Retail Product License Agreement - Topps Co. Inc. and NBA Properties Inc.
BUSINESS
CONFIDENTIAL
RETAIL PRODUCT LICENSE AGREEMENT
BETWEEN
THE TOPPS COMPANY, INC. AND
NBA PROPERTIES, INC.
July 25, 1995
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FORM: NBAP
Trading Cards/Stickers
RETAIL PRODUCT LICENSE AGREEMENT
LICENSEE: THE TOPPS COMPANY, INC.
ADDRESS: One Whitehall Street
New York, New York 10004
THIS RETAIL PRODUCT LICENSE AGREEMENT is entered into by NBA Properties, Inc.
("NBAP"), with its principal office at 645 Fifth Avenue, New York, New York
10022, 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:
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(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] of "standard size" as defined in
Paragraph 1 of the attached NBAP Standard Terms and Conditions) printed
trading cards, without interactive, digital or computer display
features, in such quantities as LICENSEE may reasonably determine
(subject to NBAP's approval not to be unreasonably withheld), and to be
marketed under the following trade/brand names, and/or such other trade
or brand names as NBAP may approve: (x) "Topps"; (y) "Stadium Club"
[INFORMATION SUBJECT TO REQUEST FOR CONFIDENTIAL TREATMENT]. For
purposes of this Paragraph, it shall be prima facie unreasonable for
NBAP to not approve LICENSEE's production of such quantities of
products [INFORMATION SUBJECT TO REQUEST FOR CONFIDENTIAL TREATMENT] as
are reasonably required for LICENSEE to achieve the sales volume
necessary for it to meet its Minimum Payment guarantees as set forth in
Paragraph E below.
For each Contract Year, at least one line shall be a non-premium brand
consisting of a basic card pack of at least six (6) cards. The
Licensed Products shall only be packaged and sold in the following
configurations: wax/foil packs; poly-wrapped; stringer packs; blister
packs; and complete boxed sets, or such other configurations as NBAP
may approve.
[INFORMATION SUBJECT TO REQUEST FOR CONFIDENTIAL TREATMENT]
(5) The following merchandise to be sold through direct response ("Direct
Response Items") only, unless otherwise indicated:
[INFORMATION SUBJECT TO REQUEST FOR CONFIDENTIAL TREATMENT]
a 50-card membership set. [INFORMATION SUBJECT TO REQUEST FOR
CONFIDENTIAL TREATMENT] Finest Bronze Cards - 2 3/4" X 3 3/4". 1/16"
thick; Finest card affixed with clear epoxy on bronze, silk-screened
back. [INFORMATION SUBJECT TO REQUEST FOR CONFIDENTIAL TREATMENT]
B. TERM: August 1, 1995 to July 31, 1998 (the "Term").
C. TERRITORY: Licensed Products may only be distributed in the United
States, the District of Columbia, U.S. territories and possessions,
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U.S. military bases worldwide (collectively, the "U.S."), and Canada,
except that trading cards may also be distributed in Australia and New
Zealand (collectively, the "Territory").
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:
1st Contract Year 2nd Contract Year 3rd Contract Year
----------------- ----------------- -----------------
U.S./CANADA
Topps Basic Cards [INFORMATION SUBJECT TO REQUEST FOR CONFIDENTIAL
TREATMENT]
All other Card Brands [INFORMATION SUBJECT TO REQUEST FOR CONFIDENTIAL
TREATMENT]
Stickers [INFORMATION SUBJECT TO REQUEST FOR CONFIDENTIAL
TREATMENT]
Direct Response [INFORMATION SUBJECT TO REQUEST FOR CONFIDENTIAL
TREATMENT]
AUSTRALIA/NZ
Trading Cards [INFORMATION SUBJECT TO REQUEST FOR CONFIDENTIAL
TREATMEMNT]
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"): In addition to all other amounts
payable to NBAP under this Agreement, LICENSEE shall contribute monthly
into NBAP's consumer products advertising and promotion fund, together
with its monthly payments of royalties under Paragraph 3 of the
attached NBAP standard terms and conditions, [INFORMATION SUBJECT TO
REQUEST FOR CONFIDENTIAL TREATMENT]. Such amount shall be spent by NBAP
in its sole discretion on NBAP advertising and promotion activities in
the U.S. and Canada for NBAP licensed products sold at retail. NBAP
shall give LICENSEE a written reports within sixty (60) days after each
Contract Year setting forth how funds collected from LICENSEE and other
NBAP licensees under this Paragraph F were spent by NBAP. In addition
to the foregoing advertising and promotion obligations, each Contract
Year LICENSEE shall pay [INFORMATION CONFIDENTIAL] into an NBAP
controlled A&P fund to be used by NBAP for promotional activities in
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Australia and New Zealand. LICENSEE shall exhibit, at its sole cost and
expense, a fair and representative selection of Licensed Products at
every trade show LICENSEE attends and where the exhibition of sports
trading cards would be appropriate.
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: Each Contract Year, LICENSEE shall expend on NBA media
and events in the U.S. and Canada during the Term are set forth on
Schedule A an amount equal to [INFORMATION SUBJECT TO REQUEST FOR
CONFIDENTIAL TREATMENT], which shall not be less than [INFORMATION
SUBJECT TO REQUEST FOR CONFIDENTIAL TREATMENT] for each Contract Year.
AGREED TO AND ACCEPTED, subject AGREED TO AND ACCEPTED:
to and incorporating the NBA PROPERTIES, INC.
attached NBAP Standard Terms By: /s/ Harvey Benjamin
and Conditions which the -------------------
undersigned has read: Harvey Benjamin
Sr. Vice President,
Business Affairs
THE TOPPS COMPANY, INC.
By: /s/ Scott Silverstein
---------------------
Title: Vice President Dated: 7/25/95
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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 Mark that has been reproduced and/or affixed
without authorization from NBAP; (ii) goods that bear any NBA
Mark produced by any source in excess of an amount ordered by
an NBAP licensee; and (iii) goods that bear any NBA Mark 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.
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(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 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 2.5" x 3.5".
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 Harmon 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,
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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. 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
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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
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 six
(6) players from each Member Team and utilize the respective team's
full logo on a mutually agreeable location on the card. (Other product
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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 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
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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.
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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 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
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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 mark used or procured by LICENSEE with
respect 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 mark
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
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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 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
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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 Mark 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)," "(R)," "(C)" or such other copyright,
trademark or service mark 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 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
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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 Mark 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 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
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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
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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 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
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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
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
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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 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
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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 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
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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 Mark 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 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.
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(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
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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 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
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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 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
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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 billings 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 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
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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.
[INFORMATION SUBJECT TO REQUEST FOR CONFIDENTIAL TREATMENT]
17. DISPOSAL OF STOCK
Within [INFORMATION SUBJECT TO REQUEST FOR CONFIDENTIAL TREATMENT]
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
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after [INFORMATION SUBJECT TO REQUEST FOR CONFIDENTIAL TREATMENT] 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 by facsimile (with confirmation copy sent by regular
mail) or express delivery properly addressed (with courtesy copy,
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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
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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 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] of
receipt of NBA'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
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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]
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.
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(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.
(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
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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
[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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