FORM: NBAP
Trading Cards/Stickers
LICENSEE: MARVEL ENTERTAINMENT GROUP, INC. RETAIL PRODUCT LICENSE AGREEMENT
ADDRESS: Executive Plaza, Suite 300
▇▇▇▇ ▇▇▇▇▇ ▇▇
▇▇. ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
THIS RETAIL PRODUCT LICENSE AGREEMENT is entered into by NBA Properties, Inc.
("NBAP"), with its principal office at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇, and Marvel Entertainment Group, Inc. ("Marvel") on behalf of its
wholly-owned subsidiaries Fleer Corporation ("Fleer"), SkyBox International,
Inc. ("SkyBox") and Panini S.r.l. ("Panini") (collectively and individually,
"LICENSEE"), with regard to the commercial use by each LICENSEE of the 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 all current NBA players ("Player
Attributes"). On the terms of this Agreement and 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 under the Fleer, SkyBox and Panini
brands the Marks of the Member Teams, the silhouetted dribbler logo (the "NBA
Logo"), the Marks of the NBA, NBA ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and NBA Playoffs and Finals
(collectively, the "Licensed Marks") in combination with the names, nicknames,
photographs, portraits, likenesses, signatures, 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 all current (at the time
of such use) NBA players (the "Licensed Attributes"), solely in connection with
the manufacture, distribution, advertisement, promotion and sale of the trading
card and sticker products described in Paragraph A below ("Licensed Products").
No license or right is granted for the use of the Licensed Marks for any
purpose other than on the Licensed Products and in the distribution,
advertisement, promotion and sale of the Licensed Products in accordance with
this Agreement
A. LICENSED PRODUCTS:
(1)(i) For the 1st "Contract Year" (as defined in Paragraph 1 of the
attached NBAP Standard Terms and Conditions), Fleer and SkyBox may
each produce up to four (4) product lines of "standard size" (as
defined in Paragraph 1 of the attached NBAP Standard Terms and
Conditions) ink-on-paper trading cards in mutually determined
quantities and to be marketed by each company respectively under the
Fleer brand names "Fleer," "Ultra," and two other Fleer brand names
"TBD" by mutual agreement, and under the SkyBox brand names "SkyBox,"
"NBA HOOPS," and two other SkyBox brand names "TBD" by mutual
agreement. (ii) For the 2nd, 3rd and 4th Contract Years respectively
such number and types of lines as LICENSEE and NBAP shall mutually
determine for each brand based on prevailing market conditions taking
into account LICENSEE's minimum guarantees hereunder, but in no event
shall the number of lines in the 2nd, 3rd and 4th Contract Years be
fewer than in the 1st Contract Year.
The Licensed Products may only be packaged and sold in the following
configurations: wax/foil packs; poly-wrapped; ▇▇▇▇▇▇▇▇ packs; blister
packs; and complete boxed sets, or such other configurations as are
consistent with the type of Licensed Products sold by LICENSEE.
LICENSEE may make up to two (2) "releases" (as defined in Paragraph 1
of the attached NBAP Standard Terms and Conditions) of each product
line each Contract Year, except that it shall only make one release,
per Contract Year, of the line designated by LICENSEE (and approved by
NBAP) as its "niche" or "specialty" product line. For each Contract
Year, at least one line under each of the Fleer and SkyBox brands
shall be a nonpremium brand consisting of a basic card pack of at
least six (6) cards.
(2) 3-ring card collector's albums.
(3) Approximately 3-1/2" x 2-1/2" paper/holographic foil player
photo and team logo sticker collectibles to be marketed under
the brand name Panini.
(4) 8-1/2" x 10-1/2" sticker album containing all NBA Member
Teams and selected individual and season statistics.
B. TERM: August 1, 1995 to July 31, 1999 (the "Term").
C. TERRITORY: Licensed Products may only be distributed in the countries
within the geographical regions as defined below (collectively, the
"Territory"). Notwithstanding the foregoing, Fleer, SkyBox and Panini
shall only be authorized to sell product in regions for which NBAP has
specifically assigned the brand a minimum payment guarantee under
Paragraph E below.
o The "North America" region shall mean the United States, Puerto Rico
and Canada.
o The "Europe" region shall mean Armenia, Austria, Azerbaijan, Belgium,
Bulgaria, Croatia, Czech Republic, Denmark, Estonia, Finland, France,
Georgia, Germany, Greece, Holland, Hungary, Iceland, Italy,
Kazakhastan, Kirghizia, Lettonia, Lithuania, Republic of Moldova,
Norway, Poland, Portugal, Romania, Russia, Slovak Republic, Slovenia,
Spain, Sweden, Switzerland, Tajikstan, Turkmenistan, Ukraine, United
Kingdom and Uzbekistan.
o The "Latin America" region shall mean Argentina, Brazil, Chile,
Colombia, Costa Rica, Mexico, Peru, Uruguay and Venezuela.
o The "Asia" region shall mean China, Hong Kong, India, Indonesia,
Japan, Korea, the Philippines, Taiwan and Thailand.
o The "Australia/NZ" region shall mean Australia and New Zealand.
o The "Africa" region shall mean Egypt, Israel, Lebanon, Morocco, Saudi
Arabia, South Africa, Tunisia, and Turkey.
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:
(1) Trading card royalty rates shall be as follows:
lst Contract Year 2nd Contract Year 3rd Contract Year 4th Contract Year
----------------- ----------------- ----------------- ------------------
NORTH AMERICA
Fleer Brands [CONFIDENTIAL TREATMENT REQUESTED]
HOOPS
SkyBox Brands
Collector Albums
ALL OTHER REGIONS
Fleer Brands [CONFIDENTIAL TREATMENT REQUESTED]
SkyBox Brands
Collector Albums
(2) Stickers and sticker album royalty rates shall be as follows:
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lst Contract Year 2nd Contract Year 3rd Contract Year 4th Contract Year
----------------- ----------------- ----------------- ------------------
NORTH AMERICA [CONFIDENTIAL TREATMENT REQUESTED]
ALL OTHER REGIONS
E. MINIMUM GUARANTEES: LICENSEE guarantees that its aggregate annual
royalty payments to NBAP with respect to sales made in each of the regions or
individual countries set forth above as follows:
(1) Trading card minimum royalties shall be as follows:
lst Contract Year 2nd Contract Year 3rd Contract Year 4th Contract Year
----------------- ----------------- ----------------- ------------------
NORTH AMERICA
Fleer Brands [CONFIDENTIAL TREATMENT REQUESTED]
SkyBox Brands
EUROPE
Fleer
ASIA
Fleer
AUSTRALIA/NZ
Fleer Brands
SkyBox Brands
LATIN AMERICA
Fleer
AFRICA
Fleer
(2) Sticker minimum royalties shall be as follows:
lst Contract Year 2nd Contract Year 3rd Contract Year 4th Contract Year
----------------- ----------------- ----------------- ------------------
NORTH AMERICA [CONFIDENTIAL TREATMENT REQUESTED]
LATIN AMERICA
EUROPE
ASIA
AUSTRALIA/NZ
AFRICA
F. MEDIA & EVENT SUPPORT ("MEDIA SUPPORT"): Each Contract Year during the
Term, Fleer, SkyBox and Panini respectively shall spend the amounts
indicated below on NBA media and events:
(1) On Media Support in North America, (y) Fleer shall expend on
NBA-controlled media and events, as are set forth on Schedule A
hereto, an amount equal to [CONFIDENTIAL TREATMENT REQUESTED], which
amount shall not be less than the following per Contract Year:
[CONFIDENTIAL TREATMENT REQUESTED] the 3rd Contract Year, and
[CONFIDENTIAL TREATMENT REQUESTED] the 4th Contract Year (however,
once LICENSEE has expended the foregoing minimum amount, or firmly
committed to spend such amount, for the applicable Contract Year, for
the balance of the Contract Year the rate shall be reduced to
[CONFIDENTIAL TREATMENT REQUESTED] and (z) SkyBox shall expend an
amount equal to [CONFIDENTIAL TREATMENT REQUESTED], which amount
shall not be less than the
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following per Contract Year: [CONFIDENTIAL TREATMENT REQUESTED] the
1st Contract Year, [CONFIDENTIAL TREATMENT REQUESTED] the 2nd
Contract Year, [CONFIDENTIAL TREATMENT REQUESTED] the 3rd Contract
Year, and [CONFIDENTIAL TREATMENT REQUESTED] the 4th Contract Year.
(2) On Media Support outside of North America, (y) Fleer shall expend on
NBA-controlled media and events (by way of example, but not limited
to, McDonald's Championship, Jam Session, preseason games, etc.), as
mutually determined, an amount equal to [CONFIDENTIAL TREATMENT
REQUESTED] which amount shall not be less than [CONFIDENTIAL
TREATMENT REQUESTED], and (z) Panini shall expend an amount equal to
[seven percent (7%) of its Net Sales (attributable to international
sales)]* which amount shall not be less than [CONFIDENTIAL TREATMENT
REQUESTED] per Contract Year, in addition, for each Contract Year
Fleer and SkyBox shall each allocate [CONFIDENTIAL TREATMENT
REQUESTED] to a NBAP- controlled advertising and promotion ("A&P")
fund to be used by NBAP for promotional activities in Australia/NZ.
G. A&P GROUP FUND PAYMENTS: In addition to all other amounts payable to NBAP
under this Agreement, (x) Fleer shall contribute monthly into NBAP's
consumer products advertising and promotion fund (the "Group Fund"),
together with its monthly payments of royalties under Paragraph 3 of the
attached NBAP Standard Terms and Conditions, an amount equal to
[CONFIDENTIAL TREATMENT REQUESTED] which amount shall not be less than the
following per Contract Year: [CONFIDENTIAL TREATMENT REQUESTED] the lst
Contract Year, [CONFIDENTIAL TREATMENT REQUESTED] the 2nd Contract Year,
[CONFIDENTIAL TREATMENT REQUESTED] the 3rd Contract Year, and
[CONFIDENTIAL TREATMENT REQUESTED] the 4th Contract Year, (y) SkyBox shall
contribute monthly into the Group Fund, together with its monthly payments
of royalties under Paragraph 3, an amount equal to [CONFIDENTIAL TREATMENT
REQUESTED], which amount shall not be less than the following per Contract
Year, [CONFIDENTIAL TREATMENT REQUESTED] the 1st Contract Year,
[CONFIDENTIAL TREATMENT REQUESTED] the 2nd Contract Year; [CONFIDENTIAL
TREATMENT REQUESTED] the 3rd Contract Year; and [CONFIDENTIAL TREATMENT
REQUESTED] for the 4th Contract Year and (z) Panini shall contribute
monthly into the Group Fund, together with its monthly payments of
royalties under Paragraph 3, an amount equal to [CONFIDENTIAL TREATMENT
REQUESTED] which amount shall not be less than [CONFIDENTIAL TREATMENT
REQUESTED] per Contract Year. Such amount shall be spent by NBAP in its
sole discretion on NBAP advertising and promotion activities for NBAP
licensed products sold at retail. NBAP shall give LICENSEE a written
report within sixty (60) days after each Contract Year setting forth how
funds collected from LICENSEE, and other NBAP licensees under similar
provisions in other license agreements, were spent by NBAP. In addition to
the foregoing A&P obligations, Fleer, SkyBox and Panini shall each
exhibit, at its sole cost and expense, a fair and representative selection
of Licensed Products at the National Sports Collectors Convention and
every other trade show where each company exhibits licensed products.
H. 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 shall only sell Licensed
Products to a buyer that, to its best knowledge, (i) purchases Licensed
Products from LICENSEE solely for sale directly to the consumer and
operates a retail establishment that supports the high quality and image
of NBA officially licensed products with appropriate merchandising
displays, promotion and/or customer service, or (ii) distributes to
retailers that support the high quality and image of NBA officially
licensed products with appropriate merchandising displays, promotion
and/or customer service. LICENSEE acknowledges that a failure to comply
with the selling practices set forth in this Paragraph shall cause
significant harm to NBAP's efforts to effectively and efficiently
distribute NBAP-licensed products.
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AGREED TO AND ACCEPTED, subject AGREED TO AND ACCEPTED:
to and incorporating the attached NBAP NBA PROPERTIES, INC.
Standard Terms and Conditions which
the undersigned has read: By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
MARVEL ENTERTAINMENT GROUP, INC. -----------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇. Vice President,
Business Affairs
By:
---------------------------------
Title: Dated:
------------------------------ ----------------------
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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. The first Contract Year
shall commence August 1, 1995.
(b) "Counterfeit Goods" shall mean and include: (i) goods that bear any
NBA ▇▇▇▇ that has been reproduced and/or affixed without
authorization from NBAP; (ii) goods that bear any NBA ▇▇▇▇ produced
by any source in excess of an amount ordered by an NBAP licensee; and
(iii) goods that bear any NBA ▇▇▇▇ that have been rejected by NBAP or
an NBAP licensee and nevertheless enter the stream of commerce.
(c) "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.
(d) "NBA Photo" means any photograph 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 or setting.
(e) "Net Sales" shall mean the amount of the [CONFIDENTIAL TREATMENT
REQUESTED] under this Agreement, after [CONFIDENTIAL TREATMENT
REQUESTED]. In computing Net Sales, [CONFIDENTIAL TREATMENT
REQUESTED] Net Sales resulting from sales to any party directly or
indirectly related to or affiliated with LICENSEE (a "Related
Transaction") shall be computed based on regular selling prices to
unaffiliated parties in the same class of trade as the affiliated
party. If a purchaser from LICENSEE purchases FOB the manufacturing
source or participates in other arrangements which result in such
purchaser paying less for the Licensed Products than LICENSEE's
regular selling prices to the trade, Net Sales with respect to any
such transaction shall be computed based on the regular selling
prices to the trade.
(f) "Parallel Goods" shall mean and include Licensed Products transferred
outside of the Territory or brought into the Territory in violation
of this Agreement.
(g) "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.
(h) "Release" means the shipment of a series.
(i) "Set" means all the cards issued in a series of a particular product
line.
(j) "Standard Size" means a card size of 2-1/2" x 3-1/2" except that the
standard size "Jam Session" card shall be 2-1/2" x 4-11/16".
2. TEAM REPRESENTATION; LIMITATIONS ON LICENSE
(a) Unless otherwise approved in writing by NBAP, each NBA Set 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. 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
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other licenses pursuant to which LICENSEE manufactures, 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.
(b) LICENSEE acknowledges that nothing contained herein shall be
construed as granting to any photographer engaged by LICENSEE the
right to enter any NBA arena for the purpose of photographing game
action, it being understood that NBAP does not control arena access.
Upon LICENSEE's request, NBAP shall provide LICENSEE with reasonable
amounts of NBA Photos for use by LICENSEE in the production of the
Licensed Products; such NBA Photos to be provided to LICENSEE at
NBAP's prevailing search and edit charges for NBAP licensees.
3. 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, Fleer, SkyBox and Panini shall each furnish (on forms
provided by or approved by NBAP) full and accurate statements (on a
country-by-country and brand basis), certified by an officer of each
respective company, showing all information relating to the
calculation of Net Sales for the preceding month. Simultaneously with
the submission of such statement, each company 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 G 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 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 G 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, auditing
LICENSEE's books and records pursuant to Paragraph 12 or claiming any
shortfall in royalty payments, or advertising and promotion payments
all during the Term and for a period of two (2) years after the
expiration or termination thereof. In order to assist with NBAP's
annual budget process, by April 15 of each Contract Year, each
LICENSEE company shall deliver a
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statement detailing its projections for sales of each Licensed
Product for the following Contract Year, broken down on a quarterly
basis. If LICENSEE fails to comply with the reporting and payment
requirements contained in this Paragraph, subject to notice and
opportunity to cure as provided under Paragraph 13(a) below, 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) Cross Collateralization: Royalty payments and Media Support may be
cross collateralized between companies and territories and across
product lines under this Agreement except that, (i) any royalty
payment for Licensed Product sold shall only be applied against the
Minimum Guarantee for the Contract Year in which 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),
(ii) annual royalty payments attributable to North American sales
cannot be cross collateralized against any shortfall in the Minimum
Guarantee(s) for another region (however, payment in excess of
aggregate international Minimum Guarantees may be applied against any
shortfall in Minimum Guarantees for North America for that same
Contract Year), (iii) Media Support cannot be cross collateralized
between Contract Years (or against royalty payments), or between
Fleer and SkyBox with regard to the Youth Educational Programs,
All-Star Jam Session or Jam Session U.S. Tour, and (iv) international
Media Support cannot be cross collateralized against North America
Media Support. Notwithstanding the foregoing, however, in no event
shall aggregate royalties paid by LICENSEE with respect to any
Contract Year be less than the aggregate annual minimum royalties for
trading cards and stickers combined in the entire Territory as set
forth in Paragraph E above.
4. 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 14.
5. 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.
6. 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.
7. 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
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not to contact any third party engaging in the aforementioned
activities, not to make any demands for claims and not to institute
any suit or action on account of such infringement or unauthorized
importation/exportation without obtaining the express prior written
permission of NBAP in each instance. In the event NBAP grants such
permission and LICENSEE institutes such a suit or takes other action,
LICENSEE shall bear all direct out-of-pocket costs and expenses of
such action and NBAP shall reasonably cooperate with LICENSEE at
LICENSEE's expense.
(b) Assistance in Protecting Marks: LICENSEE shall cooperate to the
fullest extent reasonably necessary to assist NBAP in the protection
of the rights of NBAP, the NBA and the Member Teams in and to the
Licensed Marks. NBAP shall reimburse LICENSEE for any reasonable out-
of-pocket costs actually incurred by LICENSEE in providing such
cooperation and assistance. LICENSEE shall reasonably cooperate with
NBAP in its enforcement efforts, including being named by NBAP as a
complainant in any action against an infringer and NBAP shall bear
all LICENSEE's direct out-of-pocket costs and expenses of being named
a complainant and otherwise cooperating with NBAP in any such action.
LICENSEE shall pay to NBAP, and waives all claims to, all damages or
other monetary relief recovered 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) whether or
not such damages or any part of such damages represent or are
intended to represent injury sustained by LICENSEE.
(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 ▇▇▇▇ 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, at NBAP'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 ▇▇▇▇
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 at NBAP's expense.
(d) Notices. Labeling and Records. In every instance in which any
Licensed ▇▇▇▇ 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
▇▇▇▇ notices (including the form, location and content of such
notices) as NBAP may from time-to-time designate. 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 all Licensed Products to bear the NBA Logo
together with the NBAP(C) notice in such place, and in such
prominence, as NBAP may 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
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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 anticounterfeiting
systems, stickers, and labels that NBAP may establish from
time-to-time, (iv) unless approved in writing by NBAP, and with the
exception of those Marks of LICENSEE set forth in Paragraph A (1)(i)
hereof, 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 upon its request, 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 ▇▇▇▇ on the Licensed Products
and any promotional or packaging materials.
(e) Recordation and Registered User Applications: With respect to those
countries in which one or more LICENSEEs may distribute and which
require applications to register the distributing LICENSEE as a
permitted or registered user of the Licensed Marks, or which require
the recordation of this Agreement, such 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.
(f) Licensee Trade Names and Trademarks: Fleer, SkyBox and Panini shall
each permanently affix labeling on its respective 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, each company
shall advise NBAP in writing of its trade names or trademarks used on
Licensed Products and the proposed placement of such trade names and
trademarks on the Licensed Products. NBAP has preapproved the
trademarks and trade names of LICENSEE set forth in Paragraph A
hereof. Each company 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 its 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 acknowledges that it shall acquire no rights
in any LICENSEE trade names or trademarks used hereunder. If
requested by NBAP, each company shall supply NBAP, in advance of
shipping any Licensed Products, with at least twelve (12) copies of
each type of its stickers, product 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.
8. 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 act or omission of LICENSEE, (ii) any breach of this
Agreement by LICENSEE, (iii) 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
(iv) any claim that the use of any design or other graphic component
of any Licensed Product (other than the Licensed Marks, Licensed
Attributes, NBA Photos or other material supplied to LICENSEE by
NBAP) violates or infringes upon the trademark, copyright or other
intellectual property rights (including trade dress) of a third
party, provided LICENSEE is given prompt written notice of and shall
have the option to undertake and conduct the defense of any such
Claim. In any instance
11
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 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 defend, hold harmless
and indemnify LICENSEE, its directors, officers, employees and agents
against any Claims arising out of: (i) a claim that the use, as
authorized by this Agreement, of the Licensed Marks, Licensed
Attributes, NBA Photos or other material supplied to LICENSEE by NBAP
(collectively, "Licensed Materials") 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, as authorized by this Agreement, of the Licensed
Attributes, NBA Photos or other material supplied to LICENSEE by NBAP
on Licensed Products, or in advertising or promotional materials, as
specifically approved by NBAP violates or infringes upon the right of
privacy or right of publicity of, or libels or defames, any NBA
player or (iii) 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. NBAP shall have the right, within seventy (70) days of
LICENSEE's commencement of production of Licensed Products bearing
such marks, to advise LICENSEE that one or more Marks of a Member
Team (other than the team's name or logo) are not covered by this
Paragraph 8(b), whereupon any continued use of said ▇▇▇▇ by LICENSEE
shall be at LICENSEE's sole risk. If as a consequence of NBAP's
breach of this Agreement or a Claim (for which it is entitled to
indemnification by NBAP under this Paragraph) LICENSEE is restrained
from use of any Licensed Materials and such restraint has had a
material adverse effect on LICENSEE's Licensed Product sales, NBAP
and LICENSEE shall in good ▇▇▇▇▇ ▇▇▇▇▇▇ with respect to an equitable
adjustment to LICENSEE's obligations under this Agreement. If NBAP
and LICENSEE are unable to agree on the equitable adjustment, then
the parties shall proceed in accordance with the process set forth in
sub-paragraph 23(a) below.
9. QUALITY; APPROVALS; SAMPLES
LICENSEE shall cause the Licensed Products to meet and conform to high
standards of style, quality and appearance, consistent with their price
point. In order to assure NBAP that it is meeting such standards and other
provisions of this Agreement, LICENSEE shall comply with the following:
(a) Pre-Production: Before commercial production and distribution of any
Licensed Product, each LICENSEE shall submit to NBAP all its proposed
set/subset themes, composition, package configurations, card designs,
card copy, statistical information, photographs, composite
12
matchprints, packaging and displays. LICENSEE acknowledges that NBA
Photos not obtained directly through NBAP's photo services shall not
be approved for use on Licensed Product or in NBA-identified
promotional materials. All submissions under this Paragraph shall be
accompanied by forms supplied by NBAP, using one (1) form for each
submission and filling in all necessary information, and all NBA
Photos submitted for approval must include the photograph
identification number (e.g., 95 NSBB 12345) assigned to each
photograph by NBAP's photo services. NBAP shall approve or disapprove
in writing all submissions, in its good faith exercise of sole
discretion, before the LICENSEE shall be entitled to distribute,
advertise, use, produce commercial quantities of or sell any item
relating to any such submission. Any article actually submitted and
not disapproved in writing within thirty (30) days after receipt by
NBAP shall be deemed approved. In the event of a disapproval, NBAP
shall set forth its reasons with enough specificity that LICENSEE
shall be able to remedy the defect, if curable. Approval of an
article by one company which uses particular artwork does not imply
approval of such artwork with a different article, by another company
or of such article with different artwork. LICENSEE acknowledges that
NBAP's approval of an article does not imply approval of any non-NBA
controlled elements contained in any article. After a sample of an
article has been approved, it shall not be materially changed without
resubmission of the modified article for NBAP's written approval.
(b) Production Samples: Before selling or distributing any Licensed
Product, each company shall furnish NBAP with, at no charge, for its
files two (2) sample complete sets from the first production run of
each product line. If such samples do not conform in all material
respects to the Licensed Product as approved or if the quality of
such sample does not meet the requirements of this ▇▇▇▇▇▇▇▇▇ ▇, ▇▇▇▇
shall notify the LICENSEE and such article shall not be considered a
Licensed Product, be deemed unapproved and all such articles shall be
promptly destroyed unless such articles may be remedied to NBAP's
satisfaction. Each card LICENSEE shall also furnish NBAP, free of
charge and with no right of resale, with: (i) five (5) "base cases"
(i.e., a 20-box case with 36 packs of cards per box and 12 cards per
pack) of each product line within thirty (30) days of production;
twenty (20) complete sets in binders; and (iii) any additional pieces
of Licensed Product as may reasonably be required by NBAP to promote
the sale of Official Licensed Products (e.g., for NBAP's display
room, advertisements, catalogs, mailers, product placement and trade
shows) or for comparison with earlier samples. In addition, each
LICENSEE shall provide NBAP with any additional pieces of Licensed
Product as may be required for the permanent use of the Member Teams;
for each card LICENSEE not to exceed two (2) base cases per product
line per Member Team. If NBAP wishes to purchase further quantities
of any Licensed Products for resale, LICENSEE shall sell such
Licensed Products to NBAP at the lowest price LICENSEE charges for
similar quantities sold to its preferred customers and LICENSEE shall
pay royalties on such sales. If NBAP wishes to purchase mutually
acceptable quantities of Licensed Products for give-away purposes and
not for resale, LICENSEE shall sell the Licensed Products to NBAP at
LICENSEE's direct manufacturing cost for such Licensed Products and
LICENSEE shall not be required to pay royalties on such sales to
NBAP.
(c) Rejections and Non-Compliance: All submissions or samples not
approved by NBAP shall promptly be destroyed by the LICENSEE except
as otherwise provided by NBAP. The LICENSEE shall advise NBAP
regarding the time and place of such destruction (in sufficient time
to arrange for an NBAP representative to witness such destruction, if
NBAP so desires) and such destruction shall be attested to in a
certificate signed by one of LICENSEE's officers and submitted to
NBAP within fifteen (15) days of the date on which the sample was not
approved. In the event of a 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 a LICENSEE to comply with the material provisions of
Paragraphs 7(d), 7(f), 9 (after receiving notice and opportunity to
cure, if curable, as provided under Paragraph 13(d) below), or 11(c),
NBAP shall have the right to: (i) immediately revoke that LICENSEE's
rights with respect to any 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
13
products. In the event NBAP exercises its rights under (i) above,
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.
(d) Testing: Both before and after Licensed Products are put on the
market, each LICENSEE shall follow reasonable and proper procedures
for testing the Licensed Products for compliance with laws,
regulations, standards and procedures, and shall permit NBAP (upon
reasonable notice during reasonable business hours and no more than
once a year) to inspect its and its authorized manufacturers testing,
manufacturing and quality control records, procedures and facilities
and to test or sample Licensed Products for compliance with this
Paragraph and the other terms and conditions of this Agreement.
Licensed Products found by NBAP at any time not to 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 the LICENSEE can demonstrate to NBAP's
satisfaction that such Licensed Products have been brought into full
compliance.
(e) 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, or (ii) 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 a withdrawal pursuant to (i), LICENSEE
shall as soon as practicable cease the printing of such Licensed
Product and shall have a six (6) month sell-off period and an
equitable adjustment to the minimum guarantee for such Licensed
Product. In the event of such a withdrawal pursuant to (ii), LICENSEE
shall cease the advertising of the Licensed Product and, as soon as
practicable, shall cease the printing of such Licensed Product and
the parties shall negotiate in good faith for a reasonable sell-off
period for such Licensed Product. If, in the good faith judgment of
NBAP, the sell-off of such Licensed Product is likely to defame,
bring into disrepute, or reflect unfavorably upon NBAP, the NBA, or
any of its Member Teams, then LICENSEE shall destroy its remaining
inventory of such Licensed Product. In either case, the parties shall
also negotiate 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.
10. 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.
Each LICENSEE shall furnish to NBAP, free of charge, in a computer
readable form or such other format reasonably acceptable to NBAP, the
names, addresses, telephone numbers and any other consumer information
furnished to, and maintained by, it resulting from participation in any
sweepstakes, promotion or direct mail solicitation conducted by it and
featuring the Licensed Products or NBA Marks (and which information NBAP
shall have the right to use for its marketing and research efforts as it
deems appropriate). 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 ▇▇▇▇ or Licensed Attribute may be used unless it
has been approved in all stages (i.e., creative concept, script,
storyboard, production "roughcut" and final
14
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 and shall be subject to
NBAE's prevailing search and edit charges for NBAP licensees and
NBAE's cost of providing such footage. Any promotional material
submitted that is not approved or disapproved in writing by NBAP
within ten (10) days of its receipt by NBAP shall be deemed approved
by NBAP. In the event of a disapproval, NBAP shall set forth in
writing the reasons therefor with reasonable specificity.
11. DISTRIBUTION; COMPLIANCE
(a) LICENSEE shall use commercially reasonable 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 a particular LICENSEE that a special
promotional effort is to take place in an individual store or chain
in a region in which it has distribution rights, such LICENSEE shall
use commercially reasonable efforts to sell its Licensed Products to
said store or chain. In addition, each LICENSEE shall give the
Licensed Products wide distribution and shall not, in accordance with
the selling practices set forth in this Agreement, refrain for any
reason from selling Licensed Products to any retail outlet within its
Territory that may desire to purchase Licensed Products and whose
credit rating, marketing image and past experience with LICENSEE, if
any, warrants such sale.
(b) If a LICENSEE desires to have a third party manufacture any Licensed
Product, such 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, such 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, the 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 cooperate fully with NBAP in stopping such
unauthorized use. Any change by a 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
stamp on all invoices, and shall require its own affiliated
distributor to stamp on its invoices, a prominent legend that states
that the Licensed Products are allowed to be sold only within the
Territory. In the event NBAP has good cause to believe that any of
LICENSEE's authorized distributors, agents and customers are not
observing territorial limits, LICENSEE shall, at the request of NBAP,
inquire as to whether such party or parties are observing territorial
limits and shall report in writing to NBAP the results of such
inquiries. LICENSEE shall notify NBAP of all orders from, or on
behalf of, a customer who LICENSEE knows is located outside the
Territory or has good cause to believe intends to resell the Licensed
Products outside the Territory, If LICENSEE sells Licensed Product
outside the Territory, or to a 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.
15
(d) In the event any LICENSEE sells or distributes other sports-related
licensed merchandise of a similar grade or quality as the Licensed
Products, but which do not bear any of the Licensed Marks, it will
not discriminate, in a manner which adversely impacts the Licensed
Products, in the granting of commissions and discounts to salesmen,
dealers and distributors between the Licensed Products and the
licensed products of any third party. A LICENSEE may not package its
Licensed Products in combination with other of its products, whether
similar or different, without the prior written approval of NBAP
which shall not be unreasonably withheld. In the event a LICENSEE has
employed selling or reporting methods which circumvent or reduce the
royalty or other payment or reporting obligations contained in this
Agreement, NBAP may, in addition to any other rights and remedies it
may have, at its option and upon fifteen (15) days' prior written
notice, adjust the minimum royalty per unit so that LICENSEE's
payment or reporting obligations are the same as if such practice had
not been employed.
(e) Each 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 establish from time-to-time and all applicable laws,
government rules and regulations, court and administrative decrees
and the highest standard of business ethics then prevailing in the
industry.
(f) It shall be the sole responsibility of each LICENSEE, 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 such LICENSEE's performance
under this Agreement.
12. RECORDS; AUDITS
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 no more than once per year without good cause, at all reasonable
hours of the business day and upon ten (10) days' 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 directly 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. All such
information shall be kept confidential in accordance with Paragraph 22(g)
hereof. 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%)
and greater than five thousand dollars ($5,000) LICENSEE shall also pay
for the reasonable cost of the audit. LICENSEE shall pay such amount
within thirty (30) days. All such books of account and records shall be
kept available for at least two (2) years after the expiration or
termination of this Agreement, or three (3) years after the end of the
Contract Year to which they relate, whichever is earlier. In order to
facilitate inspection of its books and records, LICENSEE shall designate a
symbol or number which will be used exclusively in connection with the
Licensed Products on which royalty payments are payable and shall maintain
for inspection as provided in this Agreement duplicates of all ▇▇▇▇▇▇▇▇ 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 copies of either (i) financial information furnish to the United
States Securities and Exchange Commission or (ii) with all financial
statements and other financial information prepared by LICENSE E
16
for distribution to its banks or other financial lending institutions to
whom it reports regularly. Such information, to the extent not publicly
available, shall be kept confidential in accordance with Paragraph 22(g)
hereof. 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.
13. 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, or rights with respect to a particular LICENSEE where
appropriate, at any time if:
(a) LICENSEE shall fail to timely remit a royalty report and payment when
due and shall fail to cure such delinquency and non-payment within
thirty (30) days (ten (10) days for other non-payment defaults) of
its receipt of written notice from NBAP; provided, however, that the
LICENSEE shall not have the right to cure more than three (3)
delinquent submissions or payment defaults.
(b) 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.
(c) LICENSEE shall exhibit a pattern of failure to timely return original
NBA Photos to NBAE in accordance with the terms of its Photo Use Form
Agreement.
(d) LICENSEE shall fail to perform or shall be in breach of any other
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 now or in the future holds a license from NBAP covering any
other products or geographic area other than the Territory and such
license is terminated by NBAP.
(f) LICENSEE (i) delivers Licensed Products outside the territory covered
by any retail product license agreement in effect during the Term
between NBAP and LICENSEE.
(g) LICENSEE sells to any third party that LICENSEE knows is altering or
modifying the Licensed Products prior to sale to the ultimate
consumer.
In addition to NBAP's other rights and remedies, upon termination of this
Agreement under this Paragraph LICENSEE shall pay NBAP (within thirty (30)
days of such termination) the Minimum Guarantees for each Licensed Product
and the A&P contribution through the end of the Agreement, less the
royalties and portion of the A&P contribution paid to NBAP through the
date of termination.
14. DISPOSAL OF STOCK
(a) With respect to trading card product, within seven (7) months
following the initial release of each series of Licensed Product,
except as otherwise approved by NBAP in writing, LICENSEE shall
destroy printing plates and any such Licensed Product on hand. In the
alternative, LICENSEE may sell or resell such Licensed Product with
NBAP's permission, not to be unreasonably withheld. LICENSEE shall be
entitled to retain for its purposes up to one hundred (100) cases of
each Licensed Product each Contract Year. Any Licensed Product
returned after seven (7) months of its initial ship date shall be
destroyed within ninety (90) days of receipt by LICENSEE. In the
alternative, LICENSEE may sell or resell such Licensed Product with
NBAP's permission, not to be unreasonably withheld. Upon request,
LICENSEE shall provide NBAP with evidence of the destruction of such
product or components. Upon expiration (but not termination except
with the prior approval of NBAP which shall not be unreasonably
withheld if such termination is unrelated to LICENSEE's breach of
Paragraphs 3,7,9 or 11 (c) above), 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.
17
(b) With respect to stickers, sixty (60) days before the expiration of
this Agreement and ten (10) days after any termination under
Paragraphs 9 or 13, Panini will furnish to NBAP a certificate showing
the number and description of Licensed Products on hand or in process
of manufacture. After expiration or termination of this Agreement,
Panini shall have no further right to manufacture, authorize any
third party to manufacture, advertise, distribute, sell, promote or
otherwise deal in any Licensed Products or use the Licensed Marks or
Licensed Attributes except as provided below. For a period of ninety
(90) days following the expiration (but not after termination except
with the prior approval of NBAP which shall not be unreasonably
withheld if such termination is unrelated to LICENSEE's breach of
Paragraphs 3,7,9 or 11(c) above) of this Agreement, Panini may
sell-off and deliver completed Licensed Products which are on hand at
the time of such expiration (the "Sell-Off Period"); provided,
however that (i) the total number of units of each Licensed Product
sold during the Sell-Off Period may not be greater than one hundred
ten percent (110%) of the total number of units of such Licensed
Product on hand on the same date the preceding Contract Year, (ii)
such Licensed Products may only be sold in accordance with this
Agreement and in the normal course of business and at regular selling
prices, (iii) all payments then due are first made to NBAP and (iv)
statements and payments with respect to the Sell-Off Period are made
in accordance with this Agreement NBAP shall have the option to
conduct physical inventories before the expiration of this Agreement
until the end of the Sell-Off Period in order to verify such
inventory and/or statements. If Panini refuses to permit such
physical inventory, Panini shall forfeit its right to dispose of its
inventory. After such Sell-Off Period, all inventory on hand or in
process (including all promotional and packaging materials) will be
destroyed.
15. 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 the unauthorized use of the Licensed Marks or Licensed
Attributes having a material adverse effect on the NBA Marks or Player
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 seek injunctive and other equitable relief, without the necessity of
proving special damages or furnishing a bond or other security unless so
ordered by the Court.
16. 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 or express delivery properly addressed. 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.
17. 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.
18. 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
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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
except in the event LICENSEE claims that NBAP has used the approval
process to frustrate the purpose of this Agreement.
19. USE OF PLAYERS
(a) LICENSEE acknowledges that this Agreement does not grant to LICENSEE
any licenses or rights with respect to the use of Player Attributes
except on Licensed Product as expressly provided herein and in
advertising and promotional materials specifically approved by NBAP.
The license granted under this Agreement does not include, and shall
not be used to imply, a testimonial or endorsement of any Licensed
Products by any NBA player. LICENSEE shall not use Player Attributes
in any manner that is a testimonial or endorsement without first
obtaining written authorization from the subject player(s)
("Endorsement Rights"). LICENSEE shall not enter into any agreement
with any NBA player which would require that player to wear any
LICENSEE- identified item in or at any NBA game, competition or event
(either courtside or in any locker room).
(b) LICENSEE may enter into an "exclusive" Endorsement Rights agreement
with a current NBA player but acknowledges that, notwithstanding any
such exclusivity, under the group license agreement between NBAP and
the National Basketball Players Association (the "Group License"),
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 manufacturers product (e.g.,
use with greater prominence than other players depicted in the
materials submitted to NBAP for approval). In the event a new Group
License is entered into during the Term and the non opt-out
categories therein are expanded to include additional products that
are licensed under this Agreement (i.e., stickers), such products
shall be treated under this Agreement consistent with the principles
of this Paragraph.
(c) In the event any current NBA player retires or becomes inactive, or
enters into an exclusive license agreement with respect to an
"opt-out" category of products (e.g., stickers) that conflicts with
the rights granted hereunder, upon receipt of written notice from
NBAP that such a player has become inactive, or entered into a
conflicting exclusive license agreement, LICENSEE shall cease and/or
cause to cease the use of such players Licensed Attributes in the
manufacture, distribution, advertisement, promotion and sale of any
applicable Licensed Product within seventy (70) days of receipt of
NBAP's notice, said seventy (70) day period being commensurate with
the sell-off period provided in the Group License. In the event that
a new Group License is entered into during the Term and the sell-off
period therein is extended beyond seventy (70) days with respect to
any product category covered by this Agreement, NBAP agrees that the
sell-off period in this Paragraph 19(c) shall be similarly extended.
20. WARRANTIES
Each party represents and warrants that it has the right and authority to
enter into and perform this Agreement and NBAP represents and warrants
that it has the right to grant the rights to use the Licensed Marks and
Licensed Attributes. LICENSEE represents and warrants that all advertising
and promotional materials shall comply with all applicable laws,
regulations and standards. 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 ▇▇▇▇ by LICENSEE in
any advertising materials relating to the Licensed Products. LICENSEE
further represents and warrants that all advertising and promotional
materials and all graphics used on Licensed Products (other than materials
or properties supplied by NBAP) will not violate the intellectual property
rights of any third party.
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21. 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 or enforced as if such
provision were not contained in this Agreement.
22. [CONFIDENTIAL TREATMENT REQUESTED]
(a) If (x) as a result of the [CONFIDENTIAL TREATMENT REQUESTED].
(i) LICENSEE's aggregate minimum royalties shall be [CONFIDENTIAL
TREATMENT REQUESTED] of the minimum royalty for such Contract
Year [CONFIDENTIAL TREATMENT REQUESTED] with respect to the 1st
Contract Year); and
(ii) LICENSEE shall be [CONFIDENTIAL TREATMENT REQUESTED] of the
minimum royalty for such Contract Year, whereupon LICENSEE shall
[CONFIDENTIAL TREATMENT REQUESTED] made thereafter in accordance
with this Agreement [CONFIDENTIAL TREATMENT REQUESTED].
(b) If (x) [CONFIDENTIAL TREATMENT REQUESTED].
(c) With respect to any Contract Year in which [CONFIDENTIAL TREATMENT
REQUESTED].
(d) If Paragraph 23(a) [CONFIDENTIAL TREATMENT REQUESTED].
23. MISCELLANEOUS
(a) [CONFIDENTIAL TREATMENT REQUESTED]: In the event of a [CONFIDENTIAL
TREATMENT REQUESTED].
(b) Force Majeure: If in any country or region outside of North America,
either LICENSEE or NBAP shall have been prevented in whole, or in
part from performing its obligations under this Agreement as a result
of war, insurrection, national emergency, restrictions imposed by
law, or "acts of God" (a "Force Majeure"), then the performance of
such party disabled by said Force Majeure shall be suspended for the
duration of the Force Majeure or resultant period of disability (the
"Disability Period"); and provided that the disabled party shall
resume its affected performance as soon as possible after the
disability has been removed. However, if such Force Majeure prevents
performance for a period in excess of ninety (90) days, either party
may terminate this Agreement with respect to the country or region
affected by the Force Majeure upon thirty (30) days' written notice
served upon the other party not later than ten (10) days after the
elapse of the 90-day Disability Period. In the event of a termination
pursuant to this Paragraph 23(b), NBAP and LICENSEE shall in good
▇▇▇▇▇ ▇▇▇▇▇▇ with each other to negotiate with respect to an
equitable adjustment to LICENSEE's obligations hereunder, including
an appropriate adjustment in Minimum Guarantees and/or A&P Minimums
with respect to the affected country or region, or other appropriate
adjustments to the Agreement. If NBAP and LICENSEE are unable to
agree on the equitable adjustment, then the parties shall proceed in
accordance with the process set forth in sub-paragraph 23(a) above.
(c) 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 shall
not be unreasonably withheld with respect to an affiliate or related
company of LICENSEE which is in the youth entertainment business),
which consent may, in NBAP's sole discretion, (i) be contingent upon
a fee payable by LICENSEE or the transferee (except with respect to
an affiliated or related company of LICENSEE), the amount of which
shall be determined by NBAP in its sole discretion, and/or (ii)
impose other terms and conditions upon the assignment, sublicense or
transfer (except with respect to an affiliated or related company
directly or indirectly wholly- owned by LICENSEE). Any transfer of a
controlling interest in LICENSEE or in any party which currently
controls LICENSEE, directly or indirectly, 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
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any such nonconsensual assignment, sublicense or encumbrance, this
Agreement shall terminate, all payment obligations of LICENSEE
hereunder shall be accelerated and immediately due and payable, and
all rights granted under this Agreement shall immediately revert to
NBAP. NBAP acknowledges that, as of the date hereof, it has received
consideration from Marvel for the right to assume SkyBox's rights
under its existing license agreement with NBAP, in connection with
Marvel's acquisition of SkyBox.
(d) 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.
(e) 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, regardless of whether these amounts
are then or thereafter payable. The provisions of Paragraphs 12 and
23(g) shall survive the expiration or termination of this Agreement.
(f) 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 18) 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.
(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
information exchanged between the parties hereunder 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
NORTH AMERICA NBA MEDIA & EVENTS
SkyBox Brands 1995-96 1996-97 1997-98 1998-99
------------- ------- ------- ------- -------
NBA Media [CONFIDENTIAL TREATMENT REQUESTED]
Youth Educational
Programs
All-Star
Jam Session
Team Card
Sheet Prog.
Broadcast Dinner
Additional Programs*
"TBD"
Fleer Brands
-------------
NBA Media
All-Star
Jam Session
Jam Session
US Tour
Additional Programs*
"TBD"
* The money to be expended with respect to Additional Programs and dollars
in excess of LICENSEE's annual minimum expenditure may be
cross-collateralized between Fleer and SkyBox and 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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