certified policy endorsements evidencing that
the insurance coverage is in full force and effect.
16. TERMINATION:
(a) In the event Licensee fails to perform any of its obligations under
this Agreement, including without limitation the active marketing and
distribution of any and/or all of the Licensed Articles; or breaches
any covenant, representation, warranty or agreement contained herein,
files a petition in bankruptcy, or is adjudged a bankrupt, or if a
petition in bankruptcy is filed against Licensee, or if Licensee
becomes insolvent, or makes an assignment for the benefit of
creditors, or if Licensee discontinues its business or if a receiver
is appointed for Licensee or Licensee's business who is not discharged
within thirty (30) days, VCP may terminate this Agreement on thirty
(30) days prior written notice, provided Licensee shall not have
remedied such failure to VCP's satisfaction within such thirty (30)
day period. Time is of the essence of this Agreement.
10
(b) In the event of termination of this Agreement by VCP for any of the
reasons set forth in Subparagraph 16(a) above, no creditor, agent,
representative, receiver or trustee of Licensee shall have the right
to dispose of any units of the Licensed Articles without the prior
written consent of VCP; until payment of all monies due to VCP from
Licensee, VCP shall have a lien on any units of the Licensed Articles
not then disposed of by Licensee at any time in respect of sales of
the Licensed Articles; and on any monies due Licensee from any jobber,
wholesaler, distributor, licensee, or other third parties, in respect
of sales of the Licensed Articles; VCP may treat all of the aforesaid
third parties as VCP's direct licensees with no obligation to the
Licensee.
(c) In the event of termination of this Agreement by VCP due to breach of
any of the terms or conditions hereof by Licensee, Licensee shall have
no right to sell, distribute or otherwise dispose of any units of the
Licensed Articles without VCP's prior written consent, not to be
unreasonably withheld.
(d) Upon the expiration of the Term or earlier termination of this
Agreement:
(i) All rights, licenses and privileges granted to Licensee
hereunder shall automatically revert to VCP and licensee shall
execute any and all documents evidencing such automatic
reversion;
(ii) Licensee shall, in VCP's discretion, either deliver to VCP
materials which reproduce the Licensed Articles or give to VCP
satisfactory proof of the destruction thereof;
(iii) All sums due VCP hereunder, whether in the form of unpaid
Advance, Royalties and/or Guarantee shall become immediately
due and payable in full to VCP without set off of any kind;
(iv) Licensee shall, within one (1) month after such expiration or
termination, deliver to VCP a complete and accurate statement,
certified to be true by an officer of Licensee, indicating the
number, description and whereabouts of all units of the
Licensed Articles on hand and/or in the process of
manufacture, as of both the date of such expiration or
termination and the date of such statement;
(v) VCP shall have the right, upon forty-eight (48) hours prior
written notice, to enter onto Licensee's premises during
normal business hours to conduct physical inventories to
verify the accuracy of the aforesaid statement;
(vi) Provided Licensee is not in breach of this Agreement, Licensee
may, upon expiration of the Term of this Agreement, sell off
existing inventories of the Licensed Articles, on a
non-exclusive basis, for a period of one hundred eighty (180)
days, subject to all the other terms and conditions hereof,
and provided the same have not been manufactured solely or
principally for sale during such period and only after first
giving VCP the opportunity to purchase the same at Licensee's
cost of manufacture thereof, which purchase may be of some or
81 of such units, in VCP's sole discretion. In the event of
early termination of this Agreement due to breach by Licensee,
Licensee shall have no right to sell oft existing inventories;
(vii) In the event of a default by Licensee of this Agreement, VCP,
at its discretion. may terminate this Agreement and any and
all other agreements entered into between VCP and Licensee.
11
17. INJUNCTION:
Licensee acknowledges that its failure to perform any of the terms or
conditions of this Agreement, or its failure to cease the manufacture,
distribution and sale of the Licensed Articles upon the expiration of the
Term or earlier termination of the Agreement shall result in immediate and
irreparable damage to VCP. Licensee also acknowledges that there may be no
adequate remedy at law for such failures and that in the event thereof VCP
shall be entitled to equitable relief in the nature of injunction and to
all other available relief, at law and/or in equity.
18. CONFIDENTIALITY:
Other than as may be required by any applicable law, government order or
regulation, or by order or decree of any court of competent jurisdiction,
Licensee shall not publicly divulge or announce, or in any manner disclose
to any third party, any information or matters revealed to Licensee
pursuant hereto, or any of the specific terms and conditions of this
Agreement, and Licensee shall do all such things as are reasonably
necessary to prevent any such information becoming known to any party other
than the parties involved with the transaction.
19. ASSIGNMENT:
The rights and obligations of Licensee hereunder may not be assigned,
delegated, or sublicensed without the prior written consent of VCP, not to
be unreasonably withheld. Licensee may not enter into any agreement with
any third party for the manufacturing or distribution of any of the
Licensed Articles without VCP's prior written consent not to be
unreasonably withheld. VCP may assign all or part of its rights hereunder,
and/or may delegate its obligations hereunder, in whole or in part, to any
third party.
20. FORCE MAJEURE:
The parties shall be released from their respective obligations hereunder
in the event government regulations or other causes arising out of a state
of war or other national emergency, or other causes beyond the reasonable
control of the parties, render performance of such obligations reasonably
impracticable. If such event continues for a period of sixty (60) days,
this Agreement shall be terminable, upon written notice, by either party.
Upon such termination, all royalties due on sales theretofore made shall
become then immediately due and payable, and no Advance, Royalties or
Guarantee theretofore paid shall be repayable. In the event neither party
elects to terminate this Agreement as immediately hereinabove provided, the
Term of this Agreement shall be extended automatically for a period of time
equal to the period or such "Force Majeure" event but not to exceed six
months from the date of first occurrence.
21. FURTHER INSTRUMENTS:
Licensee shall furnish VCP with (and shall execute, acknowledge and deliver
and cause to be executed, acknowledged and delivered to VCP) any further
instruments, in such form and substance as shall be approved or designated
by VCP, which VCP may reasonably require or deem necessary, from time to
time, in its discretion, to evidence, establish, protect, enforce, defend
or secure to VCP any or all of its rights, titles, properties or interests
or more fully to effectuate or carry out the purposes, provisions or intent
of this Agreement VCP, at its sole discretion, shall have the right to
record such instruments at the appropriate Registry or other place of
registration in some or all of the various Countries comprising the
Territory, at VCP's expense. Licensee agrees to cooperate as requested by
VCP in arranging such recordation,
12
and in cancelling or amending such registration, if so requested by VCP,
upon the expiration, termination, or amendment of this Agreement, as may be
appropriate.
22. PARAGRAPH HEADINGS:
Paragraph headings contained in this Agreement are for convenience only and
shall not otherwise be given any legal effect.
23. NO PARTNERSHIP: NO THIRD PARTY BENEFICIARIES:
Nothing herein contained shall constitute a partnership between or joint
venture by the parties hereto, or constitute either party the agent of the
other. Neither party shall hold itself out contrary to the terms of this
paragraph and neither party shall become liable by any representation, act
or omission of the other contrary to the provisions hereof. This Agreement
is not for the benefit of any third party and shall not be deemed to give
any right or remedy to any such party, whether referred to herein or not.
24. NO WAIVERS, CUMULATIVE RIGHTS:
No waiver by either party hereto of any breach of this Agreement shall be
deemed to be a waiver of any preceding or succeeding breach of the same or
any other provision hereof. The exercise of any right granted to either
party hereunder shall not operate as a waiver. The normal expiration of
the Term of this Agreement shall not relieve either party of its respective
obligations accruing prior thereto, nor impair or prejudice the respective
rights of either party against the other, which rights by their nature
survive such expiration.
25. NO VIOLATION OF LAW:
Nothing herein contained shall be construed so as to require the commission
of any act contrary to law, and wherever there is any conflict between any
provision of this Agreement and material statute, law or ordinance contrary
to which the parties have no legal right to contract, the latter shall
prevail, but in such event the provision of this Agreement affected shall
be curtailed and limited only to the extent necessary to bring it within
the legal requirements.
26. NOTICES:
Notices hereunder shall be given in writing and sent by registered or
certified mail, return receipt requested, or by prepaid telegram or
nationally recognized express carrier, addressed to VCP at the address
indicated in the Agreement, to the attention of Legal Department, or to
Licensee at the addresses indicated in Paragraph I above, to the attention
of such official as Licensee shall designate in writing. Each party shall
notify the other in writing promptly after any change of address. Notices
shall be effective upon either party's receipt of written notice.
Requirements relating to submission for approvals shall be governed by
Paragraphs 11 and 12 above.
27. GOVERNING LAW:
This Agreement shall be construed and interpreted pursuant to the laws of
the State of California applicable to agreements made and to be performed
entirely therein, and the parties hereto submit and consent to the
jurisdiction of the courts of the State of California, including Federal
13
Courts located therein, should Federal jurisdiction requirements exist, in
any action brought to enforce (or otherwise relating to this contract
Licensee shall designate an agent In California for service of process who
Is reasonably acceptable to VCP; falling which, Licensee consents to
service of process in any manner permitted by the laws of the State of
California.
28. ENTIRE AGREEMENT:
This Agreement (including any exhibits and schedules which are attached
hereto and made a part hereof by this reference), when signed by the
parties, shall constitute the entire understanding of the parties with
respect to the subject matter, superseding all prior and contemporaneous
promises, agreements and understandings, whether written or oral,
pertaining thereto and cannot be modified except by a written instrument
signed by the parties hereto, nor may it be amended or rescinded, other
than as provided by its terms, except by a writing duly executed by an
authorized officer of the party to be charged. If there is any
inconsistency between this portion of the Agreement (i.e., inclusive of all
preceding paragraphs and this paragraph) and the attached exhibits and/or
schedules, this portion of the Agreement shall prevail.
29. ACCEPTANCE BY VCP:
This Agreement shall not be binding until accepted by VCP and executed by a
duly authorized officer of VCP and VCP shall have received any Advances
payable hereunder. No additions, amendments or modifications to this
Agreement shall be effective until accepted in a similar manner.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first witnessed above.
VIACOM CONSUMER PRODUCTS, INC.
By /s/ Xxxxxxxxx X. Xxxxxxxxxx
---------------------------------
Its Vice President, Legal
--------------------------------
SEL-LEB MARKETING, INC.
By /s/ Xxx X. Xxxxxx
---------------------------------
Its Executive Vice President
--------------------------------
14
EXHIBIT "A"
LICENSEE'S ROYALTY STATEMENT
(To be completed in local currency)
TO: PARAMOUNT MERCHANDISING COPY TO: VIACOM CONSUMER PRODUCTS PARAMOUNT USE ONLY
P.O. Box 100590 000 Xxxxxxx Xxxxxx - MOB 4th Floor Reviewed by
Xxxxxxxx, XX 00000-0000 Xxxxxxxxx, XX 00000-0000 Period Ending
Attn: Controller, Finance - Licensing Check No.
Licensee's Name:_____________________ Contract Number:_________________ Period Being Reported:________________
Contract Date:_______________________ Film/TV Series Name:_____________ Country Being Reported:_______________
Paramount Licensee's Licensee's Names of Performers' Unit Gross Royalty Current Cumulative
Product Product Product Performers Likenesses Sales Sales Rate Royalty Royalty
Number Description Number Used Used Amount Amount
PARAMOUNT USE ONLY Royalties Earned
Unrecouped Advance Less: Advance Received
---------------------------
Less: Previous Royalty Payments
Balance Currently Due to VCP
Guarantee
Unearned Guarantee
EXHIBIT "B"
PRODUCT APPROVAL GUIDELINES
Your agreement with Viacom Consumer Products requires submission of all articles
for review and written approval prior to production. Please send all materials
to:
Product Development Supervisor
Viacom Consumer Products
Xxxxxxxx Xxxxxxxx, 0xx Xxxxx
0000 Xxxxxxx Xxxxxx
Xxx Xxxxxxx, XX 00000
Approval will be required at each of the following stages of preparation. This
procedure insures that problems are caught early on, when they can still be
changed, without great expense of time or money;
1. PACKAGING, COLLATERAL MATERIALS, CATALOGS AND BROCHURES, PRINT ADVERTISING
(CONSUMER AND TRADE) AND PRINTED PRODUCT
a. Rough sketches or layout concept and rough copy.
b. Finished comps - final copy and art together (mechanical) including
legal notices.
c. Final art (color).
Note: In some instances, such as posters, approval of color proof may
be required to insure quality of the final product.
2. THREE-DIMENSIONAL PRODUCTS
a. Concept (renderings).
b. Prototypes (sculpture).
c. Production samples or strike-offs.
3. AUDIO OR VIDE ADVERTISING, SALES AIDS, ETC.
a. Radio script or television script and storyboard.
b. Audio or video tapes PRIOR TO USE OR AIRING (rough cut and final cut);
copyright notice must be on tape.
Note:
REVISIONS: In addition all materials must be re-submitted for approval
each time a revision is made incorporating changes requested. Revisions
copy or manuscripts must be redlined or highlighted.
Please advise us of your time constraints, if any, so we may respond on short
notice, ONLY IF ABSOLUTELY NECESSARY. Also, please allow time to make necessary
changes. The approval time provided by agreement is generally fourteen (14)
days. Every effort will be made to expedite approvals as quickly as possible.
Samples of finished products must be submitted pursuant to the agreement.
Please remember that all submissions not approved in writing are deemed
disapproved.
ADVERTISING AND PROMOTION APPROVAL GUIDELINES
1. All advertising and promotional mechanicals or materials must be approved
in writing. This encompasses print ads, commercial (radio or television),
point-of-purchase materials, brochures and package designs.
Please submit these materials to:
Product Development Supervisor
Viacom Consumer Products
Xxxxxxxx Xxxxxxxx, 0xx Xxxxx
0000 Xxxxxxx Xxx.
Xxx Xxxxxxx, XX 00000
2. Do NOT proceed with any promotional activities prior to approval. The
submission of promotion concepts for approval will prevent possible
infringement of rights granted to other companies and spare you potential
legal liability for such infringement.
