Memo Agreement - Topps Co. Inc. and Major League Baseball Players Association
THE TOPPS COMPANY, INC. One Whitehall Street, New York, NY 10004-21109 (212) 376-0440 Fax: (212) 376-0626 email: email@example.com SCOTT SILVERSTEIN PRESIDENT & COO July 14, 2005 Via Facsimile 212-752-4378 ------------ Mr. Evan Kaplan Major League Baseball Players Association 12 East 49th Street New York, NY 10017 Dear Evan: This is to confirm that the attached Discussion Outline accurately reflects the material terms that we have agreed upon in connection with MLBPA's decision to have two baseball licensees for cards for the next four years. As we discussed, these terms only apply if there are no more than two licensees for the next four years and the other licensee does not have more releases than we do. As you requested, I have initialed each page. Please acknowledge your agreement by initialing this letter and the attached pages as well. Of course, this is subject to our execution of a more formal agreement. Please call me if you have any questions. Best Regards. Sincerely, /s/ Warren E. Friss ------------------- Warren E. Friss WEF:js att. cc. Scott Silverstein <PAGE> DISCUSSION OUTLINE -CONFIDENTIAL- TERM: 4 years (2006-2009) FINANCIAL COMMITMENT (includes SportsClix, eTopps, and Hot Button Baseball or new kid-oriented products, as approved by MLBPA, which would replace any of the aforementioned products, at their respective royalty rates) 2006: $[*****] guarantee // [*****]% royalty rate 2007: $[*****]guarantee // [*****]% royalty rate 2008: $[*****]guarantee // [*****]% royalty rate 2009: $[*****]guarantee // [*****]% royalty rate PRODUCTS: 2006-2007: No more than 20 total Major League baseball releases (including two retired player products) 2008-2009: No more than 17 total Major League baseball releases (including two retired player product) **SportsClix, eTopps, Hot Button Baseball, Topps Box sets or new kid-oriented products, as approved by MLBPA, do not count against minimum releases. ** It is the intention of the MLBPA and Topps that there will not be more than 40 baseball releases per year 2006-2007 and no more than 34 per year 2008-2009 between Topps and its MLBPA-licensed competitor. Retired player content may be included in up to 1/3 of total Major League Baseball releases with no more than 20% retired player content in each (not applicable to the retired player products). Products including current players must feature MLBPA members as the primary message on packaging, marketing materials, etc. Topps may prominently feature iconic retired baseball players (ex: Mickey Mantle) in up to three annual releases. Compliance with MLBPA guidelines applicable to all licensees in order to serve the best interests of the category, which include but are not limited to: - Policies governing the acquisition of game-used articles and autographs - Rookie regulations and rookie logo usage (as mutually agreed upon regarding design, size and placement of logo) - Player exclusive agreements (currently limited to 3 in any calendar year) for autographs, game-used materials and featured packaging/promotion - Prohibition on interfering with competitor's player relationships Prospects (non-25 man roster players) may only be included in Bowman releases in a mutually approved manner to ensure they are not perceived as Rookies. Bowman will be granted, for 2006 only, an exclusive 30-day window prior to the release of any competitive products containing MLB rookies. Products for each new calendar year may not release prior to February 1 of that year. -2- ***** Denotes information subject to a request for request for confidential treatment. <PAGE> MARKETING EXPENDITURES: Licensee Marketing Commitment (paid to MLBPA for uses listed below): 2006: $[*****] 2008: $[*****] 2007: $[*****] 2009: $[*****] ** Required expenditures for any competing licensee will be equal to or greater than those listed herein 1. MLBPA Cooperative Category Advertising Fund ($[*****]/yr2006-07) to be jointly coordinated with licensees. Any unspent funds may be carried from year-to-year at the discretion of MLBPA and licensees. 2. Cooperative category marketing programs (up to $[*****]/year) to support initiatives designed to attract new users to the category including: - National expansion and promotion of Boy Scouts initiative with plans of incorporating more youth organizations such as Little League or Babe Ruth baseball. - Retail promotions and programs (ex: expenses associated with player appearances, circulars, POP, etc. for 2004 Spring Training and All-Star Wal-Mart and Target programs) - Sampling programs (ex: annual Spring Training and Opening Day efforts) 3. MLBPA and player marketing efforts (limited to no more than $[*****]/year) such as Players Trust, Players Choice Awards and All-Star Game Party. 4. At least 60% of all marketing and promotional expenditures by Topps shall be focused on attracting entry-level/youth and sports fans/noncollectors. 5. Nothing herein shall require Topps to support any program or entity that is sponsored by a competitive licensee MISCELLANEOUS: Topps may make a charitable donation to The Players Trust in an amount equal to its unearned royalties for its 2005 SportsClix license, but not to exceed $[*****], in lieu of paying that amount to MLBPA. Provide annual and quarterly revenue forecasts, with quarterly updates, broken out by SKU and units Provide retailer-specific sales information to improve understanding of mass, sports specialty and hobby channels Provide $[*****] product credit in addition to required samples Repackaged and/or discounted products may be sold only into separate, off-price channels Quarterly meetings to review business and marketing plans and strategies -3- ***** Denotes information subject to a request for request for confidential treatment.