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Exclusive Patent License Agreement - Tonyco Inc. and Build-A-Bear Workshop Inc.

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                       EXCLUSIVE PATENT LICENSE AGREEMENT

         This Agreement made as of the 12th day of March, 2001 by and between
Tonyco, Inc., a corporation duly organized and existing under the laws of the
state of Michigan, having its principal place of business at 181 West Marshall,
Ferndale, Michigan 48220 (hereinafter referred to as "Tonyco") and Build-A-Bear
Workshop, Inc., a corporation duly organized and existing under the laws of the
state of Delaware, having its principal place of business at 1954 Innerbelt
Business Center Drive, St. Louis, MO 63114 (hereinafter referred to as
"Build-A-Bear").

                                    RECITALS

         WHEREAS, Tonyco is the owner by assignment of U.S. Patent No. 6,109,196
entitled METHOD OF CLOSING A STUFFED TOY AFTER STUFFING;

         WHEREAS, Build-A-Bear is, among other things, in the business of
providing goods and services wherein a customer selects a skin/shell toy for
stuffing via a multitude of different retail venues such as in a store
environment, via catalogs, over the internet, or other related venues and the
toy is thereafter stuffed and closed in the retail environment or by the
customer at home or elsewhere;

         WHEREAS, Tonyco has charged Build-A-Bear with infringement of U.S.
Patent No. 6,109,196;

         WHEREAS, Tonyco and Build-A-Bear are desirous of settling the
infringement issue between them relating to U.S. Patent No. 6,109,196 and, as a
result thereof, Build-A-Bear is desirous of obtaining an exclusive license
within a field of use defined hereafter under U.S. Patent No. 6,109,196 and
under any other divisional, continuation, continuation-in-part, reissued, or
re-examined applications based upon U.S. Patent No. 6,109,196 and any patents
that may result therefrom, including any foreign patents corresponding thereto
and any extensions or additions thereof and Tonyco is willing to grant to
Build-A-Bear such a license on the terms and conditions set forth below;

         NOW, THEREFORE, in consideration of the mutual premises and covenants
contained herein, the parties agree as follows:

                             ARTICLE I. DEFINITIONS

         For the purposes of this Agreement, unless the context clearly or
necessarily requires otherwise, the following terms shall have the meaning set
forth below:

         1.1      "Parties" shall mean both Tonyco and Build-A-Bear, and the
                  "Party" shall mean either of them.

         1.2      "Licensed Patent" shall mean U.S. Patent No. 6,109,196
                  entitled METHOD OF CLOSING A STUFFED TOY. AFTER STUFFING" and
                  any foreign patents or foreign patent applications
                  corresponding thereto, any continuations,
                  continuations-in-part, divisionals, reissues, re-examinations,
                  extensions or additions thereof, and any improvements thereto.

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Exclusive Patent License Agreement
Tonyco, Inc. - Build-A-Bear Workshop, Inc.
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         1.3      "Licensed Method" shall mean any method or part thereof, the
                  manufacture, use, sale, offer for sale, or importation of
                  which is covered by one or more valid claims of the Licensed
                  Patent.

         1.4      "Licensed Field of Use" shall mean any use of the Licensed
                  Method in retail stores or other Retail Venues wherein the
                  consumer selects the skin/shell toy for stuffing and the toy
                  is thereafter stuffed and closed in accordance with the
                  Licensed Method in the retail environment. Licensed Field of
                  Use will also include a kit including a skin/shell toy for
                  stuffing where said kit is provided in a retail store or
                  otherwise sold or provided to a consumer. Sales of any
                  plurality of unstuffed skin/shells alone or in kit form, to a
                  single customer, in a retail store or other Retail Venue,
                  shall fall within the Licensed Field of Use. Bulk sales of
                  unstuffed skin/shells alone or in kit form to retailers,
                  jobbers and wholesalers for stuffing by those parties for
                  resale in stuffed form shall not fall within the Licensed
                  Field of Use.

         1.5      "Retail Venue(s)" shall mean, but is not limited to, any
                  location or medium for selecting a skin/shell toy for stuffing
                  including phone orders, mail order, catalogs,
                  on-line/internet/websites, kiosks, discount chains, buying
                  parties, buying clubs, direct marketing, door-to-door sales
                  and the like.

         1.6      "Territory" shall mean worldwide.

         1.7      "Improvement" shall mean any new, improved or modified method
                  or process relating to the Licensed Method.

                           ARTICLE 2. GRANT OF LICENSE

         2.1      Tonyco hereby grants to Build-A-Bear an exclusive license, for
                  an initial term of three (3) years and with an option to
                  extend this exclusive license as set forth in Article 4 below,
                  with the right to sublicense, to manufacture, have
                  manufactured on its behalf, use, sell and offer to sell under
                  the Licensed Patent the Licensed Method in the Territory
                  within the Licensed Field of Use. Tonyco shall not grant other
                  licenses under the Licensed Patent within the Licensed Field
                  of Use. Build-A-Bear shall advise Tonyco in writing of the
                  grant of any sublicense under the Licensed Patent and shall
                  provide Tonyco with a copy of any such license.

         2.2      Tonyco hereby retains the right to grant other licenses
                  outside of the Licensed Field of Use granted to Build-A-Bear.
                  However, in this regard, Tonyco further agrees that it will
                  not grant any rights to any other licensees under the Licensed
                  Patent for use outside of the Licensed Field of Use granted to
                  Build-A-Bear which will allow such licensees to directly or
                  indirectly sell or otherwise provide pre-laced unstuffed
                  skin/shell toys made in accordance with the teachings of the
                  Licensed Patent to competitors of Build-A-Bear or to anyone or
                  any entity who


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                  will complete or allow completion of the stuffing process in a
                  retail store or other Retail Venue pursuant to the Licensed
                  Method (hereinafter collectively "Retail Operator") or to
                  anyone or entity who in turn will sell or distribute such
                  products to another party or parties in the chain of
                  distribution that will ultimately result in sale or
                  distribution to a Retail Operator. Tonyco will not grant
                  rights to such licensees which would allow them to directly or
                  indirectly sell or otherwise provide pre-laced unstuffed
                  skin/shell toys in kit form for ultimate purchase by
                  consumers. Tonyco further agrees that it will not sell
                  unstuffed skin/shell toys alone or in kit form to retailers.


                             ARTICLES. CONSIDERATION

         3.1      In consideration of the rights and license granted to
                  Build-A-Bear by Tonyco under this Agreement, Build-A-Bear
                  agrees to pay Tonyco a total sum of seven-hundred
                  fifty-thousand dollars ($750,000) as follows:

                  3.1.1    Within ten (10) days from the execution of this
                           Agreement, at least two-hundred fifty-thousand
                           dollars ($250,000) of such total sum;

                  3.1.2    Within one (1) year from the execution of this
                           Agreement, at least two-hundred fifty-thousand
                           dollars ($250,000), or the remaining balance, of such
                           total sum; and

                  3.1.3    Within two (2) years from the execution of this
                           Agreement, the remaining balance of such total sum,
                           if any.

         3.2      Build-A-Bear agrees that each payment provided in paragraphs
                  3.1.2 and 3.1.3 above shall include interest on the unpaid
                  balance of the total sum due at the rate of ten percent (10%)
                  per year simple interest until the total amount of
                  seven-hundred fifty-thousand dollars ($750,000) has been paid.

         3.3      Build-A-Bear has the right to accelerate payments and pay off
                  the total amount due, including interest, at any time within
                  the payment period.

                  ARTICLE 4. OPTION TO EXTEND EXCLUSIVE LICENSE

         4.1      Subject to the terms and conditions of this agreement, Tonyco
                  hereby grants to Build-A-Bear an option to extend this
                  exclusive license subject to the conditions of Article 2 above
                  for the full life of the Licensed Patent or any improvements
                  thereof. Build-A-Bear may exercise this option by providing
                  Tonyco with written notice thereof within one (1) year from
                  the date of payment made pursuant to Article 3.1.3 (the
                  "Option Term"). Any such license shall be subject to all of
                  the terms and conditions of this Agreement except for the
                  terms and conditions set forth in Article 3.


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Exclusive Patent License Agreement
Tonyco, Inc. - Build-A-Bear Workshop, Inc.
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         4.2      In consideration of the rights and license granted under the
                  option, Build-A-Bear agrees to pay Tonyco an additional sum of
                  $10,000 in exchange for such extension of this license, such
                  payment to accompany the written notice to Tonyco exercising
                  this option. The exercise of this option shall be at the sole
                  discretion of Build-A-Bear.

                             ARTICLES. IMPROVEMENTS

         5.1      Tonyco may from time to time make and/or acquire improvements
                  to the methods or processes described in the Licensed Patent,
                  Any such improvements will be disclosed to Build-A-Bear and
                  shall be included herein as pan of the license grant without
                  any other compensation on the part of Build-A-Bear.

                           ARTICLE 6. LIMITED WARRANTY

         6.1      Tonyco represents and warrants as follows:

                  6.1.1    That Tonyco is the sole and exclusive owner of the
                           entire right, title and interest in and to the
                           Licensed Patent and that Tonyco has full legal right,
                           authority and power to enter into this Agreement and
                           to grant the exclusive paid up license to
                           Build-A-Bear as set forth herein;

                  6.1.2    That Tonyco is not aware of any existing or
                           threatened litigation concerning the Licensed Patent;

                  6.1.3    That Tonyco has not granted any licenses under the
                           Licensed Patent within the Licensed Field of Use or
                           elsewhere that would be in conflict with the rights
                           granted in this Agreement; and

                  6.1.4    That to the best knowledge of Tonyco the Licensed
                           Patent is valid and enforceable.

         6.2      Build-A-Bear represents and warrants as follows:

                  6.2.1    That Builder-A-Bear has the full legal right,
                           authority and power to enter into this Agreement;

                  6.2.2    That Build-A-Bear will cooperate with Tonyco for the
                           protection of its rights in the Licensed Patent and
                           will furnish Tonyco with any information that it may
                           require, within reason, in protecting the Licensed
                           Patent.

         6.3      All warranties will survive termination of this Agreement.

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Exclusive Patent License Agreement
Tonyco, Inc. - Build-A-Bear Workshop, Inc.
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                      ARTICLE 7. INDEMNIFICATION BY TONYCO

         7.1      Tonyco shall defend, indemnify and hold harmless Build-A-Bear
                  and their respective directors, officers, employees, agents,
                  successors and assigns (each an "indemnitee") from and against
                  any and all claims, damages, losses and expenses suffered or
                  incurred by any such indemnitee arising from, relating to or
                  otherwise in respect of any breach of any representation or
                  warranty of Tonyco set forth above in Article 6.1 hereof.

         7.2      If a claim of infringement by a third party is made against an
                  Indemnitee hereunder based upon use of the Licensed Method set
                  forth in the Licensed Patent, the reasonable costs of
                  defending such infringement action shall be borne equally by
                  the Parties hereto. The parties agree to cooperate with each
                  other to bring any such third party suit to a successful
                  conclusion. The parties shall have the right to be represented
                  in any such suit by counsel of their own selection and no
                  settlement agreement will be entered into without the mutual
                  consent of the parties.

                             ARTICLES. INFRINGEMENT

         8.1      In the event that Build-A-Bear has reason to believe that a
                  third party is infringing upon the Licensed Patent,
                  Build-A-Bear will promptly notify Tonyco in writing of such
                  alleged infringement In the event that Tonyco has reason to
                  believe that a third party is infringing upon the Licensed
                  Patent and that the infringement could have an adverse impact
                  on Build-A-Bear's use of the Licensed Method in the Licensed
                  Field of Use, Tonyco will promptly notify Build-A-Bear in
                  writing of such alleged infringement. If a third party alleges
                  or asserts that one or more claims of the Licensed Patent is
                  invalid, this event shall be deemed to potentially impact
                  Build-A-Bear's use of the Licensed Method within the Licensed
                  Field of Use and Tonyco will promptly notify Build-A-Bear in
                  writing of such event.

         8.2      After notification as set forth above in Article 8.1 or after
                  Tonyco otherwise learns of a potential infringement, Tonyco
                  will investigate such third party infringement and will obtain
                  sufficient facts and information concerning the same in
                  sufficient detail to permit a complete infringement
                  determination to be made. If such third party is infringing
                  the Licensed Patent, Tonyco will, at its own expense, endeavor
                  to abate such infringement. In this regard, Tonyco will
                  provide Build-A-Bear with copies of all correspondence
                  relating to its efforts to abate such infringement.

         8.3      In the event that Tonyco is unable to terminate such
                  infringement within a reasonable period of time, Tonyco shall
                  have the right to commence a patent infringement action
                  against such infringer at its own expense and will retain any
                  recovery from such litigation. In this regard, Build-A-Bear
                  agrees to cooperate

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Exclusive Patent License Agreement
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                  with Tonyco to bring any such suit to a successful conclusion.
                  Tonyco will consult with Build-A-Bear throughout the
                  litigation as to its course of action with respect thereto and
                  will not enter into any settlement agreement with any third
                  party without first obtaining the mutual consent of
                  Build-A-Bear to such settlement agreement. In the event that
                  Tonyco determines that such third party is infringing the
                  Licensed Patent but chooses not to commence a patent
                  infringement action against such infringer, Build-A-Bear shall
                  have the right to bring suit at its. own expense to terminate
                  such infringement. Tonyco agrees to join such suit as a party
                  plaintiff and to cooperate with Build-A-Bear, at its own
                  expense, in connection with the conduct of such litigation.
                  Build-A-Bear shall retain all recovery from such litigation.

         8.4      Build-A-Bear shall have the right to be represented in any
                  such action which will affect or impact its use of the
                  Licensed Method within the Licensed Field of Use by counsel of
                  its own selection and at its own expense.

                          ARTICLE 9. INVALIDITY FINDING

         9.1      If, during the payment period set forth above in Article 3, as
                  a result of any litigation or re-examination or reissue
                  proceeding involving the Licensed Patent, claim 1 of the
                  Licensed Patent is declared to be finally invalid, no further
                  payments of any remaining balance due on the total sum set
                  forth in Article 3 shall become due and payable to Tonyco as a
                  result of such finding of invalidity. Claim 1 will be
                  considered finally invalid at such time as no further appeal
                  is possible within the U.S. Patent and Trademark Office or the
                  U.S. Courts from the decision, judgement or decree of
                  invalidity.

                       ARTICLE 10. PATENT MAINTENANCE FEES

         10.1     Tonyco hereby agrees that it will pay all maintenance taxes
                  and fees for the Licensed Patent as they come due, throughout
                  the entire term of the Licensed Patent. If the Licensed Patent
                  is allowed to lapse due to the non-payment of a particular
                  maintenance fee, Tonyco further agrees that Build-A-Bear will
                  be entitled to reimbursement of a pro-rata share of its
                  seven-hundred fifty-thousand dollar ($750,000) payment based
                  upon the following schedule:




Failure to Pay Maintenance Fee         Amount Recoverable
------------------------------         ------------------
                                   
(1)  3 1/2 year maintenance fee             $583,300

(2)  7 1/2 year maintenance fee             $416,700

(3) 11 1/2 year maintenance fee             $250,000



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Exclusive Patent License Agreement
Tonyco, Inc. - Build-A-Bear Workshop, Inc.
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         10.2     Payment of the reimbursable amount will be on terms and
                  conditions mutually agreeable to the Parties hereto.

                        ARTICLE 11. TERM AND TERMINATION

         11.1     Unless otherwise terminated earlier as provided herein, the
                  term of this Agreement shall commence on the effective date of
                  this Agreement and extend for a period of three years from the
                  effective date of this Agreement. Upon exercising the option
                  set forth in Article 4 above during the Option Term, the term
                  of this Agreement shall be extended for the life of the
                  Licensed Patent or any improvement thereon.

         11.2     Notwithstanding any other provisions herein to the contrary,
                  this Agreement may be terminated by either party upon written
                  notice to the other party in the event that any one of the
                  following conditions occurs:

                  11.2.1   If Build-A-Bear fails to meet its payment obligations
                           pursuant to Article 3 above and such failure to pay
                           is not remedied within a period of thirty (30) days
                           after written notice is given by Tonyco;

                  11.2.2   If the Licensed Patent lapses due to non-payment of a
                           maintenance fee pursuant to Article 10 above;

                  11.2.3   If claim 1 of the Licensed Patent is declared invalid
                           during the payment period.

                  11.2.4   At the end of three (3) years from the effective date
                           of this Agreement if the option set forth in Article
                           4 is not exercised.

                             ARTICLE 12. ASSIGNMENT

         12.1     Either party may assign this Agreement to a third party
                  acquiring substantially the entire business or substantially
                  all of the assets of a party hereto to which this Agreement
                  pertains. In such event, this Agreement will be binding upon
                  and inure to the benefit of all of the panics and their
                  respective successors and legal assigns. Tonyco agrees not to
                  assign this Agreement to any competitor of Build-A-Bear. The
                  party so assigning shall notify the other party in writing of
                  such assignment.

                            ARTICLE 13. GOVERNING LAW

         13.1     This Agreement shall be governed by and construed in
                  accordance with the laws of the State of Missouri.




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Exclusive Patent License Agreement
Tonyco, Inc. - Build-A-Bear Workshop, Inc.
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                               ARTICLE 14. NOTICES

         14.1     All notices and other communications hereunder shall be in
                  writing and sent by facsimile with confirmation sent by
                  courier requiring acknowledgement of receipt by the respective
                  parties as follows:

                  14.1.1  To Tonyco:       Tonyco, Inc.
                                           181 West Marshall Ferndale, MI 48220
                                           Attention: Mr. Dennis Silber
                                           Telephone:
                                           Facsimile:

                          With a Copy To:  Allen M. Krass, Esq.
                                           Gifford, Krass, Groh, Sprinkle,
                                           Anderson & Citkowski, P.C.
                                           250 N. Old Woodward Avenue, Suite 400
                                           Birmingham, MI 48009-5394
                                           Telephone:
                                           Facsimile: (248)647-5210

                  14.1.2  To Build-A-Bear: Build-A-Bear Workshop, Inc.
                                           1954 Innerbelt Business Center Drive
                                           St. Louis, MO 63114
                                           Attention: Maxine Clark
                                           Telephone: (314)423-8000
                                           Facsimile: (314)423-8188

                          With a Copy To:  Samuel Digirolamo, Esq.
                                           Blackwell Sanders Peper Martin LLP
                                           720 Olive Street, 24th Floor
                                           St. Louis, MO 63101
                                           Telephone: (314)345-6225
                                           Facsimile: (314)345-6060

         14.2     Either party may change the registered address to which such
                  notices shall be sent by giving written notice to the other
                  party.

                            ARTICLE 15. MISCELLANEOUS

         15.1     This Agreement contains the entire agreement of the parties
                  concerning the subject matter hereof and supercedes all prior
                  written and oral agreements, understandings and negotiations
                  with regard to the subject matter contained therein.


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         15.2     This Agreement, including this provision, may not be amended
                  without a written instrument signed by duly authorized
                  representatives of both parties.

         15.3     If any of the provisions of this Agreement shall be found to
                  be invalid or unenforceable, such invalidity or
                  unenforceability shall not invalid or render unenforceable the
                  entire agreement, but rather the entire agreement shall be
                  construed as if not containing the particular invalid or
                  unenforceable provision or provisions, and the rights and
                  obligations of the party shall be construed and enforced
                  accordingly.

         15.4     IN WITNESS WHEREOF, THE PARTIES HERETO HAVE DULY EXECUTED THE
                  FOREGOING AGREEMENT AS OF THE DAY AND YEAR FIRST WRITTEN
                  ABOVE.

Build-A-Bear Workshop, Inc.                 Tonyco, Inc.


By: /s/ Maxine Clark                        By: /s/ Anthony C. Silber
   ----------------------------------          ---------------------------------

Name: Maxine Clark                          Name: Anthony C. Silber
     --------------------------------            -------------------------------
Title: President                            Title: President
      -------------------------------             ------------------------------
Date:        3/12/01                        Date:       3/15/01
     --------------------------------            -------------------------------