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: ssilverstein@topps.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.