[HX89047], Agreement, Edison Phonograph Toy Manufacturing Co, Thomas Alva Edison, August 6th, 1889


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[HX89047], Agreement, Edison Phonograph Toy Manufacturing Co, Thomas Alva Edison, August 6th, 1889

Editor's Notes

This is an agreement made 6th day of August 1889 between Edison and the Toy Co, a corporation organized under the laws of Maine, with its ususal place of business in Boston, modifying previous agreements in light of new inventions made by Edison to which the Toy Co wishes to obtain excclusive rights. ## First, In consideration of 14,000 shares fully paid and unassessable of the capital stock of the Toy CCo., the Toy Co has the right to manufacture, sell and license others to do the same, all the inventions and imporvements described in letter patent 200, 521, and any further improvements and inventions made by Edison or which may within five years from this date be hereafter made by Edison, in or in relation to phonographs or speaking machines so far only as applicable for, and in such a form only as to be adapted for use or in association with dolls or figures for the amusement of children, and no other purpose whatsoever. Edison to deliver all requisite and resonable acts and things upon request for the same, including specific licenses or grants for each and every country, and reasonable and proper instruments. ## Second, In consideration of the foregoing, the Toy Co agrees to pay a royalty equal to 20 per centum on the actual manufacturer's price, asccertained as set forth below, of all said inventions and improvements made and sold by it in pursuancce hereof, it being however, distinctly understood a) that said royalty is not to be paid on any part or parts of dolls or toy figures used in connection or association with said inventions or improvements themselves, that is to say, the whole of the mechanism of the phonographic part and of the accesories to adapt it to the doll or toy figure, and b) that the said manufacturer's price shall include cost of labor, material and general expense, and included in general expense shall be five per centum of labor and material for depreciation of plant, plus a manufacturer's profit of twenty per centum on such cost of labor, material and general expense. ## The aforesaid royalties shall be payable quarterly wihtin thirsty days after the first day of each and every January, April, July and October every year; and the Toy Co shall render with each such payment an accurate report of the number of articles made and sold by it, or on its account, during the quarter next proceding for which such payment of royalty is dues. The Toy Co further agrees that unless the aforesaid quarterly payments payable to and received by Edison as above provided for shall aggregate at least $10,000 per year, taking each year by itself and reckoning from Oct 1st 1889, Edison shall have the option, on sixty days' written notice to the Toy Co, to terminate this contract as of the date of the expiration of such notice, provided this option at the end of any year be availed of by Edison within at least four months from the expiration of such year reckoned as aforesaid; but it is understood and agreed that the TOy Co shall have the right to make up and pay to Edison any deficiency touching the aggregate of the aforesaid quarterly payments for each year, at any time prior to the expiration of te aforesaid sixty days' written notice, in which event the said notice shall be considered cancelled. ## Third, The Toy Co agrees to keep full and accurate account of the number of articles it manufactures under this agreement, as well as the amount of royalty it owes, and the names and places of business of the parties to whom they are sold, together with the dates of sales, and all other documents relating to these sales, for the inspection of Edison or his authorized representative. ## Fourth If any third party shall violate the above patents, Edison reserves the exclusive right to prosecute at his own expense, but if he is unsuccessful then after a period of ten days the Toy Co may prosecute at its own expense. ## Fifth If the Toy Co or anyone acting under its authority wrongfully uses these patents the contract becomes null and void and all rights under the contract forfeit. If the Toy Co or any acting under its authority use the improvements in any way but for toy figures it is in violation of patent and may be prosecuted. ## Sixth Whereas, a certain agreement dated August 6th, 1889, made by and between the North American Phonograph Company and the Toy Co, provided in the third section thereof that in the event of certain improvements and inventions, manufactured in the United States for export, being used in the United States, and such use not being prevented, the Toy Co should pay to the North american Phonograph Company a certian royalty fully set forth in the said section of the said agreement; and whereas the said section further provided for the determination by arbitrators of the amount of royalty thus to be paid; and whereas it is intended by the parties hereto that as regards any payments atually and bona fide made by the TOy Co pursuant to the decsision of such arbitrators, such decision having been made honestly and in good faith, Edison shall reimburse the Toy Co therefor. Edison hereby agrees that if the Toy Co will give him written notice within thrity days after the Toy Co shall have made any payment under and pursuant to the decision of the arbitrators as provided for, he will within thirty days thereafter pay and give to the Toy Co a like amount, provided that a) the finding of the arbitrators has been made in good faith and b) that Edison has received reasonable advance notice about the arbitration and C0 that no payment shall be made by Edison except on such dolls as royalties have been regularly paid to Edison and d) that at the time of demand for reimbursement, the Toy Co shall simulltaneously provide Edison with a verified copy in writing of the arbitrators findings. ## Seventh, The Toy Co agrees that Edison owns these patents and agrees not to violate any of the specifications in this contract, agrees to act in good faith, etc. ## Eighth No assignment of rights under this contract by th Toy Co is valid without Edison's express written consent, in which case all terms of this contract shall bind the assignee. The Toy Co can assign exclusive right to sell toys in any given territory proided such rights are granted only to individuals excluding their heirs, executors, administrators, successors, assigns and legal representatives. If any corporation comes tocontrol these rights without the express written consent of Edison or his legal representatives, these rights become ipso facto void. ## Ninth, Edison will have the right to annul the agreement if the Toy Co violates the agreement, continued for a period of sixty days after notice in writing, in whcih case all rights and privileges shall cease and revert to Edison. ## Tenth, The former agreeement, made Noember 25th 1887, is annuled and cancelled by mutual consent, releasing both parties of any obligation in relation thereto. ## Eleventh, Edison has the right to a representative on the Board of Directors of the Toy Co so long as he holds at least one-eight of the capital stock in the company. It is further agreed that if the capital stock of the Toy Co increases above $ 1 million then one eighth of all such increases in fully paid and non-assessable shares shall be given to Edison, or in the case of his death to his executors, etc. ## Twelfth, Edison hereby covenants that he has and is possessed of full right and power to make the grants herein contained, and that there are in existence no rights in conflict herewith, save and except a certain license for the Dominion of Canada granted by him to the Edison Phonograph Company by instrument of writing, dated October 28th 1887, and as to that grant it is understood that the said Edison Phonograph Company will itslef give to the Toy Co, by instrument in writing, the same rights as regards the Dominion of Canada which the said TOy Co would have acquired hereunder provided Canada had been included among the other foreign countries herein named. ## AGREEMENT MARKED CANCELED March 27th, [1896?]




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Thomas A. Edison Papers, School of Arts and Sciences, Rutgers University
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