FORM: NBAP
TRADING CARDS
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") and SkyBox
International, Inc. ("SkyBox") (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 indicis 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 ("Attributes") of all current NBA
players. 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 and SkyBox brands 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, nicknames,
photographs, portraits, likenesses, signatures, NBA statistics and biographical
information (and such additional 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 (on a group basis and to the extent NBAP can convey such
rights in accordance with the Group License Agreement between NBAP and the
National Basketball Players Association ("NBPA") (or its successor)) (the
"Licensed Attributes"), solely in connection with the manufacture,
distribution, advertisement, promotion and sale of the trading card 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: Trading card products as approved by NBAP.
For each Contract Year during the Term, LICENSEE shall make * (*)
trading card product "releases" (as defined in Paragraph 1 of the
attached NBAP Standard Terms and Conditions) under the Fleer/SkyBox
brands.
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* Confidential treatment requested - portion has been omitted and filed
separately with the Securities and Exchange Commission.
B. TERM: August 1, 1998 to July 31, 2001 (the "Term").
C. TERRITORY: The rights granted to LICENSEE hereunder shall be
exercisable on a worldwide basis (the "Territory").
D. ROYALTY RATES: LICENSEE shall pay monthly to NBAP a combined royalty
and advertising and royalty payment (hereinafter referred to as
"royalty") equal to *percent (*%) of "Net Sales" (as defined in
Paragraph 1 of the attached NBAP Standard Terms and Conditions).
E. MINIMUM GUARANTEES/REQUIREMENTS:
(1) Minimum Guarantees: LICENSEE guarantees that its aggregate
annual royalty payments to NBAP for each Contract Year under
this Agreement shall not be less than the amount set forth
opposite such Contract Year:
1st Contract Year $*
2nd Contract Year $*
3rd Contract Year $*
*
(2) *:
(3) International Minimum Requirements: If at any time after the
1st Contract Year, LICENSEE shall fail to exercise its good
faith best efforts to distribute and sell Licensed Products
within any of the European, Asia Pacific and Latin American
International regions, NBAP shall have the right, upon thirty
(30) days written notice, to terminate LICENSEE's rights with
respect to the sale of Licensed Products in any such
particular international region for the balance of the Term.
LICENSEE shall be deemed not to have used its best efforts,
if NBAP can demonstrate that LICENSEE has generally failed to
make marketing and distribution efforts in support of the
Licensed Products as shall be required to enable retailers to
meet consumer demand for the Licensed Products. LICENSEE
acknowledges that LICENSEE's Minimum Guarantee obligations
under subparagraph (1) above shall not change or be affected
in any way in the event any of LICENSEE's rights to sell
Licensed Products is terminated pursuant to this
subparagraph.
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* Confidential treatment requested - portion has been omitted and filed
separately with the Securities and Exchange Commission.
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F. ADVERTISING & PROMOTION:
(1) *
(2) Fleer shall 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
Fleer (in its discretion) exhibits licensed products.
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 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.
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:
MARVEL ENTERTAINMENT GROUP, INC. By:/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇. Vice President,
Business Affairs
By:/s/ August ▇. ▇▇▇▇▇▇▇
Title: E.V.P. Dated: 7/31/98
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* Confidential treatment requested - portion has been omitted and filed
separately with the Securities and Exchange Commission.
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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, 1998.
(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*
(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.
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* Confidential treatment requested - portion has been omitted and filed
separately with the Securities and Exchange Commission.
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(h) "Release" means each series of a Licensed Product issued in
series (for example, NBA Hoops Series I and NBA Hoops Series
II would each be counted as a release) and each Licensed
Product not issued in series (for example, Flair Showcase
would be counted as a release).
(i) "Set" means all cards in all series of a Licensed Product
issued in series and in each Licensed Product not issued in
series.
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
form 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 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 and SkyBox 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
required for the preceding month. The minimum amount of each
monthly royalty
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payment shall be the amount which, when added to payments of
royalties previously made for the Contract Year, shall be
equal to one-twelfth (8.34%) of the Minimum Guarantee for
such Contract Year required under Paragraph E above,
multiplied by the number of calendar months then elapsed (the
minimum payments under this sentence shall be collectively
referred to as the "Monthly Minimum Payment"). Aggregate
royalties paid each Contract Year may exceed the Minimum
Guarantee 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. All
payments made by LICENSEE to NBAP under this Agreement shall
be made free and clear of, and without deduction or
withholding for or on account of, any income, stamp or other
taxes, charges, fees, deductions or withholdings. If any such
taxes, charges, fees, deductions or withholdings are required
by law to be withheld from any amounts payable to NBAP
hereunder, the amounts so payable shall be increased to the
extent necessary to yield to NBAP the amounts specified in
this Agreement. 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) * percent (*%) per annum over the highest prime
rate (announced by Chase 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 hereof.
In order to assist with NBAP's annual budget process, by
April 15 of each Contract Year, each LICENSEE company shall
deliver a 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, * U.S. dollars (USD *) for
each instance of non-compliance with this Paragraph.
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* Confidential treatment requested - portion has been omitted and filed
separately with the Securities and Exchange Commission.
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(b) Cross-Collateralization: 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 or against any other NBA license
(including premium license agreements entered into pursuant
to Paragraph 5 hereof) held by LICENSEE).
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 not to contact any
third party engaging in the aforementioned activities, not to
make any demands for claims
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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)," or "(C)" or such other
copyright, trademark or service ▇▇▇▇ notices (including the
form, location and content of such notices) as
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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 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 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 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
these countries in which one or more LICENSEE's 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 and SkyBox 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 Product, each company shall advise NBAP in writing
of its trade names or
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trademarks used on Licensed Products and the proposed
placement of such trade names and trademarks on the Licensed
Products. 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, products 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 the NBPA 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, any Third Party
Contributor (as defined in Paragraph 11(b) below) or any
other entity acting on LICENSEE's behalf (whether or not
approved by NBAP pursuant to this Agreement), (ii) any breach
of this Agreement by LICENSEE, any Third Party Contributor or
any other entity acting on LICENSEE's behalf (whether or not
approved by NBAP pursuant to this Agreement), (iii) the
manufacture, distribution, advertisement, promotion, sale,
possession or use of any Licensed Product (including, but not
limited to, claims relating to (w) any defect (whether
obvious or hidden and whether or not present in any sample
approved by NBAP) in a Licensed Product or in any packaging
or other materials (including advertising materials), (x) any
alleged injuries to persons or property, (y) any infringement
of any rights of any other person or entity or (z) the
alleged failure by LICENSEE to comply with applicable laws,
regulations and standards or the terms of the NBAP Code of
Conduct, as amended from time to time by NBAP (the "Code of
Conduct"), attached hereto as Exhibit A) or (iv) any claim
that any Licensed Product or element thereof (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 and rights of publicity and
privacy) 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 to
which the foregoing indemnities pertain, NBAP shall cooperate
fully with and assist
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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 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 specifically approved by NBAP in
accordance with the terms of 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 specifically approved by NBAP
in accordance with the terms of 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),
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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
subparagraph 22(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 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.
-12-
(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; (ii) 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 giveaway purposes and not for resale,
LICENSEE shall sell the Licensed Products to NBAP at
LICENSEE's direct manufacturing costs 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 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
right with respect to any Licensed Product licensed under
this Agreement, and/or (ii) at the LICENSEE's expense,
confiscate or order the destruction of such unapproved,
unauthorized or non-complying products. In the event NBAP
exercises its rights under (i) above, LICENSEE shall pay all
royalties and
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Minimum Guarantees due NBAP with respect to the Licensed
Product for which right have been revoked. Such rights(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 manufacturer's 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 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.
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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 circumstances 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
"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 and shall be
subject to NBAE's prevailing search and edit charges for NBAE
licensees and NBAP'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 therefore with reasonable specificity.
11. DISTRIBUTION; COMPLIANCE
(a) Distribution: 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
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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) Third Party Contributors: If a LICENSEE desires to use a
third party manufacture or distributor (each, a "Third Party
Contributor") in connection with the manufacturing of all or
any part of, or the distribution of, any Licensed Product,
such LICENSEE must first notify NBAP of the name and address
of such proposed Third Party Contributor and of the Licensed
Product LICENSEE desires such Third Party Contributor to
manufacture or distribute. NBAP shall have the right, in its
sole discretion, to withhold approval of any proposed Third
Party Contributor and may predicate its approval on any terms
or conditions NBAP shall determine in its sole discretion.
LICENSEE may not use a Third Party Contributor in connection
with the manufacture of all or any part of, or the
distribution of, any Licensed Product prior to receiving such
approval from NBAP. If any of LICENSEE's Third Party
Contributors uses the Licensed Marks or Licensed Attributes
for any unauthorized purpose, LICENSEE shall cooperate fully
with NBAP in stopping, such unauthorized use. Attached as
Schedule A is a true and complete list of all Third Party
Contributors currently authorized by NBAP as of the date of
execution of this Agreement. Any change by a LICENSEE from a
Third Party Contributor previously approved by NBAP shall
require approval in accordance with this Paragraph.
(c) Counterfeit, Diverted and Parallel Goods: 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
-16-
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) Selling, Distributing and Reporting: 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) Shipping and Anti-Counterfeiting Compliance: 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) Conduct Requirements: LICENSEE represents and warrants to
NBAP that LICENSEE shall faithfully comply with and adhere
to, and LICENSEE shall take all steps necessary to ensure
that all Third Party Contributors shall faithfully comply
with and adhere to, all of the terms, provisions and policies
contained in this Agreement, the Code of Conduct and all
applicable United States and foreign laws, government rules
and regulations, court and administrative decrees and the
highest standard of business ethics then prevailing in the
industry with regard to the conduct of all aspects of
LICENSEE's (or any Third Party Contributor's) business and
the manufacture, distribution, sale, testing and use of all
Licensed Products (collectively, "Conduct Requirements").
NBAP and its authorized representatives shall have the right,
upon reasonable prior notice, to examine and audit LICENSEE
to ensure compliance with the
-17-
Conduct Requirements. LICENSEE shall allow NBAP access to any
of its premises and personnel at all reasonable times for the
purposes of such auditing. LICENSEE shall take all necessary
steps in negotiating contracts with Third Party Contributors
to provide NBAP and its authorized representatives with a
contractual right to audit such Third Party Contributors to
ensure compliance with the Conduct Requirements, including
the right of NBAP to have access to the premises and
personnel of any Third Party Contributor at all reasonable
times for the purposes of such auditing.
(g) Governmental Approvals: 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.
(h) NBA Store: LICENSEE acknowledges that NBAP intends to offer
various NBA and/or Member Team-identified products for sale
in an NBAP-owned "showcase" retail store ("NBA Store").
LICENSEE further acknowledges that it will receive a variety
of tangible and intangible benefits as a result of having
merchandise manufactured by LICENSEE displayed, sold and
promoted at the NBA Store. Therefore, LICENSEE shall, in
addition to and in consideration for the license granted
under this Agreement and in consideration of the benefits it
will receive from having merchandise displayed, sold and
promoted at the NBA Store, (i) upon the request of NBAP,
perform contract manufacturing services for NBAP in
connection with the manufacture of products for sale in the
NBA Store on terms as mutually agreed upon by NBAP and
LICENSEE and (ii) offer Licensed Products to the NBA Store on
terms at least as favorable as those offered to LICENSEE's
most preferred high-volume customers, including price,
priority of delivery, discounts, cooperative or other
advertising and promotional allowances and other benefits
(regardless of volume).
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
-18-
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(f) 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 Chase 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
furnished to the United States Securities and Exchange Commission or
(ii) with all financial statements and other financial information
prepared by LICENSEE 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(f) 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 or any
payment of any nature due to NBAP or any of its affiliates
when due and shall fail to
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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 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 the
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 NBAP 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; (ii) sells
Licensed Products to a third party who LICENSEE knows,
intends to deliver the Licensed Products outside the
Territory; or (iii) LICENSEE is in breach of Paragraph 11(c).
(g) LICENSEE sells to any third party that LICENSEE knows is
altering or modifying the Licensed Products prior to sale to
the ultimate consumer.
(h) LICENSEE is in breach of Paragraphs 11(b) or 11(f).
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 through the end of the Agreement, less the royalties
paid to NBAP through the date of termination.
-20-
14. DISPOSAL OF STOCK; EFFECT OF TERMINATION
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.
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
-21-
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 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 or any other person which would
require that player or other person to wear any
LICENSEE-identified item in or at any NBA game, competition
or event (either courtside or in any locker room) or at
practice.
(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.
-22-
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, or enters into an exclusive license agreement with
respect to an "opt-out" category of products 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
player's 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, NBA) 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 made 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.
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,
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this Agreement shall be construed and enforced as if such
provision were not contained in this Agreement.
22. MISCELLANEOUS
(a) 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 ▇▇▇▇▇▇▇▇▇ ▇▇(▇), ▇▇▇▇ 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, or other appropriate adjustments to the
Agreement. If, after conferring in good faith for a
reasonable period of time, NBAP and LICENSEE are unable to
agree on the equitable adjustment, they shall jointly
designate a mutually acceptable person to determine the
equitable adjustment, and such person's determination shall
be final and binding on NBAP and LICENSEE and shall not be
subject to review in any proceeding. If NBAP and LICENSEE are
unable to designate such mutually acceptable person after a
reasonable period following their failure to agree on the
equitable adjustment, either party may request the President
of the Association of the Bar of the City of New York to make
such designation.
(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 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
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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 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.
(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, regardless of
whether these amounts are then or thereafter payable. The
provisions of Paragraphs 12 and 23(f) 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 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.
(f) 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.
(g) Construction: This Agreement has been executed in a text
using the English language, which text shall be controlling.
This Agreement
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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 the 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
Third Party Contributors:
[Information to be provided by LICENSEE]
EXHIBIT A
NBA PROPERTIES, INC.
LICENSEE AND SUPPLIER CODE OF CONDUCT
The NBA's mission is to be the most respected and successful sports league and
sports marketing organization in the world. In keeping with this mission, NBA
Properties, Inc. ("NBAP") is committed to conducting its business in a socially
responsible and ethical manner. We expect all NBAP licensees, including their
contractors, engaged in the manufacture and sourcing of products bearing NBA,
WNBA, USA Basketball and NBC trademarks (collectively "Product Suppliers") to
share this commitment. At a minimum, all Product Suppliers must adhere to the
following Licensee and Supplier Code of Conduct:
1. ETHICAL STANDARDS
Product Suppliers shall conduct their businesses in accordance with
the highest standards of ethical behavior.
2. COMPLIANCE WITH APPLICABLE LAWS
Product suppliers shall comply with all applicable laws and
regulations of the countries, states and localities in which they
operate.
3. EMPLOYMENT PRACTICES
NBAP will only do business with Product Suppliers whose employees are
appropriately compensated, present at work voluntarily, not at undue
risk of physical harm and not exploited in any way. In addition,
Product Suppliers must comply with the following specific standards:
o WAGES AND BENEFITS: Product Suppliers shall provide wages,
overtime compensation and benefits at not less than the
minimum levels required by applicable laws and regulations or
the prevailing local industry levels, if higher.
o WORKING HOURS: Product Suppliers shall, at a minimum, comply
with all applicable working hours laws and regulations.
Except in unusual business circumstances, employees shall not
be required to work more than the lesser of (a) 48 hours per
week and 12 hours of overtime or (b) the limits on regular
and overtime hours allowed by local law or, where local law
does not limit the hours of work, the regular work week in
such locality plus 12 hours of overtime. In addition, except
in unusual business circumstances, employees shall be
entitled to at least one day off in every seven-day period.
o CHILD LABOR: Product Suppliers shall not employ any person
under the age of 15 (or 14 where allowed by local law) or
under the local age for completing compulsory education, if
higher.
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o FORCED LABOR: Product Suppliers shall not use any forced
labor, whether in the form of prison labor, indentured labor,
bonded labor or otherwise.
o HARASSMENT OR ABUSE: Product Suppliers shall treat each
employee with dignity and respect, and shall not use corporal
punishment, threats of violence or other forms of physical,
sexual, psychological or verbal harassment or abuse.
o NONDISCRIMINATION: Product Suppliers shall not discriminate
in employment practices on the basis of race, religion, age,
nationality, social or ethnic origin, gender, sexual
orientation, political opinion or disability.
o FREEDOM OF ASSOCIATION: Product Suppliers shall recognize
and respect the right of employees to join organizations of
their own choosing and shall neither threaten nor penalize
employees for their efforts to organize or bargain
collectively.
o HEALTH AND SAFETY: Product Suppliers shall provide employees
with a safe and healthy working environment. Manufacturing
facilities shall, at a minimum, contain clean restrooms,
potable water, adequate lighting, adequate ventilation and
fire exits. Residential facilities, if provided, shall also
be kept sanitary and safe.
4. ENVIRONMENTAL REQUIREMENTS
Product Suppliers shall comply with all applicable environmental laws
and regulations.
5. COMMUNICATION
Product Suppliers shall take appropriate steps to ensure that the
provisions of this Code are communicated to employees, including the
prominent posting of the Code (in the local language) in their
manufacturing facilities.
6. MONITORING AND COMPLIANCE
Product Suppliers shall conduct periodic audits of manufacturing
facilities, on the basis of which they shall certify to NBAP on
request either that (a) all products bearing NBA, WNBA, USA Basketball
and NBC trademarks have been manufactured in compliance with this
Code, or (b) identified facilities have been found not to be in
compliance with this Code, in which event the Product Supplier shall
specify appropriate and effective steps to remedy the non-compliance.
NBAP or its representatives are authorized to engage in monitoring
activities to confirm compliance with this Code, including on-site
inspections of manufacturing facilities and residential facilities,
audits of records relating to employment matters and private
interviews with employees at all levels. Product Suppliers shall
retain and make available to NBAP or its representatives, either on
site or at agreed upon locations, all documentation that may be
required to assess whether or not the Product Supplier is in
compliance with this Code.
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7. FAILURE TO COMPLY
NBAP reserves the right, in addition to all other legal and
contractual rights, to terminate its relationship with any Product
Supplier found to be in violation of this Code.
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