Professional Documents
Culture Documents
Good Smile
Good Smile
10
GOOD SMILE CONNECT, LLC, a Delaware Case No.: 20STCV44737
11 limited liability company, [Assigned to Hon. Stephen I. Goorvitch,
12 Dept. 39]
Cross-Complainants,
13 CROSS-COMPLAINT OF JAMES
v. YOUNGSUK KIM, GUY BRAND, MF,
14 IMAGINARY PEOPLE, INC., a California INC. AND IMAGINARY PEOPLE, INC.;
corporation; MF, INC., a California corporation; DEMAND FOR JURY TRIAL FOR:
15 JAMES YOUNGSUK KIM, an individual,
GUY BRAND, an individual; GRECIA DIAZ, 1. Retaliation in Violation of FEHA and
16 an individual; and DOES 1-50, inclusive public policy;
Defendant(s). 2. Hostile Work Environment in Violation
17 of FEHA and public policy
3. Failure to Investigate Discrimination in
18 JAMES YOUNGSUK KIM, an individual, and Violation of FEHA
GUY BRAND, an individual; MF, Inc., a 4. Retaliation in Violation of Labor Code
19 California corporation,; and IMAGINARY
PEOPLE, INC., a California corporation, and public policy
20 5. Retaliation in Violation of California
Cross-Complainants, and Federal False Claims Act and
21 public policy
v.
6. Declaratory Relief
22
GOOD SMILE CONNECT LLC, a Delaware 7. Breach of Contract
23 limited liability company; GOOD SMILE 8. Breach of the Covenant of Good Faith
COMPANY U.S., INC, a California and Fair Dealing
corporation; GOOD SMILE COMPANY, INC.,
24 a Japanese corporation; ENNA HOZUMI, an 9. Intentional Interference with
individual; and ROES 1-20, inclusive Prospective Economic Advantage
25 10. Breach of Contract
Cross-Defendants. 11. Conversion
26
27
28
1
CROSS-COMPLAINT OF JAMES YOUNGSUK KIM, GUY BRAND, MF, INC. AND IMAGINARY
PEOPLE, INC.; DEMAND FOR JURY TRIAL
1 Cross-Complainants Guy Brand, James Youngsuk Kim, MF, Inc., and Imaginary People,
3 I.
6 purposeful effect in the County of Los Angeles, State of California. This Court, therefore, has
7 jurisdiction over the matter alleged herein, in part, pursuant to C.C.P. § 410.10. Venue is proper in
8 the County of Los Angeles, Central Division, pursuant to C.C.P. §395, because the cause of action
9 and injury arose in Los Angeles County, California. Furthermore, upon information and belief, Cross
10 Defendants’ “principal place(s) of business” are located in Los Angeles County, California.
11 II.
12 THE PARTIES
14 residing in Los Angeles County, and a former vice-president and employee of Good Smile Connect
15 LLC.
17 individual residing in Los Angeles County, and a former vice-president and employee of Good Smile
18 Connect LLC.
23 corporation with its principal place of business in Los Angeles, California. Brand is an officer of
24 MF, Inc.
27 principal place of business in Japan as well as an office in Los Angeles, California. It was formerly
28 registered to do business with the California Secretary of State back in 2012 but filed a “Surrender”
2
CROSS-COMPLAINT OF JAMES YOUNGSUK KIM, GUY BRAND, MF, INC. AND IMAGINARY
PEOPLE, INC.; DEMAND FOR JURY TRIAL
1 statement on October 1, 2019. On information and belief, Cross Complainants allege that Good
2 Smile Company, Inc., notwithstanding such “surrender,” is still conducting unlicensed business in
3 Los Angeles County California at 360 E. 2nd St., Suite 450, Los Angeles, California 90012.
5 SMILE US”) is a California corporation formerly known as Crooked Smile Holdings, Inc., and has
6 its principal place of business in Los Angeles County California located at 360 E. 2nd St., Suite 450,
7 Los Angeles, California 90012. Cross Complainants are informed and believe, and on that basis
11 County California located at 360 E. 2nd St., Suite 450, Los Angeles, California 90012. Cross
12 Complainants are informed and believe, and on that basis allege, that it is wholly owned and/or
13 managed by member GOOD SMILE US, which is in turn wholly owned by GOOD SMILE JAPAN.
14 8. Cross-Complainants are informed and believe and on that basis allege that Cross-
16 a U.S. permanent resident, residing in the County of Los Angeles, City of Glendale, California, and
17 is a manager and/or officer of GOOD SMILE JAPAN, GOOD SMILE US and GOOD SMILE DEL.
18 9. Cross-Complainants are informed and believe and based thereon allege that, unless
19 otherwise specified, Cross-Defendants and Roes 1-20 and each of them, were and are the agents,
20 employees, partners, joint-venturers, co-conspirators, owners, principals, and employers of the
21 remaining Cross-Defendants, and each of them are, and at all times herein mentioned were, acting
22 within the course and scope of that agency, partnership, employment, conspiracy, ownership or joint
23 venture. Cross-Complainants are further informed and believe and based thereon allege that the acts
24 and conduct herein alleged of each such Cross-Defendant were known to, aided and abetted,
25 encouraged, authorized by and/or ratified by the other Cross-Defendants, and each of them.
26 10. Cross-Complainants are informed and believe and based thereon allege that, unless
27 otherwise specified, Cross-Defendants, and each of them, conspired and worked in concert with
2 liability company or business entity is alleged, the allegation shall be deemed to mean and include
3 an allegation that the corporation, limited liability company or business entity acted or omitted to
4 act through its authorized officers, directors, members, managers, agents, servants, and/or
5 employees, acting within the course and scope of their duties, and that the act or omission was
6 authorized and/or ratified by the officers, directors, members and/or managers of the corporation,
8 12. Cross-Complaints are further informed and believe, and based thereon allege, that
9 at all times relevant hereto, GOOD SMILE DEL, was and now is, the alter ego of GOOD SMILE
10 US and GOOD SMILE JAPAN. Cross-Complainants are further informed and believe, and based
11 thereon allege, that at all times relevant hereto, there is a unity of interest and ownership between
12 GOOD SMILE DEL, GOOD SMILE US, and GOOD SMILE JAPAN such that any individuality
13 and separateness between said Cross-Defendants have ceased. Cross-Complainants are further
14 informed and believe, and based thereon allege, that at all times relevant hereto: (1) GOOD SMILE
15 US, and GOOD SMILE JAPAN were the sole or majority shareholders of, or the controlling or sole
16 members and or owners of, and that their directors, officers and/or managers of, and/or managed
17 and controlled, GOOD SMILE DEL through common managing personnel including a common
18 CEO, Takanori Aki aka Aki Takanori (“AKI”); (2) on information and belief allege that at the time
19 GOOD SMILE US and/or GOOD SMILE JAPAN formed GOOD SMILE DEL that it was
20 undercapitalized and had insufficient assets to pay its obligations; (3) GOOD SMILE DEL, GOOD
21 SMILE US, and GOOD SMILE JAPAN share common management and control by AKI and
22 HOZUMI; (4) GOOD SMILE US, and GOOD SMILE JAPAN used their control over GOOD
23 SMILE DEL to manipulate assets and liabilities for their own personal benefit by, among other
24 things, using the payments to common controlling managers to be made outside of GOOD SMILE
25 DEL’s payroll to evade taxes and the “surrendering” of GOOD SMILE JAPAN while still
26 conducting business in California and (5) in failing in material ways to conform with the tax,
27 statutory and other corporate formalities applicable to corporations and limited liability companies
28 operating in California.
4
CROSS-COMPLAINT OF JAMES YOUNGSUK KIM, GUY BRAND, MF, INC. AND IMAGINARY
PEOPLE, INC.; DEMAND FOR JURY TRIAL
1 13. The continued adherence to the fiction of a separate existence of GOOD SMILE
2 DEL as an entity distinct from GOOD SMILE US, and GOOD SMILE JAPAN (collectively referred
3 to as “GOODSMILE” herein) under the circumstances, permit an abuse of the corporate privilege,
5 14. Cross-Complainants are informed and believe and based thereon allege that the
6 named Cross-Defendants sued herein as Roes 1 through 20, and each of them, are in some manner
7 responsible or legally liable for the actions, events, transactions and circumstances alleged herein.
8 The true names and capacities of such fictitiously-named Cross-Defendants, whether individual,
11 capacities of such fictitiously-named Cross-Defendants when the same have been ascertained. All
12 allegations herein that pertain to Good Smile Connect LLC, Good Smile Company U.S., Inc. and
14 III.
15 PRELIMINARY STATEMENT
17 LLC and its alter egos Good Smile Company U.S., Inc. and Good Smile Company, Inc., inter alia.
18 At the crux of the dispute was GOODSMILE’s engaging in improper and/or illegal employment
19 practices, tax evasion, improper licensing schemes, distribution of potentially obscene sexually
20 explicit anime products and merchandise (“lolicon”), and on information and belief the alleged
21 funding, support of and/or affiliation with “4Chan,” an online portal now infamous for being
22 frequented by White Supremacists, Q-Anon conspiracists and insurrectionists. When BRAND and
23 KIM expressed their disgust, objection and/or refusal to participate in or be associated with what
24 they viewed as illegal, objectionable or immoral activities, they were retaliated against. This
25 retaliation and intimidation started as a reduction in authority and culminated in the pre-textual
26 “firing” of Cross-Complainants KIM and BRAND after they had already requested to transition
27 from their employer/employee relationship with GOOD SMILE DEL. Further, as set forth below,
28
5
CROSS-COMPLAINT OF JAMES YOUNGSUK KIM, GUY BRAND, MF, INC. AND IMAGINARY
PEOPLE, INC.; DEMAND FOR JURY TRIAL
1 it presaged Cross Defendants’ brazen attempt to convert inventory and property of MFI that it never
2 paid for.
3 16. Cross-Complainants Kim and Brand originally were employed by GOOD SMILE
4 DEL as “Vice Presidents” through a purchase of certain assets and liabilities, but not all, of their
5 pre-existing entity MFI, a California corporation, dba Imaginary People, the primary asset being
8 GOODSMILE was interested in servicing the fan platform and entering into the crowd funded sales
9 space, the mandate instead would be to promote GOODSMILE branded products over all else and
10 to conduct the business as “JAPAN” saw fit despite the laws, regulations and policies attendant to
12 17. Notably, the parties’ Asset Purchase Agreement confirmed that only certain of, but
13 not all assets of MF, Inc. was purchased by GOOD SMILE DEL. GOOD SMILE only agreed to
14 purchase $250,000 worth of MF, Inc., inventory, and the remaining MF, Inc. inventory (“Excess
15 Inventory”) would be consigned to GOOD SMILE DEL for two years. Specifically, per section
16 1.4(c)(i) MFI would receive 30% to 50% of the sales of the “Excess Inventory” depending on
17 whether it was sold on a retail or wholesale basis. This Excess Inventory was to be housed in GOOD
18 SMILE DEL’S warehouse. Included in the consigned inventory is Valve inventory whereby MF,
19 Inc. would receive 65% of sales of the Valve inventory. Exhibit “A” hereto is the Asset Purchase
20 Agreement dated as of April 1, 2019 between GOOD SMILE DEL and MFI.
21 18. After the Asset Purchase Agreement was entered into, KIM and BRAND, as Vice
22 Presidents of GOOD SMILE DEL initially had authority to enter into contracts on behalf of their
23 employer, they attended executive-level meetings, and provided advice on manufacturing and
24 online sales techniques in U.S. markets. KIM and BRAND directly reported to HOZUMI and
25 Robert Namba. Cross Complainants are informed and believe and on that basis allege that KIM
26 and BRAND significantly raised the profitability and overall value of the enterprise through their
27 hard work and expertise in manufacturing and online sales in both the business to business and
2 superiors regarding the business and operations of GOODSMILE in the United States that were
3 routinely ignored, or were responded to flatly, “It’s just different in Japan.” Specifically, KIM and
4 BRAND reported areas of grave concern or potential liability for GOODSMILE, such as: 1) the
5 failure to pay requisite sales taxes, 2) the “secret” sale and distribution of potentially obscene
6 sexually explicit anime products and merchandise (“lolicon”) (underage anime characters) online
8 as independent contractors resulting in avoidance of employer taxes and benefit obligations, and
9 engaging in other problematic employment practices; and even 5) the apparent association with
10 and support of 4Chan, an online portal known for being frequented by White Supremacists, Q-
11 Anon conspiracists, and insurrectionists who arguably played a part in the January 6, 2021 U.S.
12 Capital attack. Specifically, KIM and BRAND were informed by HOZUMI and believe based upon
13 her representations that AKI provided, directly or indirectly, funding for 4Chan. BRAND and KIM
14 were even asked if they wanted to collaborate on a fan design contest using 4chan’s mascot, Yotsuba
16 20. BRAND and KIM are informed and believe that GOODSMILE may have removed
17 and/or otherwise altered content accessible on their websites after notice of the potential issues and
19 21. BRAND and KIM quickly learned that although GOODSMILE projected a laid
20 back and casual work environment, in reality, it was general practice for employees to be ignored,
21 blamed, and eventually forced out if they challenged any decisions of HOZUMI. In Japan, such
22 employees have a name; they are called “Window People.” Cross-Complainants BRAND and KIM
24 22. The retaliation began with HOZUMI ignoring BRAND and KIM’S reports of what
25 they viewed as illegal activity. The retaliation escalated when BRAND and KIM were effectively
26 stripped of their authority as vice presidents, including being barred from entering into contracts,
27 and were excluded from decision making executive meetings attended by GOOD SMILE DEL’s
28 Japanese board members, AKI, HOZUMI and/or Robert Namba, GOOD SMILE DEL’S Controller
7
CROSS-COMPLAINT OF JAMES YOUNGSUK KIM, GUY BRAND, MF, INC. AND IMAGINARY
PEOPLE, INC.; DEMAND FOR JURY TRIAL
1 and acting CFO. BRAND and KIM were effectively reduced to little more than figurehead officers
2 with titles that HOZUMI used as a proxy to execute her personal objectives and to cast blame when
4 23. HOZUMI went even further when she asked BRAND and KIM to remove
5 themselves from all communications with GOOD SMILE sister company UTC and only allowed
6 them to be present in meetings that HOZUMI was present for. HOZUMI’S plan to take over the
7 sister company under her management required her to control the narrative back to Japan and
9 24. By the end of 2019, GOOD SMILE DEL was no longer paying over or reimbursing
10 MFI its share of the consignment sales of the Excess Inventory, despite requests for invoicing and
11 accounting of these sales. At the same time, transparent and disclosed efforts were also being made
13 25. A final straw came when HOZUMI directed BRAND and KIM to engage in national
-
14 original discrimination, adversely affecting those employees not of Japanese nationality during the
15 Covid-19 pandemic.
16 26. After more than 1½ years of enduring this illegal and/or offensive, discriminatory,
17 and retaliatory work environment, deprived of decision making, BRAND and KIM were effectively
18 and or constructively forced to tender their “resignation” in September 2020 to avoid further
19 retaliatory action and to broker a smooth transition out of GOOD SMILE DEL and best ensure
20 MFI’s rightful entitlement to its revenues from and portion of the consigned Excess Inventory that
21 was overdue since 2019 was not further compromised. However, after HOZUMI first expressed
22 interest in joining BRAND and KIM moving forward, ultimately Cross-Defendants did not
23 “accept” BRAND and KIM’s effective resignation when it was disclosed that both no longer
24 wanted to be employed but rather would look to a relationship as “client” or “consultant” in nature.
25 Rather, they insisted that BRAND and KIM stay employed until October 31, 2020 in order that
26 GOOD SMILE DEL could secure full forgiveness on the Paycheck Protection Program (“PPP”)
27 loan it applied for during the Covid-19 pandemic. Cross-Defendants argued and represented to
28
8
CROSS-COMPLAINT OF JAMES YOUNGSUK KIM, GUY BRAND, MF, INC. AND IMAGINARY
PEOPLE, INC.; DEMAND FOR JURY TRIAL
1 BRAND and KIM that that would avoid harm to and benefit and protect all GOOD SMILE DEL
2 employees, and questioned whether BRAND and KIM would want to see such others harmed.
3 27. BRAND and KIM soon discovered that Cross-Defendants’ action of asking them to
4 stay as employees was merely pretext when Cross-Defendants purportedly “fired” KIM and
5 BRAND two months later, asserting that they engaged in unfair competition during employment
6 and interfered with a purported business opportunity between Netflix and GOOD SMILE DEL.
7 Subsequent to the filing of this action, GOOD SMILE has changed its story, newly adding claims
8 against MFI by amendment and asserting new theories against BRAND and KIM complaining of
9 continuing sales of MF, Inc.’s remaining assets which GOOD SMILE DEL never purchased but
10 was receiving a majority percentage of sales thereof pursuant to the parties’ Asset Purchase
11 Agreement. Notably, the purported “termination,” instead of accepting their proposal to step down
12 earlier, gave rise to GOOD SMILE DEL’s argument that illegal anti-compete clauses in Brand and
13 Kim’s employment contracts were subsequently triggered thereby. On the other hand, BRAND and
14 KIM’s proposal to voluntarily leave the company, if accepted months earlier, would have
16 28. GOOD SMILE should not be permitted to continue with such illegal employment
19 IV.
20 FACTUAL ALLEGATIONS
21 29. In 2015, when BRAND and KIM first met HOZUMI, BRAND owned, and together
22 with KIM, operated MFI, a manufacturing and product sales business. They collectively had been
24 30. In August 2017, MFI sold off its business-to-business division to a competitor. The
25 business to consumer division that consisted of an online sales portal for fan art known as, “For
26 Fans By Fans,” was the remaining division of MFI and remained in operation.
27 31. In 2017, MFI also began entertaining offers from multiple companies interested in
28 “For Fans By Fans,” that BRAND and KIM had pioneered and operated. Around this time,
9
CROSS-COMPLAINT OF JAMES YOUNGSUK KIM, GUY BRAND, MF, INC. AND IMAGINARY
PEOPLE, INC.; DEMAND FOR JURY TRIAL
1 HOZUMI on behalf of GOODSMILE began showing interest in acquiring them. She scheduled
2 several meetings with BRAND and KIM and introduced them to GOODSMILE’s CEO AKI.
3 32. Following the above August 2017 sale, BRAND and KIM started to use the DBA
4 Imaginary People to phase out the trade name “Mighty Fine” that was part of the business to
5 business asset purchase. Formally, the company name during this time was MF, Inc. dba Imaginary
6 People.
7 33. On or about April 1, 2019, after nearly two years of negotiations, GOOD SMILE
8 DEL and MFI entered into an asset purchase agreement (“APA”) of only certain designated assets
9 that was expressly consented to by the sole owner of Good Smile Connect LLC, Crooked Smile
10 Holdings, Inc. (now known as Good Smile Company US, Inc., herein “GOOD SMILE US”)
11 Pursuant to the APA, $750k was paid for certain assets relating to For Fans By Fans and $250k
12 worth of inventory out of the $1.25m total inventory that was on MFI’s books. MFI had sought to
13 sell all inventory, but GOOD SMILE declined to buy it and considered the remaining $1 million
14 dollars’ worth of inventory as “obsolete.” This inventory is defined in the APA as “Excess
15 Inventory.” Given that GOOD SMILE DEL was purchasing the website where such inventory was
16 customarily sold, the parties settled on a consignment arrangement for the Excess Inventory
17 whereby GOODSMILE had a right to sell it and share in the revenues for two years. Nothing in the
18 APA granted GOOD SMILE ownership of the Excess Inventory, nor was the right to sell the Excess
19 Inventory expressly exclusive. Rather the Excess Inventory remained the property of MFI and per
20 the contract needed to be returned to MFI after the two-year period.
21 34. Similarly, the APA at 1.4(c)(iv) contains a provision related to special consigned
22 inventory from another company Valve, that was being sold by MFI pursuant to a consignment
23 agreement with Valve. The APA included a provision that GOOD SMILE DEL would share in the
25 35. Despite having the consignment arrangement with MFI, GOOD SMILE DEL did
26 not reimburse MFI pursuant to the parties’ APA, or account to MFI with any specificity such that
27 it could accurately balance its books. Knowing that it has failed to pay MFI its share of the sales of
28 the Excess Inventory and ignoring efforts to clarify what is owed, GOOD SMILE DEL alleges
10
CROSS-COMPLAINT OF JAMES YOUNGSUK KIM, GUY BRAND, MF, INC. AND IMAGINARY
PEOPLE, INC.; DEMAND FOR JURY TRIAL
1 spurious claims based on MFI, BRAND and KIM’s alleged secret sales of the Excess Inventory
2 utilizing GOOD SMILE DEL’s employees when MFI as owner of the Excess Inventory (that
3 GOOD SMILE expressly declined to purchase) was not expressly precluded from selling it.
4 Moreover, sales by MFI of its inventory not purchased by GOOD SMILE, and after-hour use of
5 GOOD SMILE DEL employees at MFI’s own cost, were disclosed to GOOD SMILE DEL and
6 approved of in writing and later confirmed verbally by NAMBA and HOZUMI. Attached hereto as
7 Exhibit “B” is a true and correct email chain between BRAND and NAMBA disclosing sales and
8 proposing that a GOOD SMILE DEL employee work afterhours to fulfill the sales, at MFI’s
11 upon MFI’s alleged failure to assign the Valve license to it pursuant to the APA. The Valve license
12 referenced in the APA, however expired by its terms in 2018, and MFI and Valve were working
13 together outside of any written agreement, a fact that was known by NAMBA in March 2019, prior
14 to the execution of the APA. Attached hereto as Exhibit “C” is the license agreement between MFI
15 and Valve which expired by its terms in 2018. Attached as Exhibit “D” are emails from the
16 Controller and acting Chief Financial Officer and on information and belief, a board member for
17 GOOD SMILE DEL, Robert Namba (“Namba,”) dated March 28, 2019 acknowledging that the
18 Valve license had expired prior to entering into the APA on April 1, 2019.
22 website, but was advised after he requested that such operability be implemented to comply with
23 the law by Namba, that it was not necessary to collect sales tax on goods owned in Japan by GOOD
24 SMILE JAPAN. On information and belief, Cross Complainants allege that Namba was the
25 Controller and acting Chief Financial Officer and a board member for GOOD SMILE DEL.
26 38. Cross-Complainants are informed and believe and on that basis allege that after
27 reporting KIM’s concerns to Namba, he conducted research and consulted with Good Smile's CPA.
28 Cross-Complaints are further informed and believe that Namba was advised that GOOD SMILE
11
CROSS-COMPLAINT OF JAMES YOUNGSUK KIM, GUY BRAND, MF, INC. AND IMAGINARY
PEOPLE, INC.; DEMAND FOR JURY TRIAL
1 DEL not only needed to collect and report state sales tax regardless of who owned the inventory,
2 he also learned that GOOD SMILE JAPAN owed back taxes for all past sales. Cross-Complaints
3 are further informed and believe that this tax liability was due to its doing business in California
4 and owning affiliates in the United States. Cross-Complainants are further informed and believe
5 that GOOD SMILE JAPAN has had an office, employees, and products it was actively selling in
6 the U.S. since at least 2012, and that it filed its “Certificate of Surrender” on October 1, 2019 with
7 the California Secretary of State to avoid taxes, presumably, among other reasons.
8 39. KIM and BRAND also communicated to HOZUMI and NAMBA that GOOD
9 SMILE JAPAN needed to report and pay these sales taxes. KIM and BRAND’s concerns regarding
10 what steps were needed to comply with tax laws were ignored. HOZUMI informed KIM that
11 GOODSMILE’S CPA had warned the company about the liabilities but stated that “Japan knows
13 40. By the fourth quarter of 2020, KIM and BRAND had succeeded in growing sales
14 revenue from $277,000 a month to $2,075,000 a month for GOOD SMILE DEL. Revenues for
15 both GOOD SMILE JAPAN and GOOD SMILE DEL increased due to KIM and BRAND’s efforts,
16 as GOOD SMILE DEL purchased GOOD SMILE JAPAN products to sell on its website.
17 41. Knowing that GOOD SMILE DEL revenue was growing, KIM again raised the issue
18 of other sales tax collection and payment to Namba, fearing continuing liability for non-compliance
19 with applicable tax laws. In a management meeting held in August 2020, KIM further expressed
20 his concern that collecting sales tax for states other than California was also necessary, and
21 requested implementation of a website process to collect sales taxes. KIM’s stated concerns were
22 again ignored, and no authorization to implement appropriate online website tax collection tools by
25 provisionally prepare for implementation of the tax tool for the GoodSmileUs.com website in case
26 a proper decision to abide by sales tax laws was eventually made. Once again in October 2020,
27 during a management meeting KIM again brought up the company’s sales tax obligations.
28
12
CROSS-COMPLAINT OF JAMES YOUNGSUK KIM, GUY BRAND, MF, INC. AND IMAGINARY
PEOPLE, INC.; DEMAND FOR JURY TRIAL
1 Unfortunately, HOZUMI and Namba refused to authorize implementation and proper use of the tax
3 43. Cross Complainants are informed and believe and on that basis allege that the tax
4 tool on the GoodSmileUs.com website has been ready since November 2020 at which time Cross
5 Complainants are informed and believe it was not being utilized. Thereafter, Cross Complainants
6 were never informed that the tax tool was in fact activated or that other state’s taxes were being
7 collected.
8 44. Cross Complainants are informed and believe and on that basis allege that GOOD
9 SMILE DEL is also intentionally and improperly designating its principal employees as
10 independent contractors in order to avoid proper withholding of social security, Medicare and
11 income taxes. For example, HOZUMI, who Cross Complainants are informed and believe at
12 relevant times was and is the Secretary, Vice President and a manager of GOOD SMILE DEL does
13 not receive income from it but rather from GOOD SMILE US in the annual amount of $56,000 to
14 run GOOD SMILE US and to manage and control GOOD SMILE DEL. Cross-Complainants are
15 further informed and believe that she and/or a loan out entity for her services is issued a 1099-Misc
16 despite being a corporate officer and a statutory employee under California law (Section 621(a) of
18 45. Cross Complainants allege on information and belief that HOZUMI receives other
19 payments through her personal limited liability company, E.N.N.A., LLC, but is not paid salary
20 directly from GOOD SMILE DEL. On further information and belief Cross Complainants allege
21 Robert Namba, the entity’s Controller and acting Chief Financial Officer, is also not paid salary
23 46. In November, 2020, KIM and BRAND questioned HOZUMI about the practice of
24 payment to her and Robert Namba through their respective limited liability companies rather than
25 through payroll. In fact, Cross Complainants are informed and believe that HOZUMI held the
26 highest position at GOOD SMILE US yet was one of the lowest paid individuals there, and the
27 highest position at GOOD SMILE DEL yet was not paid any salary for that role.
28 ///
13
CROSS-COMPLAINT OF JAMES YOUNGSUK KIM, GUY BRAND, MF, INC. AND IMAGINARY
PEOPLE, INC.; DEMAND FOR JURY TRIAL
1 B. Non-compliance with Federal Trade Commision Regulations.
2 47. GOOD SMILE sold products, such as Nendoroids, figmas, and Scale Figures under
3 pre-order. This means, GOOD SMILE did not make any figures until the customers placed their
4 orders. This type of business model reduces the inventory risk for the business.
5 48. Cross Complainants are informed and believe that Federal Trade Commission
6 (FTC) Guidelines impose strict regulation upon all sales. The regulations require that sales orders
7 must be shipped within the promised time (or within 30 days if no promise was made). If the
8 shipment cannot be completed within the time proscribed by FTC regulations, the company must
9 notify the customer of the delay, provide a revised shipment date, explain his or her right to cancel,
10 and TO receive a full and prompt refund. (Code of Federal Regulations (“CFR”) 16 CFR Part 435).
11 49. When the Covid-19 global pandemic first affected shipping and manufacturing,
12 many pre-sale orders went unfulfilled or were substantially delayed. Aware of the delays and the
13 FTC requirements, KIM and BRAND alerted HOZUMI and Robert Namba that GOOD SMILE
14 was likely violating FTC regulations which mandated that every customer be notified of the delays
15 and have the right to have orders refunded. Not wanting to issue refunds, HOZUMI and Mr. Namba
16 refused to notify customers and instead merely attempted to expedite shipments from China and
17 Japan.
18 50. On information and belief Cross Complainants allege, however, GOOD SMILE
19 DEL pre-orders were and or have been substantially delayed, possibly more than six months.
20 Meanwhile, Cross Complainants are informed and believe that FTC-required delay notifications
21 are not properly being sent to customers with sufficient information for the customer to consent to
24 51. Cross-Complainants are informed and believe and on that basis allege that GOOD
25 SMILE JAPAN treats itself as a pass-through company for many of the licenses it obtains.
26 Effectively, licenses are passed on to its subsidiaries and affiliate companies and they are charged a
27 2% fee to sell and manufacture regardless of any contractual restrictions on sub-licensing or sub-
28 manufacturing. While this may be the norm for Japanese licenses, BRAND and KIM were aware
14
CROSS-COMPLAINT OF JAMES YOUNGSUK KIM, GUY BRAND, MF, INC. AND IMAGINARY
PEOPLE, INC.; DEMAND FOR JURY TRIAL
1 that most US licenses from U.S. companies in their industry are non-assignable, non-sublicensable,
2 and non-exclusive. BRAND and KIM advised HOZUMI, that GOOD SMILE JAPAN’s practice of
3 collecting royalties from “subsidiaries” (e.g., GOOD SMILE DEL) that was manufacturing product
4 without the proper assignment of the licensed rights could give rise to liability. HOZUMI ignored
5 these concerns, and on information and belief, these improper licensing practices by Cross-
6 Defendants continue.
7 52. Correspondingly, GOOD SMILE DEL asserted rights here pursuant to a license with
8 Netflix for “Stranger Things” themed products. Notably, this license agreement was entered into
9 between Netflix and GOOD SMILE JAPAN after a long-time friend of BRAND’s wife approached
10 BRAND with the opportunity that was in turn presented to GOOD SMILE DEL. Cross-
11 Complainants are informed and believe and thereon allege that said license was actually entered into
12 with GOOD SMILE JAPAN and is expressly non-assignable by its terms. Accordingly, as a technical
13 matter GOOD SMILE JAPAN cannot assign the license to anyone else affiliated or otherwise to
14 manufacture any products, including GOOD SMILE DEL without being in breach of its obligations
15 to Netflix.1 Exhibit “E” hereto is a copy of the Netflix license agreement with GOOD SMILE
16 JAPAN.
17 53. In 2019, BRAND and KIM became aware that HOZUMI had submitted samples
18 that misrepresented the final product to licensor VIZ MEDIA for the Naruto license in order to get
19 approval for the production. HOZUMI would also sell the goods prior to obtaining the proper
20 approvals. When BRAND explained to HOZUMI that such practice was not ethical, could tarnish
21 GOOD SMILE’s reputation, and potentially subject it to liability, HOZUMI shrugged it off ignoring
22 their complaint.
24 54. In July 2019, the www.goodsmileus.com website development was complete and it
25 was launched with products in Japan from GOOD SMILE JAPAN. After the launch, BRAND and
26 1
A number of material allegations asserted in Plaintiff’s Complaint and First Amended Complaint have been removed
from the Second Amended Complaint regarding the Netflix Agreement with GOOD SMILE JAPAN. Indeed, after
27 Cross-Complainants’ demurrer to the First Amended Complaint that pointed out the false nature of the allegations, and
the court at hearing suggested that summary judgment might be appropriate GOOD SMILE changed its theory of
28 liability.
15
CROSS-COMPLAINT OF JAMES YOUNGSUK KIM, GUY BRAND, MF, INC. AND IMAGINARY
PEOPLE, INC.; DEMAND FOR JURY TRIAL
1 KIM were disgusted and alarmed when they began noticing over-sexualized anime figures
2 depicting minors being sold on the US website. Many of these sexualized figures were fantasized
3 versions of underage anime girls, which are known as “Lolicon,” a Japanese term derived from the
4 English phrase "Lolita complex." Lolicon describes a fascination with cartoons of under-aged, teen
5 or tween girls engaged in varying degrees of erotic behavior. Cross-Complainants are informed and
6 believe that the sale of such anime figures may well implicate and/or violate U.S. obscenity laws.
7 (See e.g. the Federal Protection Act, 18 U.S.C. 2252). At the time, there were no buyer age
9 55. Cross-Complainants are informed and believe that on or about such time, other
10 employees at GOOD SMILE US and GOOD SMILE DEL also complained to their superiors that
11 it was unethical to sell and market Lolicon in the U.S. to customers of all ages.
12 56. Cross-Complainants are further informed and believe that HOZUMI received a call
13 from Warner Bros. on behalf of noted film director Patty Jenkins (“Wonder Woman”) who did not
14 want Warner Brothers to renew its license for the then upcoming Wonder Woman 1984 film after
15 discovering that sexualized female figures were being sold on the GOOD SMILE website next to
16 Wonder Woman branded toys. BRAND and KIM warned HOZUMI that US licensors such as
17 Disney, Marvel, Hasbro, Nintendo, and others would likely terminate their agreement if they knew
18 about the sexualized figures sold by GOODSMILE. BRAND and KIM further explained that
19 GOODSMILE’S retail partners like Target, Game Stop, Hot Topic, BestBuy, and others would also
20 likely cancel existing orders and distance themselves from GOOD SMILE.
21 57. A meeting was called by HOZUMI to discuss the issue in or about the summer of
22 2019. During this meeting, BRAND and KIM directly informed HOZUMI how depictions of teens
23 and tweens in sexual positions on a commercial U.S. website were unethical, offensive and
24 potentially illegal. BRAND and KIM were made to feel like their concerns were being heard, but
25 rather than addressing these serious concerns or investigating the legal implications, HOZUMI
26 instead requested a sales report for the over sexualized under age figures. HOZUMI then informed
27 KIM and BRAND that the company would only remove the Lolicon from the website if sales were
28 low.
16
CROSS-COMPLAINT OF JAMES YOUNGSUK KIM, GUY BRAND, MF, INC. AND IMAGINARY
PEOPLE, INC.; DEMAND FOR JURY TRIAL
1 58. Days later, HOZUMI notified KIM and BRAND that it had been decided that
2 GOOD SMILE DEL would continue selling the over sexualized figures on the site “because AKI
3 said.” However, it would make them available only as "secret items" using a link from the GOOD
4 SMILE JAPAN blog. This would “hide” the Lolicon from U.S. licensors, but still facilitate sales
5 of Lolicon in the United States. HOZUMI also directed the GOOD SMILE DEL’S web team that
6 all decisions on what underage figures would be secretly sold on the site would be hers.
7 59. HOZUMI justified GOOD SMILE’s decision to continue to sell such offensive
8 and/or potentially obscene materials by citing a famous Japanese “manga” artist Nobuhiro Watsuki,
9 who Cross Complainants are informed and believe in 2017 was arrested for possession of child
10 pornography at his office and home. According to HOZUMI after paying a 200,000 yen ($1,900)
11 fine, he resumed making his “manga” art and everything returned to normal. "It's just different over
12 there," she said. To further illustrate her point she showed KIM and BRAND another GOOD
13 SMILE JAPAN website, Naked & Creative (www.native-store.net) which sold and distributed
14 explicitly sexualized figures, some suggesting rape scenarios, no matter what the age of the
15 character was through GOOD SMILE’s wholly owned Torrance-based distributor, Ultra Tokyo
16 Connection, LLC.
17 60. Despite BRAND and KIM’s repeated objections to this questionable continued
18 selling of these over sexualized child figures, HOZUMI would direct them to be in constant contact
19 with lolicon through group chats, figures displayed throughout the workplace, and directions from
20 her to work with the offensive material. HOZUMI confirmed that the “final decision” had been
21 made. KIM and BRAND started to remove themselves from group chats that engaged in
22 conversations about lolicon. BRAND and KIM were later excluded by HOZUMI from any
23 meetings and/or decisions regarding what materials would be made available for sale on the
24 “secret” platform. Cross-Complainants are informed and believe, and on such basis allege, that
25 such lolicon anime figures are still ultimately available for sale in California and throughout the
26 rest of the U.S. by Good Smile notwithstanding the potential legal liability and moral implications
27 stemming therefrom.
28 ///
17
CROSS-COMPLAINT OF JAMES YOUNGSUK KIM, GUY BRAND, MF, INC. AND IMAGINARY
PEOPLE, INC.; DEMAND FOR JURY TRIAL
1 E. “4Chan” and GOOD SMILE
2 61. In October 2017, BRAND and KIM visited GOOD SMILE JAPAN’s headquarters
3 in Japan for the first time. During the visit, HOZUMI informed them that GOOD SMILE JAPAN
4 had “acquired” the website 4Chan and it was being managed on the 3rd floor of its Tokyo, Japan
5 headquarters.
6 62. HOZUMI shared that GOOD SMILE JAPAN had created marketing promotions
7 with 4Chan in the past and asked if they wanted to have a collaboration with them through fan
9 63. In March 2019, a month before the parties entered into the Asset Purchase
10 Agreement, Brenton Harrison Tarrant, a 28-year-old who was self-described as a white supremacist
11 and alt-right, murdered 51 people and injured 50 more in Christchurch New Zealand. As a result of
12 this tragedy, New Zealand blocked the websites 4Chan and 8Chan (where the video of the killing
13 was posted.)
14 64. BRAND wrote an email to HOZUMI on March 17, 2019 requesting a meeting with
15 the CEO of GOOD SMILE JAPAN, Takanori Aki, regarding the 4Chan platform. HOZUMI
16 requested articles to show AKI during BRAND and KIM’s meeting. BRAND and KIM were made
17 to feel like their concerns were being heard by AKI and they proceeded with the MFI purchase
18 agreement. However, subsequently no substantive actions were taken to address BRAND and
19 KIM’s severe discomfort with the lack of a follow up by GOOD SMILE and later the killer’s
20 manifesto was published on 4Chan.
21 65. Instead, HOZUMI later instructed BRAND and KIM not to disclose to any licensors
22 or employees of GOOD SMILE’s connection to 4Chan and all discussions about the infamous
23 platform were held in person orally and behind closed doors. BRAND and KIM would for the next
24 1½ years forward articles to HOZUMI pertaining to 4Chan to express their ongoing and increasing
25 concern and discomfort with the association. HOZUMI never responded to any of these written
26 communications.
27 66. According to recent multiple media reports, 4Chan has grown into a haven for Q-
28 Anon, Neo-Nazis, white nationalism, voter fraud propaganda, conspiracy theorists and hate speech.
18
CROSS-COMPLAINT OF JAMES YOUNGSUK KIM, GUY BRAND, MF, INC. AND IMAGINARY
PEOPLE, INC.; DEMAND FOR JURY TRIAL
1 Cross-Complainants are informed and believe that GOOD SMILE and/or its CEO AKI continue(s)
4 67. After entering into the APA, BRAND and KIM as Vice Presidents of GOOD SMILE
5 DEL were privy to and included in decision making meetings. However, after BRAND and KIM
6 began pointing out operational issues, including the tax issues, the licensing practices of GOOD
7 SMILE, and their discomfort with GOOD SMILE’S sales of Lolicon, BRAND and KIM noticed
8 that they were being excluded from meetings, and only the Japanese members were included. By
9 the end of 2019, it was evident that only HOZUMI and NAMBA, both Japanese, would meet with
10 AKI and later, BRAND and KIM would be apprised of whatever decisions were made.
11 68. When the Covid-19 global pandemic affected operations and sales prospects for
12 GOOD SMILE DEL in March of 2020, state and local government orders shut down Los Angeles
13 businesses. In the wake of the lockdowns, AKI wanted BRAND and KIM to terminate all
14 employees from its OEM/private label, wholesale, and events departments and instead focus only
15 on GOOD SMILE branded product. BRAND and KIM disagreed with the termination decision
16 made by the Japanese board members and instead suggested furloughs of all employees for one to
17 two days per week, resulting in everyone taking a small pay cut but ultimately keeping their jobs.
18 69. Spurning BRAND and KIM’s approach, HOZUMI decided to do both, fire
19 employees in its OEM/private label, wholesale, and events departments and furlough the remaining
20 employees. HOZUMI, however, expressly forbade BRAND and KIM from furloughing the single
21 Japanese national employee because of how it would look to their Japanese parent company.
22 Remaining American employees, however, with little exception were furloughed. BRAND and
23 KIM themselves as officers of GOOD SMILE DEL were also furloughed, but HOZUMI and Robert
24 Namba, both Japanese, continued to work and get paid normally without furlough.
26 70. In retaliation for BRAND and KIM reporting illegal and/ or unethical activity and
28
19
CROSS-COMPLAINT OF JAMES YOUNGSUK KIM, GUY BRAND, MF, INC. AND IMAGINARY
PEOPLE, INC.; DEMAND FOR JURY TRIAL
1 began with HOZUMI simply ignoring BRAND and KIM’s reports, and failing to investigate any
2 wrongdoing.
3 71. The retaliation escalated into Cross-Defendants stripping BRAND and KIM of their
4 authority as Vice Presidents. Specifically, they could no longer enter into contracts for GOOD
5 SMILE DEL; only HOZUMI could sign these contracts. BRAND and KIM were excluded for
6 executive-level meetings and were no longer consulted on major business decisions. They also
7 were prevented from having any contact with the CPAs and attorneys of GOOD SMILE DEL and
8 had no access to company bank accounts. In effect, BRAND and KIM became Vice Presidents in
9 title only.
10 72. BRAND and KIM were also forced to make representations to GOOD SMILE
11 JAPAN at HOZUMI’s direction for her own personal gain. Specifically, while trying to take over a
12 GOOD SMILE sister company, Ultra Tokyo Connection, LLC (“UTC,”) HOZUMI would direct
13 BRAND and KIM to make specific complaints about UTC’s managing director Ayano Nikaido in
14 order to create uncertainty in Nikaido’s fitness for the position during the weekly meetings with the
15 executives of GOOD SMILE JAPAN. At one-point GOOD SMILE JAPAN directors Akiyama and
16 Uemura became aware of HOZUMI’s underlying objectives and began investigating the merits of
17 HOZUMI’S complaints. Ultimately Uemura requested that HOZUMI work more collaboratively
19 73. In this way, all communication with GOOD SMILE JAPAN was directed by and
20 through HOZUMI who would most often exclude BRAND and KIM, preferring to take meetings
21 with NAMBA and AKI, and then relay decisions after they were made. Ultimately, BRAND and
22 KIM were excluded from all important decision making but were required to relay information that
24 74. BRAND and KIM came to the view that their purpose at GOOD SMILE DEL was
25 to be the scapegoats (as “officers”) for all of the decisions of the company, despite having little if
27 75. As BRAND and KIM’s concerns had fallen on deaf ears, in an effort to distance
28 themselves from the unethical and/or illegal conduct of the entity, and concerned about liability
20
CROSS-COMPLAINT OF JAMES YOUNGSUK KIM, GUY BRAND, MF, INC. AND IMAGINARY
PEOPLE, INC.; DEMAND FOR JURY TRIAL
1 therefor, in 2019, BRAND and KIM asked to become independent contractors outside of the entity
2 - The answer was, "no, because Guy and James run the company." In reality, GOOD SMILE DEL
3 knew that not having any corporate officers on payroll would raise red flags with the State of
4 California EDD office and would make it more difficult for HOZUMI and Robert Namba
6 76. Ultimately, after being sidelined and largely ignored after bringing the various
7 serious issues of tax liability, employer liability, improper licensing practices, as well as the ethical
8 and legal concerns relating to the U.S. sale of Lolicon and GOOD SMILE’s reprehensible affiliation
9 with and support of 4Chan, BRAND and KIM determined that they could no longer work for
10 GOOD SMILE DEL and preferred to run their own business. After more than 1½ years of enduring
11 this illegal and/or offensive, discriminatory, and retaliatory work environment, deprived of decision
12 making, BRAND and KIM were effectively and or constructively forced to tender their
13 “resignation” in September 2020 to avoid further retaliatory action and to broker a smooth transition
14 out of GOOD SMILE DEL and best ensure MFI’s rightful entitlement to its revenues from and
15 portion of the consigned Excess Inventory that was overdue since 2019 was not further
16 compromised. However, after HOZUMI first expressed interest in joining BRAND and KIM
17 moving forward, ultimately Cross-Defendants did not “accept” BRAND and KIM’s effective
18 resignation when it was disclosed that both no longer wanted to be employed but wanted to run
19 their own company and rather would look to a relationship as “client” or “consultant” in nature.
20 However, Cross Defendants insisted that BRAND and KIM stay employed until October 31, 2020
21 ostensibly in order that GOOD SMILE DEL could secure full forgiveness on the Paycheck
22 Protection Program (“PPP”) loan it applied for during the Covid-19 pandemic. Cross-Defendants
23 argued and represented to BRAND and KIM that that would avoid harm to and benefit and protect
24 all GOOD SMILE DEL employees, and questioned whether BRAND and KIM would want to see
26 77. Also at this time, GOOD SMILE DEL owed BRAND and KIM and/or MFI
27 thousands and thousands of dollars in unreimbursed expenses, unauthorized credit card charges,
28 and held valuable inventory and equipment (e.g., copiers, furniture, desks, personal computers,
21
CROSS-COMPLAINT OF JAMES YOUNGSUK KIM, GUY BRAND, MF, INC. AND IMAGINARY
PEOPLE, INC.; DEMAND FOR JURY TRIAL
1 computer servers, files, etc.) belonging to MFI, BRAND, and KIM. BRAND and KIM were aware
2 that HOZUMI could intentionally financially handcuff them by GOOD SMILE DEL’s refusing to
3 return their property and money if they left on “bad terms.” GOOD SMILE DEL was also overdue
4 on remitting MFI’s share of the sales of the Excess Inventory. Relying on HOZUMI and NAMBA’s
5 representations and hoping to facilitate a smooth exit, BRAND and KIM were coerced to stay on
6 temporarily.
7 78. On or about November 1, 2020, KIM and BRAND were informed that exit
8 interviews for them and another employee were being scheduled. KIM and BRAND were later
9 further informed however that Namba instructed that a “hold” be placed on accepting BRAND and
10 KIM’s effective resignations. When asked by BRAND and KIM why their exit interviews were not
11 being processed, HOZUMI presented KIM and BRAND with a new reason for not accepting a
12 change in the parties’ employment relationship that nothing to do with PPP forgiveness. Rather
13 HOZUMI informed BRAND and KIM that she had not yet told AKI that they had sought to
14 terminate their current employment status and that she “needed” to meet with him first.
15 79. Weeks later, on November 20, 2020, BRAND and KIM were purportedly “fired” for
16 cause. Three days later, BRAND and KIM were served with the Complaint in this action (“Happy
17 Thanksgiving”). The Complaint was likely hastily drafted during the time BRAND and KIM were
18 falsely induced to stay on beyond the tender of their request to terminate their employment
19 relationship.
20 80. On information and belief, Cross-Defendants’ true motive for pre-textually inducing
21 BRAND and KIM to postpone their effective resignations was to concoct claims against the
22 whistleblowers and convert MFI’s excess inventory. On December 8, 2020 and thereafter,
23 BRAND and KIM asked that Cross-Defendants reimburse MF, Inc. for business expenses incurred
24 on Cross-Defendants’ behalf and return its company equipment (described above). To date, Cross-
27 81. In or around July 2020, after HOZUMI dismantled the OEM (“Original Equipment
28 Manufacturing,”) wholesale, and the events teams and mandated that GOOD SMILE DEL was only
22
CROSS-COMPLAINT OF JAMES YOUNGSUK KIM, GUY BRAND, MF, INC. AND IMAGINARY
PEOPLE, INC.; DEMAND FOR JURY TRIAL
1 interested in producing Good Smile branded content, BRAND and KIM were presented with
2 another opportunity through a long-time friend of BRAND’s wife, this time to aid in the production
3 of a Netflix “Stranger Things” event, a branded Drive Into Experience. Like the first “Netflix”
4 license opportunity, BRAND and KIM presented the drive through experience opportunity to
6 82. BRAND and KIM followed up and again presented the “Stranger Things Drive Into
7 Experience” event to HOZUMI in August 2020, but since AKI and HOZUMI had already
8 effectively disbanded the OEM private label, wholesale, and events teams it was doubtful whether
9 GOOD SMILE DEL could even produce merchandise for such an event at that time. BRAND
10 notified HOZUMI that his former partner at MF, Inc. could otherwise aid in the production of the
11 event. In response, HOZUMI effectively passed on the opportunity indicating that it was not a good
12 fit for GOOD SMILE DEL’s new focus on GOOD SMILE’s own branded products.
13 83. At all relevant times, HOZUMI was aware of the Drive Into Experience OEM
14 Netflix branded opportunity, and had affirmatively decided that GOOD SMILE DEL would not be
15 producing OEM events after it had disbanded its division that may have been able to accomplish
17 84. Similarly, GOOD SMILE DEL alleges a breach of contract cause of action for
18 breach of the APA premised upon MFI’s purported failure to assign an expired license despite the
19 fact that NAMBA was aware prior to entering into the APA that the license was expired.
20 85. GOOD SMILE DEL also alleges that BRAND and KIM breached their employment
21 agreements by operating MFI aka Imaginary People, despite the fact that GOOD SMILE DEL
22 declined to purchase all of its assets and stood to gain from continued sales of the Excess Inventory,
24 86. Finally, GOOD SMILE DEL also seeks to enforce an illegal non-compete clause in
25 its employee handbook and or pursuant to non-disclosure agreement and enjoin BRAND, KIM and
27 87. Based upon the foregoing, BRAND, KIM and MFI are informed and believe that
28 BRAND and KIM were not terminated for “cause” after discovery of any wrongdoing on their part,
23
CROSS-COMPLAINT OF JAMES YOUNGSUK KIM, GUY BRAND, MF, INC. AND IMAGINARY
PEOPLE, INC.; DEMAND FOR JURY TRIAL
1 but rather in retaliation for signaling their effective resignations in September of 2020 after being
2 demoted and downgraded to Vice Presidents in title only after making a number of complaints about
5 Department of Fair Employment and Housing and received notices of right to sue pursuant to
8 V.
CAUSES OF ACTION
9 FIRST CAUSE OF ACTION
10 (RETALIATION IN VIOLATION OF THE FEHA AND PUBLIC POLICY)
(By Cross Complainants Brand and Kim Against All Cross-Defendants and Does 1-20)
11
89. Cross-Complainants incorporate each and every allegation contained in the
12
preceding and foregoing paragraphs of this Cross-Complaint as if fully set forth herein.
13
90. California Government Code section 12940(h) and (i) and public policy make it
14
unlawful for an employer to retaliate against an employee who engages in a protected activity, e.g.,
15
opposing unlawful discrimination.
16
91. Brand and Kim were at all times material hereto employees of Cross-Defendants
17
within the meaning of Government Code section 12900 et seq. Cross-Defendants were and are, at
18
all relevant times, the employer within the meaning of Government Code section 12900 et seq.
19
Cross-Defendants are responsible for the acts and/or omissions of their managers to perform all
20
statutory obligations, pursuant to FEHA and other California law.
21
92. During their employment, BRAND and KIM reported to Cross-Defendants their
22
good faith belief that Cross-Defendants were engaging in a practice of national origin
23
discrimination by directing them to terminate or furlough American-born employees but retain the
24
Japanese-born employee. BRAND and KIM also reported to Cross-Defendants that the distribution
25
of what BRAND and KIM viewed as obscene if not borderline obscene and overly sexually explicit
26
underage child anime products and its affiliation with racist ideology were unethical, highly
27
offensive and/or illegal. When BRAND and KIM opposed these practices and refused to participate
28
24
CROSS-COMPLAINT OF JAMES YOUNGSUK KIM, GUY BRAND, MF, INC. AND IMAGINARY
PEOPLE, INC.; DEMAND FOR JURY TRIAL
1 in such activity, Cross-Defendants, through their officers, directors and managing agents, retaliated
2 against BRAND and KIM by stripping them of job duties, excluding them from critical
3 management meetings, assigning them demeaning tasks, failing to legitimately investigate their
4 reports, and effectively forcing them to seek to terminate their employment relationship only to be
5 duped into staying on long enough for Cross-Defendants to “fire” them under false pretenses.
6 93. The above described misconduct in response to BRAND and KIM’s opposition to
7 the unlawful discrimination had a substantial and material adverse effect on the terms and
11 benefits, emotional distress, offense, stress, and anxiety in an amount according to proof at trial.
12 95. In doing the acts herein alleged, Cross-Defendants are liable for their oppression,
13 malice and despicable conduct directed at BRAND and KIM in conscious disregard of their rights.
14 The acts alleged herein were known to, authorized and ratified by Cross-Defendants. BRAND and
15 KIM are thus entitled to recover punitive damages from Cross-Defendants in an amount according
16 to proof.
SECOND CAUSE OF ACTION
17 HOSTILE WORK ENVIRONMENT IN VIOLATION OF
18 THE FEHA AND PUBLIC POLICY
(By Cross Complainants Brand and Kim Against All Cross-Defendants and Does 1-20)
19
96. Cross-Complainants incorporate each and every allegation contained in the
20
preceding and foregoing paragraphs of this Cross-Complaint as if fully set forth herein.
21
97. California Government Code section 12940(j) and public policy make it unlawful
22
for an employer to subject its employees to a hostile working environment through the sale of
23
sexually explicit materials.
24
98. BRAND and KIM were at all times material hereto employees of Cross-Defendants
25
within the meaning of Government Code section 12900 et seq. Cross-Defendants were and are, at
26
all relevant times, the employer within the meaning of Government Code section 12900 et seq.
27
Cross-Defendants are responsible for the acts and/or omissions of their managers to perform all
28
25
CROSS-COMPLAINT OF JAMES YOUNGSUK KIM, GUY BRAND, MF, INC. AND IMAGINARY
PEOPLE, INC.; DEMAND FOR JURY TRIAL
1 statutory obligations, pursuant to FEHA and other California law. Government Code sections
2 12940(j)(3) imposes personal liability on any employee who engages in unlawful harassment,
3 regardless of whether the employer knows or should have known of the conduct and fails to take
5 99. During their employment, BRAND and KIM were disgusted and alarmed when they
7 “Lolicon”) being sold on Cross-Defendants’ US website. BRAND and KIM complained to their
8 superior, HOZUMI, that the Lolicon material was unethical, morally offensive and potentially
9 violated federal obscenity laws give there was no age restriction on the Good Smile Connect LLC
10 website selling the Lolicon anime figures.
11 100. Rather than addressing BRAND and KIM’s serious concerns or investigate the legal
12 implications, HOZUMI requested a sales report for the sexualized under age figures and told
13 BRAND and KIM that the company would only remove the Lolicon from the site if sales were low.
14 Hozumi later notified Brand and Kim that it had been decided that Good Smile Connect LLC would
15 continue selling the Lolicon on the site due to growing sales but would make them available only
16 as “secret items” using a link from the Good Smile Company Japan’s blog. This would “hide the
17 figures from Good Smile Company’s licensors,” but still permit sales of Lolicon in the United
18 States.
19 101. Despite KIM and BRAND’s repeated objections to the continued selling of these
20 over sexualized child figures, HOZUMI would direct them to be in constant contact with Lolicon
21 through group chats, figures displayed throughout the workplace, and directions from HOZUMI to
22 work with the offensive material. HOZUMI told KIM and BRAND that the “final decision” to
23 continue the sale of Lolicon had been made. Cross-Complainants are informed and believe, and
24 on that basis allege that such Lolicon anime figures are still ultimately available for sale in
25 California and throughout the rest of the U.S. by GOOD SMILE, notwithstanding the potential
27
28
26
CROSS-COMPLAINT OF JAMES YOUNGSUK KIM, GUY BRAND, MF, INC. AND IMAGINARY
PEOPLE, INC.; DEMAND FOR JURY TRIAL
1 102. The above-described misconduct in response to BRAND and KIM’s continued
2 exposure to overly sexualized under-age figures created a hostile work environment based on sex
3 and had a substantial and material adverse effect on the terms and conditions of their employment.
5 suffered, and continue to suffer damages, including substantial losses in earnings, employment
6 benefits, emotional distress, stress, embarrassment, offense and anxiety in an amount according to
7 proof at trial.
8 104. In doing the acts herein alleged, Cross-Defendants are liable for their oppression,
9 malice and despicable conduct directed at Brand and Kim in conscious disregard of their rights.
10 The acts alleged herein were known to, authorized and ratified by Cross-Defendants, including
11 HOZUMI in her managerial capacity. BRAND and KIM are thus entitled to recover punitive
17 preceding and foregoing paragraphs of this Cross-Complaint as if fully set forth herein.
106. California Government Code section 12940(k) and public policy make it unlawful
18
for an employer to fail to take all reasonable steps necessary to prevent discrimination, harassment
19
and retaliation from occurring. The fundamental public policies prohibiting discrimination,
20
harassment, and retaliation are embodied in California Government Code section 12940 et seq. and
21 other California statutes.
22 107. BRAND and KIM were at all times material hereto employees of Cross-Defendants
23 within the meaning of Government Code section 12900 et seq. Cross-Defendants were and are, at
all relevant times, the employer within the meaning of Government Code section 12900 et seq.
24
Cross-Defendants are responsible for the acts and/or omissions of their managers to perform all
25
statutory obligations, pursuant to FEHA and other California law.
26
108. During their employment, BRAND and KIM reported to Cross-Defendants their
27 good faith belief that Cross-Defendants were engaging in a practice of national origin
28 discrimination by directing them to terminate or furlough American-born employees but retain the
27
CROSS-COMPLAINT OF JAMES YOUNGSUK KIM, GUY BRAND, MF, INC. AND IMAGINARY
PEOPLE, INC.; DEMAND FOR JURY TRIAL
1 Japanese-born employee. Brand and Kim also reported to Cross-Defendants that the distribution
2 of obscene and/or borderline obscene sexually explicit Lolicon anime products and affiliation with
3 racist ideology were illegal and highly offensive. When BRAND and KIM made these reports,
Cross-Defendants had a statutory duty to investigate the reports and to prevent discrimination from
4
occurring in the future. Cross-Defendants intentionally failed to perform their statutory duty to
5
investigate as part of their overall scheme to continue despicable practice of illegal activities and
6 to disregard rights of their employees. Said misconduct violated Government Code section
7 12940(k).
8 109. As a result of Cross-Defendants’ failure to take action, BRAND and KIM have
9 suffered, and continue to suffer damages, including substantial losses in earnings, employment
benefits, emotional distress, stress, embarrassment, offense and anxiety in an amount according to
10
proof at trial.
11
110. In doing the acts herein alleged, Cross-Defendants are liable for their oppression,
12
malice and despicable conduct directed at BRAND and KIM in conscious disregard of their rights.
13 The acts alleged herein were known to, authorized and ratified by Cross-Defendants. BRAND and
14 KIM are thus entitled to recover punitive damages from Cross-Defendants in an amount according
15 to proof.
FOURTH CAUSE OF ACTION
16
RETALIATON IN VIOLATION OF CALIFORNIA LABOR CODE § 1102.5
17 AND PUBLIC POLICY
(By Cross Complainants Brand and Kim Against All Cross-Defendants and Does 1-20)
18
111. Cross-Complainants incorporate each and every allegation contained in the
19
preceding and foregoing paragraphs of this Cross-Complaint as if fully set forth herein.
20
112. California Labor Code section 1102.5 prohibits an employer from retaliating against
21
an employee for disclosing a violation of state or federal regulation to the employer or for refusing
22
to participate in illegal activities.
23
113. During their employment, BRAND and KIM reported to Cross-Defendants their
24
good faith belief that Cross-Defendants were engaging in violations of tax laws, including but not
25
limited to, failing to pay state sales tax on goods sold, distributing and selling illicit under-age sexual
26
materials, discriminating against its own employees based on their national origin, affiliating with
27
racist ideology, engaging in employment violations, and stealing from customers. BRAND and KIM
28
28
CROSS-COMPLAINT OF JAMES YOUNGSUK KIM, GUY BRAND, MF, INC. AND IMAGINARY
PEOPLE, INC.; DEMAND FOR JURY TRIAL
1 refused to participate in such activity. In response, Cross-Defendants, through its officers, directors
2 and managing agents, retaliated against BRAND and KIM by stripping them of their job duties,
3 excluding them from critical decision making, assigning them demeaning tasks, failing to investigate
4 their reports, forcing them to seek to terminate their employer/employee relationship, only to be
5 duped into staying on long enough for Cross-Defendants to “fire” them under false pretenses.
6 114. The above-described misconduct in response to BRAND and KIM’s reports of and
7 opposition to illegal activity had a substantial and material adverse effect on the terms and conditions
8 of their employment.
11 benefits, emotional distress, stress, embarrassment, offense and anxiety in an amount according to
12 proof at trial.
13 116. In doing the acts herein alleged, Cross-Defendants are liable for their oppression,
14 malice and despicable conduct directed at BRAND and KIM in conscious disregard of their rights.
15 The acts alleged herein were known to, authorized and ratified by Cross-Defendants, including
16 HOZUMI in her managerial capacity. BRAND and KIM are thus entitled to recover punitive
22 preceding and foregoing paragraphs of this Cross-Complaint as if fully set forth herein.
23 118. California’s False Claims Act (Government Code §§ 12650-12656) and the federal
24 equivalent (31 U.S.C. §§ 3729-3733) prohibit an employer from retaliating against an employee for
26 119. When BRAND and KIM reported to Cross-Defendants their good faith belief that
27 Cross-Defendants were engaging in tax fraud, including but not limited to, failing to collect and pay
28 sales tax on all goods sold and BRAND and KIM refused to participate in such activity, Cross-
29
CROSS-COMPLAINT OF JAMES YOUNGSUK KIM, GUY BRAND, MF, INC. AND IMAGINARY
PEOPLE, INC.; DEMAND FOR JURY TRIAL
1 Defendants, through its officers, directors and managing agents, retaliated against them by stripping
2 them of their job duties, excluding them critical management meetings, assigning them demeaning
3 tasks, failing to investigate the discrimination, forcing them to seek to terminate their
4 employer/employee relationship, only to be duped into staying on long enough for Cross-Defendants
6 120. The above-described misconduct in response to BRAND and KIM’s reports of and
7 opposition to illegal activity had a substantial and material adverse effect on the terms and conditions
8 of their employment.
11 benefits, emotional distress, stress, embarrassment, offense and anxiety in an amount according to
12 proof at trial.
13 122. In doing the acts herein alleged, Cross-Defendants are liable for their oppression,
14 malice and despicable conduct directed at Cross-Complainants in conscious disregard of their rights.
15 The acts alleged herein were known to, authorized and ratified by Cross-Defendants, including
16 HOZUMI in her managerial capacity. Cross-Complainants are thus entitled to recover punitive
23 preceding and foregoing paragraphs of this Cross-Complaint as if fully set forth herein.
25 employees to sign illegal agreements in restraint of trade that include in their scope the provision
27 125. California Business and Professions Code section 16600 renders every contract in
28 restraint of trade void. The Cartwright Act renders any combination in restraint of trade unlawful
30
CROSS-COMPLAINT OF JAMES YOUNGSUK KIM, GUY BRAND, MF, INC. AND IMAGINARY
PEOPLE, INC.; DEMAND FOR JURY TRIAL
1 and void. Business and Professions Code section 17200 et seq. renders violations of section 16600
3 126. Cross-Defendants required BRAND and KIM to sign illegal agreements restricting
4 their ability to compete against Cross-Defendants for a period of two years following separation of
5 employment in conjunction with a transaction involving the purchase of only some, but not all of
6 the assets of BRAND and KIM’s prior company MFI dba Imaginary People. There is no geographic
7 limitation set forth in said illegal agreements. BRAND and KIM who served effective “resignation”
9 were thereafter pre-textually fired to purportedly “trigger” the illegal non-compete provisions.
10 BRAND and KIM now are employed by, and provide services for Imaginary People, Inc. in their
12 Cross-Defendants violate California law when they enter into illegal agreements in restraint of trade
13 with employees that include a provision banning employees from competing against Cross-
14 Defendants for a period of two years following separation of employment, such as Brand and Kim
17 provisions in BRAND and KIM’s employment contracts, in that GOOD SMILE DEL is seeking to
18 enjoin fair competition, going so far as seeking to enjoin BRAND and KIM inter alia from soliciting
19 future prospective clients of GOOD SMILE DEL, the identity of which would be unknown.
20 Accordingly, BRAND and KIM also seek a declaration that the non-compete provisions in their
21 employment contracts, company handbook, non-disclosure agreements et. al. with GOOD SMILE
23 128. Ancillary to this declaratory judgment, BRAND and KIM seek an order enjoining
24 Cross-Defendants from entering into such contracts and requiring Cross-Defendants to modify any
25 existing illegal agreements in restraint of trade with employees so that these employees are free to
27 Further BRAND and KIM seek an award of three times the amount of actual damages, attorney's
28 fees, and costs pursuant to Cal. Bus. & Prof. Code section 17082.
31
CROSS-COMPLAINT OF JAMES YOUNGSUK KIM, GUY BRAND, MF, INC. AND IMAGINARY
PEOPLE, INC.; DEMAND FOR JURY TRIAL
1 SEVENTH CAUSE OF ACTION
BREACH OF CONTRACT
2 (By Cross-Complainants Brand and Kim Against Cross-Defendants Good Smile Connect
3 LLC, and Does 1-20)
129. Cross-Complainants incorporate each and every allegation contained in the
4
preceding and foregoing paragraphs of this Cross-Complaint as if fully set forth herein.
5
130. On or about April 1, 2019, Cross-Complaints BRAND and KIM each entered into
6
identical written employment agreements with Good Smile Connect LLC.
7
131. Cross Complainants BRAND and KIM did all, or substantially all, of the significant
8
things that the contract required them to do, or were excused from having to do those things.
9
132. The agreements each require 15 days notice of termination unless termination is
10
made for “cause,” defined as “conduct involving commission of a crime, act of moral turpitude,
11
dishonesty, violence or embezzlement.” These agreements also provide “That the company may also
12
elect to provide pay in lieu of notice, regardless of whether your employment is terminated for cause
13
or no cause.”
14
133. Cross Defendants through GOOD SMILE DEL breached the employment
15
agreements by failing to give proper notice, or elect to pay BRAND and KIM for not giving notice,
16
when purporting to terminate the employment agreements for “cause” for “dishonesty.” The
17
termination was pre-textual, as Cross-Complainants disclosed the “Stranger Things” opportunity
18
and presented it to GOOD SMILE DEL on multiple occasions and made after Cross-Defendants
19
Brand and Kim had served notice that they sought to terminate the parties’ employer/employee
20
relationship.
21
134. As a direct and proximate result of the aforementioned termination, Cross-
22
Defendants have been damaged in an amount according to proof.
23
2 identical written employment agreements with Good Smile Connect LLC as part of the APA between
3 MF, Inc. and Good Smile Connect LLC. Thereafter, Cross-Complaints BRAND and KIM were
6 137. In every contract or agreement there is an implied promise of good faith and fair
7 dealing. This implied promise means that each party will not do anything to unfairly interfere with
8 the right of any other party to receive the benefits of the contract.
9 138. Cross-Complainants, and each of them, did all, or substantially all of the significant
10 things that the APA and employment agreements with BRAND and KIM required them to do or
12 139. All conditions of the agreement required for performance were met by Cross-
13 Complainants or excused.
14 140. Good Smile Connect LLC, through its agents, breached the covenant of good faith
17 harassment;
19 reporting practices;
20 c. Failing to adequately address issues raised by Cross-Complainants related to
24 under false pretenses so that they could purportedly “fire” them later;
27 BRAND and KIM on the pre-textual basis that they failed to present the opportunity
3 g. By refusing and failing to reimburse corporate expenses paid by MF, Inc. on behalf
4 of Cross-Defendants.
5 141. Cross-Defendants’ actions have, inter alia, damaged the pre-existing relationship
6 between Cross-Complainants and third parties, including with regard to Netflix, and interfered with
7 their ability to build on the “Stranger Things” event, damaged the pre-existing relationship between
8 Cross-Complainants and Valve, and interfered with their ability to exploit Valve inventory and new
9 opportunities.
10 142. As a result of the aforementioned breaches of the implied covenant of good faith
11 and fair dealing, Cross-Defendants have been damaged in an amount according to proof.
3 BRAND and KIM next asked HOZUMI on August 21, 2020, if GOOD SMILE DEL wanted
4 to sell Good Smile branded products for the “Stranger Things Drive Into Experience” event.
5 HOZUMI collaborated with BRAND for GOOD SMILE DEL to provide a pitch deck to Imaginary
7 146. As a result of the foregoing, Imaginary People, Inc. proceeded with preparations for
8 the “Stranger Things Drive Into Experience” and was in a relationship with a third party regarding
11 148. After Cross-Claimants Brand and Kim gave notice that they sought to terminate
12 their employer/employee relationship with GOOD SMILE DEL, HOZUMI, knowing they were
13 already leaving, on behalf of GOOD SMILE DEL engaged in a ruse to keep Brand and Kim
14 “employed” until GOOD SMILE DEL purported to pre-textually “fire” them “for cause” in an
15 effort to arguably trigger illegal non-compete language contained in the GOOD SMILE DEL’s
17 place false restrictions on Cross-Claimants against California public policy. Specifically, HOZUMI
18 on behalf of GOOD SMILE DEL represented to Cross-Claimants BRAND and KIM that they
19 needed to stay employed until a certain date so that GOOD SMILE DEL had the requisite number
20 of employees to take advantage of a PPP loan forgiveness program thereby “protecting” the other
21 employees. However, other employees were somehow able to resign at or about such time, belying
23 149. By engaging in this ruse to effect an arguable termination for “cause,” and then
24 immediately suing Cross-Complainants for damages related to the “Stranger Things” OEM
25 experience that GOOD SMILE DEL did not have the interest or the ability to produce as structured
26 at the time, Cross-Defendants intended to disrupt the relationship with Netflix, and take the fruits
27 of Cross-Complainant’s labor for themselves without actually doing any of the work.
28
35
CROSS-COMPLAINT OF JAMES YOUNGSUK KIM, GUY BRAND, MF, INC. AND IMAGINARY
PEOPLE, INC.; DEMAND FOR JURY TRIAL
1 150. Cross-Defendants knew that that their conduct would disrupt or that it was
5 negotiations of the desired contract to be engaged in further production of the “Stranger Things
7 determined at trial.
8 152. As a result of Cross-Defendants’ conduct, Cross-Complainants did not enter into the
9 desired contract to engage in further production of the “Stranger Things Drive Through Experience”
10 OEM products damaging Cross-Complainants in an amount to be determined at trial.
11 153. Cross-Defendants conduct was a substantial factor if not the entire reason for the
12 disruption in the economic relationship with a third party regarding Netflix for the “Stranger Things
28
36
CROSS-COMPLAINT OF JAMES YOUNGSUK KIM, GUY BRAND, MF, INC. AND IMAGINARY
PEOPLE, INC.; DEMAND FOR JURY TRIAL
1 c. The Parties intend that Buyer will receive $250,000 worth of inventory, valued at
4 i. If the value of the inventory exceeds $250,000 (the portion of such inventory
6 Buyer will pay Seller, quarterly, commencing April 1, 2019 and each quarter
7 thereafter, (A) thirty percent (30%) of Net Sales generated from the sale of
8 the Excess Inventory for retail sales and (B) fifty percent (50%) of Net Sales
9 generated from the Sale of Excess Inventory for Wholesale sales for the first
10 two (2) years after the closing of the Transaction (“Payment Date”).
11 ii. If the value of the inventory is less than $250,000 the Purchase Price payable
14 iii. Excess Inventory shall be consigned to Buyer. Seller has yet to file a UCC
15 with respect to the Excess Inventory. Buyer will charge seller rent for storing
16 the Excess Inventory. Buyer has the right to reasonably restrict the amount
17 of rental space it provides for the Excess Inventory. Any Excess Inventory
18 not sold within two (2) years from date of this Agreement shall be returned
19 to Seller.
20 iv. Included in the consigned inventory is Valve inventory that Seller owns on a
21 deferred payment arrangement under Seller pays for the inventory once it
22 has been sold. Notwithstanding anything herein to the contrary, for this
23 special inventory, Buyer will pay Seller sixty five percent (65%) of Net
24 Sales, payable at the same time as payments for the Excess Inventory. Seller
25 will be allowed to store this special inventory in Buyer’s warehouse rent free.
26 Buyer has the right to reasonably restrict the amount of rental space it
27 provides for this special inventory. Any of this special inventory not sold
28 within (2) years from the date of this Agreement shall be returned to Seller.
37
CROSS-COMPLAINT OF JAMES YOUNGSUK KIM, GUY BRAND, MF, INC. AND IMAGINARY
PEOPLE, INC.; DEMAND FOR JURY TRIAL
1 159. Good Smile Connect LLC and Good Smile Company U.S., Inc. breached the APA
2 by failing to pay MF, Inc. its portion of the consigned sales for both the Excess Inventory and for
3 the Valve consigned inventory since the fourth quarter of 2019, despite multiple requests for proper
5 160. Good Smile Connect LLC and Good Smile Company U.S., Inc. further breached the
6 APA by failing to return to MF, Inc. on April 1, 2021, or expiration of the two (2) year time limit, all
8 161. Good Smile Connect LLC and Good Smile Company U.S., Inc. further breached the
9 APA by failing to return to MF, Inc. all of the Excluded Assets listed in Disclosure Schedule 1.2 and
10 is wrongfully withholding Cross-Complainant’s personal property.
11 162. Cross Complainant has substantially performed its obligations under the APA, or
12 otherwise its further performance is excused by GOOD SMILE’s prior material breach of
15 Defendants have been damaged in an amount according to proof but believed to exceed
21 preceding and foregoing paragraphs of this Cross-Complaint as if fully set forth herein.
22 165. On or about April 1, 2019, Cross-Complaints MF, Inc. entered into an Asset
23 Purchase Agreement with Good Smile Connect, LLC (“APA”) that was ratified by its sole manager
24 Good Smile Company U.S., Inc. through formal resolution whereby Good Smile Connect LLC and
25 Good Smile Company U.S., Inc. came into physical possession of certain assets owned by MF, Inc.
26 166. The APA sets forth at Article 1.2 those assets that were excluded from the sale and
28 167. The APA sets forth at Article 1.4(c) the following provisions:
38
CROSS-COMPLAINT OF JAMES YOUNGSUK KIM, GUY BRAND, MF, INC. AND IMAGINARY
PEOPLE, INC.; DEMAND FOR JURY TRIAL
1 d. The Parties intend that Buyer will receive $250,000 worth of inventory, valued at
4 i. If the value of the inventory exceeds $250,000 (the portion of such inventory
6 Buyer will pay Seller, quarterly, commencing April 1, 2019 and each quarter
7 thereafter, (A) thirty percent (30%) of Net Sales generated from the sale of
8 the Excess Inventory for retail sales and (B) fifty percent (50%) of Net Sales
9 generated from the Sale of Excess Inventory for Wholesale sales for the first
10 two (2) years after the closing of the Transaction (“Payment Date”).
11 ii. If the value of the inventory is less than $250,000 the Purchase Price payable
14 iii. Excess Inventory shall be consigned to Buyer. Seller has yet to file a UCC
15 with respect to the Excess Inventory. Buyer will charge seller rent for storing
16 the Excess Inventory. Buyer has the right to reasonably restrict the amount
17 of rental space it provides for the Excess Inventory. Any Excess Inventory
18 not sold within two (2) years from date of this Agreement shall be returned
19 to Seller.
20 iv. Included in the consigned inventory is Valve inventory that Seller owns on a
21 deferred payment arrangement under Seller pays for the inventory once it
22 has been sold. Notwithstanding anything herein to the contrary, for this
23 special inventory, Buyer will pay Seller sixty five percent (65%) of Net
24 Sales, payable at the same time as payments for the Excess Inventory. Seller
25 will be allowed to store this special inventory in Buyer’s warehouse rent free.
26 Buyer has the right to reasonably restrict the amount of rental space it
27 provides for this special inventory. Any of this special inventory not sold
28 within (2) years from the date of this Agreement shall be returned to Seller.
39
CROSS-COMPLAINT OF JAMES YOUNGSUK KIM, GUY BRAND, MF, INC. AND IMAGINARY
PEOPLE, INC.; DEMAND FOR JURY TRIAL
1 168. Despite the fact that the APA expressly requires that on April 1, 2021, or expiration
2 of the two (2) year time limit, all of the unsold Valve consignment inventory and Excluded Assets
3 listed in Disclosure Schedule 1.2 be returned to MF, Inc., Good Smile Connect LLC and Good Smile
4 Company U.S., Inc. have not returned to MF, Inc., these personal property and inventory items,
5 wrongfully converting these items as their own. Good Smile Connect LLC and Good Smile
6 Company U.S., Inc. have also failed to pay MF, Inc. its share of the consigned Excess Inventory and
7 Valve inventory converting those amounts for their own use. As a result, Good Smile Connect LLC
8 and Good Smile Company U.S., Inc. have substantially interfered with Cross-Complainants’ right
9 to their personal property Excluded Assets, as well as MF, Inc.’s right to its share of the sales of the
10 consigned inventory as well all of the Valve consigned inventory that Cross-Defendants have no
11 right to possess.
12 169. MF, Inc. does not consent to Good Smile Connect LLC and Good Smile Company
13 U.S., Inc.’s interference with its right to possess the aforementioned property.
15 requests for accounting and payments for the sale of the consigned inventory. Additional requests in
16 early 2021 were also made. Good Smile has refused to respond to these inquiries.
17 171. Good Smile Connect LLC and Good Smile Company U.S., Inc.’s knowing and
18 continued refusal to account and remit to MF, Inc. payment for the consigned inventory, refusal to
19 turn over all of the Valve consigned inventory and all of MF, Inc’s personal property items expressly
20 excluded by the APA has caused and continues to cause damages to MF, Inc.
21 172. As a direct and proximate result of the aforementioned knowing interference with
22 MF, Inc.’s property rights, Cross-Defendants have been damaged in an amount according to proof.
23 VI.
24 PRAYER
25 WHEREFORE, Cross-Complainants pray for relief as follows:
26 ON THE FIRST CLAIM FOR RELIEF
27 1. For compensatory damages in an amount according to proof, with
28 interest thereon;
40
CROSS-COMPLAINT OF JAMES YOUNGSUK KIM, GUY BRAND, MF, INC. AND IMAGINARY
PEOPLE, INC.; DEMAND FOR JURY TRIAL
1 2. For punitive damages in an amount sufficient to deter future bad acts;
2 3. For reasonable attorney fees according to proof;
3 4. For pre- and post-judgment interest at the legal interest rate;
4 5. For costs of suit incurred; and
5 6. For such other and further relief as the court may deem just and
6 proper.
7 ON THE SECOND CLAIM FOR RELIEF
8 7. For compensatory damages in an amount according to proof, with
9 interest thereon;
10 8. For punitive damages in an amount sufficient to deter future bad acts;
11 9. For reasonable attorney fees according to proof;
12 10. For pre- and post-judgment interest at the legal interest rate;
13 11. For costs of suit incurred; and
14 12. For such other and further relief as the court may deem just and
15 proper.
16 ON THE THIRD CLAIM FOR RELIEF
17 13. For compensatory damages in an amount according to proof, with
18 interest thereon;
19 14. For punitive damages in an amount sufficient to deter future bad acts;
20 15. For reasonable attorney fees according to proof;
21 16. For pre- and post-judgment interest at the legal interest rate;
22 17. For costs of suit incurred; and
23 18. For such other and further relief as the court may deem just and
24 proper.
25 ON THE FOURTH CLAIM FOR RELIEF
26 19. For compensatory damages in an amount according to proof, with
27 interest thereon;
28 20. For punitive damages in an amount sufficient to deter future bad acts;
41
CROSS-COMPLAINT OF JAMES YOUNGSUK KIM, GUY BRAND, MF, INC. AND IMAGINARY
PEOPLE, INC.; DEMAND FOR JURY TRIAL
1 21. For pre- and post-judgment interest at the legal interest rate;
2 22. For costs of suit incurred; and
3 23. For such other and further relief as the court may deem just and
4 proper.
5 ON THE FIFTH CLAIM FOR RELIEF
6 24. For compensatory damages in an amount according to proof, with
7 interest thereon;
8 25. For punitive damages in an amount sufficient to deter future bad acts;
9 26. For reasonable attorney fees according to proof;
10 27. For pre- and post-judgment interest at the legal interest rate;
11 28. For costs of suit incurred; and
12 29. For such other and further relief as the court may deem just and
13 proper.
14 ON THE SIXTH CLAIM FOR RELIEF
15 30. For a declaration that; Cross-Defendants violate California law when
16 they enter into illegal agreements in restraint of trade with employees
17 that include a provision banning employees from competing against
18 Cross-Defendants for a period of two years following separation of
19 employment.
20 31. For an order enjoining Cross-Defendants from entering into such
21 contracts and requiring Cross-Defendants to modify any existing
22 illegal agreements in restraint of trade with employees so that these
23 employees are free to provide services in California to a California-
24 based employer following separation of employment.
25 32. For three times the amount of actual damages, attorney's fees, and costs
26 pursuant to California Business & Professions Code section 17082.
27 ///
28 ///
42
CROSS-COMPLAINT OF JAMES YOUNGSUK KIM, GUY BRAND, MF, INC. AND IMAGINARY
PEOPLE, INC.; DEMAND FOR JURY TRIAL
1 ON THE SEVENTH CLAIM FOR RELIEF
2 33. For damages under contract in an amount according to proof, with
3 interest thereon;
4 34. For costs of suit incurred; and
5 35. For such other and further relief as the court may deem just and
6 proper.
7 ON THE EIGHTH CLAIM FOR RELIEF
8 36. For damages under contract in an amount according to proof, with
9 interest thereon;
10 37. For costs of suit incurred; and
11 38. For such other and further relief as the court may deem just and
12 proper.
13 ON THE NINTH CLAIM FOR RELIEF
14 39. For compensatory damages in an amount according to proof, with
15 interest thereon;
16 40. For costs of suit incurred;
17 41. For punitive damages in an amount sufficient to deter future bad acts;
18 42. For reasonable attorney’s fees according to proof; and
19 43. For such other and further relief as the court may deem just and
20 proper.
21 ON THE TENTH CLAIM FOR RELIEF
22 44. For damages under contract in an amount according to proof, with
23 interest thereon;
24 45. For costs of suit incurred; and
25 46. For such other and further relief as the court may deem just and
26 proper.
27 ///
28 ///
43
CROSS-COMPLAINT OF JAMES YOUNGSUK KIM, GUY BRAND, MF, INC. AND IMAGINARY
PEOPLE, INC.; DEMAND FOR JURY TRIAL
1 ON THE ELEVENTH CLAIM FOR RELIEF
2 47. For compensatory damages in an amount according to proof, with
3 interest thereon;
4 48. For special damages in an amount according to proof, with interest
5 thereon;
6 49. For costs of suit incurred;
7 50. For reasonable attorney’s fees according to proof; and
8 51. For such other and further relief as the court may deem just and
9 proper.
10
Dated: September 1, 2021 HAMRICK & EVANS, LLP
11
12
16
17
19 Cross-Complainants Guy Brand, James Youngsuk Kim, MF, Inc., and Imaginary People,
20 Inc. hereby demands a jury trial as to each and every cause of action stated above so triable.
21
Dated: September 1, 2021 HAMRICK & EVANS, LLP
22
23
27
28
44
CROSS-COMPLAINT OF JAMES YOUNGSUK KIM, GUY BRAND, MF, INC. AND IMAGINARY
PEOPLE, INC.; DEMAND FOR JURY TRIAL
EXHIBIT "A"
ACTION BY WRITTEN CONSENT
OF THE SOLE MANAGER OF
April 1, 2019
The undersigned, being the sole manager (the "Manager") of Good Smile Connect
LLC, a Delaware limited liability company (the "Company"), pursuant to the provisions of
Section 18-404(d) of the Delaware Limited Liability Company Act (the "Act") and the Limited
Liability Company Agreement of the Company (the "Operating Agreement"), does hereby
consent to and adopt the following as the actions of the Manager. Capitalized terms, unless
otherwise defined herein, shall have the meaning assigned to them in the Asset Purchase
Agreement (defined below).
WHEREAS, pursuant to the terms and conditions set forth in the Asset
Purchase Agreement, at the Closing, Seller will sell, convey, assign, transfer, and
deliver to the Buyer, and Buyer will purchase from Seller, all of Seller's right,
title, and interest in, to, and under all of the tangible and intangible assets,
properties, and rights of every kind and nature and wherever located (other than
the Excluded Assets), which relate to, or are used or held for use in connection
with the Business (collectively, the "Purchased Assets") (as defined in the Asset.
Purchase Agreement), in exchange for consideration described in Section 1.4 of
the Asset Purchase Agreement (the "Purchase Price");
BN 36014014v1
RESOLVED FURTHER, that the Manager, by execution of this Written
Consent, consents to and approves the Asset Purchase Agreement, the Transaction
Documents and the transactions contemplated thereby;
RESOLVED FURTHER, that the Company, the Manager and each of its
officers are authorized to take any and all action, to make any and all payments
and to execute any and all documents that they consider appropriate to effect and
perform the Asset Purchase Agreement.
aN 36014014v I
IN WITNESS WHEREOF, the undersigned has executed this Written Consent,
effective as of the date first written above.
SOLE MANAGER;
April 1, 2019
The undersigned, constituting the sole member (the "Member") of Good Smile
Connect LLC, a Delaware limited liability company (the "Company"), pursuant to the provisions
of Section 18-302(d) of the Delaware Limited Liability Company Act, as amended (the "Act")
and Section 1.6 of the Operating Agreement of the Company (the "Operating A r lent"), do
hereby consent to and adopt the following as the action of the Member of the Company:
WHEREAS, the Member shall have full and complete authority, power
and discretion to manage and control the business, affairs and properties of the
Company, to make all decisions regarding those matters and to perform any and
all other acts or activities customary or incident to management of the Company's
business; and
Takanori Aki
Naoki Meiri
Enna Hozum
Robert Namba
James Kim
Guy Brand
By:
Name: Takanori Aid
Tide: President
April 1, 2019
The undersigned, hereby certifies that he is the President of Crooked Smile Holdings,
Inc., sole manager (the "Manager") of Good Smile Connect LLC, a Delaware limited liability
company (the "Buyer") and that he delivers this Certificate as President of the Manager of the
Buyer (and not in his individual capacity) in connection with and pursuant to Section 2(b)(iv) of
that certain Asset Purchase Agreement entered into as of April 1, 2019 (the "Purchase
Agreement") by and between MF, Inc., formerly known as Mighty Fine, a California corporation
(the "Seller") and the Buyer. Capitalized terms used but not defined herein have the meanings
assigned to them in the Purchase Agreement.
I . Attached hereto as Exhibit A is a true, correct and complete copy of the resolutions
adopted by the Manager of Buyer, authorizing the execution, delivery and performance of
the Purchase Agreement and the Transaction Documents and the consummation of the
transactions contemplated hereby and thereby; and
2, Set forth below are the names and signatures of the officers of Buyer authorized to sign
the Purchase Agreement and the other Transaction Documents:
BN 36012i 39v2
IN WITNESS WHEREOF, the undersigned has executed this Certificate and caused this
Certificate to be delivered as of date ft rst written above,
ENTITY NAME:
MP, INC.
ALEX PADILLA
Secretary of State
NLH
NP-25 (REV 02/2019)
STATE OF CALIFORNIA
FRANCHISE TAX BOARD
PO BOX 942857
SACRAMENTO CA 94257-0540
According to our records, the following entity information is true and accurate as of the date of this letter.
o 2. The entity is not in good standing with the Franchise Tax Board.
n 3. The entity is currently exempt from tax under Revenue and Taxation Code (R&TC) Section 23701.
WHEREAS, MF, Inc., formerly known as Mighty Fine, a California corporation (hereinafter
"Assignor"), registered and/or is the current owner of record for the domain names set forth on Exhibit A,
attached hereto and incorporated by reference (hereinafter the "Domains").
WHEREAS, Crooked Smile Holdings, Inc., a California corporation with an address of 360 F.
2nd Street, Suite 450, Los Angeles California 90012 (hereinafter "Assignee") desires to acquire all rights
in and to the Domains;
WHEREAS, the Assignor desires to assign the Domains to Assignee, and Assignee desires to
acquire the Domains from Assignor.
NOW, THEREFORE, in consideration of the foregoing and for other good and valuable
consideration, the receipt, sufficiency and adequacy of which is hereby acknowledged, the parties,
intending to be legally bound, agree as follows:
3. Cooperation and Further Documentation. Assignor agrees to execute and deliver without
further consideration such further instruments and other documents, and to cooperate with Assignee in
any manner as may be reasonably required by Assignee to vest all rights, title, and interest in and to the
Domains in Assignee and to effectuate the purpose and intent of this Agreement so that the transfer of the
Domains to the Assignee is recorded in the appropriate registrar for the Domains. Assignor further agrees
to undertake whatever actions are required by the registrar, including, without limitation, the initiation of
the transfer process and removal of any registrar locks, to effectuate the transfer of ownership of the
Domains to Assignee so that Assignee will be the sole registered owner of the Domains and the Domains
will be registered on whatever domain name registrar that the Assignee shall designate.
I
131,1 36010858v1
AGREED TO AND ACCEPTED BY MF, INC., A CALIFORNIA CORPORATION
DOMAIN NAMES
1. goodsmileus.com
2. goodsmileshopus.com
3. goodsmileshopusa.com
ACTION BY WRITTEN CONSENT
OF THE BOARD OF MANAGERS OF
April 1, 2019
Appointment of Officers
WHEREAS, the Managers shall have full and complete authority, power
and discretion to manage and control the business, affairs and properties of the
Company, to make all decisions regarding those matters and to perform any and
all other acts or activities customary or incident to management of the Company's
business; and
BOARD OF MANAGERS:
Takanori A ki
Enna Hozumi
Guy Brand
Date: 3/27/19
James Kim
I. Position
Job title
Your title will be Vice President and you will report to the Company's Board of Managers.
Working schedule
This is a full-time position requiring approximately 40 hours per week. Your regular weekly
schedule will be Monday to Friday 10:00AM to 7:00PM.
Employment Relationship
Employment with the Company is for no specific period of time. Your employment with the
Company will be "at will," meaning that either you or the Company may terminate your
employment at any time and for any reason, with or without cause. Any contrary
representations that may have been made to you are superseded by this letter agreement. This
is the full and complete agreement between you and the Company on this term, Although your
job duties, title, compensation and benefits, as well as the Company's personnel policies and
procedures, may change from time to time, the "at will" nature of your employment may only
be changed in an express written agreement signed by you and a duly authorized officer of the
Company (other than you.)
U. Cash Compensation
Salary
The Company will pay you a starting salary at the rate of $200,000.00 Gross annual salary per
year, payable in accordance with the Company's standard payroll schedule, beginning May 1,
2019 and you will receive your first paycheck on May 15, 2019. This salary will be subject to
adjustment pursuant to the Company's employee compensation policies.
Tax withholding
All forms of compensation referred to in this letter agreement are subject to reduction to
reflect applicable withholding and payroll taxes and other deductions required by law.
Tax advice
You are encouraged to obtain your own tax advice regarding your compensation from the
Company. You agree that the Company does not have a duty to design its compensation
policies in a manner that minimizes your tax liabilities and you will not make any claim against
the Company or its Board of Managers related to tax liabilities arising from your compensation.
Although your employment, as set forth herein, is at all times at-will, and may be terminated by
you or by the company at any time, for any reason or no reason, you and the company agree to
provide 15 days' notice prior to termination of employment, except that, if the company
terminates your employment for "cause" (defined as conduct involving commission of a crime,
act of moral turpitude, dishonesty, violence or embezzlement), the company may terminate
your employment without notice. The company may also elect to provide pay in lieu of notice,
regardless of whether your employment is terminated for cause or no cause.
You may indicate your agreement with these terms and accept this offer by signing and dating
this agreement by April 2, 2019. Upon your acceptance of this employment offer, Good Smile
Connect, LLC will provide you with the necessary paperwork and instructions.
Sincerely,
Enna Hozumi
Vice President
Signatures:
/c43-t2/71/
Company Representative (Print)
Date
Applicant (Sign)
Applicant (Print)
Date
Date: 3/27/19
Guy Brand
I. Position
Job title
Your title will be Vice President and you will report to the Company's Board of Managers.
Working schedule
This is a full-time position requiring approximately 40 hours per week. Your regular weekly
schedule will be Monday to Friday 10:00AM to 7:00PM.
Employment Relationship
Employment with the Company is for no specific period of time. Your employment with the
Company will be "at will," meaning that either you or the Company may terminate your
employment at any time and for any reason, with or without cause. Any contrary
representations that may have been made to you are superseded by this letter agreement. This
is the full and complete agreement between you and the Company on this term. Although your
job duties, title, compensation and benefits, as well as the Company's personnel policies and
procedures, may change from time to time, the "at will" nature of your employment may only
be changed in an express written agreement signed by you and a duly authorized officer of the
Company (other than you.)
The Company will pay you a starting salary at the rate of $200,000.00 Gross annual salary per
year, payable in accordance with the Company's standard payroll schedule, beginning May 1,
2019 and you will receive your first paycheck on May 15, 2019. This salary will be subject to
adjustment pursuant to the Company's employee compensation policies.
Tax withholding
All forms of compensation referred to in this letter agreement are subject to reduction to
reflect applicable withholding and payroll taxes and other deductions required by law.
Tax advice
You are encouraged to obtain your own tax advice regarding your compensation from the
Company. You agree that the Company does not have a duty to design its compensation
policies in a manner that minimizes your tax liabilities and you will not make any claim against
the Company or its Board of Managers related to tax liabilities arising from your compensation.
Although your employment, as set forth herein, is at all times at-will, and may be terminated by
you or by the company at any time, for any reason or no reason, you and the company agree to
provide 15 days' notice prior to termination of employment, except that, if the company
terminates your employment for "cause" (defined as conduct involving commission of a crime,
act of moral turpitude, dishonesty, violence or embezzlement), the company may terminate
your employment without notice. The company may also elect to provide pay in lieu of notice,
regardless of whether your employment is terminated for cause or no cause.
You may indicate your agreement with these terms and accept this offer by signing and dating
this agreement by April 2, 2019. Upon your acceptance of this employment offer, Good Smile
Connect, LLC will provide you with the necessary paperwork and instructions.
Sincerely,
Enna Hozumi
Vice President
Good Smile Connect, tic
Signatures;
61/.1 /1-7-e;Fol4(
Company Representative (Print)
Date
Applicant (Sign)
Date
This Asset Purchase Agreement (this "Agreement"), dated as of April 1, 2019 is entered
into between MF, Inc., formerly known as Mighty Fine, a California corporation ("Seller"), and
Good Smile Connect, LLC, a Delaware limited liability company ("Buyer"). Capitalized terms
used in this Agreement have the meanings given to such terms herein, as such definitions are
identified by the cross-references set forth in Exhibit A attached hereto.
RECITALS
WHEREAS, Seller wishes to sell and assign to Buyer, and Buyer wishes to purchase and
assume from Seller, the rights and obligations of Seller to the Purchased Assets and the Assumed
Liabilities, subject to the terms and conditions set forth herein;
ARTICLE I
PURCHASE AND SALE
Section LI Purchase and Sale of Assets. Subject to the terms and conditions
set forth herein, at the Closing, Seller shall sell, convey, assign, transfer, and deliver to Buyer,
and Buyer shall purchase from Seller, all of Seller's right, title, and interest in, to, and under all
of the tangible and intangible assets, properties, and rights of every kind and nature and wherever
located (other than the Excluded Assets), which relate to, or are used or held for use in
connection with, the Business (collectively, the "Purchased Assets"), including the following:
(a) all accounts receivable related to the Business held by Seller set forth on
Disclosure Schedule 1.1(a) ("Accounts Receivable");
(b) all Net Income arising out of Imaginary People's contract with BANDAI
NAMCO Arts Inc. dated as of May 1, 2018, as set forth on Disclosure Schedule 1.1(b); "Net
Income" shall be defined as all revenue under the said contract minus the cost of goods sold,
(d) all open orders related to the Business set forth on Disclosure Schedule
1.1(d);
(e) all Contracts (the "Assigned Contracts") set forth on Disclosure Schedule
1.1(e). The term "Contracts" means all contracts, leases, licenses, instruments, notes,
commitments, undertakings, indentures, joint ventures, and all other agreements, commitments,
dand legally binding arrangements, whether written or oral set forth on Disclosure Schedule
1.1(e);
(i) all of Seller's rights under warranties, indemnities, and all similar rights
against third parties to the extent related to any Purchased Assets;
(j) all insurance benefits, including rights and proceeds, arising from or
relating to the Business, the Purchased Assets, or the Assumed Liabilities;
(k) originals or, where not available, copies, of all books and records,
including books of account, ledgers, and general, financial, and accounting records, machinery
and equipment maintenance files, customer lists, customer purchasing histories, price lists,
distribution lists, supplier lists, production data, quality control records and procedures, customer
complaints and inquiry files, research and development files, records, and data (including all
correspondence with any federal, state, local, or foreign government or political subdivision
thereof, or any agency or instrumentality of such government or political subdivision, or any
arbitrator, court, or tribunal of competent jurisdiction (collectively, "Governmental
Authority"), sales material and records, strategic plans and marketing, and promotional surveys,
material, and research ("Books and Records")); and
(1) all goodwill and the going concern value of the Purchased Assets and the
Business.
2
Section 1.3 Assumed Liabilities.
(a) Subject to the terms and conditions set forth herein, Buyer shall assume
and agree to pay, perform, and discharge only the following Liabilities of Seller (collectively, the
"Assumed Liabilities"), and no other Liabilities:
(i) all trade accounts payable of Seller to third parties in connection with
the Business that remain unpaid and are not delinquent as of the Closing Date on
Disclosure Schedule 1.3(a)(i); and
(ii) all Liabilities in respect of the Assigned Contracts but only to the
extent that such Liabilities thereunder are required to be performed after the Closing
Date, were incurred in the ordinary course of business, and do not relate to any
failure to perform, improper performance, warranty, or other breach, default, or
violation by Seller on or prior to the Closing.
(a) The consideration for the Purchased Assets shall be $1,000,000.00 (the
"Purchase Price"), plus the assumption of the Assumed Liabilities. Buyer shall pay the
Purchase Price by wire transfer to Seller of immediately available funds in accordance with the
wire transfer instructions set forth on Disclosure Schedule 1.4 and in according with the
following schedule:
(ii) $250,000.00 plus the federal short-term interest rate of 2.52% payable
six (6) months after the Closing Date.
3
(c) The Parties intend that Buyer will receive $250,000 worth of inventory,
valued at cost and excluding obsolete inventory as mutually determined by the parties, at Closing
as part of the Assets.
(i) If the value of the inventory exceeds $250,000 (the portion of such
inventory valued in excess of $250,000 shall be referred to as the "Excess
Inventory"), Buyer will pay Seller, quarterly, commencing April 1, 2019 and each
quarter thereafter, (A) thirty percent (30%) of Net Sales generated from the sale of
the Excess Inventory for retail sales and (B) fifty percent (50%) of Net Sales
generated from the Sale of Excess Inventory for Wholesale sales for the first two (2)
years after the closing of the Transaction ("Payment Date").
(ii) If the value of the inventory is less than $250,000, the Purchase Price
payable at closing would be decreased by an amount equal to $250,000 minus the
actual value of the inventory.
(iii) Excess Inventory shall be consigned to Buyer. Seller has yet to file a
UCC with respect to the Excess Inventory. Buyer will charge seller rent for storing
the Excess Inventory. Buyer has the right to reasonably restrict the amount of rental
space it provides for the Excess Inventory. Any Excess Inventory not sold within
two (2) years from date of this Agreement shall be returned to Seller.
(v) "Net Sales" shall be defined as selling price less all discounts,
allowances and returns, consistent with past practice.
Section 1.5 Allocation of Purchase Price. The Purchase Price and the
Assumed Liabilities shall be allocated among the Purchased Assets for all purposes (including
Tax and financial accounting) as shown on the allocation schedule set forth on Disclosure
Schedule 1.5 (the "Allocation Schedule"). The Allocation Schedule shall be prepared in
accordance with Section 1060 of the Internal Revenue Code of 1986, as amended. Buyer and
Seller shall file all returns, declarations, reports, information returns and statements, and other
documents relating to Taxes (including amended returns and claims for refund) ("Tax Returns")
in a manner consistent with the Allocation Schedule.
Section 1.6 Third Party Consents. To the extent that Seller's rights under
any Purchased Asset may not be assigned to Buyer without the consent of another Person which
has not been obtained, this Agreement shall not constitute an agreement to assign the same if an
4
attempted assignment would constitute a breach thereof or be unlawful, and Seller, at its
expense, shall use its reasonable best efforts to obtain any such required consent(s) as promptly
as possible. If any such consent shall not be obtained or if any attempted assignment would be
ineffective or would impair Buyer's rights under the Purchased Asset in question so that Buyer
would not in effect acquire the benefit of all such rights, Seller, to the maximum extent permitted
by Law and the Purchased Asset, shall act after the Closing as Buyer's agent in order to obtain
for it the benefits thereunder and shall cooperate, to the maximum extent permitted by Law and
the Purchased Asset, with Buyer in any other reasonable arrangement designed to provide such
benefits to Buyer.
ARTICLE II
CLOSING
Section 2.1 Closing. Subject to the terms and conditions of this Agreement,
the consummation of the transactions contemplated by this Agreement (the "Closing") shall take
place at the Buyer's office in Los Angeles, California, simultaneously with the execution of this
Agreement, or at such other time or place or in such other manner as Seller and Buyer may
mutually agree upon in writing. The date on which the Closing is to occur is herein referred to as
the "Closing Date."
(i) a bill of sale in the form of Exhibit B attached hereto (the "Bill of
Sale") and duly executed by Seller, transferring the Purchased Assets to Buyer;
(iv) Hold Harmless Letter signed by Guy Brand, Stacy Brand and Patricia
Timsawat in the form of Exhibit E attached hereto;
5
delivered in connection with this Agreement or at the Closing (collectively, the
"Transaction Documents") and the consummation of the transactions contemplated
hereby and thereby, and (B) the names and signatures of the officers of Seller
authorized to sign this Agreement and the other Transaction Documents;
(i) the Purchase Price and prepaid expenses set forth on Disclosure
Schedule 1.4(b);
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Buyer that, except as set forth on the Disclosure
Schedules, the statements contained in this Article III are true and correct as of the date hereof.
6
enforceability may be limited to bankruptcy, insolvency, reorganization, or other similar laws
affecting creditor's rights generally and by the availability of equitable remedies (the
"Bankruptcy Exceptions").
Section 3.3 Assigned Contracts. Each Assigned Contract is valid and binding
on Seller in accordance with its terms and is in full force and effect. Neither Seller nor, to
Seller's knowledge, any other party thereto is in breach of or default under (or is alleged to be in
breach of or default under) in any material respect, or has provided or received any written notice
of any intention to terminate, any Assigned Contract. To Seller's knowledge, no event or
circumstance has occurred that would constitute an event of default under any Assigned Contract
or result in a termination thereof. Complete and correct copies of each Assigned Contract
(including all modifications, amendments, and supplements thereto and waivers thereunder) have
been made available to Buyer. Seller has not received any material disputes pending or
threatened under any Assigned Contract.
Section 3.5 Title to Purchased Assets. Seller has good and valid title to all of
the Purchased Assets, free and clear of Encumbrances.
7
maintenance or repairs except for ordinary, routine maintenance and repairs that are not material
in nature or cost. The Purchased Assets are sufficient for the continued conduct of the Business
after the Closing in substantially the same manner as conducted prior to the Closing and
constitute substantially all of the rights, property, and assets necessary to conduct the Business as
currently conducted. None of the Excluded Assets are material to the Business.
Section 3.7 Inventory. All Inventory, whether or not reflected in the Balance
Sheet, consists of a quality and quantity usable and salable in the ordinary course of business
consistent with past practice, except for obsolete, damaged, defective, or slow-moving items that
have been written off or written down to fair market value or for which adequate reserves have
been established.
(a) Disclosure Schedule 3.9(a) sets forth with respect to the Business (i) each
customer who has paid aggregate consideration to Seller for goods or services rendered in an
amount greater than or equal to $10,000.00 for each of the two (2) most recent fiscal years
(collectively, the "Material Customers"); and (ii) the amount of consideration paid by each
Material Customer during such periods. Seller has not received any notice, and has no reason to
believe, that any of the Material Customers has ceased, or intends to cease after the Closing, to
use the goods or services of the Business or to otherwise terminate or materially reduce its
relationship with the Business.
(b) Disclosure Schedule 3.9(b) sets forth with respect to the Business (1) each
supplier to whom Seller has paid aggregate consideration for goods or services rendered in an
amount greater than or equal to $10,000.00 for the past twelve (12) months (collectively, the
"Material Suppliers"); and (ii) the amount of purchases from each Material Supplier during
such periods. Except as set forth on Disclosure Schedule 3.9(b), Seller has not received any
notice, and has no reason to believe, that any of the Material Suppliers has ceased, or intends to
cease, to supply goods or services to the Business or to otherwise terminate or materially reduce
its relationship with the Business.
(a) Seller owns and possesses or has the right to use all Intellectual Property
necessary for the operation of the business of Seller as presently conducted.
(b) Neither Seller nor any of its directors or officers, has ever received any
written charge, complaint, or claim alleging infringement, misappropriation, or violation of any
third party's intellectual property rights that is still pending.
8
(c) All current employees and website contractors of the Seller involved in
research, development and/or design activities on behalf of the Seller, including content design,
artwork of any kind, software development, and/or other product and services development have
executed written agreements whereby they have assigned or agree to assign to the Seller all
Intellectual Property created, developed, discovered, or reduced to practice during the term of
their employment or service engagement with the Seller.
(b) Seller is in compliance with all Governmental Orders against, relating to,
or affecting the Business or the Purchased Assets.
Section 3.13 Taxes. All Taxes due and owing by Seller have been, or will be,
timely paid. No extensions or waivers of statutes of limitations have been given or requested
with respect to any Taxes of Seller. All Tax Returns required to be filed by Seller for any tax
periods prior to Closing have been, or will be, timely filed. Such Tax Returns are, or will be,
true, complete, and correct in all respects. The term "Taxes" means all federal, state, local,
foreign, and other income, gross receipts, sales, use, production, ad valorem, transfer,
documentary, franchise, registration, profits, license, withholding, payroll, employment,
unemployment, excise, severance, stamp, occupation, premium, property (real or personal),
customs, duties, or other taxes, fees, assessments, or charges of any kind whatsoever, together
with any interest, additions, or penalties with respect thereto.
9
Section 3.16 No Implied Representations. Except for the representations and
warranties expressly made by the Seller in this Article III, as qualified and supplemented by the
matters set forth in the Disclosure Schedules, the Seller does not make and hereby disclaims, any
other representation or warranty (express or implied, and including those referred to in the
Uniform Commercial Code or in any statute or rule of law that can be limited or waived) with
respect to the Seller or its operations, assets, Liabilities, condition (financial or otherwise),
operating results or prospects.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller that the statements contained in this Article IV
are true and correct as of the date hereof.
ARTICLE V
COVENANTS
Section 5.1 Confidentiality. From and after the Closing, Seller shall, and
shall cause its Affiliates to, hold, and shall use its reasonable best efforts to cause its or their
respective directors, officers, employees, consultants, counsel, accountants, and other agents
("Representatives") to hold, in confidence any and all information, whether written or oral,
concerning the Business, except to the extent that Seller can show that such information; (a) is
generally available to and known by the public through no fault of Seller, any of its Affiliates, or
their respective Representatives; or (b) is lawfully acquired by Seller, any of its Affiliates, or
their respective Representatives from and after the Closing from sources which are not
10
prohibited from disclosing such information by a legal, contractual, or fiduciary obligation. If
Seller or any of its Affiliates or their respective Representatives are compelled to disclose any
information by Governmental Order or Law, Seller shall promptly notify Buyer in writing and
shall disclose only that portion of such information which is legally required to be disclosed,
provided that Buyer shall use reasonable best efforts to obtain as promptly as possible an
appropriate protective order or other reasonable assurance that confidential treatment will be
accorded such information.
Section 5.3 Waiver of Bulk Sales Laws. The parties hereby waive
compliance with the provisions of any other bulk sales, bulk transfer, or similar Laws of any
jurisdiction that may otherwise be applicable with respect to the sale of any or all of the
Purchased Assets to Buyer. Any Liabilities arising out of the failure of Seller to comply with the
requirements and provisions of any such bulk sales, bulk transfer, or similar Laws of any
jurisdiction which would not otherwise constitute Assumed Liabilities shall be treated as
Excluded Liabilities.
Section 5.4 Receivables. From and after the Closing, if Seller or any of its
Affiliates receives or collects any funds relating to any Accounts Receivable or any other
Purchased Asset, Seller or its Affiliate shall remit such funds to Buyer within ten (10) business
days after its receipt thereof. From and after the Closing, if Buyer or its Affiliate receives or
collects any funds relating to any Excluded Asset, Buyer or its Affiliate shall remit any such
funds to Seller within ten (10) business days after its receipt thereof.
Section 5.5 Transfer Taxes. All sales, use, registration, and other such Taxes
and fees (including any penalties and interest) incurred in connection with this Agreement and
the other Transaction Documents, if any, shall be borne and paid fifty percent (50%) by Seller
and fifty percent (50%) to Buyer when due. Seller shall, at its own expense, timely file any Tax
Return or other document with respect to such Taxes or fees (and Buyer shall cooperate with
respect thereto as necessary).
Section 5.6 Further Assurances. Following the Closing, each of the parties
hereto shall, and shall cause their respective Affiliates to, execute and deliver such additional
documents, instruments, conveyances, and assurances and take such further actions as may be
reasonably required to carry out the provisions hereof and give effect to the transactions
contemplated by this Agreement and the other Transaction Documents.
ARTICLE VI
INDEMNIFICATION
11
for eighteen (18) months except for Sections 3.1, 3.4, 3.5, 3.12, 3.13 and 3.15 (collectively the
"Fundamental Representations"), which shall survive for five (5) years.
(c) any Third Party Claim based upon, resulting from, or arising out of the
business, operations, properties, assets, or obligations of Seller or any of its Affiliates (other than
Assumed Liabilities) conducted, existing, or arising on or prior to the Closing Date. For
purposes of this Agreement, "Third Party Claim" means notice of the assertion or
commencement of any Action made or brought by any Person who is not a party to this
Agreement or an Affiliate of a party to this Agreement or a Representative of the foregoing; or
Section 6.5 Cumulative Remedies. The rights and remedies provided in this
Article VIII are cumulative and are in addition to and not in substitution for any other rights and
remedies available at law or in equity or otherwise.
(a) Notwithstanding the foregoing, the Seller will not be liable under this
Article VI unless and until the aggregate Losses for which it would otherwise be liable under this
Agreement exceed $10,000 (the "Tipping Point"), at which point the Seller will be liable for the
aggregate Losses back to the first dollar of Losses incurred; provided that, notwithstanding the
foregoing, the Tipping Point shall not apply to Losses arising out of any fraud or breach of the
Fundamental Representations and such Losses shall not count towards the Tipping Point.
(b) The aggregate amount of all Losses for which an Indemnified Party may
be liable under this Article VI shall not exceed $200,000.
ARTICLE VII
MISCELLANEOUS
Section 7.1 Expenses. All costs and expenses incurred in connection with this
Agreement and the transactions contemplated hereby shall be paid by the party incurring such
costs and expenses.
Section 7.2 Notices. All notices, claims, demands, and other communications
hereunder shall be in writing and shall be deemed to have been given: (a) when delivered by
hand (with written confirmation of receipt); (b) when received by the addressee if sent by a
nationally recognized overnight courier (receipt requested); (c) on the date sent by facsimile or
email of a PDF document (with confirmation of transmission) if sent during normal business
hours of the recipient, and on the next business day if sent after normal business hours of the
13
recipient, or (d) on the third day after the date mailed, by certified or registered mail, return
receipt requested, postage prepaid. Such communications must be sent to the respective parties
at the following addresses (or at such other address for a party as shall be specified in a notice
given in accordance with this Section 7.2):
If to Seller:
MF, Inc.
360 E. 2" Street Ste. 450
Los Angeles, CA 90012
Attention: Guy Brand, James Kim
Email: guy@imaginarypeople.com, james@imaginarypeople.com
If to Buyer:
Section 7.6 Entire Agreement. This Agreement and the other Transaction
Documents constitute the sole and entire agreement of the parties to this Agreement with respect
to the subject matter contained herein and therein, and supersede all prior and contemporaneous
understandings and agreements, both written and oral, with respect to such subject matter. In the
event of any inconsistency between the statements in the body of this Agreement and those in the
other Transaction Documents, the Exhibits, and the Disclosure Schedules (other than an
exception expressly set forth as such in the Disclosure Schedules), the statements in the body of
this Agreement will control.
14
Section 7.7 Successors and Assigns. This Agreement shall be binding upon
and shall inure to the benefit of the parties hereto and their respective permitted successors and
permitted assigns. Neither party may assign its rights or obligations hereunder, including by
merger or operation of law, without the prior written consent of the other party, which consent
shall not be unreasonably withheld or delayed. Any purported assignment in violation of this
Section 9.6 shall be null and void. No assignment shall relieve the assigning party of any of its
obligations hereunder.
15
IN WITNESS WHEREOF, the parties hereto have caused this Asset Purchase Agreement
to be executed as of the date first written above by their respective officers thereunto duly
authorized.
SELLER:
MF, Inc., a California corporation
By:
Name: Guy Brand
Title: Vice President
BUYER:
Good Smile Connect, LLC, a Delaware limited
liability company
By: (
Name: Takanori Aid
Title: President
EXHIBIT A
DEFINITIONS CROSS-REFERENCE TABLE
The following terms have the meanings set forth in the location in this Agreement
referenced below:
TERM SEcrioN
Accounts Receivable Section I .1(a)
Actions Section 3.11(a)
Affiliate Section l.3(h)
Agreement Preamble
Allocation Schedule Section 1.5
Assigned Contracts Section 1.1(e)
Assignment and Assumption Agreement Section 2.2(a)(11)
Assumed Liabilities Section 1.3(a)
Bill of Sale Section 2.2(a)(i)
Books and Records Section 1.1(k)
Business Recitals
Buyer Preamble
Buyer Indemnitees Section 6.2
Closing Section 2.1
Closing Date Section 2.1
Contracts Section 1.1(e)
Control Section 1.3(b)
Encumbrance Section 3.2
Excess Inventory Section 1.4(c)(i)
Excluded Assets Section 1.2
Excluded Liabilities Section 1.3(b)
Governmental Authority Section 1.1(k)
Governmental Order Section 3.2
Indemnified Party Section 6.4
Indemnifying Party Section 6.4
Intellectual Property Section 1.1(g)
Inventory Section 1.1(c)
Knowledge Section 7.4
Law Section 3.2
Liabilities Section 1.3(a)
Losses Section 6.2
Material Customers Section 3.9(a)
Material Suppliers Section 3.9(b_
Person Section 3.2
Purchased Assets Section 1.1
Purchase Price Section 1.4
Representatives Section 5.1
Required Consents Section 2.2(a)(viii)
Seller Preamble
Seller Indemnitees Section 6.3
Tangible Personal Property Section 1.1(f)
Taxes Section 3.13
Tax Returns Section 1.5
Third Party Claim Section 6.2(c)
Tipping Point Section 6.6
Trademark Assignment Agreement Section 2.2(a)(iii)
Transaction Documents Section 2.2(a)(v)
EXHIBIT B
BILL OF SALE
This BILL OF SALE (the "Bill of Sale"), dated as of April 1, 2019 is being
delivered by MF, Inc., formerly known as Mighty Fine, a California corporation (the
"Company"), to Good Smile Connect, LLC, a Delaware limited liability company
("Buyer").
WHEREAS, the Company and Buyer have entered into that certain Asset
Purchase Agreement dated April I, 2019 ("Asset Purchase Agreement"). Capitalized
terms used but not otherwise defined herein shall have the same meaning ascribed to
them in the Asset Purchase Agreement;
WHEREAS, the parties hereto intend this instrument to further evidence such
sale, conveyance, transfer and delivery and assignment.
NOW, THEREFORE, the parties to this Bill of Sale, in connection with the
Asset Purchase Agreement and for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, hereby agree as follows:
1. Recitals. The Recitals set forth above are hereby incorporated by reference
into the agreement by the parties set forth herein.
1
BN 34735981v1
4. Power of Attorney. The Company hereby irrevocably constitutes and
appoints Buyer, its successors and assigns, the true and lawful attorneys of the Company
with full power of substitution, in the name of the Company or otherwise, and on behalf
and for the benefit of the Company, its successors and assigns, to demand and receive
from time to time any and all property of the Company hereby conveyed, transferred,
assigned and delivered or intended so to be; to give receipts, releases and acquittances for
or in respect of the same or any part thereof; to institute and prosecute in the name of the
Company or otherwise any and all proceedings at law, in equity or otherwise, which
Buyer, its successors and assigns, may deem necessary to collect, assert or enforce any
claim, title, right, debt or account hereby transferred and assigned or intended so to be;
and to defend and compromise any and all actions, suits or proceedings in respect of any
of the properties hereby assigned and transferred or intended so to be, that Buyer, its
successors or assigns, shall deem necessary or desirable. The Company hereby declares
that the foregoing powers are coupled with an interest and shall he irrevocable in any
manner or for any reason.
2
BN 34735981v]
give any third party any right of subrogation or action over against any party to this Bill
of Sale.
10. Successors and Assigns. This Bill of Sale will be binding upon and inure
to the benefit of the parties hereto and their respective successors and assigns.
11. Execution; Deliveries. This Bill of Sale to the extent signed and delivered
by means of a facsimile machine or other electronic transmission, shall be treated in all
manner and respects and for all purposes as an original agreement or instrument and shall
be considered to have the same binding legal effect as if it were the original signed
version thereof delivered in person.
12. Severability. if any provision of this Bill of Sale shall be adjudged by any
court of competent jurisdiction to be unenforceable or invalid, that provision shall be
limited or eliminated to the minimum extent necessary so that this Bill of Sale shall
otherwise remain in full force and effect and enforceable. Any provision of this Bill of
Sale held invalid or unenforceable only in part or degree will be rewritten by mutual
agreement to so closely reflect the invalid or unenforceable provision, while being valid
and enforceable.
13. Governing Law. This Bill of Sale, the legal relations between the parties
and any action, whether contractual or non-contractual, instituted by any party with
respect to matters arising under or growing out of or in connection with or in respect of
this Bill of Sale shall be governed by and construed in accordance with the laws of the
State of California without regard to conflicts of laws doctrines.
* * *
3
BN 34735981v I
IN WITNESS WHEREOF, the undersigned has caused this Bill of Sale to be duly
executed by an authorized representative on the day arid year first above written.
COMPANY:
MF, Inc., a California corporation
By:
Name: Guy Brand
Title: Vice President
BUYER:
Good Smile Connect, LLC,
a Delaware limited liability company
By:
Name: Takanori Aki
Title: President
WHEREAS, the Company and Buyer have entered into that certain Asset Purchase
Agreement dated April 1, 2019 ("Asset Purchase Agreement"). Capitalized terms used but not
otherwise defined herein shall have the same meaning ascribed to them in the Asset Purchase
Agreement; and
WHEREAS, for the purpose of consummating the Closing, the Company has agreed to
assign all of the Company's right, title and interest in, to and under the Assigned Contracts, and
Buyer has agreed to assume the liabilities and obligations of the Company under the Assigned
Contracts after the Closing Date.
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, it is hereby agreed as follows:
1. Recitals. The Recitals set forth above are hereby incorporated by reference into
the agreement by the parties set forth herein.
4. Waivers. No failure of any party to exercise any right or remedy given to such
party under this Agreement or otherwise available to such party or to insist upon strict
compliance by any other party with its obligations hereunder, and no custom or practice of the
parties in variance with the terms hereof, shall constitute a waiver of any party's right to demand
exact compliance with the terms hereof, unless such waiver is set forth in writing and executed
by such party. Any such written waiver shall be limited to those items specifically waived
therein and shall not be deemed to waive any future breaches or violations or other non-specified
breaches or violations unless, and to the extent, set forth therein.
1
13N 30010185v5
5. Asset Purchase Agreement. This Agreement is subject in all respects to the terms
and conditions of the Asset Purchase Agreement. Nothing contained in this Agreement shall be
deemed to supersede any of the representations, warranties, covenants or other agreements
contained in the Asset Purchase Agreement. To the extent any provision of this Agreement is
inconsistent with the Asset Purchase Agreement, the provisions of the Asset Purchase
Agreement shall control.
8. Successors and Assigns. This Agreement will be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns.
10. Governing Law. This Agreement, the legal relations between the parties and any
action, whether contractual or non-contractual, instituted by any party with respect to matters
arising under or growing out of or in connection with or in respect of this Agreement shall be
governed by and construed in accordance with the laws of the State of California without regard
to conflicts of laws doctrines.
2
BN 30010185v5
IN WITNESS WHEREOF, each of the parties has caused this Assignment and
Assumption Agreement to be duly executed by an authorized representative on the day and year
first above written.
COMPANY;
MF, Inc., a California corporation
By:
Name: Guy Brand
Title: Vice President
BUYER:
Good Smile Connect, LLC,
a Delaware limited liability company
By:
Name: Takanori Aki
Title: President
Product License Agreement, dated August 8, 2016, between the Company and Cartoon
Network Enterprises, Inc. (Over the Garden Wall).
2. Product License Agreement, dated January 1, 2013, between the Company and Cartoon
Network Enterprises, Inc., as amended by amendments dated October 21, 2014, April 15,
2015 and December 2, 2016 (Adventure Time with Finn and Jake).
3. License Agreement, dated July 1, 2012, between Company and Frederator Networks,
Inc., as amended by amendments dated August 8, 2013, December 15, 2014, April 4,
2017 and February 5, 2018 (Bee and Puppycat).
4. License Agreement dated May 1, 2012 between Frederator Networks, Inc. and the
Company, as amended by amendments dated August 8, 2013, and April 7, 2017 (Bravest
Warrior).
5. Merchandise Licensing Agreement, dated May 1, 2011, between the Company and
Hasbro, Inc. and Hasbro International, Inc, as amended August 16, 2013 (D&D).
6. Licensing Agreement, dated April 25, 2018, between the Company and Dan Salvato,
LLC (Doki Doki).
7. Merchandise Licensing Agreement, dated May 17, 2016, between Valve Corporation and
the Company, as amended by amendment dated March 8, 2017 (DOTA).
10. Licensing Agreement, dated July 21, 2014, between the Company and Coffee Stain
Studios AB, as amended January 1, 2018 (Goat Simulator).
11. License and Services Agreement, dated August 1, 2016, between the Company and
ArenaNet, LLC, as amended by amendments dated January 5, 2017, April 5, 2018 and
June 6, 2018 (Guild Wars 2).
12. License Agreement, dated June 25, 2015, between the Company and Crypton Future
Media, Inc., as amendment July 1, 2017 (Hatsune Miku).
13. Licensing Agreement dated July 1, 2015 between the Company and What Pumpkin
Studios, LLC, as amended by amendment dated December 16, 2016 and emails dated
April 22, 2016 and April 23, 2016 (Homestuck & Hiveswap).
14. Licensing Agreement, dated August 4, 2016, between the Company and ZAG America,
Exhibit A
BN 30010185v5
LLC, as amended by amendments dated February 13, 2017 and January 1, 2018
(Miraculous Ladybug).
15. Licensing Agreement, dated January 1, 2018, between the Company and Monomi Park
LLC, as amended by amendment dated February 12, 2018 (Slime Rancher).
16. Licensing Agreement, dated September 1, [20161, between the Company and D-Pad
Studios AS (Owlboy).
17. Merchandise Licensing Agreement, dated April 18, 2018, between the Company and
PUBG Corporation (PUBG).
18. Licensing Agreement, dated January 1, 2018, between Imaginary People LLC and Euge
Leung (Puglie).
19. License Agreement, dated April 7, 2014, between the Company, Yacht Club Games,
LLC (as licensor) and Eerie Theory Entertainment, Inc. (as agent), as amended by
amendments dated January 29, 2016 and January 1, 2018 (Shovel Knight).
20. Licensing Agreement, dated November 1, 2017, between Imaginary People LLC and
Digital Extremes Ltd. (Warframe).
21. Licensing Agreement, dated October 15, 2013 between the Company and CBS Consumer
Products Inc., as amended by amendments dated January 1, 2014, September 12, 2014,
May 14, 2015, September 1, 2015 and July 20, 2016.
22. Licensing Agreement, dated October 2, 2014 between Company and Electronic Arts Inc.,
with an addendum dated October 15, 2015. (Titan Fall, Mass Effect 1,2, 3, Dragon Age:
Inquisition, Dragon Age II and Dragon Age: Origins).
23. Licensing Agreement, dated December 9, 2013 between Company and Cartoon Network
Enterprises, Inc., as amended by amendments dated May 8, 2015, April 15, 2015, August
15, 2016 & July 23, 2018
24. Warehouse Lease agreement between AAAA Family Real Estate LLC and MF, Inc.
dated April 4, 2018, lease addendum dated April 26, 2018 and lease amendment dated
June 30, 2018.
25. Web development agreement between Imaginato and MF, Inc. dated February 20, 2014.
Exhibit A
BN 30010185v5
EXHIBIT D
WHEREAS, Assignee has executed that certain Asset Purchase Agreement dated
April 1, 2019 ("Asset Purchase Agreement"). Capitalized terms used but not otherwise
defined herein shall have the same meaning ascribed to them in the Asset Purchase
Agreement; and
NOW, THEREFORE, for the consideration set forth in the Purchase Agreement,
and other good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, it is hereby agreed as follows:
1. Recitals. The Recitals set forth above are hereby incorporated by reference
into the agreement by the parties set forth herein.
1
3. Recording of Transferred Trademarks. Assignor hereby authorizes and
requests the Register of Trademarks of the United States and other applicable
governmental authorities to record Assignee as Assignee of the Transferred Trademarks
to the extent applicable. Further, Assignor hereby authorizes Assignee to deliver certified
copies of this Trademark Assignment, from time to time, in order to record the
assignment of the Transferred Trademarks, with any applicable governmental authorities,
as well as for any other use which may become necessary by Assignee.
-2-
9. Purchase Agreement. This Trademark Assignment is subject in all
respects to the terms and conditions of the Purchase Agreement. Nothing contained in
this Trademark Assignment shall be deemed to supersede any of the representations,
warranties, covenants or other agreements contained in the Purchase Agreement. To the
extent any provision of this Trademark Assignment is inconsistent with the Purchase
Agreement, the provisions of the Purchase Agreement shall control.
14. Headings. The title of and the article, section and paragraph headings in
this Trademark Agreement and the provision of tables of contents are for convenience of
reference only and shall not govern or affect the interpretation of any of the terms or
provisions of this Agreement.
15. Governing Law. This Trademark Assignment, the legal relations between
the parties and any action, whether contractual or non-contractual, instituted by any party
with respect to matters arising under or growing out of or in connection with or in respect
of this Trademark Assignment shall be governed by and construed in accordance with the
laws of the State of California without regard to conflicts of laws doctrines.
*
-3-
IN WITNESS WHEREOF, Assignor has caused this Trademark and Domain
Name Assignment to be executed and delivered by a duly authorized officer as of the day
and yeas first above written.
ASSIGNOR:
MF, Inc., a California corporation
By:
Name: Guy Brand
Title: Vice President
ASSIGNEE:
Good Smile Connect, LLC,
a Delaware limited liability company
By:
Name; Takanori Aki
Title: President
Marks
Trademarks:
3. FOR FANS BY FANS USA 25; 28; 35 4699463 March 10, 2015 March 10, 2025
4. STUDIO CHIBI USA 28 5566220 September 18, 2018 September 18, 2028
Domain Names
1. forfansbyfans.com
2. forfansxfans.com
3. cuddleheroes.com (pillow line)
4. officialvalvestore.com
5. valvestore.forfansbyfans.com
6. fanforge.com
7. fanforge.org
8. weloveartists.com
9. goodsmileconnect.com
Schedule A
DISCLOSURE SCHEDULES
Accounts Receivables
51069230 Pay with Amazon FFBF Phillip Ortmann $46.45 2019-02-14 11:06:25
51069030 Pay with Amazon FFBF Amanda DiFatta $35.53 2019-02-14 10:38:48
51068630 Paypal FFBF Adrien COUDERT $46.45 2019-02-14 10:14:00
51068230 Paypal FFBF Kaitlyn Pitcher $35.53 2019-02-14 09:57:56
51068030 Paypal FFBF Ashvanora $18.63 2019-02-14 09:49:12
51067530 Paypal FFBF Thomas Ruddle $46.45 2019-02-14 06:09:10
50905830 Paypal FFBF Andrea Jackson $66.19 2019-01-20 11:08:37
50896730 Paypal FFBF Kristofer Sanchez $55.19 2019-01-19 16:05:55
50890230 Paypal FFBF V Vargas $140.19 2019-01-19 09:31:04
49616330 Paypal FFBF Theodore Bouzalas $72.48 2018-10-07 12:38:47
49607430 Paypal FFBF John Mui $66.48 2018-10-06 13:11:51
49607330 Paypal FFBF Ellis Clark $141.48 2018-10-06 13:02:57
49607230 Paypal FFBF Matthew Ballard $87.48 2018-10-06 12:55:35
49604830 Paypal FFBF Aaron Reyes $142.48 2018-10-06 10:32:09
49597430 Paypal FFBF Collin Bancroft $56.48 2018-10-05 10:59:22
49595832 Paypal FFBF Kenneth Hojas $67.48 2018-10-05 08:15:21
49595831 Paypal FFBF Kenneth Hojas $72.48 2018-10-05 08:15:21
49595830 Paypal FFBF Kenneth Hojas $59.48 2018-10-05 08:15:21
49588830 Paypal FFBF Malik Spivey $80.48 2018-10-04 11:35:54
49386530 Paypal FFBF sarah green $77.91 2018-09-01 17:46:12
10432030 Paypal VS mooney $69.50 2019-04-01 05:21:41
10430330 Paypal VS Qingyun Dan $77.87 2019-03-31 12:18:02
10429630 Paypal VS Deltaos $74.81 2019-03-31 01:11:59
10427630 Paypal VS BaggiestJaguar $69.77 2019-03-29 21:05:26
10426730 Paypal VS Zach $69.21 2019-03-29 17:09:27
10426630 Paypal VS ABSURD HERO $68.73 2019-03-29 17:05:28
Total $11,816.29
Total $12,302.80
i
DISCLOSURE SCHEDULES
All Contracts
License Agreements:
1. Product License Agreement, dated August 8, 2016, between the Company and Cartoon Network Enterprises, Inc. (Over the
Garden Wall).
2. Product License Agreement, dated January 1, 2013, between the Company and Cartoon Network Enterprises, Inc., as amended
by amendments dated October 21, 2014, April 15, 2015 and December 2, 2016 (Adventure Time with Finn and Jake).
3. License Agreement, dated July 1, 2012, between Company and Frederator Networks, Inc., as amended by amendments dated
August 8, 2013, December 15, 2014, April 4, 2017 and February 5, 2018 (Bee and Puppycat).
4. License Agreement dated May 1, 2012 between Frederator Networks, Inc. and the Company, as amended by amendments dated
August 8, 2013, and April 7, 2017 (Bravest Warrior).
5. Merchandise Licensing Agreement, dated May 1, 2011, between the Company and Hasbro, Inc. and Hasbro International, Inc,
as amended August 16, 2013 (D&D).
6. Licensing Agreement, dated April 25, 2018, between the Company and Dan Salvato, LLC (Doki Doki).
7. Merchandise Licensing Agreement, dated May 17, 2016, between Valve Corporation and the Company, as amended by
amendment dated March 8, 2017 (DOTA).
8. Merchandising License Agreement, dated August 5, 2016, between Exploding Kittens, LLC and the Company as amended by
Amendment No. I dated November 10, 2016 (Exploding Kittens).
9. Licensing Agreement, dated May 8, 2017, between Polytron Corporation Incorporated and the Company (FEZ).
IO. Licensing Agreement, dated July 21, 2014, between the Company and Coffee Stain Studios AB, as amended January 1, 2018
(Goat Simulator).
11. License and Services Agreement, dated August 1, 2016, between the Company and ArenaNet, LLC, as amended by
amendments dated January 5, 2017, April 5, 2018 and June 6, 2018 (Guild Wars 2).
12. License Agreement, dated June 25, 2015, between the Company and Crypton Future Media, Inc., as amendment July 1, 2017
(Hatsune Miku).
13. Licensing Agreement dated July 1, 2015 between the Company and What Pumpkin Studios, LLC, as amended by amendment
dated December 16, 2016 and emails dated April 22, 2016 and April 23, 2016 (Homestuck & Hiveswap).
14. Licensing Agreement, dated August 4, 2016, between the Company and ZAG America, LLC, as amended by amendments
dated February 13, 2017 and January 1, 2018 (Miraculous Ladybug).
15. Licensing Agreement, dated January 1, 2018, between the Company and Monomi Park LLC, as amended by amendment dated
February 12, 2018 (Slime Rancher).
16. Licensing Agreement, dated September I, [2016], between the Company and D-Pad Studios AS (Owlboy).
17. Merchandise Licensing Agreement, dated April 18, 2018, between the Company and PUBG Corporation (PUBG).
18. Licensing Agreement, dated January I, 2018, between Imaginary People LLC and Euge Leung (Puglie).
19. License Agreement, dated April 7, 2014, between the Company, Yacht Club Games, LLC (as licensor) and Eerie Theory
Entertainment, Inc. (as agent), as amended by amendments dated January 29, 2016 and January 1, 2018 (Shovel Knight).
DISCLOSURE SCHEDULES
20. Licensing Agreement, dated November 1, 2017, between Imaginary People LLC and Digital Extremes Ltd. (Warframe).
21. Licensing Agreement, dated October 15, 2013 between the Company and CBS Consumer Products Inc., as amended by
amendments dated January 1, 2014, September 12, 2014, May 14, 2015, September 1, 2015 and July 20, 2016.
22. Licensing Agreement, dated October 2, 2014 between Company and Electronic Arts Inc., with an addendum dated October 15,
2015. (Titan Fall, Mass Effect 1,2, 3, Dragon Age: Inquisition, Dragon Age II and Dragon Age: Origins).
23. Licensing Agreement, dated December 9, 2013 between Company and Cartoon Network Enterprises, Inc., as amended by
amendments dated May 8, 2015, April 15, 2015, August 15, 2016 & July 23, 2018
24. Warehouse Lease agreement between AAAA Family Real Estate LLC and MF, Inc. dated April 4, 2018, lease addendum dated
April 26, 2018 and lease amendment dated June 30, 2018.
25. Web development agreement between Imaginato and MF, Inc. dated February 20, 2014.
Warehouse Lease:
Between AAAA Family Real Estate LLC (Lessor) & M.F Inc.
Lease agreement dated 4/4/18.
Lease addendum dated 4/26/18.
Lease amendment dated 6/30/18.
Triple Net Lease.
Square Foot: 12,300
Base Rent: $.65 per square foot. 4% increase every year.
NNN: $0.13 per square foot
3-year lease 5/1/2018-5/1/2021.
Option for 1 or 3-year extension.
Note: See Warehouse Lease and Warehouse Lease Amendment Documents
Fixed Assets
Item Qty Cost Per Unit FMV Per Unit Total FMV
Conference Table I $5,000.00 $1,000.00 $1,000.00
Alienware Computer 1 $1,000.00 $600.00 $600.00
Conference System 1 $1,250.00 $800.00 $800.00
Samsung 65 inch TV 1 $1,800.00 $600.00 $600.00
White Credenza 1 $200.00 $50.00 $50.00
Desk 1 $1,500.00 $500.00 $500.00
Chairs for lunch tables 12 $100.00 $100.00 $1,200.00
Design Jet Poster Printer 1 $10,000.00 $1,800.00 $1,800.00
Vinyl Cutter 1 $750.00 $600.00 $600.00
Photo Equipment / Mannequins 1 $3,000.00 $3,000.00 $3,000.00
laptops in use/Assorted Misc in use 5 $800.00 $800.00 $4,000.00
File Cabinets 2 $20.00 $10.00 $20.00
Employee set up 15 $2,000.00 $500.00 $7,500.00
Desks 15 $100.00 $100.00 $1,500.00
Chairs-Padded Rolling 20 $150.00 $100.00 $2,000.00
Conference table-5 piece 1 $7,000.00 $2,500.00 $2,500.00
Chairs-Padded Rolling-Gray 23 $150.00 $85.00 $1,955.00
Conference Table 1 $5,000.00 $1,500.00 $1,500.00
White Credenza 1 $200.00 $50.00 $50.00
Refrigerators 1 $200.00 $50.00 $50.00
Sonic Wall 1 $250.00 $125.00 $125.00
Wifi 2 $200.00 $100.00 $200.00
Time Clock 1 $750.00 $500.00 $500.00
Fireproof Safe 1 $135.00 $135.00 $135.00
Rolling space dividers 2 $50.00 $25.00 $50.00
TV's for Conventions 4 $1,200.00 $1,200.00 $4,800.00
Alienware Computer 2 $1,000.00 $500.00 $1,000.00
Laminator 1 $500.00 $500.00 $500.00
Display case - Dota 2 2 $2,000.00 $500.00 $1,000.00
Display case with LED Light 1 $1,500.00 $500.00 $500.00
Water Cooler w/ Ice maker 1 $200.00 $100.00 $100.00
Air Compressor 1 $10,000.00 $10,000.00 $10,000.00
Employee set up 2 $300.00 $300.00 $600.00
Heat Press I $3,000.00 $3,000.00 $3,000.00
Heat Press 1 $800.00 $800.00 $800.00
Heat Press 1 $0.00 $0.00 $0.00
Sublimation Paper Printer 1 $10,000.00 $2,000.00 $2,000.00
Sublimation Paper Printer 1 $500.00 $500.00 $500.00
Poster Printer 1 $1,500.00 $1,500.00 $1,500.00
Paper Cutter 1 $800.00 $800.00 $800.00
Employee set up 2 $500.00 $500.00 $1,000.00
Racking/shelving 12 $0.00 $0.00 $0.00
DISCLOSURE SCHEDULES
Trademarks
[C 028. US 022 023 038 050. G & S: Action figure toys; Collectable toy figures; Fantasy character toys; Plush
toys; Vinyl dolls. FIRST USE: 20110701. FIRST USE IN COMMERCE: 20110701
IC 035. US 100 101 102. G & S: On-line retail store services featuring clothing, toys and accessories; Retail
store services featuring clothing, toys and accessories. FIRST USE: 20110701. FIRST USE IN COMMERCE:
20110701
Standard
Characters
Claimed
Mark Drawing
(4) STANDARD CHARACTER MARK
Code
Serial Number 86351060
DISCLOSURE SCHEDULES
Trademarks (Unregistered)
Fan Forge
Domain Names
forfansbyfans.com
forfansxfans.com
cuddleheroes.com
valvestore.forfansbyfans.corn
fanforge.com
fanforge.org
weloveartists.com
goodsmileconnect.com
DISCLOSURE SCHEDULES
Item Qty Cost Per Unit FMV Per Unit Total FMV
Direct to Garment Printing Machine 1 $75,000.00 $10,000.00 $10,000.00
Direct to Garment Printing Machine 1 $75,000.00 $10,000.00 $10,000.00
DTG Printing Pallet 4 $1,500.00 $250.00 $1,000.00
DTG Printing Pallet 4 $1,500.00 $250.00 $1,000.00
DTG Printing Pallet 1 $1,500.00 $250.00 $250.00
DTG Printing Pallet 4 $1,500.00 $250.00 $1,000.00
Humidifier 2 $25.00 $50.00 $100.00
Purifier/Humidifier Motor 1 $300.00 $300.00 $300.00
Humidity Sensor / Reader 1 $50.00 $50.00 $50.00
Sticker Printer 1 $7,500.00 $1,000.00 $1,000.00
Cleaning Gun $50.00 $50.00 $50.00
Cleaning Station 1 $200.00 $50.00 $50.00
Google Home Mini 2 $20.00 $40.00 $40.00
James Desktop and Laptop setup 1 $4,000.00 $2,000.00 $2,000.00
Guy Desktop and Laptop setup 1 $6,000.00 $2,000.00 $2,000.00
Sonos 3 $100.00 $100.00 $300.00
Cameras 2 $199.00 $150.00 $300.00
2 Canon Cameras 60D and Various Lenses Guy 2 $15,000.00 $12,000.00 $10,000.00
Canon 18-35mm Lens - James 1 $1,500.00 $1,200.00 $1,200.00
Ergnomic Chair for Dino and Stacy 2 $2,000.00 $400.00 $800.00
Computer setup 1 $1,000.00 $500.00 $500.00
Desk 1 $1,500.00 $500.00 $500.00
fi leserver 1 $10,000.00 $1,000.00 $1,000.00
mf-dcl 1 $3,000.00 $1,000.00 $1,000.00
mf-hypervOl 1 $150.00 $50.00 $50.00
mf-exchhub 1 $5,000.00 $1,000.00 $1,000.00
mf-exchdb 1 $300.00 $100.00 $100.00
UPS 1 $150.00 $100.00 $100.00
UPS 1 $150.00 $100.00 $100.00
Sharp Copier Multifunction Device 1 $5,000.00 $1,000.00 $5,000.00
Metal Screen Room Divider 1 $3,000.00 $200.00 $200.00
Dryer Leased 1 $30,000.00 $5,000.00 $5,000.00
Dryer Leased 1 $30,000.00 $5,000.00 $5,000.00
Water Purifier 1 $200.00 $200.00 $200.00
Sharp Copier Multifunction Device 3 $1,000.00 $1,000.00 $3,000.00
SuperLovers Display case 1 $3,000.00 $100.00 $100.00
TOTAL $64,290.00
Excluded Trademarks
Wire Info
Domestic Wires:
MF, Inc.
Checking# 71877179
ABA/Routing# 122000496
Bank Information:
Union Bank of California
900 South Main Street
Los Angeles, CA 90015
Contact: Lucy Serna
Ph 213.312.4556 I Fx 213.312.4562
DISCLOSURE SCHEDULES
Allocation Schedule
DISCLOSURE SCHEDULES
Required Consent
Required Consent
Supplier Amount
AAAA Family Real Estate, LLC $80,803.40
Aaron Brown $27,524.79
AETNA $78,442.68
Allied Plush, Inc dba Bear With Me $101,640.30
Am Trust North America, Inc. $56,424.00
AMEX $472,662.87
Andrew Hussie $56,802.23
AQ Live LLC dba Sports and Music One Live $103,271.75
Artists Payment $151,585.27
Aspire Venture Partners Limited $219,515.00
BOARD of EQUALIZATION $42,176.37
CASSANDRA L. STEENSRUD $37,102.41
Champion Logistics Group, Inc. $36,972.50
Chase Amazon Business $457,268.30
Chase-5544 $38,231.38
China Manufacturing Direct $40,160.12
China Mountain Trading USA $55,787.84
David No $76,235.53
East 15th Street Partners $29,582.07
Euge Leung _V_ $24,122.38
Fedex $36,687.82
Geiger $606,459.66
GOOD SMILE COMPANY, INC-v $37,536.86
HIRSCH SOLUTIONS INC. $59,223.23
INDEPENDENT TRADING CO. $20,682.34
Jonathan Nghiem $28,765.00
Jules and Associates, Inc $51,433.47
LA APPAREL $54,739.07
LADW $39,901.83
Musterbrand Inc $32,483.35
POVevolving $34,572.43
PRINT & STITCH INC $22,406.00
Prolee Industrial Limited $145,969.88
Rachel Lawson $26,995.99
RELX INC. dba REED EXHIBITIONS $42,275.00
Roxanne Montgomery $31,558.23
Select Staffing $36,494.26
SMB Screen Printing $21,898.45
SPD Manufacturing $29,160.97
Steevin Love $57,300.00
THE FREGOLLE GROUP,INC $57,666.15
THE UNITED STATES PLAYING CARD COMPANY $65,969.37
TRANS-AM AIR&SEA FREIGHT(LAX) INC. $49,987.93
TRANS-AM container Line $22,784.62
ULINE $22,925.30
Ultra Tokyo Connection $74,091.58
UPS $81,417.66
Valve Corporations $756,547.82
WHAT PUMPKIN STUDIOS-v $56,802.23
Wing Hang (3Y) Industries Limited $187,818.50
DISCLOSURE SCHEDULES
Hi Guy
I talked to Enna about this and we’re both good with this order.
I think inventory in general is a longer discussion so let’s figure out all the details next week when Enna gets back.
Sincerely,
Bobby Namba
Good Smile Company, Inc.
Bobby,
Just wanted to loop you in. Stacy received an order last night for Dota 2 product from the warehouse. I
want to make these orders transparent. Our goal is to clear out the warehouse of older product in the
next 6 months.
Since this is product that GSC is not buying, we were thinking we could have Vanessa in the warehouse
stay 30 minutes later after work one day next week and ship out the order. We would just pay her
directly for the extra time.
To be clear these are not orders we will be working on during work hours.
<image002.jpg>
<image004.jpg>
ForFansByFans.com
Imaginary People
360 2nd Street Unit 450 Los Angeles CA 90012
1
EXHIBIT "C"
MERCHANDISE LICENSING AGREEMENT
This Merchandise Licensing Agreement is effective on the I 7th day of May, 2016
("Effective Date") by and between VALVE CORPORATION, a Washington
corporation with its principal office at 10900 NE 4th Street, Suite 500, Bellevue, WA
9g004 (hereinafter "Licensor") and MIGHTY FINE, a private California corporation
with principal office 2010 E. 151 Street Los Angeles, CA 90021 (hereinafter "Licensee").
SCHEDULE
A. Licensed Property:
The "Licensed Property" shall consist of the trademark, logo, and artwork
contained in the Licensed Product as depicted in Exhibit A. Additional artwork may
be added to Licensed Property if approved by Licensor in writing pursuant to
Section 7 of the Standard Terms and Conditions.
B. Licensed Product:
The "Licensed Products" shall consist of the following specific products.
Additional products may be added to Licensed Products, if approved by Licensor in
writing pursuant to Section 7 of the Standard Terms and Conditions.
Apparel
Accessories
Drinkwarc
Art Prints
Mouscpads
Phone Covers
Toys/Collectibles
Plush
C. License Term:
The "Term" shall commence on the Effective Date and expire 24 months from the
Effective Date. The ferm may be extended for additional 12 month period(s) upon
request from Licensee and receipt of written approval to such request from
Licensor, which may be granted or withheld at Licensor's sole discretion.
D. Licensed 'Territory:
The "Licensed Territory" shall include: Worldwide - subject to export restrictions
or legal limitations.
E. Grant of License:
The License herein granted is: Non-exclusive.
F. Complimentary Copies\Purchase:
Licensee shall furnish and ship to Licensor, at Licensee's expense, Ibur (4) samples
of Licensed Product including all packaging materials for the purpose: of Valve
promoting the Licensed Product or for Valve's internal use. Additionally, Licensor
shall be allowed to purchase an unlimited number of the Licensed Products at the
Licensee's lowest wholesale pricing for the Licensed Product.
G. Royalty:
The "Royalty" la able to Licensor shall be e tial to the following:
Royalty to Workshop
Description Licensor Contributor Royalty
Valve Licensed Product - Wholesale 12% 0
Valve licensed Product - Retail 15% 0
Valve + Workshop Contributor Product — Wholesale 12% 3% . 7%
Valve 4 Workshop Contributor Product Retail 10% 5% 15%
Special Case I - Valve Wholesale Workshop Purchase 0% 5% - 15%
Spe(ial Case 2 Valve Events volvi., O M Products
Retail (inIghty fin;:f ope:r:5ted) m
. ..,:.
a. 12%of Revenue for wholesale sales and 15% of Revenue for retail sales.
Wholesale sales are defined as sales to a bona tide reseller. Retail sales arc
defined as sales to anyone other than a bona tide reseller. No Royalty due for
sales to Licensor.
iii. Royalty equals 10% of Revenue for any and all Retail sales
including sales on www.welovetuic.com and at event meeting
the conditions described in (c)(ii) below. In addition, Licensee
will pay 5% - 15% of Revenue to the Steam Workshop
Contributor for sales on cat; h such orders.
c. 20% of Revenue for Licensed Product sales that meet the condition listed
below.
Online and event sales of Licensed Product supporting
Licensor produced events regarding a Licensed Property during
the period of said event. Examples of Licensor produced
events that would meet this criteria include but are not limited
to a CS:60 Major event for sales of CS:60 Licensed
Products, and/or a Dota Major event for the Dota 2 Licensed
Products.
V, Valve Corporation (year) Portal, the Portal logo, Counter-Strike, the Counter-
Strike logo, Team Fortress 2, the Team Fortress logo, Len 4 Dead, the Left 4
Dead logo, Dota 2, the Dota 2 logo, Half-Life, and the Half-Life logo arc
trademarks and/or registered trademarks of Valve Corporation in the United States
and other countries.
K. Valve Store
L. Entire Agreement.
This Agreement, including the Exhibits attached hereto, and the Standard Terms
and Conditions executed on or about the Effective Date, constitute the entire
agreement between the parties with respect to the subject matter hereof and
merges all prior and contemporaneous communications and proposals, whether
electronic, oral or written, between the parties with respect to such subject matter.
Neither party has relied in entering into this Agreement on any statement,
inducement or representation that is not set forth in this Agreement.
This Agreement by and between the parties shall consist of the above Schedule and
attached Standard Terms and Conditions. By signing in the spaces provided below, the
parties have agreed to all of the terms and conditions comprising this Agreement. Except
for the updated Royalty definitions in Section G.a, Section G.b, and Section ac which
will take effect July l', 2016. Prior to July 2016 Royalty definitions will match the
existing Merchandise Licensing Agreement between Licensor and Licensee dated August
15, 2013 (as amended) (the "2013 Agreement"). Otherwise, the 2013 Agreement is
terminated and superceded by this new Agreement.
PORTAL 2
COUNTER STRIKE
Ti fORTRESS
DC fA 2
DOTA 2
HAL F-L I FE
HALF-L I FE 2
EXHIBIT B
A. Strategic Business Plan
2. Order Process/Operations
3. Notifications
4. Delivery
6. Customer Service
1.1 License Grant Subject to the terms and conditions set forth herein, Licensor
grants to Licensee, and Licensee accepts from Licensor, a non-transferable. non-
assignable license (without the right to grant sub-licenses) as to the Licensed
Property to develop and manufacture (or have manufactured by a third party
manufacturer) the Licensed Products, and to market, advertise, distribute and sell
the Licensed Products solely in the Licensed Territory during the Term, all as
defined above.
1./ Reservation of Rights. AU rights with respect to the Licensed Property. not
specifically granted herein to Licensee are expressly reserved by Licensor.
1 .3 Covenant Regarding Use. Licensee represents and warrants that it shall not both
during and subsequent to the Term: (i) use the licensed Property (or any portion
thereof), directly or indirectly. to develop. manufacture, and/or otherwise produce
any article of merchandise other than the specific Licensed Products expressly
authorized hereunder: and/or (ii) use the Licensed Property (or any portion
thereof), directly or indirectly, to market and/or otherwise promote the sale of any
other products or services.
2
2. Licensed Territory.
3.1 Licensee agrees that it shall pay to Licensor in (IS Dollars (USS) a Royalty in the
amount set forth in Section (1 of the Schedule. Foreign currency translations for
non-US sales shall be based upon the average exchange rate (as reported each
business day in the Wall Street Journal) during the relevant quarterly reporting
period.
3.2 The Royalty shall accrue and be due and payable to Licensor when the Licensed
Products arc sold, invoiced and/or paid Ibr, whichever occurs first. Royalty
statements shall be delivered to Licensor within thirty (30) days after each of
March 31st. June 30th, September 30th and December 31st for the preceding
calendar quarter in each year during the Term and payments due to Licensor shall
accompany each statement. Royalty statements shall be rendered regardless of
whether Royalties are actually due and payable for such period.
3.3 Licensee shall keep accurate and complete books and records as they relate hereto
from the date of execution of this Agreement until two (2) years after the last day
of the Term of this Agreement. On reasonable notice and during normal business
hours Licensor shall have the right to examine said books and records. If any audit
discloses that Licensee owes Royalties to Licensor in excess of five percent (S %)
of Royalties previously paid, Licensee shall pay the reasonable audit costs.
3.4 Within 10 days of execution of the Agreement. Licensee will pay to Licensor the
amount, if' any, set forth in Section H as a "Royalty Advance". The Royalty
Advance shall constitute a nonrefundable and fully-recoupable advance payment
of royalties payable by licensee to Licensor under this Section 3. Accordingly,
Licensee will not be obligated to make royalty payment to Licensor until the
accrued total of all royalties earned by Licensor ("Earned Royalties") exceeds
the Royalty Advance advanced to Licensor under this section.
4.1 Ownership. Licensee acknowledges that the Licensed Property is owned solely
and exclusively by Licensor and/or its affiliates. Nothing in the Agreement or in
the performance thereof shall operate to grant Licensee any right, title, or interest
in or to the Licensed Property other than as specified in the limited license grant
herein. Licensee's use of the any trademarks included in the License Property
shall inure solely to the benefit of Licensor. To the extend any art, models, plans,
designs. specifications, drawings, materials are prepared by Licensee under this
Agreement include material subject to copyright protection, such documents and
materials shall be deemed "work for hire" as such term is defined under U.S.
copyright law. To the extend any such documents or materials do not qualify as a
work for hire under applicable law, and to the extent they include material subject
to copyright, patent, trade secret, or other proprietary rights protection, Licensee
hereby irrevocably and exclusively assigns to Licensor, its successors, and
assigns, all right, title, and interest in and to all submitted documents and
materials. To the extent any of the Licensee's rights in the same are not subject to
assignment or transfer hereunder, including without limitation any moral rights.
Licensee hereby irrevocably and unconditionally waives all enforcement of such
rights. Licensee shall execute and deliver such instruments and take such other
actions as may be required to carry out the assignments contemplated by this
paragraph. Any documents, magnetically or optically encoded media, and other
materials created by Licensee under this Agreement shall be owned by Licensor.
4.2 Notices. All Licensed Products packaging and marketing materials shall bear the
copyright notice, trademark notices shown in Section J of the Schedule and any.
other legal notices which Licensor may from time to time require.
4.3 Third Party Infringers. When Licensee becomes aware that a third party is or may
be making unauthorized use of any of the Licensed Property or Licensed Product.
Licensee shall promptly give Licensor written notice thereof, which notice shall
fully describe the potentially infringing actions by such third party and, with
respect to the Licensed Product, the legal steps Licensee considers to take. Each
party may act at its own expense to protect its rights in the Licensed Products, and
to the extent both parties seek to make claims against an infringer, the parties shall
cooperate in the prosecution of such claims:
5.1 Rig Licensor. Licensor represents and warrants solely for the benefit of Licensee
that (i) Licensor has the flat. power and authority to enter into this Agreement
and to fully perform its obligations hereunder; and (ii) any Licensed Property
materials used in the Licensed Product does not infringe the copyright, trade
secret, privacy, or publicity right of any third person; and (iii) the making of this
Agreement by Licensor does not violate any separate agreement existing between
Licensor and any other person or entity.
5.2 13), Licensee. Licensee warrants and represents that (i) Licensee has the right.
power and authority to enter• into this Agreement and to fully perlbrin its
obligations hereunder: (ii) the Licensed Product (excluding materials from the
Licensed Property) does not infringe the copyright, trademark, trade secret,
privacy, or publicity right of any third person; (iii) the making of this Agreement
by Licensee does not violate any separate agreement existing between License and
any other person or entity; and (iv) all Licensed Products (a) shall be of a high
standard of quality, style and appearance; (h) shall not deviate from any approved
prototypes; (c) shall be of merchantable quality and safe for public use; and (d)
shall be manufactured, marketed, sold and distributed in accordance with all
applicable laws, regulations and safety standards; and (e) shall be diligently
marketed, sold and distributed throughout the Licensed Territory.
5.3 Licensor has registered and/or common law trademark covering video games in
various territories. However, Licensor does not warrant its trademark for the
Licensed Product in the Licensed Territory. Licensee is solely responsible for the
clearance of trademark usage in the Licensed Product in the Licensed Territory.
4
6. Indesnnifications.
6.1 By Licensor. Licensor agrees to indemnity and hold harmless Licensee from and
against any final judgments (including reasonable attorneys' fees and court costs)
arising out of any breach or alleged breach of any of Licensor's representations
and warranties contained in the Agreement. provided that Licensee gives Licensor
prompt written notice of the assertion of any such claim or suit. Licensor shall
have the option to undertake and control the defense and settlement of any such
claim or suit. subject to the right of Licensee to participate in any such proceeding
at its own expense with counsel of its own choosing,
6.2 13y Licensee. Licensee agrees to indemnify, hold harmless, and defend (except as
provided in the last sentence of this Section 6.2) Licensor and Licensor's
subsidiaries and affiliates from and against all claims damages, losses, liabilities.
suits and expenses (including reasonable attorneys' fees and court costs) arising
out of any breach or alleged breach of any of Licensee's representations and
warranties contained in this agreement and/or arising out of or in connection with
the manufacture, packaging., distribution. promotion, advertising. sale or
exploitation of the Licensed Products including without limitation, any claims of
product liability. Licensor shall have the right to defend any such action or
proceeding with counsel of its own choice at Licensor's cost and expense.
All prototypes of Licensed Products and of all artwork, copy packaging, literal): text.
advertising and promotional materials, including the quality, style and the media to he
used thereof, shall he subject to Licensor's prior written approval before manufacture,
sale or distribution of the Licensed Products. After such materials have been approved
by Licensor. licensee shall not depart therefrom without Licensor's prior written
approval. Licensor at all reasonable times to inspect the site of production of the
Licensed products.
8. Termination.
8. 1 , Without CallSe termination without Cause, Either party may terminate this
Agreement for any reason, kvith or without cause, upon thirty (30) days' prior
written notice to the other party. Neither party will incur liability to the other
for damages of any kind resulting solely from terminating this Agreement in
accordance with its terms.
8.2 Insolvency. Either party shall be entitled to terminate this Agreement with
immediate effect by giving written notice to the other party if such other party
shall have a trustee, receiver or an administrative receiver appointed over it or
over any part of its undertaking or assets or shall pass a resolution for winding
up (otherwise than for the purpose of a bona fide scheme of solvent
amalgamation takeover or reconstruction) or shall enter into any voluntary
bankruptcy or an administration order is made in relation to such other party or
any analogous situation to any of the above under the law of any jurisdiction
occurs in relation to such other party or such other party sells substantially the
whole of its assets or ceases, or threatens to cease carrying on business.
-5
8.3 Other Breaches. If other party fails to perform any of its other obligations
hereunder, the other party may terminate this Agreement upon thirty (30) days'
notice, unless the party in breach of the contract cures such breach within said
thirty (30) days and gives notice to the other party.
8.4 Effect of Termination; Survival_ Upon the termination of this Agreement, all
licenses granted pursuant to this Agreement will he terminated and cease to be
effective and Licensee will cease exercising any of the rights granted under
such licenses. The following Sections will survive any termination or
expiration of this Agreement: 1, 3 (to the extent that royalties have accrued to
the date of termination), 8.4, 9, 5, 6 and I0.
9. Confidential Information
9. 1 Each party acknowledges and agrees that certain information which it may,
receive from the other party is confidential ("Confidential Information")
which information includes but is not limited to:
(a) the fact that the other party intends to develop or has developed any
particular software or other product;
(b) any nonpublic i»formation concerning the Licensed Property or any other
existing or future product or service ofl,icensor,
(c) any information concerning the terms and eond t ons of this Agreement;
9.2 Either party may disclose information which would otherwise be Confidential
Information if and to the extent:
(a) required by law or regulatory body provided that prior to disclosing such
information the disclosing party shall where practicable give the other
party at least 10 business days' notice;
(b) the information has come into the public domain through no fault of that
party:
(d) disclosed to the professional advisers of the party for legitimate business
purposes.
6
10. Nliscellaneous.
10.1 Notices. All notices and statements shall be in writing and shall together with
any payments be personally delivered or sent postage prepaid and return
receipt requested, or by recognized courier to the intended party at the address
set forth in the preamble of Agreement (unless notification of a change of
address is given in writing).
0,2 Waiver, Modification. The terms of this Agreement may not be waived or
modified except by an agreement in writing executed by the parties hereto. A
waiver of any breach of this Agreement must be in writing and shall not he
deemed to be a waiver of any prior or succeeding breach.
c"—.77›
By: /TN
/ \AN B):
Title: Title:
MERCHANDISE LICENSING AGREEMENT
AMENDMENT NO. 1
RECITALS
Whereas the parites wish to amend the Agreement, therefor, for valuable consideration, the
adequacy and receipt of which is hereby acknowledged, the parties amend the agreement as
follows:
In the closing clause of the Agreement, the clause shall be deleted and replaced with the
following:
This Agreement by and between the parties shall consist of the above Schedule and
attached Standard Terms and Conditions. By signing in the spaces provided below, the parties
have agreed to all of the terms and conditions comprising this Agreement, except the updated
Royalty definitions in Section G.a, Section G.b and Section G.c, which will take effect October
I st, 2016. Prior to October 1st, 2016, Royalty definitions will match the existing Merchandise
Licensing Agreement between Licensor and Licensee dated August 15, 2013 (as amended) (the
- 2013 Agreement"). Otherwise, the 2013 Agreement is terminated and superceded by this new
Agreement.
By: By;
Mighty Fine
Patty Tosawat
Name: Name: coo
Date: Date:
Title: Title:
DocuSign Envelope ID B2BC1275-38E8-4ABE-91BC-87B29DB7576C
Valve Corporation
Bellevue, WA 98004
Letter of authorization
We, Valve Corporation, a corporation incorporated under the laws of the state of Washington, U.S.A.,
with offices located at 10400 NE 4' ST, Suite 1400, Bellevue, WA 98004, hereby confirms that MF,
Inc. a company incorporated under the laws of California, U.S.A., whose registered office is at 2010
E 15' St, Los Angeles, CA 90021, is authorized to import, promote, distribute, merchandise, sell and
offer products ("Products"), including toy figures, based on Dota 2, a video game developed by Valve
Corporation ("Valve") .
Best Regards,
--ClocuSi d by;
\.-EA59211)C8E03497
Liam Lavery
General Counsel
EXHIBIT "D"
From: Bobby Namba <bobby@goodsmile.jp>
Sent: Thursday, March 28, 2019 9:41 AM
To: 'Roxanne Montgomery'
Cc: 'Guy Brand'; 'James Kim'; '穂積エナ'
Subject: RE: Licenses
Attachments: License Cover Sheet.pdf
For Viz, I have agreements listed under U, G, & H in the attached file.
Will the Viz license end up being 1, 2 or 3 agreements?
Sincerely,
Bobby Namba
GOOD SMILE COMPANY INC.
Hello Bobby,
I am working with Viz to nail down the final agreement for Homestuck/Hiveswap. I am hoping we will have an
agreement by the end of this week or early next week at the latest.
I just received the fully countersigned agreement for CBS. I have updated this on our drive and will attach here for you
Thank you,
Roxanne Montgomery
ForFansbyFans.com
360 East 2nd Street
Los Angeles CA 90012
roxanne@imaginarypeople.com
t0 11
4 FANS
By
FANS.
Roxanne
Sincerely,
Bobby Namba
GOOD SMILE COMPANY INC.
Hello Bobby!
I do not have counter-signed agreements handy for Star Trek or EA but I have reached out. My contact at EA is OOO until
April 1st but I am hoping I will hear back on Star Trek soon.
Thank you,
Roxanne Montgomery
ForFansbyFans.com
360 East 2nd Street
Los Angeles CA 90012
roxanne@imaginarypeople.com
, dFOR
FO WS
er...... 8
.1".7: FANS
2
<enna@goodsmile.jp>
Subject: Licenses
Hi Roxanne
Do you have the fully executed agreements for the following licenses:
Thimblestump Hollow
Slime Rancher
Homestuck
Hiveswap
Hasbro
Valve
Exploding Kittens
Valve
Sincerely,
Bobby Namba
GOOD SMILE COMPANY INC.
3
Amendments - (New LLC Update)
Complete? IP New LLC Email Email sent New LLC Notes License ortglnely Under Name Amends Date Bent Date Complete Neese
Fez 3/12/2019 Mighty Fine 9127/2015 Followed up 10/112015. 10/25/2015,11/5/2018, 11/27/2015, 3/12/2019
IS Pugbe Pug ,,,, 3/12/2019 Approved - OK Imaginary People Good Smile Conned 9/14/2018 9118n018
LI Wartrame M 3/12/2018
...
Imaginary People Good Smile Connect 9/14/2016 10/24/2018
II Owlboy ea 3/12/2019 Approved -Alt Mighty Fine Good Smde Conned 9/27/2018 10/11/2018
Cartoon Network L'2 3/12/2019 Mighty Fine Good Smile Connect 10/23/2018 11/19/2016
Arena Net IS 3/12/2019 Mighty Fine Good Smite Connect 9/27/2015 10/2/2018
Doki Doki 151 3/12/2019 MF. Inc Good Smite Connect 9/14/2018 9/28/2018
MF Inc (renewal
Shovel Knight 5 311212019 Good Smile Connect
Amendment) 9/14/2015 91192018
PUBG al 3t12/2019 Approved - OK MF. Inc Good Smile Connect
MF Inc (renewal
Bee & Puppycat Good Smile Connect
© 3/12/2019 Amendment) 927/2018 10/12/2018
kV Inc (renewal
Miraculous Ladybug 5 3/12/2019 Amendment)
Good Smile Conned
9/27/20113 10/25/2018
Hetsune iliku 151 3/12/2019 Approved - OK ‘IF Inc (renewal Amendment) Good Smile Conned 9/27/2018 11/8/2018
Goat Son ei 3/12/2019 Mighty Fine MF. Inc 927/20113 Fo8owed up 10/11/2018, 10/25/20111,11/5/2018, 11/27/2015, 3/12/2019
p 1_1 Armee° — Taken down per licensor Mighty Fine OA 4/2018 N/A Licenaor declining to sign - MI end sell off 12/31 - License taken down
C, i
Hornestudi — Renewing wain Viz as GSC Mighty Fine Good Smile Connect 10/11/2015 10/12/2018 Mat Pumpkin Studios. LLC
1-k Ntveswap — Renewing with Vlz es GSC Mighty Fine Good Smile Conned 101112018 10/12/2018 Atm Pumpkin Games, Mx
t -s Tr- 4=e1-1
be) Bc- —5c -k ck. " -k
From: Bobby Namba <bobby@goodsmile.jp>
Sent: Thursday, March 28, 2019 5:36 PM
To: 'Guy Brand'; 'James Kim'; '穂積エナ'
Subject: Hold Harmless Note & License Update
Attachments: Hold Harmless for Notes.docx; License Update.docx
Guy
Sincerely,
Bobby Namba
GOOD SMILE COMPANY INC.
1
Here is an update on the licenses
Assigned
Puglie Pug-Good to go. Additional email consent needed.
Doki Doki-Good to go
Goat Simulator-Need fully executed 1.1.18 amendment
Contracts that will be Under Good Smile Connect LLC that Haven’t Been Executed
Hasbro
Valve-Guy and James working on deal outside the current agreement.
Exploding Kittens
Viz-Homestuck/Hiveswap
This agreement, together with any mutually agreed and executed Schedule(s), (collectively, “Agreement”) is effective as of
December 1, 2019 (“Effective Date”), and is by and between Netflix CPX, LLC, with an address of 5808 W. Sunset Blvd, Los
Angeles CA 90028 and Netflix CPX International, B.V., with an address of Stadhouderskade 55, 1072 AB Amsterdam, the
Netherlands (together “Licensor”), and Good Smile Company, Inc., with an address of Akiba CO Building 8F, 3-16-12
Sotokanda, Chiyoda-ku, Tokyo, Japan (attn: Ashley Fick) (“Licensee”). (Licensor and Licensee each individually a “Party”,
and collectively, the “Parties”). As set forth herein, and in any attached schedule(s) (“Schedules”), each of which is
incorporated by reference, the Parties agree as follows:
1. Grant of Rights a. Pursuant to the terms and conditions of this Agreement, and as set forth in any
Schedule(s) entered into by the Parties, Licensor grants to Licensee a non-exclusive, non-
transferable, non-assignable, non-sublicensable license (except to the extent permitted
under this Agreement or any Schedule(s)) to use the Licensed Property solely in
connection with the design, development, creation, production, manufacture, advertising
and marketing, distribution and sale of the Licensed Article(s) via the Distribution
Channel(s) in the License Territory during the License Term (“License”). Licensed
Property, Licensed Articles, Distribution Channel(s), and License Territory are defined in
the Schedule(s).
c. Licensor hereby reserves all rights not specifically granted to Licensee. Licensee agrees
that rights granted under this Agreement are specific to those articles listed in a
Schedule(s). Products not specifically granted as a “Licensed Article” are not granted, even
if they may be characterized as an extension, relative, or derivative of a granted Licensed
Article.
d. In the event Licensee (i) has not introduced a specific category of Licensed Article within
six (6) months of the agreed-upon on-shelf date (as articulated in “On-Shelf Date” section
of an applicable Schedule), and/or (ii) is not making any sales of such article after six (6)
months of the on-shelf date during the Licensed Term, Licensor shall have the right at any
time to delete such Licensed Article from the definition of “Licensed Articles” by giving
written notice of such deletion to Licensee, and all rights to such Licensed Article(s) shall
revert to Licensor.
e. Licensee shall not use the Licensed Property, any Licensor Entity(ies), any character (or
talent performing as a character), or the Licensor name and logo to imply, suggest or
otherwise create any appearance of an endorsement for any product, service or corporate
entity.
f. Licensor shall not be prevented from using, exploiting or granting third parties the right to
use the Licensed Property in any manner whatsoever. Licensee acknowledges and agrees
that nothing in this Agreement limits Licensor or Licensor Entity’s ability to market or
promote the Licensed Property(ies) or their availability at any time, including in
connection with goods, services, promotional or commercial tie-ins or otherwise. As used
within this Agreement, “Licensor Entity” shall mean Licensor’s parent or any of its or their
1 of 23
DocuSign Envelope ID: BE63923C-E93C-44E5-AB9B-ECB795BEE523
subsidiaries or affiliates.
g. Licensee acknowledges that certain Licensed Properties may be based upon pre-existing
creative works (e.g., theatrical or literary work) (“Pre-Existing Works”), and that Licensor
does not control the merchandising rights in these Pre-Existing Works. Licensee
acknowledges that (i) Licensor grants no rights to the Pre-Existing Works; (ii) merchandise
based on Pre-Existing Works may be indistinguishable from Licensed Articles, and (iii)
existence of such merchandise does not constitute a breach of the Agreement.
2. Licensed Term a. The term of this Master Merchandising License Agreement shall commence upon the
Effective Date and continue until December 31, 2021, unless terminated earlier as
provided in the Agreement or by operation of Law (“Overall Term”).
b. Specific terms for each Schedule(s) shall be set forth in a specific Schedule(s). All
Schedule(s) shall naturally expire as of the end date of the Overall Term, unless specifically
agreed to between the Parties.
3. Sell Off Period a. Licensor may grant Licensee a sell off period (“Sell Off Period”) in an applicable
Schedule(s).
b. The Sell Off Period shall not apply if Licensor terminates this Agreement for cause, and
Licensee’s right of sell-off shall terminate automatically if Licensee (or its manufacturer(s))
breaches any term or condition of this Agreement. For avoidance of doubt, Sell Off Periods
specifically exclude Licensed Articles that are not in tangible form (e.g., digital goods).
c. Upon expiration of the Sell-off Period, all remaining Licensed Articles shall at Licensor’s
option be: (i) sold to Licensor at Licensee’s direct cost of manufacture, excluding
overhead; (ii) donated to a non-profit charitable organization approved in writing by
Licensor; or (iii) destroyed, and Licensee shall furnish Licensor with a sworn certificate of
destruction; provided, however, such sales or donation under this paragraph shall be
made on a royalty-free basis.
4. Licensed Territory a. The License is limited to the Licensed Territory listed in a Schedule(s). In the event Licensee
/ Licensed has not introduced at least two (2) skus of an article into a country within six (6) months
Language of the agreed-upon on-shelf date and/or is not making any sales after six (6) months of
the agreed-upon on-shelf date within such country, such country(ies) shall fall outside the
definition of “License Territory”, and this Agreement shall be amended accordingly. For
the avoidance of doubt, the reversion of rights relating to countries and articles are not
coupled, i.e., Licensee may lose rights to a specific article, but may continue to sell into a
country if at least two (2) skus are still sold in that country.
b. Licensee shall require that Distribution Channels geoblock sales and access to the Licensed
Articles strictly within the Licensed Territory granted in a Schedule(s) and shall not
distribute the Licensed Articles to anyone to whom it knows or should know is outside the
Licensed Territory, unless expressly required by Law. Nothing in this Agreement is
intended (and is not to be construed) to prevent Licensee from making passive sales (sales
in response to an unsolicited request from customers) of Licensed Articles anywhere
within the European Economic Area.
c. Licensee shall not manufacture, distribute or sell the Licensed Articles into any countries
or territories restricted under the U.S. Department of Treasury’s Office of Foreign Assets
Control (“OFAC”).
d. English shall govern this Agreement, and in the event this Agreement or any portion
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e. If Licensee must translate any part of the Licensed Articles into a local language, Licensee
shall be responsible for the accuracy and completeness of any local language translations,
provided that Licensee shall adhere to any translations or localizations provided by
Licensor in connection with the Licensed Property.
5. Distribution a. Distribution Channels are set in an applicable Schedule(s). Within the allowable
Channels Distribution Channels, Licensee shall provide Licensor with a list of specific retail partners
that will purchase and ultimately sell the Licensed Articles. Licensor may reject individual
retailers on a case-by-case basis, even if such retailers fall within an authorized
Distribution Channel.
c. For any Licensee owned distribution outlets, Licensee shall adhere to all applicable Laws
associated with data privacy and collection/storage of any credit card data, as well as any
specific Laws associated with marketing to or collecting personal information from or
regarding minors.
6. Minimum a. Specific Minimum Guarantee(s) (and applicable advances) shall be set forth in an
Guarantee applicable Schedule(s).
b. In the event Licensee enters into multiple Schedule(s) with Licensor, Minimum Guarantees
under such Schedule(s) shall not be cross-collateralized.
c. Where the Minimum Guarantee is payable in installments, Licensee may not accelerate
payment of any installment or otherwise pay any installment more than ten (10) days in
advance of the date upon which it is due. Licensee’s obligation to pay Royalties shall
commence once the current installment of the Minimum Guarantee has been recouped
and shall not be contingent upon recoupment of the entire Minimum Guarantee or
deferred in anticipation of future installments of the Minimum Guarantee.
7. Royalties; Royalty a. Individual royalty rates shall be set forth in an applicable Schedule(s) and shall be
Rate; Currency accounted and paid as further set out in the applicable Schedule(s).
b. If there is no FOB Royalty Rate listed on an applicable Schedule(s), and Licensee ships
articles on a F.O.B. basis (as such term is commonly understood in the industry), Licensee
shall pay Licensor an equal cash value for those sales equivalent to the Royalty paid if the
Licensed Articles had been shipped directly to and fully paid for by Licensee, its
subsidiaries, affiliates or warehousemen.
c. Royalties accrue as of the date Licensed Article are shipped, billed, or purchased,
whichever is earliest. Licensee owes Licensor no royalties for the mere manufacture of
Licensed Article(s).
d. If Licensee makes any sale to any of its affiliated or subsidiary entity, or to any other
person, firm or corporation related in any manner to Licensee, or its officers, directors, or
major stockholders (“Licensee’s Related Party”), then Licensee shall pay Licensor a
Royalty based on the sales price charged by Licensee’s Related Party on resale of the
Licensed Article(s) .
e. In the event Licensee inadvertently accepts payment from any individual(s) located in a
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country restricted under OFAC, no royalty payments from any such individual(s) shall be
remitted to Licensor.
8. Royalty Reporting/ a. Licensee shall account and pay Royalties on the schedule outlined in an applicable
Accounting Schedule(s).
c. Licensee shall also provide detailed sell-in and sell-thru reports, outlining orders by
retailers, as well as sales by retail channel.
d. Once Licensee provides the Royalty Statements, and Licensor verifies and accepts
amounts, Licensor shall provide Licensee with invoices, where the invoiced amounts will
correspond to those stated on the Royalty Statements (the “Royalty Invoices”), which
will contain all details required by Law.
e. Any and all bank or other charges (including currency conversion fees) incurred by
Licensee relating to payments in favor of Licensor shall be borne by Licensee.
f. Licensee shall pay all amounts due in US dollars. If Licensee must convert to US dollars,
Licensee shall use the average rate of exchange for buying United States dollars as quoted
in the currency table published by OANDA Corporation located at
https://www.oanda.com/currency/table) for the calendar quarter to which the payment
applies. If there are two rates for a currency, Licensee shall use the most favorable rate to
Licensor.
g. Licensor’s receipt or acceptance of any Royalty Statement or Royalty payment does not
waive or restrict Licensor’s audit rights set forth in Section 9 below. In no event shall
Licensee be entitled to a refund of Royalties paid.
h. In addition to Royalty reports, Licensee shall provide Licensor with an annual forecast
projecting sales, which Licensee shall update on a quarterly basis, together with an
estimate of Royalties due to Licensor. The forecast shall be submitted on the form
supplied as Exhibit B.
i. Wire Transfer Payments: All payments for any Advance, payments of invoices for
Minimum Guarantee installments and Royalty payments may be made via wire transfer
to the following account and shall reference the Licensee name, applicable Schedule,
contract number(s) and Licensed Property(ies):
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b. During the Audit Period, Licensor and its duly authorized representative(s) shall have the
right, upon five (5) business days’ prior written notice and during business hours, to
examine and copy and otherwise audit all such books of account and records during the
License Term. Licensor shall have free and full access thereto for such purposes.
c. In the event that such inspection reveals an underpayment by Licensee, Licensee shall
have fifteen (15) days from receipt of any audit report to respond with documentation
reasonably refuting any claim contained therein, while paying any undisputed amounts.
If no such documentation is provided or documentation is provided but Licensor disagrees
that such documentation warrants a reduction in the amount claimed by Licensor to be
due, then Licensee shall promptly remit payment to Licensor in the amount of the
underpayment plus interest at the rate of one and one-half percent (1.5%) per month (or
the maximum rate allowed by law if lower) but not on a compound basis, from the date
such payment was due until the date when such payment is actually made. Licensor shall
also be free to pursue its remedies under the Agreement related to non-payment.
d. In the event that such discrepancy is greater than five percent (5%) of the Royalties owed
to Licensor for any quarterly period, then Licensee shall bear all reasonable expenses
related to such inspection, including reasonable attorney’s fees if applicable.
10. Taxes a. Licensee shall be responsible for any applicable taxes that are incurred or arise in
connection with or related to the sale of goods and services under this Agreement
(including net income or gross receipts taxes, franchise taxes, property taxes or taxes
arising from sales between Licensee and its customers).
b. Except as specifically provided in the definition of Royalties due, no costs, taxes, fees or
assessments of any nature incurred in the manufacture, sales, advertising, distribution or
promotion of the Licensed Article shall be deducted or withheld from gross sales before
calculating royalties. If any taxes are required to be deducted or withheld on payments or
credits made by Licensee to Licensor, Licensee may deduct or withhold such taxes from
the amount owed Licensor and pay them to the appropriate taxing authority, provided
that Licensee promptly secures and delivers an official receipt for such amounts deducted
or withheld and other documents reasonably requested by Licensor that enable Licensor
to claim a foreign tax credit or refund and prior to any such withholding, Licensee shall
provide reasonable notice to Licensor of its intent to deduct or withhold taxes and shall
cooperate with Licensor to minimize or eliminate any deduction or withholding for taxes.
Licensee shall use reasonable efforts (and shall cooperate with Licensor) to ensure that
any deduction or withholding for taxes are minimized or refunded to the extent possible
under applicable law.
c. If Licensee provides Licensor with a valid exemption certificate, Licensor shall not collect
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b. Licensee shall also submit all other materials upon which the Licensed Property appears,
including Marketing & PR Materials and Packaging (defined below).
c. Licensor shall have the right to approve or disapprove in its sole discretion any submission
by Licensee and shall provide approval/disapproval within ten (10) business days of
Licensor’s receipt of such items. A submission is disapproved if Licensee has not received
Licensor’s written approval thereof within such window. After Licensor has approved a
submission, Licensee shall not make any changes without resubmitting the modified
Licensed Article(s) for Licensor’s written approval. Approval of any material does not imply
approval for use with a different Licensed Article(s), or as Marketing & PR Materials or
Packaging. Licensee shall not move to the next phase of production without express
written approval over the previous phase. Email constitutes written approval for the
purposes of this Section 11.
d. As used herein:
• “Marketing & PR Materials” shall mean any marketing, communication, publicity,
promotion or advertisement using the Licensed Property, including any press releases
(provided Licensor has approved issuance of such release), website, audiovisual work,
social media or email communications, print advertisements, online banner
advertisements, in store displays and signage (standees, wobblers, window displays),
influencer lists and gifting kits, event plans, etc.; and
• “Packaging” shall mean cartons, labels, containers, tags, packing inserts, packing and
wrapping material, and similar materials upon which the Licensed Property appears.
f. Licensee shall, upon Licensor’s direction, ship to Licensor, or destroy and certify such
destruction of, all unapproved or substandard Licensed Articles, and shall provide Licensor
with such certifications of destruction.
g. If Licensee is in breach of any provision of this Agreement, and Licensor notifies Licensee
of such breach, then Licensor may, in its sole discretion, suspend the review and approval
of all Licensed Articles, Marketing & PR Material, and/or Packaging submissions until such
time as Licensee has cured all such breach(es).
12. Samples a. Prior to the initial distribution of each Licensed Article(s), the Licensee shall supply to the
Licensor the specific number of samples of Licensed Articles, Marketing & PR Materials
and Packaging listed in the relevant Schedule(s).
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b. The Licensor Entities shall have the right to purchase additional copies (whose number
shall be mutually agreed upon by the Parties) of each of the Licensed Article(s) at
Licensee’s best standard wholesale price.
13. Marketing and PR a. Licensee, at its own cost and expense, shall market, advertise, and promote the Licensed
Article(s) during the License Term in the License Territory as set forth in its Marketing &
PR Plan (defined below). Licensor shall have the right to review and approve all marketing,
PR, publicity or advertising related activity, including all Marketing & PR Materials, as set
out in Section 11 above.
b. In the event Licensee wishes to release a press release or statement regarding this
Agreement, the Licensed Articles, or its partnership with Licensor, Licensee must first
obtain Licensor’s prior written approval over issuance of a release. Licensee is under no
obligation to issue a press release, and the Parties shall discuss the appropriateness of
issuing a press release, provided Licensor reserves the right to reject Licensee’s request to
issue a statement.
c. For each Licensed Property, and within ninety (90) days of signature of the relevant
Schedule(s), Licensee shall furnish to Licensor a detailed written marketing, advertising,
communication, PR and publicity plan that sets forth the proposed activities to market,
promote and communicate about the Licensed Articles and partnership overall
(“Marketing & PR Plan”). The Marketing & PR Plan shall include budgets, media
assortment, release strategy, proposed events, influencer strategy, PR outreach and
plans, and any other information as Licensor requires with respect to each Licensed
Article(s). Licensee must submit any changes to the Marketing & PR Plan to Licensor for
approval. Licensee shall follow the Marketing & PR Plan unless changes to the plan have
been agreed to by Licensor in writing. Email agreement is acceptable for the purpose of
this Section 13.
d. Licensee shall start advertising, promotion or marketing of the Licensed Article(s) in the
License Territory on the marketing date set forth on the applicable Schedule(s) (or as
agreed between the parties).
e. On a biannual basis, Licensee shall provide Licensor with a detailed report outlining its
execution of the Marketing & PR Plan, with a summary of program performance.
f. If the Marketing & PR Plan includes a sweepstakes, contest or other giveaway, Licensee
agrees that it will conduct and administer the same in compliance with all applicable laws.
Licensee will not represent or imply that Licensor is a sponsor or a co-sponsor of such
sweepstakes contest or giveaway.
g. Licensee shall not directly or indirectly sell or distribute the Licensed Article for
Promotional Purposes without Licensor’s prior approval. As used herein, “Promotional
Purposes” means any of the following, regardless of whether the Licensed Article(s) is
given away free or a fee is charged to the end consumer: on-pack or in pack promotions,
instant win games; loyalty program or points-based reward, gift-with-purchase or free
gift; any giveaway; any sweepstakes or contest; any co-branded or promotional tie-in with
any other brand, property or Distribution Channel.
h. Licensee shall not market or advertise the Licensed Property or Licensed Article in a
manner that would disparage or adversely affect the reputation, image or customer
goodwill of Licensor or any other of Licensor’s services, products, trademarks, service
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marks or logos. Without limiting the generality of the foregoing, Licensee shall not market
or advertise the Licensed Article with liquor or liquor-related products, sexually oriented
material, online gambling or offshore sports-book betting operations, firearms, tobacco,
personal or feminine hygiene products, undergarments, drugs or pharmaceuticals, or
religious or political products, organizations, advertising, or promotions.
14. Clearances / Third a. Licensee shall obtain any necessary consents or permissions, and pay any residuals,
Party Materials / royalties, use fees or other similar payments payable to third parties or collecting
Use of Talent societies, whether by collective bargaining agreements, guilds/unions or individual
contracts, by reason of the manufacture, distribution, advertising, promotion, marketing
or sale of the Licensed Articles.
b. Licensee shall obtain (and pay for) any necessary rights, permissions and/or authorizations
to use any third-party materials (e.g., trademarks, copyrights, artwork, fonts, music, etc.)
on or in the Licensed Articles, Packaging, and Marketing & PR Materials, including third
party IP contained within the Licensed Property. Upon Licensee’s request, Licensor shall
use commercial best efforts to notify Licensee of such third-party IP contained within the
Licensed Property, however nothing herein shall obligate Licensor to obtain such
clearances on behalf of Licensee.
c. Licensee shall not seek any consents, clearances or approvals directly from talent, and
must coordinate such talent approvals through Licensor, however nothing herein shall
obligate Licensor to obtain such clearances, consents or approvals. Licensee
acknowledges that talent approvals may not be obtainable.
d. For any and all events, promotions, or marketing that include Licensor talent participation,
Licensee may request that Licensor attempt to facilitate talent participation. Licensor does
not guarantee talent participation or approvals. Participation agreements and all
necessary payments to talent for such talent remain Licensee’s sole responsibility.
15. Sales Efforts / a. Licensee shall make the Licensed Article(s) available for sale within the License Territory
Product Launch by no later than specific shipping dates or product launch dates listed in an applicable
Date Schedule(s).
b. At all times, Licensee shall ensure that the Licensed Articles (and Packaging thereof), and
any marketing, advertising, publicity, communications and publicity activities in support
of the Licensed Articles, fully comply with all Law. This may include ratings or maturity
guidelines, or warnings regarding suitability for specific age groups.
c. Licensee shall take all industry standard steps to ensure that the Licensed Articles are not
used in a manner outside of the standard and useful purpose of the Licensed Article.
d. In the event the Licensed Article includes any items marketed or directed towards children
(i.e., minors under the age of thirteen (13) years of age), Licensee shall comply with all
Law(s) associated with testing, certification, component part(s)/ingredients, levels of
dangerous or hazardous substances (e.g., lead), labeling and packaging. Licensee shall
ensure that all Marketing & PR Materials, as well as all actual marketing, communications,
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advertising and publicity activities, conform to Laws associated with marketing to children
(e.g., COPPA).
f. In performing its obligations under this Agreement, Licensee, and its directors, officers,
employees and representatives, will not take any action that would result in a violation of
economic or financial sanctions administered by OFAC. Licensee is not itself, and will not
employ or otherwise transact with, any person listed in a sanctions-related list of
designated persons maintained by OFAC.
g. As used, “Law(s)” shall mean applicable international, national, federal, state and local
laws, rules, and regulations; treaties, conventions, and governmental orders, directives;
orders, decrees, judgments, and settlements of all courts, tribunals and arbitrators; and
all mandatory and voluntary industry standards, whether existing now or subsequent to
the Effective Date including, as applicable, anti-bribery, anti-corruption, guidance or
regulations relating to the specific Licensed Article categories or marketing, adverting,
publicity or promotion thereof (e.g., consumer protection agencies), tax laws or
regulations; export and import controls in each country, and laws, regulations, standards
or self-regulatory guidance related to the collection, storage, and use of any data collected
or derived by a Licensee or its subcontractors, or other acts and standards. Laws are
“applicable” to a Party if they are binding on or apply to a Party or if they relate to the
Party’s performance under this Agreement.
17. Testing / Product a. Licensee shall follow proper procedures for testing the Licensed Article(s) (and Packaging)
Recalls to ensure compliance with Law and to conform to Exhibit C.
c. Licensor reserves the right, exercisable in its sole discretion, to require the removal of any
Licensed Article(s), Marketing & PR Materials or Packaging from public access for any of
the following reasons: (i) government or public relations issues; (ii) loss of rights in the
Licensed Property; or (iii) talent relations. Licensee shall promptly adhere to any Licensor
directives regarding removal. The Parties acknowledge that Licensee shall not be required
to recall Licensed Articles already sold to end user consumers, provided Licensor may
require that Licensee remove or require return of not-yet-sold Licensed Article(s) on shelf
at a Distribution Channel.
d. In the event of a government or regulatory recall of the Licensed Article(s), Licensee shall
notify Licensor by telephone and email within twenty-four(24) hoursif Licensed Article(s)
may be subject to a product recall or other safety related event. Within three (3) business
days of providing initial notice to Licensor, Licensee shall submit to Licensor a written
report including the Licensed Article(s) at issue, all SKU numbers affected, the Licensed
Property involved, the alleged violation or product safety concern, the number of units
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produced and sold, the Distribution Channels which sold the Licensed Article(s), the
name(s) and address(es) of the manufacturer(s) that produced the Licensed Article(s), and
the corrective action(s) planned by the Licensee, including any public statements or
methods of communication intended to be used by Licensee. Licensor shall have the right
to pre-approve Licensee’s corrective action plan. Time is of the essence in connection
with Licensee’s obligations hereunder. Licensee shall be liable to Licensor for any losses
incurred by Licensor with regard to the recalled Licensed Articles.
18. Minimum a. Licensee shall obtain and maintain in full force and effect during the License Term and for
Insurance Cover a period of not less than three (3) years thereafter, at its sole cost and expense, the
following insurance: (i) commercial general liability insurance with no non-standard
exclusions (including coverage for bodily injury, personal injury, property damage,
casualty loss, errors and omissions, independent contractors and contractual and
trademark liability) with limits of not less than Five Million United States Dollars
(US $5,000,000) per occurrence, Five Million United States Dollars (US $5,000,000)
aggregate; (ii) product liability insurance with limits of not less than Three Million United
States Dollars (US $3,000,000) per occurrence, Three Million United States Dollars (US
$3,000,000) aggregate; and (iii) workers’ compensation with statutory limits and
employers’ liability insurance with limits not less than One Million Dollars ($1,000,000).
b. Following Licensee’s execution of this Agreement, Licensee shall provide Licensor with
certificates of insurance to Licensor evidencing the coverage set forth above, and listing
Licensor as additional insureds to each of the insurance liability policies set forth above.
All policies must include language that, before any proposed cancellation or material
modification in the coverage, the insurance carrier shall give the certificate holder(s) not
less than thirty (30) days prior written notice thereof. Any claims covered by Licensee’s
insurance policies shall not be offset or reduced in any amount whatsoever by any other
insurance which the Licensor Entities may maintain independently.
c. Licensee’s insurance shall be carried by a licensed insurer qualified in either the State of
California, or Licensee’s home jurisdiction, with a rating in accordance with the BEST
Rating Guide of A (or its equivalent) or better. Each policy required hereunder shall be
primary and non-contributory.
19. Subcontractors a. Licensee shall not delegate any of its rights or obligations under this Agreement to any
third party without Licensor’s prior written approval. In the event Licensor approves
Licensee’s engagement of a third party (“Subcontractor”), Licensee shall: (i) remain
obligated under this Agreement for all performance, and liable for all acts and omissions
of the Subcontractor; (ii) require each Subcontractor to agree in writing to comply with
the terms of this Agreement; (iii) require each Subcontractor to agree in writing that
Licensor is an intended third-party beneficiary of its agreement with Licensee; (iv) pay all
amounts due to Subcontractor; and (v) require each Subcontractor to verify that its
employees shall comply with Laws.
b. Licensee shall retain ownership of all intellectual property rights in its Confidential
Information and all intellectual property owned by Licensee prior to the effective date of
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this Agreement, except to the extent such derive from or include the Licensed Property
(collectively the “Licensee IP”). Licensor shall not obtain any rights to any Licensee IP.
c. Except for Licensee IP, Licensee acknowledges that ownership of any and all creative
works created, conceived, produced or reduced to practice during the License Term
relating to the Licensed Articles, Marketing & PR Materials, Packaging, or Licensed
Property including copyrights, trademarks, trade dress or other intellectual property of
any sort, and the goodwill pertaining thereto (“Proprietary Materials”), shall at all times
remain in the name of Licensor. All Proprietary Materials shall constitute “works made
for hire” within the meaning of the Copyright Act of 1976, as amended, and all such
Proprietary Materials shall be deemed transferred and assigned to Licensor promptly
upon creation without any further action by any Party. If third parties who are not
employees of Licensee contribute to the creation of the Proprietary Materials, Licensee
shall obtain from such third parties, prior to commencement of work, a full written
assignment of rights so that all right, title and interest in the Proprietary Materials,
throughout the universe, in perpetuity, shall vest in Licensor, and a waiver of moral rights
by the author(s). If and to the extent any Proprietary Materials are not be considered
“work made for hire” (or such legal principle is not recognized in the Licensed Territory),
Licensee hereby irrevocably assigns and agrees to assign all of its right, title, and interest
in such Proprietary Materials to Licensor and shall take all steps reasonably necessary to
assist Licensor to effectuate such assignment. Licensee hereby waives all rights and
benefits of so-called “moral rights of authors” and any similar rights or principles of laws.
d. Licensee recognizes the unique value of the Licensed Property, its secondary meaning in
the mind of the public, and the goodwill associated therewith. Licensee hereby assigns
and conveys to Licensor all trademarks, service marks, trade dress, copyrights, equities,
goodwill, titles, or other rights in and to the Licensed Property that may have been
obtained by Licensee or that may have vested in Licensee as a result of its activities under
this Agreement. Licensee shall not assert any claim to such goodwill or take any action
that could be detrimental to such goodwill, either during or after the License Term.
Licensee agrees that its use of trademarks owned by Licensor, and the goodwill therein,
inures to Licensor’s benefit.
21. IP Protection a. Licensee shall include all legal lines or legends as Licensor may require, and as may be set
out in a Schedule.
b. Licensee shall not take any action to protect the Proprietary Materials without Licensor’s
prior written approval. Licensee shall also provide any necessary support Licensor may
reasonably request in protecting the Licensed Property, including demonstrating proof of
use, providing necessary samples, etc.
c. Licensee shall promptly advise Licensor of any unauthorized or infringing uses of the
Proprietary Materials about which Licensee becomes aware and assist with any takedown
or removal protocol as Licensor may implement. Should a Subcontractor, Distribution
Channel or other Licensee-related entity be responsible for the unauthorized uses,
Licensee shall immediately terminate arrangements with such entities. Licensor shall have
the sole right to determine whether to take action against any unauthorized uses and shall
control absolutely all infringement litigation brought against third parties involving or
affecting the Licensed Property and Licensor may join Licensee as a party thereto at
Licensor’s expense.
d. Licensee shall not use the Licensed Property as the generic name of the Licensed Article(s).
Notwithstanding any grant of rights hereunder with respect to online/internet
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distribution of the Licensed Article(s), Licensee shall not make use of, nor register for use,
any identifiable element(s) of the Licensed Property (including, but not limited to, title(s),
talent, character or place names, tagline(s), plotline(s), credit(s) and the like) in
conjunction with any domain name(s) or social media handles it may own or control.
e. Licensee shall not at any time, whether before, during or after the License Term, file any
application for the registration of or use of, or oppose any application by Licensor for the
registration of, or otherwise challenge Licensor’s rights in, the Licensed Property or the
Proprietary Materials, or any trade name, trademark or logo that is confusingly similar to
any of Licensor’s trade names, trademarks and logos.
22. Data a. If Licensee collects consumer information (such as name, postal address, email address or
telephone number) in connection with marketing, advertising, promotion or publicity of
the Licensed Articles, Licensee must abide by all applicable Law.
b. On request, and subject to applicable Law, Licensee shall exercise all commercially
reasonable efforts to secure consumer’s permission (in the form of opt-out consent) to
enable Licensor to use such consumer’s information for Licensor’s direct marketing of its
products and services.
23. Warranties / a. Licensee represents and warrants to Licensor that:
Covenants i. it has all necessary legal capacity, right, power, and authority to enter into, execute,
fully perform, and be bound by this Agreement and that the execution and
performance of this Agreement by Licensee of Licensee’s obligations under this
Agreement, do not breach, and shall not result in a breach or violation of, any
agreement to which Licensee is a party or by which Licensee is bound;
ii. it shall ensure that all of the Licensed Article and any associated materials comply
with all applicable Law;
iii. it has or shall obtain all necessary consents, licenses and authorizations and all other
formalities required in connection with the manufacture, distribution, promotion and
sale of the Licensed Article, Marketing & Publicity Materials and Packaging in
accordance with this Agreement (including all required licenses, permits, approvals,
and guild obligations), and that its exercise of rights will not violate any third party
intellectual property rights;
iv. it shall in no way encumber, assign or otherwise hypothecate the License;
v. there is no pending or threatened litigation which may affect the legality, validity or
enforceability of this Agreement or any of the transactions contemplated herein or
Licensee’s ability to perform fully its obligations herein; and
vi. it assumes full responsibility for all acts, omissions and misrepresentations by
Licensee and its subcontractors arising out of or relating to any exercise of the rights
granted under License.
b. Licensor represents and warrants that it owns or controls the rights granted herein, that
it has full power and authority to execute this Agreement and to perform its obligations.
c. The obligations set out in this clause shall survive variation, renewal, termination or expiry
of this Agreement.
24. Indemnification a. Licensee shall defend, indemnify and forever hold harmless the Licensor and Licensor
Entities and each of its and their respective officers, directors, shareholders, employees,
contractors, agents, representatives, assigns and successors-in-interest (collectively,
“Related Parties”) from and against any and all claims, liabilities, penalties, losses, costs,
damages, demands, actions, causes of action, suits, proceedings, judgments and expenses
including amounts paid in settlement, attorneys’ fees, court costs and other legal
expenses (collectively, “Claims”) arising out of, connected with, or relating to: (i) the
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b. Licensor shall at all times indemnify and hold harmless Licensee and its Related Parties
from and against any and all Claims in connection with any third-party claims or suits
arising out (i) Licensee’s use of the Licensed Property in the manner approved hereunder
by Licensor and (ii) of any breach by Licensor of any representation or warranty as set
forth in Section 23 above.
c. Each Party shall give the other prompt written notice and reasonable cooperation relative
to any Claim, including defense thereof. Licensor shall have the option to undertake and
conduct the defense or settlement of any Claim and Licensee shall not settle any Claim
without the prior written consent of Licensor. Both Parties shall act to mitigate any
damage arising out of or related to such claims and/or suits.
d. Any damages that may be awarded under this Agreement shall be limited to any actual
damages suffered. In no event shall either Party be liable for any special, incidental,
consequential, exemplary or punitive damages or indirect losses, or any claim for loss of
profits, lost business or lost business opportunities, even if the other Party has been
advised of the possibility of such damages.
25. Termination & a. This Agreement will automatically terminate on expiration of the Overall Term. Either
Consequences of Party may (without prejudice to its other rights and remedies) terminate this Agreement
Termination with immediate effect by giving the other Party written notification of termination if the
other Party is in breach of any material term of this Agreement that is incapable of
remedy, or if capable of remedy is not remedied within thirty (30) days of notice thereof.
b. The Parties may mutually agree to terminate this Agreement if an incident of force
majeure (e.g., natural disaster, strike, war) affects Licensee’s ability to service this
Agreement for a period of longer than ninety (90) calendar days.
c. The Licensor may in addition (without prejudice to its other rights and remedies)
terminate this Agreement with immediate effect if:
i. Licensee fails to pay amounts due within fifteen (15) business days of payment due
date, and again fails to pay within fifteen (15) business days of receipt of written
notice;
ii. Licensee fails to service, exploit, promote or market the availability of the Licensed
Article(s) to its clients or customers for a continuous one (1) year period;
iii. Licensee’s financial or corporate health or position are adversely affected due to
bankruptcy, reorganization, change in ownership or control, restructuring or
appointment of a receiver or trustee;
iv. the Licensee transfers, disposes of or threatens to transfer or dispose of any part of
its assets, or seeks to assign, transfer or otherwise hypothecate the License;
v. the Licensee is subject to any voluntary or involuntary order of any governmental
agency or regulatory body, involving the recall of any of the Licensed Articles because
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of safety, health or other hazards or risks to the public and fails to take prompt
corrective action;
vi. Licensee, or any Distribution Channel, violates any Law; or
vii. Licensee discontinues its business.
d. Upon expiration or termination of this Agreement however arising, the Licensee shall:
i. immediately cease to use the Licensed Property and refrain from holding itself out as
a licensee or in any way connected with the Licensor;
ii. within twenty (20) days of expiration or termination, return (or destroy, if instructed
by Licensor) all materials bearing or related to the Licensed Property and Licensor’s
Confidential Information, and give written notice to Licensor of compliance with such
instructions;
iii. within thirty (30) days of expiration or termination, provide a final inventory (“Final
Inventory”) of any and all Licensed Articles available as of the date of expiration or
termination;
iv. within thirty (30) days of expiration or termination, provide a final Royalty report and
pay any sums due to the Licensor, including the remaining unpaid balance of any
Minimum Guarantee(s).
e. Licensor shall have the right, upon ten (10) business days’ prior written and during normal
business hours, to enter all premises where remaining inventory is located, to take a
physical inventory to verify the Final Inventory statement or condition of the Final
Inventory set forth in any condition statement.
f. All accrued rights and liabilities of either Party, indemnities granted hereby and all other
provisions of this Agreement that in order to give effect to their meaning need to survive
its termination shall remain in full force and effect after termination or expiration.
26. Confidentiality a. Licensor and Licensee each acknowledge that, in the course of the performance of this
Agreement, it may be a “Receiving Party” as it may obtain confidential information or
materials (collectively “Confidential Information”) from the other party (the “Disclosing
Party”) including the following items related to the Licensor Materials or Licensed
Property: underlying literary material, creative elements, style guides, Marketing & PR
Plan, media plans, story lines, plot lines, story arcs, talent information, research material
and data, specifications, processes, technological developments or other proprietary
materials. The Receiving Party, at all times both during the License Term and thereafter,
shall keep all of the Confidential Information in confidence and trust. The Receiving Party
shall not use the Confidential Information other than as expressly permitted herein
without the Disclosing Party’s consent. The Receiving Party agrees to return to the
Disclosing Party, promptly upon request, any written, printed or other materials
embodying the Confidential Information or materials, including all copies or excerpts
thereof, given to or acquired by the Receiving Party in connection with this Agreement.
The Receiving Party shall not directly or indirectly disclose to the public or to any non-
essential person or entity any of the terms of this Agreement without consent, unless
otherwise required to do so by any law established by any government with applicable
jurisdiction. Licensee agrees that neither it nor any of its respective affiliates, subsidiaries
or Subcontractors will, without the prior written approval of Licensor in each instance (i)
make any use, including in advertising, publicity, promotional materials or otherwise, of
(a) the name of Licensor nor any trade name, trademark, trade device, or service mark
thereof owned by Licensor or (b) any content on the Licensor’s service; or (ii) make any
public statements or issue press releases or similar announcements about Licensor, the
Licensed Property, the Licensed Article(s), or relating to any other provision covered in
this Agreement. Licensee acknowledges that any breach of the foregoing will cause
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irreparable injury to the Licensor and Licensor Entities not readily measurable in monetary
amounts; consequently, Licensor and Licensor Entities, without waiving any other rights
or remedies, shall be entitled to injunctive or declaratory relief in connection with any
breach or threatened breach hereof.
27. Notices a. Any notices or other communication required or permitted to be given shall be in writing
addressed to the respective Party at the address set forth in the introductory Paragraph
hereof and shall be deemed to have been delivered and given for all purposes when
actually delivered. Notice will be deemed effective upon the earlier of actual receipt or
three (3) business days after transmittal. Notices received after 5:00 p.m. (Los Angeles
time), on weekends, or on holidays, shall be deemed to have been received on the next
business day.
c. Notices to Licensee: Unless otherwise directed by Licensee, all notices shall be sent by
email or regular mail to:
28. Miscellaneous a. This Agreement constitutes the entire agreement between the parties, supersedes all
prior and contemporaneous agreements, and cannot be modified except by a written
instrument signed by the Parties.
b. This Agreement may be executed in one or more separate counterparts and by electronic
or facsimile delivery, each of which shall be deemed to be one and the same original
instrument.
c. The failure of any Party to partially or fully exercise any rights or the waiver of any Party
of any breach shall not prevent a subsequent exercise of such right or be deemed a waiver
of any subsequent breach of the same or any other term of this Agreement.
d. The terms of this Agreement are severable, and the invalidity of any term of this
Agreement shall not affect the validity of any other term; provided, however, that if any
term of this Agreement pertaining to the payment of monies to Licensor shall be declared
invalid, illegal, unenforceable, inoperative or otherwise ineffective, Licensor shall have the
right to terminate this Agreement as provided herein.
e. Paragraph and subparagraph headings are for ease of reference only and shall not have
any effect upon the construction of this Agreement. Unless stated or context requires
otherwise: (i) all internal references are to this Agreement, its Parties, and its Schedules;
(ii) all monetary amounts are expressed and, if applicable, payable, in U.S. dollars;
(iii) “days” means calendar days; (iv) “may” means that the applicable Party has a right,
but not a concomitant duty; (v) “notify” means to give notice as provided in (and “notice”
means a notice that complies with) Section 27; (vi) “current” or “currently” means “as of
the Effective Date” but “then-current” means the present time when the applicable right
is exercised or performance is rendered or measured; (vii) lists of examples following
“including”, “e.g.”, “such as”, or “for example” are deemed to include “without
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limitation”; (viii) “or” means “and/or” (i.e., “a or b” is interpreted to mean “a, or b, or both
a and b”); and (ix) a Party’s choices under this Agreement are in its sole discretion,
including any approval rights held by Licensor.
29. Assignment; No a. The Licensor shall be entitled to freely assign or sub-license any of its rights and obligations
Joint Venture under this Agreement to any third party. This Agreement is personal to the Licensee and
the Licensee shall not be entitled to assign delegate, encumber or sub-license any of its
rights and obligations under this Agreement (except to the extent permitted under this
Agreement or any Schedule(s)) to any third party unless it has first obtained the written
consent of the Licensor. Any assignment prohibited hereunder shall be null and void.
NETFLIX
L
CPX INTERNATIONAL, B.V.
DocuSigned by:
Licensee Name: GOOD SMILE COMPANY, INC.
e—DocuSigned by:
oti LielvattAIA,
Signed: _______________________________________ Takanori Aki
Signed: _______________________________________
CR049BFA78E548F... s,—AA788A9E72134FA...
Rob Zimmermann Takanori Aki
Signatory name: ________________________________ Signatory name: ________________________________
Director CEO
Signatory title: _________________________________ Signatory title: _________________________________
February 24, 2020 | 12:10 AM PST February 21, 2020 | 1:26 PM PST
Date signed: ___________________________________ Date signed: ___________________________________
Signed: ________________________________
%,—00A33B392EA04C6...
Tara Sinclair
Signatory name: ________________________________
Global Licensing
Signatory title: _________________________________
February 21, 2020 | 1:45 PM PST
Date signed: ___________________________________
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SCHEDULE(S)
This Schedule(s)-1 is effective as of December 1, 2019 (“Schedule(s) Effective Date”) and is made part of the Master
Merchandising License Agreement dated as of December 1, 2019 (the “Agreement”), between Netflix CPX, LLC and Netflix
CPX International, BV (collectively, “Licensor”) and Good Smile Company, Inc. (“Licensee”). All capitalized terms used but not
defined herein shall have the same meaning as ascribed to such terms in the Agreement.
The Licensed Property does not include any Excluded IP, as defined in Section 1 of the Agreement.
License Term: This Schedule(s) License Term commences as of the Schedule(s): Effective Date and continues
until December 31, 2021, subject to earlier termination.
Sell Off Ninety (90) days commencing immediately upon the expiration of the License Term, subject to
the terms of the Agreement.
Exclusivity: Non-exclusive.
All individual Licensed Articles are subject to Licensor’s prior written approval.
For clarity, and as applicable, the Minimum Guarantee may be cross collateralized by License
Years. Further, if Licensor has granted multiple properties to Licensee under individual
Schedule(s), Licensee may not cross collateralize minimum guarantees across such Schedule(s).
Reporting Schedule: Royalties to be accounted for and paid within thirty (30) days of the Quarter Dates (as set forth
below), and must be reported in the form set forth on Schedule B: Royalty Form via Licensor’s
online system – BrandComply.
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As used herein, the following shall have the meanings set forth here:
• “Net Wholesale Sales” means gross sales (the gross invoice amount billed to customers,
including any wholesalers, distributors, or retailers) for Licensed Article(s), less the
following deductions: (a) sales or value added taxes charged to consumers; and Capped
Deductions.
• “Net Retail Sales” means gross sales (the amount charged to end consumers) for
Licensed Article(s), less the following deductions: (a) sales or value added taxes charged
to consumers; and (b) Capped Deductions.
• “Capped Deductions” means customary trade discounts and actual, documented, and
verifiable volume discounts granted by Licensee in the normal course of business, not
to exceed an amount equal to five percent (10%) of gross sales in any calendar quarter,
and actual returns from retailers, distributors or end consumers of the Licensed Articles
as a result of damaged or defective merchandise, which shall not exceed five percent
(10%) of gross amounts due to Licensor in a calendar quarter. Licensee shall not hold a
reserve against returns.
Total: $200,000.00
Late Fees: Late payments shall bear interest at the rate equal to one and a half percent (1.5%) per month.
License Territory(ies): Worldwide, but specifically excluding China, Crimea, Iran, North Korea, Russia, and Syria, and any
other territory where distribution or sale of the Licensed Articles is prohibited or restricted by
Law.
License Language(s): Licensed Articles shall use English language on packaging, descriptions, etc.
Licensee shall submit a list of specific retail partners through which it intends to distribute the
Licensed Articles; approval by email is acceptable for additional Distribution Channels.
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All Minimum Retail Doors shall have dedicated retail space for the Licensed Property including
but not limited to shop in shops, signage, fixtures, fittings, details of which will be included in the
annual Marketing & PR Plan.
Marketing & PR Plan; Licensee shall market, promote, and advertise the Licensed Articles, Licensed Property, and
Marketing Commitment Licensor service in a manner, form, and media approved by Licensor. Licensee shall commit to a
mutually agreed upon percentage of Net Wholesale Sales to market, promote and advertise the
Licensed Articles. Licensee shall outline its specific marketing activities, from trade, retail slotting,
paid media spends, etc., in the Marketing & PR Plan, as required under Section 13 of the
Agreement.
Approval: All materials for approval pursuant to the Agreement shall be sent through Licensor’s compliance
system, BrandComply.
Samples: Twelve (12) number of final production samples of the Licensed Articles;
One (1) digital copy of the Licensed Article; and
One (1) digital copy of Marketing & PR Materials and Packaging.
Legal Notice: The following must permanently appear on all Licensed Article:
INSERT TITLE ©/™ Netflix, Inc. [insert distribution year]; and
Any applicable billing blocks or talent credits as may be provided by Licensor.
NETFLIX CPX, LLC f .—DocuSi ned Licensee Name: GOOD SMILE COMPANY, INC.
f --DocuSigned by:
Signed: ________________________________
C0A33B392EA04C6
Takanori Aki
Signed: ________________________________
AA788A9E72134 FA...
Tara Sinclair Takanori Aki
Signatory name: ________________________________ Signatory name: ________________________________
Global Licensing CEO
Signatory title: _________________________________ Signatory title: _________________________________
rbl4 ioolt,1114ictVuln,
Signed: ________________________________
CF049BFA78E548F...
Rob Zimmermann
Signatory name: ________________________________
Director
Signatory title: _________________________________
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Al X A *Transaction Type
A B 0
Channel Re al Rate a Curre Price Units Gross Sales Discounts and Allowances Elgr,MMEITTMITI Be.. MI Period ear Rate Factor Rate Factor Justification
.Nature of the A given geographical A retail channel where The percentage of A designation for which A designation of The price The number of The total Discounts and Allowances Stock Keeping A description of Quarter during which Year during Should be entered as 1 Should be entered as 1
transaction, either region on the globe. licensed products are sales price or per unit rate type applies to the which global the good units against gross sales to be subtracted from the Unit. the product. transaction took place. which unless you area licensee with unless you area licensee with
a Sale, a Return, sold. (see Possible charge that is due to products reported. currency was was sold at. which you against which gross sales amount. Should be provided as the transaction a Rate Factor rate. Rate factor a Rate Factor rate. Enter the
or a Credit Values tab on Sample the Property owner for Examples: FOB, Retail utilized for the Examples: mist pay royalties must quarter code (Ex: Q1, Q2, took place. should be entered as the complete calculation used to
Report for reference) usage of the Property. sales item in 6.2575, royalties per be reported. Q3, Q4). Should be percentage of the total product arrive at the rate factor.
Please indicate in question. Must 5.0000. the terms of Examples: provided as subject to the royalty rate.
...** format. I.e. - be specified as the contract. 100.00, the four Entered as decimal. I.e., .235
A 10% royalty would the three letter Examples: 253.50 digit year. for 23.5%.
be entered as 10.000. ISO code. 100, 30.
Examples: USD,
EUR.
3
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EXHIBIT C
QUALITY AND STANDARD REQUIREMENTS / TESTING REQUIREMENTS
1. The Licensed Article shall be of high quality in design, material and workmanship and suitable for the purpose intended. Licensee shall not
offer for sale, advertise, promote, distribute, or use for any purpose any Licensed Article or packaging that are damaged, defective, seconds,
or that otherwise fail to meet the specifications or quality requirements set forth in this Exhibit C or deviate in type or quality from the
products which have been approved in writing by Licensor. Licensee shall fully correct and remedy any deficiencies in its use of the Licensed
Property or the quality of the Licensed Article and any materials bearing the Licensed Property at its own expense.
2. The Licensed Article are to be manufactured and sold by Licensee pursuant to this Agreement and in strict compliance with all applicable
federal, state and local laws and regulations, and all industry standards and regulations. On a periodic basis, Licensee may be required to
provide documentation of such compliance.
3. Licensee must include any warnings, labels, ingredient or materials lists, or other similar disclosures required under the greater of Law or
best industry standards. The Licensed Articles will provide use and care instructions that are useful, understandable, and accurate.
4. The Licensed Articles will not cause harm when used as instructed and with ordinary care for their intended purpose. All Licensed Articles
shall be made of non-toxic and non-allergenic material and shall not contain small items or breakable pieces that could be injurious to
children. No injurious, deleterious or toxic substances will be used in or on the Licensed Articles.
5. Testing: Licensee shall comply with testing or certification requirements imposed by Law or best industry practice. Testing shall be
conducted by laboratories certified under the applicable regulatory or governing body. Licensee shall submit to Licensor its plan for testing
the Licensed Articles, and, after testing, shall certify to Licensor that such tests yielded the required standards. Licensee shall submit any
required certifications to the applicable governing or regulatory body in the Licensed Territory. Licensee shall at all times during the Overall
Term, and for a period of five (5) years afterward, maintain and make available to Licensor the actual records of such tests in order for
Licensor to verify the manner in which such tests were conducted and the results that were obtained. If any tests indicate that the Licensed
Article(s) (or Packaging) are defective or non-compliant, then Licensee shall: (i) take promptly any required corrective action to cure such
defect or failure to comply; and (ii) retest the applicable Licensed Article(s) prior to any distribution of such Licensed Article(s) to the public.
Thereafter, Licensee promptly shall submit the results of such retest to Licensor for review.
6. Forced Labor and Trafficking: Licensee, on its own behalf and on behalf of its subcontractors, will not do business with third parties that use
forced labor, prison labor, indentured labor or bonded labor, or permit their suppliers or subcontractors to do so. Employees shall not be
subject to any forms of coercion, fraud, deception, or giving up control of their person to another for the purpose of such exploitation.
Employees shall maintain possession or have control of personal identity and travel documents. Employees’ freedom of movement shall
not be restricted, nor shall employees be prevented from terminating employment.
7. Child Labor: Licensee, on its own behalf and on behalf of its subcontractors, will not purchase, distribute, or utilize in any other manner
products or components thereof manufactured by persons younger than 15 years of age or younger than the age of completing compulsory
education in the country of manufacture where such age is higher than 15.
8. Harassment or Abuse: Licensee and its subcontractors must treat their employees with respect and dignity. No employee shall be subject
to physical, sexual or psychological harassment or abuse.
9. Nondiscrimination: Licensee and its subcontractors shall not subject any person to discrimination in employment, including hiring, salary,
benefits, advancement, discipline, termination or retirement, on the basis of gender, race, religion, age, disability, sexual orientation,
nationality, political opinion, or social or ethnic origin.
10. Health and Safety: Licensee and its subcontractors shall provide a safe and healthy working environment to prevent accidents and injury to
health arising out of, linked with, or occurring as part of work or as a result of the operation of employer facilities. Licensee and its
subcontractors must fully comply with all applicable workplace conditions, safety and environmental Laws.
11. Environmental Sustainability: Licensee and its subcontractors shall comply with all applicable legal environmental requirements and shall
make sure that it obtains, keeps current, and follows the reporting guidelines of all the required environmental permits and registrations to
be at any time legally compliant. All the applicable laws and regulations related to hazardous materials, chemicals and substances shall be
strictly followed. Prior to discharge or disposal, supplier shall characterize and treat wastewater and solid waste appropriately and according
to applicable laws and regulations.
12. Freedom of Association: Licensee and its subcontractors shall recognize and respect the right of employees to freely associate in accordance
with the laws of the countries in which they are employed.
13. Wages and Benefits: Licensee and its subcontractors recognize that wages are essential to meeting employees’ basic needs. Licensee and
its subcontractors shall pay employees at least the minimum wage required by local law regardless of whether they pay by the piece or by
the hour and shall provide legally mandated benefits.
14. Work Hours: Licensee and its subcontractors shall not require their employees to work more than the limits on regular and overtime hours
allowed by the law of the country of manufacture. Except under extraordinary business circumstances, such employees shall be entitled to
no less than one day off in every seven-day period. Licensee and its subcontractors must inform their workers at the time of their hiring if
mandatory overtime is a condition of their employment. Licensee and its subcontractors shall not compel their workers to work excessive
overtime hours.
15. Overtime Compensation: Licensee’s and its subcontractors’ employees shall be compensated for overtime hours and such premium rate as
is legally required in the country of manufacture or, in countries where such laws do not exist, at a rate at least equal to their regular hourly
compensation rate.
16. Legal and Ethical Business Practices: Licensee and its subcontractors must fully comply with all applicable local, state, federal, national and
international laws, rules and regulations including, but not limited to, those relating to wages, hours, labor, health and safety, and
immigration. Licensee and its subcontractors must be ethical in their business practices.
17. Penalties: Licensor reserves the right to terminate its business relationship with Licensee and or any of its subcontractors who violates the
requirements of this Agreement, including these Quality and Standard Requirements. Licensor reserves the right to terminate this
Agreement if Licensee or its subcontractors fail to provide written confirmation to Licensor that Licensee and/or its subcontractors have a
program in place to monitor Licensee’s and its subcontractors’ suppliers and subcontractors for compliance with these Quality and Standard
Requirements.
DocuSign Envelope ID: BE63923C-E93C-44E5-AB9B-ECB795BEE523
Exhibit D:
FORM OF THIRD-PARTY SUBCONTRACTOR’S AGREEMENT
“Licensee” [_____________________]
Licensed Property
Manufactured Products
Territory of Manufacture
Territory of Shipment
In order to induce Licensor to consent to the manufacture of the Manufactured Products by the undersigned for the Licensee and notwithstanding
the terms of any Agreement between Licensee and Third-Party Subcontractor, Third Party Subcontractor agrees that:
1. Third Party Subcontractor shall not manufacture the Manufactured Products to the order of anyone but the Licensee, shall invoice only the
Licensee and shall not ship to anyone other than the Licensee or Licensee’s customers.
2. Third Party Subcontractor shall not subcontract production of the Manufactured Products or components that contain the Licensed Property
without the prior written consent of Licensor.
3. Third Party Subcontractor shall not without the prior written consent of Licensor manufacture merchandise utilizing any of the copyrighted
material or trademarks owned by Licensor other than the Manufactured Products.
4. Third Party Subcontractor shall permit the authorized representative of Licensor to inspect its activities and premises, books of account and
invoices relevant to the manufacture and supply of the Manufactured Products.
5. Third Party Subcontractor shall not publish or cause the publication of pictures of the Manufactured Products in any publication or promotional
material, nor publicize in any way the fact that it is permitted to manufacture the Manufactured Products.
6. Third Party Subcontractor shall not take any action anticipated to harm or adversely affect Licensor’s rights or related goodwill in the Licensed
Property, nor shall it challenge the validity of or Licensor’s ownership of the Licensed Property, either during the term of this Third-Party
Subcontractor’s Agreement or thereafter.
7. Third Party Subcontractor shall not use any name or mark, other than those included in the Licensed Property that is identical to or confusingly
similar to any name or mark included in the Licensed Property in the manufacture, distribution, sale or advertisement of any goods or services.
8. Third Party Subcontractor shall not register or use in any country any name or mark identical to or confusingly similar to any name or mark
included in the Licensed Property.
9. Upon the Expiration Date, or upon notification by Licensor, Third Party Subcontractor shall immediately cease manufacturing the Manufactured
Products and deliver to Licensor or its authorized representative evidence that the Licensed Property has been removed from any molds, plates
or other devices used to produce the Manufactured Products, or in the event removal is not practical or effective, that such molds or plates have
been destroyed.
10. Third Party Subcontractor shall not manufacture or permit the manufacture of Manufactured Products in whole or in any part, using child or slave
labor or, otherwise, in any manner repugnant to basic human rights. Third Party Subcontractor warrants that the Manufactured Products are in
compliance with all applicable laws, regulations, and other statutory instruments in the Territory of Shipment, including product safety legislation.
6 I hereby certify that I am employed in the office of a member of the bar of this court at
whose direction the service was made.
7
I further certify that on September 1, 2021, I caused to be served the copies of the attached:
8
CROSS-COMPLAINT OF JAMES YOUNGSUK KIM, GUY BRAND, MF, INC. AND
9 IMAGINARY PEOPLE, INC.; DEMAND FOR JURY TRIAL FOR:
1. Retaliation in Violation of FEHA and public policy;
10 2. Hostile Work Environment in Violation of FEHA and public policy
3. Failure to Investigate Discrimination in Violation of FEHA
11 4. Retaliation in Violation of Labor Code and public policy
5. Retaliation in Violation of California and Federal False Claims Act and public policy
12 6. Declaratory Relief
13 7. Breach of Contract
8. Breach of the Covenant of Good Faith and Fair Dealing
14 9. Intentional Interference with Prospective Economic Advantage
10. Breach of Contract
15 11. Conversion
on the parties in said action as follows:
16
BY REGULAR MAIL: by placing a true copy thereof enclosed in a sealed envelope
17 with postage thereon fully prepaid, for collection and mailing at my place of business
following ordinary business practices. Said document(s) will be deposited with United
18 States Post Office mail box at Burbank, California, addressed as follows:
19 SEE ATTACHED SERVICE LIST
20 BY ELECTRONIC MAIL: On the above-mentioned date, from Burbank, California, I
caused each such document to be transmitted electronically to the party(ies) at the e-mail
21 address(es) indicated on the attached Service List. To the best of my knowledge, the
transmission was reported as complete, and no error was reported that the electronic
22 transmission was not completed.
23 (State) I declare under penalty of perjury under the laws of the State of California that the
foregoing is true and correct.
24
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1 SERVICE LIST
Good Smile Connect, LLC v. Imaginary People, Inc., et al.
2 LASC Case No.: 20STCV44737
3
Todd Lander Attorneys for Plaintiff
4 Jeffrey S. Goodfried
FREEMAN FREEMAN & SMILEY LLP
5 1888 Century Park East, Suite 1500
Los Angeles, CA 90067
6 T: (310) 255-6100
todd.lander@ffslaw.com
7 jeffrey.goodfried@ffslaw.com
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