EXHIBIT 10.25
LICENSING AGENT AGREEMENT
This Licensing Agent Agreement (the "Agreement") is
entered into July 25, 1997 by and between Sega of America, Inc., a
California corporation with offices at 000 Xxxxxxxxx Xxxxx, Xxxxxxx
Xxxx, Xxxxxxxxxx 00000 ("Sega") and American Champion Media, Inc., a
California corporation, with offices at 00000 Xxxxxxxxxx Xxxxxx, Xxxxx
0, Xxxxxxx, Xxxxxxxxxx 00000 ("American").
This Agreement is being entered into with respect to the
following facts:
A. American is the sole owner and has the exclusive right to
license the trademark, brand name, logo, characters and related
properties known as "Xxxxx Xxxxx" (collectively the "Name") based
upon the television programs of the same name to be broadcast on PBS
("Programs").
B. American desires to appoint Sega as its non-exclusive agent
(and if any of the conditions set forth in paragraph 1(a) through (d)
below are satisfied, its exclusive agent) for purposes of licensing and
merchandising the Name for use on or in connection with all categories
of merchandise products (e.g., clothing, toys, sporting goods, etc.),
services and home video programs (collectively the "Products"), and
Sega desires to accept such appointment in accordance with the terms
and conditions set forth in this Agreement.
In consideration of the promises and agreements set forth
herein, the parties hereby agree as follows:
1. Subject to the provisions set forth below in this
paragraph 1, American hereby appoints Sega to represent American as its
non-exclusive agent for purposes of licensing and merchandising the
Name to third parties for use on and in connection with the Products
throughout the world (the "Territory").
Notwithstanding the forgoing, American agrees that in
the event Sega enters into any license provided in subparagraphs (a)
through (c) below, Sega shall immediately become the exclusive (as
distinguished from non-exclusive) agent for American for the purposes
of licensing and merchandising the "Name" to the third parties for use
on or in connection with the Products throughout the Territory and
American agrees that no other person or entity (including American
and/or Xxxxxxx) shall thereafter be entitled to solicit or otherwise
arrange for the merchandising and licensing of the Name (other than
Sega). American may solicit providing they turnover the negotiations
to Sega for final negotiations.
(a) A master toy licensing;
(b) A home video license;
(c) A master apparel license.
2. Sega shall submit each proposed licensing arrangement
to American in the form of a term sheet providing reasonable detail as
to the proposed transaction. American shall forward to Sega any
proposed changes to the terms promptly following receipt of the term
sheet but in any event no later than five (5) business days after
receipt. Based on the terms approved by American, Sega shall prepare
or have prepared a merchandise license agreement ("License Agreement")
incorporating the agreed terms and such other terms and conditions as
are customary and reasonable. No License Agreement shall be entered
into without American's prior consent. American shall have approval
over the Products and over the material terms of the License
Agreements, which approval shall be exercised in American's sole
discretion. Sega hereby waives any claim it may have that American did
not exercise it approval rights in good faith with respect to any
proposed License Agreement. American shall respond to Sega within
fourteen (14) days with respect to its approval or disapproval of any
proposed License Agreements. All License Agreements shall be entered
into in the name of American and shall be executed by American.
3. This Agreement shall be effective as of the date of
execution hereof and shall continue for a term of three (3) years (the
"Term"). Commencing sixty (60) days prior to the expiration of the
Term, Sega and American shall negotiate in good faith with respect to
extending the term for some additional period of time. The initial
term and any extension thereof is referred to herein as the "Term."
4. Sega shall do the following with respect to the Name:
(a) Seek out, negotiate and present for approval
and execution by American, business opportunities relative to the
merchandising and licensing of the Name.
(b) Monitor and oversee the licensing, promotion
and marketing programs with all existing or hereinafter acquired
third party licensees ("Licensees").
(c) Whenever necessary, conduct personal visits to
Licensees' manufacturing facilities, to ensure conformance with
the quality control provisions of the License Agreements.
(d) Engage in other such activities as the parties
may mutually agree and use its best efforts to maximize revenue
generated from the exploitation of the rights granted hereunder
and to enhance the value and the reputation of the Name.
(e) Report and update American in writing on a
regular basis as to the status of License Agreements and all
pending or anticipated business arrangements relating to the
Name.
(f) If appropriate, attend the Consumer Electronics
Show, the Toy Fair, the annual Licensing Show and other trade
shows to exhibit and display the Name.
5. American agrees to reimburse Sega for all expenses
incurred by Sega in connection with the licensing and merchandising of
the Products which are pre-approved by American in writing, including,
but not limited to, presentations, press kits, style guides, art work,
design materials, display materials, trade show expenses specifically
related to the Name (including travel expenses related thereto and
promotional materials.) Sega agrees that it will absorb all of its own
office and overhead expenses relating to the licensing and
merchandising of the Name and any travel and legal expenses not
specifically related thereto and that it will receive no compensation
except as specified in this paragraph and in paragraph 8 below.
6. American shall have the responsibility at its own
cost and expense for obtaining and maintaining appropriate trademark
and copyright protection throughout the Territory with respect to the
Products. Sega shall advise American in writing of any suspected of
known infringement of the Name.
7. Sega is hereby authorized, but not obligated to,
solicit third party relationships in the multimedia and interactive
areas as well as any other medium (other than television which shall
remain exclusively the domain of American.) Any compensation for
services not already contemplated by this Agreement shall be separately
negotiated between American and Sega.
8. All monies, including advances and guarantees,
received by American or any of its agents or affiliated companies, from
the licensing, merchandising or other disposition of the Products
utilizing the Name or from any other rights granted hereunder ("Gross
Receipts") shall be applied in the following order and priority:
(a) First, American shall pay Sega 30% of the Gross
Receipts.
(b) Second, American shall pay Sega an amount equal
to the expenses incurred by Sega and pre-approved by
American in writing pursuant to paragraph 5 above.
(c) Third, all sums remaining after the payment to
Sega of the sums specified in subparagraphs 8(a) and
(b) above shall be retained by American.
(d) Upon the expiration or earlier termination of
this Agreement, Sega shall (provided the Agreement
has not been terminated for Sega's fraud,
misrepresentation or other tortious or illegal
conduct) continue to be entitled to receive the
forgoing fee and expenses with respect to any License
Agreements entered into during the Term for the
greater of (i) the actual term of each such License
Agreement; or (ii) five (5) years from the date of
commencement of each such License Agreement; provided
Sega continues to service such License Agreements as
provided in paragraph 4 above.
9. The License Agreements shall provide that payments
due from Licensees shall be paid to American. American shall deposit
all sums received from such License Agreements into a bank account in
the name of American ("Distribution Account"). American shall hold
Sega's portion of the Gross Receipts in trust for the benefit of Sega.
10. American shall remit to Sega itemized statements of
its collections and of all deductions therefrom on a quarterly basis.
American shall pay Sega interest on any amounts not paid by American in
a timely fashion at the then prevailing prime rate of interest charged
by Bank of America.
11. American will keep true and accurate books of account
with respect to each License Agreement showing all receipts thereunder
and all deductions therefrom. Sega shall have the right to audit
American's books, records and documents relating to the License
Agreements during normal business hours, at its own cost, but not more
frequently than once per year. A copy of any audit report shall be
delivered by the auditor to American concurrently with the delivery of
the report to Sega. If, as a result of such audit, it is determined
that American has under-accounted to Sega by 5% or more, American shall
promptly pay Sega such under-accounted for amount plus interest thereon
at the then prevailing prime rate of interest charged by Bank of
America plus all reasonable sums paid by Sega in connection with such
audit.
12. American acknowledges that Sega is engaged in the
business (among others) of acting as a merchandising and licensing
agent for companies and their products and services and Sega shall be
entitled to continue to represent such other companies, products and
services in their business activities during the Term and thereafter
whether or not in competition with American. Sega shall not, at any
time during the Term, reveal, divulge or make known to any person
(other that its accountants, attorneys or taxing authorities) or use
for Sega's own account, any non-public proprietary information of which
Sega may become aware during the Term by virtue of this Agreement. At
American's request, Sega shall make available to American a list of
those clients for whom Sega is currently acting as a licensing agent.
13. Either party may terminate this agreement if the
other party commits a material breach of any of the terms hereof and
fails to cure such a breach within thirty (30) days after receipt of
written notice of the alleged breach from the other party; or if the
other party becomes insolvent or bankrupt, goes into liquidation or
otherwise takes advantage of or becomes subject to any law relating to
insolvency or reorganization. If Xxxxxxx Xxxxxx ("Xxxxxx") shall
leave the employ of Sega during the Term, American may terminate this
Agreement by giving written notice to Sega within thirty (30) days
after American receives notice from Sega that Xxxxxx will be leaving
the employ of Sega.
14. American represents, warrants and agrees for the
benefit of Sega that:
(a) American has full power and authority to enter
into this Agreement and to fulfill its obligations hereunder.
(b) The performance of the terms of this Agreement
and of American's obligations hereunder shall not be inconsistent
with any agreement of American.
(c) American is the sole owner of the Name and the
use thereof with respect to any Product in the Territory shall
not intringe upon or violate any patent, copyright, trademark,
tradename, trade secret or other proprietary right of a any third
party nor violate the right of privacy of publicity of, nor
constitute a libel or slander against, or violate the copyright
of any person or entity; and
(d) So long as this Agreement remains in effect
American shall not make or enter into any agreement or
arrangement with any third party which is inconsistent with any
of the provisions of this Agreement, it being understood that (i)
American may enter into any agreement with PBS or any of its
affiliated companies including, but not limited to, agreements
relating to "pledge drives" and PBS retail affiliates such as
the Store of Knowledge and Sega shall not be entitled to any fees
in connection therewith; and (ii) American may (unless and until
this Agreement becomes exclusive pursuant to the provisions of
paragraph 1 above) enter into another licensing agent agreement
with a party other that Sega provided American shall notify Sega
in such event. American may solicit providing they turn over
final negotiations to Sega for execution, in the event that this
agreement becomes exclusive.
15. American agrees to defend, indemnify and hold Sega
harmless from and against any and all claims, losses, liabilities,
damages, expenses and costs (including reasonable attorneys' fees and
court costs) which may result from a breach or alleged breach by
American any of the warranties, representations or other agreements by
American contained herein.
16. Sega represents, warrants and agrees for the benefit
of American that:
(a) Sega possess full power and authority to enter
into this agreement and to fulfill its obligations.
(b) The performance of the terms of this Agreement
and of Sega's obligations shall not constitute a breach of any
agreement by which Sega is bound.
(c) So long as this Agreement remains in effect,
Sega shall not make or enter into any agreement or arrangement
with any third party which is inconsistent with any of the
provisions of this Agreement.
(d) Sega will not knowingly engage in any tortious
or illegal or illegal conduct in its solicitation of proposals
for American or in the performance of any of its duties as
expressed in paragraph 4 above.
(e) Sega will cooperate with American, at
American's expense, with respect to the prosecution of any
infringement actions brought hereunder.
17. Sega agrees to defend, indemnify and hold American
harmless from and against any and all claims, losses, liabilities,
damage expenses, and costs (including reasonable attorneys' fees and
court costs) which may result from a breach or alleged breach of any
warranty, representation or agreement by Sega herein.
18. In the event American (or any company in which
American or any shareholder of American may have an interest) enters
into any agreement(s) during the period commencing on the date hereof
and terminating one (1) year after the Term of this Agreement, for the
license of the Name for use on or in connection with any Products with
any person or entity (or affiliate thereof) to whom Sega may make a
presentation to American during the Term, American shall pay Sega the
fee provided in paragraph 8(a) with respect to any such agreement.
American hereby acknowledges that a presentation was made by Sega to
American with respect to the companies referred to on Exhibit "A"
attached hereto at the Licensing Show in New York on June 9, 1997.
19. All notices which either party may be required to
give the other shall be given by sending them by certified or
registered mail, return receipt requested, postage pre-paid or by
delivering them pre-paid to a national overnight courier service or by
telefax at the addresses set forth above.
20. Nothing contained in this Agreement shall be deemed
to constitute a partnership or other legal relationship except that of
principal and agent.
21. Any controversy or dispute arising out of this
Agreement shall be settled by binding arbitration in accordance with
the then current rules of the American Arbitration Association and any
judgment from such award may be entered by any court of competent
jurisdiction. Such arbitration shall take place in Los Angeles,
California. In the event of any proceeding brought by either party to
enforce the terms of this Agreement, the prevailing party shall be
entitled to recover from the other reasonable attorneys' fees and
expenses and all court costs.
22. Neither party hereto may assign or transfer this
Agreement or any rights hereunder to any person, firm or corporation
except to an affiliated company or a company acquiring substantially
all of the assets of Sega or American.
23. This Agreement shall be deemed to have been entered
into and delivered within the state of California and the rights and
obligations to the parties shall be construed and enforced in
accordance with and governed by the internal laws of the state of
California.
24. The terms of paragraphs 8, 9, 10, 11, 15, 17, 18 and
21 shall survive the termination or expiration of this agreement.
25. This Agreement constitutes the entire understanding
of the parties, and revokes and supersedes all prior agreements between
the parties with reference to the Name. This Agreement may not be
modified except by written agreement between the parties.
IN WITNESS WHEREOF, the parties hereto intending to be
legally bound hereby have executed this Agreement on the date first
written above.
SEGA OF AMERICA, INC.
By: /s/ Xxxxxxx Xxxxxx
AMERICAN CHAMPION MEDIA, INC.
By: /s/ Xxxxxxx X. Xxxx
