PRODUCT LICENSE AGREEMENT

THIS PRODUCT LICENSE AGREEMENT is entered into by

___________________, located
at___________________(referred to herein as ''ARTIST'')
and___________________a California corporation with its
principal office at___________________(referred to herein as
''LICENSEE'') with regard to the commercial use of certain works
of art created by the Artist (the ''Licensed Images'').

CONTRACT

1. THE LICENSE: Subject to the attached Standard Terms and

Conditions, ARTIST hereby grants to LICENSEE, and LICENSEE
hereby accepts, the non-exclusive right and license to use the
Licensed Images solely in connection with the manufacture,
distribution, advertisement, promotion and sale of the products
described below (''Licensed Products'') in the Territory designated
or described herein. No license or right is granted for the use of a
Licensed Image for any purpose other than on a Licensed Product
and in the distribution, advertisement, promotion and sale of a
Licensed Product in accordance with this Agreement. All rights
not specifically granted in this Agreement are expressly reserved
by ARTIST. COMMENT

2. LICENSED IMAGES: COMMENT

3. LICENSED PRODUCTS: COMMENT

4. TERM:This license shall be effective for a period

of___________________years (the ''Term''). The term will
commence on___________________(the ''Commencement
Date'').Sixty days prior to the expiration of the Term, ARTIST
may send a notice of renewal to LICENSEE. ARTIST may grant
such renewal in his sole discretion and may propose
modifications to this Agreement, as he deems appropriate.
Except as modified by the parties, the terms and conditions
applicable during the renewal term shall/ be the same as those
contained herein. If LICENSEE fails to respond to ARTIST's
renewal proposal within fifteen (15) days of receipt thereof, or if
ARTIST declines to offer renewal, the Agreement shall be deemed
terminated as of the end of the Term. COMMENT

5. TERRITORY:Licensed Products may only be distributed

in:___________________(the ''Territory''). COMMENT

6. ROYALTY RATES: LICENSEE shall pay quarterly to ARTIST a

royalty equal to the percentage of ''Net Sales'' (as defined in
Paragraph 1 of the attached Standard Terms and Conditions)
listed opposite each indicated Licensed Product or Licensed
Product Category.
Licensed Domestic Direct
Product or Sales Import
Category Sales
COMMENT

7. MINIMUM GUARANTEES AND ADVANCE: LICENSEE guarantees

that its aggregate, annual royalty payments to ARTIST for each
Licensed Product category listed below during the Term shall not
be less than the amount set forth opposite such Licensed Product
or Licensed Product Category. Upon execution of this Agreement,
LICENSEE shall pay to ARTIST $___________________ as an
advance to be credited and allocated equally against LICENSEE's
initial Minimum Guarantee obligations. The Minimum Guarantee
shall be payable in equal quarterly installments over the course
of each annual period under the Agreement.
Licensed Product Minimum
or Category Guarantee
COMMENT

8. COPYRIGHT NOTICE: ''Image Copyright: [Name of Artist] All

Rights Reserved.''

9. REQUIRED DATE OF FIRST DISTRIBUTION:

___________________ COMMENT

10. SELLING PRACTICES: LICENSEE acknowledges ARTIST's

legitimate and reasonable interest in protecting the integrity and
value of the Licensed Images. Therefore, LICENSEE shall only
distribute Licensed Products to a person or entity that, it
reasonably believes operates a business that promotes high
quality products with appropriate merchandising displays,
promotion and/or customer service. LICENSEE acknowledges that
a failure to comply with the selling practices set forth in this
paragraph shall cause significant harm to ARTIST and shall be
deemed a material breach of this Agreement.

AGREED TO AND ACCEPTED, subject

to and incorporating the attached
ARTIST standard terms and conditions
which the undersigned has read:
AGREED TO AND ACCEPTED:
[Artist]
[LICENSEE]
By: ___________________
By: _________________
Title: ___________________
COMMENT

PRODUCT LICENSE TERMS AND CONDITIONS

1. ADDITIONAL DEFINITIONS

For the purposes of this Agreement:

(a) ''Contract Year'' shall mean each twelve-month period

hereunder, each such period commencing on the commencement
date of the Term as set forth in Paragraph 4 of the Agreement.

(b) ''Counterfeit Goods'' shall mean and include: (i) goods that
bear any Licensed Image that has been reproduced and/or
affixed without authorization from ARTIST; (ii) goods that bear
any Licensed Image produced by any source in excess of an
amount ordered by the LICENSEE; and (iii) goods that bear any
Licensed Image that have been rejected by ARTIST and
nevertheless enter the stream of commerce.

(c) ''Diverted Goods'' shall mean and include any goods produced
by someone acting on behalf of the Licensee, which goods are
not delivered by the producer or to a person designated by the
Licensee to receive such goods.
(d) ''Net Sales'' shall mean the amount of the gross sales of a
Licensed Product by LICENSEE, after deducting any bona-fide
credit or adjustment for returns actually made. In computing Net
Sales, no direct or indirect expenses or costs incurred in
connection with paying royalties due under this Agreement
(including transferring funds or royalties or converting currency
into U.S. dollars) or manufacturing, selling, distributing,
importing or advertising (including cooperative and other
advertising and promotion allowances) the Licensed Products
shall be deducted, nor shall any deduction be made for
uncollectible accounts, cash discounts, early payment discounts,
discounts relating to advertising, mark-down allowances or other
allowances. Net Sales resulting from sales to any party directly or
indirectly related to or affiliated with LICENSEE (a ''Related
Transaction'') shall be computed based on regular selling prices
to the trade. If such related party or affiliate is a reseller to the
trade of the Licensed Products, the sales price for purposes of
determining Net Sales of a Related Transaction shall be the
higher of the sales price to the related or affiliated party or the
sales price charged to the trade by such related or affiliated
party.

(e) ''Parallel Goods'' shall mean and include Licensed Products

transferred outside of the Territory or brought into the Territory
in violation of this Agreement.

(f) ''Premium'' shall mean anything given free or sold at

substantially less than its usual selling price (but does not include
sales made pursuant to periodic price reductions resulting from
''specials,'' ''sales,'' or volume pricing discounts) for the purpose
of increasing the sale of, or publicizing, any product or service, or
other giveaway or promotional purpose. Other giveaway or
promotional purposes include, but are not limited to, self-
liquidating offers, uses of Licensed Products as sales force or
trade incentives and sales of Licensed Products through
distribution schemes involving earned discounts or ''bonus''
points based on the consumer's use of the offeror's product or
service.

(g) ''Retail Sale'' shall mean the sale of Licensed Products directly
or indirectly to the ultimate consumer by any means including
but not limited to retail outlets, mail order catalog, via televised
shopping programs, and/or the Internet.

2. LIMITATIONS ON LICENSE

The combination sale of any non-licensed product with a Licensed

Product is strictly prohibited without the prior written consent of
the ARTIST and will be deemed a material breach of this
Agreement. Licensed Products shall not be used as a Premium for
any third party without the prior written approval of ARTIST in
each instance and unless specifically authorized pursuant to a
separate agreement with ARTIST.

3. STATEMENTS AND PAYMENTS; REPORTING

(a) Statement and Payments: Promptly on or before the 20th day

of each calendar quarter during the term of this Agreement,
LICENSEE shall furnish to the ARTIST a full and accurate
statement, certified by an officer of LICENSEE, showing all
information relating to the calculation of Net Sales for the
preceding quarter, including, without limitation, the quantity,
description and net sales price, itemized by month, style or
model number, and including the amount of discounts or credits
taken in calculating Net Sales of the individual Licensed Products
distributed and/or sold by category and by country if applicable.
Simultaneously with the submission of such statement, LICENSEE
shall make all quarterly royalty payments required under this
Agreement for the period covering such preceding quarter.
Aggregate royalties paid during the Term may exceed the
Minimum Guarantee for the Term. Such quarterly statements
shall be furnished whether or not there are any Net Sales for that
quarter. LICENSEE shall not deduct or withhold any amounts by
reason of any tax. Any applicable tax on the distribution and sale
of the Licensed Products shall be borne, and paid directly, by
LICENSEE. In order to avoid the imposition of foreign withholding
taxes on ARTIST, all payments shall be in U.S. dollars, from a
U.S. source approved by ARTIST. All computations and payments
shall be in U.S. dollars, at the spot rate for the local currency as
published in the Wall Street Journal for the last business day of
the preceding month. If LICENSEE shall fail to timely pay any
amount due under this Paragraph, LICENSEE shall pay interest
on such amount at a rate equal to the lesser of (i) three percent
(3%) per annum over the highest prime rate printed in the Wall
Street Journal prevailing during the period between the date the
payment first became due and the date such payment is actually
paid or (ii) the highest rate permitted by law during the period
between the date the payment first became due and the date
such payment is actually paid. The receipt or acceptance by
ARTIST of any of the statements furnished or royalties paid by
LICENSEE (including the cashing of any royalty checks) shall not
preclude ARTIST from questioning their accuracy at any time,
auditing LICENSEE's books and records pursuant to Paragraph 10
or claiming any shortfall in royalty payments.

(b) No Cross Collateralization: Any royalty payment for a

Licensed Product or a Licensed Product Category shall only be
applied against the Minimum Guarantee for such Licensed
Product or a Licensed Product Category in which the unit of such
Licensed Product was sold (i.e., any shortfall in, or payment in
excess of, the Minimum Guarantee for a product or category may
not be offset or credited against the Minimum Guarantees for any
other product or category).

4. PROTECTION OF RIGHTS

(a) Unauthorized Activities: LICENSEE shall promptly notify

ARTIST in writing of any infringements of the Licensed Images or
the Licensed Products or the sale of any Licensed Products
outside the Territory (e.g., unauthorized importation/exportation
of goods) which may come to LICENSEE's attention. ARTIST shall
have the sole right to determine whether or not any action shall
be taken or demand made on account of any such infringement
or unauthorized importation/exportation. LICENSEE agrees not to
contact any third party, not to make any demands for claims and
not to institute any suit or action on account of such infringement
or unauthorized importation/exportation without obtaining the
express prior written permission of ARTIST in each instance.

(b) Assistance in Protecting Copyrights: LICENSEE shall

cooperate to the fullest extent necessary to assist ARTIST in the
protection of the rights of ARTIST in the Licensed Images,
including, without limitation, executing and delivering any and all
documents necessary or desirable in connection with obtaining,
defending or maintaining ARTIST's rights in and to the Licensed
Images. ARTIST shall reimburse LICENSEE for any reasonable
out-of-pocket costs actually incurred by LICENSEE in providing
such cooperation and assistance.

(c) Ownership of Copyrights: LICENSEE acknowledges that the

Licensed Images, and the copyrights therein, are the sole and
exclusive property of the ARTIST, his successors and assigns.
Any intellectual property rights in the Licensed Images that may
accrue to LICENSEE shall inure to the benefit of the ARTIST and
shall be assigned to the ARTIST upon its request. LICENSEE
acknowledges that it has received only a license to use the
Licensed Images and that this Agreement does not constitute any
form of assignment or transfer of ownership in the Licensed
Images.

(d) Notices and Labeling and Records: In every instance in which

any Licensed Images are used, LICENSEE shall cause to appear
on or within each Licensed Product sold, by means of a tag, label,
imprint or other appropriate device, the copyright notice.

LICENSEE shall: (i) faithfully comply with any shipment tracking,

identification and anti-counterfeiting systems, tags and labels
that ARTIST may establish from time-to-time, (ii) unless
approved in writing by ARTIST, not cross-license or otherwise
use other licensed properties with the Licensed Products or
Licensed Images and (iii) keep appropriate records, and advise
ARTIST, of the date when each of the Licensed Products is first
placed on sale or sold in each country of the Territory (along with
a copy of the invoice) and the date of first use in each country of
the Licensed Images on the Licensed Products and any
promotional or packaging materials.

(e) LICENSEE grants to ARTIST the perpetual right to use (and

modify) and reproduce, without payment of royalties,
requirement of credit lines, or other conditions, all proprietary
ideas, suggestions, recommendations, plans, concepts, drawings,
photographs, designs, and other work products utilizing the
Licensed Images (collectively, ''Work Products'') provided by
LICENSEE in connection with work performed under this
Agreement.

5. INDEMNIFICATIONS AND INSURANCE

(a) LICENSEE shall be solely responsible for, hold harmless and

indemnify the ARTIST and his heirs, successors and assigns
against any claims, demands, causes of action or damages,
including all costs and attorneys' fees incurred by ARTIST in
connection with defending against such claims, demands, causes
of action or damages (collectively, ''Claims''), arising out of: (i)
any act or omission of LICENSEE, (ii) any breach of this
Agreement by LICENSEE, (iii) any defect (whether obvious or
hidden and whether or not present in any sample approved by
ARTIST) in a Licensed Product or any packaging or other
materials (including advertising materials), or arising from
personal injury or any infringement of any rights of any other
person or entity by the manufacture, sale, possession or use of
Licensed Products or their failure to comply with applicable laws,
regulations and standards or (iv) any claim that the use of any
design or other graphic component of any Licensed Product
violates or infringes upon the copyright or other intellectual
property rights (including trade dress) of a third party; provided
LICENSEE is given prompt written notice of and shall have the
option to undertake and conduct the defense of any such Claim.
In the event LICENSEE chooses for exercise its rights under the
proviso in the preceding sentence, ARTIST shall cooperate fully
with and assist LICENSEE in all respects in connection with any
such defense, LICENSEE shall reimburse ARTIST for all
reasonable out-of-pocket costs actually incurred by ARTIST in
connection with such cooperation and assistance and LICENSEE
shall not enter into a settlement of such Claim or admit liability
or fault without ARTIST's prior written approval.

(b) ARTIST shall be solely responsible for, and shall defend, hold
harmless and indemnify LICENSEE, its directors, officers,
employees and agents against any Claims arising out of: (i) a
claim that the use of a Licensed Image as authorized by this
Agreement violates or infringes upon the copyright or other
intellectual property rights of a third party in or to the Licensed
Image or (ii) any breach of this Agreement by ARTIST, provided
ARTIST is given prompt written notice of and shall have the
option to undertake and conduct the defense of any such claim.
In any instance to which the foregoing indemnities pertain,
LICENSEE shall cooperate fully with and assist ARTIST in all
respects in connection with any such defense. ARTIST shall
reimburse LICENSEE for all reasonable out-of-pocket costs
actually incurred by LICENSEE in connection with its cooperation
and assistance with this in accordance with this subparagraph.

(c) In the event of a breach of this Agreement by one party to

this Agreement, such breaching party shall indemnify the non-
breaching party for all costs and attorneys' fees incurred by it in
connection with any claim, demand or cause of action by the
non-breaching party against the breaching party for enforcement
of this Agreement.

(d) LICENSEE shall obtain and maintain, at its sole cost,

comprehensive general liability insurance coverage, including,
but not limited to, Products Liability, Contractual Liability and
Advertising Liability, which policy shall be written for the benefit
of LICENSEE and which shall name the ARTIST as an additional
insured with respect to third party liability. The amount of
coverage (which may be comprised of a primary general liability
policy and an excessive liability policy) shall be a minimum of
Two Million U.S. dollars (USD 2,000,000) per occurrence
combined single limit and Three Million U.S. dollars (USD
3,000,000) general aggregate. The policy and certificate of
insurance shall be endorsed to indicate that LICENSEE's
insurance is primary and not in excess of or contributory to any
other insurance in effect for the ARTIST. Such insurance shall be
carried by an insurer authorized to conduct business in the State
of___________________with a rating by A.M. Best & Co. of A--
or other rating satisfactory to ARTIST. Such insurance policy shall
also provide that ARTIST receive written notice within thirty (30)
days prior to the effective date of the cancellation, non-renewal
or any material change in coverage. In the event that LICENSEE
(i) fails to deliver to the ARTIST a certificate of such insurance
evidencing satisfactory coverage promptly upon the ARTIST's
execution of this Agreement, or (ii) modifies such policy so as not
to comply with the terms of this paragraph, ARTIST shall have
the right to terminate this Agreement at any time. Such
insurance obligations shall not limit LICENSEE's indemnity
obligations, except to the extent that LICENSEE's insurance
company actually pays ARTIST amounts which LICENSEE would
otherwise be obligated to pay ARTIST.

6. QUALITY; APPROVALS; SAMPLES

LICENSEE shall cause the Licensed Products to meet and conform

to high standards of style, quality and appearance. In order to
assure ARTIST that it is meeting such standards and other
provisions of this Agreement, LICENSEE shall comply with the
following:

(a) Pre-Production: Before commercial production and

distribution of any Licensed Product, LICENSEE shall submit to
the Artist all preliminary (due within ninety (90) days fromthe
effective date of this Agreement) and proposed final artwork,
three dimensional models (if any), prototypes, mock-ups and
pre-production samples of each Licensed Product including all
styles, colors and variations, together with its labels, tags,
cartons and containers (including packaging and wrapping
materials). ARTIST shall approve or disapprove in writing all
submissions, in ARTIST's sole discretion, before LICENSEE shall
be entitled to distribute, advertise, use, produce commercial
quantities of or sell any item relating to any such submission.
Approval of an article which uses particular artwork does not
imply approval of such artwork with a different article or of such
article with different artwork. LICENSEE acknowledges that
ARTIST's approval of an article does not imply approval of any
non-ARTIST controlled elements contained in any article. After a
sample of an article has been approved, LICENSEE shall not
make any changes without resubmitting the modified article for
ARTIST's written approval.

(b) Production Samples: Before selling or distributing any

Licensed Product, LICENSEE shall furnish the ARTIST, at no
charge, with six (6) samples of the Licensed Product from the
first production run of each manufacturer of the Licensed
Products, including all styles, colors and variations, together with
its labels, tags, cartons and containers (including packaging and
wrapping materials). If such samples do not conform to all
aspects of the Licensed Product as approved under Paragraph
6(a) or if the quality of such sample does not meet the
requirements of this Paragraph 6, ARTIST shall notify LICENSEE
and such article shall not be considered a Licensed Productshall
be deemed unapproved and all such articles shall be destroyed
promptly.

(c) Rejections and Non-Compliance: The rights granted under

this Agreement do not permit the sale of ''seconds'' or
''irregulars.'' All submissions or samples not approved by ARTIST
shall promptly be destroyed by LICENSEE. In the event of
LICENSEE's unapproved or unauthorized manufacture,
distribution, use or sale of any products or materials, ARTIST
shall have the right to: (i) immediately revoke LICENSEE's rights
with respect to any Licensed Product licensed under this
Agreement, and/or (ii) at LICENSEE's expense, confiscate or
order the destruction of such unapproved, unauthorized or non-
complying products. Such right(s) shall be without prejudice to
any other rights ARTIST may have under this Agreement or
otherwise.

(d) Testing: Both before and after Licensed Products are put on
the market, LICENSEE shall follow reasonable and proper
procedures for testing the Licensed Products for compliance with
laws, regulations, industry standards and procedures (including,
without limitation, good manufacturing and storage practices),
and shall maintain a vigorous quality control and safety
assurance program with respect to the Licensed Products. In the
alternative and at ARTIST's written request, LICENSEE agrees to
provide ARTIST with the result of all laboratory testing of the
Licensed Products as a condition precedent to the initial
production of the Licensed Products. Laboratory testing may be
performed by LICENSEE. However, ARTIST reserves the right to
require LICENSEE to submit the Licensed Products for testing at
an outside testing service of ARTIST's choosing. LICENSEE shall
pay all costs associated with any laboratory testing, whether
conducted by LICENSEE or by an outside testing service.
Licensed Products found by ARTIST at any time not to comply
with applicable laws, regulations, industry standards and
procedures shall be deemed unapproved, even if previously
approved by ARTIST. LICENSEE shall be given sixty (60) days to
resubmit such Licensed Products to ARTIST and demonstrate to
ARTIST's satisfaction that such Licensed Products have been
brought into full compliance. Should LICENSEE fail to do so,
ARTIST may, in its sole discretion, terminate this Agreement as
to that Licensed Product by giving written notice thereof to take
effect immediately. LICENSEE shall permit ARTIST (upon
reasonable notice) to inspect its and its authorized
manufacturer's testing, manufacturing and quality control
records, procedures and facilities and to test or sample Licensed
Products for compliance with this Paragraph and the other terms
and conditions of this Agreement. ARTIST expressly disclaims
any liability arising by virtue of any right of consent or approval
to, or of any act, product or practice of LICENSEE.

(e) Revocation of Approval: In the event that (i) LICENSEE uses

the Licensed Images improperly or violates any term of this
Paragraph 6 or (ii) ARTIST becomes aware of anything relating to
any such Licensed Product that, due to use or abuse, could result
in significant harm to people or property and that in the opinion
of ARTIST, reflects unfavorably upon the professional, business
or personal reputation of ARTIST, then, in any such event,
ARTIST shall have the right, in its sole discretion, to withdraw its
approval of such Licensed Product. In the event of such
withdrawal, ARTIST shall provide immediate written notice to
LICENSEE and LICENSEE shall cease to use the Licensed Images
in connection with the sale, distribution, advertisement or use of
such Licensed Product and such Licensed Product shall
immediately be withdrawn from the market and destroyed.
Within ten (10) days after LICENSEE's receipt of such notice,
LICENSEE shall pay all royalties and Minimum Guarantee
amounts due ARTIST with respect to the Licensed Product for
which approval has been revoked. If there are other Licensed
Products for which approval has not been withdrawn under this
subparagraph, then this Agreement shall remain in full force and
effect as to such other Licensed Products. LICENSEE shall notify
ARTIST in writing of any Licensed Products deleted from its
product lines.
7. PURCHASES BY ARTIST

If ARTIST wishes to purchase further quantities of any Licensed

Products for resale, LICENSEE shall sell such Licensed Products to
ARTIST at the lowest price LICENSEE charges for similar
quantities sold to its preferred customers and LICENSEE shall not
be required to pay royalties on such sales. If ARTIST wishes to
purchase Licensed Products for give-away purposes and not for
resale, LICENSEE shall sell the Licensed Products to ARTIST at
LICENSEE's direct manufacturing cost for such Licensed Products
and LICENSEE shall not be required to pay royalties on such
sales to ARTIST.

8. PROMOTIONAL MATERIAL

LICENSEE shall not use a Licensed Image or any reproduction of

a Licensed Image in any advertising, promotion or display
material or in any other manner whatsoever without prior written
approval from ARTIST. All copy and material depicting or using a
Licensed Image, or which reference the ARTIST (including display
and promotional material, catalogs and press releases) shall be
submitted to ARTIST for approval well in advance of production
(but in no event less than ten (10) business days prior to the
start of commercial production) to allow adequate time for
ARTIST, in his sole discretion, to approve, disapprove or
comment upon such materials and for any required changes to
be made.

9. DISTRIBUTION; COMPLIANCE

(a) LICENSEE shall use its best efforts to distribute and sell,
within and throughout the Territory, the Licensed Products in
such manner as may be required to meet competition by
reputable manufacturers of similar articles. In any ninety (90)
day period in which LICENSEE fails to sell or distribute Licensed
Products in reasonable commercial quantities, LICENSEE shall be
deemed not to have used its best efforts. In addition. LICENSEE
shall begin the bona fide manufacture, distribution and sale of
the Licensed Products on a national basis on or before the date
specified herein as the REQUIRED DATE OF FIRST
DISTRIBUTION. LICENSEE shall make and maintain adequate
arrangements for the broadest possible distribution and timely
delivery of Licensed Products through all regular channels of
distribution for Retail Sales. LICENSEE agrees to maintain
adequate inventories of the Licensed Products as an essential
part of its distribution program. In the event ARTIST advises
LICENSEE that a special promotional effort is to take place in an
individual store or chain, LICENSEE shall use its best efforts to
sell the Licensed Products to that store or chain in such quantities
as may be required for such effort. In addition, LICENSEE shall
give the Licensed Products wide distribution and shall not, in
accordance with the selling practices set forth in this Agreement,
refrain for any reason from selling Licensed Products to any retail
outlet within the Territory that may desire to purchase Licensed
Products and whose credit rating and marketing image warrants
such sale.

(b) If LICENSEE desires to have a third party manufacture or

distribute any Licensed Product (excluding direct marketing
outlets), LICENSEE must first notify ARTIST of the name and
address of such third party. ARTIST shall have the right, in its
sole discretion, to withhold approval for such third party
manufacture or distributor. If ARTIST grants approval for such
third party manufacture or distribution, it may grant such
approval pursuant to an agreement to be entered into prior to
such manufacture or distribution among the ARTIST, LICENSEE
and such manufacturer or distributor which will, among other
things, require that the third party manufacturer or distributor be
subject to all of the terms and conditions of this Agreement. If
ARTIST does not require the third party to enter into a separate
agreement, LICENSEE must provide ARTIST with a copy of its
agreement with the third party, which agreement must provide
that it is subject to this Agreement. If any of LICENSEE's
authorized manufacturers or distributors uses the Licensed
Images for any unauthorized purpose, LICENSEE shall be
responsible for, and shall cooperate fully and use its best efforts
in stopping, such unauthorized use. Any change by LICENSEE
from a third party manufacturer or distributor previously
approved by ARTIST shall require approval in accordance with
this Paragraph.
(c) LICENSEE shall not make or authorize, any use, direct or
indirect, of the Licensed Products, like or similar, in any other
country outside the Territory and will not knowingly sell the
Licensed Products to persons who intend or are likely to resell
them in any country outside the Territory. LICENSEE shall use all
commercially reasonable means to prevent the creation of any
Counterfeit Goods, Diverted Goods or Parallel Goods by its
employees, agents, representatives or any others operating
under its direction, supervision or control and involving the
Licensed Images. LICENSEE shall periodically, and at the request
of ARTIST, inquire of its authorized distributors, agents and
customers as to whether they are observing territorial limits and
shall periodically report in writing to ARTIST the results of such
inquiries. LICENSEE shall notify ARTIST of all orders from, or on
behalf of, a customer who LICENSEE knows (or has reason to
know after having made reasonable inquiry) is located outside
the Territory or intends to resell the Licensed Products outside
the Territory. If LICENSEE knows or has reason to know that any
Licensed Product sold by LICENSEE is resold outside the
Territory, LICENSEE shall compensate ARTIST for the injury to its
licensing and distribution program and shall pay all costs and
expenses, including attorney's fees, required to remove such
goods from the marketplace. Any such monetary damages shall
be in addition to, and not in lieu of, such other rights and relief
(including injunctive relief) as may be available to ARTIST.
LICENSEE shall incorporate within its contracts of sale or sales
orders a provision similar in substance to this subparagraph and
which provides that the obligations set forth in this subparagraph
shall be a continuing obligation on the resale of the Licensed
Products to subsequent authorized wholesale purchasers and
which makes ARTIST a third party beneficiary of such provision.

(d) In the event LICENSEE sells or distributes other merchandise

of a similar grade or quality as the Licensed Products, but which
does not bear the Licensed Images, LICENSEE will not
discriminate, in a manner which adversely impacts the Licensed
Products, in the granting of commissions and discounts to
salesmen, dealers and distributors between the Licensed
Products and the merchandise of any third party. LICENSEE may
not package the Licensed Products (or sell to any third party who
they know intends to package the Licensed Products) in
combination with other products,, similar or different, without the
prior written approval of ARTIST.

(e) LICENSEE shall at all times conduct all aspects of its business
in a fair and reasonable manner and in compliance with all
applicable laws, government rules and regulations, court and
administrative decrees and the highest standard of business
ethics then prevailing in the industry.

10. RECORDS; AUDITS

LICENSEE shall keep accurate books of account and records

covering all transactions relating to the license granted in this
Agreement (including, but not limited to, sales of Licensed
Products, and compliance with shipment tracking, identification
and anti-counterfeiting systems and labels that ARTIST may
establish from time to time). ARTIST and its authorized
representatives shall have the right, at all reasonable hours of
the day, to examine and audit such books of account and records
and all other documents and materials in LICENSEE's possession
or under its control (including records of LICENSEE's parents,
subsidiaries, affiliates and third parties, if they are involved in
activities which relate to this Agreement) relating to this
Agreement. ARTIST shall have free and full access for such
purposes and for the purpose of making extracts and copies.
Should an audit by ARTIST establish a deficiency between the
amount found to be due ARTIST and the amount LICENSEE
actually paid or reported, the LICENSEE shall pay the amount of
such deficiency, plus interest at the then current prime rate from
the date such amount should have been paid until the date of
payment. Should such audit establish a deficiency of more than
five percent (5%), LICENSEE shall also pay for the cost of the
audit within thirty (30) days. All such books of account and
records shall be kept available for at least two (2) years after the
expiration or termination of this Agreement. In order to facilitate
inspection of its books and records, LICENSEE shall designate a
symbol or number which will be used exclusively in connection
with the Licensed Products on which royalty payments are
payable and shall maintain for inspection as provided in this
Agreement duplicates of all billings to customers with respect to
Licensed Products.

11. EARLY TERMINATION

Without prejudice to any other rights ARTIST may have pursuant

to this Agreement or otherwise, ARTIST shall have the right to
terminate this Agreement at any time if:

(a) LICENSEE shall not have begun the bona-fide distribution and
sale of each Licensed Product within and throughout the Territory
in accordance with this Agreement on or before the REQUIRED
DATE OF FIRST DISTRIBUTION set forth at the outset of this
Agreement.

(b) LICENSEE shall fail to timely remit a royalty payment when

due and shall fail to cure such non-payment within ten (10) days
of its receipt of written notice from ARTIST.

(c) LICENSEE or any guarantor under this Agreement shall be

unable to pay its liabilities when due, or shall make any
assignment for the benefit of creditors, or under any applicable
law admits in writing its inability to meet its obligations when due
or commit any other act of bankruptcy, institute voluntary
proceedings in bankruptcy or insolvency or permit institution of
such proceedings against it.

(d) LICENSEE shall exhibit a pattern of frequent failure to make

timely delivery of sufficient quantities of the Licensed Products to
its retail accounts.

(e) LICENSEE shall fail to perform or shall be in breach of any

other term or condition of this Agreement; provided, however,
that if such breach can be cured, termination shall take effect
thirty (30) days after written notice of such breach is sent by
ARTIST if such breach has not been cured during such thirty (30)
day period.

(f) LICENSEE (i) delivers Licensed Products outside the Territory;

(ii) sells Licensed Products to a third party who LICENSEE knows,
or has reason to know, intends to deliver the Licensed Products
outside the Territory; or (iii) LICENSEE is in breach of Paragraph
9 (c).

(g) LICENSEE sells to any third party that LICENSEE knows, or

has reason to know, is altering or modifying the Licensed
Products prior to sale to the ultimate consumer.

In addition to ARTIST's other rights and remedies, upon

termination of this Agreement under this Paragraph LICENSEE
shall pay ARTIST (within thirty (30) days of such termination) the
Minimum Guarantees for each Licensed Product or Licensed
Product Category through the end of the Agreement, less the
royalties paid to ARTIST through the date of termination.

12. DISPOSAL OF STOCK

Sixty (60) days before the expiration of this Agreement and ten
(10) days after any other termination, LICENSEE will furnish to
ARTIST a certificate showing the number and description of
Licensed Products on hand or in process of manufacture. After
expiration or termination of this Agreement, LICENSEE shall have
no further right to manufacture, authorize any third party to
manufacture, advertise, distribute, sell, promote or otherwise
deal in any Licensed Products or use the Licensed Images except
as provided below. For a period of ninety (90) days following the
expiration (but not after the termination) of this Agreement,
LICENSEE may sell-off and deliver completed Licensed Products
which are on hand at the time of such expiration (the ''Sell-Off
Period''); provided, however that (i) ARTIST shall have a right of
first refusal on all such sales (except as Licensee has firm written
orders to third parties), with no third party offered more
favorable prices or terms then those first offered ARTIST, (ii) the
total number of units of each Licensed Product sold during the
Sell-Off Period may not be greater than one hundred ten percent
(110%) of the total number of units of such Licensed Product on
hand on the same date the preceding Contract Year, (iii) such
Licensed Products may only be sold in accordance with this
Agreement and in the normal course of business and at regular
selling prices, (iv) all payments then due are first made to
ARTIST and (v) statements and payments with respect to the
Sell-Off Period are made in accordance with this Agreement.
ARTIST shall have the option to conduct physical inventories
before the expiration of this Agreement until the end of the Sell-
Off Period in order to verify such inventory and/or statements. If
LICENSEE refuses to permit such physical inventory, LICENSEE
shall forfeit its right to dispose of its inventory. Upon termination
of the Agreement or after the Sell-Off Period, as the case may
be, all inventory on hand or in process (including all promotional
and packaging materials) will either be returned to ARTIST or
destroyed and LICENSEE shall deliver to ARTIST a certified
statement signed by LICENSEE's President or Chief Financial
Officer that such materials have been returned to LICENSOR or
destroyed.

13. EQUITABLE RELIEF

LICENSEE acknowledges that ARTIST is entering into this

Agreement not only in consideration of the royalties to be paid,
but also for the promotional value and intrinsic benefit resulting
from the manufacture, advertisement, distribution, sale and
promotion of the Licensed Products by LICENSEE in the Territory.
LICENSEE acknowledges that the Licensed Images possess a
special, unique and extraordinary character which makes difficult
the assessment of the monetary damage which ARTIST would
sustain as a result of the unauthorized use of the Licensed
Images. LICENSEE further acknowledges that (i) its failure to
manufacture, advertise, distribute, sell and promote the Licensed
Products in accordance with this Agreement, including
LICENSEE's failure to satisfy its obligation to maintain and not to
detract from the value of the Licensed Images, and (ii) the
unauthorized use of the Licensed Images, will, in either case,
cause immediate and irreparable damage to ARTIST for which
ARTIST would not have an adequate remedy at law. Therefore,
LICENSEE agrees that, in the event of a breach of this Agreement
by LICENSEE, in addition to such other legal and equitable rights
and remedies as shall be available to ARTIST, ARTIST shall be
entitled to injunctive and other equitable relief, without the
necessity of proving damages or furnishing a bond or other
security.
14. NOTICES

All notices and statements to be given and all payments to be

made under this Agreement shall be given or made at the
respective address of the parties as set forth above, unless
notification of a change of address is given in writing. Any notice
of breach or default must be in writing and sent by facsimile,
overnight express delivery, or registered or certified mail, return
receipt requested, properly addressed and stamped. Any written
notice shall be deemed to have been given at the time it is sent.

15. NO JOINT VENTURE

Nothing in this Agreement shall be construed to place the parties

in the relationship of partners or joint venturers or principal and
agent, or employer and employee. Neither party shall have the
power to obligate or bind the other to a third party in any
manner whatsoever.

16. ARBITRATION OF CERTAIN MATTERS

Any dispute or disagreement between the parties relating solely

to the amount of royalty payments owing under this Agreement
shall be settled by arbitration under the Commercial Arbitration
Rules of the American Arbitration Association. Judgment upon the
award may be entered in any court having jurisdiction. No other
dispute or disagreement between the parties (including any claim
by ARTIST that LICENSEE is using the Licensed Images in a
manner not authorized by this Agreement or is otherwise in
breach of this Agreement) shall be settled by arbitration. All
decisions by ARTIST relating to disapproval of any Licensed
Product or advertising, promotion or display material shall be
final and binding on LICENSEE and shall not be subject to review
in any proceeding.

17. WARRANTIES

Each party represents and warrants that it has the right and
authority to enter into and perform this Agreement. LICENSEE
represents and warrants that all advertising and promotional
materials shall comply with all applicable laws, regulations and
standards. ARTIST's approval of such materialsis not a
representation that ARTIST believes such materials are sufficient
to meet applicable laws, regulations and standards, nor is it a
representation that ARTIST agrees with or supports any claims
made by LICENSEE in any advertising materials relating to the
Licensed Products. LICENSEE further represents and warrants
that all advertising and promotional materials and all graphics
used on Licensed Products will not violate the intellectual
property rights of any third party.

18. SEVERABILITY

In the event any provision of this Agreement is found to be void,

invalid or unenforceable as a result of any judicial or
administrative proceeding or decree, this Agreement shall be
construed and enforced as if such provision were not contained in
this Agreement.

19. MISCELLANEOUS

(a) Assignment: This Agreement and any rights granted under

this Agreement are personal to LICENSEE and shall not be
assigned, sublicensed, subcontracted or encumbered, directly or
indirectly, by law or by contract, without ARTIST's prior written
consent, which consent may, in ARTIST's sole discretion, (i) be
contingent upon a fee payable by LICENSEE or the transferee,
the amount of which shall be determined by ARTIST in its sole
discretion, and/or (ii) impose other terms and conditions upon
the assignment, sublicense or transfer. Any transfer of a
controlling interest in LICENSEE or in any party which currently
controls LICENSEE, directly or indirectly, shall be deemed an
assignment prohibited by the preceding sentence. Any
nonconsensual assignment, sublicense, subcontract or
encumbrance of this Agreement by LICENSEE shall be invalid and
of no force or effect. Upon any such nonconsensual assignment,
sublicense or encumbrance, this Agreement shall terminate and
all rights granted under this Agreement shall immediately revert
to ARTIST.
(b) Waiver: None of the provisions of this Agreement can be
waived or modified except expressly by a writing signed by both
parties. There are no representations, promises, agreements,
warranties, covenants or undertakings by ARTIST other than
those contained in this Agreement. No failure on the part of
ARTIST to exercise any right under this Agreement shall operate
as a waiver of such right; nor shall any single or partial exercise
of any right preclude any other or further exercise or the exercise
of any other rights.

(c) Survival: No expiration or termination of this Agreement shall

relieve LICENSEE of its obligation to pay ARTIST any amounts
due to ARTIST at the time of termination, regardless of whether
these amounts are then or thereafter payable. The provisions of
Paragraphs 10 and 19(e) shall survive the expiration or
termination of this Agreement.

(d) Governing Law and Jurisdiction: This Agreement shall be

construed in accordance with the laws of the State of
___________________, USA, without regard to its principles of
conflicts of laws. Any claim arising under this Agreement (except
as provided under Paragraph 16) shall be prosecuted in a federal
or state court of competent jurisdiction located within
the___________________and LICENSEE consents to the
jurisdiction of such court and to the service of process by mail.

(e) Confidentiality: Neither party shall (nor shall they permit or

cause their employees or agents to) divulge, disseminate or
publicize information relating to this Agreement or the financial
or other terms of this Agreement, (including any information on
the specifications or methods of reproduction of the Licensed
Images, to any third party (other than their respective attorneys
or accountants), except as may be required by law or to fulfill the
terms of this Agreement. In addition, LICENSEE agrees that it
shall not (without the express prior written consent of ARTIST,
given in its sole discretion), issue press releases concerning the
ARTIST.

(f) Construction: This Agreement, together with any exhibits or

attachments, constitutes the entire agreement and
understanding between the parties and cancels, terminates and
supersedes any prior agreement or understanding relating to the
subject matter of this Agreement between LICENSEE and
ARTIST. The headings in this Agreement are for reference
purposes only and shall not affect the interpretation of this
Agreement.