GENERAL LICENSE TERMS

of the

kullaloo CA Inc.
5181 St. Margaret’s Bay Road
Upper Tantallon, NS, B3Z 4R4
Canada

– hereinafter referred to as “licensor” –

about

the use, exploitation, publication and distribution of a so-called “cutting files and the iron-on transfers created from them” (the “cutting files”) and in this context the use of the brand “kullaloo” (the “brand”)

by

commercially active customers (hereinafter referred to as “licensees”).

PREAMBLE

1) The licensor markets cutting designs for use with cutting machines under the protected trademark. The cutting designs are offered in the form of different copyrighted cutting file formats to commercial and private customers for a fee. The licensee offers products from the field of handicraft and would like to use the cutting files in the context of his trade to manufacture products with ironed-on transfers created with the offered files (such as cuddly toys, bags, pillows).

2) These conditions do not apply to the acquisition of cutting files for exclusively private use or for exclusively commercial use of small series of max. 20 pieces per cutting design. Separate license conditions apply to these.

3) Rights of use with regard to the cutting files and / or the brand are granted exclusively in accordance with these general license conditions. Other contractual provisions, in particular general terms and conditions of the licensee, do not apply, even without this being expressly excluded. If types of use are not regulated in these terms and conditions, they are not part of the rights of use granted.

§1 Subject of the contract

The rights of use for cutting files granted to the licensee refer to the respective specific design series to which the cutting files belong to. The licensee always acquires the rights of use for the whole design series for which the additionally acquired license extension for commercial use is to apply.

Design series are quoted in the product descriptions. If there isn’t a name of the design series stated, then the character itself or the file bundle is considered a series. Multiple digital producst which belong to one design series only require one commercial license extension.

Digital products associated with one design series or a single character could be:

• a sewing pattern which is used to sew a caracter as a plush toy
• an embroidery file that will be used to embroider the character, e.g. eyes or mouth
• an embroidery file whose design contains the character and which can then be embroidered onto a blanket
• a cutting file that will be used to create iron-ons for the plush toy character, e.g. eyes or mouth
• a cutting file whose design contains the character and which can be used to create transfers for shirts, blankets etc.

This means: If the licensee purchases for example a sewing pattern and cutting files associated with the pattern, then the licensee only needs ONE commercial license extension as these two products usually belong to the same design series.

The licensee must notify the licensor in writing when purchasing the license extension for which design series he purchases the commercial license.

§2 Rights of use

1) The licensor grants the licensee a non-exclusive, non-transferable, time-limited, spatially and content-restricted simple right of use to the licensee within Canada and the United States for his own purposes in accordance with this contract to use. This means that the licensee is entitled to manufacture handicraft products with ironed-on transfers created with the cutting files.

2) The licensee is unrestrictedly free in manufacturing a product with using the design files. When using them, however, it should be noted that the cutting files are only used in the original, i.e. digitally unchanged design on any carrier material (e.g. bags, pillows, other textiles, etc.) and may then be sold as manufactured products. The creation and sale of iron-on transfers and patches is also permitted.

3) However, the licensee is not entitled, among other things, to reproduce, publish, distribute, resell, allow third parties to use, edit or change the cutting files in any form, in particular not with the use of technical aids.

4) The use of the cutting files is carried out personally by the licensee or his employees. It is not permitted to allow third parties to use them – not even to use them to manufacture their own products, unless this has been expressly permitted in writing by the licensor following a request from the licensee. Otherwise, the cutting files shall only be used to manufacture products personally by the licensee.

5) The licensee sells the products with the ironed-on transfers created with the cutting files exclusively in his own name or under brands that are exclusively owned or used by him. However, the licensee will provide the corresponding sales presentation in his online shop / web offer for each of these products, easily recognizable for the potential buyer, with the following note: “Cutting file(s): kullaloo / www.kullaloo.ca”.

6) The licensor reserves the right to point out a presentation of the products that is detrimental to the brand in his opinion and to request the licensee not to use the above notice in the future or to place it differently.

7) The products with the ironed-on transfers created by using the cutting files are to be offered at least at prices that an average licensee usually also applies for his own products. Special promotions, special prices and discount promotions or the like are permitted within the usual framework.

8) The licensor can revoke the granting of usage rights at any time for an important reason. An important reason exists in particular if the licensee does not comply with the terms of use and does not immediately refrain from doing so even after a written warning with a threat of revocation by the licensor. If the rights of use are revoked, the licensee will immediately surrender or irrevocably delete the embroidery designs and other copies made and insure this.

§3 Material and legal defects

1) The selection of the materials to be used (iron-on foil, carrier material etc.) and the responsibility for the implementation of the design are the sole responsibility of the licensee. The licensor assumes no liability or warranty in this regard – unless this is based on intentional or grossly negligent misconduct on the part of the licensor, in particular with regard to an implementation that deviates from the purpose of the cutting files. The licensor makes no statement and assumes no responsibility with regard to the suitability of the manufactured product or the use of the materials selected by the licensee. This also applies to any infringement of third party rights (including copyrights, trademarks and designs) due the specific use of the manufactured product which contains the iron-on transfers created with the cutting files.

2) The responsibility for ensuring that the applicable statutory provisions are complied with regard to the manufactured products lies solely with the licensee. The licensor points out that in the context of the sale of toys there are legal regulations that must be observed. The licensee is encouraged to find out more before selling the products.

3) Should third parties assert property rights against the licensee in relation to the cutting files or the iron-on transfers produced with them, he will inform the licensor immediately in writing.

§4 Liability

1) The unlimited liability of the licensor is limited to intent and gross negligence, as well as in cases of injury to life, limb or health. In the case of simple negligence, only direct, foreseeable and contract-typical damage will be reimbursed. Lost profit will not be replaced.

§5 Statute of limitations

1) Claims by the licensee due to material or legal defects become statute-barred within one year of the cutting files being made available. The statutory limitation periods apply if the publication of the cutting files to a third party can be requested due to a legal deficiency.

2) A limitation period of one year from the start of the statutory limitation period applies to other claims of the licensee from a contract as well as from an obligation. The claims become statute-barred at the latest when the statutory maximum periods have expired.

§6 License period and contract termination

1) The rights of use for the respective cutting files are granted for a period of one year beginning on the 1st day of the month following the initial purchase of the license extension for commercial use by the licensee.

2) The right to use and exploit the cutting files as well as exploitation, distribution and publication of products in which the cutting design is used in accordance with this contract ends with the expiry of the license period in accordance with section 1) above, without the need for a special termination on the part of the licensor.

3) The license period is only extended due to an extension of the right of use for the cutting files, which the licensor can offer to the licensee at the end of the license period.

§7 Final provisions

1) This contract contains the only regulation of the legal relationship between the parties. There are no other agreements and / or side agreements. Changes to this contract must be made in writing. This also applies to the written form clause.

2) Should a provision of this contract be ineffective, this does not affect the effectiveness of the rest of the contract. In this case, the parties agree to replace the ineffective clause with an effective clause which, within the framework of what is legally permissible and economically reasonable, comes closest to the ideas of the parties.

3) This agreement is governed by the laws of the Province of Nova Scotia, without regard to conflict of laws principles that would require the application of the laws of another jurisdiction. The parties irrevocably submit all disputes relating to this contract to the jurisdiction of the courts of the Province of Nova Scotia.