EXHIBIT 10.2
PBA TOUR, INC.
January 26, 2000
IAM Group, Ltd.
85 10th Avenue
Sixth Floor
New York, NY 10011
ATTN: Thomas Verola
Re: License Agreement (the "License Agreement"), dated as
of May, 1999, by and between PBA TOUR, INC., an Ohio
non-profit corporation ("PBA") and IAM GROUP, LTD.,
a New York corporation ("IAM Group").
Dear Gentlemen,
Based upon our recent discussions of the License Agreement in
light of the prospective purchase of PBA, we desire to amend and clarify the
License Agreement to provide more particularly for the respective rights and
obligations of PBA and IAM Group.
Accordingly, subject to paragraph 4 below, we hereby agree to
amend and clarify the License Agreement as follows:
1. PBA'S RIGHT TO SELL PRODUCTS. PBA shall have the right to
sell Products on which the Proprietary Marks are placed ("Licensed Products"),
subject to the following terms and conditions:
(a) Notwithstanding the provisions of Section 9(c) of
the License Agreement (as amended by Paragraph 3 below), for a period of one (1)
year after the date of this Agreement, PBA shall not sell any Licensed Products
to any wholesaler, retailer, distributor, bowling center or bowling pro shop
(collectively, "Commercial Customers") without the prior written consent of IAM
Group; provided, however, that, subject to the provisions of Paragraph 1(d)
below and Section 9(d) of the License Agreement (as amended by Paragraph 3
below), PBA may sell Licensed Products to persons other than Commercial
Customers (i.e. consumers) without such consent.
(b) Subject only to the provisions of Section 9(c) of
the License Agreement (as amended by Paragraph 3 below), at any time following
the date that is one (1) year after the date of this Agreement, PBA may sell
Licensed Products to any Commercial Customer to which IAM Group has not sold
Licensed Products within the prior one (1) year, provided such sales are not
materially detrimental to any relationship between IAM Group and its existing
customer(s) with respect to Licensed Products.
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(c) PBA shall not sell Licensed Products at any PBA
Tour or PBA Senior Tour event (collectively, "PBA Event") at which IAM Group is
selling Licensed Products without the prior written consent of IAM Group.
(d) For any Licensed Products which IAM Group does
not elect to manufacture pursuant to Section 9(d) of the License Agreement (as
amended by Paragraph 3 below), PBA shall pay to IAM Group a royalty fee, for the
period commencing as of the date of this letter and ending June 30, 2000 and for
each subsequent twelve (12) month period during the term of the License
Agreement, in an amount equal to eight percent (8%) of the PBA Net Sales (as
such term is hereinafter defined) of such Licensed Products sold during the
period in question.
(i) For purposes of this letter and the License Agreement, the
term "PBA Net Sales" shall mean PBA's retail list price of all
Licensed Products that PBA sells hereunder, except such Products
described in Item 12 of Exhibit B to the License Agreement and
such Products which IAM Group elects to manufacture pursuant to
Section 9(d) of the License Agreement (as amended by Paragraph 3
below), minus the following: (a) the amount of any federal,
state and local taxes that PBA is required to pay in connection
with such sales; (b) the amount of any costs and expenses
reasonably incurred by PBA with respect to the shipment of
Licensed Products; (c) the cost to PBA of any promotional
discounts granted with respect to Licensed Products, provided
that such discounts are reasonable in amount and made within the
normal course of business; (d) customer returns of Licensed
Products; and (e) uncollected accounts of PBA for Licensed
Products sold, but not to exceed One Hundred Thousand Dollars
(5100,000) per year during the Initial Term or any Renewal Term.
(ii) Within thirty (30) days of the end of each quarter during
the Initial Term and, if applicable, the Renewal Term, PBA shall
furnish to IAM Group its Licensed Products sales report for the
preceding quarter prepared in accordance with the terms hereof.
Each sales report that PBA furnishes to IAM Group shall contain
the following information: (a) a description of each Licensed
Product which IAM Group did not elect to manufacture and which
was sold by PBA during the quarter in question; (b) the sales
price of each such Licensed Product sold and the amount of
federal, state and local taxes, if any, that PBA is required to
pay in connection with each sale; (c) the amount of the royalty
payment being paid to IAM Group on each such sale hereunder; and
(iv) such additional information as IAM Group may reasonably
require.
(e) Notwithstanding any provisions of this Paragraph
1 to the contrary, for general promotional advertising purposes, PBA shall have
the right from time to time to provide up to 50,000 units of Licensed Products
on each occasion free of charge to any person, including without limitation (i)
any Commercial Customer (other than wholesaler or distributor)
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and (ii) any person at any PBA Event, whether or not IAM Group is selling
Licensed Products at such event. PBA's rights under this Paragraph 1(e) shall
not be subject to any of the provisions of Section 9 of the License Agreement
(as amended by Paragraph 3 below).
(f) RIGHTS AND OBLIGATIONS OF PBA. Notwithstanding
anything to the contrary contained in this letter or the License Agreement, PBA
shall have the right to own and operate one or more websites (collectively, the
"PBA Website") for the purposes of (i) promoting and selling goods or services,
including without limitation Licensed Products, and (ii) distributing to the
general public information relating to PBA Events, including without limitation
coverage of such events. PBA shall provide a link, the size of which shall not
be less than the size of a standard advertising link at a place of prominence on
the PBA Website, from the PBA Website to a website owned and operated by IAM
Group (the "IAM Website").
(g) RIGHTS AND OBLIGATIONS OF IAM GROUP. IAM Group
shall not have any rights to alter, modify or otherwise manipulate the PBA
Website. In connection with the IAM Website, IAM Group shall have the right to
use as the uniform resource locator only "PBAOL", "PBATOURGEAR" and/or one
additional name to be mutually agreed upon between the parties, each with any
extension (including, without limitation, ".COM", ".NET", and ".ORG"), but shall
not have the right to use any other uniform resource locator incorporating or
bearing a resemblance to "PBA" or "PBATOUR", each with any extension (including,
without limitation, ".COM", ".NET", and ".ORG"). Any rights granted by PBA to
IAM Group to distribute information relating to PBA Events, including without
limitation such rights granted in connection with the right to own and operate
an ISP pursuant to Section 1(d) of the License Agreement, shall not include any
right to use or distribute any copyrighted material owned by PBA other than PBA
logos. IAM Group shall provide a link, the size of which shall not be less than
the size of a standard advertising link on the IAM Website, from the IAM Website
to the PBA Web site.
3. RIGHT OF FIRST REFUSAL. Section 9 of the License Agreement is hereby deleted
in its entirety and replaced with the following:
(a) PBA agrees that it shall notify IAM Group of any third-party
proposals that PBA receives during the Term with respect to the
manufacturing, marketing and sale in any territory of goods
other than the Products on which Proprietary Marks are to be
placed. IAM Group shall have the right, for a period of fifteen
(15) days from the date of PBA's notice to IAM Group, to notify
PBA of IAM Group's election to manufacture, market or sell such
goods under the terms of this Agreement. If IAM Group delivers
such notice to PBA within such fifteen (15) day period, IAM
Group shall commence production of such goods within ninety (90)
days after delivery of such notice and shall deliver such goods
within an additional forty-five (45) days, or such other greater
period of production and delivery that may be provided for in
the third-party proposal, all in accordance with a standard of
quality as would be reasonably available to PRA in an
arms-length transaction with a third-party, in which case the
term "Products" shall be
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deemed to include such goods. If IAM Group fails to deliver such
notice within such fifteen (15) day period, or if' having
delivered such notice, IAM Group fails to comply with such
production and delivery schedule and quality standards, PBA
shall be entitled to enter into a licensing agreement with
respect to such goods on any terms and conditions that PBA may
deem appropriate in its sole discretion, and IAM Group shall
have no further rights under this subsection 9(a) with respect
to such goods in any territory.
(b) PBA further agrees that in the event any licensing
agreements that it maintains with third parties with respect to
the manufacture, promotion and sale of consumer goods other than
the Pro4ucts terminates during the Term, IAM Group shall have
the right, for a period of fifteen (15) days following the date
of said termination, to notify PBA of IAM Group's desire to
manufacture, market and sell such goods under the terms of this
Agreement. If IAM Group delivers such notice to PBA within such
fifteen (15) day period, IAM Group shall commence production of
such goods within ninety (90) days after delivery of such notice
and shall deliver such goods within an additional forty-five
(45) days, all in accordance with a standard of quality as would
be reasonably available to PBA in an arms-length transaction
with a third-party, in which case the term "Products" shall be
deemed to include such goods. If IAM Group fails to deliver such
notice within such fifteen (15) day period, or if' having
delivered such notice, IAM Group fails to comply with such
production and delivery schedule and quality standards, PBA
shall be entitled to enter into a licensing agreement with
respect to such goods on any terms and conditions that PBA may
deem appropriate in its sole discretion, and IAM Group shall
have no further rights under this subsection 9(b) with respect
to such goods in any territory. The rights granted to IAM Group
under this subsection 9(b) shall not be deemed to apply in those
circumstances in which PBA is contractually obligated to renew
an existing licensing arrangement with a third party.
(c) PBA further agrees that it shall notify IAM Group of its
desire to sell, at any time following the date that is one (1)
year after the date of this Agreement, Products on which
Proprietary Marks are to be placed to any wholesaler, retailer,
distributor, bowling center or bowling pro shop to which IAM
Group has not sold such Products within the prior one (1) year.
IAM Group shall have the right, for a period of fifteen (15)
days from the date of PBA's notice to IAM Group, to notify PBA
of IAM Group's desire to sell Products to any such customer
under the terms of this Agreement. If IAM Group delivers such
notice to PBA within such fifteen (15) day period, JAM Group
shall negotiate in good faith and use its best efforts to enter
into a purchase order or an unconditional contract for the sale
of such Products to such customer within thirty (30) days after
delivery of such notice. If IAM Group fails to deliver such
notice within such fifteen (15) day period, or, if' having
delivered such notice, IAM Group fails to enter into such
purchase order or unconditional contract within such thirty (30)
day period, PBA shall be entitled to enter into an agreement
with such customer on any terms and conditions that PBA
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may deem appropriate in its sole discretion, and, except any
right to receive royalties that IAM Group may have under this
Agreement, IAM Group shall have no further exclusive rights
under this subsection 9(c) with respect to sales to such
customer.
(d) PBA further agrees that, in addition to any other
notifications required under this Section 9, it shall notify IAM
Group of any Products on which Proprietary Marks are to be
placed and which PBA intends to sell in accordance with the
terms of this Agreement. PBA's notice shall specify the terms
and conditions upon which a third party is willing to
manufacture such Products. IAM Group shall have the right, for a
period of fifteen (15) days from the date of PBA's notice to IAM
Group, to notify PBA of IAM Group's election to manufacture such
Products on the same terms specified in PBA's notice to IAM
Group, such election to be irrevocable once made. If IAM Group
delivers such notice to PBA within such fifteen (15) day period,
IAM Group shall manufacture such Products in accordance with
such terms (other than terms respecting licensing fees or
commissions payable by such third party and delivery schedule
terms in excess of those set forth in Section 9(a) above). If
IAM Group fails to deliver such nonce within such fifteen (15)
day period, or if' having made such election, IAM Group fails to
manufacture such Products in accordance with such terms, PBA
shall be entitled to obtain one or more alternative sources for
the manufacture of such Products, and IAM Group shall have no
further rights under this subsection 9(d) with respect to the
manufacture of such Products.
(e) Notwithstanding the foregoing, the right of first refusals
granted herein shall not include or affect in any manner
whatsoever any existing licensing arrangements with respect to
the Proprietary Marks to which PBA is a party as of the date
hereof."
4. CONDITION PRECEDENT. This letter shall be effective upon, and only upon,
consummation of a sale of all or substantially all of the assets of PBA to
Christopher Peters and his investor group, or to any entity or entities in which
he and/or they together directly or indirectly have a controlling interest, and
in the event that such consummation does not occur, this letter shall be of no
further force or effect.
5. GENERAL. All defined terms used and not defined herein shall have the
meanings ascribed to them in the License Agreement. Except as expressly provided
herein, the License Agreement shall remain in full force and effect, unmodified,
in accordance with its terms. In the event of any conflict between the terms of
this letter and the terms of the License Agreement, the terms of this letter
shall prevail. For convenience purposes, this letter may be executed by
facsimile and in any number of counterparts, all of which, when taken together,
shall constitute one and the same ori2inal agreement.
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Sincerely,
PBA TOUR, INC., an Ohio non-profit corporation
BY: /s/ MARK GERBERICH
-----------------------------------------
Its: Commissioner
cc: Weber & Weber
Federal Plaza
300 Rabro Drive, Suite 122
Hauppauge, NY 11788
ATTN: William E. Weber, Esq.
The foregoing is hereby agreed to and accepted this - day of January, 2000.
IAM GROUP, LTD., a New York corporation
By: /s/ Jahn Avarello/Its: CEO
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