Silvers v. Google, Inc.

Filing 120

MOTION by Stelor Productions, LLC for protective order as to privileged communications with Steven Silvers , and for reconsideration of [118-1] order granting [92-1] motion to compel privilege log from Google Inc. (hd, Deputy Clerk)

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Case 9:05-cv-80387-KLR Document 120 Entered on FLSD Docket 09/18/2006 Page 1 of 30 UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF FLORID A CASE NO . 05-80387 CIV RYSKAMP/VITUNA C STEVEN A . SILVERS, an individual . Plaintiff , V. GOOGLE INC ., a Delaware corporation, r..r,E' W4DDOX Defendant . IA GOOGLE INC ., a Delaware corporation , Counterclaimant , V. STEVEN A . SILVERS , an individual ; STELOR PRODUCTIONS, INC ., a Delaware Corporation ; STELOR PRODUCTIONS, LLC, a Delaware limited liability company, and STEVEN ESRIG, an individual , Counterdefendants . STELOR PRODUCTIONS, LLC'S MOTION FOR PROTECTIVE ORDER AS TO PRIVILEGED COMMUNICATIONS WITH STEVEN SILVERS AN D RECONSIDERATION ON THAT BASIS OF SEPTEMBER 11, 2006 ORDER GRANTING GOOGLE INC'S MOTION TO COMPE L Stelor Productions, LLC ("Stelor") hereby moves on the following grounds for entry of an order preventing Google from obtaining production of privileged communications including emails between Stelor and Steven Silvers . For that reason as well, Stelor asks for reconsideration of the Court's September 11, 2006 Order Granting Google Inc,s Motion t o BIJRLIN(iroN - Sc ' FIw iuu · KAPI .,N (&) Bi .oNShv. P A 'SHI)RI` . D RI\'1' hll :\\II . I' LO I,IU\ 33I1 .1 (1LII(I- IN IlIL 6RO\1 . PI .. THUI'I z6,),) Sul III BA\ T : 3n5 .KcK ." 4oo I' : ;c) ; .K ;S c26l [\IAII IV R) Il IISKHI- - 1-011 \\\ \V IISRHI_\\\ CI1\I 777 Case 9:05-cv-80387-KLR Document 120 Entered on FLSD Docket 09/18/2006 Page 2 of 30 Compel (DE # 118), which orders Mr . Silvers to produce these documents that Stelor claims ar e privileged . Introduction Google seeks production from Stelor of privileged communications with Steven Silvers , including emails . The communications concern the protection of the Googles Trademark and the related intellectual property rights covered by the License Agreement between Stelor and Silvers . Among other issues, the communications address potential actions and strategies - including possible litigation -- to protect those rights . These are communications between a licensor and licensee, and also pursuant to an express written joint privilege agreement, addressing how best to protect their legal rights in the intellectual property in which they share a common interest . As such, the communications are privileged and protected by the work-product doctrine . Google should not be permitted to discover them . Background Silvers is the licensor of the "Googles" trademarks implicated in this litigation, and Stelo r is the licensor . A copy of the License, Distribution and Manufacturing Agreement ("License Agreement") between Stelor and Silvers is attached hereto as Exhibit A . The License Agreement expressly addresses the protection of the intellectual property . See Articles VIII and X1 . Protection of that intellectual property is clearly an important component of the Agreement, and has been a priority for both Stelor and Silvers . In addition to the License Agreement, Silvers and Stelor entered into a Consulting Agreement (Attached at Exhibit B hereto) . The Consulting Agreement, among other provisions , BI RLIN iION · SCHwILP · K,wi .,AN 011X1- (&) BI .ONSKY, P.A. IN rnL : Gu(>\F PENFiio ( NF 2 6uU Sot III B .\YSIIORF I)kne T : 3u ; .8 ;8 .' uoo I : 3u ; . 8 ;8 . ; 2 6 1 F.NI .\I I I N PU 0 RSKI31 _ \\V CU NI \'.\%W DSIQ3LAN ( uM Nit \\u . I'LoRMA 331 ;3 Case 9:05-cv-80387-KLR Document 120 Entered on FLSD Docket 09/18/2006 Page 3 of 30 addressed Silvers' role "maintain[ing] any intellectual property right under this Agreement or the License . Distribution and Manufacturing Agreement (as amended) between the Company and Consultant ." (Id . at ~ 3 .a .) The Consulting Agreement also requires Silvers to keep confidential and proprietary information secret during the course of the agreement and for two years after termination . (Ii. at 6 .a . ) In September 2004, Stelor and Silvers also entered into a written Joint Privilege Agreement (Exhibit "C" hereto) . The purpose of that Joint Privilege Agreement, among other things, was to ensure that communications between Stelor and Silvers related to enforcement of the intellectual property rights remained privileged and protected from disclosure . That was important because of trademark cancellation proceedings involving Google, which had already been brought at that time before the Trademark Trial and Appeal Board . Thus, the agreement acknowledged that Stelor and Silvers have a "common business interest in the conduct and progress of the TTAB Proceedings, the UDRP Proceedings, and the Potential Litigation and in other matters related to the resolution of the dispute with Google concerning the competing claims of right to register and use the Googles Marks and the Google Marks ." (A/ . at 2 .) The Joint Privilege Agreement further provides as follows : It is the desire, intention, and common understanding of counsel for the Parties (a) that the exchange of Privileged Materials is not intended to, and shall not, waive or diminish in any way the confidentiality of such materials or their continue d protection under the attorney-client privilege, the work product doctrine, and/or any other applicable privilege or protection and (b) that all Privileged Materials exchanged hereunder shall, to the extent that they are entitled to protection under the attorney-client privilege, the work product doctrine, and/or any other applicable privilege or protection, remain entitled to such protection under the joint defense doctrine despite the disclosure hereunder to on of the other Parties . 3 BUIU .lNriroN ( FI-I(I · Sc HwIGP· K,vwi .,a\ (&) BI .ONSKY, PA ; 313 3 IN Till (i RO\T PLti IHOUSI . 2 644 soul II BA\SHORI . I)Rf\L ~i'Of\MMI . FLORIDA To 30'i-858-2Q00 F : 30 s -85,8-i26 1 F .NI .\I I . INFO W HSKI3IA\V(ONI \'. V'.V BS KBL4gV I 0 NI Case 9:05-cv-80387-KLR Document 120 Entered on FLSD Docket 09/18/2006 Page 4 of 30 Id . at 3 . The agreement provides that it shall remain operative even "if adversity subsequently should arise or be claimed between or among any of the Parties ." Id. at 4 . A party may withdraw from this agreement only on notice to counsel, id. at 4, and is obligated, in that case, to return or destroy privileged materials received form the other party . Id. at 3 . Any withdrawal of the Joint Privilege Agreement is "solely on a prospective basis and such Party shall continue to he subject to the terms of this Agreement ." Id . at 3 . The parties are also obligated to "assert, and to take all reasonable steps to permit and facilitate the assertion and preservation of, all applicable privileges and protections with regard to the Privileged Materials and [the] Agreement in the appropriate forums ." Id. at 4 . Pursuant to these agreements, Silvers and Stelor had various communications covered by the work product doctrine and the attorney client privilege . Google's request for production of all communications between Stelor and Silvers, including their emails, intrudes on thes e privileges and should not be permitted . A privilege log, which is general in nature due to the volume of the documents, is attached hereto as Exhibit D . Argument The documents Google seeks include protected work product and/or attorney-client communications made pursuant to the License Agreement, the Consulting Agreement and/or the .Joint Privilege Agreement . Therefore, Stelor respectfully requests that this Court enter a protective order prohibiting disclosure of privileged documents by Stelor or Silvers . Stelor and Silvers had three agreements confirming the confidentiality and privileged nature of this work product . As described above, these agreements comprehensively address the protection of the covered intellectual property, and confirm the privileged nature of the parties ' 4 BVRI .IN(ilON · Scliwylh:P · 1{APLAN (&) BI .ONsKY, PA. OFFING IN IHF- (TROVE PLNTH O JSF 2(O') So(-m B .a)'sHUHr I)RI\L viIA\11, IIORIO\ 33H O I : 305 .858 .2800 F : 3 05 .858 .526 1 L\IAII INHI(/ HSKHLAWCONI WNU HSKHI :\\\ C ONI Case 9:05-cv-80387-KLR Document 120 Entered on FLSD Docket 09/18/2006 Page 5 of 30 communications related to the issue of the property's protection . Because of this highly detailed, and scrupulously documented, relationship between Silvers and Stelor, any work product exchanged in the emails is protected from discovery . Federal Rules of Civil Procedure, Rule 26(b)(3) provides as follows : a party may obtain discovery of documents and tangible things otherwise discoverable under Subdivision (b)(1) of this rule and prepared in anticipation of litigation or for trial by or for another party or by or for that other par ty 's representative (including the other party's attorney, consultant , surety, indemnitor, insurer, or agent ) only upon a showing that the party seeking discovery has substantial need of the materials in the preparation of the party's case and that the party is unable without undue hardship to obtain the substantial equivalent of the materials by other means . In ordering such discovery of such materials when the required showing has been made, the court shall protect against disclosure of the mental impressions, conclusions, opinions, or legal theories of an attorney or other representative of a party concerning the litigation . M . (emphasis added . ) Any emails prepared in anticipation of litigation are, therefore, protected by the work product doctrine . See Rule 26(b)(3) . Furthermore, discussions about litigation would necessarily entail the mental impressions of Stelor's employees and Silvers . As noted in Lott v . Seaboard Systems Railroad, Inc., 109 F .R .D . 554, 557 (S .D . Ga . 1985), the material need not be prepared by an attorney since Rule 26(b)(3) expressly extends protection to materials prepared by or for a representative of a party, including his agent ." See also Harden i' . Acaclian Gas Pipeline System, 173 F .R .D . 429 (E .D . La . 1997) (applying the work product protection to employees of a corporation . ) In Doe v . Aulauga County Board of'Education v . Doe, No . 2 :04-CV-1 155-F, 2006 WL 1223831 (M .D . Ala . May 5, 2006), the court held that a letter written by a school principal to the superintendent of the school system was protected by the work product doctrine because i t 5 BURLINGTON " SciIWIrP · 1{AYI .AN (&) BI .ONSKY, PA . ()FF7(F IN rIIG GRO\F: P[ :NIHOLKI .. 20yU Sold 11 n :\) SIIORI- 1) RIVE f\-11\nu . FIORFU-\ 331 ; T : 3n5 .}{i}{ .'yuo F : 3u 5 .858 .s26 1 F.M :\II INFOW' HSIHI .\WCO\I HSKBL4\\'(_ONI . Case 9:05-cv-80387-KLR Document 120 Entered on FLSD Docket 09/18/2006 Page 6 of 30 appeared to the cou rt that the letter in question was prepared by a party or its agent in anticipation of litigation , and not in the ordinary course of business ." Id . at *1 . Likewise, in FDIC v . Cherry . Bekaert & Rolland, 131 F .R .D . 596 (M .D . Fla . 1990), the court held that personal work papers created by the FDIC investigator were protected from discovery by the work product doctrine . And in Briggs & Stratton ('orp ., v. Concrete Sales and Services, 174 F .R .D . 506, 508 ( M .D . Ga . 1997 ), the court stated , " the materials need not be prepared by an attorney, however : work product protection extends to materials prepared by or for a representative of a pa rt y including his agent or consultants so long as they are prepared in anticipation of litigation ." In Briggs & Stratton , the court applied the work product protection to work performed by environmental consultants . Pursuant to these authorities , communication between Stelor ' s employees and Silvers is privileged insofar as they constitute work product . Silvers worked as a consultant under the License Agreement, the Consulting Agreement, and the Joint P ri vilege Agreement for the express purpose of enforcing and perfecting the rights to the intellectual property in the Googles name . These agreements created and confirm Silver ' s role in defending the intellectual prope rt y for the benefit of Stelor as the Licensee . See, e.g., Arkansas State Police Association, Inc . v . C omnnrissioner of'Internal Revenue, 282 F .3d 556, 559 ( 8(h Or . 2002 ) ( holding that license agreement created agency relationship) . See also Myers v . holiday Inns, Inc., No . 87-2438, 1987 WL 16887 ( E .D . Pa . September 9, 1987 ) ( same) . The c-mails are also privileged because there was a common interest between Silvers and Stelor to protect the marks -- both as a matter of common law and by virtue of the Joint Privilege Agreement . Where the part ies have a common interest in litigation , they and their attorneys ar e 6 BVRLINu1 0 N · SCHwiI-P · "'1 .,4N (&) BLONSKY, P. A . OLIICF I\ III[ (i RU1.1- N',TIIOFSE- _bqq SOL1H B\YSIIOR[ I)RI\I MIAMI . 1-IOKID :\ 331 ; } T : 315 .85 8 . : oo F : 30 ; .RS .i'G 1 LMA11 . INH )Y (/ BS1H1 .U\'CIlN1 N\%M H9.HIAN CUM Case 9:05-cv-80387-KLR Document 120 Entered on FLSD Docket 09/18/2006 Page 7 of 30 free to pool information and resources without waiving the work product and attorney client privilege. See In re LTI'Securities Litig ., 89 F .R .D . 595, 604 (N .D . Tex . 1981) (citing Wilson P. .4braharn Constr . Corp . v. .-lrmco Steel C'orp ., 559 F .2d 250, 253 (5t11 Cir . 1977)) .1 The common interest privilege "enables litigants who share unified interest to exchange . . . privileged information to adequately prepare their cases without losing the protection afforded by the privilege ." See Visual Scene, Inc . v. Pilkington Bros ., PLC, 508 So . 2d 437, 440 (Fla . 3d DCA 1987) the common interest privilege relates not only to attorney/client materials, . . . but also to an attorney's work product"), see also Tvne v . Time Warner Entertainment Co ., 212 F .R .D . 596, 600 (M .D . Fla . 2002) (holding that disclosing privilege information to those with common legal interest "does not constitute a waiver of privilege .") The Joint Privilege Agreement buttresses this common interest privilege . See Old Tampa Bat' Enterprises, inc . v. General Electric Co ., 745 So . 2d 517, 518 (Fla . 3d DCA 1999) (enforcing joint defense agreement) . ` I in Bonner v. City o f Prichard, 661 F .2d 1206 (1 111' Cir . 1981) ( en boric ), the Eleventh Circuit Court of Appeals adopted as precedent all decisions of the former Fifth Circuit Court of Appeals decided prior to October 1, 1981 . 2 Google may argue that any privilege has been waived because Silvers has taken the position that the License Agreement and other agreements have been terminated . Of course, no judicial determination has been made as to termination, and it is not a matter for Google to decree . Stelor disputes that the License Agreement was properly terminated, and Stelor maintains that its rights continue under the License Agreement, as well as under the Consulting Agreement and the Joint Privilege Agreement . In any event, the termination of even a joint privilege agreement does not waive the attorney client privilege and work product doctrine . See In re LTV Securities Litig ., 89 F .R .D . at 604 (holding that a potential controversy between co-litigants did not undermine the common defense privilege) and Old Tampa Bad' Enterprises, Inc ., 745 So . 2d at 5 1 8 (where parties to a joint defense agreement become adverse, order should be issued to prevent disclosure of "confidences gained through the agreement regarding defenses held in common .") The Joint Privilege Agreement expressly provides that it any withdrawal from it is prospective only, and that the Joint Privilege Agreement remains effective in the event of adversity between th e parties . (Ex . C at 3 and 4 .) 7 BHR.INGIoN I · SCHWIrP· K,ari .,AN (&) BILONSKY, PA 0 1-11(1 IN I HI- (i Rl)\'L PF.NTHUL'SF 26 .(4 Sm Iii [3 :\\SHORF. DRI%F MI \\tl . I II)RII) 3 3133 I : 3l i .~SI{ ._yUU F : 31)S .858 .526 1 F\\iL I N FIYN BSKHIA\Vl'l)N1 Nl\\V IISKI3 LAR ('1)M Case 9:05-cv-80387-KLR Document 120 Entered on FLSD Docket 09/18/2006 Page 8 of 30 Disclosing work-product and attorney-client communications contained in these communications between Stelor and Silvers would violate the work product doctrine and the attorney-client privilege and should he prohibited . Conclusion Because Google seeks privileged communications exchanged between Silvers and Stelor, Stelor respectfully requests issuance of a protective order prohibiting production of these documents . Respectfully submitted , BURLINGTON, SCHWIEP, KAPLAN & BLONSKY, P .A . Counsel for STELOR PRODUCTIONS, LLC , 2699 South Bayshore Drive, Penthouse Miami, Florida 3313 3 Tel : 305-858-2900 Fax : 305-858-526 1 Email : kka n ~i bskhlaw .co m By : /s/ Kev i Ia n Florida Bar No . 933848 David J . Zac k Florida Bar No . 641685 8 BVRI .INOTON · SC'H WIF.P · KAPLAN OFii L IN IHF (IKI\L B I .O NSKY . P A PLKIHM tiI _6,),) Sol 111 RA\SHC)KF. DRI\L M14\II, IIIIRID :\ 31 3 T :305 .858 .2901) F :3os .8 ;s .s,6 i I-.\IAI1 . INFO It BSKHI :\ ( (I\I \\'NNVBSKHI A\\((1\I Case 9:05-cv-80387-KLR Document 120 Entered on FLSD Docket 09/18/2006 Page 9 of 30 CERTIFICATE OF SERVICE AND CONFERENC E I HEREBY CERTIFY that a true copy of the foregoing was served via email and United States Mail on this 15th day of September, 2006 upon the following : Steven A . Silvers, pro se Suite 202 - PMB 203 8983 Okeechobee Boulevard West Palm Beach, Florida 3341 1 Tel : 954-4445-678 8 Fax : 561-784-9959 vv ru e(.~i hotma il . co m Ramsey Al-Salam, Esq . William C . Rava, Esq . PERKINS COIE LLP Suite 4800 1201 Third Avenu e Seattle, Washington 98101-3099 RAlsalam(a perkln scole .co m Jan Douglas Atlas, Esq . ADORNO & YOSS LLP Suite 170 0 Johanna Calabria, Esq . PERKINS COLE LLP Suite 240 0 Four Embarcadero Center San Francisco , CA 9411 1 E-mail : Calabria cr. _ erkinsco lc .co m 350 East Las Olas Boulevard Fort Lauderdale, Florida 33301 I further certify that pursuant to Local Rules 7 .1 .A .3 I conferred in good faith with opposing counsel to resolve the issues set forth in this motion and was unable to resolve such issues . /s / 9 13 LIKI .IN (;TON · SC' HwIGP · MI-I( I IN 111e GKO\ r KAI'I . AN BI .()NSKY, P A PEN IH (nsr 26uu S0I'JH 13\'SHOKF UKIIr NliAMi . FIORID,\ 3313 ; 1 : 1 0 5 . 8 5 8 .'4uu F : 3( K .85 K . ; :(1 1 I-,N1\11 IN I UrN HSKHI . \ ( UM N\\%% BSKBL\\\ (OMM Case 9:05-cv-80387-KLR Document 120 Entered on FLSD Docket 09/18/2006 Page 10 of 30 LICENSE, DISTRIBUTIO N AND -MANUFACTURING AGREEMENT This LICENSE, DISTRIBUTION AND MANUFACTURING AGREEMENT between Steven A . Silvers and . Stelor-Productions, Inc. is effecti ve as of June 1, 2002 and is entered into by and between Steven A. Silvers (LICENSOR), an Individual, whose official address is 3741 NE 163nd Street, PMB -#325,' North Miami Beach, FL 33160 and'StelorProduetions , Inc. (LICENSEE), is Delaware c6rporation with its current offices located at : 14701 Moektngbird Drive, Datnestown , Maryland, 20874 . WTTNFSSETH . WHEREAS, LICENSOR is the sole and exclusive owner of the GOOGLES characters identified more fully in "Schedule A" attached hereto (the "Licensed Property") ; WHLrRP.AS, LICENSOR is the sole and exclusive ' owner of the GOOGLES trademarks identified more fully in "Schedule A" attached hereto (the 'Licensed Trademarks") ; WHEREAS, LICENSOR has the power and agthorlty to grant to LICENSEE the .light, privilege and license to use , manufacture, distribute, and sell those types of products that incorporate or in otherwise based on the Licensed Property as identified in "Schedule A" attached hereto (the "Licensed Products") and to use the Licensed Trademarks on or in association with such Licensed Products; WHEREAS, LICENSEE has or will have the ability to manufacture, have manufactured, have submanufactured , distribute and sell or have add and distributed the Licensed Products in'the .Liocnaed Territory more clearly defined in Schedule A (the Territory) and to use the Trademark(s) on or .in association with the licensed Products; WHEREAS, LICENSEE desires to o'btain from LICENSOR an exclusive license to use, ·manufacture, have `manufactured and sell Incensed Products in the Territory and to use the'Licensed Trademarks on or'in association with the Licensed'Products; WHEREAS, LICENSEE . has agreed, pursuant to a* letter agreement, . to ace as a consultant far LICENSOR ; 'en d NOW, THEREFORE, in consideration of the promises and agreements set forth herein, the parties, each intendingto be legally bound. hereby, do hereby agree as follows: L NSE K UN .· A - LICENSOR hereby grants to LICENSEE, for the Term of this Agreement as-recited in "Schedule A" attached hereto, the exclusive (even as-to LICENSOR), worldwide , sub licensable right and license to use, reproduce , modify, create deri vative works. of, manufacture , have manufactured, market, advertise , sell, dis tribute, display, perform , and otherwise commercialize the Licensed Products and Licensed Proper ti es in the Territory . The license includes a license under any and all intellectual property rights and interests therein, including by way of explanati on, products which deal with the crea ti ve characters known as The Googles, anything that contains the letters GOO (in upper or lower case) together with any and all products, which comp ri se and which will compri se those characters, likenesses, which include Iggle, Oogle, Oggle, Gooroo, Goo ti an(s), the planet Goo, slides, computer web site(s), membership lists, dubs, materi als, patterns , prototypes , logos, trademarks, service marks, clothing, merchandise, educati onal products, marketi ng- and promoti onal data and tools, packaging .and advertising, modificati ons, updates and v8riati ons, and all other,items associated therewith whether in singular or plural Case 9:05-cv-80387-KLR Document 120 Entered on FLSD Docket 09/18/2006 Page 11 of 30 ~~ --~ B- -- -LICENSOR-hereby- grants -to LICENSEE for-the term-of·this--Agreement· as-recited-in-"Schedule A" attached hereto, the exclusive (even as to LICENSOR), worldwide, sub licensable right and license to use the Licensed Trademarks on or In associati on with the Licensed Products as 'well as on packaging, promotional, and advertising material associ ated therewith . C . LICENSEE shall have the right to sublicense LICENSEE'S rights under this Agreement- provided that any and all such sublicenses shall be subject to the terms and conditions of this Agreement. · D . " No licenses will be deemed to have been granted by either party to any of its Intellectual Property Rights, except as otherwise expressly provided in this Agreemen t B . LICENSEE agrees to place on al l Licensed Products, where practicable, the phrase " created by Steven A . 'Silvers" or other similar wording . IL TERM OI? THE AGREEMEN T This Agreement and the provisions hereof, except as otherwise provided, shalt be in full force and effect commencing on the date of execution by 'both parties and shall extend for $ Term .as recited in "Schedule A" attached hereto (the "Term"). · M COMPENSATIO N A. . In corisideration for the licenses granted hereunder, LICENSEE agrees to pay - to LICENSOR, during the Term of this Agreement a royalty in the amount recited in "Schedule A" attached hereto (the "Royalty") based onLIC EISEE's Oct Sales of Licensed Products . 'Net Sales" shall means the gross revenues on a cash basis ( .e, actually collected by LICENSEE but without counting any gross revenues twice) excluding shipping and handling charges, sales - taxes, VAT, and other taxes imposed upon sales less () customary trade discounts, (t) allowances actually shown on the invoice (except cash -discounts not deductible in the .calculation of Royalty) (Il) bona fide returns, charge backs, refunds or credits (net of all returns actually made or allowed as supported by memoranda actually Issued to the customers), (iv) sales of remainder inventory made at'less than the total of LICENSEE's actual cost of goods and actual direct selling costs solely for purposes of liquidation or closo-out, (v) other uncollectible accounts, (vi) cooperative advertising .allowances, (vii) Was commissions paid. B. The Royalty .owed LICENSOR shall be calculated on .9 quarterly calendar basis on collected funds (the 'Royalty Period") and shall be payable no later than thirty (30) days after the termination of the preceding full calendar quarter, i .e ., commencing on the first (1st) day -of January ; April, .July and October with the exception of the. first and last calendar quarters which may be "short" depending upon the effective date of this Agreement . Mir each 7DVMTV"PAVT1T2= ie ma royalty statement in a form acaeptableto Licensor . Such royalty statement shall be certified as accurate by a duly authorized officer of Licensee, reciting on a country-by-country basis, the stock number, item, units sold, description, quantity shipped, gross invoice, amount billed to customers less discounts, allowances, . retains and reportable sales for' each Licensed Product. Such statements shall be furnished to Licensor whether or not any licensed Products were sold- during the Royalty Period . The -LICENSEE hereby further agrees to provide the LICENSOR with a list of all of it's sub licensees added during the current royalty period. i D . If LICENSEE sells any Licensed Products to any party affiliated with LICENSEE, or in any way directly or indirectly related to or under the common control with LICENSEE, .at a pri ce less than the average weighted price charged to other parties, the Royalty payable to LICENSOR shall be computed -on the basis of the averaged weighted . price charged to other parties if the Licensed Products are not ultimately resold to unaffiliated tbi .d parties . . Case 9:05-cv-80387-KLR Document 120 Entered on FLSD Docket 09/18/2006 Page 12 of 30 _ . E . ___ Al l payments dua hereunder. shall be made in United States-currency-drawn ons .United ._- ._ ' I States bank, -unless otherwise specified between theparties and may offset or be offset f ro m any othe r payments due to LICENSEE under this or any other agreement between the parties . F. Late payments sha ll incur interest at the rate of ONE PERCENT ( 1%) per month - from the date such payments were o ri ginally due . IV. AUDI T A. LICENSOR shall have the tight, at its own aapense , to have a nationally recognized certifi ed public accounting firm , upon at least thi rty (30) days written notice and no mo re than twice .per calendar year, to inspect during normal business bows, LICENSEE's books and records and all other documents and material in the possession of or under the .coritrol of LICENSEE with respect to the subject matter of this Agreement at the place or places where such records are normally retained by LICENSEE . B. In the event that such inspecti on reveals an underpayment discrepancy greater than 5% of the amount of Royalty owed LICENSOR from what was actually paid, LICENSMS shall have the opportunity to. oonduct . its own audit If LICENSEE agrees -to the amount, if any, . of any, discrepancy, LICENSEE shall pay such discrepancy, plus interest, calculated- at the rate of ONE AND ONE-HALF PERCENT ( I 1 12%) per mouth. Upon settlement of any underpayment discrepancy , no fur her audit by LICENSOR shall be requested that year. That period and date shall represent the new period start data for future audits for underpayment disc repancies . In th e event that such discrepancy is in excess of TEN THOUSAND'UNIT&) STATES DOLLARS ($10,000 .00), LICENSEE sha ll also reimburse LICENSOR for the cost of auditingfees. in connection therewith. C . All books and records relative to I.ICENSEE's obligations hereunder shall be maintained and kept accessible and available to LIC ENSOIt for inspection for at'least three (3 ) years after . the expirati on of the initial or any · subsequent term . D . In the avant that an investigation of LIC ENSEE's books and records is made, ce rtain . mfidential and proprietary business information of LICENSEE may necessarily be made available to the person off persons conducting such investigation . It is agreed that such confidential and proprietary business' information shall be held in confidence by LICENSOR and shall slot be used by LICENSOR or disclosed to any third party for a period of two (2 ) years from the date of disclosure , or without the pri or express written permission of LICENSEE unless required by law , except LICENSOR may .-not disclose at any ti me to any third party any such confidential and propri etary business information which are trade secrets of LICENSEE . It is understood and agreed , however, that such information may be used by LICENSOR in any proceeding based on LICTNSEE's failure to pay its actual Royalty obligation . V. WARRANTIES AND OBLIGATIONS - EIGTi~iS9 repFesente-aad.wa m~ the (i) the -execution, delivery and performance of this Agreement have been duly authori zed by . all necessary action of LICENSOR and this Agreement is a va lid and binding obligation of LICENSOR, enforceable in accordance with its terms ; (ii) the execution, delivery and performance by LICENSOR -of this Agreement will not violate or conflict with any applicable U.S . law or regulation, or any order, writ, judgment or decree of any court or governmental authority to which LICENSOR is subject, or result in a violation, breach ofy or default under any contract , lease, or other agreement binding on LICENSOR; (iii) - - LICENSOR owns the exclusive righis in and to the Licensed Intellectual Property, Licensed Trademarks, Licensed Patents and Licensed Copyrights necessary to effectuate the granting of the .Licensing Rights from the LICENSOR to the LICENSEE as contemplated herein . Case 9:05-cv-80387-KLR Document 120 Entered on FLSD Docket 09/18/2006 Page 13 of 30 tht? li p-= Intiltt ual ,Praperty.. .and 1.icctisad _~radtmarks .dn .not . . infringe the rights, including without limitation, Intellectual Property Rights, of any third party ; and (v) except as set forth in Schedule B attached hereto, LICENSOR has not received any notice' from any third party of any alleged or actual infringement of the Licensed Intellectual Property or licensed Trademarks and the Licensed Intellectual Property and/or Licensed Trademarks are not the subject, and has not been the subject, of any previous or pending litigation with the exception of the Ganz .. litigation which ,has been resolved . B . LICENSEE represents and warrants that : (i) the executi on, delivery and performance of this Agreement have been duly authorized by all necessary action of LICENSEE and this Agreement is .a valid and binding obligation of lIC'ENSEE, . enforceable in accordance with its terms; the execution, delivery and performance by LICENSEE of this Agreement will C1 1) not violate or conflict with any applicable U . S . law or regulation, or any oriier , writ, judgment or decree of any cou rt or, governmental authori ty to which LICENSEE is subject , or result in a Violati on, breach oi; or default under any contract, lease, or other agreement binding on LICENSEE ; and (iii) it will use its commercially reasonable -efforts to promote , market, sell and distribute the Licensed Products . C. Disclaimer of Wananties. EXCEPT ASEXPRESSLY PROVIDED ABOVE, NE1THl3K PARTY MAKES ANY WARRANTIES OR REPRESENTATIONS OF ANY KIND, BMIM EXPRESS OR IMPLIED, REGARDING THIS AGREEMENT AS TO ANY MATTER INCLUDING, BUT NOT LIMITED TO Th1PLTI?D WARRANTIES OF MBRCIRANTA$1L ( OIL . FM MS FOR A PARTICULAit PURPOSE . D. · LICENSEE shall be solely responsible for the manufacture, production, We and distribution of the licensed Products or to have such Licensed Products manufactured , produced, sold and distributed , and will bear all related costs associated therewith . V1. -NOTICES, QUALITY CONTROL . AND SAMPLES - A. The Licensed Products, as well as all promotional, packaging and advertising materi al relative thereto, shall include all appropriate legal notices, The Licensed Products shall. be of a high quality which is at least equal to oompanable products manufactured and marketed by LICENSEE and in conformity with a standard sample provided , C, Prior to the commencement of manufacture and sale of the Licensed Products, LICENSEE shall submit to LICENSOR for his Input, at no cost to LICENSOR , a reasonable number of samples of all Licensed Products which LICENSEE'intends to manufacture and sell and of all p ro motional and advertising mate ri al associated therewith . 37L NOTICES AND PAYMENT A. Any notice required to be gi ven pursuant to this Agreement shall be in writing and delivered personally to the other designated party at the above-stated address or mailed by certified or . registered mail, retu rn receipt requested or delivered by a recognized na ti onal overnight courier service . B . Either party may change the address to which notice or payment is to be sent by written notice to the other in accordance with the provisions of this paragraph , I d Case 9:05-cv-80387-KLR Document 120 Entered on FLSD Docket 09/18/2006 Page 14 of 30 VIIL INTELLECTUAL PROPERTY PROTECTIO N A LICENSOR hereby -grants LICENSEE all right, power and interest to seek, obtain and maintain all Intellectual Property Rights associated with the Licensed Intellectual Property and Licensed Trademarks, Licensed Copyrights and any other Intellectual Property Rights granted herein . LICENSOR further agrees to assistLICENSEE as may be required to apply for and obtain recordation of and from time to time enforce , maintain and defend such Intellectual Property Rights . LICENSOR hereby grants LICENSEE an irrevocable power of attorney for the initial and'any subsequent terms of this Agreement to act for and on LICENSOR's behalf and Instead of LICENSOR, at LICLrNSEE's expense, to execute and file any such document(s) and to do all other lawfully p ermitted acts to further the purposes of the foregoing with the same legal force-and effect as if executed i?y LICENS0 8 B. ` LICENSOR shall retain all rights, title'and interest in the licensed Intellectual Property and Licensed - Trademarks and any modifications thereto based solely on such Licensed Intellectual Property . LICENSEE acknowledges LICENSOR' , exclusive rights in the licensed Intellectual Property and, further, acknowledges that the-Licensed Intellectual Property and/or the Licensed Trademarks rights we unique and original to LICENSOR and that LICENSOR is the owner thereof. LICENSEE shall not, at- any time during or after the efllbctive Terri of the Agreement, dispute or contest, directly or indirectly, LICENSOR's exclusive ri ght and title to the Licensed Intellectual Property and/or the Licensed Trademarks (s) or the validity thereof: C. LICENSEE agrees that its use of thelicensedlntellectual Property and/or the Licensed Trademarks(s) inures to the benefit of LICENSOR and that the LICENSEE shall not acquire any rights in the Licensed Intellectual Property .and/or the Licensed Trademarks (s) except for the license granted herein . D. LICENSOR shall -retain all rights, title and interest in and to -the licensed Intellectual ' Properties . The LICENSOR owns the exclusive rights to the Licensed Intellectual Property . LICENSOR hereby waiver and releases LICENSEE from any and all current or future claims or causes of acti ons by third parties, whether known or unknown, arising out of or relating to such Licensed Intellectual Properti es including, but not limited to, any claim that Licensed Products violate, infringe an orinisappropriate any of LICENSOR' s Intellectual Property Rights . E . Each party shall execute all papers, testify on all matters , and othbrwise cooperate in eyery way necessary and desirable to effect any of the provisions-under this Section (Intellectual Property Protection). The party requesting such shall reimburse the other party for the expenses incurred as a result of such cooperation . The parties agree to take any ac ti ons or prepare or.execute any documents reasonably requested by the other party . Furthermore, during the term of this agreement , LICENSOR shall not initiate or maintain any relationship or conversations with LICENSEE'S current or prospective olicats; cttd ars, any Company o written request by LICENSEE . IX. TERMINATION . A Right to Terminate on Notice. This Agreement may terminated by either party upon six ti0) days wri tten noti ce to - the other party in the event of a breach a material provision of this Agty ernen by the other party, provided that during the sixty (60) days pe ' . , the breaching party fails t o re ( cure such br c Case 9:05-cv-80387-KLR Document 120 Entered on FLSD Docket 09/18/2006 Page 15 of 30 B LICENSEE shall have the right to terminate this Agreement at any time on thirty 1130 days'riften iio~ce t "7 (CENSOR. I:n such event , all moneys paid to LICENSOR shall be deemed nonw o refundable and LICENSEE 's obliga ti on to pay any unpaid royalti es shall be accelerated and shall become immediately due and payable . C. Additionally, if, after five years of the initial intellectual property license, there are three consecutive years during which royalty payments to LICENSOR are loss than one hundred thousand dollars ($100,000.00), LICENSOR has the opti on to cancel this . Agreement in accordance with Section IX. TF BATION, Para A . . X . POST TERMINATION RIGHTS A . Not less than thirty (30) days prior to the expiration of this Agreement or immediately upon termination thereof, . LICENSEE shall provide LICENSOR with a complete -schedule of all inventory of Licensed Products then on hand or on order (the'Inventory") . E . . . Upon expiration or termination of this Agreement, LICENSEE shall be entitled, for an additional period of six (6) months, to continue to sell such Inventory . Such sales shall be made subject to all of the provisions of this Agreement and to an accounting for and the payment of a Royalty thereon . Such accounting and payment shall be due and paid within thirty (30) days of the quarterly calendar cited as the period basis for royalty calculation. LICENSEE shall have the right to continue the use of the name(s) associate with the products and articles that encompass this Agreement for so -long as LICENSEE is actively selling its inventory of articl es and products. At the conclusion of LICENSEE'S efforts in this regard, LICENSEE agrees to discontinue the use of names , trademarks, signs , advertising and anything else that might make it appear that the LICENSEE is still handling 'the articles and products of LIcENSOB . C. :Upon the expiration or termination of this Agreement, all of the license rights of .LICENSEE under this Agreement shall forthwith terminate and immediat el y revert to LICENSOR and LICENSEE, except 93--detailed above in Secti on (B) of the "Post 'Termination Rights" Section, shall immediately discontinue all . use of the Licensed Pro perty and the like, at no cost whatsoever to LICENSO R D. Upon .termination of this Agreement for any reason whatsoever , LICENSEE agoras to immediately return to LICENSOR all mate rial relating to the licensed Intellectual Proper ty . Furthermore, upon termination or .expiration of this Agreement, LICENSEE agrees to immediately inform all of it's 'sub licensees regarding th e'said termination or expiration of this Agreement . XI. INFRINGEMENTS A. During the Term of this Agreement and any and all optionlrenewal pe ri ods, LIC NSEE shall have the solo right, in its discretion and at its expense, to take any and all actions against third persons . to protect the Intellectual Property Rights licensed in this Agrreement B. Upon request by eith er par ty to the other, the o th er party shall execute all papers , testify on all matters , and otherwise cooperate in every way necessary and desirable for the prosecution of any. such lawsuit. Each pa rty shall reimburse the other party for th e expenses incurred as a result of such . cooperation. XIL INDEMNITY A. LICENSEE agrees to -indemnify arid hold harmless LICENSOR, its agents, heirs, assigns and representatives, against all costs, expenses and losses (i ncluding reasonable attorneys ' fees and costs) incurred through claims of third parties against LICENSOR based on product liability but excluding any claims based solely upon the use of th e Licensed Intellectual Property or Licensed Trademarks by LICENSEE in accordance-with th e terms of this Agreement. ' . A Case 9:05-cv-80387-KLR Document 120 Entered on FLSD Docket 09/18/2006 Page 16 of 30 - B, LICENSQR agrees to (ndemnify·and hold harmless·LICENSEE,-its officers ; directors,-agents and. employees, against all . costs, expenses and losses (including reasonable attorneys' fees and costs) incurred through claims of third parties against LICENSEE based on or arising from (i) any irit ingement, misappropriation or other related action involving the Licensed Intellectual Property or Licensed Trademarks ; or (j) any breach of LICENSOR's obligations, representations, warranties or duties under this agreement. C . With respect to any claims falling within the scope of the foregoing indemnifications : (i) each party agrees promptly to notify the other of and keep the other fully advised with respect to such . claims and the progress of any suits in which the other party is not participating, (ii) each party .shall have the right to assume, at its sole expense, the-defense of.a claim or suit made or filed against the other party ; (iii) each party shall have the' right to participate, at its Bole expense, in any suit instituted against It; and (iv) a party assuming the defense of a claim or suit against the other party shall not settle such claim or suit without the prior written approval of the other party, which approval shall not be unreasonably withheld or delayed. . M. LTNIITATION OF LIABILIT Y A. IN NO EVENT WILL EIMER PARTY BE LIABLE UNDER THIS AGREIEIdENT FOR ANY INDIRECT, INCIDENTAL, SPECIAL, CONSEQUENTIAL OR PUNITIVE DAMAGES IN CONNBCTIQN WITH OR ARISING OUT OF THIS AGREEMENT (INCLUDING LOSS OF PROFITS, USE, DATA, OR OTHER ECONOMIC ADVANTAGE), NO MATTER WHAT THEORY OF LIABI TY, EVEN IF THE EXCLUSIVE REAIIIDIES ' PROVIDED FOR IN THIS AGR T FAIL OF THEM ESSENTIAL PURPOSE AND EVEN IF EITHER PARTY HAS BEEN ADVISED OF THE POSSIBILITY OR PROBABILITY OF SUCH DA MAGES. THE PROVISIONS OF THIS SECTION "LIDILTAT ION OF LIABILITY" . ALLOCATE TEE RISKS UNDER THIS ' AGREEMENT BETWEEN ' LICENSOR AND LICENSEE AND TEE PARTIES HAVER I iRD UPON TIlE LD&TAT IONS SET FORTH HEREIN IN DBTBtMINIt G WHETSER TO ENTER INTO THIS AGREE)dENT . B . EACH PARTY'S LIABILITY TO THE OTHER UNDER THIS AGREEMENT FOR CLAIMS RELATING TO THIS AGREEMENT, WHETHER FOR BREACH OF CONTRACT OR IN TORT, SHALL BE LIMITED TO THE AGGREGATE ROYALTY FEES PAID BY LICENSEE TO LICENSOR DURING THE TWELVE MONTH PERIOD PRECEDING THE CLAIM . . M. INSURANCE . , · LICENSEE .shall, throughout the Term of this Agreement, obtain and maintain at its own cost and expense from a qualified insurance company licensed to do business as required .by state and federal law(s), standard Product Inability Insurance naming LICENSOR as an additionally named insured . Such policy shall provide-protection against any and all claims, demands and causes of action arising out of any defects or failure to perform, alleged or otherwise, of the Licensed Products or any material used in connection---=tn eeewith-oraey nseJlhcraof- Tro-amoemt-of-covgagrsfraff-be xa-spec ed-in- Rcheduie-A"-attaohed-hereto . LICENSEE agrees to furnish LICENSOR a certificate of insurance evidencing same within ninety (90) days after issuance of same, and, In no event, shall LICENSEE manufacture, distribute or sell the Licensed Products prior to receipt by LICENSOR of such evidence of insurance . XV. FORCE MAJEURE LICENSEE shall not be liable for any failure of performance hereunder due to causes beyond its reasonable control, including but not li mited to acts of God, fire, explosion, vandalism, strikes, lockouts, work stoppages, other labor difficulties, supplier failures, storm or other similar catastrophes, any law, order, regulation, directi on, action or request of the state , local or federal government or of any government agency, commission , court, bureau, corpora ti on or oth er instrumentality of any one or more of such governments , or of any civil or military autho ri ty, nati onal emergencies , insurrections , riots, or wars . 7 Case 9:05-cv-80387-KLR Document 120 Entered on FLSD Docket 09/18/2006 Page 17 of 30 .-. XI!L JURISDICTION AND DISPUTES ._ . . . A. This Agreement shall be governed in accordance with the laws of the State of Florida without regard to its principles of conflicts of laws . B . All disputes under this Agreement shall be resolved by the courts of the State of Florida including the United States District Court for Florida and the parties all consent to the jurisdiction of such courts, agree to accept service of process by mail, and hereby waive any jurisdictional or venue defenses otherwise available to it. X AGREEMENT BINDING ON SUCCESSORS The provisions of the Agreement shall be binding upon and shall inure to the benefit of the parties hereto, their heirs, administrators, successors and assigns . XWJL / JVER No waiver by either party of any default shall be deemed as a waiver of prior or subsequent default . of the same or other provisions of this Agreemen t X . SE VLF RABII If any term, clause or provision hereof is held invalid or unenforceable by a court of competent jurisdiction, -such invalidity shall not affect the validity or operation of any other term, clause or provision and such invalid term, clause or provision shall be deemed to be severed from the Agreement XX. NO JOINT VENTURE . / Nothing contained herein shall cons titute this arrangement to be employment, a j oint venture or a partnership . . XXI. ASSIGNABILIT Y Neither party may assign by any act or operation of .law-the rights and obligations of this Agreement unless in connection with a transfer- of substantially all of the assets of LICENSEE and/or with the consent of LICENSOR, which shall not be unreasonably withheld or delayed. By way of example and not limita tion, LICENSEE may freely assign its rights and obligations under this Agreement to Stelor Productions, Inc . XJIU. INTLrGRATIO N TFP° " e sent-oensti #es-fha-entii rtnderstaading-sf-dhepartiesrurdiavokes-and-superaed prior agreements between the parties, including any option agreements which may have been entered into between the parties , and .is intended as- a final expression of their Agreement It shall not be modified or amended except in writing signed by the parti es hereto and specifically referring to this Agreement This Agreement shall take precedence over any other documents which may be in conflict with said Agreement XXTLL RATII+ICATIO N The LICENSOR hereby agrees to the transfer of this License from the LICENSEE (The Aurora Collection, Inc .) to Stelor Productions, Inc. as . contemplated by the Asset &.Purchase Agreement, dated May 1 ", 2002, and executed . . between the . above mentioned partie s R Case 9:05-cv-80387-KLR Document 120 Entered on FLSD Docket 09/18/2006 Page 18 of 30 IN WITNESS WEER OP, the parti es hereto, intending to be legally bound hereby, have each caused to be affixed hereto its or his/her hand and seal the day indicated . STEVEN A. SILVERS STELOR PRODUCTIONS, . INC . By : Steven A . S very Printe d Title: ' Owner, CEN OR Title : Dated: Dated : S ' Z/002Received Ten Thousand Dollar signing bonus .($10,000.00) I MICHAEL WM NOTARY PUBLIC STATE OF MARYLAND MyCornn,i aloq ExpUns Apr il 1, 2003 Q Case 9:05-cv-80387-KLR Document 120 Entered on FLSD Docket 09/18/2006 Page 19 of 30 "SCHEDULE A" LICENSED INTELLECTUAL PROPERTY ' The following Licensed Intellectual Property forms part of this Agreement: A License under any and all intellectual property rights and interests therein, including by way of explanati on, products which deal with a creative' ohatacter known as Googles , anything that contains the letters GOO (in upper or lower case), together with any and all products , which comprise and which will comp ri se those characters, likenesses, which include Iggle , Dogle, Oggle, Gooroo, Gootlan(s), the Planet Goo, slides, computer web site(s), membership lists, clubs, materials, patterns, prototypes, logos, trademarks, service marks, clothing, merchandise , educati onal products, marketing and promotional data and tools, packaging and advertising, modifications , updates and variations, and all other items associated therewith whether in singular or plura l LICENSED TRADEMARKS The -following . Licensed Trademarks form part of this . Agreement: (i) "The Googles" (word and design) Trademarks in International Class Code (016) of theU .S .P.T.O . and the co-existent Trademarks Agreement with Ganz, Inc. of Canada in International Class Code (028) bf the U .S .P.T.O., which is hereto attached and made a part of this "Schedule A" document, (H) "Oogle", (iii) "Iggle", (rv) "Oggle", (v) "GooR .oo", (v1) "Planet Goo", (vii) "GooMu", (viii) "GooToons", (rx) "GooStu$", (x) "GooKids", (xi) "GooStore" and (xii) any o ther trademarks, whether registered, pending or future or common law, used in connection with the Licensed Property, including ., but not limited to, any trademark inoosporating the phrase "Goo" currently in existence . UQE SED PRODUCTS · The following Licensed Products. form part of this Agreement ' all products which compri se the likenesses, stories , ideas, concepts, or designs of the Licensed Property, including without limitation, .stuffed toy figurines , videos, stickers , t-ahirts or other clothing items, slides, movies , cartoons, books (comic and otherwise ), posters , playing, trading and collector cards, CDs, cassette tapes, DVDs, TV programs, motion pictures, all other forms of communication and publication, programs , computer Web site (s), membership lists and clubs, and any other products . DERIVATIVE S A Derivative as defined in this agreement shall mean a product or service that is utilized by the LICENSEE and developed .by a party other thari the LICENSOR but is used in conjunction with licensed products, articles and /or services. l`t can be a product or service produced by the LICENSEE or a third part y(inventor,sublicenseeett,)thatinitsuseenhancesthevalueoftheGoogleaUniversebutdoesnothave a conflict, d#h-an-alread}~ aardctiug 6eogles-preduot idea-er-eeseept -ea-eutiifled-iwthis- agreemenHtmay-not possess the "Googles" or "000" in it's name and would therefore fall under the LICENSOR'S exclusiv e ownership as defined in the amended agreement but can be used in conjunction with the "Goo" Universe by the LICENSEE : TRRTTORY The following count ri es sha ll constitute the Territory : Global/Worldwide rights . TERM This Agreement shall . commence on the date executed below by both parties and shall be for a thirty (30) year term . This Agreement shall automatically renew for one additional ten (10) year term on the same terms tied conditions provided for herein ("Renewal Term") . Upon expiration of the first Renewal Term of ten (10) years, this Agreement shall automatically renew for-a=second ten (10)year extended Term on th e in `/Ulll Case 9:05-cv-80387-KLR .,r Document 120 Entered on FLSD Docket 09/18/2006 Page 20 of 30 le- . _ seare.tenns and conditions provided for .herein, unless LICENSOR -provides written· noti ee - of its intenti on- to not to renew this Agreement within one hundred eigh ty ( 180) days pri or to expiration of the Renewal Term . . ROYALTY RATE LICENSEE shall pay the following royal ty rates: (1) SIX PERCENT ( 6%) of Net Sales of Licensed Products that are based solely nn the Licensed Intellectual Property and (ii ) THREE PERCENT (3%) of Net Sales of Licensed Products that are based solely on De ri vati ve Products and (iii) In the case of Sub Licenses royal ti es will be TAN PERCENT (10%) of Net sales after subtracting licensing costa and royalties .paid to third parties only . PRODUCT LIABiLiTY INSURANCE Minimum Product Liability Insurance shall be Two Million U . S . dollars (S2,000,OOD . 00) combined single limit for .each single occurrence for bodily injury and/or for property damage. S L) CGC Ss . l t'I U -{ ~~~ F o4' ~~~ D ' L1'c cttisov- a r( . G~ 4 t'P ~ . th"r r~~ 5 I Lth r irc r sm~ f L LX1, 'L / JyrC. -' Pz, `car' My Commission Expires April 1, 2DO3 MICHAEL LUM IOTARy PUBLIC STATE OF MAgyLA. ID . s/r 107z pi1 7: C1~7I( Case 9:05-cv-80387-KLR Document 120 2205 7 Entered on FLSD Docket 09/18/2006 :30199o363 e Page 21 of 30 5- 7-0 . : 5 27PY : XE . 0 t o June 1, 2002 W. Stevan Silvers 3741 N.E. 163'd Street PMB 0 324 North Miami Beach, FL 33160 Dear Steven: This letter agreement ("Agreement') will save to memarialize the t erms of the consuJtzntcy arrangement between Stelor Productions, Inc . ("Company') and Steven A. Silvers ("Consultant"). 1. Ent!azerncnt of Consultant. a. Company hereby engages Consultant as an independent contractor to the Company. Consultant's title shall be Executive Creative Consultant. Company is relying on Mr . Silvers to continue his role of "Papa Googles" and continue to offer his creative input to the Company . b. In consideration for the covenants of Consultant contained h--rain, Company will_ pay Consultant the following : (1) a signing boons often thousand dollars ($10,000) and (ii) a monthly consultancy fee of five thousand five hundred dollars (SS,500) beginning on )unc 1, 2002, and continuing each month thereafter for twelve (12) months . Company shall pay Consultant six thousand dollars ($6,000) monthly for a second 18-month period, beginning June 1, 2003 . Al) payments made to Consultant will not be offset against any royalties paid by the Company to Consultant pursunad to the Lt=sr, Distribution and Man cturingg Agreement Company will continue to reimburse The Aurora Collection, Inc. for the existing health plan if available, or if not available, will reimburse consultant 5300 per mou th during the term of this Agreement. During the term of the Agre an Company will reimburse The Aurora Collection, Inc. for, if available, the use ofa leased company vehicle, with company to reimburse The Aurora Collection, Inc for insurance coverage . Consultant epees to pay all costs of maintenance and upkeep . Stelor willwrite an agreement with Consultant g anf=_ him options for 1,000 shares of Stelor's stock under Stelor's stock option plan . If the number of options available under the Stelor Productions current plan is increased during the Consultant's service Company mill issue an additional one thousand option shares (1,000 ) Q It is agreed by company that in the event the Company fails to compensa te the Consultant as outlined in this Agreement and in accordance with the farms of this Agreement (including all opti on periods surrounding same) for two consecutive months and if after thirty (30) days fags to cure alleged breach, then. Consultant has the right (option) to terminate this Agreement and among other legal remedies afforded Consultant to seek : redress before the Court, the license Agreement sha ll, likewise 'mmediatcly terminate. This caveat shall exist only if Consultant is not paid for other than "good Cause" erminati um as outlined below at sec tion five (5) b of this A greement. 2. Relationship of Parties . The relationship of Company and Consultant established trader this Agrecmcnt is of an independent oontractor. Nothing in this Agreement shall be construed to give any party the power to direct or control the daily activiti es of any of the other par ti es, or to constitute the parties as principal and agent, employer and employee, franchisor and franebisee , partners, joint venturers, co-owners, or otherwise as participants in a joint undertaking . The parties understand and agree dad none of the parties grants any other party the power or authority to make or give any agreement; statcmcnt, rcpresentatioa, wanarty, or other commitment on behalf of any other party, or to enter into any contract or otherwise incur any liability or obligation, express or implied, on behalf of any other parry, or to transfer, release, or Waive any right, title, or interest of any other pasty . Furthermore, during the term of ~tYre11· 1` . 29 of 53 ,F ~ .~~a1R1'~ Case 9:05-cv-80387-KLR Document 120 22057 Entered on FLSD Docket 09/18/2006 ;3C'eOC363 6 Page 22 of 30 w 3/ 5- 7-0+ : 5 : 27vu :%r 0 4 1 this agreement, LICENSOR shall not initi ate or maintain any relationship or conversations with LICENSEE'S current or prospective clients, vendors, any Company relationships with the media ( press etc.) without the prior express writ= request by LICENSEE . 3. Duties of Consultant. Ccosultant ' s duties hereunderare ss follows: L Consultant shall use his best efforts to perform such services as may be requested by Company from tithe to time consistent and wmmo svrste with his positi on ua Executive Creative Consultant . including, but not limited to, recanting all papas . testifying on all Company related matscra and otherwise cooperating in every way wousary and desirable to strengthen , establish or rrraintain any intellectual popery right granted under this Agreement our are License , Distribution and Manufacturing Agreement (as amended) between Company and Consultant The Consultant shall male ; himself available to the Company byway of selepmaq der, cm4 video confeeaang Csf d:emod noccssary) on an as needed basis and during rcasoenble business hours Monday through Friday. Consultant shall further make himsef available, in perso n. if deetaed necessary. to the Company so long as the Consult ant is given a minimum of ten ( 10) days written noti ce if Consultant is. at the time of said request, residing outside of the Contin ental United States and three (3) days w ritten notice by the Company if Consultant is residing at the time of said request, within the Continental United States . In either case, Consultant must c maintain a United States address for purposes of receiving corresponden ce, samples, che ks etc. Wri tten . notice may also be deemed given if mmmunim-d via Consultant 's personal email a ddress or a fax number to be provided to the Company . Written noti ce must be sent via U .S . Mail certified , ream. rmcipt requested , or via a nati onally recognized mail carrier service with "signature " required . Written notice may also be sent if communicated via Consultant 's personal email address or a fax number to be provided to the Company . However, the latter shall not be used for any "official " noti ce purposes. b. During the term of this Agretent and for a p :riod of ( 1) years after the termination or expiration of this Agreement, Consultant shall not, either individually or in conjunction with a third petty, engage in any business, trade, or profession as owner , officer, manager, employee, consul ta nt or otherwise if such bu siness competes in any material way with Company' s business of developing, creating, selling, manufacturing, distributing , or marketing products , media or materials for children . G . Consu ltant shall offer Company a right of fast refusal to li cense , develop, munufactue, market or se ll any and all children ' s chara ters or other products, id:,es, inventions or c creations created by Consultant that are not within the scope of this Agreement or the License, Distribution and Manufacturing Agreement (as amended) between Company and Consultant If Consultant provides Company with any now idea's either relating to The Googics as well as anything entirely new that may not relate to the current universe of characters and /or idea ' s, that upon submission of ;,i-h r ,-w idea or concept which shall be placed in writing Company shall have one hundred and twenty : ( I , :.I) days to -ccept and ent er into an agreem ent for said property. d . Consultant agrees to hold harmless , defend and indemnify Company and its officers, directors, employees , agents and servants from and against any and all claims, d mates and expenses, including reasonable legal foes and expenses, of whatever Lind and nature directly or indirectly arising out of or on account of or resulting from the Consultant's activiti es (other than as expressly authorized by Company) including, without limitation, Consultant' s failure to comply with his obligations und er this Agreement, acts or omissions . 4. Duties of Comnanv . 7. 30 of 53 Case 9:05-cv-80387-KLR Document 120 2205 7 Entered on FLSD Docket 09/18/2006 :301900363 6 to Page 23 of 30 F 4/ 5- 7-04 ; 8=27PU : Y4 i Company shall reimburse Consultant for all reasonable Uwe] and li ving expenses L that arc deemed to be essential to Company' s success and are pro -approved by as authorized office of the Company and incurred as a direct result of Consultant' s obli gati ons under this Agreement such a s attending tradeshows, board meetings, etc . The Company shall, upon prapcr documentation bzvmg been presented to the Company, or its official /degnaind rcpresenttctive, within seven (7) days of receipt of same , reimburse Consultant said incurred expenses as approved by Company. 5. Te and Terming ion a. Subject to the provisions for termination as provided herein, this Agreement shall eotnmeuce upon execution and shall have a term of thirty (30) months . b. Cotnpaay may immediately terminate this Agrcrment upon the occurrence of any of the following (i) a material laeaeb of any provision of this Agreement by Consultant ,, (ii) a failure by Consultant, after written notice, to perfmvr such duti es required of Consultant as outlined in thi s agreement; (i ii) the initiation of any bankruptcy, recei vership. trust deed, creditors arrangement, composition or comparable proceeding by Consultant, or if any such proceeding is instituted against Consultant; (iv) the conviction of Consultant of any felony crime. (v) any use, sale or possession by C nsul t of any illegal drug or comrolled substance that is prosecutable under US Federal Laws . Written notice to mean by way of Certified marl, turn receipt requested or by way of s Nationa lly recognized mail service , Courier service etc. C. Upon termination or c q iraaom of this Agreement by either party, Consultant shall immediately =turn to Company all Proprietary Informa ti on (as defined below) in Consultant' s possession, custody or control in whatever form held (including copies, compilati ons, summaries, or embodiments tbereofrlating to Proprietary Information) and provide written certificatiati that all such material has been returned . d Company agrees to provide Consultant shirty (30) days Notice, from date of said written notice of termination by the Company, within which to cure may alleged breach it has made against the Consultant identified in paragraph three (3) under "Duties of Consultant". 6. Prooricrirn · Infornution : ProvriatarvRights. IL In the course of performing his duties under this Agreement, Consultant may obtain information relating to Company and/or its customers, suppliers or other third parties that is ofa confidential and pro, . ict::ry nature ("Proprietary Information') . Such Proprietary Information may include, without ]utaation, trwle secrets, research and development, customer lists, vendor ] ists, schedule of account ;. p:ar ,,prugzain:, : . .vcntions,, computer aoftwarc, know-how. inventions, product information, techniques, processes, schemati cs, data, financial information and sales and marketing plans. Consultant shak at alt times, both during the term of this Agreement and for a period of two (2) years thereafter its termination, keep in trust and confidence all such Proprietary Information, and shall not use such Proprietary Information other than in the course of performing his duties as expressly provided in this Agreement, nor shall Consultant disclose any such Propricnuy Information to any person without Company's prior written consent except as required or needed in any legal and/or Court action by Consultant against the Company or any other third party . This pertains to only that infonnetion not otherwise gathered from public sources, knowledge already in the public eye or a matter of public record, and/or any other third party other than Consultant I 31 of 53 Case 9:05-cv-80387-KLR Document 120 ·20S7 Entered on FLSD Docket 09/18/2006 I ;30%000383 6 Page 24 of 30 a 5i S- 7-04 ; 5 :27PM ; XI I b . The Company aclmowl,dges that the Consultant is not being hired as a work- for hire but rather is bang coaapmsatod, pursuant to this Consulting agreemen; as a Consultant for the egress purpose ofadvising, rucoanmendin & counseling, and other wise utilir Consultant's eecport se in the "sit= making pro cess as ft pertains to the existing and `further d,-velopmcnt of the Google's pr'oje only. C . The services and rights which Company is granting to Consultant hereunder are extraordina ry and unique and cannot be replaced or adequately compensated in money damages . and any, breach by Consultant of This Agreement will cause irreparable i jrny to Company. Therefore, Consultant agrees that in the event of it breach of this Agreement, Company , in addition to any other remedies that might be available to

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