Free Declaration in Opposition - District Court of California - California

Case 3:08-cv-03897-JSW

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MERCHANDISE LtCENSE AGREEMENT

(CATEGORY: GAMES, TOYs)

BASIC TERMS:
A.
CONTRACT NO: DATED: PARTIES: L5179 As of October I, 2007
LUCASFILM LTD.

B.
C.

-and-

RAND INTERNATIONAL, INc.

("Licensor") a Califomi~ Corporation P.O. Box 29901 San Francisco, CA, 94129-0901 Tel: (415) 623-1000 Fax: (415) 623·1059 Attn: Busii1ess Affairs

("Licensee") a New York Corporation

D. E.

LICENSED· PRODUCTS: LICENSED PROPERTY:

51 E)(ecutive Boulevard Farmingdale, NY 11735 Tel: (631) 249-6000 Fax: (631) 249·6015 Email: [email protected] Attn: Steve Goldmeier "Licensed Products" means those products, goods and articles as defined in the Rider. "Licensed Property'j means subject to the terms, conditions and restrictions contained in any agreement between Licensor or any Licensor-Related Entity and any person, firm or entity rendering services or granting rights, the original titles, designs, place narri~s, character names and likenesses, dialogue, music, sound effects, words, symbols, logographics, selected footage clips, photographs, artwork, visual representations of props, costumes, sets, special effects and any other original creative elements which appear in, have become directly associated with, and as depicted in, the motion pictures listed below (the "Picture[s]")]:
STAR WARS: "STAR WARS: EPISODE1IV -A NEW HOPE," "STAR WARS:

EPISODE V - THE Ervp'IRE STRIKES BACK," "STAR WARS: EPISODE VIRETURN OF THE JEDI", "STAR WARS: EPISODE I - THE PHANTOM MENACE" ("EPISODE I"), "STAR WARS: EPISODE II - ATTACK OF THE CLONES" ("EPISODE II") ~nd "STAR WARS: EPISODE III - REVENGE OF THE SITH" ("EPISODE III"); CLONE WARS: "Clohe Wflrs Volume I" (produ~ed by Cartoon Network), and "Clone Wars Volume (produced by Cartoon Network)" and that certain as yet unreleased production produced by Lucasfilm Animation Ltd. tentatively entitled "Clone Wars";

rl

and such original trademarks, tradenames, servicemarks and servicenames owned by Licensor and arising out of and which have become directly associated with the Pictures, to the extent of Lic~nsor's rights in each applicable country of the Territory under such country's applicable trademark laws (the "Licensor Trademarks"). F. RIGHTS GRANTED: Subject to the terms of the Agreement, Licensor hereby grants to Licensee the non-exclusive right to utilize the Licensed Property only in connection with the Licensed Products during the Term in the Territory. The territory of this Agreement (the "Territory") consists of The United States and Canada. The term of this Agreement ("Term") commences as of October 1, 2007 ("Start Date") and ends on December 31, 2009, inclusive ("Expiration Date"), except as extended or earlier terminated as provided in this Agreement.

G.

TERRITORY:

H.

TERM:

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I.

PAYMENTS:

(1)

Advance(s): Licensee agrees to pay to Licensor, as an advance against unearned Royalties hereunder, the amount of Two Hundred Thousand Dollars ($200,000). This sum shall be payable in the following amounts at the following times (collectively the "Advance"): (a) Seventy-five Thousand Dollars ($75,000) thereof, to be received by Licensor upon Licensee's execution of this Agreement;

(b) Fifty Thousand Dollars ($50,000) thereof, to be received by Licensor on or about June 1,2008;

(c)

Seventy-five Thousand Dollars ($75,000) thereof, to be received by Licensor on the date five (5) days following, and contingent upon the occurrence of, the first U.S. Exhibition (as defined herein) of the new "Clone Wars" animated production.]

Notwithstanding anything to the contrary, with respect to all Advance payments pursuant to this Clause 1(1), interest shall accrue immediately on all late payments at the rates set forth in Subparagraph 8.1 hereinbelow.

(2)

Royalties: (a) WHEELED GOODS: Ten Percent (10%) ofNet Sales; and
(b) NON-WHEELED GOODS: Twelve Percent (12%) ofNet Sales.

(3)

Bank Guaranty. Licensee agrees to secure on behalf of Licensor, and to deliver to Licensor, concurrently with the its delivery of the execution original of this Agreement, a Bank Guaranty from a bank in the form attached hereto as Exhibit R-2 and incorporated herein by this reference, or such other such form as Licensor may approve. Proposed Product & Marketing Plan: Due by: October 15,2007. Proposed Product & Marketing Plan: Due by January 15 of each Calendar Year ofthe Term, commencing with January 15,2008. List Prices: Due no later than thirty (30) days prior to the first sale of Licensed Products hereunder.

J.

PROPOSED PRODUCT & MARKETING PLAN: (See Exhibit TI); LIST PRICES ENTIRE AGREEMENT:

(1) (2) (3)

K.

The foregoing Basic Terms (together with the Standard Conditions, the Rider, and all Exhibits and Schedules attached hereto, all of which are incorporated herein by this reference), are referred to collectively as the "Agreement" and constitute the complete and entire agreement between the parties with respect to the subject matter hereof, superseding and replacing any and all prior agreements, negotiations, communications, and understandings (both written and oral) regarding such subject matter. This Agreement, whether or not executed by the parties, shall not become effective until all required documentation (including as applicable, but not limited to, letter of credit, bank guaranty and/or insurance certificate) has been received by Licensor. In the event ofa conflict between the terms or conditions of the Standard Conditions and those of these Basic Terms and/or the Rider, the terms and conditions of these Basic Terms and/or of the Rider, to the extent that they· conflict, shall prevail. In the event of a conflict between the Basic Terms and the Rider, the terms of the Rider shall prevail. This Agreement may only be modified, or any rights under it waived, by a written document executed by both parties.

All terms not otherwise defined herein shall have the same meaning as set forth in the Standard Conditions or Rider to which these Basic Terms are attached. LUCASFILM LTD icensor") a California Co ration By: ----"<------L~'__'_9'_

~

a

%

INTERNATIONAL, INC. ("Licensee")

Corpo,mtiOO

By:·· Print Name: Title:

L<2~
Steven Goldmeier
.-!Prin~·,c"""jp",a~l "

Print Name: _ _--"~~==~"""'----Title: ---"V...,ic""e'--'Pur""e"'si""de""n""'t _

_

AX

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STANDA:.RD CONDITIONS ,
All tenns not otherwise defined herein shall have the Same meaning as set fOlih in the Basic Tenns or Rider to which these Standard Conditions are attached. 1. GRANT OF LICENSE: In consideration of the promises, \}'arranties, representations, obligations, payments and agreements made or assumed by Licensee hereunder, and subject to the tenns and conditions of this Agreement, Licensor hereby grants to Licensee the n~J-exc1usive, non-transferable, non-assignable license during the Tenn and only within the Territory: 1.1 to reproduce any and all elements comprising Licensrd Property in conjunction with the development, design, manufacture, packaging, advertisement, publicity and marketing of Licensed Products; to distribute and sell Licensed Products: (a) (b) 1.3 to a bona fide third party Permitted Distribution Channel for resale on a retail basis to an End Consumer; or to a bona fide third party Distributor for sale to a bona fide third party Permitted Distribution Channel for resale on' a retail basis to an End Consumer; and

1.2

to use the Licensor Trademarks on al')q in connection with any Advertising Material for a Licensed Product.

2.

RESTRICTIONS ON LICENSE: 2.1 Distribution. Without limitation, Licensee shall not have the right to distribute or sell (or authorize any entity to distribute or sell) any Licensed Product: (a) (b) to or through any channel, method or outlet of ~istribution set forth· in Exhibit 1 as an "EXCLUDED DISTRIBUTION CHANNEL", without Licensor's prior written consent; for export to any country outside of the Territory unless such Licensed Product is destined for ultimate delivery within the Territory and Licensee shall not distribute or sell (or authorize any entity to distribute or sell) any Licensed Product to or through any party if Licensee knows, or in the exercise of its reasonable good faith business judgment should know, that such distribution or sale wl1l result in the distribution for sale or resale of any Licensed Product outside of the Territory, subject to any Applicable Laws to the minimum extent Licensee is pennitted thereby to Julfill orders to locations that are outside of the Territory, and provided that such orders have not been solicited by or on behalf of Licensee; to or through a Closeout Entity in any country of the Territory prior to the date eighteen (18) months after the initial "sale" (as defmed in Subparagraph 15.50 hereinbelow) of such Licensed Product to a Customer in such country, unless Licensor otherwise expressly agrees in writing; through any Television Home Shopping Retailer except to the extent that, at Licensor's request, Licensee supplies to Licen~or or to Lice~sor's designee any Licensed Product to such specific Television Home Shopping Retailer(s) as Licensor may approve, if at all, in advance in writing.

(c)

(d)

2.2

Advertising. Licensee shall not at any time hf,lve the right to conduct (or authorize any entity to conduct) advertising for any Licensed Product that is primarily intended to be disseminated outside of the Territory. Without limiting t~e generality of the foregoing, Licensee shall not directly or indirectly authorize or expressly solicit the fulfillment of, or fulfill orders for, the distribution or sale of any Licensed Product outside of the Territory throrgh means of the so-called World-wide Web, Internet or any so-called "on-line service" or other electronic media, without Licensor's prior written consent and provided Licensee has executed a separate license agreement with Licensor in this regard, in a fonn satisfactory to Licensor. Initial Shipment Date. Licensee agrees that the initial shipment of any Licensed Product to a Customer in the Territory or, if Licensor specifies in a coUntry ("Initial Shipment Date") shall not occur later than the applicable date for such Licensed Product as set forth in the applicable Annual Product & Marketing Plan approved b~ Licensor hereunder. Manufacturing. Licensee shall have no right to sublicense to any entity the right to manufacture any Licensed Product hereunder, whether or not such entity is a Licensee Affiliate, unless and until Licensor has approved any such prf:iposed manufacturer and such proposed manufacturer shall have also executed an Approval of Manufacturer Agreement with Licensor on Licensor's fonn for such agreement (such approved en~ity a "Mdnufacturer") attached to and made a part of this Agreement as Exhibit IV as same may be modified from time to time. Sublicensing. Licensee shall have no right to sublicense to any entity any right licensed to it hereunder (other than the right to manufacture Licensed Product which is governed by Subparagraph 2.4 hereinabove), whether or not such entity is a Licensee Affiliate, unless and until Licensor has approved any such proposed sublicensee and such proposed sublicensee shall have

2.3

2.4

2.5

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also executed an Approval of Sublicensee Agreement with Licensor on Licensor's then-current form for such agreement (such approved entity a "Sublicensee"). 2.6 No Joint or Cross Distributing. Promoting or Selling. No Licensed Product shall be created for any specific Customer, or jointly or cross distributed, marketed, promoted or sold with any other product or service without Licensor's prior written consent in each instance. No Similar Products or Dumping of Licensed Products. Licensee agrees that, during the Term and any applicable Sell-Off Period and throughout the Territory, Licensee: (a) (b) will not Dump any Licensed Product anywhere; aqd will not manufacture, distribute or sell any merchandise or authorize the manufacture, distribution or sale of any merchan~ise bearing any artwork or other representation which is confusingly similar to or' whicp disparages the Licensed Property (or any element thereof).

2.7

2.8

Third Party Sourcing. Licensee sh~ll not have the right to use any artwork or other creative material incorporating elements of the Licensed Property used in connection with the products, goods or articles of third parties (including, without limitation, books, comics and trading cards) without first advising Licensor in writing of the third p~rty which had used such artwork and without first obtaining Licensor's written approval thereof in accordance with Paragraph 4 hereinbelow. No Electronic Mechanism or Element. Except as permitted in this Agreement or as the parties may otherwise agree in writing, no Licensed Product may include any electronic mechanism or electronic element which allows Licel1sed Products to interact with the Internet or with any product which is not a Licensed Product, add the fact that a Licensed Product is or could be incorporated with or used in conjunction with any other propuct which i~ not a Licensed Product (whether or not such other product has any electronic feature or capabilitY) neither renders such other product a Licensed Product hereunder, nor is Licensee nor any third 'party authorized to utilize any Licensed Property in connection with or in association with such other product. No Electronic Transmissions of Licensed Property. For the avoidance of doubt, except as otherwise agreed in advance in writing by Licensor, Licensee shall have no right to electronically transmit or to authorize the "electronic transmissions" (as hereinafter defmed) of any Licensed Property to any unauthorized pahy(ies). The terms "electronically transmit" and "electronic transmission" shall mean, without limitation, the public performance, dissemination, distribution, or other use, reproduction, republication andlor duplication by means of the so-called Internet including, without limitation by meaps of "digital downloads" and/or "streaming," webcasting and/or file transfer or any other means whether now or hereafter known, devised or invented. Third Party Obligations. If and to the extent that the rights licensed to Licensee are exclusive, notwithstanding anything to the contrary contained in this Agreement or otherwise, but without limitation of Licensor's other rights and remedies, with respect to any exclusive rights granted hereunder: (a) Licensee acknowledges that Licensor may have heretofore executed agreements with third parties which may encompass rig4ts with respect to some or all of the Licensed Products and/or which may &Tant to such third parties the right to dispose of, distribute and sell Licensed Products during their respective sell-off periods, which sell-off periods may occur during the Term, and that such sell-off tights shall not violate the terms of this Agreement; and (b) Licensor shall have the unrestricted right, prior to the expiration or termination of the Term to provide for the disposition of any or all of the rights licensed to Licensee hereunder, including, without limitation, entering into agreements with any third party(ies) which provide for the right for such third party(ies) to design, manufacture and/or distribute Licensed Products anywhere in the Territory, provided, that such agreemJnt(s) shall not by its terms authorize the shipment of a Licensed Product t.o a Retail Entity on a date that would allow such Licensed Product to be sold on a retail basis to the consuming public prior to the expiration or termination of the Term.

2.9

2.10

2.11

3.

RESERVED RlGHTS: 3.1 General. Licensor retains all rights not expressly licensed to Licensee under this Agreement, such reserved rights including, without limitation, the right to grant licenses to third parties which do not violate the terms of this Agreement, and the right, subject to Subparagraph 3.2 hereinbelow, to advertise, promote, manufacture, distribute and sell through any Licensor Channel any Licensed Product or other products based on the Licensed Property anywhere in the world, including without limitation in the Territory during the Term. Licensor Channels. In the event that Licensor desires to distribute and/or sell Licensed Product that has been distributed and/or soltl hereurlder by Licensee, Licensor shall have the right to purchase from Licensee any Licensed Product for which Licensee has rights hereunder (if at all). Licensee shall manufacture for or distribute and sell to (or cause the manufacture for or distribution and sale to) Licensor or Licensor's designee such quantities of such Licensed Product as Licensor shall request for the applicable liCensor Channel, and shall sell such Licensed Product to Licensor or to Licensor's designee at the lowest price and on the most favorable terms given by

3.2

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Licensee or a Sublicensee to a Customer fot the same or comparable Licensed Product. Further, if Licensor desires to distribute and/or sell Licensed Product that is exclusive to Licensor through Licensor's web site, then Licensor shall so notify Licensee of its requirements therefor and Licensee shall manufacture (or cause the manufacture) of such exclusive Licensed Product in the quantities requested by Licensor and shall sell same solely to Licensor or Licensor's designee at the lowest price and on the most favorable terms given by Licensee or a Sublicensee to a Customer for comparable product. Licensee a~knowledges and agrees that Licensed Product purchased by Licensor pursuant to this Paragraph may be advertised, promoted, manufactured, distributed and sold through any Licensor Channel at any time throughout the world. 3.3 Premiums/Consumer Marketing. Nqtwithstanding anything to the contrary contained in this Agreement or otherwise, Licensor ret~ins all rights not expressly licensed to Licensee pursuant to this Agreement, including, without limitation, the exclusive right to license to Licensee or to any I third party the right to manufacture, market, ~onduct advertising, distribute or sell any Licensed Product in connection with any Premium or Consumer Marketing. In this connection, if Licensee is selected by Licensor or by Licensor's designee to manufacture, market, distribute or sell any Licensed Product manufactured and packaged by Licensee as part of such arrangement, then Licensor and Licensee shall negotiate on good faith toward an agreement regarding any such Premium or Consumer Marketing and, without limitation, Licensee shall supply such Licensed Product to Licensor or Licensor's designee at an amount equal to the lowest price given by Licensee or any Sublicensee to any Customer for the same or comparable Licensed Product.

4.

LICENSOR APPROVALS: 4.1 Proposed Product & Marketing Plans. In addition to the foregoing, Licensee shall submit to Licensor for Licensor's approval a thorough and detailed Proposed Product & Marketing Plan (in Licensor's standard form[s], as such form may be modified from time to time) regarding the development, production, manufactur~, distribution, advertising and/or sale of each and every Licensed Product, all in accordanc y i with E?iliibit II attached hereto and incorporated by this reference. Each such submission shall occur prior to the product development, manufacture, production, distribution, marketing, shipment 9r sale of 8.\1y Licensed Product hereunder for the applicable time period to which a Proposed Product & Marketing Plan relates, together with any relevant Quarterly Updates. If Licensor disapproves all or any part of a Proposed Product & Marketing Plan, Licensee shall revise such Proposed Product & Marketing Plan (or any Plan Element thereof), as the case may be, anp re-submit same to Licensor for its approval again pursuant to this Subparagraph, until such Proposed Product & Marketing Plan (or Plan Element), as the case may be, is approved by Licensor. Licensor's approval of anyone Proposed Product & Marketing Plan or Quarterly Update shall not be deemed to constitute Licensor's approval of any other Proposed Product & Marketing Plan or Quarterly Update, as the case may be. Copyright Materials. Prior to the manufactllre, production, distribution, marketing, shipment, sale or use by Licensee of any Licensed Product or the use, printing, duplication or application of any other Copyright Material including any of the following, or of any modification(s) thereof, Licensee will submit to Licensor f9r Licensor's approval, and shall concurrently therewith complete Licensor's then-current applicable Standard Approval Form for, each and every:
(a)

4.2

Licensed Product, includiqgj but not limited to, the initial concepts, design documents, scripts, copy, alpha versionj beta version, unpainted sculpt, painted sculpt, prototype and manufacturing sample; audio and/or visual material (including, without limitation, artwork, photographs, images and designs and web site materials) incorporating any part of the Licensed Property, including, without limitation, initial concepts, preliminary designs and fmal artwork intended for any use hereunder including, without limitation, all uses in connection with any use of Licensed Property in connection with Subparagraph 2.10 hereinabove (the "Designs"); and carton, container, packaging, instruction, tag, label, wrapping and any other material for any Licensed Product and/or for any advertisin~, marketing, publicity, promotional or other material related to any Licensed Property to be used hereunder and/or Licensed Product (including, by way Of Illustration, but without limitation, any audio and/or visual material, banner, graphic il11a~e, catalog, flyer, sales sheet, package insert, point-ofpurchase or disp,lay material or arty trade, Consumer Marketing [if any] and other marketing or sirrtilar advertisements or announcements), whether or not any such material makes use of the Licensed Property (each such material an "Advertising Material"). Each and every Advertising Material ~ubmitted in a language other than English will be accompanied by a complete and accurate English translation thereof.

(b)

(c)

Without limiting the generality of the foregoing, Licensor shall have the sole right to approve and/or, at its election, develop the conceptualization, desigp, creation, preparation and exploitation of all marketing concepts, plans, materials and/or activities (including any retail sales activities) involving any use of Licensed Property in cOlmection with this Agreement. If and to the extent Licensee is permitted, if at all and with Licensor's prior written consent, to display on the Internet any Licensed Property in connection with its advertising and/or marketing rights hereunder, Licensee shall place or cause to be placed on each applicable web site an appropriate copyright or other notice approved or provided' by Licensor with resRect to all Licensed Property, Licensor

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Trademarks and other intellectual property of Licensor and/or its contracting parties and a clearly visible and legible written statement 'expressly prohibiting the use of any Licensed Property other than for "private, non-commercial home use." 4.3 General. Licensor has absolute approval in it~ sole discretion of all Proposed Product Plans, all Annual Product & Marketing Plans and all Copyright Materials, at all stages of the development, production and application thereof. Licensee agrees to strictly adhere to all of Licensor's product approval procedures, to comply with all of Licensor's style and legal guides provided to Licensee (including the Sourcebook), and to cause all parties with whom it contracts relative to the Licensed Products to do so. If any alteration or modification to any Copyright Material is made, it shall be made at Licensee's sole cost and each such alteration and modification shall be submitted to Licensor for further written approval in accordance with this Paragraph 4 unless and until Licensee has received Licensor's approval thereQf in the manner prescribed herein. Licensee shall ensure that each and every Licensed Product, in its finished goods form, shall in all material respects be an accurate representation of the prototype sample for the applicable Licensed Product as approved by Licensor. Licensor's a,pproval of any item or element in accordance with this Paragraph 4 with respect to any Proposed Product & Marketing Plan, Licensed Product or other matter shall not be deemed to be approval of ~uch item or element with respect to the use of such item for any other Proposfd Product & Marketing Plan, Licensed Product or other matter, whether or not similar. Licensee's timely submission of and compliance with the material terms of each Proposed Product & Marketing Pial} approved by Licensor is of the essence of and deemed to be a material term of this Agreement. Any acts by Licensee contrary to the terms of this Paragraph 4 shall be deemed a material breach of this Agreement entitling Licensor, in addition to any and all remedies it may have at law and in equity, to terminate this Agreement. Ouality Assurance. Licensee shall ensure that the form, quality and standard of all materials used in the connection with each Licensed Product conform to that of the samples approved by Licensor pursuant to this agreemeht and complies with all good manufacturing practices relevant to any l Licensed Property and/or Licensed Products including methods of storage and with all laws and regulations relevant to any Licensed Product(s) including, without limitation, any and all relevant regulations and other Applicable Laws concerning the Licensee's web site and/or the advertising, marketing, manufacture, sale or promotion, labeling or Imarking of such Licensed Product(s) hereunder. Any modification by Licertsee to any Licensed Product previously approved above shall be submitted to Licensor for written apprQval as if the same were new and without approval. Right To Inspect. Licensee shall allow Licensor and/or Licensor's duly authorized representative the right to inspect samples of the Li~ensed Product at any time and on reasonable notice, and shall afford it every reasonable assistance and allow or procure them access to any of Licensee's premises or other premises where any Licensed Product is being created or held to Licensee's order, for so long as any use is made bfthe Lic¢nsed Property. Recall Of Product. Licensee agrees to rec~ll immediately on the demand of Licensor any or all Licensed Products which fail to conform to the samples approved by Licensor pursuant to this Agreement or which Licensor reasphably suspects to be defective for any other reason and cease the distribution and/or sale of such Licensed Products until such time as the Licensed Products have been corrected to Licensor's satisfaction. Licensee will at all times have in place appropriate procedures to ensure that such recall ~nd cessation can be carried out immediately.

4.4

4.5

4.6

5.

ARTWORK, CLIPS AND MUSIC; COPYRIGHT l'4ATERIALS: 5.1 Artwork, Clips and Music. Licensee agrees and acknowledges that, notwithstanding the license granted by Licensor under this Agreement, use of any visual material, musical material, audio representation and/or audiovisual material relating to the Licensed Property including, without limitation, any and all music, vocals, drafts, manuscripts, artwork, tapes, preprinted material and all positive prints of footage (whether or not supplied by Licensor) (collectively "Artwork, Clips and Music") may require license payn1ents independent of and unrelated to Licensee's obligations to malce payments to Licensor of Adyance(s) and Royalties under this Agreement. Examples of such licenses and/or payments include; without limitation, rights and/or residual payments to talent, trade unions and guilds; reuse fees, master use fees, synchronization licenses and residuals. Licensee agrees and acknowledges that Licensee may in aqdition be required under any applicable talent agreements or collective b~tgaining agreements to obtain releases from third parties, including, without limitation, performers, artists, talent, unions and/or guilds, for use of Artwork, Clips and Music. Approvals. Licensee shall not have the right to make any use of the Licensed Property, including, without limitation, any Artwork, Clips and Music, without first obtaining any required authorization, release, approval or license, and the prior written approval of Licensor, exercised in I its good faith discretion. Licensee shall be solely responsible for any and all payments required with respect to the use of any Artwork, Clips and Music in connection with a Licensed Product and the marketing, advertising, sale, distributioh and/or promotion thereof. All specific uses of any Artwork, Clips and Music shall be subject to the prior written approval of Licensor, as provided in Paragraph 4 above, but the granting of such approval does not negate Licensee's obligations under this subparagraph 5.2.

5.2

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5.3

Licensee's Expense. Licensee shall pay to Licensor, within thirty (30) days after Licensee's receipt of an invoice therefor, any and all fees in excess of One Thousand Dollars ($1,000) relating to the production, duplication and shipping of CopyrIght Mat~rials for Licepsee; provided, however, that Licensor shall lend to Licensee, free of charge, o~e (l) copy of Licensor's standard style guide/sourcebook containing CDs with i/nages for the Licensed Property (the "Sourcebook"), subject to Subparagraph 5.4 hereinb~low. The paYment obligations by Licensee set forth in this subparagraph 5.3 shall apply to any original artwork dony at Licensee's request by Licensor, or by third parties under contract to Licensor. Licensee will pay for all costs arising in any way by reason of the license granted and the uses of any dopyright Materials hereunder including, without limitation, all production, duplication, transfer, h\lndling, ~hipping, conversion fees and charges, as well as the cost of distributing, delivyry and returning such Copyright Materials and the cost of replacing any lost or damaged materials delivered to or made available to Licensee hereunder. Without limitation, as between Licensor and Licensee, Licensee shall be solely responsible for obtaining any necessary licenses for and p,aying for any and all authorized electronic transmission(s) authorized hereunder of any Licensefi 'property.

5.4

Delivery/Return of Materials. Licerysee agrees to deliver (free of charge) to Licensor, or to give reasonable access to Licensor and Licensor's designees, free of charge, any and all Copyright Materials (in such formats, including, without limitatioh, high resolution files, electronic or otherwise, as Licensor may, in its discretion, reque~t) for duplication and other purposes. Upon the earliest to occur of the comp etion of its use thereof, the expiration of the Term hereof or the termination of this Agreement/ Licensee at its sole expense (including, without limitation, shipping and handling) shall return all Copyright Materials (including, without limitation, Licensor's Sourcebook) still remaining in Licerjsee's possession or control which was delivered to or made available to Licensee hereunder and such delivery shall be to Licensor or to such other source or location(s) as Licenso(' s~all designate. In any event, Licensee's return of such Copyright Materials must occur no latyr than the Initial Shipment Date for the applicable Licensed Product to which any such Artworks, Clips and Music relates, unless Licensor otherwise agrees in writing.

sote

6.

PRODUCT SAMPLES: 6.1 Sample Requirement. Upon commercial release of each version of each and every Licensed Product (including, without limitation, each language version and modified version) by or for Licensee, Licensee will furnish to Licensor at no cost the following items, as well as all respective containers, tags, labels and packaging therefor, not later than thirty (30) days prior to the Initial Shipment Date of each and every version of a Licensed Product SKU the following number of samples: (a) six (6) samples (twelve [12] if the Licensed Products are collectibles or toys) of each version of a Licensed Product SKU having a suggested retail selling price of One Hundred Dollars ($100) or less, six (6) samples (twelve [12] if the Licensed Products are collectibles or toys) of each version of a Licensed Product SKU having a suggested retail selling price of over One Hundred U.S. Dollars ($100) but less than Two Hundred Dollars, and six (6) samples (twelve [12] if the Licensed Products are collectibles or toys) of each version of a Licensed Product SKU having a suggested retail selling price of such SKU of more than Two Hundred Dollars ($200); I six (6) samples of all advertising, p.romotional and display materials referencing each such version ofa Licensed Product SKU; and one (1) DVD copy of any film or video advertising material for referencing each such version ofa Licensed Product SKU.

(b) (c) 6.2

Reimbursement of Costs. If Licensor requests samples in addition to those set forth above, Licensee will supply to Licensor such additional samples at Licensee's direct out-of-pocket cost of manufacture. If Licensee fails to timely provide Licensor with the samples of any Licensed Product version so requested by Licensor, then, without limitation, of Licensor's rights and remedies in such event, Licensee shall reimburse to Licensor an amount equal to one-hundred percent (100%) of all costs and charg~s (including, without limitation, shipping and handling) incurred by Licensor in obtaining such samples on its own, within thirty (30) days of its receipt of Licensor's invoice therefor. Licensee's repeated failure to provide to comply with the requirements of this Paragraph 6 shall, at Licensor's option, be deemed a material breach of this Agreement. No Royalty to Licensor on Samples. No saJ;11ples supplied to Licensor pursuant to this Paragraph 6 shall be subject to the Rbyalty obligations to Licensor pursuant to this Agreement.

6.3

7.

ADVANCES/ROYALTIES: 7.1 Advances. Licensee shall pay to Licensor each of the amounts set forth in Clause I of this Agreement (each such amount an "Advance'! herein) on or before the due date provided in Clause I

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above, which amounts shall constitute non-retumable advances against and recoupable from Royalties otherwise payaole to Licensor hereunder. 7.2 ROYALTIES. (a) Royalty Amount. Licensee will pay to Licensor an amount for each unit of the Licensed Products hereunder equal to the perc~ntage of Net Sales set forth in Clause 1(2) of the Agreement (the "Royalties"). Net Sales. "Net Sales" me~s one htlIldred percent (l00%) of all gross amounts (subject to Subparagraphs 7.2[g] and 7.2[h] hereinbelow) derived by Licensee or a Sublicensee, as the case may be, from the "sale" (as defined in Subparagraph 15.50 hereinbelow) of each and every Licensed Product hereunder, calculated on the greatest of the following: (i) the highest list price specified by Licensee in the Annual Product and Marketing Plan for the applicable Pennitted Distribution Channel (e.g. the mass, mid-tier, specialty and direct classes of trade) without discount; or (ii) the amount actually charged for each Licensed Product by Licensee or a Sublicensee, as the case may be, for the applicable Pennitted Distribution Channel; or (iii) the amount actually received for each Licensed Product by Licensee or a Sublicensee, as the case may be, for the applicable distribution channel; or (iv) the average of the highest invoice price charged to customers in a particular distribution channel calculate:d by ad~ing the highest invoice prices shown on 10% of such invoices and dividing ~e result by the number of invoices (such greatest amount is sometimes hereinafter referred to as the "List Price"); less only the "Allowable Deductions" (as defined hereinbelow). Other than the Allowable Deductions, there shall be no deductions from or teductions of Net Sales of any kind, including, but not limited to, deductions for retums,_cash payment discount~ or freight discounts or any allowances or reserves of any kind, including for uncollectible or uncollected amounts (whatever the reason), so-called "free goods," any costs incurred in connection with the product development, manufacture, distribution or sale of a Licensed Product, any general or administrative costs of any kind; any taxes, freight, insurance or other transportation costs; or any other costs or expenses of any nature. Allowable Deductions. The tenn "Allowable Deductions" means the following:

(b)

(c)

(i)

any and all reasonable and actual trade or promotional discounts and allowances which are shown on an invoice and which do not exceed in their totality three percent (3%) of the list price set forth in the Annual Product and Marketing Plan; and returns supported by credit memos actually issued to a "Customer", provided that such retums may not ~xceed three percent (3%) of the total invoiced amount during the life of the contract (regardless of whether such returns are the result of retum policies, defective products, product warranties, stock balancing, price protection or any other provision or obligation).

(ii)

(d)

F.O.B. or Ex Works. Notwithstanding anything to the contrary contained herein, unless otherwise specified in Clause 1.(2) of the Basic Tenns, the applicable Royalty for a Licensed Product sold on a F.O.B., Ex Works or similar basis ("F.O.B. Product") shall be the applicable non-F.O.B Royalty Percentage of Net Sales set forth in Clause 1(2) hereinabove multiplied by 1.67 (the "F.O.B. Royalty"). Rebates, Discounts, Deductions. Notwithstanding anything to the contrary contained in Subparagraph 7.2(b) hereinabove, there shall l,e no rebates, discounts, allowances, deductions from or reductions to the gross amounts derived by Licensee or a LicenseeRelated Entity with respect to a Licensed Product as a result of the manufacturing, distribution, marketing, promotiorl or sale of a product, good or article that is not a Licensed Product. ' Bundling. Licerlsee shall not have the right to distribute, market or sell (or authorize a third party to distribute, m~rket or sell) any Licensed Product with any other product, good or article (other than another Licensed Product) in a single package at a single price ("Bundling") without LiceqSor's priot written approval of whether or not such Bundling may occur, the tenns and 60nditiqns' of such Bundling, and Licensor's Royalty in such instance. Evaluation Units. Any shipment or other distribution by Licensee or a Sublicensee of a promotional or evaluation unit to a third party ("Evaluation Unit") of any Licensed Product will be deemed Net Sales and shall be calculated at an amount equal to the List Price for such Licensed Product for the applicable Pennitted Distribution Channel in the applicable country from the time of its initial commercial release until the date of such shipment or, if such Licen~~d Product has not be~n commercially released, at an amount equal to the List Price for a comparable Licens~d Product for the applicable Pennitted Distribution Channel in the applicable country !Tom th~ time of its initial commercial release until the date of shipment of such Evaluation Unit, except to the extent that Licensee has obtained Licensor's prior written consent to exempt an Evaluation Unit of a Licensed Product from Licensee's Royalty obligations hereunder.

(e)

(f)

(g)

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(h)

VAT. Any VAT that is inclt,ded in the List Price of a Licensed Product SKU shall not be treated as part of the gross amounts used to determine the amount of Net Sales. Accordingly, Licensee shall not pass along to Licensor and Licensor shall not bear any VAT incurred in connection with any Licensed Product. Sales In Violation. If Lioensee sells any Licensed Product(s) in violation of the terms and/or conditions of this Agree~ent (jncluding without limitation without the appropriate written approval from Licensor as described in this Agreement, or outside of the Permitted Distribution Channels, or outside the Territory), then notwithstanding anything contained in this Agreement, and without limitation, the Royalty payable to Licensor with respect to such Licensed Product(s) shall be one hundred percent (100%) of all gross amounts derived py Licensee ~r a Sublicensee from such sales. No Waiver. Acceptance of any sums by Licensor by way of Advances, Royalties or otherwise shall not prevent Licensor at any time from disputing or demanding particulars with reference to the amounts due nor shall such acceptance constitute Licensor's waiver of any breach by Licensee of any terms hereof.

(i)

(k)

(1)

No Carryover. If the parties agree to an extension of the Term and if, on the expiration of the Tenn, any Advance sha1l not have been recouped by the applicable Royalties paid to Licensor, then th~! shortfall will not be carried forward to any extension of the Term. I List Prices. Licensee shall submit to Licensor in writing a complete set of its List Prices no later than thirty (30) days prior to the date pf the fIrst sale of Licensed Products hereunder, which List Prices shall be resubmitted to Licensor as and when same are revised or modifIed by Licynsee during the Tern).

8.

STATEMENTS. PAYMENTS ANb AUDITS:
I

8.1

Payment Terms. Licensee will wire transfer to Licensor (as immediately available funds) all sums due to Licensor hereunder for Licensor's receip,t thereof within thirty (30) days following the end of each calendar quarter based on thl'l Net Sal6s of Licensed Products in such calendar quarter. Net Sales generated hereunder shall be reported to Licens~r in respect of the calendar quarter in which such Net Sales are paid or reported by Licensee, whichever fIrst occurs. All payments to be made pursuant to this Agreement will be in United States currency. Late payments will accrue, and Licensee's statements and payments hereunder shall reflect, interest charges froin the due date through the date of payment at an interest rate equal to three percent (3%) over the prime lending rate set by the Bank of America N.TS.A., or the maximum legal rate, if such maximum legal rate is lower, and shall be payable upon demand. Remittance of Funds. In the event that payments are made to Licensor hereunder, all compensation amounts stated in the Agreement, includitig, without limitation, Advances and Royalties accrued and/or payable to Licensor pursuant. to the Agreement shall be computed, accrued, paid and remitted to Licensor in U.S. Dollars. It shall be Licensee's sole responsibility and expense to obtain the approval of any governmental authorities to take whatever steps that may be required and to comply in all respec~s with all applicable laws and regulations in order to remit funds to Licensor. All monies, including, without limitation, Royalties, due to Licensor hereunder shall be payable to Licensqr's account and/or shall be remitted to Licensor in U.S. Dollars (except as otherwise agreed by Licensor in writing, if at all), and, the rate of conversion to U.S. Dollars from the local currency of a source country other than the United States shall be the offIcial government rate df exchange for such currency which is in effect according to the Wall Street Journal either: (i) (ii) on the date the relevant stat~rhent is due (if no Royalties are actually payable to Licensor with such statement); or on the date payment is due (if Rpyalties are actually payable to Licensor) or, if payment to Licensor is late, then the rate of exchange published in the Wall Street Journal on the date payment is due or the date of actual p~yment, whichever yields the higher amount of U.S. Dollars.

8.2

8.3

Royalty Report. WITHIN THIRTY (30) DAYS AFTER THE CLOSE OF EACH CALENDAR QUARTER, LICENSEE WILL PREPARE AND DELIVER TO LICENSOR A ROYALTY REPORT IN LICENSOR'S STANDARD ROYALTY REPORT FORM, AS SUCH FORM SHALL BE MODIFIED BY LIdENSOR FRpM TIME TO TIME ("ROYALTY REPORT FORM"). A current copy of such Royalty Report Form is attached hereto as Exhibit III and incorporated herein by this reference. A Roralty Report Form will be due each calendar Quarter of the Term and of the Sell-Off Period (if applicable) whether or not Royalties are payable to Licensor hereunder. Licensee's Records. During the Term iilld for not less than three (3) years after the expiration or termination thereof, Licensee will maintain complete and accurate records of all transactions relating to this Agreement and/or Licep.see's rights and/or obligations hereunder including, but not limited to, the data and information contained in the Royalty Report (collectively "Licensee Records").

8,4

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8.5

Inventory. At the request of Licensor, Licensee shall submit a statement showing the number and description of Licensed Products mahufact1lred, shipped, distributed, on hand and/or in process. Licensor shall have the right at any tUne to takeI a physical inventory to ascertain such information , and/or verify such inventory statement. . Audits. Licensor or any independent auditor selected by Licensor may from time to time, but not more frequently than once per Calendar Year, upon reasoni:lble notice and during normal business hours, inspect (with respect to audits conducted in the Territory) at Licensee's main headquarters located in the Territory any and all Lic;ensee Records maintained by Licensee in the Territory and such audit samples from other countries as may be requested by Licensor and (with respect to audits outside of the TerritOlY) wherever such records are kept outside of the Territory. If, upon performing such audit, it is determined that Licensee has underpaid Licensor, Licensee will immediately make full payment of all monies 9ue under P~ragraph 7 hereinabove. If the amount of underpayment exceeds Five Thousand u.s. Dollars (U.S. $5,000) of the payments due Licensor in the period being audited, Licen~ee will bear all direct expenses and costs related to such audit in addition to its obligation to make full payment under Paragraph 7 hereinabove. Further, Licensee agrees that it shall modify Licensee's accounting procedures as set forth in the audit fmdings in order to ensure future cqmpliance with the provi~ions of this Agreement. In addition, if such inspection and audit reveals a discrepancy of more than three percent (3%) between the book inventory versu~ th~ physical inventory, Licensee shall be required to pay to Licensor the Royalty based on the difference between the book inventory and the physical inventory for each of the Licensed Products. If such inspection and audit reveals Royalty payments due to Licensor of twenty perc~nt (20%) or greater for the period covered by such inspection, then, in addition to any imd all other rights, legal and/or equitable, of Licensor, Licensor shall have the right to immediately terminate th\'l Agreement upon notice to Licensee. Without limiting the foregoing, if such inspection and audit reveals any sale of Licensed Product(s) in violation of any term and/or co~dition of this Agreement, then the provisions of subparagraph 7.2(1) shall also apply. All underpayments and late payments will be subject to interest charges, at the rate specified for late payments in Subparagraph 8.1 hereinabove, calculated from the due date to the actual payment date. The obligation to maintain records and to grant Licensor and Licensor's representatives access to such records shall survive the expiration or earlier termination of this Jil.greement. Taxes. (a) (b) No taxes of any kind may be deducted from any Royalties or gross amounts derived with respect to the sale of any Licensed Proquct. If and only to the extent that RQyalties hereunder are remitted to Licensor from a jurisdiction having a tax withholding requirement, then Licensee is authorized by Licensor to deduct and to withhold from Royalties generated from such jurisdiction any withholding tax imposed by s,uch jurisdiction at the local statutory rate or lower income tax convention rate, if applicable; provided, however, that: ! (i) the Royalties due to Licensdr with respect to any particular units of a Licensed Product may not be reduced by withholding taxes from more than one taxing jurisdiction, and such tax payments made by Licensee on behalf of Licensor may not reduce the amounts payable and paid to Licensor under this Agreement by more than the applicable withholding taxes of the relevant taxing jurisdiction. Licensee shall promptly provide Licensor with notification of and official receipts for all tax payments made on Licensor's behalf pursuant to this Agreement. If within forty-five (45) days after ea~h payment is made hereunder, Licensor has not received either: (A) (B) an authenticatec\ withholding tax certificate (stamped by the appropriate tax authority); or written evidence by Licensee (in form satisfactory to Licensor) that Licensee has filed an application to receive a withholding tax certificate from sU9h tax authority, then Licensee shall immediately pay to Licensor an amount equal to the amount previously withheld by Licensee from such payment, divided by 1 minus the applicable withholding tax rate, (e.g., if the tax withheld was $15, and the withholding tax rate was 15%, then Licensee shall remit to Licensor
$15/85%,'01' $17.65).

8.6

8.7

(ii)

(c)

It shall be Licensee's sole responsibility to obtain at its expense the approval of any governmental authorities; to take whatever steps may be required to remit funds to Licensor; and to comply in all respects with all Applicable Laws.

8.8

Blocked Funds. Any mohies accrued to Licensor or received in a currency in the Territory which cannot be converted into U.S. Dollars and cannot be promptly remitted to Licensor in the United States because such monies are restricted due to moratorium, embargo, banking regulations, exchange restrictions or other governmentally-imposed rJstrictions against such conversion and remittance (such restricted monies th~ "Blpcked Funds") shall be deposited into an account in Licensor's (or Licensor's designee's) name either within or without the Territory (at Licensor's

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election), and Licensee shall immediately notify Licensor in writing of such deposit (including the name of bank, account number, amounts deposited). Blocked Funds shall not be treated as Advances or Royalties or otherwise accrue to Licensor's account hereunder unless and until such Blocked Funds are so deposited and Licensor has received written notice thereof as required above. 8.9 Net Sales to Licensee Affiliates. With respect to the Net Sale of any Licensed Product to any Licensee Affiliate (or to any empldyee, officer, director, shareholder of Licensee or of a Licensee Affiliate) at a special price or at a phce less than the List Price, Licensee shall pay Royalties based upon either the List Price (regardless of the price charged by Licensee to such License Affiliates) or upon the highest Net Sales price charged by the applicable Licensee Affiliates on sales of such Licensed Products to customers or other entities which ;1re not Licensee Affiliates, whichever yields the larger amount of Royalties to Licensor.

9.

OWNERSHIP: 9.1 Ownership. Licensor represents and warrants that it has t1,le right to grant the license granted by this Agreement. Licensee aclmowledges and agrees that, as between Licensor and Licensee, the Licensed Property is owned solely and exclusively by Licensor. Further, Licensee acknowledges and agrees that all worldwide perpetual right, title and interest in and to each and every Copyright Material immediately from inception is and shall remain the sole, exclusive property of Licensor and be owned solely and exclusively by Licensor including, without limitation, all worldwide, perpetual copyrights therein (and all renewals and extensions thereof) and all other intellectual property rights in and to such Copyright Material, and Licensor shall have the right to use, and authorize others to use, such Copyright Material in any manner and by any means and media in perpetuity throughout the world without restriction. Employment for Hire. Licensee aclalowledges that the Licensed Property is owned solely and exclusively by Licensor. Licensee h~s caused or shall cause any Copyright Material created or contributed (in whole or in part) to any Copyright Material as a result of the services of any employee of Licensee, as well as the results and proceeds of such services, to constitute a "work made for hire" (as that ttlnn is under~tood in the U.S. Copyright Law) within the scope of such employee's employment for License y. Each such Copyright Material and the results and proceeds of such employee's services in connection therewith are freely assignable by Licensee, and are hereby assigned, to Licensor hereunder. Assignment of Contractors. Licensee at its sole expense will obtain from each third party who is not an employee of Licensee and who is engaged to assist witl1 or contribute to the development or creation of any Copyright Material, prior to and as a condition of such engagement, a complete written assignment to Licensor, in Licensor's standard fonn, as such fonn may be revised from time to time, such that Licensor shall acquire from Licensee or such third parties all right, title and interest in, to and with respect to such Copyright Material and the results and proceeds of such third party in connection therewith are assigned to Licensor in accordance with this Agreement. Assignment by Licensee. Licensee hereby assigns, transfers and conveys to Licensor all right, title and interest that Licensee may have in th~ Licensed Prbducts and in any Copyright Material, including any and all intellectual property rights therein and goodwill associated therewith. Licensee hereby, on beh~lf of itself, Its en1p loyees and its contractors, irrevocably transfers and assigns to Licensor, and waives and agrees never to assert, any and all Moral Rights which Licensee, any of its employees or any of its contractors may have in or with respect to the Licensed Property or in or to any Copyright Material, even after expiration or tennination of this Agreement. Notwithstanding the foregoing and ,any provi~ion to the contrary in this Paragraph 9, Licensor agrees and aclmowledges that, as between Lidmsor and Licensee, Licensee remains the owner of all tangible rights in and to all physical inventory of Licensed Products, subject to Licensor's rights with respect thereto in the event of a tennination pursuant tp Paragraph 14 hereinbelow. Ownership of Production Materials; In addition to Licensor's other rights and remedies hereunder, if Licensee is in material breach of this Agreement or if the Agreement, in whole or in part, is tenninated prior to the expiration Of the Tenn then, at Licensor's sole option exercisable within one hundred eighty (180) days ofthetennination date by written notice to Licensee, Licensee shall transfer, assign and deliver to Lic~risor, and shall cause all Sublicensees and Manufacturers to transfer and assign to Licensor the full, complete and immediate ownership and possession of any and all physical, tangible tools, molds and printing plates I.\,sed in the development or production of any and all Copyright Material induding, without limitation, any Licensed Product created pursuant to this Agreement which reproduce any aspect of the Licensed Property (collectively "Production Materials"), whether br not developed by or on behalf of Licensee, a Licensee Affiliate, a Sublicensee, a Manufacturer or any third party.

9.2

9.3

9.4

9.5

10.

REPRESENTATIONS AND WARRANTIES; INDEMNITIES: 10.1 Licensor's Warranties. Licensor represents and warrants; that it is a corporation duly organized under applicable law; and that it has tl)e full right, power and authority to enter into and to perform this Agreement and to grant the riglits licensed to Licensee pursuant to Paragraph I hereinabove. Licensor makes no representation Of warranty as to the amount of receipts Licensee will derive

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hereunder or as to the quality, rating pr success of any Picture or reception it will receive by the public, nor shall Licensor be obligated to distribute, exhibit or exploit any Picture or to continue to use any of the Licensed Property. 10.2 Licensee's Warranties. L,icensee represents and warrants that:
(a)
(b)

it has the full right, power and authority to enter into and to perform this Agreement; neither the use of Licensee's name, logos and/or of any intellectual property of Licensee or of any third party(ies) in connection with any Licensed Property or any Licensed Product nor any of the obligations and agreements made or assumed by Licensee does or will violate the right of any party whatsoever; it will not harm or misuse the Licensed Property or bring the Licensed Property into disrepute; it will not create any expenses chargeable to Licensor without the prior written approval of Licensor; it and all others authorized by It or acting on its h;ehalf will comply at all times hereunder with all applicable laws, rules an~/qr regulations relating, affecting or pertaining to the use of any Licensed Property (in'cluding, without limitation, laws relating to tax, advertising, prorhotional offers and/or privacy) and to all applicable laws, rules and/or regulations relating, affecting or prtaining to the taxation, manufacture, sale, advertising, marketing, promotion, safetr and/or use of each and every unit of a Licensed Product sold hereunder (individually and collectively the "Applicable Law[s]"); it shall maintain the highest quality and standards of Licensee in effect as of the Start Date, as well as the international brand image created by Licensor in respect of the Property from time to time; and it will diligently and continuously manufacture, distribute, and sell the Licensed Products in each country within the Territory, subject to the terms and conditions of this Agreement; it will enter into a valid and binding Mreement with each Retail Entity and Distributor to whom it sells any Licensed Product expressly prohibiting such Retail Entity or Distributor from directly or indirectly selling br distributing any Licensed Product to or through an Excluded Distribution Channel in contravention to the terms and conditions of this Agreement, and if such ~etail Entity is an Internet Retail Entity, requiring that such Internet Retail Entity post a notice; on its web site(s) that the Licensed Products are not available for shipment outside the Tertitory (and requiring that such Internet Retail Entity shall not fulfill orders to locations outside of the Territory, subject to Applicable Laws); Licensee shall enforce all such agreements and shall promptly inform Licensor if it knows or has reason to suspect that any such agreement has been breached with respect to any Licensed Product; it will not accept, and shall cause all employees and independent contractors not to accept, any third party crecltive submissions on Licensor's behalf which have not been expressly authorized by Licensor; and it will not use or aut[!orize the use of the name or intellectual property of any LicensorRelated Entity, nor f:y Licensed Ptoperty, nor any talent, nor any association with any of the foregoing to end rse, directly or indirectly, any product or service except as expressly authorized in writin by Licensor.

(c)
(d)

(e)

(f)

(g)

(h)

(i)

10.3

Licensor's Indemnity. Lice sor shall indemnify and hold harmless Licensee from any and all losses, liabilities, damages, fi es, j\ldgments, settlements, costs and expenses (including, without limitation, any reasonable co sel fees and costs, whether or not in connection with litigation) to the extent arising out of any c aims or suits brought or made against Licensee arising solely out of the use by Licensee of th Licensed Property as authorized by Licensor pursuant to this Agreement. Licensor shall ave the optiop. to undertake and conduct the defense of any suit so brought. If Licensor underta s such defense and Licensee nevertheless retains its own counsel to monitor such defense, Licens e shall be solely responsible for the fees and any other expenses related to such counsel. Licensee's Indemnity. EXCej to th~ extent of Licensor's obligations under Subparagraph 10.3 hereinabove, Licensee shall nderntiify and hold harmless Licensor from any and all losses, liabilities, damages, fmes, ,udgments, settlements, costs and expenses (including, without limitation, any reasonable counsel fees and costs, whether or not in connection with litigation) to the extent arising out of any ~laims or suits brought or made against Licensor by reason of the breach by Licensee of any w~lJanty, representation or obligation made by Licensee hereunder including, without limitation, and'an~ such claims or suits brought arising out of or in connection with any of Licensee's ObligationS pursuant to this Agreement, including, without limitation, Subparagraph 13.2 hereinbelow and/or ny of the following: (a)
(b)

10.4

any unauthorized use of Lice, sed Property by Licensee or any person; firm or entity with whom Licensee contracts; , . any alleged defects

rnY/~herent danger in any Licensed Product;
12

f

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(c)

any infringement or violation of any copyright, patent, trademark, trade secret or other intellectual property or proprietary right of any third party in connection with any Copyright Material; any libel, slander, other fOhns of def~mation, pl~giarism, piracy or unfair competition resulting from the alleged unauthorized use of any intellectual property or material; and/or any breach of contract, implied in fact or in law, resulting from the alleged submission, acquisition or use of any material related to the Licensed Property and used by Licensee.

(d) (e)

Subject to Licensor's prior written approval, Licensee shall have the option to undertake and conduct the defense of any suit so brought, provided, that in addition Licensee's selection of counsel shall be subject to Licensor's prior approval, and fuhher, provided, that Licensee regularly consults with Licensor regarding such defense. Licensee will not enter into any settlement of any claims or suits without the prior written approval of Licensor. If Licensee undertakes such defense and Licensor nevertheless retains its 0\Yll counsel to monitor such defense, Licensor shall be solely responsible for the fees and any other $xpenses related to such counsel. Licensee shall not at any time defend on its own behalf any ~9tion arising directly or indirectly from any claim that the Licensed Property (or any element qf it) infringes or otherwise violates any rights of any third party.

11.

INSURANCE: 11.1 General. Licensee will, throughout the t~nn of this Agreement and for a period not less than three (3) years following tennination or expiration of this Agreement, maintain insurance obtained from I a reputable carrier acceptilble to Licensor a~ding Licensot and each and every Licensor-Related Entity as additional insureds to each insurance policy to which this Paragraph 11 applies, covering claims brought and/or arising anywhere in the WOrld relating to the Licensed Property. Coverage. Licensee shall cause Licensor and all Licensor-Related Entities to be added as additional insureds to Licensee's Cdmmercial General Liability Insurance Policy by endorsement to such policy, which policy shall provide coverage for any and all claims, demands and causes of action for personal injury and/or property d~mage arising out of or purporting to arise out of any defects in or failure to perfonn by any ~icensed Product and/or any physical or intangible material used in connection therewith in the ~iinimum amounts required pursuant to this Paragraph 11. Licensee will also cause Licensor and all Licensor-Related Entities to be added as additional insureds to Licensee's standard errors and omissions insurance policy by endorsement to such policy, which policy shall provide coverage, in the minill1um amounts required pursuant to this Paragraph 11, for any and all claims, d