**Exhibit 10.35**

** **

**RETAIL AND PROMOTIONAL LICENSEWARNER BROS. CONSUMER PRODUCTS INC.#14559-SCOO**

 

RETAIL AND PROMOTIONAL LICENSE AGREEMENT madeNovember 10, 2003, by and between Warner Bros. Consumer Products Inc.,whose address is 4000 Warner Blvd., Burbank, CA 91522 (hereinafter referred toas “LICENSOR”) and Poore Brothers, Inc., whose address is 3500 S. La CometaDrive, Goodyear, AZ 85338, Attention: Eric Kufel (hereinafter referred to as“LICENSEE”).

 

**WITNESSETH:**The parties heretomutually agree as follows:

 

**1.****                                     ****DEFINITIONS:**As used in this Agreement, the followingterms shall have the following respective meanings:

 

**(a)****                                 ****“Channels of Distribution”:**Licensee may conduct the Licensed Promotionand shall sell and distribute the Licensed Products and/or the LicensedPremiums through the following Channels of Distribution only (as such channelsare defined and numbered in Exhibit I attached hereto and incorporated hereinby reference):

 
|   | **CHANNEL** |   | **EXHIBIT 1  NUMBER** |
|--------|-------------|--------|-----------------------|

 

[*]

 

All other Channels ofDistribution defined in Exhibit I which are not specified above in thisParagraph 1(a) are specifically excluded from this Agreement.

 

[*]

 

(b)**                                ****“Guaranteed Consideration”:[*]**

 

(c)**                                 ****“Licensed Premium(s)”:**Licensee shall have the right to includepremiums incorporating the Licensed Property in association with the LicensedPromotion.

 

Any and all such premiumsshall be determined by the parties at a later date and shall be added to thisLicense Agreement pursuant to a written amendment, provided, however, thatLicensor shall have the absolute right to approve in writing all the elements(i.e. all premiums as well as all product packaging, advertising, etc.) priorto manufacture of said premiums.

 

For purposes of thissubparagraph, the term “premium” shall be defined as including, but notnecessarily limited to, combination sales, free or self-liquidating itemsoffered to the public in conjunction with the sale or promotion of a product orservice, including traffic building or continuity visits by theconsumer/customer, or any similar scheme or device, the prime intent of whichis to use the premiums in such a way as to promote, publicize and or sell theproducts, services or business image of the user of such item.

 

(d)                                 **“Licensed Products”:**Salted Snacks Category (incorporating theLicensed Property in its packaging and in the shapes of the individual snackitems within each package) defined as: Potato Chips, Potato Crisps, 2-D Potatoor Corn Snacks, 3-D Potato or Corn Snacks, Pretzels, Cheese Puffs, TortillaChips, Pellet Fried Snacks, Extruded Fried Snacks.

 

It is understood and agreedthat for the purposes of this Agreement, Salted Snacks Category shall excludethe following: pre-popped popcorn, nuts, crackers, and cookies.

 

(e)                                  **“Licensed Promotion”:**The right to utilize the Licensed Property inconnection with the advertising and promotion of the Licensed Products and withthe manufacture, distribution and advertisement of Licensed Premiums as setforth below:

 

(i)                                     Licensee shall invest [*] of its annual NetSales (as defined in Paragraph 4(b) below) of the Licensed Products towardstrade and consumer marketing support (“Annual Marketing Support”). [*] of suchAnnual Marketing Support investment shall be allocated towards television mediacommitments (the “TV Commitment”) on Time Warner networks each calendar year tosupport the Licensed Products. In the event, Licensor is no longer affiliatedwith television

 

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[*] = CERTAIN CONFIDENTIALINFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTEDAND FILED WITH THE SECURITIES AND EXCHANGE COMMISSION (“SEC”) PURSUANT TO SECRULE 24b-2 UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

 

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media outlets during theTerm, Licensee may utilize other television networks to fulfill the TVCommitment.

 

It is understood and agreedthat the Annual Marketing Support set forth above may include the Annual FSIRequirement set forth in separate license agreement #13770-WBLT betweenLicensee and Licensor.

 

(ii)                                  Licensee shall support the launch of theLicensed Product with a FSI during the 2004 calendar year.

 

(iii)                               Licensor shall allow Licensee to run a :05 to: 07 second tag at Licensee’s option themed with the Licensed Property on itsexisting television commercial spot featuring the Looney Tunes Property  licensed to Licensee under separate licenseagreement #13770-WBLT.

 

(f)**                                   ****“Licensed Property”:**The fictional cartoon characters as theyappear in the animated television series entitled “SCOOBY-DOO” as follows: **SCOOBY-DOO, FRED JONES, DAPHNE BLAKE, VELMA DINKLY,SHAGGY ROGERS, MYSTERY MACHINE**including said characters’representations, names, likenesses and all environmental settings, artwork andother materials associated therewith. Licensee further understands and agrees that the rights granted hereinare limited only to the cartoon characters set forth above and that any and allrights in, to or associated with any theatrical motion picture, movie of theweek, television special or direct to video containing the “SCOOBY-DOO” cartooncharacters, whether live action, animation or both, as well as with any sequelsthereto, are specifically excluded herefrom, it being understood that allrights in and to said property are reserved exclusively to Licensor for useand/or licensing as it deems appropriate to third parties of its choice atLicensor’s sole discretion. Furthermore, no film clips, stills, sound bites, voices, music or otheraudio clips are included herein. If Licensee wishes to use any such elements,Licensee must separately procure the necessary rights and any rights clearanceor related fees arising from same shall be at Licensee’s sole expense.

 

(g)**                                ****“Marketing Date”:**Date Licensed Products first shipped tocustomer, but not later than March 30, 2004.

 

(h)**                                ****“Royalty Rate”:**Licensee shall pay to Licensor the following sums:

 

(i)                                     [*] of Net Sales (as defined in Paragraph4(b) below) of all Licensed Products; and

 

(ii)                                  [*] of Net Purchase Price of all LicensedPremiums distributed by Licensee hereunder. The term “Net Purchase Price”herein shall mean the price actually paid by Licensee for any LicensedPremium(s) authorized and distributed hereunder. It is understood and agreedthat any Royalties paid to Licensor on Net Purchase Price of Premiums shall bein addition to and shall not offset the Guaranteed Consideration hereunder.

 

(g)**                                ****“Style Guide”:**Any materials provided by Licensor toLicensee which sets forth the style, format, characterization and any artworkdepicting the Licensed Property which has been approved by Licensor in writing.

 

(i)**                                    ****“Term”:**October 2, 2003 through [*].

 

(j)**                                    ****“Territory”:**United States (fifty states), Puerto Rico,United States Virgin Islands, and United States Military Bases.

 

2.                                       **GRANT OF LICENSE:**

 

(a)                                  Subject to the restrictions, 1imitations,reservations and conditions and Licensor’s approval rights set forth in thisAgreement, Licensor hereby grants to Licensee and Licensee hereby accepts forthe Term of this Agreement, a license to utilize the Licensed Property solelyon or in connection with the Licensed Promotion and the Licensed Products and/orLicensed Premiums throughout the Territory on an exclusive basis in the SaltedSnack Category as defined in Paragraph 1(d), except that sales of LicensedProducts and Licensed Premiums sold through Airport Gift and Other AirportStores shall be on a non-exclusive basis.

 

(b)                                 Without limiting any other approval rights ofLicensor as contained herein, no television commercials (animated or liveaction) may be utilized under this Agreement without the specific prior writtenapproval of Licensor.

 

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[*] = CERTAIN CONFIDENTIALINFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTEDAND FILED WITH THE SECURITIES AND EXCHANGE COMMISSION (“SEC”) PURSUANT TO SECRULE 24b-2 UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

 

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**3.****                                     ****RESERVATION OF RIGHTS;PREMIUMS:**

 

(a)                                  Licensor reserves all rights not expresslyconveyed to Licensee hereunder, and Licensor may grant licenses to others touse the Licensed Property, artwork and textual matter in connection with otheruses, services and products without limitation.

 

(b)                                 Notwithstanding anything to the contrarystated herein, Licensor, for itself and its affiliates, specifically reservesthe right, without limitation throughout the world, to itself use, or licenseany third party(s) of its choice to use the Licensed Property for themarketing, manufacture, distribution and sale of products and/or the promotionof services similar or identical to those licensed herein in Paragraphs l(c)and 1(d) above for sale through any catalogue(s) or online website produced ordistributed by or on behalf of Licensor or its affiliated companies, or forsale or distribution in any theaters, arenas or restaurants or for sale ordistribution in connection with any home video product, including DVD or otherformats, or for sale or distribution in the retail stores known as “WarnerBros. Studio Stores” and any other retail stores operated by or on behalf ofLicensor or its affiliated companies, or for sale or distribution in anytheme/amusement parks operated by or on behalf of Licensor and its affiliatedcompanies, including without limitation, the Six Flags and Movie World parks orits licensees, Six Flags, Movie World, or their affiliated companies. Inaddition, Licensor reserves the right to allow Six Flags and Movie World tomanufacture (or have manufactured by a third party) products similar oridentical to those licensed herein for distribution or sale in theme and/oramusement parks owned or operated by Six Flags and/or Movie World. Further,Licensor reserves the right to use, or license others to use, and/ormanufacture products similar or identical to those licensed herein for use aspremiums. Nothing contained herein shall be construed to mean that Licensee isgranting a license to Licensor to utilize Licensee’s proprietary and/orpatented technology.

 

(c)                                  Licensee specifically understands and agreesthat no rights are granted herein with respect to the Warner Bros. “shield”logo or trademark, or any other trademark(s), logo(s) or copyrights owned byLicensor other than those specifically set forth above in the LicensedProperty, it being understood that all rights in and to said properties arereserved exclusively to Licensor for use and/or licensing as it deemsappropriate to third party(s) of its choice. Notwithstanding the foregoing Licensee may use the Warner Bros. shieldlogo in connection with the legal line referenced in Paragraph 8(d) below asinstructed by Licensor’s Brand Assurance Department.

 

(d)                                 Licensee agrees that it will not use, orknowingly permit the use of, and will exercise due care that its customerslikewise will refrain from the use of, the Licensed Products as premiums or theLicensed Premiums as products for retail sale, except with the prior writtenconsent of Licensor.

 

4.                                       **CONSIDERATION:**

 

(a)                                  The Guaranteed Consideration paid by Licenseeas set forth above shall be applied against such royalties as are, or havebecome, due to Licensor. No part of such Guaranteed Consideration shall berepayable to Licensee. Royalties earned in excess of the GuaranteedConsideration applicable to the Term hereof shall not offset any GuaranteedConsideration required in respect of the succeeding renewal term (if any);likewise, royalties earned in excess of the Guaranteed Consideration applicableto the renewal term (if any) shall not offset any Guaranteed Considerationapplicable to any prior term.

 

(b)                                 Royalty Payments: Licensee shall pay toLicensor a sum equal to the Royalty Rate as set forth above of (i) all NetSales by Licensee of the Licensed Products and/or (ii) Net Purchase Price ofthe Licensed Premiums covered by this Agreement. The term “net sales” hereinshall mean [*]. No costs incurred in the manufacture, sale, distribution,advertisement, or exploitation of the Licensed Products shall be deducted fromany royalties payable by Licensee.

 

(c)                                  Royalties shall be payable concurrently withthe periodic statements required in Paragraph 5(a) hereof, except to the extentoffset by the Guaranteed Consideration theretofore remitted.

 

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[*] = CERTAIN CONFIDENTIALINFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTEDAND FILED WITH THE SECURITIES AND EXCHANGE COMMISSION (“SEC”) PURSUANT TO SECRULE 24b-2 UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

 

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**5.****                                     ****PERIODIC STATEMENTS:**

 

(a)                                  Within thirty (30) days after the end of thefirst fiscal quarter after the date of execution of the License Agreement andpromptly on the 25th day after the end of each fiscal quarter thereafter,Licensee shall furnish to Licensor complete and accurate statements certifiedto be accurate by Licensee, or if a corporation, by an officer of Licensee,showing the (i) number of units; (ii) country in which manufactured, sold,distributed and/or to which shipped; (iii) Description (as such term is definedbelow) of the Licensed Products and/or Licensed Premiums; (iv) gross salesprice or Net Purchase Price (if applicable); and (v) itemized deductions fromgross sales price and net sales price (if applicable) together with any returnsmade during the preceding fiscal quarter. Such statements shall be in suchformats as Licensor shall reasonably require (which formats may be amended byLicensor from time to time) and shall be furnished to Licensor whether or notany of the Licensed Products and/or Licensed Premiums have been distributedduring fiscal quarters to which such statements refer. Receipt or acceptance byLicensor of any of the statements furnished pursuant to this Agreement or ofany sums paid hereunder shall not preclude Licensor from questioning thecorrectness thereof at any time, and in the event that any inconsistencies ormistakes are discovered in such statements or payments, they shall immediatelybe rectified and the appropriate payments made by Licensee. Upon demand ofLicensor, Licensee shall at its own expense, but not more than once in anytwelve (12) month period, furnish to Licensor a detailed statement by anofficer of Licensee showing the (i) number of units; (ii) country in whichmanufactured, sold, distributed and/or to which shipped; (iii) Description ofthe Licensed Products and/or Licensed Premiums; (iv) gross sales price or NetPurchase Price (if applicable); and (v) itemized deductions from gross salesprice and net sales price (if applicable) of the Licensed Products and/orLicensed Premiums covered by this Agreement distributed and/or sold by Licenseeup to and including the date upon which Licensor has made such demand. Forpurposes of this Paragraph 5(a), the term “Description” shall mean a detaileddescription of the Licensed Products and/or Licensed Premiums including thenature of each of the Licensed Products and/or Licensed Premiums, any and allnames and likenesses, whether live actors or animated characters, from theLicensed Property utilized on the Licensed Products and/or Licensed Premiumsand/or any related packaging and/or wrapping material, and any other componentsof the Licensed Property utilized on the Licensed Products and/or LicensedPremiums and/or any related packaging and/or wrapping material. In the eventLicensor is responsible for the payment of any additional third partyparticipations based on Licensee not reporting by character name and likenessas provided above, Licensee shall be responsible for reimbursing Licensor forthe full amount of all such third party claims, including without limitationthe participation itself, interest, audit and reasonable attorneys’ fees.Licensee understands and agrees that it is a material term and condition ofthis Agreement that Licensee include the Description on all statements. In theevent Licensee fails to do so, Licensor shall have the right to terminate thisAgreement, in accordance with the provisions of Paragraph 14 herein.

 

(b)                                 On all statements and payments requiredhereunder, Licensee will reference the contract number(s) set forth on thefirst page of this Agreement (and/or such other contract number(s) designatedby Licensor in a written notice to Licensee). If Licensee chooses to deliverstatements by e-mail, Licensee will deliver such statements to the followinge-mail address: wbcproyrep@warnerbros.com.

 

If Licensee chooses todeliver payments by wire transfer, Licensee will deliver such payments asfollows:

 

**BANK OF AMERICA**

1850 Gateway Blvd. #5693

Concord, CA 94520

USA

 

Account Number: 1257-000503

ABA #: 121000358

 

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Swift Code: BofA US 6S

Account Name: Warner Bros.

Reference: WBCP / LicenseeName / Contract Number

 

If the United States PostalService is used to deliver statements and/or payments, Licensee will deliversuch statements and/or payments to the following:

 

**WARNER BROS. CONSUMER PRODUCTS INC.**

21477 Network Place

Chicago, IL 60673-1214

USA

 

If Federal Express or anyother courier service is used to deliver statements and/or payments, Licenseewill deliver such statements and/or payments to the following:

 

**BANK ONE**

Attention WBCP lockbox#21477

525 West Monroe

8th Floor Mail Room

Chicago, IL 60661

Telephone Number312-732-5500

 

(c)                                  Any payments which are made to Licensorhereunder after the due date required therefore, shall bear interest at thethen current prime rate, as published in The Wall Street Journal (New Yorkedition), plus three (3%) percent (or the maximum rate permissible by law, ifless) from the date such payments are due to the date of payment. Licensor’sright hereunder to interest on late payments shall not preclude Licensor fromexercising any of its other rights or remedies pursuant to this Agreement orotherwise with regard to Licensee’s failure to make timely remittances.

 

**6.****                                     ****BOOKS AND RECORDS:**

 

(a)                                  Licensee shall keep, maintain and preserve(in Licensee’s principal place of business) for at least two (2) yearsfollowing expiration or termination of the Term of this Agreement or anyrenewal(s) hereof (if applicable), complete and accurate records of accountsincluding, without limitation, purchase orders, inventory records, invoices,correspondence, banking and financial and other records pertaining to thevarious items required to be submitted by Licensee as well as to ensureLicensee’s compliance with local laws as required pursuant to Paragraph 13(k)hereof. Such records and accounts shall be available for inspection and auditup to two (2) times per year during or after the Term of this Agreement or anyrenewal(s) hereof (if applicable) during reasonable business hours and uponreasonable notice by Licensor or its nominees. Licensee agrees not to cause anyinterference with Licensor or nominees of Licensor in the performance of theirduties. During such inspections and audits, Licensor shall have the right totake extracts and/or make copies of Licensee’s relevant records as it deemsreasonably necessary. Licensor agrees to keep confidential all information andcopies obtained by Licensor pursuant to this Paragraph other than with respectto required disclosures in connection with disputes between the parties or asotherwise required by law, court order or governmental process.

 

(b)                                 The exercise by Licensor in whole or in part,at any time of the right to audit records and accounts or of any other rightherein granted, or the acceptance by Licensor of any statement or statements orthe receipt and/or deposit by Licensor, of any payment tendered by or on behalfof Licensee shall be without prejudice to any rights or remedies of Licensorand such acceptance, receipt and/or deposit shall not preclude or preventLicensor from thereafter disputing the accuracy of any such statement orpayment.

 

(c)                                  If pursuant to its right hereunder Licensorcauses an audit and inspection to be instituted which thereafter discloses adeficiency between the amount found to be due to Licensor and the amountactually received or credited to Licensor, then Licensee shall, upon Licensor’sdemand, promptly pay the deficiency, together with interest thereon at the thencurrent prime rate from the date such amount became due until the date ofpayment, and, if the deficiency is more than five percent (5%) of all paymentsmade by Licensee during the period covered by

 

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the audit, then Licenseeshall pay the reasonable costs and expenses of such audit and inspection.

 

7.                                       **INDEMNIFICATIONS:**

 

(a)                                  During the Term, and continuing after theexpiration or termination of this Agreement, Licensor shall indemnify Licenseeand its affiliates and shall hold them harmless from any loss, liability,damage, cost or expense, including reasonable attorneys’ fees, arising out ofany claims or suits which may be brought or made against Licensee and itsaffiliates by reason of the breach by Licensor of the warranties orrepresentations as set forth in Paragraph 12 hereof, provided that Licenseeshall give prompt written notice, and full cooperation and assistance toLicensor relative to any such claim or suit and provided, further, thatLicensor shall have the option to undertake and conduct the defense of any suitso brought. Licensee shall not, however, be entitled to recover for lostprofits. Licensee shall cooperate fullyin all respects with Licensor inthe conduct and defense of said suit and/or proceedings related thereto.

 

(b)                                 During the Term, and continuing after the expirationor termination of this Agreement, Licensee shall indemnify Licensor and each ofits affiliates, and shall hold them harmless from any loss, liability, damage,cost or expense including reasonable attorneys fees, arising out of any claimsor suits which may be brought or made against Licensor or any of itsaffiliates, by reason of: (i) any breach of Licensee’s covenants andundertakings hereunder; (ii) any unauthorized use by Licensee of the LicensedProperty; (iii) any use of any trademark or copyright on or in connection withthe Licensed Products, the Licensed Premiums or the Licensed Promotion (excepttrademarks or copyrights in the Licensed Property used in accordance with theterms of this Agreement), design, patent, process, method or device on or inconnection with the Licensed Products, the Licensed Premiums or the LicensedPromotion; (iv) Licensee’s non-compliance with any applicable federal, state orlocal laws or with any other applicable regulations; and (v) any allegeddefects and/or inherent dangers (whether obvious or hidden) in the LicensedProducts and/or Licensed Premiums, or the use thereof. Provided, however, thatLicensor shall give prompt written notice, and full cooperation and assistanceto Licensee relative to any claim or suit and provided, further, that Licenseeshall have the option to undertake and conduct the defense of any suit sobrought. Licensor shall cooperate fully in all respects with Licensee in theconduct and defense of said suit and/or proceedings related thereto. Provided,however, that Licensor shall give prompt written notice, and full cooperation and assistance to Licensee relative to any such claim orsuit and provided, further, that Licensee shall have the option to undertakeand conduct the defense of any suit so brought. Licensor shall cooperate fully in all respects with Licensee in the conduct and defense of said suitand/or proceedings related thereto.

 

(c)                                  With regard to Paragraph 7(b) above, Licenseeagrees to obtain, at its own expense, Commercial General Liability Insurance,including product liability and contractual liability coverage providingadequate protection for Licensor and each of its affiliates and Licenseeagainst any such claims or suits in amounts no less than three million dollars($3,000,000) per occurrence, combined single limits. Simultaneously with theexecution of this Agreement, Licensee undertakes to submit to Licensor a fullypaid policy or certificate of insurance naming Licensor and each of itsaffiliates as additional insured parties and, requiring that the insurer shallnot terminate or materially modify such policy or certificate of insurancewithout written notice to Licensor at least thirty (30) days in advancethereof. Such insurance shall at all times be primary and not contributory withany insurance carried by Licensor or any of their affiliates. Further thedelivery of the policy or certificate, as provided in this Paragraph 7(c) arematerial obligations of Licensee.

 

**8.****                                     ****ARTWORK; COPYRIGHT ANDTRADEMARK NOTICES:**

 

(a)                             The Licensed Property shall be displayed orused only in such form and in such manner as has been specifically approved inwriting by Licensor in advance and Licensee undertakes to assure usage of thetrademark(s) and character(s) solely as approved hereunder. Licensee furtheragrees and acknowledges that any and all Artwork (defined below) created,utilized, approved and/or authorized for use hereunder by Licensor whichotherwise features or includes the Licensed Property shall be owned in itsentirety exclusively by Licensor excluding intellectual property rights in andto any elements that are owned by Licensee or

 

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licensed by Licensee from athird party and do not include the Licensed Property. “Artwork” as used hereinshall include, without limitation, all pictorial, graphic, visual, audio,audio-visual, digital, literary, animated, artistic, dramatic, sculptural,musical or any other type of creations and applications, whether finished ornot, including, but not limited to, animation (including, without limitation,animation produced by Warner Bros. Animation), drawings, designs, sketches,images, tooling and tooling aids, illustrations, film, video, electronic,digitized or computerized information, software, object code, source code,on-line elements, music, text, dialogue, stories, visuals, effects, scripts,voiceovers, logos, one-sheets, promotional pieces, packaging, displaymaterials, printed materials, photographs, interstitials, notes, shot logs,character profiles and translations, produced by Licensee or for Licensee,pursuant to this Agreement. Licensor reserves for itself or its designees allrights to use any and all Artwork created, utilized and/or approved hereunderwithout limitation excluding intellectual property rights in and to any elementsthat are owned by Licensee or licensed by Licensee from a third party and do noinclude the Licensed Property. Nothing contained herein shall be construed tomean that Licensee is granting a license to Licensor to utilize Licensee’sproprietary, patented technology, and/or intellectual property rights whetheralone or in combination with the Licensed Property.  Notwithstanding the foregoing, the parties agree that the term“Artwork” excludes any elements of the Licensed Products and other materials createdin connection herewith, and all related intellectual property rights,independently created by Licensee, solely or jointly with any third party, orlicensed to Licensee from a third party, that do not use, exploit or derivefrom any of the Licensed Property, including, for example, any original,independently created Licensee artwork used in Licensee’s packaging,advertising, and products that does not use, exploit or derive from any of theLicensed Property.

 

(b)                                 Licensee acknowledges that, as betweenLicensor and Licensee, the Licensed Property, Artwork and all derivative worksthereof, and all other depictions, expressions and derivations thereof,excluding intellectual property rights in and to any elements that are owned byLicensee or licensed by Licensee from a third party and do not include theLicensed Property, and all copyrights, trademarks and other proprietary rightstherein are owned exclusively by Licensor and Licensee shall have no interestin or claim thereto, except for the limited right to use the same pursuant tothis Agreement and subject to its terms and conditions.

 

Licensor acknowledges that,as between Licensor and Licensee, the Licensee’s intellectual property and allderivative works thereof, and all copyrights, trademarks and other proprietaryrights therein are owned exclusively by Licensee and Licensor shall have notinterest in or claim thereto.

 

Licensee agrees andacknowledges that any Artwork created by Licensee or for Licensee hereunder isa “work made for hire” for Licensor under the U.S. Copyright Act, and any andall similar provisions of law under other jurisdictions, and that Licensor isthe author of such works for all purposes, and that Licensor is the exclusiveowner of all the rights comprised in the undivided copyright and all renewals,extensions and reversions therein, in and to such works in perpetuity andthroughout the universe. Licensee hereby waives and releases in favor ofLicensor all rights (if any) of “droit moral,” rental rights and similar rightsin and to the Artwork (the “Intangible Rights”) and agrees that Licensor shallhave the right to revise, condense, abridge, expand, adapt, change, modify, addto, subtract from, re-title, re-draw, recolor, or otherwise modify the Artwork,without the consent of Licensee. Licensee hereby irrevocably grants, transfersand assigns to Licensor all right, title and interest, including copyrights,trademark rights, patent rights and other proprietary rights, it may have inand to the Artwork and all derivative works, in perpetuity and throughout theuniverse. Licensee acknowledges that Licensor shall have the right to terminatethis Agreement in the event Licensee asserts any rights (other than thosespecifically granted pursuant to this Agreement) in or to the Licensed Propertyor Artwork.

 

Licensee hereby warrantsthat any and all work created by Licensee under this Agreement apart from thematerials provided to Licensee by Licensor is and shall be wholly original withor fully cleared by Licensee and shall not copy or otherwise infringe therights of any third parties, and Licensee hereby indemnifies Licensor and willhold Licensor harmless from any such claim of infringement or otherwiseinvolving Licensee’s performance hereunder, under the terms of Paragraph 7(b).At the request of Licensor, Licensee shall execute such form(s) of assignmentof copyright or other papers as Licensor may reasonably request in order to

 

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confirm and vest in Licensorthe rights in the properties as provided for herein. In addition, Licenseehereby appoints Licensor as Licensee’s Attorney-in-Fact to take such actionsand to make, sign, execute, acknowledge and deliver all such documents as mayfrom time to time be necessary to confirm in Licensor, its successors andassigns, all rights granted herein. If any third party makes or has made anycontribution to the creation of Artwork authorized for use hereunder, Licenseeagrees to obtain from such party a full confirmation and assignment of rightsso that the foregoing rights shall vest fully in Licensor, in the Form of theContributor’s Agreement attached hereto as Exhibit 2 and by this reference madea part hereof, prior to commencing work, and subject to the prior writtenapproval of Licensor, ensuring that all rights in the Artwork and LicensedProperty arise in and are assigned to Licensor. Promptly upon entering intoeach such Contributor’s Agreement, Licensee shall give Licensor a copy of suchContributor’s Agreement. Licensee assumes all responsibility for such partiesand agrees that Licensee shall bear any and all risks arising out of orrelating to the performance of services by them and to the fulfillment of theirobligations under the Contributor’s Agreement.

 

(c)                                  Upon expiration or termination of thisAgreement for any reason, or upon demand by Licensor at any time, Licenseeshall promptly deliver to Licensor all Artwork or Licensed Property, whetherfinished or not, including drawings, drafts, sketches, illustrations, screens,data, digital files and information, copies or other items, information orthings created in the course of preparing the Licensed Property, excluding anyelements that are owned by Licensee or licensed by Licensee from a third partyand all materials provided to Licensee by Licensor hereunder, or, at Licensor’soption and instruction, shall destroy some or all of the foregoing and shallconfirm to Licensor in writing that Licensee has done so. Licensee shall notuse such Artwork or Licensed Property, items, information or things, material,for any purpose other than is permitted under this Agreement. For any Licenseeelements and/or intellectual property that utilize Licensed Property or Artworkin whole or in part, Licensee shall destroy such elements and/or intellectualproperty upon expiration or termination of this Agreement for any reason andshall confirm to Licensor in writing that Licensee has done so.

 

(d)                                 Licensee shall, within thirty (30) days ofreceiving an invoice, pay Licensor for Artwork executed for Licensee byLicensor (or by third parties under contract to Licensor) for use in thedevelopment of the Licensed Products and/or Licensed Premiums and any relatedpackaging, display and promotional materials at Licensor’s prevailingcommercial art rates. The foregoing shall include any Artwork that, inLicensor’s opinion, and subject to Licensee’s written approval, is necessary tomodify Artwork initially prepared by Licensee and submitted for approval.Estimates of Artwork charges are available upon request. Licensor shall submitto Licensee, for Licensee’s prior approval, any increases of ten percent (10%)or more above the estimate originally approved by Licensee, and Licensee shallnot be obligated to pay for such increased cost if Licensee has not providedits approval thereof.

 

(e)                                  Licensee shall cause to be imprinted,irremovably and legibly on the packaging of each Licensed Product and/orLicensed Premium manufactured, distributed or sold under this Agreement, andall printed and/or televised advertising, promotional, packaging and wrapping materialwherein the Licensed Property appears, the following copyright and/or trademarknotice(s) or such other notice as may be approved by Licensor:

 

TM& © **Hanna-Barbera.**

**(s03)**

 

(The year date shall be asinstructed by Licensor.)

 

(f)                                    In no event shall Licensee use, in respect tothe Licensed Products and/or Licensed Premiums and/or in relation to anyadvertising, promotional, packaging or wrapping material, any copyright ortrademark notices which shall conflict with, be confusing with, or negate, any noticesrequired hereunder by Licensor in respect to the Licensed Property.

 

(g)                                 Licensee agrees to deliver to Licensor freeof cost six (6) of each of the Licensed Products and/or Licensed Premiumstogether with their packaging and wrapping material for trademark registrationpurposes in compliance with applicable laws, simultaneously upon distributionto the public. Any copyrights or trademarks with respect to the LicensedPromotion or Licensed Products and/or Licensed Premiums shall be procured byand for the benefit of Licensor and

 

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at Licensor’s expense.Licensee further agrees to provide Licensor with the date of the first use ofthe Licensed Products and/or Licensed Premiums in interstate and intrastatecommerce.

 

(h)                                 Licensee shall assist Licensor, at Licensor’sexpense, in the procurement, protection, and maintenance of Licensor’s rightsto the Licensed Property. Licensor may, in its sole discretion, commence orprosecute and effect the disposition of any claims or suits relative to theimitation, infringement and/or unauthorized use of the Licensed Property eitherin its own name, or in the name of Licensee, or join Licensee as a party in theprosecution of such claims or suits. Licensee agrees to cooperate fully withLicensor in connection with any such claims or suits and undertakes to furnishfull assistance to Licensor in the conduct of all proceedings in regardthereto. Licensee shall promptly notify Licensor in writing of any knowninfringements or imitations or unauthorized uses by others of the LicensedProperty, on or in relation to promotions similar to the Licensed Promotion orproducts identical to similar to or related to the Licensed Products and/orLicensed Premiums. Licensor shall in its sole discretion have the right tosettle or effect compromises in respect thereof. Licensee shall not instituteany suit or take any action on account of such infringements, imitations orunauthorized uses.

 

(i)                                     Licensee acknowledges receipt of Licensor’sStyle Guide and undertakes to utilize the depictions of the Licensed Property(and, if authorized by Licensor, any emblems and/or devices associatedtherewith) in the form as set forth therein on all Licensed Products as well asadvertising, promotional, packaging or wrapping materials. In the event thatLicensee desires to utilize renditions which vary from those as set forth inthe Style Guide, Licensee shall make a request to Licensor in that connection,and if the request is approved, Licensor shall prepare appropriate Artwork anddeliver same to Licensee. Licensee shall utilize such Artwork solely in theform furnished by Licensor, if Licensee decides to use such Artwork inLicensee’s sole discretion, shall pay a reasonable fee to Licensor in respectthereof not later than one month after delivery thereof by Licensor toLicensee, and such fee shall be additional to and not offset by any GuaranteedConsideration referred to in Paragraph 1(b) hereinabove.

 

(j)                                     If Licensee is unable or unwilling to useartwork from the Licensor’s Style Guide and if Licensor is unable or unwillingto provide Licensee with Artwork as described in subparagraph (h) above and ifLicensor expressly consents in writing, which consent shall not be unreasonablywithheld, but may be subject to such conditions as Licensor may elect in itssole discretion, then and only then may the Licensee create or procure thecreation of Artwork. In any event, Licensee shall assign or procure theassignment in writing of all rights, copyright and otherwise, in and to anyArtwork, and it is intended that this provision shall take effect as anassignment of prospective copyrights in Artwork yet to be created by or for.The Licensee further undertakes to take all and any steps necessary for therecordal or registration of the assignment(s) referred to hereinabove.

 

**9.****                                     ****APPROVALS AND QUALITYCONTROLS:**

 

(a)                                  Licensee agrees to strictly comply andmaintain compliance with the quality standards, specifications and rights ofapproval of Licensor in respect to any and all usage of the Licensed Propertyon or in relation to the Licensed Products and/or Licensed Premiums throughoutthe Term of this Agreement and any renewals or extensions thereof (ifapplicable). Licensee agrees to furnish to Licensor free of cost for itswritten approval as to quality and style, samples of each of the LicensedProducts and/or Licensed Premiums, together with their packaging, hangtags, andwrapping material, as follows in the successive stages indicated: (i) roughsketches/layout concepts; (ii) finished artwork or final proofs; (iii)pre-production samples or strike-offs; and (iv) finished products, includingpackaged samples.

 

(b)                                 No Licensed Products and/or Licensed Premiumsand no material utilizing the Licensed Property shall be manufactured, sold,distributed or promoted by Licensee without prior written approval. In additionto the foregoing, Licensee understands that it shall furnish to Licensor,scripts and storyboards of any proposed media use of the Licensed Property asmay be authorized hereunder, in sufficient time for Licensee to make allrevisions which Licensor in its sole discretion may request. Licensee may,subject to Licensor’s prior written approval, use textual and/or pictorialmatter pertaining to the Licensed Property on promotional, display andadvertising material as may, in its reasonable judgment, promote the sale ofthe Licensed

 

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Products and/or LicensedPremiums. All advertising and promotional materials relating to the LicensedPromotion and Licensed Products and/or Licensed Premiums must be submitted tothe Licensor for its written approval at the following stages appropriate tothe medium used. For print materials, submissions are to be made at thefollowing stages: (a) rough sketches or layout concepts; (b) finished artworkor final proofs; and (c) finished materials. For television commercials, ifapproved by Licensor, submissions are to be made at the following stages: (a)initial concept; (b) storyboard, including written text; (c) pencil tests andvoice-overs for animation and/or selection of performers for live action; and(d) a cassette of the finished commercial prior to air date. For radio or otheraudio materials, if approved by Licensor, submissions are to be made at thefollowing stages: (a) initial concept; (b) script; (c) voice-overs; and (d) acassette of the finished commercial prior to the air date.

 

(c)                                  Approval or disapproval shall lie inLicensor’s sole discretion. Licensor shall use its best efforts to approve,disapprove or otherwise comment upon any items submitted to it for approval asmay be required hereunder within ten (10) business days after receipt by it ofsuch item(s). In the event that Licensor fails to approve, disapprove orotherwise comment upon the item(s) so submitted within said ten (10) businessdays, then Licensee shall have the right to notify Licensor of such failure byfacsimile (evidenced by written confirmation of facsimile transmittal) andLicensor shall thereafter be required to approve, disapprove or otherwisecomment upon the item(s) so submitted within seven (7) business days afterreceipt by it of said facsimile and failure to do so shall be deemed approvalof any item(s) so submitted. Any Licensed Products and/or Licensed Premiums notso approved in writing shall be deemed unlicensed and shall not be manufactured,distributed or sold. If any unapproved Licensed Products and/or LicensedPremiums are being distributed or sold, Licensor may, together with otherremedies available to it including, but not limited to, immediate terminationof this Agreement, require such Licensed Products and/or Licensed Premiums tobe promptly withdrawn from the market and to be destroyed, such destruction tobe attested to in a certificate signed by an officer of Licensee.

 

(d)                                 Any material modification of a Licensed Productand/or Licensed Premium must be submitted in advance for Licensor’s writtenapproval as if it were a new Licensed Product and/or Licensed Premium. Anychange involving the Artwork appearing on a Licensed Product shall constitute amaterial modification of such Licensed Product. Approval of a Licensed Productand/or Licensed Premium which uses particular artwork does not imply approval of such artwork for use with a different LicensedProduct and/or Licensed Premium.

 

(e)                                  Licensed Products and/or Licensed Premiumsmust conform in all material respects to the final production samples approvedby Licensor. If in Licensor’s reasonable judgement, the quality of a LicensedProduct and/or Licensed Premium originally approved has deteriorated in laterproduction runs, or if a Licensed Product and/or Licensed Premium has otherwisebeen altered, Licensor may, in addition to other remedies available to it,require that such Licensed Product and/or Licensed Premium be immediatelywithdrawn from the market.

 

(f)                                    Licensee shall permit Licensor to inspectLicensee’s manufacturing operations, testing and manufacturing payroll records(including those operations and relevant records of any supplier ormanufacturer approved pursuant to Paragraph 10 (b) below) with respect to theLicensed Products and/or Licensed Premiums.

 

(g)                                 If any changes or modifications are requiredto be made to any material submitted to Licensor for its written approval inorder to ensure compliance with Licensor’s specifications or standards ofquality, Licensee agrees promptly to make such changes or modifications.

 

(h)                                 Subsequent to final approval, no fewer thantwenty-four (24) production samples of Licensed Products and/or LicensedPremiums will be sent to Licensor, to ensure quality control simultaneouslyupon distribution to the public. In addition, Licensor shall have the right topurchase any and all Licensed Products and/or Licensed Premiums in any quantityat the maximum discount price Licensee charges its best customer, assumingsimilar quantities and shipment terms.

 

(i)                                     To avoid confusion of the public, Licenseeagrees not to associate other characters or properties with the LicensedProperty on the Licensed Products and/or Licensed Premiums or in any packaging,promotional or display materials unless Licensee receives Licensor’s prior

 

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written approval.Furthermore, Licensee agrees not to use the Licensed Property (or any componentthereof) on any business sign, business cards, stationery or forms, nor as partof the name of Licensee’s business or any division thereof.

 

(j)                                     Pursuant to this Agreement, Licensee shalluse its reasonable commercial efforts to notify its customers of therequirement that Licensor has the right to approve all promotional, display andadvertising materials that incorporate the Licensed Property. It is understoodand agreed that the use of images featuring the Licensed Product and itsapproved packaging in promotional, display and advertising materials isexcluded from this requirement, provided, however, none of the LicensedProperty is utilized separately from the Licensed Product and its packaging.

 

(k)                                  Any request by Licensee to use animation oranimated character voices in Licensed Products or related packaging oradvertising materials (including, without limitation, television or radiocommercials) is subject to Licensor’s prior written approval. If the requesteduse is so approved by Licensor, such animation or character voices will beproduced for or provided to Licensee by Warner Bros. Animation or other thirdparties identified and approved by Licensor, and will be subject to suchadditional fees and other terms set forth in a separate agreement (oragreements) between Licensee and Warner Bros. Animation and/or other thirdparties identified and approved by Licensor. In the event any video or soundclips (“Clips”) or stills shots (“Stills”) from any television series or motionpicture are approved by Licensor in writing for use by Licensee in LicensedProducts or related packaging or advertising materials (including, withoutlimitation, television or radio commercials), such Clips or Stills will beprovided by Warner Bros. Television and/or Warner Bros. Theatrical, asapplicable, subject to the terms set forth in Paragraph 9 (1) below and, ifrequired by Licensor, pursuant to such additional fees and other terms setforth in a separate agreement (or agreements) between Licensee and Warner Bros.Television and/or Warner Bros. Theatrical. Any payment made or payable to thirdparties (including, without limitation, Warner Bros. Animation, Warner Bros.Television and Warner Bros. Theatrical) with respect to such animation,character voices, Clips or Stills will be in addition to and will not offsetthe Guaranteed Consideration required to be paid by Licensee hereunder.

 

(l)                                     Licensee will not make or authorize anyreproduction whatsoever of any Clips or Stills, in whole or in part, except inconnection with the Licensed Products and/or related packaging or advertisingmaterials as such may be approved for use by Licensor as set forth above inParagraph 9(k). Licensee will not have the right to edit or otherwise alter theClips or Stills, or any portion thereof, except as specifically approved inwriting by Licensor. Licensee will be solely responsible for, and will obtain,all other authorizations, consents and releases, including, but not limited to,authorization of any talent appearing in, or whose voice may be used in, theClips or Stills, and will pay all reuse fees and other compensation as may berequired by applicable collective bargaining or individual contracts or by law.Without limiting the foregoing, if any music is included in the Clips asexhibited, Licensee will obtain a11 necessary music synchronization andperformance rights from the copyright proprietors of such music and such otherpersons or entities, including performing rights societies, as may own orcontrol the rights thereto and will obtain all necessary master recordinglicenses required in connection with any music included in the soundtrack ofthe Clips. Licensee’s use of the Clips or Stills will not affect Licensor’scontinued and separate copyright ownership of the Clips or Stills or theproduction from which the Clips or Stills were taken, or Licensor’s continuedownership of the trademarks and any other intellectual property rightsassociated with any characters or other elements appearing or embodied in theClips or Stills or such production. Licensee will hold any copyrights in trustfor Licensor insofar as the Clips or Stills are concerned (and, upon Licensor’srequest, the Licensed Products and/or related packaging or advertisingmaterials will bear a specific copyright notice for the Clips or Stills in aform prescribed by Licensor and will contain appropriate credit to Licensor asrequired by Licensor, e.g., “Clips from the Motion Picture used courtesy ofWarner Bros. Entertainment Inc.”). Promptly upon completion of the approveduse, Licensee will, at its own expense, return to Licensor all Clip and/orStill related materials delivered to Licensee by Licensor, including withoutlimitation, preprint material, positive prints and any video copies of Clips.

 

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(m)                               Licensor’s approval of Licensed Productsand/or Licensed Premiums (including, without limitation, the Licensed Productsand/or Licensed Premiums themselves as well as promotional, display andadvertising materials) shall in no way constitute or be construed as anapproval by Licensor of Licensee’s use of any trademark, copyright and/or otherproprietary materials not owned by Licensor.

 

**10.****                              ****DISTRIBUTION; SUBLICENSEMANUFACTURE:**

 

(a)**                                 **Within the Channels of Distribution set forthin Paragraph 1(a) hereof, Licensee shall sell the Licensed Products/LicensedPremiums to wholesalers, distributors or retailers for sale or resale and distributiondirectly to the public. If Licensee sells or distributes the LicensedProducts/Licensed Premiums at a special price, directly or indirectly, toitself, including without limitation, any subsidiary of Licensee or to anyother person, firm, or corporation affiliated with Licensee (including anyaffiliated distributors) or its officers, directors or major stockholders, forultimate sale to unrelated third parties, Licensee shall pay royalties withrespect to such sales or distribution, based upon the price generally chargedthe trade by Licensee.

 

(b)                                 Licensee shall not be entitled to sublicenseany of its rights under this Agreement. In the event Licensee is not themanufacturer of the Licensed Products and/or Licensed Premiums, Licensee shall,subject to the prior written approval of Licensor, which approval shall not beunreasonably withheld, be entitled to utilize a third party manufacturer inconnection with the manufacture and production of the Licensed Products and/orLicensed Premiums, provided that such manufacturer shall execute a letter inthe form of Exhibit 3 attached hereto and by this reference made a part hereofIn such event, Licensee shall remain primarily obligated under a11 of theprovisions of this Agreement and any default of this Agreement by suchmanufacturer shall be deemed a default by Licensee hereunder. In no event shallany such third party manufacturer agreement include the right to grant anyrights to subcontractors.

 

11.                                 **GOODWILL:**Licensee recognizes the great value of thepublicity and goodwill associated with the Licensed Property and acknowledges:(i) such goodwill is exclusively that of Licensor; and (ii) that the LicensedProperty has acquired a secondary meaning as Licensor’s trademarks and/oridentifications in the mind of the purchasing public. Licensee furtherrecognizes and acknowledges that a breach by Licensee of any of its covenants,agreements or undertakings hereunder will cause Licensor irreparable damage,which cannot be readily remedied in damages in an action at law, and may, inaddition thereto, constitute an infringement of Licensor’s copyrights,trademarks and/other proprietary rights in, and to the Licensed Property,thereby entitling Licensor to equitable remedies, and costs.

 

12.**                                ****LICENSOR’S WARRANTIES ANDREPRESENTATIONS:**Licensorrepresents and warrants to Licensee that:

 

(a)                                  It has, and will have throughout the Term ofthis Agreement, the right to license the Licensed Property to Licensee inaccordance with the terms and provisions of this Agreement; and

 

(b)                                 The making of this Agreement by Licensor, anduse by Licensor of the Licensed Property pursuant to this Agreement does notviolate any agreements, rights or obligations of any person, firm orcorporation.

 

**13.****                              ****LICENSEE’S WARRANTIES ANDREPRESENTATIONS:**Licenseerepresents and warrants to Licensor that, during the Term and thereafter:

 

(a)                                  It will not attack the title of Licensor (orthird parties that have granted rights to Licensor) in and to the LicensedProperty or any copyright or trademarks pertaining thereto, nor will it attackthe validity of the license granted hereunder;

 

(b)                                 It will not harm, misuse or bring intodisrepute the Licensed Property;

 

(c)                                  It will conduct the Licensed Promotion aswell as manufacture, promote and distribute the Licensed Products and/orLicensed Premiums in accordance with the terms of this Agreement, and incompliance with all applicable government regulations and industry standards;

 

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(d)                                 It will not create any expenses chargeable toLicensor without the prior written approval of Licensor in each and everyinstance. It will not cause or allow any liens or encumbrances to be placedagainst, or grant any security interest (except to U.S. Bank NationalAssociation, a National banking association) in, the Licensed Property, and/orit will not intentionally cause or allow any liens or encumbrances to be placedagainst, or grant any security interest (except to U.S. Bank NationalAssociation, a National banking association) in Licensee’s inventory, contractrights and/or accounts receivables, and/or proceeds thereof, with respect tothe Licensed Products without Licensor’s prior written consent;

 

(e)                                  It will use reasonable commercial efforts toprotect its right to manufacture, promote and distribute the Licensed Productsand/or Licensed Premiums hereunder;

 

(f)                                    It will at all times comply with allgovernment laws and regulations, including but not limited to product safety,food, health, drug, cosmetic, sanitary or other similar laws relating orpertaining to the conduct of the Licensed Promotion as well as the manufacture,distribution, advertising or use of the Licensed Products and/or LicensedPremiums, and shall maintain its appropriate customary high quality standardsduring the Term hereof. It shall comply with any regulatory agencies whichshall have jurisdiction over the Licensed Promotion or Licensed Products and/orLicensed Premiums and shall procure and maintain in force any and allpermissions, certifications and/or other authorizations from governmental and/orother official authorities that may be required in response thereto. EachLicensed Product and/or Licensed Premium and component thereof distributedhereunder shall comply with all applicable laws, and regulations. Licenseeshall follow reasonable and proper procedures for testing that all LicensedProducts and/or Licensed Premiums comply with such laws, regulations andstandards. Licensee shall permit Licensor or its designees to inspect testingrecords and procedures with respect to the Licensed Products and/or LicensedPremiums for compliance. Licensed Products and/or Licensed Premiums that do notcomply with all applicable laws, regulations and standards shall automaticallybe deemed unapproved and immediately taken off the market;

 

(g)                                 It shall, upon Licensor’s request, providecredit information to Licensor including, but not limited to, fiscal year-endfinancial statements (profit-and-loss statement and balance sheet) andoperating statements;

 

(h)                                 It will provide Licensor with the date(s) offirst use of the Licensed Products and/or Licensed Premiums in interstate andintrastate commerce, where appropriate;

 

(i)                                     It will, pursuant to Licensor’s instructions,duly take any and all necessary steps to secure execution of all necessarydocumentation for the recordation of itself as user of the Licensed Property inany jurisdiction where this is required or where Licensor reasonably requeststhat such recordation shall be effected. Licensee further agrees that it willat its own expense cooperate with Licensor in cancellation of any suchrecordation at the expiration of this Agreement or upon termination ofLicensee’s right to use the Licensed Property. Licensee hereby appointsLicensor its Attorney-in-Fact for such purpose;

 

(j)                                     It will not deliver or sell Licensed Productsand/or Licensed Premiums outside the Territory or knowingly deliver or sellLicensed Products and/or Licensed Premiums to a third party for deliveryoutside the Territory;

 

(k)                                  It will not use any labor that violates anylocal labor laws, including all wage and hour laws, laws against discriminationand that it will not use prison, slave or child labor in connection with themanufacture of the Licensed Products and/or Licensed Premiums;

 

(l)                                     It shall not send, share with or otherwise discloseany Artwork to any third party, including licensees of Licensor, but with theexception of approved third party manufacturers hereunder, without the priorwritten consent of Licensor;

 

(m)                               It shall at all times comply with allcommercially reasonable manufacturing, sales, distribution, retail andmarketing policies and strategies promulgated in writing by Licensor fromtime-to-time, and provided the same shall not materially increase the costs ofmanufacturing, sales, distribution, retail and marketing the Licensed Products;and

 

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(n)                                 If requested by Licensor to do so, it willuse reasonable efforts to utilize specific design elements of the LicensedProperty provided to Licensee by Licensor on any promotional or advertisingmaterials and/or hangtags, labels or other materials with respect to theLicensed Products and/or Licensed Premiums.

 

**14.****                              ****TERMINATION BY LICENSOR:**

 

(a)                                  Licensor shall have the right to terminatethis Agreement without prejudice to any rights which it may have, whetherpursuant to the provisions of this Agreement, or otherwise in law, or inequity, or otherwise, upon the occurrence of any one or more of the followingevents (herein called “defaults”):

 

(i)                                     Licensee materially defaults in theperformance of any of its obligations provided for in this Agreement; or

 

(ii)                                  Licensee shall have failed to deliver toLicensor or to maintain in full force and effect the insurance referred to inParagraph 7(c) hereof; or

 

(iii)                               Licensee shall fail to make any payments duehereunder on the date due; or

 

(iv)                              Licensee shall fail to deliver any of thestatements required herein or to give access to the premises and/or 1icenserecords pursuant to the provisions hereof to Licensor’s authorizedrepresentatives for the purposes permitted hereunder; or

 

(v)                                 Licensee shall fail to comply in all materialrespects with any laws, or regulations as provided in Paragraph 13(f) or anygovernmental agency or other body, office or official vested with appropriateauthority finds that the Licensed Products and/or Licensed Premiums are harmfulor defective in any way, manner or form, or are being manufactured, sold ordistributed in contravention of applicable laws, regulations or standards, orin a manner likely to cause harm; or

 

(vi)                              Licensee shall be unable to pay its debtswhen due, or shall make any assignment for the benefit of creditors, or shallfile any petition under the bankruptcy or insolvency laws of any jurisdiction,county or place, or shall have or suffer a receiver or trustee to be appointedfor its business or property, or be adjudicated a bankrupt or an insolvent; or

 

(vii)                           Licensee does not commence in good faith toexecute the Licensed Promotion (i.e. manufacture, distribute and sell theLicensed Products and/or Licensed Premiums) on or before the Marketing Date orthereafter fails to diligently and continuously execute the Licensed Promotion;or

 

(viii)                        Licensee shall execute the Licensed Promotionand/or manufacture, sell or distribute (whichever first occurs) any of theLicensed Products and/or Licensed Premiums without the prior written approvalof Licensor as provided in Paragraph 9 hereof; or

 

(ix)                                Licensee undergoes a change of control asdefined in Attachment A, attached hereto and incorporated herein by reference,provided that Licensor must give written notice of termination, if at all,within thirty (30) days after written notice of the change in control is givento Licensor by Licensee; or

 

(x)                                   Licensee uses Artwork which has not beenapproved by Licensor in compliance with the provisions of Paragraph 8(h), (i)or (j) hereof; or

 

(xi)                                A manufacturer approved pursuant to Paragraph10(b) hereof shall sell Licensed Products and/or Licensed Premiums to partiesother than Licensee or engage in conduct, which conduct if engaged in by Licenseewould entitle Licensor to terminate this Agreement; or

 

(xii)                             Licensee delivers or sells Licensed Productsand/or Licensed Premiums outside the Territory or knowingly sells LicensedProducts and/or Licensed Premiums(s) to a

 

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third party who Licenseeknows intends to, or who Licensee reasonably should suspect intends to, sell ordeliver such Licensed Products and/or Licensed Premiums outside the Territory;or

 
| (xiii) | Licensee uses any labor  that violates any local labor laws and/or it uses prison, slave or child  labor in connection with the manufacture of the Licensed Products and/or  Licensed Premiums; or |
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|   |                                                                                                                                                                                               |
| (xiv)  | Licensee has made a  material misrepresentation or has omitted to state a material fact necessary  to make the statements not misleading as they pertain to this Agreement; or                     |
|   |                                                                                                                                                                                               |
| (xv)   | Licensee shall materially  breach any other agreement in effect between Licensee on the one hand and  Licensor on the other.                                                                       |

 

(b)                                 In the event any of these defaults occur,Licensor shall give notice of termination in writing to Licensee in the mannerprescribed in Paragraph 16 below. Licensee shall have fifteen (15) days fromthe date of giving notice in which to correct any of these defaults (exceptdefaults based on non-payment of monies to Licensor which must be cured withinten (10) days and defaults based on subdivisions (vii), (viii), (x) and (xii)above which are not curable), and failing such, this Agreement shall thereuponimmediately terminate, and any and all payments then or later due from Licenseehereunder (including Guaranteed Consideration) shall then be immediately dueand payable in full and no portion of those prior payments shall be repayableto Licensee.

 

(c)                                  Licensee shall have the right to terminatethis Agreement without prejudice to any other rights which it may have, whetherpursuant to the provisions of this Agreement, or otherwise at law or in equity,if Licensor defaults in the performance of any of its obligations provided forin this Agreement or in the event of a material breach by Licensor of itswarranties or representations set forth in this Agreement. In the event anysuch default occurs, Licensee shall give notice of termination in writing toLicensor by certified mail. Licensor shall have thirty (30) days from the dateof giving notice in which to correct any default or, if the correction wouldreasonably take more than thirty (30) days, such additional time as is neededso long as Licensor diligently pursues such correction, and failing suchcorrection, this Agreement shall thereupon immediately terminate, and any andall Guaranteed Consideration later due from Licensee hereunder shall no longerbe due; provided, however, that no portion of prior payments hereunder shall berepayable to Licensee.

 

**15.****                              ****FINAL STATEMENT UPONEXPIRATION OR TERMINATION:**Licenseeshall deliver, as soon as practicable, but not later than forty-five (45) daysfollowing expiration or termination of this Agreement, a statement indicatingthe number and description of Licensed Products and/or Licensed Premiums onhand together with a description of all advertising and promotional materialsrelating thereto. Following expiration or termination of this Agreement,Licensee shall immediately cease any and all manufacturing of the LicensedProducts and/or Licensed Premium. However, if Licensee has complied with allthe terms of this Agreement, including, but not limited to, complete and timelypayment of the Guaranteed Consideration and Royalty Payments, then Licensee maycontinue to distribute its remaining inventory, on a non-exclusive basis only,for a period not to exceed ninety (90) days following such expiration (the“Sell-Off Period”), subject to payment of applicable royalties thereto. In noevent, however, may Licensee distribute during the Sell-Off Period an amount ofLicensed Products and/or Licensed Premiums that exceeds the average amount ofLicensed Products and/or Licensed Premiums distributed during any consecutiveninety (90) day period during the Term. In the event this Agreement isterminated by Licensor for any reason under this Agreement, Licensee shall bedeemed to have forfeited its Sell-Off Period. If Licensee has any remaininginventory of the Licensed Products and/or Licensed Premiums following theSell-Off Period, Licensee shall, at Licensor’s option, make available suchinventory to Licensor for purchase at or below cost, deliver up to Licensor fordestruction said remaining inventory or furnish to Licensor an affidavitattesting to the destruction of said remaining inventory. Licensee shall, atLicensor’s option, deliver to Licensor at no charge all Artwork (except toolingand tooling aids) related to the Licensed Products, deliver up to Licensor fordestruction Artwork or furnish to Licensor an affidavit attesting to thedestruction of said Artwork. Licensee shall furnish to Licensor an affidavitattesting to the destruction or removal of the Licensed Property from alltooling and tooling aids. Licensor shall have the right to conduct a physicalinventory in order to ascertain or verify such inventory and/or statement. Inthe event that Licensee refuses to permit Licensor to conduct such physicalinventory,

 

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Licensee shall forfeit itsright to the Sell-Off Period hereunder or any other rights to dispose of suchinventory. In addition to the forfeiture, Licensor shall have recourse to allother legal remedies available to it.

 

**16.****                              ****NOTICES:**Except as otherwise specifically providedherein, all notices which either party hereto are required or may desire togive to the other shall be given by addressing the same to the other at theaddress set forth above, or at such other address as may be designated inwriting by any such party in a notice to the other given in the mannerprescribed in this paragraph.  All suchnotices shall be sufficiently given when the same shall be deposited soaddressed, postage prepaid, in the United States mail and/or when the sameshall have been delivered, so addressed, by facsimile or by overnight deliveryservice and the date of transmission by facsimile, receipt of overnightdelivery service or two business days after mailing shall for the purposes ofthis Agreement be deemed the date of the giving of such notice.

 

**17.****                              ****NO PARTNERSHIP, ETC.:**This Agreement does not constitute and shallnot be construed as constitution of a partnership or joint venture betweenLicensor and Licensee. Neither party shall have any right to obligate or bindthe other party in any manner whatsoever, and nothing herein contained shallgive, or is intended to give, any rights of any kind to any third persons.

 

**18.****                              ****NOSUBLICENSING/NON-ASSIGNABILITY:**This Agreement shall bind and inure to the benefit of Licensor, itssuccessors and assigns. This Agreement is personal to Licensee. Licensee shallnot sublicense, franchise or delegate to third parties its rights hereunder(except as set forth in Paragraph 10(b) hereof) without the prior writtenconsent of Licensor. Neither this Agreement nor any of the rights of Licenseehereunder shall be sold, transferred or assigned by Licensee and no rightshereunder shall devolve by operation of law or otherwise upon any receiver,liquidator, trustee or other party. Notwithstanding the foregoing, Licensorshall not seek injunctive relief to prevent Licensee from consummating a“change of control” as defined in Attachment A, and any termination of thisAgreement as a result of a “change of control” shall be in accordance withParagraph l4(a)(ix) above.

 

**19.****                              ****BANKRUPTCY RELATEDPROVISIONS:**

 

(a)**                                 **The parties hereby agree and intend that thisAgreement is an executory contract governed by Section 365 of the U.S.Bankruptcy Code (“Bankruptcy Code”).

 

(b)                                 In the event of Licensee’s bankruptcy, theparties intend that any royalties payable under this Agreement during thebankruptcy period be deemed administrative claims under the Bankruptcy Codebecause the parties recognize and agree that the bankruptcy estate’s enjoymentof this Agreement will (i) provide a material benefit to the bankruptcy estateduring its reorganization and (ii) deny Licensor the benefit of the exploitationof the rights through alternate means during the bankruptcy reorganization.

 

(c)                                  The parties acknowledge and agree that anydelay in the decision of trustee of the bankruptcy estate to assume or rejectthe Agreement (the “Decision Period”) materially harms Licensor by interferingwith Licensor’s ability to alternatively exploit the rights granted under thisAgreement during a Decision Period of uncertain duration. The parties recognizethat arranging appropriate alternative exploitation would be a time consumingand expensive process and that it is unreasonable for Licensor to endure aDecision Period of extended uncertainty. Therefore, the parties agree that theDecision Period shall not exceed sixty (60) days.

 

(d)                                 Licensor, in its interest to safeguard itsvaluable interests (including, without limitation, its intellectual propertyrights in the Licensed Property), has relied on the particular skill andknowledge base of Licensee. Therefore, the parties acknowledge and agree thatin a bankruptcy context this Agreement is a license of the type described bySection 365(c)(1) of the Bankruptcy Code and may not be assigned without theprior written consent of the Licensor.

 

**20.****                              ****CONSTRUCTION AND DISPUTERESOLUTION:**This Agreementshall be construed in accordance with the laws of the State of California ofthe United States of America without regard to its conflicts of lawsprovisions. Any and all controversies, claims or disputes arising out of orrelated to this Agreement or the interpretation, performance or breach thereof,including, but not

 

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limited to, allegedviolations of state or federal statutory or common law rights or duties, andthe determination of the scope or applicability of this agreement to arbitrate(“Dispute”), except as set forth in subparagraphs (b) and (c), below, shall beresolved according to the procedures set forth in subparagraph (a), below,which shall constitute the sole dispute resolution mechanism hereunder:

 

**(a)****                                 ****Arbitration:******In the event that the parties are unable toresolve any Dispute informally, then such Dispute shall be submitted to finaland binding arbitration. The arbitration shall be initiated and conductedaccording to either the JAMS Streamlined (for claims under $250,000) or theJAMS Comprehensive (for claims over $250,000) Arbitration Rules and Procedures,except as modified herein, including the Optional Appeal Procedure, at the LosAngeles office of JAMS, or its successor (“JAMS”) in effect at the time therequest for arbitration is made (the “Arbitration Rules”). The arbitrationshall be conducted in Los Angeles County before a single neutral arbitratorappointed in accordance with the Arbitration Rules. The arbitrator shall followCalifornia law and the Federal Rules of Evidence in adjudicating the Dispute. Theparties waive the right to seek punitive damages and the arbitrator shall haveno authority to award such damages. The arbitrator will provide a detailedwritten statement of decision, which will be part of the arbitration award andadmissible in any judicial proceeding to confirm, correct or vacate the award.Unless the parties agree otherwise, the neutral arbitrator and the members ofany appeal panel shall be former or retired judges or justices of anyCalifornia state or federal court with experience in matters involving theentertainment industry. If either party refuses to perform any or all of itsobligations under the final arbitration award (following appeal, if applicable)within thirty (30) days of such award being rendered, then the other party mayenforce the final award in any court of competent jurisdiction in Los AngelesCounty. The party seeking enforcement shall be entitled to an award of allcosts, fees and expenses, including attorneys’ fees, incurred in enforcing theaward, to be paid by the party against whom enforcement is ordered.

 

**(b)****                                 ****Injunctive Relief:******Notwithstanding the foregoing, either partyshall be entitled to seek injunctive relief (unless otherwise precluded by anyother provision of this Agreement) in the state and federal courts of LosAngeles County.

 

**(c)****                                 ****Other Matters:******Any Dispute or portion thereof, or any claimfor a particular form of relief (not otherwise precluded by any other provisionof this Agreement), that may not be arbitrated pursuant to applicable state orfederal law may be heard only in a court of competent jurisdiction in LosAngeles County.

 

**21.**                               **WAIVER, MODIFICATION ETC.:**No waiver, modification or cancellation ofany term or condition of this Agreement shall be effective unless executed inwriting by the party charged therewith. No written waiver shall excuse theperformance of any acts other than those specifically referred to therein. Thefact that the Licensor has not previously insisted upon Licensee expresslycomplying with any provision of this Agreement shall not be deemed to be awaiver of Licensor’s future right to require compliance in respect thereof andLicensee specifically acknowledges and agrees that the prior forbearance inrespect of any act, term or condition shall not prevent Licensor fromsubsequently requiring full and complete compliance thereafter. If any term orprovision *of*this Agreement isheld to be invalid or unenforceable by any court of competent jurisdiction orany other authority vested with jurisdiction, such holding shall not affect thevalidity or enforceability of any other term or provision hereto and thisAgreement shall be interpreted and construed as *if*such term or provision, to the extent the same shall havebeen held to be invalid, illegal or unenforceable, had never been containedherein. Headings of paragraphs herein are for convenience only and are withoutsubstantive significance.

 

**22.****                              ****CONFIDENTIALITY:**The Artwork and the materials and informationsupplied to one party by the other hereunder constitute, relate to, contain andform a part of confidential and proprietary information of the disclosingparty, including, but not limited to, Style Guides, design elements, characterprofiles, unpublished copyrighted material, release dates, marketing andpromotional strategies, information about new products, properties andcharacters, the terms and conditions of this Agreement, and other informationwhich is proprietary in nature or is a trade secret (collectively, the“Proprietary Information”). The parties acknowledge and agree that theProprietary Information is highly confidential and that disclosure of theProprietary Information will result in serious harm to the owner thereof. Amongother damage, unauthorized disclosure of the Proprietary Information will. (i)damage carefully planned marketing strategies, (ii) reduce interest in theLicensed Property, (iii)

 

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make unique or novelelements of the Licensed Property susceptible to imitation or copying bycompetitors, infringers or third parties prior to Licensor’s release of theinformation or materials, (iv) damage proprietary protection in undisclosed orunpublished information or materials, and (v) provide unauthorized thirdparties with materials capable of being used to create counterfeit andunauthorized merchandise, audio-visual products or other products, all of whichwill seriously damage Licensor’s rights and business. Except as expresslyapproved in writing by the owner of the Proprietary Information, the otherparty shall not reproduce or use the Proprietary Information of the other partyand shall not discuss, distribute, disseminate or otherwise disclose theProprietary Information or the substance or contents thereof, in whole or inpart, in its original form or in any other form, with or to any other person orentity other than employees of the parties and, in the case of Licensee, thirdparties who have executed a Contributor’s Agreement (as provided in Paragraph8(b)) or third party manufacturer’s agreement (as provided in Paragraph 10(b))and been approved by Licensor as provided hereunder, and such employees andthird parties shall be given access to the Proprietary Information only on a“need-to-know” basis. The foregoing restrictions shall not apply to anyinformation which, (i) at the time of disclosure, is in the public domain orwhich, after disclosure, becomes part of the public domain by publication orotherwise through no action or fault of the receiving party; (ii) informationwhich the receiving party can show was in its possession at the time ofdisclosure and was not acquired, directly or indirectly, from the other party;(iii) information which was received from a third party having the legal rightto transmit the same; (iv) information which is independently developed,conceived, or created without use of or reference to any ProprietaryInformation of the other party; or (v) information which is disclosed pursuantto valid court order, other legal process, or disclosure laws. Notwithstandinganything herein to the contrary, either party to this Agreement and itsrepresentatives may disclose to any and all persons, without limitation of anykind, the tax treatment and tax structure of the transactions contemplated bythis Agreement and all materials of any kind (including opinions or other taxanalyses) that are provided to it relating to such tax treatment and taxstructure.

 

**23.****                              ****ENTIRE AGREEMENT:**This Agreement constitutes the entireAgreement between the parties concerning the subject matter hereof and cancelsand supersedes any prior understandings and agreements between the partieshereto with respect thereto. There are no representations, warranties, terms,conditions, undertakings or collateral agreements, expressed, implied orstatutory, between the parties other than as expressly set forth in thisAgreement.

 

24.                                 **ACCEPTANCE BY LICENSOR:**This instrument, when signed by Licenseeshall be deemed an application for license and not a binding agreement unlessand until accepted by Licensor by signature of a duly authorized officer andthe delivery of such a signed copy to Licensee. The receipt and/or deposit byLicensor of any check or other consideration given by Licensee and/or deliveryof any material by Licensor to Licensee shall not be deemed an acceptance byLicensor of this application. The foregoing shall apply to any documentsrelating to renewals or modifications hereof.

 

This Agreement shall be ofno force or effect unless and until it is signed by all of the parties listedbelow:

 

 
| AGREED and ACCEPTED:                                                | AGREED and ACCEPTED:      |
|---------------------------------------------------------------------|---------------------------|
|                                                                |                      |
| **WARNER  BROS. CONSUMER PRODUCTS INC.**                            | **POORE  BROTHERS, INC.** |
|                                                                |                      |
|                                                                |                      |
| By:                                                                 |                      |   | By: |   |   |
| Gary R. Simon, Senior Vice  President  Business & Legal Affairs |                      |
|                                                                |                      |
| Date:                                                               |                      |   | Date: |   |   |
|                                                                     |                           |  |  |  |  |  |  |

 

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**EXHIBIT 1#14559-SCOO**

 

**CHANNELS OF DISTRIBUTIONDEFINITIONS**

 

**LICENSEEMAY SELL THE LICENSED PRODUCTS ONLY THROUGH THE CHANNELS OF DISTRIBUTION ASSPECIFIED ABOVE IN PARAGRAPH 1(a) OF THIS LICENSE AGREEMENT AND AS SUCHCHANNELS ARE DEFINED IN THIS EXHIBIT 1. ALL OTHER CHANNELS OF DISTRIBUTIONDEFINED IN THIS EXHIBIT 1, WHICH ARE NOT SPECIFIED IN PARAGRAPH 1(a) ABOVE, ARESPECIFICALLY EXCLUDED FROM THIS LICENSE AGREEMENT.**

 

1.                                       “Airport Gift and Other Airport Stores” shall mean gift and other stores locatedwithin airports, excluding Duty-Free Store Operators (as defined below).Examples of Airport Gift and Other Stores include, without limitation, **Paradies**and **W.H. Smith.**

 

2.                                       “Amusement Game Redemption” shall mean distribution of products asprizes awarded in amusement games.

 

3.                                       “Amusement Park Gift Stores” shall mean gift stores located withinamusement parks, such as Six Flags, Paramount Parks, Universal Theme Parks,Dollywood, Walt Disney World and the Disneyland Resort.

 

4.                                       “Art & Craft Stores” shall mean stores that offer for saleprimarily art and craft supplies. Examples of Art & Craft Stores include,without limitation, **Fast Frame, Michaels**and**Michaels MJ Designs.**

 

5.**                                      **“Athletic Apparel & Footwear Stores” shall means stores that offer for saleprimarily athletic apparel and footwear. Examples of Athletic Apparel &Footwear Stores include, without limitation, **Footlocker,Athlete’s Foot**and **Champs.**

 

6.**                                      **“Automotive/Carwash Stores” shall mean (a) stores that offer for saleprimarily automotive supplies, or (b) stores located at carwash or gasolinestation premises.

 

7.                                       “Baby Specialty Stores” shall mean stores that offer for saleprimarily infant apparel, furniture, accessories and other products designedspecifically for babies. Examples of Baby Specialty Stores include, withoutlimitation, **Babies R**Us.

 

8.                                       “Beauty Supply Stores” shall mean stores that offer for saleprimarily cosmetics, haircare products, beauty accessories and personalgrooming related items.

 

9.                                       “Business to Business” shall mean when a licensee sells product toanother business and the items sold are used for **corporate gifts, prizes, etc.**

 

10.                                 “Camera/Photo Specialty Stores” shall mean stores that offer for saleprimarily camera equipment and supplies.

 

11.**                                **“Candy/Confectionery Specialty Stores” shall mean stores that offer for saleprimarily candy and confectionery products. Examples of Candy/ConfectionerySpecialty Stores include, without limitation, **FAOSchweetz**and **The Sweet Factory.**

 

12.**                                **“Catalog Showrooms” shall mean stores that offer a broadassortment of products for sale primarily through a catalog along with displayof samples of products in a showroom. Examples of Catalog Showrooms include,without limitation, **Service Merchandise.**

 

13.                                 “Chain Book Stores” shall mean chain stores (containing twenty(20) or more individual stores) that offer for sale primarily books. Examples ofChain Book Stores include, without limitation, **B. Dalton, SuperCrown, Walden Books**and **Brentano’s.**

 

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14.                                 “Chain Comic Book Stores” shall mean chain stores (containing twenty(20) or more individual stores) that offer for sale primarily comic books.

 

15.                                 “Chain Drug Stores” shall mean chain stores (containing twenty(20) or more individual stores) that offer for sale primarily prescription andover-the-counter drugs, personal care products and household products. Examplesof Chain Drug Stores include, without limitation, **Walgreens, Rite-Aid, Thrifty/Payless, C.V.S./Revco, Thrift Drug, PharMor, Longs Drugs, Jean Coutu, London Drugs**and **Shopper’s Drug Mart.**

 

16.**                                **“Chain Jewelry Stores” shall mean chain stores (containing twenty(20) or more individual stores) that offer for sale primarily jewelry. The“Chain Jewelry Stores” channel shall specifically exclude Guild Jewelers (asdefined below). Examples of Chain Jewelry Stores include, without limitation, **Sterling, Barry’s, Lipman’s**and **Hellsburg.**

 

17.                                 “Chain Toy Stores” shall mean chain stores (containing twenty(20) or more individual stores) that offer for sale primarily toys. In order tobe considered a “Toy Store” hereunder, the total number of toy-type SKU’s(stock-keeping units) must represent eighty percent (80%) or more of suchstore’s total SKU’s. The “Chain Toy Stores” channel shall specifically excludeToy Specialty/Better Toy Chain Stores (as defined below). Examples of Chain ToyStores include, without limitation, **Toys RUs.**

 

18.                                 “Coffee Specialty Stores” shall mean stores that offer for saleprimarily specialty coffee and related products, such as coffee mugs. Examplesof Coffee Specialty Stores include, without limitation, **Starbucks, Buzz Coffee, Gloria Jeans**and **The Coffee Beanery.**

 

19**.****                                **“College/University Stores” shall mean stores located on the campuses ofcolleges or universities,

 

20.                                 “Commercial Facilities” shall mean offering products for sale toarchitectural firms or interior designers working with commercial facilities,such as hotels and daycare facilities.

 

21.                                 “Computer Specialty Stores” shall mean stores that offer for saleprimarily computer equipment and supplies. Examples of Computer SpecialtyStores include, without limitation, **Comp**USA.

 

22.                                 “Convenience Stores” shall mean stores that offer for saleprimarily packaged and “quick service” food products, are generally open 24hours a day, and are designed to offer greater convenience than largerSupermarket/Grocery Stores. Examples of Convenience Stores include, withoutlimitation, **7-11, AMIPM, Dairy Mart**and**Circle K.**

 

23.**                                **“Dental/Medical Profession” shall mean institutions or offices thatprovide dental or medical services, such as hospitals, laboratories or doctors’offices.

 

24.                                 “Direct Mail Catalogs” shall mean catalogs that offer products forsale and are mailed directly to consumers’ homes. The “Direct Mail Catalogs”channel shall specifically exclude catalogs for fundraising purposes whichshall be included in the “Fundraising” channel defined below. Examples ofDirect Mail Catalogs include, without limitation, **Spiegel, Hearth**& **Home,Domestications, Tapestry, Company Store, Hammacher Schlemmer, Fingerhut, Amway,Lillian Vernon, Regal, Avon and Sears Catalog.**

 

If Licensor grants toLicensee the right to. distribute Licensed Products through anyDirect Mail Catalogs: (a) each such catalog shall be specified in the Channelsof Distribution set forth in Paragraph 1(a) of the License Agreement orotherwise expressly approved in writing by Licensor on a case-by-case basis,and (b) each such catalog depicting or referring to the Licensed Products orthe Licensed Property must be submitted to Licensor for prior written approvalin accordance with Licensor’s Brand Assurance policies and procedures.

 

25.                                 “Direct Response” shall mean print advertisement, freestanding inserts (“FSI’s”) and other promotional material (except catalogs)that are mailed directly to consumers’ homes for the purpose of solicitingproduct sales directly from consumers. The “Direct Response” channel shallspecifically exclude direct mail catalogs which shall be included in the“Direct Mail Catalog” channel defined above.

 

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If Licensor grants toLicensee the right to distribute Licensed Products through Direct Response,each print advertisement, FSI and other promotional material depicting orreferring to the Licensed Products or the Licensed Property must be submittedto Licensor for prior written approval in accordance with Licensor’s BrandAssurance policies and procedures.

 

26.                                 “Door-to-Door Solicitation” shall mean offering products for salethrough personal visits by salespersons to consumers’ homes.

 

27.                                 “Duty-Free Operators” shall mean (a) stores usually located intransit locations (i.e. airports, in-flight, train, ferry stations, cruiselines and ports) which offer products for sale to international travelers freeof taxes and duties and (b) sales offered to diplomat shops, diplomat suppliersand individual diplomats free of taxes and/or duties. If Licensor grants toLicensee the right to distribute products through Duty-Free Operators, suchchannels of distribution (like all other channels of distribution granted)shall be limited to those stores located within the Territory.

 

28.                                 “Educational Institutions” shall mean offering products (generallybooks) for sale to public or private schools or other educational institutions.Examples of Educational Institutions include, without limitation, the LosAngeles Unified School District.

 

29.                                 “Educational Specialty Stores” shall mean stores that offer for sale primarilyeducational products. Examples of Educational Specialty Stores include, withoutlimitation, **Imaginarium**and **Nature Company.**

 

30.                                 “Electronics Stores” shall mean stores that offer for saleprimarily electronic products. Examples of Electronics Stores include, withoutlimitation, **Circuit City, Fry’s**and**Best Buy.**

 

31.                                 “Family Restaurants” shall mean a food service establishment orgroup of food service establishments that offer a sit down meal menu conduciveto all members of the family and generally offers table service to customers.Examples of Family Restaurants include, without limitation, **Denny’s**and **Friendly’s.**

 

32.                                 “Fashion Accessory Stores” shall mean stores that offer for saleprimarily costume jewelry, hair accessories and other fashion accessories.Examples of Fashion Accessory Stores include, without limitation, **Claire’s Boutique, Afterthoughts, It’s About Time,Piercing Pagoda, Ardene**and **Bentley’s.**

 

33.                                 “Fashion Specialty Boutiques” shall mean stores that offer for saleprimarily fashion apparel product. Examples of Fashion Specialty Boutiquesinclude, without limitation, **Fred Segal,Urban Outfitters, American Rag, and Dr. J’s.**

 

34.                                 “Florists” shall mean stores or companies that offer for sale primarily flowers.Examples of Florists include, without limitation, **Conroy’s, FTD**and **1-800-Flowers.**

 

35.                                 “Food Service” shall mean locations that provide foodservice to consumers in cafeterias, hospital food services, school lunchprograms, and similar institutional food service locations.

 

36.                                 “Fundraising” shall mean offering products for salethrough catalogs, direct mail brochures, prize programs and in-school sales,which are used by schools and charitable, religious or other organizations toraise funds. Examples of Fundraising companies include, without limitation, **Giftco, Springwater**and **Darlington Farms.**

 

37.                                 “Furniture Stores” shall mean stores that offer for saleprimarily furniture. Examples of Furniture Stores include, without limitation, **Wickes, Homemakers, Kiddles**and **Levitz.**

 

38.**                                **“Garden Specialty Stores” shall mean stores that offer for saleprimarily garden supplies and plants. Examples of Garden Specialty Storesinclude, without limitation, **Armstrong’s,Callaway’s**and **Wolf Nurseries.**

 

39.**                                **“Gift Retailers” shall mean stores that ( a) offer productsfor sale that are in somewhat related product categories and are known as “gifts” in the trade, which products generally are classified in the trade as “better” quality and are higher priced (as compared toNational and Regional

 

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Discount/Mass Retailers’products), (b) do not usually discount merchandise or sell it at greatlyreduced prices, (c) usually focus more on aesthetics in merchandise displaysthan on price, and (d) generally require individual store servicing bysuppliers in merchandise set-up, display, SKU maintenance and reordering.Suppliers to Gift Retailers typically advertise in trade publications, such as “Gift& Stationery Business”,“Giftware News” and “Gifts &Decorative Accessories”.

 

Suppliers to Gift Retailersusually include companies such as Enesco, Midwest of Cannon Falls, New CreativeEnterprises, Dale Tiffany, Pacific Rim, Ande Rooney, Waterford, GiftCraft,Carson Industries, Possible Dreams, Lenox, Department 56, Lefton, Swarovski andFlambro. The “Gift Retailers” channel shall specifically exclude Novelty GiftStores (as defined below), Duty-Free Store Operators (as defined above), andAirport Gift and Other Airport Stores (as defined above).

 

40.                                 “Gourmet Food Specialty Stores” shall mean stores that offer for saleprimarily gourmet and specialty food products. Examples of Gourmet FoodSpecialty Stores include, without limitation, **BristolFarms, Whole Foods**and **Gelsons.**

 

41.                                 “Greeting Card Stores” shall mean stores that offer for saleprimarily greeting cards. Examples of Greeting Card Stores include, withoutlimitation, **Hallmark.**

 

42.                                 “Guild Jewelers” shall mean stores that offer for saleprimarily fine jewelry which is generally classified in the trade as “best” or“highest” quality, Examples of Guild Jewelers include, without limitation, **Mayers, Rogers**and **Bailey Banks**& **Biddle.**

 

43.                                 “Hobby & Model Stores” shall mean stores that offer for saleprimarily hobby and model supplies.

 

44.                                 “Home Improvement Stores” shall mean stores that offer for saleprimarily hardware and home improvement supplies. Examples of Home ImprovementStores include, without limitation, **HomeDepot, OSH, Home Base, Lowes and Home Hardware.**

 

45.**                                **“Home Specialty Stores” shall mean stores that offer for saleprimarily bedding, towels and other bathroom products, kitchen merchandise andhousewares. Examples of Home Specialty Stores include, without limitation, **Strouds, Linens ‘N’ Things, 3D Bed**& **Bath, Bed/Bath/Beyond**and **Luxury Linens.**

 

46.**                                **“Ice Cream Shops” shall mean stores that offer for sale primarilyice cream, ice cream cakes and similar frozen dessert products. Examples of IceCream Shops include, without limitation, **Baskin-Robbins,Dairy Queen and Ben and Jerry’s Shops.**

 

47.                                 “In-Store Bakeries” shall mean the in-store bakery departmentswithin Supermarket/Grocery Stores, National and Regional Discount/MassRetailers and Warehouse Clubs. Such departments offer for sale primarilyfreshly baked breads, cakes, cookies and similar bakery items.

 

48.                                 “Internet” shall mean offering products for sale through the electronic networkknown as the Internet.

 

49.                                 “Mall Clothing Specialty Stores” shall mean stores that offer for saleprimarily clothing and are located within a mall. Examples of Mall ClothingSpecialty Stores include, without limitation, **MillersOutpost, Wet Seal, Au Coin Des Petites, La Senza, Suzie Shier and Reitmans.**

 

50.                                 “Mid-Tier Department Stores” shall mean stores that offer products forsale in a broad assortment of unrelated product categories, which products aregenerally classified in the trade as “better” (but not “best”) qualityproducts. Examples of Mid-Tier Department Stores include, without limitation, **JC Penney, Sears, Mervyn’s, SteinMart, Kohls, FredMeyer, The Bay, Clemont and Simon’s.**

 

51.**                                **“Military Exchange Services” shall mean military headquarters as well asindividual bases of armies and/or airforces of each country within theTerritory. Examples of Military Exchange Services include, without limitation,U.S. **Army and Airforce Exchange Service(“AAFES”)**and **the Canadian ForcesExchange Service (“CANEX”).**If Licensor grants to Licensee the rightto distribute products through Military Exchange Services, such channel ofdistribution shall be limited to the Military Exchange Services of thecountries within the Territory, but shall include all of such Military ExchangeServices’ stores located anywhere in the world.

 

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52.                                 “Music/Video Stores” shall mean stores that offer for saleprimarily musical recordings, on compact discs, cassettes or other media,and/or movie recordings on videos, laser disks or other media for home use byconsumers. Examples of Music/Video Stores include, without limitation, **Blockbuster, Musicland, Tower Records, Virgin Records,Wherehouse Records, Sam Goody’s**and **Suncoast.**

 

53.                                 “National Discount/Mass Retailers” shall mean stores that (a) have nation-widedistribution, (b) offer products for sale in a broad assortment of unrelatedproduct categories, which products generally are not classified in the trade as“better/best” quality products, (c) are usually “self-service” with more of anemphasis on price than aesthetics, and (d) generally do not require individualstore servicing by suppliers. Suppliers to National Discount/Mass Retailerstypically advertise in trade publications, such as “Discount Store News”and “Discount Merchandiser”, and usually attend the IMRA (InternationalMass Retailer Association) trade show. The “National Discount/Mass Retailers”channel shall specifically exclude the in-store bakery departments of suchstores, which shall be included in the “In-Store Bakeries” channel definedabove. Examples of National Discount/Mass Retailers include, withoutlimitation, **Walmart, K-Mart, Target, Zellers,Biway and Canadian Tire.**

 

54.**                                **“Non-Chain Book Stores” shall mean stores or groups of stores(containing fewer than twenty (20) individual stores) that offer for saleprimarily books.

 

55.                                 “Non-Chain Comic Book Stores” shall mean stores or groups of stores(containing fewer than twenty (20) individual stores) that offer for saleprimarily comic books.

 

56.                                 “Non-Chain Drug Stores” shall mean stores or groups of stores(containing fewer than twenty (20) individual stores) that offer for saleprimarily prescription and over-the-counter drugs, personal care products andhousehold products.

 

57.                                 “Non-Chain Jewelry Stores” shall mean stores or groups of stores(containing fewer than twenty (20) individual stores) that offer for saleprimarily jewelry. The “Non-Chain Jewelry Stores” channel shall specificallyexclude Guild Jewelers (as defined above).

 

58.                                 “Non-Chain Toy Stores” shall mean stores or groups of stores(containing fewer than twenty (20) individual stores) that offer for saleprimarily toys. In order to be considered a “Toy Store” hereunder, the totalnumber of toy-type SKU’s must represent eighty percent (80%) or more of suchstore’s total SKU’s. Examples of Non-Chain Toy Stores include, withoutlimitation, **Talbot’s Toyland**and **Tons of Toys, Inc.**

 

59.**                                **“Non-Mall Clothing Specialty Stores” shall mean stores that offer for saleprimarily clothing and are not located within a mall. Examples of Non-MallClothing Specialty Stores include, without limitation, **Kids Mart, Kids R**Us, **Clothestime**and **Fashion Bug.**

 

60.                                 “Novelty Gift Stores” shall mean stores that offer for saleprimarily novelty gift items. The “Novelty Gift Stores” channel shallspecifically exclude Airport Gift and Other Airport Stores and Duty-FreeOperators (as such terms are defined above). Examples of Novelty Gift Storesinclude, without limitation, **Spencer’s**and**It Stores.**

 

61.                                 “Off-Price/Closeout Stores” shall mean stores that offer for saleprimarily discounted apparel and other merchandise. Examples ofOff-Price/Closeout Stores include, without limitation, **Marshall’s, T.J. Maxx, Ross Dress For Less, Hit orMiss, Tuesday Morning and Winners.**

 

62.                                 “Office Specialty Stores” shall mean stores that offer for saleprimarily office supplies. Examples of Office Specialty Stores include, withoutlimitation, **Office Depot, Staples and OfficeMax.**

 

63.**                                **“Outlet Stores” shall mean stores that offer for saleprimarily discounted merchandise of a particular manufacturer or retailer.

 

64.                                 “Party Stores” shall mean stores that offer for saleprimarily party supplies. Examples of Party Stores include, without limitation,**Party City**and **Party World.**

 

65.                                 “Pet Stores” shall mean stores that offer for saleprimarily pet supplies. Examples of Pet Stores include, without limitation,PetCo and **PetSmart.**

 

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66.                                 “Quick Service Restaurants” shall mean a food service establishment orgroup of food service establishments that offer rapid meal menus to consumersand generally do not offer table service to customers. Examples of QuickService Restaurants include, without limitation, **Subway**and **Burger King.**

 

67.                                 “Regional Discount/Mass Retailers” shall mean stores that (a) have regionaldistribution, (b) generally offer products for sale in a broad assortment ofunrelated product categories, which products generally are not classified inthe trade as “better/best” quality products, (c) are usually “self-service”with more of an emphasis on price than aesthetics, and (d) generally do notrequire individual store servicing by suppliers. Suppliers to RegionalDiscount/Mass Retailers typically advertise in trade publications, such as “DiscountStore News” and “Discount Merchandiser”, and usually attend the IMRA(International Mass Retailer Association) trade show. The “RegionalDiscount/Mass Retailers” channel shall specifically exclude the in-store bakerydepartments of such stores, which shall be included in the “In-Store Bakeries”channel defined above. Examples of Regional Discount/Mass Retailers include,without limitation, **Meijers, Caldor, Ames,Bradlees, Hill’s, Rose’s, Venture, Shopko, Cotter, Fields, Giant Tiger, Harts,Northwest and Saan Stores.**

 

68.                                 “Retail Bakeries” shall mean stores that offer for saleprimarily freshly baked breads, cakes, cookies and similar bakery items. The“Retail Bakeries” channel shall specifically exclude In-Store Bakeries (asdefined above).

 

69.                                 “School Book Clubs/Fairs” shall mean offering products for salethrough book catalogs distributed to teachers and students at public or privateschools (usually elementary or high school) or through book fairs conducted onthe premises of such schools. Examples of School Book Clubs/Fairs include,without limitation, Troll Book Club and Scholastic Book Fair.

 

70.                                 “Souvenir Stores” shall mean stores that offer for saleprimarily souvenirs.

 

71.                                 “Sporting Good Stores” shall mean stores that offer for saleprimarily sporting goods, equipment, athletic apparel, and other merchandisethat reflects a sports theme. Examples of Sporting Good Stores include, withoutlimitation, **Big 5**and **Sports Chalet.**

 

72.                                 “Sports Stadium Shops” shall mean concessionaire shops locatedwithin stadiums or arenas where sporting events are held.

 

73.                                 “Stationery Stores” shall mean stores that offer for saleprimarily stationery. Examples of Stationery Stores include, withoutlimitation, **Farr’s Stationaires.**

 

74.                                 “Street Vendors” shall mean individual merchants who offer productsfor sale in stands, booths or other non-permanent structures usually located onthe sidewalk and designed to attract passing pedestrians.

 

75.                                 “Supermarket/Grocery Stores” shall mean stores that offer for saleprimarily packaged food products. The “Supermarket/ Grocery Stores” channelshall specifically exclude the in-store bakery departments of such stores,which shall be included in the “In-Store Bakeries” channel defined above. The“Supermarket/Grocery Stores” channel shall specifically exclude Gourmet FoodSpecialty Stores (as defined above) and Convenience Stores (as defined above).Examples of Supermarket/Grocery Stores include, without limitation, **Kroger, Safeway, American Stores, Albertson’s, WinnDixie, Food Lion, Von’s, Finast, Ralphs, Marsh and Superstores.**

 

76.                                 “Swap Meets/Flea Markets” shall mean offering products for salethrough organized events known as swap meets or flea markets, which involve agroup of vendors offering for sale a variety of products, often collectibles orantiques.

 

77.                                 “Television Home Shopping” shall mean offering products for salethrough cable and broadcast television, including infomercials, QVC and HomeShopping Network. The “Television Home Shopping” channel shall specificallyexclude sales through the Internet, CD-Interactive and other electronic media.

 

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78.                                 “Theatrical Concessions” shall mean the retail section that sellssuch items as popcorn, soda and candy within chain and non-chain movie theaterlocations such as Cineplex Odeon, Loews and Cinemark,

 

79.                                 “Toy Specialty/Better Toy Chain Stores” shall mean companies that offer for saleprimarily specialty toys. Examples of Toy Specialty/Better Toy Chain Storesinclude, without limitation, **FAO Schwarz,Zany Brainy, Imaginarium, and Noodle Kidoodle.**

 

80.                                 “Toy Wholesalers” shall mean companies that offer for saleprimarily toys to retail stores. In order to be considered a “Toy Wholesaler”hereunder, the total number of toy-type SKU’s must represent eighty percent(80%) or more of such wholesaler’s total SKU’s.

 

81.                                 “Trackside - CART” shall mean offering products for sale atraces organized and sponsored by Championship Auto Racing Teams.

 

82.                                 “Trackside - NASCAR” shall mean offering products for sale atraces organized and sponsored by the National Association for Stock Car Racing.

 

83.                                 “Trackside - NHRA” shall mean offering products for sale atraces organized and sponsored by the National Hot Rod Association.

 

84.                                 “Upstairs Department Stores” shall mean stores that (a) offer productsfor sale in a broad assortment of unrelated product categories, which productsare generally classified in the trade as “best” quality products, and (b) offera high level of customer service with a strong emphasis on store aesthetics.Examples of Upstairs Department Stores include, without limitation, **Bloomingdale’s, Macy’s, Nordstrom, May DepartmentStores, Saks Fifth Avenue, Neiman Marcus**and **Dillards.**

 

85.                                 “Vending Machines” shall mean self-contained automateddispensing equipment operated by insertion of coin or paper currency or theequivalent thereof (i.e. debit cards, credit cards, etc.).

 

86.**                                **“Wall Decor Stores” shall mean stores that offer for saleprimarily wall decor products. Examples of Wall Decor Stores include, withoutlimitation, **Deck The Walls, Aaron Brothers**and**Prints Plus.**

 

87.                                 “Warehouse Clubs” shall mean stores that offer for saleproducts in large sizes and quantities with more of an emphasis on price thanservice or store aesthetics, The “Warehouse Clubs” channel shall specificallyexclude the in-store bakery departments of such stores, which shall be includedin the “In-Store Bakeries” channel defined above. Examples of Warehouse Clubsinclude, without limitation, **Sam’s Club**and**Price Costco.**

 

88.                                 “WBSS International” shall mean the retail stores known as WarnerBros. Studio Stores, which are operated outside the United States.

 

If Licensor grants toLicensee the right to sell Licensed Products to WBSS International: (a) suchrights shall be worldwide, notwithstanding any restrictions as to “Territory”contained in the Agreement, and (b) such rights shall be non-exclusive,notwithstanding any exclusivity provisions contained in the Agreement,

 

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**EXHIBIT****2**

 

**#14559-SCOO**

 

CONTRIBUTOR’SAGREEMENT

 

The undersigned (“Contributor”) has beenengaged by Poore Brothers, Inc. (“Licensee”), in connection with an agreementbetween Licensee and Warner Bros. Consumer Products Inc. (“Warner”) date                                                              (the“Agreement”) to work on or contribute to the creation of certain products(“Licensed Products”) that exploit certain of Warner’s intellectual propertyrights and/or related packaging, wrapping, advertising or promotional materials(“Collateral Materials”).

 

Contributor agrees and acknowledges that anycreation, whether finished or not, and all copyrights, trademarks and otherintellectual property rights contained therein and all tangible embodimentsthereof that uses, exploits or derives from any of Warner’s intellectualproperty (“Artwork”) created by Contributor in connection herewith, solely orjointly with Licensor, Licensee or any other party, will be deemed a “work madefor hire” for Licensor under the U.S. Copyright Act, and any and all similarprovisions of law under other jurisdictions, and that Licensor will be deemedthe author and the exclusive owner of such Artwork, and all intellectualproperty rights therein, in perpetuity and throughout the universe.  For clarification, the term “Artwork” doesnot include any elements of the Licensed Products or other materials created inconnection with Contributor’s engagement by Licensee that do not use, exploitor derive from any of Warner’s intellectual property.  In the event any such Artwork cannot be deemed a “work made forhire” as set forth above, Contributor hereby assigns to Licensor all right,title and interest in and to such Artwork. Contributor hereby irrevocablyappoints Licensor as Contributor’s attorney-in-fact for the purpose ofexecuting documents on Contributor’s behalf as deemed necessary or desirable byLicensor to confirm such assignment, which appointment is coupled with aninterest. If Contributor has any rights, including without limitation “artist’srights” or “moral rights,” in such Artwork which cannot be assigned,Contributor agrees to waive enforcement worldwide of such rights againstLicensor. In the event that Contributor has any such rights that cannot beassigned or waived, Contributor hereby grants to Licensor, an exclusive,worldwide, irrevocable, perpetual, transferable license to use, reproduce,distribute, create derivative works of, publicly perform, publicly display anddigitally transmit such Artwork in any medium or format, whether now known orlater developed, for any purpose.

 

To induce Licensor to consent to theengagement of Contributor by Licensee, Contributor hereby acknowledges theproprietary and confidential nature of the information that Licensee orLicensor may provide to Contributor, or that Contributor might gain access toas the result of the privileged relationship created by this engagement (the“Proprietary Information”) and agrees to: (a) hold the Proprietary Informationin strict confidence, using no less than a reasonable degree of care to protectsuch Proprietary Information; (b) use the Proprietary Information solely asnecessary to perform the services required by the engagement (the “PermittedUse”); (c) if Contributor is a business entity rather than an individual,disclose the Proprietary Information only to Contributor’s employees with aneed to know such Proprietary Information in connection with the Permitted Useand who have signed confidentiality agreements or are otherwise legally boundby confidentiality obligations consistent with, and no less restrictive than,the terms of this paragraph; and (d) return (to either Licensee or Licensor) ordestroy (upon the written direction of Licensee or Licensor) all tangible andintangible materials containing the Proprietary Information promptly followingthe expiration or termination of Contributor’s engagement. Contributoracknowledges and agrees that the Proprietary Information is highly confidentialand that unauthorized use or disclosure of such Proprietary Information willresult in serious, irreparable harm for which Licensor’s remedies at law wouldbe inadequate. Accordingly, Contributor acknowledges and agrees that if anysuch unauthorized use or disclosure occurs, Licensor will be entitled, inaddition to any other remedies available to it at law or in equity, to theissuance of injunctive or other equitable relief.

 
| **CONTRIBUTOR:** |
|------------------|
|             |
|             |   |
| Signature        |
|             |
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| Print Name       |
|             |
|             |   |
| Address          |
|             |
|             |   |
| Country          |
|             |
|             |   |
| Date             |

 

**AGREED andACCEPTED:**

 

**WARNERBROS. CONSUMER PRODUCTS INC.**

 
| By:    |                                                                |   |
|--------|---------------------------------------------------------------------|--------|
|   | Gary  R. Simon, Senior Vice President  Business & Legal Affairs |
|   |
| Date:  |                                                                |   |
|        |                                                                     |        |  |  |

 

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**EXHIBIT****3**

 

**#14559-SCOO**

 

**WARNER BROS.CONSUMER PRODUCTS INC.**

4000 Warner Boulevard

Bridge Building 156 South - 4th Floor

Burbank, CA 91522

 

**Re: Approvalof Third Party Manufacturer**

 

To Whom It May Concern:

 

This letter will serve as notice to WarnerBros. Consumer Products Inc. (“Licensor”) that pursuant to Paragraph 10(b) ofthe that certain License Agreement between Licensor and Poore Brothers, Inc.(“Licensee”)dated                                                       ,200  (the “Agreement”), the undersigned company (“Manufacturer”) hasbeen engaged as the manufacturer for Licensee in connection with themanufacture of the Licensed Products (as defined in the Agreement).Manufacturer hereby acknowledges that it may not manufacture Licensed Productsfor, or sell or distribute Licensed Products to, anyone other than Licensee.Manufacturer hereby further acknowledges that it has received a copy and iscognizant of the terms and conditions set forth in the Agreement. Manufacturerhereby agrees to be bound by and comply with all such terms and conditions inconnection with Manufacturer’s performance as a manufacturer of the LicensedProducts as if named as Licensee under the Agreement. Manufacturer will not useany prison, slave or child labor in connection with the manufacture of theLicensed Products, and will comply with all local laws, including withoutlimitation, labor laws, wage and hour laws and anti-discrimination laws.Licensor will, at anytime, have the right to inspect the facilities and recordsof Manufacturer to ensure compliance therewith. It is understood that thisengagement is on a royalty-free basis and that Manufacturer may not subcontractany work hereunder to any third party without Licensor’s prior writtenapproval.

 

To induce Licensor to consent to theengagement of Manufacturer by Licensee, Manufacturer hereby acknowledges theproprietary and confidential nature of the information that Licensee orLicensor may provide to Manufacturer, or that Manufacturer might gain access toas the result of the privileged relationship created by this engagement (the“Proprietary Information”) and agrees to: (a) hold the Proprietary Informationin strict confidence, using no less than a reasonable degree of care to protectsuch Proprietary Information; (b) use the Proprietary Information solely asnecessary to perform the services required by the engagement (the “PermittedUse”); (c) disclose the Proprietary Information only to Manufacturer’semployees with a need to know such Proprietary Information in connection withthe Permitted Use and who have signed confidentiality agreements or areotherwise legally bound by confidentiality obligations consistent with, and noless restrictive than, the terms of this paragraph; and (d) return (to eitherLicensee or Licensor) or destroy (upon the written direction of Licensee orLicensor) all tangible and intangible materials containing the ProprietaryInformation promptly following the expiration or termination of Manufacturer’sengagement. Manufacturer acknowledges and agrees that the ProprietaryInformation is highly confidential and that unauthorized use or disclosure ofsuch Proprietary Information will result in serious, irreparable harm for whichLicensor’s remedies at law would be inadequate. Accordingly, Manufacturer acknowledgesand agrees that if any such unauthorized use or disclosure occurs, Licensorwill be entitled, in addition to any other remedies available to it at law orin equity, to the issuance of injunctive or other equitable relief

 

Manufacturer understands that its engagementas the manufacturer for Licensee is subject to Licensor’s written approval.Manufacturer therefore requests that Licensor sign in the space below, therebyshowing Licensor’s acceptance of Manufacturer’s engagement as set forth above.

 
|   | Very truly yours,          |
|--------|----------------------------|
|   |                       |
|   |                       |   |
|   | Manufacturer/ Company Name |
|   |                       |
|   |                       |   |
|   | Signature                  |
|   |                       |
|   |                       |   |
|   | Print Name:                |
|   |                       |
|   |                       |   |
|   | Address                    |
|   |                       |
|   |                       |   |
|   | Country                    |
|   |                       |
|   |                       |   |
|   | Date                       |
|   |                       |
|   |                       |   |
|   | Product(s) Manufacturing   |

 
| AGREED and ACCEPTED:                 |
|--------------------------------------|
|                                 |
| WARNER BROS. CONSUMER  PRODUCTS INC. |
|                                 |
| By:                                  |   |   |
|                                 | Gary  R. Simon, Senior Vice President  Business & Legal Affairs |
|                                 |
| Date:                                |   |   |
|                                      |  |  |  |  |

 

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**ATTACHMENT A**

 

**#14559-SCOO**

 

(a) “Change of Control”means and includes each of the following:

 

(1)                                  Any transaction or series of transactions,whereby any person (as that term is used in Section 13 and 14(d)(2) of theSecurities Exchange Act of 1934, as amended (the “Exchange Act”), is or becomesthe beneficial owner (as that term is used in Section 13(d) of the ExchangeAct) directly or indirectly, of securities of the Licensee representing morethan fifty percent (50%) of the combined voting power of the Licensee’s thenoutstanding securities; provided, that for purposes of this paragraph,the term “person” shall exclude (A) a trustee or other fiduciary holdingsecurities under an employee benefit plan of the Licensee or a subsidiary ofLicensee and (B) a corporation owned directly or indirectly by the stockholdersof the Licensee in substantially the sameproportions as their ownership in the Licensee;

 

(2)                                  Any merger, consolidation, other corporatereorganization or liquidation of the Licensee in which the Licensee is not thecontinuing or surviving corporation or entity or pursuant to which shares ofStock would be converted into cash, securities, or other property, other than(A) a merger or consolidation with a wholly owned subsidiary, (B) areincorporation of the Licensee in a different jurisdiction, or(C) other transaction in which there is no substantial change in thestockholders of the Licensee;

 

(3)                                  Any merger or consolidation of the Licenseewith or into another entity or any other corporate reorganization, if more thanfifty percent (50%) of the combined voting power of the continuing or survivingentity’s securities outstanding immediately after such merger, consolidation orother reorganization is owned by persons who were not stockholders of theLicensee immediately prior to such merger, consolidation or otherreorganization;

 

(4)                                  The sale, transfer, or other disposition ofall or substantially all of the assets of the Licensee; or

 

(5)                                  A change or series of related or unrelatedchanges in the composition of the Board of Directors of Licensee, during anytwenty-four (24) month period beginning on the first anniversary of the date ofthis Agreement, as a result of which fewer than fifty percent (50%) of theincumbent directors are directors who either (1) had been directors of theLicensee on the later of such first anniversary or the date twenty-four (24)months prior to the date of the event that may constitute a Change of Control(the “Original Directors”) or (ii) were elected, or nominated for election, tothe Board of Directors of the Licensee with the affirmative votes of a least amajority of the aggregate of the Original Directors who were still in office atthe time of the election or nomination and the directors whose election ornomination was previously so approved.

 

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