MERCHANDISING LICENSE AGREEMENT

4.  THIRD PARTY CLAIMS: If either party learns that a third party has or claims rights which would or might conflict with the proposed or actual use of the Products, or names or designs similar thereto, then Licensee will either make reasonable modifications in its use of the Products as mutually agreed in writing with PUL, or at PUL’s request, discontinue the use of the allegedly infringing part of the Products; provided, that the foregoing shall not have any effect on PUL’s indemnification obligations hereunder. PUL may participate fully at its own expense in the defense of any claim or suit instituted against Licensee with respect to the use of the Products by Licensee. In no event may Licensee acknowledge the validity of such a claim, seek or obtain a license from such a third party, or take any other action which might impair the ability of PUL to contest the claim. With respect to any claim contemplated by this Paragraph, each party agrees promptly to notify and keep the other party fully advised of such claim.

 

5.  INDEMNIFICATIONS: Licensee will defend (at PUL’s request), indemnify and hold PUL, its affiliates and their respective employees, officers, agents, attorneys, stockholders and directors, and their respective successors, licensees and assignees harmless from and against any and all claims, liabilities, judgments, penalties, losses, damages (including, without limitation, any damages for product liability) and costs (including, without limitation, reasonable outside attorneys’ fees and expenses) relating to any claims of any third party (including, without limitation, any government agency in any country) which arise from or relate to any of the following: (a) any injury or damage caused directly or indirectly either by any Products or by the manufacture, promotion, marketing, distribution, sale or use of any Products; (b) any act or omission by Licensee or any of its subsidiaries, manufacturers, distributors, agents or representatives, or any of their employees or agents relating to the performance of this Agreement; (c) Licensee’s failure to comply in any material respect with any term hereof; or (d) any breach by Licensee of any representation, warranty or agreement made by Licensee hereunder. PUL will have the right to defend any such action or proceeding with counsel of its choice (subject to Licensee’s approval of such counsel, not to be unreasonably withheld or conditioned) at Licensee’s reasonable cost and expense. The obligations of Licensee under this Paragraph will survive termination of this Agreement. Notwithstanding the foregoing, PUL agrees to seek the benefit of any applicable insurance policies of Licensee prior to enforcing any of its rights under this Paragraph 5.

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7.  PRODUCT LIABILITY INSURANCE: During the Term and for a period of not less than one (1) year thereafter, Licensee will obtain and maintain, at its sole cost and expense: (a) comprehensive general liability insurance with limits of not less than Two Million Dollars (US$2,000,000) per occurrence, Five Million Dollars (US$5,000,000) aggregate; (b) product liability insurance with limits of not less than Two Million Dollars (US$2,000,000) per occurrence, Five Million Dollars (US$5,000,000) aggregate; and (c) workers’ compensation and employers’ liability insurance, where applicable, in accordance with local law. Each insurance policy will contain a waiver of subrogation. Licensee’s insurance will be carried by an insurer with a rating in accordance with the BEST Rating Guide of A-6 (or its international equivalent) or better. Compliance herewith will in no way limit Licensee’s indemnity obligations to PUL or its affiliates. Within thirty (30) days following the execution of this Agreement by Licensee, Licensee will provide certificates of insurance to PUL certifying that PUL and any other entity specified by PUL have been added as additional insureds to each insurance policy set forth above and that before any proposed cancellation or material modification in the coverage the insurance carrier will give the certificate holder(s) not less than thirty (30) days’ prior written notice thereof. Upon -receipt of any such notification, PUL will have the right to purchase replacement insurance from an insurance carrier of PUL’s choice and charge Licensee for all costs thereof. Licensee will pay all such costs immediately upon submission by PUL.

 

8.  APPROVALS:

 

       (a)  Approvals. All prototypes of the Products and all materials, artwork, copy, packaging, literary text, advertising and promotional materials in connection therewith, including the quality and style thereof, will at all stages of development and production be subject to PUL’s approval before manufacture, sale or distribution, as applicable. Before selling or distributing the Products, Licensee will furnish and ship to PUL, at Licensee’s expense, twelve (12) samples of each Product, including all packaging materials, and five (5) samples of all advertising and promotional materials in connection therewith. PUL will make reasonable efforts to notify Licensee in writing of its approval or disapproval of each such Product and/or advertising and promotional materials within three (3) business days of receipt of the applicable sample, it being understood that PUL’s failure to approve or disapprove any such sample within such time period will constitute a disapproval. Once approved, Licensee will not modify them without PUL’s approval. On PUL’s request from time to time, Licensee will furnish and ship to PUL, at Licensee’s expense, one representative sample of each Product together with its packaging for quality control purposes. Licensee will provide a reasonable number of additional samples (not for resale) to PUL upon PUL’s request therefor at wholesale cost. If Licensee manufactures, sells or distributes Products which PUL has not approved or has specifically disapproved in writing, or if Licensee authorizes any third party to do so, then PUL may terminate this Agreement immediately.

 

 

       (b)  Approvals Generally. Unless explicitly set forth to the contrary herein, all PUL approvals will be exercised in advance and in writing and may not be unreasonably withheld or conditioned.

 

9.  PRODUCT LIABILITY COMPLIANCE: Licensee represents and warrants to PUL that all Products are in compliance with all applicable laws, regulations, standards and PUL specifications, including, without limitation, the regulating laws of the United States, the country(ies) where Licensee manufactures the Products, the Territory and all other applicable jurisdictions. Licensee will permit PUL and/or its representative, upon reasonable advance written notice, at all reasonable times to inspect the site of production of the Products in order to evaluate the manufacture of the Products and Licensee’s processes and facilities to verify compliance with the requirements set forth in this Paragraph. If any of the Products are found not to comply with the foregoing requirements, then Licensee will immediately destroy all such Products at PUL’s and/or any government agency’s request.

 

10.  RESTRICTIONS ON EXPLOITATION: Without PUL’s approval, which shall not be unreasonably withheld or conditioned, Licensee will not (a) use or authorize the use of the Products as premiums or promotional tie-ins, (b) use the PUL IP with any other name, property or design (except Licensee’s name or the names of other parties in the manufacturing or distribution chain, as required by applicable law), (c) package or bundle the Products for sale or distribution with other articles which do not bear any of the Property, or (d) sell the Products on a mass-market basis (including, without limitation, on or through any internet site associated or affiliated with any mass market except as set forth in the Merchandising License Agreement), on a consignment basis or through “electronic direct response” channels consisting of radio or television (including television home shopping networks). All press releases, publicity announcements or other media disclosures by Licensee relating to this Agreement and/or its subject matter will be subject to PUL’s approval, provided, that PUL shall not have approval rights on any matters required to be disclosed pursuant to any of the Securities Laws. Licensee expressly agrees that (i) only images of the approved Products themselves will be depicted at Licensee’s web site; (ii) Licensee’s web site may not be connected by way of hyperlink or otherwise to the web site(s) of PUL without the approval of PUL nor will the PUL’s web site(s) include a hyperlink to Licensee’s web site; (iii) the Property may not be referenced in the domain name of Licensee’s web site without PUL’s prior approval; provided, that PUL shall not unreasonably withhold or condition the use of any domain name of Licensee for any online/Internet retail sale of Products by Licensee; and (iv) Licensee’s web site, to the extent it includes images of the Products, will include a COPPA compliant privacy policy statement, and Licensee will adhere to said statement and to all laws concerning children and minors on its website and in its internet dealings. In no event will images embodying the PUL IP and made available to potential consumers electronically via on-line internet services deviate in form or content from those approved hereunder or be reproducible or downloadable or be accompanied by any additional materials relating to the Property.

 

 

11.  EVENTS OF DEFAULT:

 

       (a)  The occurrence of one or more of the following will constitute a default under this Agreement, and such default shall become an “Event of Default” upon the delivery of any applicable notice or the lapse of any applicable cure period relating thereto: (a) a material breach by Licensee of any of its representations and warranties herein; (b) any failure by Licensee to adhere in any material respect to the approval process herein or PUL’s directions with respect thereto; (c) the distribution, sale or shipment of any Products not approved by PUL; (d) any failure of Licensee to perform any of Licensee’s covenants or obligations or to meet any conditions under this Agreement including, without limitation, any failure to pay any portion of any amounts specified herein on or before the date when due or to make any payments required of Licensee herein; (e) any actual or attempted assignment, sublicense or other transfer by Licensee of any or all of its rights granted herein, or delegation of any of its duties or obligations herein, without PUL approval; (I) any actual or attempted use by Licensee of the PUL IP in any manner, medium, language or territory not specifically granted hereunder; (g) bankruptcy, assignment for the benefit of Licensee’s creditors or other form of insolvency of Licensee; (h) any Change of Control (as defined herein) of Licensee; and (i) Licensee’s the breach of any other agreement between PUL and Licensee.

 

       (b)  For the purposes herein, the term “Change of Control” shall mean: (i) a merger or consolidation of the Licensee in which the stockholders of the Licensee immediately prior to such transaction would own, in the aggregate, less than 50% of the total combined voting power of all classes of capital stock of the surviving entity normally entitled to vote for the election of directors of the surviving entity or (ii) the sale by the Licensee of all or substantially all the Licensee’s assets in one transaction or in a series of related transactions.

 

       (c)  Notwithstanding anything else contained in this Agreement, except for the payment of any amounts due hereunder, neither party will be liable for any delay in the performance of any of its obligations if such delay is caused by any reason outside the reasonable control of the party so delaying (a “Force Majeure Event”) subject to the obligations of the party so delaying promptly notifying the other party in writing of the reasons for the delay and the likely duration of the delay. The performance of such party’s obligations will be suspended during the period that the Force Majeure Event persists and such party will be granted an extension of time for performance equal to the period of the delay. For the avoidance of doubt, no Force Majeure Event will constitute a default or Event of Default hereunder.

 

12.  TERMINATION/EXPIRATION: PUL will have the right, in its sole discretion, to terminate this Agreement effective immediately upon notice to Licensee at any time upon the occurrence of any default; provided, however, that in the event of default pursuant to Paragraphs 11(a) or 11(d) to the extent that such default is capable of cure, Licensee will have a period not to exceed ten (10) business days from the date of notice to cure the default to PUL’s satisfaction. Upon the expiration or termination of this Agreement, all rights granted to Licensbe hereunder will automatically and immediately revert to PUL, and Licensee will have no further right to exploit or in any way deal with any Products or related materials. Immediately upon the expiration or termination of this Agreement, Licensee will at PUL’s written election either (a) turn over to PUL all molds, printing plates, artwork, films, silk-screens and other materials used in the design, creation and/or reproduction of the Products or the Property at a price to be mutually agreed upon by Licensee and PUL or (b) provide evidence satisfactory to PUL of the destruction of the materials set forth in clause (a) above. Licensee shall have the right to terminate this Agreement upon written notice to PUL in the event that PUL materially breaches this Agreement and fails to remedy such breach (to the extent susceptible to cure) within ten (10) business days after Licensee delivers written notice of such breach to PUL.

13.  SELL-OFF PERIOD. Upon expiration or termination of this Agreement, Licensee will have ninety (90) calendar days (“Sell-Off Period”) in which to sell off Products manufactured prior to such ninety (90)-day period on a non-exclusive basis, subject to Licensee’s payment obligations herein, provided that Licensee will not manufacture units of the Products in anticipation of the Sell-Off Period. Upon expiration of the sell-off period, at PUL’s option, Licensee will sell some or all remaining Products to PUL at direct manufacturing cost or will destroy the Products and provide to PUL a duly executed certificate of destruction. Notwithstanding the foregoing, Licensee will not have the right to a Sell-Off Period in the event that PUL terminates this Agreement as a result of Licensee’s default.

 

14.  REMEDIES: Each party agrees that upon any breach or default by the other party, the non-breaching party will be entitled to recover from the breaching party, in addition to any other remedies available to such party in law or in equity in the event of breach or default, reasonable attorneys’ fees, costs and expenses, including collection agency fees incurred in the enforcement of the provisions hereof.

 

15.  CONFIDENTIALITY: The terms and conditions of this Agreement are confidential and may not be disclosed by Licensee or PUL to any third party other than its employees who a need to know such terms and conditions and its professional advisors (including, without limitation, its attorneys, investment bankers and accountants) who are bound by ethics rules to maintain the confidentiality of the same or who have expressly agreed to maintain this confidentiality obligation, or except as otherwise required by law or legal process. Neither party will utilize confidential information provided by the other except as expressly permitted hereunder without the other’s prior written consent. Upon expiration or termination of this Agreement, Licensee will return to PUL any materials embodying PUL’s confidential information.

 

16.  CLEARANCES: Licensee will be solely responsible for obtaining all third party consents and permissions (and the payment of any costs and expenses in connection therewith) necessary in connection with the advertising, promotion, sale, distribution or other exploitation of the Products and, any advertising or promotion thereof.

 

17.  MISCELLANEOUS:

 

       (a)  Notices. Any notice or other communication will be effective only if given in writing, personally delivered or sent by facsimile, overnight courier, or mail, postage prepaid to the pertinent address(es) contained on the signature page of this Agreement (or such other address as either party will have designated by written notice to the other party), and evidenced by a delivery receipt. Notices directed to PUL must be given to both PUL’s representative (if designated by PUL) and PUL, and will not be effective until received by both PUL’s representative and PUL. Copies of all notices to PUL will be simultaneously sent to *. Any notice will be effective upon the date received by the recipient(s), as evidenced by the delivery receipt(s).

 

 

This Agreement, dated as of April 25, 2013 made by and between Pretty Ugly, LLC, doing business as Pretty Ugly, LLC (“Pretty Ugly”) at * and Boldface Licensing + Branding at _______________________ (hereinafter “Company”).

1.

APPROVAL GRANTED: Reference is made to the Merchandising License Agreement dated as of _______________  between Pretty Ugly, as Licensor, and _____________  granting Licensee the right to manufacture: (“See attached list of licensed articles”). Licensee has advised Pretty Ugly that Licensee desires to use the services of Company to manufacture the Licensed Articles. Subject to the terms and conditions herein, Pretty Ugly grants approval for Licensee to engage Company as the manufacturer of the Licensed Articles.

 

The approval granted under this Agreement shall be on a non-exclusive basis and be valid only during the term of the Merchandising License Agreement. This Agreement and the approval granted hereunder may be terminated by Pretty Ugly: (i) at any time by giving notice of termination in writing to Company, (ii) automatically without notice upon the expiration or sooner termination of the Merchandising License Agreement; or (iii) automatically upon breach of any terms of this Agreement by Company. Termination of this Agreement shall not affect or prejudice the rights of Pretty Ugly.

 

2.	REPRESENTATIONS, WARRANTIES, AND OBLIGATIONS OF COMPANY:

 

Company hereby represents, warrants, and agrees that:

 

(a)

Company shall only manufacture the Licensed Articles as and when directed by Licensee. Any act of manufacturing, marketing, distributing, or selling of products bearing the artistic work, design, trade mark, trade name, logo, or packaging of Pretty Ugly without the direction of the Licensee shall constitute infringement of the intellectual property rights of Pretty Ugly, in which event Company shall be liable to Pretty Ugly for all losses and damages suffered by Pretty Ugly. Pretty Ugly shall have the right to dispose of such unauthorized or infringing articles or products at its absolute discretion without payment or compensation to Company;

 

(b)

Company shall manufacture the Licensed Articles in accordance with all requirements imposed by Licensee, including without limitation any requirements regarding: (i) compliance with all laws, regulations, and governmental rules applicable to the Licensed Articles and/or their manufacture, and (ii) affixing notices such as copyright, trademark, patent, or other proprietary notices to the Licensed Articles as may be designated by Pretty Ugly through its Licensee;

 

By signing in the space provided below, the parties hereto have accepted and agreed to all the terms and conditions above.