OMITTED INFORMATION HAS BEEN INDICATED HEREIN AND FILED SEPARATELY WITH THE
COMMISSION AS IT IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST.
BUSINESS
CONFIDENTIAL
RETAIL PRODUCT LICENSE AGREEMENT
BETWEEN
THE TOPPS COMPANY, INC. AND
NBA PROPERTIES, INC.
February 25, 1995
FORM: NBAP
Trading Cards/Stickers
RETAIL PRODUCT LICENSE AGREEMENT
LICENSEE: THE TOPPS COMPANY, INC.
ADDRESS: Xxx Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
THIS RETAIL PRODUCT LICENSE AGREEMENT is entered into by NBA Properties, Inc.
("NBAP"), with its principal office at 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx
00000, and the licensee listed above ("LICENSEE") with regard to the commercial
use of certain names, logos, symbols, emblems, designs and uniforms and all
identifications, labels, insignia or indicia thereof (the "Marks") of the
National Basketball Association (the "NBA") and its Member Teams (collectively,
the "NBA Marks") in combination with the names, nicknames, photographs,
portraits, likenesses, signatures or other identifiable features of "Current"
(as defined in Paragraph 1 of the attached NBAP Standard Terms and Conditions)
NBA players ("Player Attributes"). Subject to the attached NBAP standard terms
and conditions, NBAP hereby grants to LICENSEE, and LICENSEE hereby accepts, the
non-exclusive (except as otherwise expressly provided in this Agreement) right
and license to use (i) the Marks of the Member Teams, the silhouetted dribbler
logo (the "NBA Logo"), the Marks of the NBA, NBA All-Star Weekend and NBA
Playoffs and Finals (collectively, the "Licensed Marks") in combination with the
names, photographs, likenesses, NBA statistics and biographical information (and
such additional Player Attributes as NBAP may specifically approve on a case-by-
case basis from time-to-time) of Current NBA players (the "Licensed Attributes")
in accordance with the terms of Paragraph A below solely in connection with the
manufacture, distribution, advertisement, promotion and sale of the products
described in Paragraph A below including one or more of the Licensed Marks
("Licensed Products"). No license or right is granted for the use of the
Licensed Marks for any purpose other than on the Licensed Products and in the
distribution, advertisement, promotion and sale of the Licensed Products in
accordance with this Agreement.
A. LICENSED PRODUCTS:
(1) (i) For the 1st "Contract Year" (as defined in Paragraph 1 of the attached
NBAP Standard Terms and Conditions):
[INFORMATION SUBJECT TO REQUEST FOR CONFIDENTIAL TREATMENT]
B. TERM: [INFORMATION SUBJECT TO REQUEST FOR CONFIDENTIAL TREATMENT]
C. TERRITORY: [INFORMATION SUBJECT TO REQUEST FOR CONFIDENTIAL TREATMENT]
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D. ROYALTY RATES: LICENSEE shall pay monthly to NBAP a royalty equal to the
percentage of "Net Sales" (as defined in Paragraph 1 of the attached NBAP
Standard Terms and Conditions) with respect to sales made in each of the
regions set forth above as follows:
[INFORMATION SUBJECT TO REQUEST FOR CONFIDENTIAL TREATMENT]
E. MINIMUM GUARANTEES: LICENSEE guarantees that its aggregate annual royalty
payments to NBAP for each Contract Year for all Licensed Product shall not
be less than the amount set forth opposite the below-indicated regions:
[INFORMATION SUBJECT TO REQUEST FOR CONFIDENTIAL TREATMENT]
F. ADVERTISING AND PROMOTION ("A&P"): [INFORMATION SUBJECT TO REQUEST FOR
CONFIDENTIAL TREATMENT]
G. SELLING PRACTICES: LICENSEE acknowledges NBAP's legitimate and reasonable
interest in protecting the value of the NBA Marks and maximizing the
effectiveness of its advertising, promotion and distribution efforts by
segmenting the classes of trade into which its licensees sell NBAP-licensed
products. Therefore, LICENSEE acknowledges that a failure to comply with
the selling practices set forth in this Agreement shall cause significant
harm to NBAP's efforts to effectively and efficiently distribute NBAP-
licensed products.
H. MEDIA SUPPORT: [INFORMATION SUBJECT TO REQUEST FOR CONFIDENTIAL TREATMENT]
AGREED TO AND ACCEPTED, subject AGREED TO AND ACCEPTED:
to and incorporating the NBA PROPERTIES, INC.
attached NBAP Standard Terms By: /s/ Xxxxxx Xxxxxxxx
and Conditions which the -------------------
undersigned has read: Xxxxxx Xxxxxxxx
Xx. Vice President,
Business Affairs
THE TOPPS COMPANY, INC.
By: /s/ Xxxxx Xxxxxxxxxxx
---------------------
Title: Vice President Dated: 2/25/95
------------------ ---------
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NBAP STANDARD TERMS AND CONDITIONS
1. ADDITIONAL DEFINITIONS
For the purposes of this Agreement:
(a) "Contract Year" shall mean a twelve (12) month accounting period
commencing August 1 and concluding July 31.
(b) "Counterfeit Goods" shall mean and include: (i) goods that bear any
NBA Xxxx that has been reproduced and/or affixed without authorization
from NBAP; (ii) goods that bear any NBA Xxxx produced by any source in
excess of an amount ordered by an NBAP licensee; and (iii) goods that
bear any NBA Xxxx that have been rejected by NBAP or an NBAP licensee
and nevertheless enter the stream of commerce.
(c) "Current" (as used with respect to players) shall mean (i) a player on
an NBA team roster as of the time of LICENSEE's submission of its
player list for NBAP approval, or use, (ii) in the event of a
LICENSEE's submission during the "off-season," players that were on an
NBA team roster at the end of the preceding regular season and have
not announced their retirement or an intention to play basketball in a
professional league other than the NBA, and (iii) such other players
as NBAP may approve for use on a case-by-case basis.
(d) "Diverted Goods" shall mean and include any goods produced by someone
acting on behalf of an NBAP licensee, which goods are not delivered by
the producer to such licensee or to a person designated by such
licensee to receive such goods.
(e) (i) "NBA Photo" means any photograph (which shall specifically include
transparencies, negatives and any other photographic property created)
of a current NBA player taken by any party during an NBA game,
competition, event or NBA-coordinated activity (e.g., Pre-Draft Camps,
Rookie Orientation, player appearances, etc.), or in which such a
player is pictured in his NBA team or League issued uniform or
practice wear or NBA-identified merchandise. (ii) "Commissioned
Photo" shall mean any NBA Photo taken by a photographer engaged by
LICENSEE on or after October 1, 1993 and in accordance with
Paragraph 2 below.
(f) (i) "Net Sales" shall mean [INFORMATION SUBJECT TO REQUEST FOR
CONFIDENTIAL TREATMENT]
(g) "Parallel Goods" shall mean and include Licensed Products transferred
outside of the Territory or brought into the Territory in violation of
this Agreement.
(h) "Premium" shall mean anything given free or sold at substantially less
than its usual selling price (but does not include sales made pursuant
to periodic price reductions resulting from "specials," "sales," or
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volume pricing discounts) for the purpose of increasing the sale of,
or publicizing, any product or service, or other giveaway or
promotional purpose. Other giveaway or promotional purposes include,
but are not limited to, self-liquidating offers, uses of Licensed
Products as sales force or trade incentives and sales of Licensed
Products through distribution schemes involving earned discounts or
"bonus" points based on the consumer's use of the offeror's product or
service.
(i) "Release" means the shipment of a series.
(j) "Set" means all the cards issued in all series of a particular product
line.
(k) "Standard Size" means a card size of 2 1/2" x 3 1/2".
2. ARENA ACCESS; EXPENSES
(a) [INFORMATION SUBJECT TO REQUEST FOR CONFIDENTIAL TREATMENT]
(b) Expenses & Responsibilities: All expenses related to assignments
performed by LICENSEE's photographers hereunder shall be paid by
LICENSEE. Such expenses include, but are not limited to: the
purchase, installation and shipping of strobes; all travel expenses;
purchase and shipment of film; building and union fees if applicable;
and any and all other expenses deemed necessary by LICENSEE or NBAP to
perform photographic assignments hereunder. All film exposed by
photographers in connection with assignments performed hereunder shall
be shipped, via overnight delivery, unprocessed to the offices of NBA
PHOTOS (450 Xxxxxx Meadow Boulevard, Secaucus, New Jersey 07094) on
the next business day following the day of the assignment. All
shipping costs shall be paid by LICENSEE or its photographers, and NBA
PHOTOS shall pay processing expenses. If permission is granted to
LICENSEE or its photographers to process exposed film, LICENSEE or the
photographers shall pay the cost of processing. On occasion, NBAP may
desire to send originals from a specific game or games to an NBAP
client or NBA team prior to sending them to LICENSEE. [INFORMATION
SUBJECT TO REQUEST FOR CONFIDENTIAL TREATMENT] In the event LICENSEE
does not respond within two (2) business days, NBA PHOTOS may submit
the materials to its client or team provided that such a submission by
NBA PHOTOS does not knowingly interfere with LICENSEE's ability to
meet its production deadlines and does not violate the provisions of
Paragraph 3(b) below. NBAP shall catalog, label and duplicate all of
the Commissioned Photos selected by NBAP for inclusion in the NBA
PHOTOS' archives and shall send to LICENSEE within five (5) business
days after receipt of the exposed film all originals of Commissioned
Photos along with a set of duplicates. NBAP shall pay all costs
associated with duplication.
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LICENSEE shall review all original materials and return to NBA PHOTOS,
within ten (10) business days from its receipt thereof, any originals
not selected by LICENSEE for use on Licensed Product. Commissioned
Photos selected for use on Licensed Product shall be returned by
LICENSEE to NBA PHOTOS upon request. LICENSEE shall make every
reasonable effort to provide NBA PHOTOS with timely access to any
materials being held by LICENSEE.
3. RIGHTS IN COMMISSIONED PHOTOS
All Commissioned Photos shall become and remain the property of NBAP as
provided under Paragraph 10(d) below.
(a) NBAP's rights in Commissioned Photos shall include, but not be limited
to: (i) the unrestricted and exclusive reproduction rights throughout
the world, without name credit, for advertising, trade, or art
purposes or any other lawful purpose; (ii) the exclusive right
throughout the world to protect the Commissioned Photos by copyrights,
in NBAP's name and for its benefit, including the right to secure
extensions and renewals of such copyrights, in NBAP's name and for
NBAP's benefit; (iii) the right to alter, retouch or crop the
Commissioned Photos in any way; (iv) the right to license, distribute,
assign or transfer any right, title, interest or copyright in the
materials or otherwise dispose of the Commissioned Photos or any
portion thereof for any purpose and in any manner except as otherwise
noted in Paragraph 3(b) below; and (v) all subsidiary rights.
(b) NBAP shall have exclusive rights and privileges in, to, and in
connection with the Commissioned Photos during the full terms of any
copyrights relating to the materials and all renewals and extensions
thereof to: (i) create from the Commissioned Photos any form or
medium now known or hereafter to become known, including but not
limited to, all formats of electronic, magnetic, digital, laser or
optical based media (a "Converted Work"); (ii) reproduce any Converted
Works; (iii) prepare and reproduce any audible segments based on the
Commissioned Photos ("Audio Segment"); (iv) prepare and reproduce any
video or motion picture segments based on the Commissioned Photos
("Visual Segment"); (v) prepare and reproduce any composition which
includes any combination of the Commissioned Photos, a Converted Work,
an Audio Segment or a Visual Segment ("Products"); (vi) prepare and
reproduce any derivative works based on the materials ("Derivative
Products"); (vii) prepare and reproduce any compilations which include
the Commissioned Photos, Converted Works, products or Derivative
Products, ("Product Compilations"); (viii) distribute copies in any
form of the materials, Converted Works, Products, Derivative Products
or Product Compilations by sale, lease, license or lending;
(ix) transmit, download or
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otherwise transfer or distribute, the Commissioned Photos, Converted
Works, Products, Derivative Products or Product Compilations;
(x) perform the Converted Works, Products, Derivative Products or
Product Compilations; and (xi) display the Commissioned Photos, the
Converted Works, Products, Derivative Products or Product
Compilations. [INFORMATION SUBJECT TO REQUEST FOR CONFIDENTIAL
TREATMENT]
4. SHARED PHOTO LICENSING REVENUES
[INFORMATION SUBJECT TO REQUEST FOR CONFIDENTIAL TREATMENT]
5. TEAM REPRESENTATION
Unless otherwise approved in writing by NBAP, one NBA Set within LICENSEE's
basic line must include individual cards of a minimum of [INFORMATION
SUBJECT TO REQUEST FOR CONFIDENTIAL TREATMENT] players from each Member
Team and utilize the respective team's full logo on a mutually agreeable
location on the card. (Other product lines can have fewer than 6 players
from each team but such minimum player requirement shall be subject to
NBAP's approval.) All designs of the Licensed Products using the Licensed
Marks, including any packages, containers or tags, shall be subject to
NBAP's prior written approval and shall be used solely in furtherance of
this Agreement, and such designs will not be used in any other respect by
LICENSEE nor will LICENSEE authorize any third party to use such designs.
Notwithstanding the foregoing, NBAP acknowledges that LICENSEE may hold
other licenses pursuant to which LICENSEE manufacturers, distributes or
sells products similar in design to the Licensed Products and nothing in
this Agreement is intended to prohibit LICENSEE's manufacture, distribution
or sale of such products not bearing or relating to the Licensed Marks.
6. STATEMENTS AND PAYMENTS; REPORTING
(a) Statement and Payments: By the fifteenth (15th) day following the end
of each month, LICENSEE shall wire transfer to NBAP the "Monthly
Minimum Payment" (as defined below), and within fifteen (15) days
(i.e., by the 30th day following the end of each month) of each such
payment, shall furnish (on forms provided by or approved by NBAP) full
and accurate statements (on a country-by-country and unit basis, if
more than one country is contained within the definition of the
Territory), certified by an officer of LICENSEE, showing all
information relating to the calculation of Net Sales for the preceding
month. Simultaneously with the submission of such statement, LICENSEE
shall wire transfer to NBAP the overage, if any, with respect to the
Monthly Minimum Payment made and the actual earned royalty and A&P
contribution required under Paragraphs F and H for the preceding
month. The minimum amount of each monthly royalty payment with
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respect to each region shall be the amount which, when added to
payments of royalties previously made for the Contract Year with
respect to such region, shall be equal to one-twelfth (8.34%) of the
Minimum Guarantee for such region for such Contract Year required
under Paragraph E above, multiplied by the number of calendar months
then elapsed. The minimum amount of each monthly advertising and
promotion payment shall be the amount which, when added to the
advertising and promotion payments previously made for the Contract
Year, shall be equal to one-twelfth (8.34%) of the A&P contribution
for such Contract Year required under Paragraphs F and H above,
multiplied by the number of calendar months then elapsed (the minimum
payments under this sentence and the preceding sentence collectively
referred to as the "Monthly Minimum Payment"). Aggregate royalties
and any advertising and promotion payments paid each Contract Year may
exceed the Minimum Guarantee and the A&P contribution for such
Contract Year. Such monthly statements shall be furnished and the
required payments made by LICENSEE whether or not there are any Net
Sales for that month. LICENSEE shall not deduct or withhold any
amounts by reason of any tax (including any taxes imposed on NBAP);
any applicable tax on the distribution and sale of the Licensed
Products shall be borne, and paid directly, by LICENSEE. In order to
avoid the imposition of foreign withholding taxes on NBAP, all
payments shall be in U.S. dollars, from a U.S. source approved by
NBAP. All computations and payments shall be in U.S. dollars, at the
spot rate for the local currency as published in the Wall Street
Journal for the last business day of the preceding month. If LICENSEE
shall fail to timely pay any amount due under this Paragraph, LICENSEE
shall pay interest on such amount at a rate equal to the lesser of
(i) three percent (3%) per annum over the highest prime rate
(announced by Chemical Bank, New York branch) prevailing during the
period between the date the payment first became due and the date such
payment is actually paid or (ii) the highest rate permitted by law
during the period between the date the payment first became due and
the date such payment is actually paid. The receipt or acceptance by
NBAP of any of the statements furnished or royalties paid by LICENSEE
(including the cashing of any royalty checks) shall not preclude NBAP
from questioning their accuracy at any time, auditing LICENSEE's books
and records pursuant to Paragraph 15 or claiming any shortfall in
royalty payments, or advertising and promotion payments. In order to
assist with NBAP's annual budget process, by April 15 of each Contract
Year, LICENSEE shall deliver a statement detailing LICENSEE's
projections for sales of each Licensed Product for the following
Contract
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Year, broken down on a quarterly basis. If LICENSEE fails to comply
with the reporting requirements contained in this Paragraph, NBAP may
charge LICENSEE, as liquidated damages, two thousand U.S. dollars (USD
2,000) for each instance of non-compliance with this Paragraph.
(b) No Cross Collateralization: (i) Except as provided in
sub-paragraph (b)(ii) below, (y) any royalty payment for a unit of
Licensed Product sold shall only be applied against the Minimum
Guarantee for such Licensed Product for the Contract Year in which the
unit of such Licensed Product was sold (i.e., any shortfall in, or
payment in excess of, the Minimum Guarantee for a Contract Year may
not be offset or credited against the Minimum Guarantees for any other
Contract Year, against any other Licensed Product or against any other
NBA license held by LICENSEE). If Minimum Guarantees are stated
separately for different lines of Licensed Products, royalty payments
resulting from Net Sales in one line of Licensed Product shall be
applied only against the Minimum Guarantee for such line of Licensed
Product. (z) In the event of any shortfall with respect to the
Minimum Guarantee for any line of Licensed Product for any Contract
Year, NBAP shall waive its rights with respect to payment of the
balance of such product line minimum provided LICENSEE's:
(yy) aggregate royalty payment for such Contract Year exceeds the
aggregate Minimum Guarantee for such Contract Year, and (zz) royalty
payments with respect to the product line for which there has been a
shortfall equals or exceeds seventy-five percent (75%) of the stated
Minimum Guarantee for such product line.
[INFORMATION SUBJECT TO REQUEST FOR CONFIDENTIAL TREATMENT]
7. NON-RESTRICTIVE GRANT; RIGHTS RESERVED
Nothing in this Agreement shall prevent NBAP from granting any other
licenses and rights. All rights not specifically granted in this Agreement
are expressly reserved by NBAP. No right of renewal or option to extend is
granted or implied and LICENSEE shall have no right to continue
manufacturing or selling Licensed Products or to continue holding itself
out as a licensee of NBAP after the expiration or termination of this
Agreement except as provided in Paragraph 17.
8. PREMIUMS
Licensed Products shall not be used as a Premium without the prior written
approval of NBAP in each instance and unless specifically authorized
pursuant to a separate agreement with NBAP. Nothing in this Agreement
shall prohibit LICENSEE from marketing Licensed Products using creative
techniques consistent with industry practice, including, but not limited
to, periodic "specials," "sales," or volume
-8-
discount prices, so long as all receipts are accounted for in Net Sales and
in accordance with this Agreement.
9. GOODWILL
LICENSEE recognizes that (i) a portion of the value of the NBA Marks is
attributable to goodwill, (ii) the goodwill attached to the NBA Marks
belongs exclusively to NBAP, the NBA and its Member Teams and (iii) that
such NBA Marks have secondary meanings in the minds of the public.
LICENSEE shall not, during the Term or thereafter, challenge (y) the
property rights of the Member Teams, whether severally owned or held in
association as the NBA, or NBAP's property rights, in and to NBA Marks, or
(z) the validity, legality or enforceability of this Agreement.
10. PROTECTION OF RIGHTS
(a) Unauthorized Activities: LICENSEE shall promptly notify NBAP in
writing of any infringements of the Licensed Marks or the Licensed
Products or the sale of any Licensed Products outside the Territory
(e.g., unauthorized importation/exportation of goods) which may come
to LICENSEE's attention. NBAP shall have the sole right to determine
whether or not any action shall be taken on account of any such
infringement or unauthorized importation/exportation. LICENSEE agrees
not to contact any third party, not to make any demands for claims and
not to institute any suit or action on account of such infringement of
the NBA Marks or unauthorized importation/exportation of Licensed
Product without obtaining the express prior written permission of NBAP
in each instance.
(b) Assistance in Protecting Marks: LICENSEE shall cooperate to the
fullest extent necessary to assist NBAP in the protection of the
rights of NBAP, the NBA and the Member Teams in and to the Licensed
Marks. NBAP shall reimburse LICENSEE for any reasonable out-of-pocket
costs actually incurred by LICENSEE in providing such cooperation and
assistance. LICENSEE shall cooperate with NBAP in its enforcement
efforts, including being named by NBAP as a complainant in any action
against an infringer. LICENSEE shall pay to NBAP, and waives all
claims to, all damages or other monetary relief recovered with
respect to the NBA Marks in any such NBAP-initiated action by reason
of a judgment or settlement (other than for reasonable attorneys' fees
and expenses incurred at NBAP's request).
(c) Ownership of Marks: LICENSEE acknowledges that NBAP and/or the Member
Teams are the exclusive owners of the Licensed Marks. Any
intellectual property rights in the Licensed Marks that may accrue to
LICENSEE shall inure to the benefit of NBAP and shall be assigned to
NBAP upon its request. Any copyright, trademark or service xxxx used
or procured by LICENSEE with respect
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to or involving the Licensed Marks, derivations or adaptations of the
Licensed Marks, or any word, symbol or design which is similar to the
Licensed Marks so as to suggest association with or sponsorship by the
NBA, one of its Member Teams or any of their affiliates, shall be
procured for the benefit of and in NBAP's name, but at LICENSEE's
expense, notwithstanding their creation by LICENSEE. LICENSEE shall
take all necessary steps to secure an assignment to NBAP of the
copyright from a creator of work that is not work-for-hire. Any
copyright, trademark or service xxxx affecting or relating to the
Licensed Marks already procured or applied for shall be assigned to
NBAP. LICENSEE shall supply NBAP with any necessary supporting
materials required to obtain copyright or trademark registrations of
any copyrights or trademarks required to be assigned to NBAP under
this Agreement. NBAP acknowledges that nothing in this Paragraph or
Agreement shall be construed as granting or conveying to NBAP any
rights with respect in or to LICENSEE's present trademarks or trade
names, and trade names and brand names used across multiple sports and
not incorporating any NBA Marks.
(d) Ownership of Commissioned Photos: All Commissioned Photos shall
become and remain the property of NBAP, and shall be considered works-
for-hire for NBAP within the meaning of the United States Copyrights
Law (the "Copyright Law") for all purposes and may, without delay or
restriction, be registered in the name of NBA PHOTOS with the U.S.
Copyright Office of the Library of Congress (the "Copyright Office")
and such other national or multinational registries in which NBAP may
elect to effect such filings. If, for any reason, the Commissioned
Photos are held not to be "works-for-hire", LICENSEE hereby assigns to
NBAP all rights LICENSEE has, throughout the world and in perpetuity,
in the Commissioned Photos. Accordingly, in consideration of NBAP's
obligations under this Agreement, all rights in the Commissioned
Photos shall be owned exclusively by NBAP. LICENSEE shall not have or
claim to have any right of any kind whatsoever in such materials other
than as set forth herein, and LICENSEE agrees to execute any documents
necessary to transfer all rights and title in the materials to NBAP.
NBAP shall be considered to be the "Author" of any and all such works
under applicable international laws and treaties and have the sole
right and entitlement accorded "Authors" thereunder. LICENSEE hereby
appoints NBAP as "Attorney-In-Fact" for the purpose of executing any
documents reasonably necessary to implement the terms of this
Agreement. LICENSEE shall secure copyright for NBAP (by such means as
are reasonably appropriate, e.g., use of -C- notice or
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registration in the Copyright Office) of all Commissioned Photos. To
the extent permitted by law, all Commissioned Photos shall be
commissioned by LICENSEE as "works-for-hire" for NBAP within the
meaning of the Copyright Law, for all purposes, and may, without delay
or restriction, be registered in the name of NBAP with the Copyright
Office and such other national or multinational registries in which
NBAP may elect to effect such filings. LICENSEE shall require all
photographers performing assignments for LICENSEE in connection with
this Agreement to sign a copy of an agreement in the form of Exhibit A
(or in such other from as LICENSEE may elect to utilize subject to
NBAP's prior approval as to its legal sufficiency and content), which
grants and assigns to NBAP all copyright and ownership of any and all
Commissioned Photos created by the photographers in connection with
this Agreement. LICENSEE shall submit to NBAP fully executed
agreements in the form of Exhibit A, or other NBAP approved form or
documentation as provided above, for each photographer prior to
performing assignments in connection with this Agreement. In the
alternative, consistent with LICENSEE's past practice, LICENSEE can
continue to have its photographers grant and assign to LICENSEE all
copyright and ownership in Commissioned Photos and LICENSEE then in
turn conveying same to NBAP as provided above.
(e) Notices, Labeling and Records: In every instance in which any
Licensed Xxxx is used free-standing in any Licensed Product or
promotional materials design (i.e., not appearing as embodied in or on
a uniform, equipment, etc.), LICENSEE shall include the notice "-TM-,"
"-Registered Trademark-," "-C-" or such other copyright, trademark or
service xxxx notices (including the form, location and content of such
notices) as NBAP may reasonably designate from time-to-time. In
addition, the following general notice (in the English language, and
in the language of any foreign country where the Licensed Products
will be sold subject to space limitations and the requirements of
local law) must be included on the packaging of the Licensed Product:
"The NBA and individual NBA member team identifications
reproduced on this product are trademarks and copyrighted
designs, and/or other forms of intellectual property, that
are the exclusive property of NBA Properties, Inc. and the
respective NBA member teams and may not be used, in whole or
in part, without the written consent of NBA Properties Inc."
LICENSEE shall: (i) cause each card to bear the NBA, Logo together
with the NBAP -C- notice in such place, and in such prominence, as
NBAP may reasonably
-11-
designate from time-to-time, (ii) include on the product box and
wrapper the "Official Licensed Product" logo and the NBAP -C- notice
in such place, and in prominence, as NBAP may designate from time-to-
time, (iii) faithfully comply with and adhere to NBAP's mandatory
hologram "Official Licensed Product" identification system or such
system(s) as NBAP may from time-to-time require including, but not
limited to, identification devices on individual cards, shipment
tracking, identification and anti-counterfeiting systems, stickers and
labels that NBAP may establish from time-to-time, (iv) unless approved
in writing by NBAP, not cross-license or otherwise use other licensed
properties or other Marks with the Licensed Products or Licensed
Marks, and (v) keep appropriate records, and advise NBAP, of the date
when each of the Licensed Products is first placed on sale or sold in
each country of the Territory and the date of first use in each
country of each different Licensed Xxxx on the Licensed Products and
any promotional or packaging materials. If NBAP requires the
incorporation of an anti-counterfeiting device on individual cards
that adds a direct manufacturing cost (other than a DE MINIMUS COST)
to the Licensed Products, NBAP shall make a reasonable equitable
adjustment to LICENSEE's obligations under this Agreement.
(f) Recordation and Registered User Applications: With respect to those
countries in which LICENSEE may distribute and which require
applications to register LICENSEE as a permitted or registered user of
the Licensed Marks, or which require the recordation of this
Agreement, LICENSEE shall execute and deliver to NBAP such
applications, agreements or other documents as may be necessary. In
such event, this Agreement rather than such agreements will govern any
disputes between LICENSEE and NBAP, and when this Agreement expires or
is terminated, any such other agreement shall also be deemed expired
or terminated.
(g) LICENSEE Trade Names and Trademarks: LICENSEE shall permanently affix
labeling on each Licensed Product or its packaging, indicating its
name, trade name and address so that the public can identify the
supplier of the Licensed Product. Prior to any distribution or sale
of any Licensed Products, LICENSEE shall advise NBAP in writing of
LICENSEE's trade names or trademarks used on Licensed Products and the
proposed placement of such trade names and trademarks on the Licensed
Products. LICENSEE shall only sell Licensed Products under mutually
agreed upon trade names or trademarks and with approved copyrighted
designs, shall not incorporate the Licensed Marks into LICENSEE's
corporate or business name or trademark in any manner
-12-
whatsoever and shall place its trade names and trademarks on Licensed
Products only as approved by NBAP. NBAP hereby pre-approves the use
of the trademarks and trade names of LICENSEE set forth in Paragraph
A(1)(i) above and shall not unreasonably withhold approval as to
additional trademarks or trade names proposed for use by LICENSEE
during the Term. As requested by NBAP, LICENSEE shall supply NBAP, in
advance of shipping any Licensed Products, with at least twelve (12)
copies of each type of its stickers, product boxes, labels and other
markings of origin for use in identifying and authenticating Licensed
Products in the marketplace. LICENSEE shall not use, whether during
or after the Term, any Marks: (i) in connection with the Licensed
Marks without NBAP's authorization, (ii) confusingly-similar to the
Licensed Marks, or (iii) intended to relate or refer to the Licensed
Marks, the Member Teams or events involving Member Teams.
11. INDEMNIFICATIONS
(a) LICENSEE shall be solely responsible for, and shall defend, hold
harmless and indemnify NBAP, NBA Entertainment, Inc. ("NBAE"), the NBA
and its Member Teams and their respective affiliates, owners,
directors, governors, officers, employees and agents (collectively
"NBA Parties") against, any claims, demands, causes of action or
damages, including attorneys' fees (collectively, "Claims"), arising
out of: (i) any breach of this Agreement by LICENSEE, (ii) any defect
(whether obvious or hidden and whether or not present in any sample
approved by NBAP) in a Licensed Product or any packaging or other
materials (including advertising materials), or arising from personal
injury or any infringement of any rights of any other person or entity
by the manufacture, sale, possession or use of Licensed Products or
their failure to comply with applicable laws, regulations and
standards or (iii) any claim (except as to those for which LICENSEE is
entitled to indemnification by NBAP under sub-paragraph (b) below)
that the use of any Commissioned Photo violates or infringes upon the
copyright or other intellectual property rights of any third party, or
(iv) any claim that the use of any design or other graphic component
of any Licensed Product (other than the Licensed Marks) violates or
infringes upon the trademark, copyright or other intellectual property
rights (including trade dress) of a third party, provided LICENSEE is
given prompt written notice of and shall have the option to undertake
and conduct the defense of any such Claim. In any instance to which
the foregoing indemnities pertain, NBAP shall cooperate fully with and
assist LICENSEE in all respects in connection with any such
-13-
defense. LICENSEE shall reimburse NBAP for all reasonable out-of-
pocket costs actually incurred by NBAP in connection with such
cooperation and assistance. In any instance to which such indemnities
pertain, LICENSEE shall not enter into a settlement of such Claim or
admit liability or fault with respect in or to the NBA Marks without
NBAP's prior written approval. LICENSEE shall obtain and maintain
product liability insurance providing protection for the NBA Parties
against any Claims arising out of any alleged defects in the Licensed
Products or any use of the Licensed Products, in the amount of one
million dollars ($1,000,000) (including the amount of the deductible).
Such insurance shall be carried by an insurer with a rating by A.M.
Best & Co. of A-7 or other rating satisfactory to NBAP. Such
insurance policy shall also provide that NBAP receive written notice
within thirty (30) days prior to the effective date of the
cancellation, non-renewal or any material change in coverage. In the
event that LICENSEE fails to deliver to NBAP a certificate of such
insurance evidencing satisfactory coverage prior to NBAP's execution
of this Agreement, NBAP shall have the right to terminate this
Agreement at any time. Such insurance obligations shall not limit
LICENSEE'S indemnity obligations, except to the extent that LICENSEE's
insurance company actually pays NBAP amounts which LICENSEE would
otherwise be obligated to pay NBAP.
(b) NBAP shall be solely responsible for, and shall all defend, hold
harmless and indemnify LICENSEE, its directors, officers, employees
and agents against any Claims arising out of: (i) a claim that the
use of the Licensed Marks as authorized by this Agreement violates or
infringes upon the trademark, copyright or other intellectual property
rights (including trade dress) of a third party in or to the Licensed
Marks, (ii) a claim that the use of the Licensed Attributes on
Licensed Products, or in advertising or promotional materials, as
specifically approved by NBAP violates or infringes upon the right of
privacy or right of publicity of any NBA player, (iii) a claim arising
out of LICENSEE's compliance with terms and conditions of this
Agreement relating to the procurement of NBA Photos and Commissioned
Photos for use on Licensed Product (and NBA-identified advertising and
promotion materials), or (iv) any breach of this Agreement by NBAP,
provided NBAP is given prompt written notice of and shall have the
option to undertake and conduct the defense of any such Claim. In any
instance to which the foregoing indemnities pertain, LICENSEE shall
cooperate fully with and assist NBAP in all respects in connection
with any such defense. NBAP shall reimburse LICENSEE for all
reasonable out-of-pocket expenses actually incurred by LICENSEE in
connection with such cooperation and
-14-
assistance. In any instance to which such indemnities pertain, NBAP
shall not enter into a settlement of such Claim or admit liability or
fault without LICENSEE's prior written approval.
12. QUALITY; APPROVALS; SAMPLES
LICENSEE shall cause the Licensed Products to meet and conform to high
standards of style, quality and appearance. In order to assure NBAP that
it is meeting such standards and other provisions of this Agreement,
LICENSEE shall comply with the following:
[INFORMATION SUBJECT TO REQUEST FOR CONFIDENTIAL TREATMENT]
(c) Use of NBA Photos and Footage: Any NBA Photo or NBA game action
footage that LICENSEE uses in connection with the Licensed Products
must be obtained from NBAE or NBA PHOTOS (as applicable), other than
with respect to Commissioned Photos, and shall be subject to NBAE and
NBA PHOTOS respective usage agreements, and prevailing search and edit
charges for NBAP card licensees (and which charges shall be no greater
than those charges any other NBAP card licensees) and any applicable
use or holding fee. All NBA Photos must be returned to NBA PHOTOS in
their original slide mount or sleeve with the photo identification
number/bar code number intact or a service fee shall be assessed
LICENSEE in accordance with the terms of NBA PHOTOS usage agreement.
(d) Rejections and Non-Compliance: All submissions or samples not
approved by NBAP shall promptly be destroyed by LICENSEE. LICENSEE
shall advise NBAP regarding the time and place of such destruction (in
sufficient time to arrange for an NBAP representative to witness such
destruction, if NBAP so desires) and such destruction shall be
attested to in a certificate signed by one of LICENSEE's officers and
submitted to NBAP within fifteen (15) days of the date on which the
sample was not approved. In the event of LICENSEE's unapproved or
unauthorized manufacture, distribution, use or sale of any products or
materials bearing the Licensed Marks, including promotional materials,
or the failure of LICENSEE to comply with Paragraphs 10(e), 10(g), 12
or 14(c), NBAP shall have the right to: (i) immediately revoke
LICENSEE's rights with respect to such Licensed Product licensed under
this Agreement, and/or (ii) at that LICENSEE's expense, confiscate or
order the destruction of such unapproved, unauthorized or non-
complying products. In the event of LICENSEE's failure to comply with
the material terms of the aforementioned Paragraphs, within thirty
(30) days after LICENSEE's receipt of notice of such breach, LICENSEE
shall pay all royalties, Minimum Guarantees and advertising and
promotion amounts due NBAP with respect to the Licensed Product for
which rights have been revoked. Such right(s) shall be without
prejudice
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to any other rights NBAP may have under this Agreement or otherwise.
If NBAP obtains a substitute licensee for the Licensed Products
produced by LICENSEE and rights to which have been revoked hereunder,
NBAP shall credit all revenues received from such substitute licensee
with respect to such Licensed Product against LICENSEE's obligations
for the Minimum Guarantees and the A&P Minimum.
(e) Testing Requirements: LICENSEE shall follow reasonable and proper
procedures for testing the Licensed Products for compliance with laws,
regulations, standards and procedures. Licensed Products that do not
comply with applicable laws, regulations, standards and procedures
shall be deemed unapproved, even if previously approved by NBAP, and
shall not be shipped unless and until LICENSEE can demonstrate to
NBAP's satisfaction that such Licensed Products have been brought into
full compliance.
(f) Revocation of Approval: In the event that: (i) the quality,
appearance or style of any Licensed Product previously approved by
NBAP ceases to be acceptable to NBAP because of a change in the
quality, appearance or style of the Licensed Product, (ii) LICENSEE
uses the Licensed Marks improperly or violates any material term of
this Paragraph 12 or (iii) there is an event or occurrence relating to
any player depicted in a Licensed Product which, in the good faith
opinion of NBAP, defames or brings into disrepute, or reflects
unfavorably upon NBAP, the NBA or any of its Member Teams, then, in
any such event, NBAP shall have the right, in its sole discretion, to
withdraw its approval of such Licensed Product. In the event of such
withdrawal, NBAP shall provide immediate written notice to LICENSEE
and LICENSEE shall cease the use of the Licensed Marks and Licensed
Attributes in connection with the sale, distribution, advertisement or
use of such Licensed Products and, if practicable, such Licensed
Product shall immediately be withdrawn from the market and destroyed;
provided, however, that in the event of a revocation of approval
pursuant to this Paragraph, NBAP and LICENSEE shall negotiate in good
faith to provide for a reasonable sell-off period for such Licensed
Product and an equitable adjustment to the Minimum Guarantee for such
Licensed Product. If there are other Licensed Products for which
approval has not been withdrawn under this subparagraph, then this
Agreement shall remain in full force and effect as to such other
Licensed Products. LICENSEE shall notify NBAP in writing of any
Licensed Products deleted from its product lines.
13. PROMOTIONAL MATERIAL; LIST GENERATION
LICENSEE shall not use the Licensed Marks or Licensed Attributes, or any
reproduction of the Licensed Marks or
-16-
Licensed Attributes in any advertising, promotion or display material or in
any other manner whatsoever without prior written approval from NBAP.
LICENSEE shall furnish to NBAP, free of charge, in a computer readable form
or such other forma reasonably acceptable to NBAP, the names, addresses,
telephone numbers and any other consumer information furnished to, and
maintained by, LICENSEE resulting from participation in any NBA-themed
sweepstakes, promotion or direct mail solicitation conducted by LICENSEE
(and which information NBAP shall have the right to use for its marketing
and research efforts as it deems appropriate; provided, however, that such
information shall not be made available to LICENSEE's competitors). Under
no circumstance will "lotteries," "games of chance" or any other type of
promotion which NBAP believes reflects unfavorably upon the NBA or its
Member Teams be approved. All copy and material depicting or using the
Licensed Marks or Licensed Attributes (including display and promotional
material, catalogs and press releases) shall be submitted for approval well
in advance of production (but in no event less than ten (10) business days
prior to the start of commercial production) to allow adequate time for
NBAP, in its sole discretion, to approve, disapprove or comment upon such
materials and for any required changes to be made. By way of example, no
television or cinema advertising containing any Licensed Xxxx or Licensed
Attribute may be used unless it has been approved in all stages (i.e.,
creative concept, script, storyboard, production "rough-cut" and final
version). Unless otherwise approved by NBAP, any NBA Photo or NBA game
action footage that LICENSEE uses in connection with the Licensed Products
must be obtained from NBAE or NBA PHOTOS (as applicable) and shall be
subject to NBAE and NBA PHOTOS respective search and edit charges and any
applicable use or holding fee. Any promotional material submitted that is
not approved or disapproved by NBAP within ten (10) days of its receipt by
NBAP shall be deemed approved by NBAP.
14. DISTRIBUTION; COMPLIANCE
(a) LICENSEE shall use its best efforts to distribute and sell, within and
throughout the Territory, the Licensed Products in such manner as may
be required to meet competition by reputable manufacturers of similar
articles. LICENSEE shall make and maintain adequate arrangements for
the distribution and timely delivery of Licensed Products to retailers
within and throughout the Territory. In the event NBAP advises
LICENSEE that a special promotional effort is to take place in an
individual store or chain, LICENSEE shall use reasonable efforts to
sell the Licensed Products to said store or chain. In addition,
LICENSEE shall give the Licensed Products wide distribution and shall
not, in accordance with the selling practices set forth in this
Agreement and consistent with LICENSEE's customary criteria and
reasonable business judgment, refrain for
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any reason from selling Licensed Products to any retail outlet within
the Territory that may desire to purchase Licensed Products and whose
credit rating and marketing image warrants such sale.
(b) If LICENSEE desires to have a third party manufacture any Licensed
Product, LICENSEE must first notify NBAP of the name and address of
such third party and of the Licensed Product LICENSEE desires such
third party to manufacture. Attached as Schedule B is a true and
complete list of all third party manufacturers currently authorized by
NBAP. NBAP shall have the right, in its sole discretion to withhold
approval for such third party manufacture. If NBAP grants approval
for such third party manufacture, it may grant such approval pursuant
to an agreement (on a form supplied by NBAP) to be entered into prior
to such manufacture among NBAP, LICENSEE and such manufacturer which
will, among other things, require that the third party manufacturer be
subject to all of the terms and conditions of this Agreement. If NBAP
does not require the third party to enter into a separate agreement,
LICENSEE must provide NBAP with a copy of its agreement with the third
party, which agreement must provide that it is subject to this
Agreement. If any of LICENSEE's authorized manufacturers uses the
Licensed Marks for any unauthorized purpose, LICENSEE shall be
responsible for, and shall cooperate fully and use its best efforts in
stopping, such unauthorized use. Any change by LICENSEE from a third
party manufacture previously approved by NBAP shall require approval
in accordance with this Paragraph.
(c) LICENSEE understands and acknowledges the meanings of "Counterfeit
Goods," "Diverted Goods" and "Parallel Goods" as set forth in
Paragraph 1 above and LICENSEE shall not authorize or knowingly permit
the creation of any such goods by its employees, agents,
representatives or any others operating under its direction,
supervision or control and involving the NBA Marks. LICENSEE shall
use commercially reasonable efforts to stamp or imprint on all its
invoices a prominent legend that states that the Licensed Products are
allowed to be sold only within the Territory. In the event NBAP has
good cause to believe that any of LICENSEE's authorized distributors,
agents and customers are not observing territorial limits, LICENSEE
shall, at the request of NBAP, inquire as to whether such party or
parties are observing territorial limits and shall report in writing
to NBAP the results of such inquiries. LICENSEE shall notify NBAP of
all orders from, or on behalf of, a customer who LICENSEE knows is
located outside the Territory or has good cause to believe intends to
resell the Licensed Products outside the Territory. If LICENSEE sells
Licensed Product outside the Territory, or to a
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customer that it knows to be reselling the Licensed Product outside
the Territory, LICENSEE shall pay all NBAP's costs and expenses,
including attorney's fees, required to remove such goods from the
marketplace. Such right of reimbursement shall be in addition to, and
not in lieu of, such other rights and relief (including injunctive
relief) as may be available to NBAP.
(d) In the event any LICENSEE sells or distributes other major sports
league licensed trading cards or stickers, LICENSEE will not
discriminate in its sales and distribution practices among the
products of the various leagues in a manner which adversely impacts
the sale of the Licensed Products. LICENSEE may not package the
Licensed Products in combination with other products, whether similar
or different, without the prior written approval of NBAP. In the
event that NBAP believes in good faith, based upon audit of LICENSEE's
royalty statements and records and generally accepted accounting
principles within the industry, that LICENSEE has employed selling or
reporting methods designed to circumvent or reduce the royalty or
other payment or reporting obligations contained in this Agreement,
upon written notice LICENSEE shall, within ten (10) days, pay NBAP an
amount equal to the difference between the amount paid to NBAP during
the period such irregular reporting methods were used and the amount
that should have been paid had the irregular reporting methods not
been employed, plus interest at the highest prime rate (as announced
by Chemical Bank, New York branch) announced during the period such
irregular report methods were employed.
(e) LICENSEE shall at all times conduct all aspects of its business in a
fair and reasonable manner and in compliance with all shipment
tracking, identification and anti-counterfeiting systems and labels
that NBAP may reasonably establish from time-to-time and all
applicable laws, governmental rules and regulations, court and
administrative decrees and the highest standard of business ethics
then prevailing in the industry.
(f) It shall be LICENSEE's sole responsibility, at its sole expense, to
obtain all approvals (including, but not limited to, approvals of
advertising materials) of all governmental authorities which may be
necessary in connection with LICENSEE's performance under this
Agreement.
15. RECORDS; AUDITS
(a) LICENSEE shall keep accurate books of account and records covering all
transactions relating to the license granted in this Agreement
(including, but not limited to, sales of Licensed Products, purchases
and uses of NBA hologram stickers and compliance with
-19-
shipment tracking, identification and anti-counterfeiting systems and
labels that NBAP may establish from time to time). NBAP and its
authorized representatives shall have the right, at all reasonable
hours of the day and upon reasonable prior notice, to examine and
audit such books of account and records and all other documents and
materials in LICENSEE's possession or under its control (including
records of LICENSEE's parents, subsidiaries, affiliates and third
parties, if they are involved in activities which relate to this
Agreement) relating to this Agreement. NBAP shall have free and full
access for such purposes and for the purpose of making extracts and
copies. Should an audit by NBAP establish a deficiency between the
amount found to be due NBAP and the amount LICENSEE actually paid or
reported, the LICENSEE shall pay the amount of such deficiency, plus
interest at the then current prime rate (as announced by Chemical
Bank, New York branch) from the date such amount should have been paid
until the date of payment. Should such audit establish a deficiency
of more than five percent (5%), LICENSEE shall also pay for the cost
of the audit. LICENSEE shall pay such amount within thirty (30) days.
All such books of account and records shall be kept available for at
least two (2) years after the expiration or termination of this
Agreement, or three (3) years after the end of the Contract Year to
which they relate, whichever is earlier. In order to facilitate
inspection of its books and records, LICENSEE shall designate a symbol
or number which will be used exclusively in connection with the
Licensed Products on which royalty payments are payable and shall
maintain for inspection as provided in this Agreement duplicates of
all xxxxxxxx to customers with respect to Licensed Products. LICENSEE
shall, within ten (10) business days of NBAP's request (which shall
not be made more than four (4) times per Contract Year), furnish NBAP
with a list of LICENSEE's top twenty-five (25) retail accounts for
Licensed Products (on a country by country basis) and their monthly
purchases of Licensed Products (broken down by unit sales and in
dollar volume by retailer). LICENSEE shall, promptly upon execution
thereof, supply NBAP with true and complete copies of any agreement it
enters into with any Member Team or any NBA player. In addition,
LICENSEE shall, on a quarterly basis during the Term, provide NBAP
with financial information furnished to the United States Securities
and Exchange Commission (the "SEC"). However, if LICENSEE is no
longer required to furnish such information to the SEC, LICENSEE
shall, on a quarterly basis during the Term, provide NBAP with copies
of all financial statements and other financial information, relevant
to its NBA business, prepared by LICENSEE for distribution to its
-20-
banks or other financial lending institutions to whom it reports
regularly. At NBAP's request, LICENSEE shall reasonably cooperate
with NBAP in developing an electronic data interchange, or developing
such other system, that will facilitate NBAP's review of LICENSEE's
graphic designs for Licensed Products.
(b) [INFORMATION SUBJECT TO REQUEST FOR CONFIDENTIAL TREATMENT]
16. EARLY TERMINATION
Without prejudice to any other rights NBAP may have pursuant to this
Agreement or otherwise, NBAP shall have the right to terminate this
Agreement at any time if:
(a) Within nine (9) months from the date that this Agreement is executed
on behalf of NBAP, LICENSEE shall not have begun the bona-fide
production of each card line set forth in Paragraph A(1) above within
and throughout the Territory in accordance with this Agreement.
(b) After two (2) delinquent payments during the Term, LICENSEE shall fail
to timely remit a royalty payment when due and shall fail to cure such
non-payment within thirty (30) days (ten (10) days for other non-
payment defaults under Paragraphs F or H) after its receipt of written
notice from NBAP and provided the cumulative number of days late
(excluding cure period) is more than twenty-one (21) days. LICENSEE
shall have no right to cure more than three (3) payment defaults.
(c) LICENSEE or any guarantor under this Agreement shall be unable to pay
its liabilities when due, or shall make any assignment for the benefit
of creditors, or under any applicable law admits in writing its
inability to meet its obligations when due or commit any other act of
bankruptcy, institute voluntary proceedings in bankruptcy or
insolvency or permit institution of such proceedings against it.
(d) LICENSEE shall fail to perform or shall be in breach of any material
term or condition of this Agreement; provided, however, that if such
breach can be cured, termination shall take effect thirty (30) days
after written notice of such breach is sent by NBAP if such breach has
not been cured during such thirty (30) day period.
(e) LICENSEE (i) delivers Licensed Products outside the territory covered
by any retail product license agreement in effect during the Term
between NBAP and LICENSEE; (ii) sells Licensed Products to a third
party who LICENSEE knows, or has reason to know, intends to deliver
the Licensed Products outside the Territory; or (iii) LICENSEE is in
breach of Paragraph 14(c).
(f) LICENSEE sells to any third party that LICENSEE knows, or has reason
to know, is altering or modifying the actual Licensed Products (as
opposed to merely repackaging) prior to sale to the ultimate consumer.
-21-
[INFORMATION SUBJECT TO REQUEST FOR CONFIDENTIAL TREATMENT]
17. DISPOSAL OF STOCK
Within [INFORMATION SUBJECT TO REQUEST FOR CONFIDENTIAL TREATMENT] months
following the initial ship date of each series of Licensed Product, except
as otherwise approved by NBAP in writing, LICENSEE shall destroy printing
plates and any Licensed Product on hand. LICENSEE shall be entitled to
retain for its purposes up to one hundred (100) cases of Licensed Product
each Contract Year. Any Licensed Product returned after [INFORMATION
SUBJECT TO REQUEST FOR CONFIDENTIAL TREATMENT] months of its initial ship
date shall be destroyed within ninety (90) days of receipt by LICENSEE.
Upon request, LICENSEE shall provide NBAP with evidence of the destruction
of such product or components. Upon expiration or termination, any
Licensed Product on hand at the end of the sell-off period or subsequently
returned to LICENSEE (or unfinished components of Licensed Products) shall
be destroyed by LICENSEE at its cost, no later than thirty (30) days
thereafter.
18. EQUITABLE RELIEF
LICENSEE acknowledges that NBAP is entering into this Agreement not only in
consideration of the royalties to be paid, but also for the promotional
value and intrinsic benefit resulting from the manufacture, advertisement,
distribution, sale and promotion of the Licensed Products by LICENSEE in
the Territory. LICENSEE acknowledges that the Licensed Marks and Player
Attributes possess a special, unique and extraordinary character which
makes difficult the assessment of the monetary damage which NBAP would
sustain as a result of the unauthorized use thereof. LICENSEE further
acknowledges that: (i) its failure to manufacture, advertise, distribute,
sell and promote the Licensed Products in accordance with this Agreement,
including LICENSEE's failure to satisfy its obligation to maintain and not
to detract from the value of the Licensed Marks, and (ii) the unauthorized
use of the Licensed Marks or Licensed Attributes, will, in either case,
cause immediate and irreparable damage to NBAP for which NBAP would not
have an adequate remedy at law. Therefore, LICENSEE agrees that, in the
event of a breach of this Agreement by LICENSEE, in addition to such other
legal and equitable rights and remedies as shall be available to NBAP, NBAP
shall be entitled to injunctive and other equitable relief, without the
necessity of proving damages or furnishing a bond or other security.
19. NOTICES
All notices and statements to be given and all payments to be made under
this Agreement shall be given or made at the respective address of the
parties as set forth above, unless notification of a change of address is
given in writing. Any notice of breach or default must be in writing and
sent
-22-
by facsimile (with confirmation copy sent by regular mail) or express
delivery properly addressed (with courtesy copy, attention: General
Counsel, and also LICENSEE's controller in instances of payment default).
Any written notice shall be deemed to have been given at the time it is
confirmed received, if sent by facsimile, or next business day if sent by
express delivery.
20. NO JOINT VENTURE
Nothing in this Agreement shall be construed to place the parties in the
relationship of partners or joint venturers. Neither party shall have the
power to obligate or bind the other to a third party in any manner
whatsoever.
21. ARBITRATION OF CERTAIN MATTERS
Any dispute or disagreement between the parties relating solely to the
amount of royalty payments owing under this Agreement shall be settled by
arbitration in New York City under the rules then in effect of the American
Arbitration Association. Judgment upon the award may be entered in any
court having jurisdiction. No other dispute or disagreement between the
parties (including any claim by NBAP that LICENSEE is using the Licensed
Marks in a manner not authorized by this Agreement or is otherwise in
breach of this Agreement) shall be settled by arbitration. All decisions
by NBAP relating to disapproval of any Licensed Product or advertising
promotion or display material shall be final and binding on LICENSEE and
shall not be subject to review in any proceeding.
22. USE OF PLAYERS
(a) LICENSEE acknowledges that this Agreement does not grant to LICENSEE
any licenses or rights with respect to the use of Player Attributes
except on Licensed Product as expressly provided herein and in
advertising and promotional materials specifically approved by NBAP.
The license granted under this Agreement does not include, and shall
not be used to imply, a testimonial or endorsement of any Licensed
Products by any NBA player. LICENSEE shall not use Player Attributes
in any manner that is a testimonial or endorsement without first
obtaining written authorization from the subject player(s)
("Endorsement Rights"). LICENSEE shall not enter into any agreement
with any NBA player which would require that player to wear any
LICENSEE-identified item in or at any NBA game, competition or event
(either courtside or in any locker room).
(b) LICENSEE may enter into an "exclusive" Endorsement Rights agreement
with a current NBA player but acknowledges that, notwithstanding any
such exclusivity, under the group license agreement between NBAP and
the National Basketball Players Association, such player has no right
to "opt-out" with respect to
-23-
the trading card category. Accordingly, LICENSEE further acknowledges
that NBAP shall continue to license to other trading card
manufacturers the right to use the Licensed Attributes of such player.
Notwithstanding the foregoing, NBAP shall not permit any other trading
card manufacturer to use the Licensed Attributes of any player for
whom LICENSEE has secured Endorsement Rights in any manner that is a
testimonial or endorsement of such other manufacturer's product (e.g.,
use with greater prominence than other players depicted in the
materials submitted to NBAP for approval).
(c) In the event any current NBA player retires or becomes inactive (e.g.,
has been waived and is not under contract to any NBA team), upon
receipt of written notice from NBAP that such a player has retired or
become inactive, LICENSEE shall cease and/or cause to cease the use of
such player's Licensed Attributes in the manufacture, distribution,
advertisement, promotion and sale of the Licensed Products within
[INFORMATION SUBJECT TO REQUEST FOR CONFIDENTIAL TREATMENT] days of
receipt of NBAP's notice.
23. WARRANTIES
NBAP represents and warrants that it has the right and authority to enter
into and perform this Agreement and has the right to grant the rights to
use the Licensed Marks and Licensed Attributes as provided under this
Agreement. LICENSEE represents and warrants that it has the right and
authority to enter into and perform this Agreement and has the right to
grant all rights to Commissioned Photos as provided under this Agreement.
LICENSEE further represents and warrants that (i) all advertising and
promotional materials shall comply with all applicable laws, regulations
and standards, and (ii) all advertising and promotional materials and all
graphics used on Licensed Products will not violate the intellectual
property rights of any third party. NBAP's approval of such materials will
not imply a representation or belief that NBAP believes such materials are
sufficient to meet applicable laws, regulations and standards, nor shall it
imply that NBAP agrees with or supports any claims made by LICENSEE in any
advertising materials relating the Licensed Products.
24. SEVERABILITY
In the event any provision of this Agreement is found to be void, invalid
or unenforceable as a result of any judicial or administrative proceeding
or decree, this Agreement shall be construed and enforced as if such
provision were not contained in this Agreement.
25. LOCKOUT
[INFORMATION SUBJECT TO REQUEST FOR CONFIDENTIAL TREATMENT]
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26. MISCELLANEOUS
(a) Work Stoppage: [INFORMATION SUBJECT TO REQUEST FOR CONFIDENTIAL
TREATMENT]
(b) Assignment: This Agreement and any rights granted under this
Agreement are personal to LICENSEE and shall not be assigned,
sublicensed, subcontracted or encumbered, directly or indirectly, by
law or by contract, without NBAP's prior written consent, which
consent may, in NBAP's sole discretion, (i) be contingent upon a fee
payable by LICENSEE or the transferee, the amount of which shall be
determined by NBAP in its sole discretion, and/or (ii) impose other
terms and conditions upon the assignment, or transfer. Any transfer
of a controlling interest in LICENSEE or in any party which currently
controls LICENSEE (directly or indirectly), which is accompanied, or
followed within a year thereof, by a change in 2 of the 3 following
senior management positions: chief executive officer president; or
vice president of marketing, shall be deemed an assignment prohibited
by the preceding sentence. Any nonconsensual assignment, sublicense,
subcontract or encumbrance of this Agreement by LICENSEE shall be
invalid and of no force or effect. Upon any such nonconsensual
assignment, sublicense or encumbrance, this Agreement shall terminate
and all rights granted under this Agreement shall immediately revert
to NBAP.
(c) Waiver: None of the provisions of this Agreement can be waived or
modified except expressly by a writing signed by both parties. There
are no representations, promises, agreements, warranties, covenants or
undertakings by either party other than those contained in this
Agreement. No failure on the part of NBAP to exercise any right under
this Agreement shall operate as a waiver of such right; nor shall any
single or partial exercise of any right preclude any other or further
exercise or the exercise of any other rights.
(d) Survival: No expiration or termination of this Agreement shall
relieve LICENSEE of its obligation to pay NBAP any amounts due to NBAP
at the time of termination (subject to any credit otherwise provided
for above), regardless of whether these amounts are then or thereafter
payable. The provisions of Paragraphs 3, 4, 10(d), 12 and 26(g) shall
survive the expiration or termination of this Agreement.
(e) Governing Law and Jurisdiction: This Agreement shall be construed in
accordance with the laws of the State of New York, USA, without regard
to its principles of conflicts of laws. Any claim arising under this
Agreement (except as provided under Paragraph 21) shall be prosecuted
in a federal or state court of competent jurisdiction located within
the City of New York, USA and LICENSEE consents to the jurisdiction of
such court and to the service of process by mail.
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(f) Loss or Damaged Materials: In the event of any dispute between NBAP
and LICENSEE regarding loss or damaged Commissioned Photos, the
parties agree that the value of each such photographs, transparency or
negative shall not exceed one dollar ($1.00). If unprocessed film is
lost by NBA PHOTOS, NBAP shall reimburse LICENSEE for its out-of-
pocket costs in connection with the assignment (e.g., the
photographer's fee and travel expenses, film and strobe expenses)
where the lost film was shot.
(g) Confidentiality: Neither party shall (nor shall they permit or cause
their employees or agents to) divulge, disseminate or publicize
information relating to this Agreement or the financial or other terms
of this Agreement (including any information on the specifications or
methods of reproduction of the Licensed Marks or obtained pursuant to
Paragraph 13 above (except as for use as otherwise permitted
thereunder) or Paragraph 15(a) above) to any third party (other than
their respective attorneys or accountants or the NBA Board of
Governors), except as may be required by law or to fulfill the terms
of this Agreement.
(h) Construction: This Agreement has been executed in a text using the
English language, which text shall be controlling. This Agreement,
together with any exhibits or attachments, constitutes the entire
agreement and understanding between the parties and cancels,
terminates and supersedes any prior agreement or understanding
relating to the subject matter of this Agreement between LICENSEE and
the NBA, any Member Team, NBAP or NBAE. The headings in this
Agreement are for reference purposes only and shall not affect the
interpretation of this Agreement. This Agreement shall not be binding
on NBAP until signed on its behalf by its President or Senior Vice
President, Business Affairs.
# # #
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SCHEDULE A
U.S. & CANADIAN NBA MEDIA NBA & EVENTS
1ST CONTRACT 2ND CONTRACT 3RD CONTRACT
YEAR YEAR YEAR
------------ ------------ ------------
[INFORMATION SUBJECT TO REQUEST FOR CONFIDENTIAL TREATMENT]
* The money to be expended with respect to Additional Programs, and dollars
in excess of the annual minimum expenditures set forth in Paragraphs F and
H above, may be spent on spokesmen fees paid to current NBA players,
collateral material or other advertising or promotional activities directly
related to LICENSEE's NBA card business. NBA product may also be
represented in a multi-league retail promotion (i.e., MLB, NBA, NFL and/or
NHL), subject to NBAP's prior approval in each instance, and the NBA pro
rata expenditure credited against LICENSEE's Additional Program obligation.
On a quarterly basis, LICENSEE shall furnish NBAP with a written statement
that sets forth the amount expended (and describing the activity) on the
foregoing activities for the preceding quarter.
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