GF9 vs. Wizards of The Coast

Case 2:20-cv-01700 Document 1 Filed 11/17/20 Page 1 of 51
7
UNITED STATES DISTRICT COURT
8 WESTERN DISTRICT OF WASHINGTON
9
GALE FORCE NINE, LLC, a Virginia
10 Limited Liability Corporation, No.
11 Plaintiff, COMPLAINT FOR BREACH OF

CONTRACT, BREACH OF IMPLIED
12 v. DUTY OF GOOD FAITH AND FAIR
DEALING, DECLARATORY
13 WIZARDS OF THE COAST LLC, a RELIEF, AND INJUNCTIVE RELIEF
Delaware Limited Liability Company,
14 JURY DEMAND
Defendant.
15
16 COMES NOW, Plaintiff GALE FORCE NINE, LLC (“GF9”), by and through its counsel
17 of record, Oles Morrison Rinker & Baker, LLP, and alleges as follows:
18 I. PARTIES
19 1. Plaintiff Gale Force Nine, LLC (“GF9”) is a Virginia Limited Liability Corporation
20 with its principal place of business in Earlysville, Virginia. GF9 is wholly owned by Battlefront
21 Miniatures Ltd. a New Zealand corporation with its principal place of business in Auckland, New
22 Zealand. Battlefront New Zealand Ltd. is owned by John Paul Brisigotti a British citizen with his
23 current residence in Virginia and Peter Simunovich a New Zealand citizen with his current
24 residence in Auckland, New Zealand.
25
26
COMPLAINT FOR BREACH OF CONTRACT, OLES MORRISON RINKER & BAKER LLP
BREACH OF IMPLIED DUTY OF GOOD FAITH 701 PIKE STREET, SUITE 1700
SEATTLE, WA 98101-3930
AND FAIR DEALING, AND INJUNCTIVE RELIEF – Page 1 PHONE: (206) 623-3427
FAX: (206) 682-6234
1
2. Defendant Wizards of the Coast LLC (“Wizards”) is a Delaware Limited Liability
2
Company with its primary place of business located at 1600 Lind Avenue Southwest, Suite 400,
3
Renton, Washington 98057.
4
II. JURISDICTION AND VENUE
5
3. This court has jurisdiction over the subject matter and the parties pursuant to 28
6
U.S.C. § 1332. GF9 and Wizards are diverse citizens and the amount in controversy, exclusive of
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costs and interest, exceeds seventy-five thousand dollars ($75,000.00).
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4. This Court also has jurisdiction over the subject matter of this action for declaratory
9
relief under 28 U.S.C. §§ 2201 and 2202.
10
5. Venue is proper in this Judicial District pursuant to 28 U.S.C. § 1391(a) and (c) in
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that Defendant Wizards resides in this Judicial District and the parties have stipulated to venue in
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Washington State by contract, a true and correct copy of which is attached hereto as Exhibit A.
13
III. FACTS
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6. GF9 is a manufacturer and distributor of figurines, board games, cards, books, and
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other products associated with sci-fi and fantasy titles and/or brands such as Dungeons & Dragons,
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Dr Who, Dune, Star Trek, and other similar titles.
17
7. Wizards is the owner of the Dungeons & Dragons brand and trademark. Wizards
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is a subsidiary of, and wholly owned by, Hasbro, Inc.
19
8. This dispute arises out of a Merchandise Licensing Agreement (“2017
20
Agreement”), entered into between Wizards and GF9 on February 22, 2017, relating to the
21
translation and distribution in foreign markets of Dungeons & Dragons brand products and books.
22
A true and correct copy of the 2017 Agreement is attached hereto as Exhibit A.
23
9. The 2017 Agreement was amended on or about May 1, 2018, to among other items,
24
extend the term of the 2017 Agreement from February 7, 2021 to December 31, 2021.
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FAX: (206) 682-6234
1
10. The parties also entered into a Merchandising Licensing Agreement on May 1, 2008
2
(“2008 Agreement”) for the manufacture and worldwide distribution of Dungeons & Dragons
3
brand products. A true and correct copy of the 2008 Agreement is attached hereto as Exhibit B.
4
A. Wizards Failure to Approve Products Previously Agreed Upon for Release
5
11. Under to the 2017 Agreement, products planned for translation and release in the
6
different foreign markets for the coming calendar year are agreed upon between Wizards and GF9
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in December of the then current calendar year (sometimes bleeding into the beginning of the next
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calendar year) and a product release schedule is established. Based off this release schedule, GF9,
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through its translation and distribution subcontractors in their respective foreign markets, plan for
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and begin translation and production of the products several months before the scheduled release
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date.
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12. Products scheduled for release in the coming year are then added to the Wizards’
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approval platform prior to the planned release date and Wizards gives the final approval for the
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distribution subcontractor to release the product for sale.
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13. From the inception of the 2017 Agreement to June 2020, all the products which
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were included on the approved release schedule were subsequently approved by Wizards through
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its approval platform without comment or correction. Wizards has occasionally taken longer than
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the designated approval process time to provide its approval, but prior to June 2020, had never
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declined to approve a product that had been included on the agreed upon release schedule.
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14. The 2020 release schedule for products licensed under the 2017 Agreement was
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approved by Wizards and GF9 in December of 2019.
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15. Subsequent revisions to the release schedule were made each month in January,
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February, March, and April, primarily to show delay to planned product release dates that were
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being affected by the COVID 19 pandemic.
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FAX: (206) 682-6234
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16. On or about May 18, 2020, Wizards communicated to GF9 its desire to end the
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2017 Agreement and the 2008 Agreement one year early – on December 31, 2020 rather than the
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planned expiration date of December 31, 2021.
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17. The parties communicated over the next several months in an attempt to strike a
5
compromise; however, no agreement has been reached.
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18. During the discussions regarding Wizards’ requested early end to the 2017 and
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2008 Agreements, Wizards informed GF9 that certain products licensed under the 2017
8
Agreement, which were included in the parties’ agreed to release schedule, were not going to be
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approved.
10
19. Wizards did not note any issue with the products, yet declined to approve the
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products for release.
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20. All of the products Wizards declined to approve were listed on the approved release
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schedule and updates. These unapproved products are not wholly new products, but rather new
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translations of previously approved and released products – in English and other languages –
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planned for release by Wizards approved translation and distribution subcontractors in Wizards
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approved foreign markets.
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21. From June 2020 to October 2020, GF9 repeatedly communicated with Wizards to
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continue to seek approval of the products, but Wizards continued to decline to approve the products
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and would not provide any rationale for its failure to do so.
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22. GF9 and its foreign translation and distribution subcontractors spent significant
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time and money translating and preparing the products included on the release schedule.
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23. The course of dealing between Wizards and GF9 established that GF9 and the
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foreign subcontractors could rely on the mutually agreed upon release schedule to plan for and
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begin translation and production of products.
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FAX: (206) 682-6234
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24. On November 9, 2020, GF9 sent a letter to Wizards notifying it that GF9 considered
2
Wizards’ failure to approve submitted products was a breach of the 2017 Agreement and demanded
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that Wizards’ cure its breach. As of today, Wizards has not done so.
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B. Wizards Allegation of Breach of Contract by GF9
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25. On November 9, 2020, Wizards sent to GF9 a notice of breach of the 2017
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Agreement.
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26. Wizards’ breach notice alleged two breaches of the 2017 Agreement by GF9
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through the actions of two of GF9’s foreign translation and distribution subcontractors.
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27. First, Wizards alleged that GF9 breached the 2017 Agreement through the actions
10
of TRPG Club (GF9’s Korean translation and distribution subcontractor). Wizards alleged that
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certain unidentified products translated into Korean and distributed by TRPG Club were of low
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quality, including translations that were poorly done and included inaccurate, missing, and
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offensive translations. Wizards breach notice went on to further allege that TRPG Club failed to
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provide adequate customer service to consumers of Dungeons & Dragons materials.
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28. Second, Wizards alleged a breach of the 2017 Agreement due to the actions of
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Black Book Editions FR (“BBE”). Wizards alleged that after BBE translated certain Dungeons &
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Dragons books into French, it republished certain portions of the translated product under its own
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brand “Heros & Dragons.”
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29. Wizards’ notice of breach states that it intends to terminate of the 2017 Agreement,
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unless GF9 remedies its breach to Wizards’ satisfaction within the applicable time periods for cure.
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30. However, the products translated and distributed by TRPG Club, which are the
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subject of Wizards’ allegation of breach, were submitted in their final translated form to Wizards
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and approved by Wizards for release. Wizards informed GF9 that it had reviewers on its staff who
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were fluent in Korean who reviewed the product as translated and did not note a single correction
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or issue.
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FAX: (206) 682-6234
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31. GF9 disputes that the TRPG Club translation was of a poor quality, and TRPG Club
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provided a report stating the adequacy of its translation that was subsequently provided to Wizards,
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on November 12, 2019.
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32. When the translation quality issue was brought to the attention of GF9 and Wizards,
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GF9 sought direction from Wizards on the action necessary to rectify the alleged translation issue.
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Although GF9 and TRPG Club disputed that any significant deficiency in the translation was
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present in the products, GF9 offered to remove the products from the market. However, Wizards
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directed GF9 to leave the products in the market and to not renew its contract with TRPG Club or
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submit any additional products for approval.
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33. Acting on Wizards direction, GF9 did not take any further action related to the
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translated products, informed TRPG Club that its contract would not be renewed, and has not
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submitted any additional TRPG Club products for approval or release.
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34. GF9 cured any breach of the 2017 Agreement it may have committed related to the
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alleged poor translation when it enacted the actions directed by Wizards.
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35. Wizards’ breach notice further alleged a breach of the 2017 Agreement by the
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actions of TRPG Club for customer complaints about damaged books and orders that never arrived.
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36. GF9 is aware of very few customer complaints related to TRPG Club produced
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products all of which occurred in fall 2019 (one year before the breach notice). Customer
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complaints stem largely from products being damaged in transit. The amount of products for
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which customers complained is extremely minimal and within the expected threshold of transit
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damaged products experienced in all other markets (including the US market).
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37. GF9 worked with TRPG Club to ensure that each of the customer complaints TRPG
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Club received were rectified by either providing replacement products or a refund as requested by
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the respective customer.
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FAX: (206) 682-6234
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38. GF9 and TRPG Club rectified each of the customer issues and therefore no breach
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exists. Even said breach did occur, it has since been cured.
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39. GF9 disputes that it breached the 2017 Agreement due to the alleged actions of
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BBE in utilizing Wizards’ intellectual property for its own benefit.
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40. GF9 does not have an obligation under the 2017 Agreement to prosecute and defend
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Wizards intellectual property from use by the translation and distribution subcontractors. The
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2017 Agreement provides Wizards the sole right to determine whether or not any action shall be
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taken on account of an intellectual property infringement and GF9 is required to assist Wizards in
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this defense, if requested to do so.
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41. On information and belief, Wizards has not instituted an action against BBE.
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42. However, even if GF9 may have some responsibility under the 2017 Agreement for
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BBE alleged infringement, BBE did not utilize Wizards’ intellectual property gained through its
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relationship with GF9. BBE produced and distributed for sale its Heros & Dragons product in the
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fall of 2016, approximately ten months before it entered into the contract with GF9 to translate and
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distribute Dungeons & Dragons products. BBE’s Heros & Dragons product utilized text
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previously translated under a Dungeons & Dragons open gaming license, which permits the
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Dungeons & Dragons core rules and mechanics of game play to be used by others.
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43. Upon information and belief, Wizards was aware of the Heros & Dragons products
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already in the market prior to GF9’s agreement with BBE to translate and distribute Dungeons &
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Dragons products in the French market. Wizards approved BBE as the French partner with
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knowledge that Heroes & Dragons already existed in the market.
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44. Under its contract with GF9, when BBE translated the Dungeons & Dragons
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products, it utilized the same translated text it had previously translated and used in its Heros &
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Dragons products (i.e. the open gaming license core rules and game play mechanics). BBE did
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not use intellectual property gained through its contractual relationship with GF9 for its Heros &
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FAX: (206) 682-6234
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Dragons products, instead when translating the Dungeons & Dragons products it used translated
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text it already possessed before the contract with GF9 to expedite the translation process.
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45. Upon Wizards informing GF9 of its belief that BBE was utilizing Wizards’
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intellectual property in its Heros & Dragons products, GF9 entered into discussions with BBE to
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terminate the existing translation and distribution agreement between BBE and GF9, to purchase
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all outstanding stock of Heros & Dragons at GF9’s expense, to pull all existing Heros & Dragons
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products from the market, and to destroy all product purchased.
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46. Agreement between GF9 and BBE was reached to accomplish the above stated
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objectives, and GF9 informed Wizards of the agreement. After reaching agreement with BBE and
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informing Wizards, Wizards required that BBE sign an admission of liability indicating that it had
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improperly utilized Wizards’ intellectual property. BBE refused to sign the admission of liability
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that Wizards demanded and the deal between GF9 and BBE was not completed.
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47. Because BBE refused to sign the admission of liability demanded by Wizards, and
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upon the request of Wizards, in November 2019, GF9 terminated BBE for breach of its agreements
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with GF9 for failure to timely pay its royalties. The termination of BBE and settlement of
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outstanding claims was concluded fully in May 2020, with full agreement on termination and
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settlement from Wizards. A new French partner was approved and the market became active again
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in February 2020.
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48. GF9 has no control over BBE after termination of its agreement with BBE and
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therefore, cannot cure any breach that Wizards has alleged relating to BBE’s continued use of
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intellectual property in BBE’s Heros & Dragons product.
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IV. FIRST CAUSE OF ACTION – BREACH OF CONTRACT
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49. GF9 incorporates by this reference each and every allegation contained in
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paragraphs 1 through 48 as though fully set forth herein.
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50. Wizards and GF9 entered into the 2017 Agreement on February 22, 2017.
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FAX: (206) 682-6234
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51. The 2017 Agreement provides that “…[GF9] will have the right to translate and the
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exclusive rights to manufacture, publish, market, sell and distribute physical translated versions of
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the Dungeons & Dragons’ Starter Set, Player’s Handbook, Dungeon Master’s Guide, and Monster
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Manual (and at [Wizards’] sole discretion, other Dungeons & Dragons products as provided to
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[GF9] by [Wizards].” (Emphasis in original).
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52. Wizards provided approval to GF9 to translate, manufacture, and distribute in
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foreign markets certain other Dungeons & Dragons products.
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53. After being provided Wizards approval for other products, GF9 and Wizards agreed
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in the 2020 release schedule to release these previously approved products in certain approved
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markets.
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54. Wizards actions in failing to approve products under the 2017 Agreement, despite
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the products being included on the mutually agreed upon release schedule, is a breach of the 2017
13
Agreement.
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55. As a direct and proximate result of Wizards’ breach of contract GF9 suffered and
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will continue to suffer damages in an amount to be proven at trial, and which on information and
16
belief, is in excess of $950,000.00.
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V. SECOND CAUSE OF ACTION – BREACH OF IMPLIED DUTY OF GOOD
18 FAITH AND FAIR DEALING
19 56. GF9 incorporates by this reference each and every allegation contained in
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21
57. The 2017 Agreement between Wizards and GF9 contained an implied covenant of
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good faith and fair dealing by and between the parties, which prohibits them from engaging in
23
24 any activity or conduct that would prevent the other party from receiving the benefit of the
25 contract.
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FAX: (206) 682-6234
1 58. Wizards actions in declining to approve products under the 2017 Agreement,
2 despite the products being included on the mutually agreed upon release schedule, is contrary to
3 the established course of dealing between the parties and a breach of Wizards’ duty of good faith
4
and fair dealing.
5
59. Wizards actions in declining to approve products included on the release schedule
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deprived GF9 and its translation and distribution subcontractors of the benefit of the contract and
7
8 had the effect of interfering with and destroying the value of the 2017 Agreement.
9 60. As a direct and proximate result of Wizards’ breach of the implied covenant of
10 good faith and fair dealing GF9 suffered and will continue to suffer damages in an amount to be
11
proven at trial, and which on information and belief, is in excess of $950,000.00.
12
VI. THIRD CAUSE OF ACTION – DECLARATORY RELIEF AND
13 TEMPORARY INJUNCTIVE RELIEF
14 61. GF9 incorporates by this reference each and every allegation contained in
15
16
62. Wizards sent to GF9 a notice of breach on November 9, 2020, alleging breach of
17
contract by GF9 for the actions of its prior translation and distribution subcontractors – TRPG
18
Club and BBE.
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20 63. Wizards’ breach notice states that it will terminate the 2017 Agreement, if the
21 breaches alleged by Wizards are not cured the full satisfaction of Wizards within the respective
22 cure period provided in the 2017 Agreement.
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64. Wizards’ accusations are without merit, because (1) Wizards approved for release
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the TRPG Clubs’ final translation of the product it now alleges to have been poorly translated;
25
(2) TRPG Club’s translation was not of poor quality; (3) GF9 and TRPG Club adequately and
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FAX: (206) 682-6234
1 appropriately resolved any customer complaints about damaged or incomplete products; (4) GF9
2 followed the direction of Wizards in leaving the complained of products in the Korean market,
3 not renewing TRPG Club’s contract, and not approving any additional products for release by
4
TRPG Club; (5) GF9 is not responsible under the 2017 Agreement for the alleged improper use
5
of Wizards’ intellectual property by BBE; (6) BBE used open gaming license content (core rules
6
and game play mechanics) that Wizards permitted to be utilized by the public; and (7) BBE’s
7
8 Heros & Dragons product(s) were published in the fall of 2016, ten months before BBE and GF9
9 entered into contract for translation and distribution of Dungeons & Dragons products and
10 Wizards knew of the BBE’s Heros & Dragons product and the use of open gaming license
11
content prior to GF9 entering into contract with BBE.
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65. GF9 herein seeks a determination by the court that GF9 is not in breach of the
13
2017 Agreement, such that any termination by Wizards would be wrongful.
14
66. Absent injunctive relief, GF9 will be irreparably harmed if Wizards is allowed to
15
16 terminate the 2017 Agreement on the basis of the alleged breach of contract. As such, GF9
17 herein seeks to enjoin Wizards from terminating the 2017 Agreement based on the alleged
18 breaches in its November 9, 2020 Notice.
19
67. Under the 2008 and 2017 Agreements, if there is a default and termination under
20
one of them, it automatically causes a default (and likely termination) of the other. As such,
21
Wizards is expected to terminate the 2017 Agreement, based on the meritless reasons set forth in
22
23 its November 9, 2020 letter, which will then lead to the termination of the 2008 Agreement. The
24 loss of both these Agreements will cause devastating, irreparable harm to GF9.
25 68. If wrongfully terminated, GF9 will be forced to lay off a significant amount of its
26 work force – as the Dungeons & Dragons products account for a substantial portion of GF9’s
FAX: (206) 682-6234
1 yearly revenue. GF9 will suffer significant impacts to its reputation in the industry – with
2 distribution partners to whom GF9 supplies the manufactured products and licensors of other
3 products with whom GF9 currently works and desires to work. Further, GF9’s manufacturing
4
partners with whom GF9 has contracted to manufacture Dungeons & Dragons and other products
5
– will be significantly harmed, as GF9 will be forced to terminate its foreign translation and
6
distribution subcontractors and face legal challenges in numerous jurisdictions worldwide.
7
8 Finally, GF9 will lose the continued revenue expected to be earned under the 2017 Agreement
9 for the remainder of its term.
10 69. If Wizards is permitted to terminate the 2017 Agreement, GF9 is required to

11
immediately cease production of any additional products and very shortly thereafter either sell to
12
Wizards the products it has already produced or destroy the entirety of its remaining stock of
13
produced products.
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70. If Wizards termination of the 2017 Agreement is allowed to proceed, GF9 will
15
16 face significant hardships as described above.
17 VII. PRAYER FOR RELIEF

18 WHEREFORE, Plaintiff Gale Force Nine, LLC, having set forth the above fact and
19
having alleged the above first through third causes of action, prays for judgment against
20
Defendant Wizards of the Coast LLC as follows:
21
1. Judgement for monetary damages against Wizards in an amount to be proven at
22
23 trial, and which on information and belief, is in excess of $950,000.00;
24 2. An award of attorneys’ fees and costs incurred by GF9 in prosecuting the
25 foregoing claims against Wizards;

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FAX: (206) 682-6234
1 3. For declaratory relief finding that GF9 has not breached the 2017 Agreement for
2 the breaches alleged by Wizards in its November 9, 2020 notice of breach;

3 4. For permanent injunctive relief restraining Wizards from:
4
a. Terminating the 2017 Agreement for the breach of contract alleged in its
5
November 9, 2020 notice of breach;
6
5. For any other costs, including interest, authorized by law; and
7
8 6. For such other relief as the court may deem just and equitable.
9 DEMAND FOR JURY TRIAL
10 Plaintiff hereby demands a jury trial of all issues in the Complaint that are triable to a
11
jury.
12
DATED THIS 17th day of November, 2020.
13
14 OLES MORRISON RINKER & BAKER LLP

15 /s/ Eric P. Forner
16 Thomas R. Krider, WSBA #29490
Eric P. Former, WSBA #49264
17 701 Pike Street, Ste. 1700
Seattle, WA 98101
18 T: 206-623-3427
E: krider@oles.com
19 E: forner@oles.com
20
Attorneys for Plaintiff Gale Force Nine, LLC
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FAX: (206) 682-6234
Exhibit A
LICENSE AGREEMENT BASIC TERMS
THIS AGREEMENT is by and between Licensor and sum equal to that shown in the License Agreement
Licensee named in the License Agreement Summary Summary on all Net Sales.
to which these Basic Terms are attached. (b) Periodic Statements. On or before the
twenty-fifth (25th) day of the month following the
WITNESSETH: end of each March, June, September, and December
WHEREAS, Licensee wishes to license to the during the Term, Licensee shall furnish to Licensor
Licensed Property for the purpose of translating it complete and accurate statements, showing the
into various languages for marketing, selling and number, country in which sold or to which shipped,
distributing the Licensed Articles in to various description, gross wholesale price charged, itemized
markets around the world; and deductions from the gross wholesale price, and the
WHEREAS, Licensor desires to provide Net Sales price of the Licensed Articles distributed
Licensee with such rights; and sold by Licensee during the preceding calendar
NOW, THEREFORE, in consideration of the quarter, together with any returns made during the
mutual covenants herein contained, and for other preceding quarter. Such statements shall be
good and valuable consideration the sufficiency of furnished to Licensor whether or not any of the
which is hereby acknowledged, the parties do hereby Licensed Articles have been sold during the quarter to
agree as follows: which such statements refer. In the event that
Licensee is late in furnishing its royalty statements or
1. GRANT OF LICENSE payments hereunder, Licensor will be entitled to
(a) Licensed Articles. Subject to Licensee’s demand of Licensee, at Licensee’s own expense, an
compliance with the terms and conditions of this independent auditor’s report, within fifteen (15) days
Agreement, Licensor hereby grants to Licensee, of such demand, detailing all information pertaining
during the Term, an exclusive right, license and to Licensee’s sales activities hereunder as specified
privilege to use the Licensed Property solely in above for inclusion in each royalty report.
connection with the manufacture, translation, sale, (c) Royalty Payments. Royalties in excess of
marketing, promotion, and distribution of the any advance payment required and paid hereunder
Licensed Articles listed in the License Agreement shall be due on the twenty-fifth (25th) day following
Summary. the close of the calendar quarter in which earned, and
(b) Territory. The license hereby granted payment shall be made by electronic payment as
extends only to the Territory area listed in the License specified in the License Agreement Summary. The
Agreement Summary and only to sales through the receipt or acceptance by Licensor of any of the
Channels of Distribution, also as defined in the statements furnished pursuant to this Agreement, or
License Agreement Summary. Licensee agrees that it of any royalties paid hereunder (or the cashing of any
will not make or authorize any use, direct or indirect, royalty checks paid hereunder) shall not preclude
of the Licensed Articles in any other area, or outside Licensor from questioning the correctness thereof at
the Channels of Distribution, and that it will not any time within three (3) years after the expiration
knowingly sell Licensed Articles to persons who and/or termination of this License Agreement, and in
intend or are likely to resell them in any other area or the event that any inconsistencies or mistakes are
outside the Channels of Distribution. discovered in such statements or payments, they
(c) Term. The Term of the license hereby shall immediately be rectified and the appropriate
granted shall be effective as shown in the License payment made by Licensee. Licensee shall not be
Agreement Summary, unless sooner terminated in permitted to reduce royalty payments for any reason
accordance with the provisions hereof. without prior written approval from Licensor.
Licensee shall pay Licensor interest on a late royalty
2. TERMS OF PAYMENT payment at an interest rate of one and one half
(a) Terms of Payment. Licensee agrees percent (1.5%) per month, or the highest rate
to pay the Advance Minimum Guarantee as shown in permitted by law, whichever rate is lower, from the
the License Agreement Summary; no part of such date the royalty payment should have been received
amounts shall in any event be repayable to Licensee. by Licensor until paid. Royalty payments must be
Licensee also agrees to pay to Licensor, as royalties, a remitted to Licensor at the address noted above.
Wizards of the Coast LLC | 1600 Lind Avenue Southwest, Suite 400 | Renton, Washington 98057
Merchandise Licensing Agreement | Page 6 of 19
3. NONEXCLUSIVITY infringements or imitations by others of the Licensed

Except for the rights granted herein, nothing in this Property on articles similar to those covered by this
Agreement shall be construed to prevent Licensor Agreement which may come to Licensee's attention,
from utilizing the Licensed Property in any other and Licensor shall have the sole right to determine
manner whatsoever. Licensor reserves all rights to whether or not any action shall be taken on account
use or license others to use the Licensed Property in of any such infringements or imitations. Licensee shall
connection with any other product, good or service. not institute any suit or take any action on account of
any such infringements or imitations, or otherwise
4. GOODWILL institute any suit or take any action relating to the
Licensee recognizes the great value of the goodwill Licensed Property, without first obtaining the written
associated with the Licensed Property, and consent of Licensor to do so.
acknowledges that the Licensed Property and all (b) Except with Licensor's prior written
rights therein including goodwill, belong exclusively consent and in accordance with the terms of the
to Licensor and that the Licensed Property has a Licensee Agreement Summary, neither Licensee, its
secondary meaning in the mind of the public. parent or any of its subsidiaries or affiliates, will
Additionally, Licensee acknowledges and agrees that register or attempt to register copyrights in any
all goodwill created by Licensee’s use of the Licensed country or to register as a trademark, service mark,
Property shall automatically inure to the benefit of design patent or industrial design, any of the Licensed
Licensor. Licensee further recognizes and Articles, trademarks or derivations or adaptations
acknowledges that a breach by Licensee of any of its thereof, or any word, symbol or design which is so
covenants, agreements or undertakings with respect similar thereto as to suggest association with or
to use of the Licensed Property, legal marking sponsorship by Licensor or any of its subsidiaries. In
requirements, quality standards, or ethical standards the event of breach of the foregoing, Licensee agrees,
will cause Licensor irreparable damage, which cannot at its expense and at Licensor's request, immediately
be readily remedied in damages in an action at law, to terminate the unauthorized registration activity
and may, in addition thereto, constitute an and promptly to execute and deliver, or cause to be
infringement of Licensor’s intellectual property rights delivered to Licensor, such assignments and other
in the Licensed Property, entitling Licensor to documents as Licensor may require to transfer to
equitable remedies, costs and reasonable attorney’s Licensor all rights to the registrations, patents or
fees. Notwithstanding anything herein to the applications involved.
contrary, Licensee hereby waives, and forever
releases Licensor from, any and all claims, actions, 6. INDEMNIFICATION AND PRODUCT
and suits alleging that Licensor may have failed to LIABILITY INSURANCE
adequately promote, advertise or otherwise use or (a) Licensee hereby indemnifies Licensor
exploit the Licensed Property during or after the Term and undertakes to defend Licensee and Licensor
(such matters being entirely within Licensor’s against, and to hold Licensor harmless from, any
discretion), and Licensor shall be under no obligation claims, suits, loss and damage arising out of any sale
to sell any products utilizing the Licensed Property at or use of the Licensed Articles, or any use of the
any time. Licensed Property, or any design, logo, verbiage,
trademark, personal name, patent, process, idea,
5. LICENSOR'S TITLE AND PROTECTION OF method or device, by Licensee in connection with the
LICENSOR'S RIGHTS Licensed Articles, or any other alleged action by
(a) Licensee agrees to assist Licensor to the Licensee, and also from any claims, suits, loss and
extent necessary or desirable in the procurement of damage arising out of strict liability for, or any actual
any protection or to protect any of Licensor's rights to or alleged defects in, the Licensed Articles, whether
the Licensed Property, and Licensor, if it so desires, defects in, design, manufacture, or otherwise.
may commence or prosecute any claims or suits in its Licensee shall be solely responsible for trademark
own name or in the name of Licensee, or join Licensee searches, and clearance of the use, of any
as a party thereto. Licensor will reimburse Licensee trademarks, names, designs, logos, or verbiage which
for any reasonable out-of-pocket costs Licensee Licensee may use on the Licensed Articles. Licensee
incurs in rendering such assistance, provided that agrees to give Licensor prompt written notice of any
Licensor has approved such costs in advance in such claims or suits and to take any such corrective
writing. Licensee shall notify Licensor in writing of any action as Licensor may require in its discretion
including, but not limited to, product recall or any such claim, suit, action, loss, and/or damage,
changes in product design. In the event of a claim, permits Licensor to conduct and control the defense
action, or suit alleging a defect in the design, with counsel of Licensor’s own choosing, and
manufacture, or otherwise in the Licensed Articles, or provides Licensor with full cooperation with respect
alleging strict liability for damages due to the Licensed thereto. In no event shall Licensor be liable for
Articles, Licensee agrees not to destroy or discard any Licensee’s consequential damages or lost profits. No
engineering design records or safety testing records warranties, either express or implied, shall be
pertaining to the Licensed Articles. Licensee agrees deemed given by Licensor hereunder. The indemnity
that it will obtain, at its own expense, product liability described in this Paragraph, and termination of this
insurance, written on an occurrence basis (not a Agreement, without further obligation other than the
“claims made” basis), from a recognized insurance payment of royalties on actual sales to date, shall
company, providing adequate product liability constitute Licensee’s sole remedy in the event of a
insurance protection (at least in the amount of Two finding of copyright infringement based on Licensee’s
Million United States Dollars (U.S. $2,000,000.00) for use of the Licensed Property as authorized
Bodily Injury Liability and Property Damage Liability hereunder.
for each occurrence and Five Million United States
Dollars (U.S. $5,000,000.00) in annual aggregate), 7. MERCHANDISE AND MANUFACTURING
effective throughout the Term and any renewal, and STANDARDS
for at least three (3) years after any expiration or (a) Quality of Merchandise. Licensee agrees
termination of the Agreement, naming Licensee as that the Licensed Articles shall be of acceptable
named insured and Licensor and its parent company quality that satisfies consumer expectations, making
as additional named insured against any claims, suits, them merchantable and fit for their intended and
loss, or damage arising out of any such actual or foreseeable uses. The Licensed Articles will be of such
alleged defects in the Licensed Articles. It is agreed style and appearance as to be appropriate for and
that the deductible under said insurance policy or suited to their exploitation to the best advantage and
Licensee’s self-insurance retention amount may not to the protection and enhancement of the Licensed
exceed One Hundred Thousand United States Dollars Property and the goodwill pertaining thereto.
(U.S. $100,000.00). As proof of such insurance, a Licensee warrants that the Licensed Articles will be
certificate of insurance naming Licensor as an designed, produced, sold and distributed in
additional named insured will be submitted to accordance with Licensor’s Safety and Reliability
Licensor by Licensee for Licensor's prior approval Specifications set forth in Schedule B, attached hereto
before any Licensed Article is distributed or sold, and and incorporated herein by
at the latest, within thirty (30) days after the date first reference.
written above. Licensor shall be entitled to a copy of (i) In order to insure that the Licensed
the then-prevailing certificate of insurance, which Articles meet the above requirement, Licensee shall
shall be furnished Licensor by Licensee. As used in the submit to Licensor a document (the “Quality
first, fifth, and sixth sentences of this Paragraph 6(a), Assurance Plan”) that lists all of the applicable laws,
"Licensor" shall include Licensor, the parent, rules and regulations governing the manufacture and
subsidiaries, and affiliates thereof, and the officers, sale of the Licensed Articles in the Territory as well as
directors, agents and employees of each. The a detailed description of the tests to be conducted on
certificate of insurance shall include a provision to the Licensed Articles by Licensee to ensure
notify Licensor in writing, prior to the effective date, compliance with such laws, rules, and regulations and
of any amendment or cancellation of such insurance the Specifications. Licensee shall also supply Licensor
before the expiration date thereof. with written laboratory reports confirming that the
(b) Licensor hereby indemnifies Licensee Licensed Articles conform to the Specifications, laws,
and undertakes to defend Licensee against, and to rules and regulations included in the Quality
hold Licensee harmless from, any claims, suits, action, Assurance Plan. Upon request by Licensor, Licensee
loss, and damage arising out of any claims and/or shall provide Licensor with specific test data and in
actions of actual or alleged copyright infringement any case Licensee agrees to maintain such reports
based on the Licensed Property as supplied to and other safety testing records, as well as all
Licensee by Licensor and used by Licensee pursuant engineering design records, for a period of not less
to the terms of this Agreement, provided that than twenty (20) years.
Licensee has given Licensor prompt written notice of
(ii) Licensee shall furnish to Licensor, for being referred to herein as a "Manufacturer") as
Licensor’s approval, submissions representing the permitted and if approved by Licensor, strictly comply
development Licensed Articles as well as marketing and will remain in strict compliance throughout the
materials and solicitations. Licensor shall provide Term with Licensor’s Global Business Ethics Principles
either written approval or written requested changes (hereinafter, the “Principles”), attached hereto as
to the submitted files, within ten (10) business days Schedule C and incorporated herein by reference.
of receiving such files for approval. If Licensee does Licensee covenants and agrees that Licensor or its
not receive feedback within such ten (10) business representative shall have the right from time to time,
days, the submission shall be deemed unapproved. with or without prior notice, to inspect and audit any
such facilities of Licensee or any Manufacturer or
Licensee hereby warrants that the final product of the proposed Manufacturer, and such inspection and
Licensed Articles will be of the same standards of audit process may include, but might not necessarily
quality, or better, as the Licensee’s current products. be limited to, a review of the facility’s policies,
records and payroll documents, walkthrough of the
Licensee will not materially change the Licensed entire facility, and confidential interviews with
Articles or marketing materials without Licensor’s management and workers. Licensor’s approval of any
express written approval. Licensee shall, without such Manufacturer may be conditioned upon such
charge, furnish Licensor with twenty–five (25) Manufacturer being determined to be in compliance
samples (unless a smaller number of samples is with the Principles. Licensee shall, prior to production
agreed to by Licensor) of the first printing of each and thereafter on an annual basis on or before each
Licensed Article for its records. Should subsequent anniversary of the date of this Agreement, provide to
printings of a Licensed Article be substantially Licensor a written disclosure of the name and location
different from the first, changes for which Licensee of the manufacturing, printing, and packaging
has received the appropriate approval hereunder, facilities, both those of Licensee and those of any
Licensee shall furnish Licensor with an additional six Manufacturer, producing the Licensed Articles, and if
(6) copies of this new printing. following Licensee providing such a written disclosure
there is any change or planned change of the name or
From time to time after Licensee has commenced location of such facilities, then Licensee shall give
selling the Licensed Articles, and upon Licensor's Licensor prompt written notice stating the changes or
written request, Licensee shall furnish without cost to planned changes, and any such new facility shall be
Licensor, not more than twenty-five (25) additional subject to approval as provided in this Agreement
random samples of each Licensed Article being prior to production. Licensee shall not engage any
manufactured or sold by Licensee hereunder, Manufacturer that refuses to consent to Licensor’s
together with any cartons, containers and packing inspection and audit of such facilities, and upon
and wrapping material used in connection therewith. notice from Licensor shall immediately terminate the
Should Licensor require additional Licensed Articles services of any such Manufacturer that attempts to
for any reason whatsoever, Licensor may purchase prevent any such inspection. Prior to using any
such at Licensee's cost price. Sale of any Licensed Manufacturer or any facility (whether that of Licensee
Article by Licensee, the quality of which has not been or a Manufacturer) for production of the Licensed
specifically approved by Licensor as hereinabove Articles, Licensee must obtain Licensor's written
provided, shall be deemed to constitute a material approval of such Manufacturer and any facilities to be
breach of this Agreement. used by Licensee or such Manufacturer for
(b) Manufacturing Ethics and Approval of production of the Licensed Articles.
Manufacturers. Licensee acknowledges that Licensor
has a significant interest in ensuring that the Licensed As part of the approval process Licensee must submit
Articles are manufactured, distributed, and sold in to Licensor for Licensor's review with respect to each
accordance with the highest ethical and business such facility an audit or audits as specified below
standards. Licensee covenants and agrees that any conducted by a third-party auditor acceptable to
manufacturing, printing or packaging facilities Licensor reporting the level of compliance of such
producing the Licensed Articles including, Licensee’s facility with the Principles. Licensee shall submit an
own such facilities and those of any third party audit that is not older than twelve months old from
manufacturer, printer or packager of the Licensed the time of production. Licensee shall cooperate with
Articles (any such manufacturer, printer or packager Licensor and cause the Manufacturer to cooperate
with Licensor in addressing any issues or concerns governmental body or agency, whether on Licensee’s
raised by any audit. Licensor may condition its own volition or in response to any such inquiry,
approval of a Manufacturer or facility on the without first notifying Licensor and giving Licensor a
submission of a corrective action plan within ten right of meaningful consultation as to any such
business days and submission of a third-party communication and/or response.
verification audit prior to factory approval. With (d) Licensee agrees to maintain and
respect to each such facility approved by Licensor for provide Licensor with quarterly reports, within thirty
production of the Licensed Articles, if Licensee or a (30) days of the end of each calendar quarter,
Manufacturer continues to use such facility for describing all consumer complaints and/or quality-
production of the Licensed Articles, then Licensee related inquiries or notifications related to the
shall submit to Licensor for Licensor's review annually Licensed Articles, regardless of whether or not they
no later than twelve (12) months from the date of the concerned bodily or physical injury. Upon request
prior audit submission an audit conducted within the from Licensor, licensee must submit reports within 48
prior year by a third-party auditor acceptable to hours. It is further agreed that safety and/or potential
Licensor reporting the level of compliance of the safety complaints, inquiries, or notifications shall be
facility with the Principles. The submission of such reported by Licensee to Licensor within two (2)
audits and Licensor's approval of any Manufacturer or business days. All reports under this subparagraph
facility shall not be deemed to waive or release the shall be sent via email to Licensor.
provisions of Paragraph 7(b)(i) above including,
without limitation, the right of Licensor or its 8. TRADEMARK AND COPYRIGHT
representatives to inspect and audit any PROTECTION
manufacturing, printing or packaging facilities. (a) Labeling. As a condition to the grant of
Licensor shall have the right to amend the Principles, the rights hereunder, Licensee agrees that it will
as well as the Specifications, from time to time, and cause the Required Notices or such other notice as
such amended version shall be deemed incorporated Licensor may direct, to appear on or within each
herein by reference ten (10) days after notice to Licensed Article sold by it and on or within all
Licensee of such changes, absent Licensee’s notice to packaging, cartons, wrapping material, advertising,
Licensor of its formal written objections thereto promotional, or display material bearing the Licensed
within such time period (in the event that, after Property.
Licensee’s objections, the parties are unable to agree (b) Approval. Each Licensed Article and all
as to the amendment of such Principles or advertising, promotional or display material bearing
Specifications within ten (10) days of the objection, the Licensed Property shall be submitted by Licensee
Licensor shall have the right to terminate this to Licensor for its written approval in accordance with
Agreement under Paragraph 12 (a)). No part of the Section 6(a)(ii), as may be granted or withheld in
licensed product manufacturing may be done in the Licensor’s sole discretion, prior to use by Licensee.
following countries: Afghanistan, Pakistan, Cuba, East Approval by Licensor shall not constitute a waiver of
Timor, Haiti, Iran, Iraq, Libya, Myanmar, North Korea, Licensor's rights or Licensee's duties under any
Saudi Arabia, Somalia, Sudan, or Syria. provision of this Agreement. Licensee must use
(c) In the event that Licensee is contacted Licensor's approval form with each submission for
by any governmental body or agency (including but Licensor's approval. Otherwise, Licensor is not under
not limited to the United States Food And Drug any obligation to review Licensee's submission.
Administration, Federal Trade Commission, (c) Ownership. All right, title and interest in
Consumer Product Safety Commission, Federal and to all copyrights and trademarks embodying the
Communications Commission, the U.S. Department Licensed Property or derived from the creation,
of Justice, Health Canada, or any federal, state, or manufacture or sale by Licensee of the Licensed
provincial attorney general’s office) concerning any Articles, and all copyright and trademark registrations
issue of product safety, product quality, allegedly based thereon, shall be in Licensor's name and shall
false or deceptive trading or advertising practices, or be owned exclusively by Licensor, and Licensee
an alleged failure to comply with governmental covenants and agrees that this Agreement shall be
regulations or laws, Licensee shall so notify Licensor deemed a license, not a transfer, of Licensor’s rights
within twenty four (24) hours of such contact. in the Licensed Property, and that Licensee shall have
Furthermore, except as may be otherwise required by no interest in or claim to the Licensed Property or to
law, Licensee agrees not to contact any such any of the copyrights and trademarks associated
therewith, except to the limited extent of the license Quantities" shall mean sufficient quantities to meet
to use same pursuant to this Agreement, and subject at least Licensee's average order level for its regular
to its terms and conditions. Licensee agrees not to distributors and/or customers for similar articles of
utilize the Licensed Property or any other intellectual the type licensed hereunder.
property of Licensor except as expressly permitted by (b) Licensee agrees that it will sell and
this Agreement or pursuant to a separate license distribute the Licensed Articles outright at a
agreement. Licensee further agrees to provide competitive price and at not more than the price
Licensor with the date of the first use of the Licensed generally and customarily charged the trade by
Articles in commerce and to execute, and provide Licensee, and not on an approval or consignment
Licensor with, all necessary documents, assignments basis, and only within the Channels of Distribution to
and signatures which Licensor may request for the jobbers, wholesalers and distributors for sale and
purpose of perfecting Licensor's title to all such distribution to retail stores and merchants, and to
copyright and trademark registrations. Licensee retail stores and merchants for sale and distribution
agrees to secure assignments of all rights which any direct to the public, and as otherwise may be
third party designers of the Licensed Articles or specifically permitted under the terms of this
related materials may otherwise claim. All uses of the Agreement. Licensee shall not sell or distribute
trademarks by Licensee hereunder shall inure to Licensed Articles to anyone whose sales or
Licensor's benefit. Without limiting the foregoing, distribution are or will be made for publicity or
Licensee hereby assigns to Licensor all copyrights and promotional tie-in purposes, combination sales,
trademarks in the Licensed Articles and the Licensed premiums, give-aways, or similar methods of
Property, together with the goodwill attaching to that merchandising, or who engages in deceptive, illegal,
part of the business in connection with which the or immoral business practices. For purposes of this
trademarks are used. paragraph, the term "premium" shall include, but not
(d) Licensee’s Pre-Existing Intellectual be limited to, free or self-liquidating items offered to
Property. Notwithstanding the foregoing, Licensor the public in conjunction with the sale or promotion
acknowledges that it claims no ownership in of a product or service, or any similar scheme or
trademarks, copyrights, artwork, patents, or device, the prime intent of which is to use the
software, (including storylines or characters included Licensed Articles in such a way as to promote,
in such software) that Licensee owned or licensed publicize and/or sell services and/or other product(s).
from a third party prior to the date of this Agreement. Licensee is expressly prohibited from making door to
door sales. Except for Licensee’s right to liquidate
9. PROMOTIONAL MATERIAL discontinued product (as described under section 14
(a) Licensor shall have the right (subject to hereof), any sale is made at a special price to any of
approval as described herein) to use the Licensed Licensee's subsidiaries or to any other person, firm or
Property and the name of Licensee so as to give the corporation related in any manner to Licensee or its
Licensed Property and/or Licensor full and favorable officers, directors or major stockholders, there shall
prominence and publicity. be a royalty paid on such sales based upon the price
(b) Licensee also agrees to submit to generally charged the trade by Licensee.
Licensor for advance approval designed sketches of
all advertising and other publicity material which 11. RECORDS
Licensee proposes to use in connection with the Licensee agrees to keep accurate books of account
promotion and sale of the Licensed Articles (in and records covering all transactions relating to the
accordance with the terms of this Agreement). license hereby granted, and Licensor and its duly
authorized representatives shall have the right at all
10. DISTRIBUTION reasonable hours of the day to an inspection of
(a) Licensee agrees that it will commence Licensee’s books of account, records, customer lists,
sales of the Licensed Articles by the Initial On-Sale record retention and/or document destruction
Date, and that during the Term of this license it will policies, and all other documents, materials, and
diligently manufacture, distribute, and sell the premises in the possession or under the control of
Licensed Articles in Substantial Quantities and that it Licensee with respect to the subject matter and terms
will make and maintain proper and adequate of this Agreement, and shall have free, full, and
arrangements for the distribution of the Licensed unfettered use thereof and access thereto for all
Articles. For purposes of this Agreement, "Substantial customary business purposes and for the purpose of
making extracts therefrom and ensuring Licensor of the License Agreement Summary. Such notice shall be
Licensee’s compliance with the terms of this effective when mailed by Licensor.
Agreement. All books of account and records shall be (b) If Licensee becomes insolvent, or if a
kept available for at least three (3) years after the petition in bankruptcy or for reorganization is filed by
termination of this license. In the event that or against it, or if any insolvency proceedings are
Licensor's duly authorized representatives shall instituted by or against it under any state or federal
discover an underpayment of five percent (5%) or law, or if it makes an assignment for the benefit of its
more pursuant to any such examination, or in the creditors, or if a receiver is appointed for its property
event that Licensee attempts to hinder Licensor’s and business and remains undischarged for a period
unfettered inspection of all materials relevant to such of fifteen (15) days, or if it liquidates its business in
an audit, Licensee shall pay to Licensor the fee for any manner whatsoever, or if any distress, execution
such examination, plus out-of-pocket costs. The fee or attachment is levied on any of its assets and
for said examination shall be One Thousand United remains undischarged for a period of fifteen (15)
States Dollars (U.S. $1,000.00) per day, but in cases of days, or if Licensee abandons the manufacture of the
underpaid royalties Licensee shall never be charged Licensed Articles, Licensor shall have the right, if it so
more than Four Thousand United States Dollars (U.S. elects, to terminate this Agreement and the license
$4,000.00) for any individual examination. hereby granted, upon ten (10) days' notice in writing
Furthermore, in the event of any such underpayment to Licensee. Upon the expiration of such ten (10)
of three percent (3%) or more, Licensee shall be days, this Agreement and the license hereby granted
required, within thirty (30) days of Licensor’s periodic shall cease and terminate.
demand thereafter, to furnish Licensor, at Licensee’s (c) If Licensee shall violate any of its
own expense, with a detailed statement by an obligations under the terms of this Agreement
independent certified public accountant showing the relating to the payment of any royalty, Advance
number, country in which manufactured, country in Royalty Payment or relating to any merchandise or
which sold or to which shipped, description, the gross manufacturing standards (it being agreed that each
wholesale price, itemized deductions from said price, of such obligations shall be deemed to be material),
and the Net Sales price of the Licensed Articles Licensor shall have the right to terminate the license
distributed and/or sold by Licensee up through the hereby granted upon five (5) days’ notice in writing
date of Licensor's demand. Royalties found to be due for nonpayment, and upon ten (10) days’ notice in
as a result of Licensor's examination of Licensee's writing for breach of the aforementioned standards,
books of accounts should be paid immediately with and such termination shall become effective unless
interest at an interest rate of one and one half Licensee shall completely remedy the violation within
percent (1.5%) per month, or the highest rate the specified time period and satisfy Licensor, as
permitted by law, whichever rate is lower, from the judged in Licensor’s sole and absolute discretion, that
date the royalty amount should have been paid to such violation has been remedied.
Licensor until paid. (d) If Licensee shall violate any of its other
obligations under the terms of this Agreement, and
12. TERMINATION each of such obligations shall be deemed to be
(a) If Licensee shall not have commenced in material, Licensor shall have the right to terminate
good faith to manufacture and distribute in the license hereby granted upon fifteen (15) days'
Substantial Quantities of Licensed Articles by the notice in writing, and such notice of termination shall
Initial On Sale Date, or if at any time thereafter in any become effective unless Licensee shall completely
three (3) month period after the Initial On Sale Date, remedy the violation within the fifteen (15)-day
Licensee fails to sell any of the Licensed Articles (or period and satisfy Licensor that such violation has
any class or category of the Licensed Articles), or the been remedied.
parties are unable to agree on changes to the (e) Termination of the license under the
Principles or Specifications as described in Paragraph provisions of Paragraph 12 shall be without prejudice
7(b), Licensor may terminate this license with respect to any rights which Licensor may otherwise have
to any Licensed Articles or class or category thereof against Licensee including the right to recover
which have not been manufactured and distributed royalties due hereunder or damages caused it by
during such calendar quarter by giving notice of Licensee's breach. Upon the termination of this
termination to Licensee or as otherwise set forth in license, notwithstanding anything to the contrary
herein, all royalties on sales theretofore made, all
unpaid advances, and all minimum guarantee Licensee is in default of its obligations under this
balances shall become immediately due and payable, Agreement including, but not limited to, its
and shall not be repayable. obligations to pay royalties or any portion of the Total
(f) Licensee’s material breach of the terms Royalty Guarantee. Licensee shall give Licensor a
of any other agreements which it may have, now or in reasonable opportunity to purchase, at Licensee’s
the future, with Licensor or its affiliates shall be cost of manufacture, any inventory of the Licensed
deemed a material breach of this Agreement as well. Articles remaining at the beginning and end of said
Sell-Off Period, although Licensor shall be under no
13. FINAL STATEMENT UPON obligation to exercise such right. Notwithstanding
TERMINATION OR EXPIRATION anything to the contrary herein, Licensee shall not
Sixty (60) days before the expiration of this license manufacture, sell or dispose of any Licensed Articles
and again, within ten (10) days after such expiration after termination hereof based on the failure of
(or, in the event of termination of this license, ten (10) Licensee to affix notice of copyright, trademark, or
days after receipt of notice of termination or the service mark as specified above, or because of the
happening of the event which terminates this departure by Licensee from the quality and style
Agreement where no notice is required), Licensee approved by Licensor pursuant to Paragraph 7, or by
shall furnish to Licensor a statement showing the reason of termination for any other causes set forth
number and description of articles covered by this in Paragraph 12 above. In the event of such
Agreement on hand or in process. Licensor shall have termination by Licensor by reason of any cause
the right to take a physical inventory to ascertain or contained in Paragraph 12, Licensee, its receivers,
verify such inventory and statement, and refusal by representatives, trustees, agents, administrators and
Licensee to submit to such physical inventory by successors shall have no further right to sell, exploit
Licensor shall forfeit Licensee's right to dispose of or in any way deal in or with any of the Licensed
such inventory as provided in Paragraph 14 hereof, Articles, or any advertising matter, packing material,
Licensor retaining all other legal and equitable rights boxes, cartons or other documentation relating
Licensor may have in the circumstances. thereto. Any inventory of Licensed Articles remaining
after expiration or termination of this Agreement and
14. DISPOSAL OF STOCK any permitted Sell-Off Period, and not purchased by
(a) Notwithstanding anything to the contrary Licensor, shall be destroyed, and a certificate of such
herein, should Licensee decide to discontinue a destruction shall be promptly provided to Licensor by
Licensed Article, it will inform Licensor of such Licensee.
decision in writing. Licensee shall lose the right to (c) Throughout the Term and any Sell-Off
reprint such Licensed Article, and the rights to that Period, Licensee agrees to refrain from “dumping”
Licensed Article shall revert to Licensor immediately the Licensed Articles in the market place. “Dumping”
upon Licensee selling the remainder of its inventory, shall mean the distribution of Licensed Articles at
or the end of the term for that Licensed Article, volume levels significantly above Licensee’s
whichever is sooner (subject to the Sell-Off period). immediately preceding sales levels with respect to
(b) After expiration of this Agreement, the Licensed Articles and at price levels so far below
Licensee, except as otherwise provided in this prior levels and/or industry norms (including but not
Agreement, may dispose of Licensed Articles which limited to sales below cost) with respect to the
are completed and on hand at the time of expiration Licensed Articles as to disparage and/or devalue the
for the Sell-Off Period specified in the License Licensed Property. Nothing herein shall be construed
Agreement Summary (hereinafter, the “Sell-Off as granting Licensor the right to set or approve
Period”), provided that (i) royalties with respect to Licensee’s pricing, and nothing shall be deemed to
sales during the Sell-Off Period are paid and restrict Licensee’s ability to set prices in its own
statements are furnished for that period in unfettered discretion.
accordance with Paragraph 2 and are not credited
against any Advance Royalty Payment or Total 15. EFFECT OF TERMINATION OR
Royalty Guarantee, (ii) the Licensed Articles had been EXPIRATION
offered for sale and shipped prior to the expiration of Upon and after the expiration or termination of this
the Term, and (iii) such sales are restricted to the license, all rights granted to Licensee hereunder shall
Territory and Channels of Distribution. No such forthwith revert to Licensor, and Licensee will refrain
inventory sell off shall be permitted in the event that from further use of the Licensed Property or any
further reference to it, direct or indirect, or anything made at the respective addresses of the parties as set
deemed by Licensor to be similar to the Licensed forth above, unless notification of change of address
Property in connection with the manufacture, sale or is given in writing and the date of mailing shall be
distribution of Licensee's products, except as deemed the date the notice or statement is given.
provided in Paragraph 14.
19. NO JOINT VENTURE
16. LICENSOR'S REMEDIES Nothing herein contained shall be construed to
(a) Licensee acknowledges that its failure constitute the parties joint venturers, nor shall any
(except as otherwise provided herein) to commence similar relationship be deemed to exist between
in good faith to manufacture, distribute and sell in them. Nothing herein contained shall be construed as
Substantial Quantities any one or more of the constituting Licensee as Licensor's agent or as
Licensed Articles by the Initial On Sale Date, and to authorizing Licensee to incur financial or other
continue during the Term hereof to diligently and obligations in Licensor's name, and it is specifically
continuously manufacture, distribute and sell the understood and agreed that under no circumstances
Licensed Articles or any class or category thereof, will shall any power granted, or which may be deemed to
result in immediate damages to Licensor. be granted to Licensee, be deemed to be coupled
(b) Licensee acknowledges that its failure with an interest. It is specifically understood that the
(except as otherwise provided herein) to cease the rights and powers retained by Licensor to supervise
manufacture, sale or distribution of the Licensed or otherwise intervene in Licensee's activities and to
Articles or any class or category thereof at the determine all matters of policy, all as hereinabove
termination or expiration of this Agreement will provided, are retained because of the necessity of
result in immediate and irremediable damage to protecting Licensor's copyrights, trademarks,
Licensor and to the rights of any subsequent licensee. properties and property rights generally, and
Licensee acknowledges and admits that there is no specifically to conserve the goodwill and good name
adequate remedy at law for such failure to cease of Licensor's company and of the Licensed Property.
manufacture, sale or distribution, and Licensee
agrees that in the event of such failure, Licensor shall 20. NO ASSIGNMENT OR SUBLICENSE BY
be entitled to equitable relief by way of temporary LICENSEE
and permanent injunctions and such other further This Agreement and all rights and duties hereunder
relief as any court with jurisdiction may deem just and are personal to Licensee and shall not, without the
proper. written consent of Licensor, be assigned, mortgaged,
(c) Resort to any remedies referred to in sublicensed or otherwise encumbered by Licensee or
this Agreement shall not be construed as a waiver of by operation of law. For purposes of this Agreement,
any other rights and remedies to which Licensor is the term "assignment" shall, in addition to the
entitled under this Agreement or otherwise. transfer of this Agreement or the rights or obligations
thereunder, whether voluntarily, involuntarily, by
17. EXCUSE FOR NONPERFORMANCE operation of law or otherwise, be deemed to include
Licensee shall be released from its obligations (i) a sale or other transfer by Licensee of all or
hereunder and this license shall terminate in the substantially all of its assets; (ii) the liquidation or
event that governmental regulations or other causes dissolution of Licensee; (iii) the merger,
arising out of a state of national emergency or war or amalgamation, consolidation or reorganization of
causes beyond the control of the parties render Licensee into or with another corporation or other
performance impossible (herein any such event to be entity as a result of which Licensee is not the surviving
referred to as a “Force Majeure Event”), and one corporation; or (iv) any transaction (including any of
party so informs the other in writing of such causes the foregoing transactions, as well as any in which
and its desire to be so released. In such events, all Licensee is the surviving corporation) which, whether
royalties on sales theretofore made shall become by way of sale, gift or other transfer, whether
immediately due and payable, and no advance or involving Licensee or the record or beneficial owners
minimum royalties shall be repayable. of equity interests in Licensee, results in more than a
twenty percent (20%) change in the voting control of
18. NOTICES Licensee. Licensee shall not be entitled to sublicense
All notices and statements to be given, and all any of its rights under this Agreement, except that, in
payments to be made hereunder shall be given or the event Licensee is not a Manufacturer (as defined
in Paragraph 7(b) above) of the Licensed Articles, by reason of anything contained in this Agreement,
Licensee may, subject to the prior written approval of except as provided in Paragraphs 5 and 20.
Licensor, utilize a third-party Manufacturer in
connection with the manufacture and production of 22. GOVERNING LAW This Agreement shall
the Licensed Articles, provided such engagement is in be construed in accordance with the internal laws of
accordance with the conditions specified in the State of Washington. The parties agree that any
Paragraph 7(b) above. In such event and in the event dispute arising hereunder shall be subject to the
of any permitted assignment, Licensee shall remain exclusive jurisdiction of the courts of such State,
primarily obligated under all of the provisions of this including the United States District Court for the
Agreement, and Licensee’s successor and/or assignee Western District of Washington, and consent to the
shall be required to notify Licensor in writing within jurisdiction thereof.
five (5) days of any decision to cease use of an
approved third party Manufacturer. In no event shall 23. HEADINGS
any sublicense agreement include the right to grant The paragraph and other headings in this Agreement
any further sublicenses. are for reference purposes only and will not affect the
meaning or interpretation of this Agreement.
21. INTEGRATION
No waiver or modification of any of the terms of this 24. SEVERABILITY
Agreement shall be valid unless in writing and signed In the event that any provision(s) of this Agreement is
by the party to be charged. No waiver by either party adjudicated by a court of competent jurisdiction to be
of a breach or default hereunder, or a continuing unlawful, unenforceable, invalid, and/or
breach or default, shall be deemed a waiver by such unconscionable, that provision(s) shall be deemed
party of a subsequent breach or default of like or severed from this Agreement and shall not affect the
similar nature. Any approval or consent given by validity or enforceability of the remaining provisions
Licensor shall not constitute a waiver of any of hereof or this Agreement as a whole.
Licensor's rights or Licensee's duties under any
provision of this Agreement. There are no 25. SURVIVAL
representations, promises, warranties, covenants or The provisions of Paragraphs 2, 4, 5, 6, 7(c) and (d),
undertakings other than those contained in this 8(c), 11, 12(e), 13, 14, 15, 16(b) and (c), 22, 23, and
Agreement, which represents the entire 24, as well as those on the License Agreement
understanding of the parties. No person, firm, group Summary, (where appropriate), shall survive the
or corporation (whether included in the Licensed termination or expiration of this Agreement.
Property or otherwise), other than Licensee and
Licensor, shall be deemed to have acquired any rights -END-
SCHEDULE A
Dungeons & Dragons Localization Guidelines
Refer to the following rules when localizing Dungeons & Dragons content. We understand that there may
be exceptions and clarifications necessary to add to this document. If so, please contact your
representative from the Dungeons & Dragons team.
1 Proper Nouns
 1a: Characters (main characters, deities, and proper names within spells)
The names of characters should be transliterated.
o Exception: Titles and types/descriptions of characters should be translated where possible.
For example, “Spider Queen”, “Blackguard”, etc.
 1b: Locations
The name of locations should be transliterated.
o Exception: If the location’s name includes locally translatable terms like “bridge”,
“mountain”, etc. Those specific terms should be translated.
 This exception does not include closed compound names like “Waterdeep”,
“Chasmleap”, etc unless stated specifically by the Dungeons & Dragons team. Those
terms should be transliterated.
 1c: Organizations
The names of organizations should be translated wherever possible, unless a part of the
organization name includes a character or location (normally capitalized). If so, refer to 1a or 1b for
that portion of the organization name.
2 Races, Monsters, and Classes

Wherever possible, use translation or established localized words for these names. Otherwise,
transliterate the name.
3 Spells & Magic Items

The names of spells & magic items should be translated wherever possible, unless a part of the name
includes a character or location (normally capitalized). If so, refer to 1a or 1b for that portion of the name.
4 Mechanical Terms (Ability Score, Armor Class, Constitution, etc)

Mechanical terms that are key to the TRPG should be translated wherever possible.
5 Brand Terms (Company, Brand, or Product Names)

 The Dungeons & Dragons, Forgotten Realms, and Wizards of the Coast logos should never be
localized.
o In legal text, do not translate any Brand Term.
o Exception: Other than in logos and legal text, Brand Terms may be localized following the
first inline use, and translated through the text of the rest of the document.
 Product Names may be translated, removing any TM or ® mark.
o If standard for the language, you may include the English name and translate it directly
below the English version of the Product Name.
 Exception: The titles of the core TRPG rulebooks (Player’s Handbook, Monster Manual, and Dungeon
Master’s Guide) should not be localized without permission.
CONFIDENTIAL
SCHEDULE B
United States:
Licensor’s Safety and Reliability Specifications and all applicable laws, rules, and regulations of the United States
including (but not limited to): The Federal Hazardous Substances Act; The Federal Food, Drug, and Cosmetic Act; the
Flammable Fabrics Act; ASTM F963-96a, Standard Consumer Safety Specification on Toy Safety; and all other
applicable state and local laws and regulations.
Canada:
Licensor’s Safety and Reliability Specifications and all applicable laws, rules, and regulations of Canada including (but
not limited to):
 Canadian Federal Hazardous Product Act

 Canadian Federal Food, Drug, and Cosmetics Act
 Canadian Federal Packaging and Labeling Act
 Canadian Provincial Stuffed Article Act
And all associated Canadian Federal/Provincial statutes and regulations.
Other:
The European Toy Safety Standard: EN71 Parts 1, 2, & 3 and parts 6 & 9 (as applicable); and any and all other laws,
rules and regulations applicable to safety and reliability in the Territory.
SCHEDULE C
Hasbro Global Business Ethics Principles
Hasbro, Inc., together with its subsidiaries and affiliates ("Hasbro"), strives to conduct its business in accordance
with high ethical and business standards, and seeks to have its vendors, suppliers and licensees conduct themselves
in the same manner. Hasbro has long recognized concerns about the quality and character of working conditions
around the world including the United States. We are continually striving to improve the working environment for
those involved in the production of our toys and games. Hasbro wants its consumers to have confidence that
products manufactured by Hasbro, or its vendors, suppliers and licensees, are produced in accordance with the
principles set forth herein and are not made under inhumane or exploitative conditions. Implementation of the
Global Business Ethics Principles enables Hasbro to ensure that manufacturing facilities involved in the production
of Hasbro products ("Facilities") understand and adhere to Hasbro's requirements in this area. Participation in this
program and adherence to these principles is mandatory for all Facilities.
1. Forced Labor - There will not be any use of forced, prison or indentured labor in the production of Hasbro
products*. All employment including overtime, shall be on a voluntary basis.
2. Child Labor - The use of child labor is prohibited. No person shall be employed in a factory that produces or
manufactures any Hasbro product at an age younger than sixteen**, or younger than the age for completing
compulsory education in the country of manufacture where such age is higher.
3. Working Hours and Compensation - Facilities must comply with all applicable national and local wage and
hour laws including minimum wage laws, or shall be consistent with the prevailing industry wage standards,
if higher. Employee benefits shall be provided in accordance with national and local requirements.
Normal working hours should not exceed forty-eight (48) hours/week with one day off in every seven-day
period. Overtime work in necessary business circumstances shall be conducted in such a way as to
adequately compensate workers for all work performed beyond the normal working hour standard.
4. Health and Safety - Facilities shall ensure that all employees have a healthy and safe environment including
in dormitories, where provided. Hasbro expects all Facilities to promote an awareness of health and safety
issues to their employees including issues surrounding fire prevention, emergency evacuation, proper use
of safety equipment, basic first-aid and the proper use and disposal of hazardous waste materials.
5. Abuse; Discrimination - Facility employees shall be treated with dignity and respect. No employee shall be
subject to abuse, cruel or unusual disciplinary practices or discrimination in employment or hiring on the
grounds of race, religion, origin, political affiliation, sexual preference, age or gender.
6. Communication of Principles - Facilities will communicate these principles to employees in an appropriate
oral and written fashion and will undertake efforts to educate employees about these principles on a
periodic basis.
7. Acceptance of Advantages - Hasbro will not tolerate Facilities who do not conduct business in an ethical
and proper manner or who use bribes, kickbacks or provide gifts, favors, or services to gain a competitive
advantage with Hasbro.
8. Environmental Impact - Hasbro maintains a commitment to sound environmental programs and practices
and encourages the reduction and recycling of waste. Facilities must comply with all applicable laws relating
to the environment and dispose of toxic materials in a controlled and safe manner. To that end, Hasbro
seeks to conduct business with Facilities who are equally dedicated to pursuing continuous efforts to
improve the compatibility of its operations with the environment.
9. Freedom of Association - Hasbro recognizes all employees' right to choose [or not] to affiliate with legally
sanctioned organizations or associations without unlawful interference.
10. Monitoring - Hasbro shall have the right to conduct periodic on-site visits of working and living conditions
including audits of production records and practices and of wage, hour and payroll information maintained
by Facilities, to review and ensure compliance with these principles. Although Hasbro retains its rights to
terminate its relationship with a vendor, supplier or licensee facility in violation of these principles, Hasbro
will endeavor to work with Facilities to promptly address any problems discovered in the course of its review
or audit. Hasbro will require the implementation of an acceptable written corrective action plan for any
problems found during an audit. Failure to address items in the corrective action plan may also result in
termination of the business relationship.
11. Certification - Hasbro will require a written statement from Facilities of compliance with these principles.
12. Compliance with Applicable Laws - Facilities will comply with the national laws of the country in which they
are conducting business, any local laws, regulations or standards applicable to their business and the
industry standards which have been established in their location; provided, however, in the event of any
conflict between the provisions of any of the preceding laws, regulations, or standards and the provisions
of this document, then the provision containing the higher standards shall prevail.
Hasbro, as a member of the Toy Industries of America, strongly supports and endorses the industry efforts to
improve factory working conditions. While Hasbro will retain the right to conduct its own audits, participation in the
ICTI CARE program including regular audits by an approved audit company will generally be sufficient. The ICTI CARE
audit documentation and guidance materials can be found on the ICTI CARE website.
Brian Goldner
Chief Executive Officer
June 2016
* Rehabilitation programs may be assessed by Hasbro on a case-by-case basis.

** Workers under sixteen may be considered on a case-by-case basis when hired in accord with International Labor
Organization (ILO) Convention 138.
Exhibit B

GF9 vs. Wizards of The Coast

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Case 2:20-cv-01700 Document 1 Filed 11/17/20 Page 1 of 51

11 Plaintiff, COMPLAINT FOR BREACH OF

9 for the remainder of its term.

10 69. If Wizards is permitted to terminate the 2017 Agreement, GF9 is required to

16 face significant hardships as described above.

17 VII. PRAYER FOR RELIEF

23 trial, and which on information and belief, is in excess of $950,000.00;

24 2. An award of attorneys’ fees and costs incurred by GF9 in prosecuting the

25 foregoing claims against Wizards;

2 the breaches alleged by Wizards in its November 9, 2020 notice of breach;

9 DEMAND FOR JURY TRIAL

14 OLES MORRISON RINKER & BAKER LLP

LICENSE AGREEMENT BASIC TERMS

3. NONEXCLUSIVITY infringements or imitations by others of the Licensed

Dungeons & Dragons Localization Guidelines

2 Races, Monsters, and Classes

3 Spells & Magic Items

4 Mechanical Terms (Ability Score, Armor Class, Constitution, etc)

5 Brand Terms (Company, Brand, or Product Names)

 Canadian Federal Hazardous Product Act

And all associated Canadian Federal/Provincial statutes and regulations.

Hasbro Global Business Ethics Principles

* Rehabilitation programs may be assessed by Hasbro on a case-by-case basis.

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