<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
AMENDMENT NO. 1
TO
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended December 31, 1995
-----------------
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from ______________ to ________________
Commission File Number: 0-25916
----------
YES! ENTERTAINMENT CORPORATION
(Exact name of Registrant as specified in its charter)
California 94-3165290
------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3875 Hopyard Road, Suite 375, Pleasanton, California 94588
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (510) 847-9444
---------------------------------
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, no par value
--------------------------
(Title of Class)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
The aggregate market value of voting stock held by nonaffiliates of the
Registrant, based upon the closing sale price of the Common Stock on March 15,
1996 on the Nasdaq National Market was approximately $85,316,369. Shares of
Common Stock held by each officer and director and by each person who owns 5% or
more of the outstanding Common Stock have been excluded in that such persons may
be deemed to be affiliates. This determination of affiliate status is not
necessarily a conclusive determination for other purposes.
The number of shares outstanding of the Registrant's Common Stock as of
March 15, 1996 was 13,985,382.
DOCUMENTS INCORPORATED BY REFERENCE
Certain sections of the Registrant's definitive Proxy Statement for the
1996 Annual Meeting of Shareholders to be held on May 29, 1996 are incorporated
by reference in Part III of this Form 10-K to the extent stated herein.
<PAGE>
EXPLANATORY NOTE
This Annual Report on Form 10-K/A ("Form 10-K/A") is being filed as
Amendment No. 1 to the Registrant's Annual Report on Form 10-K filed with the
Securities and Exchange Commission on March 29, 1996 ("Form 10-K") solely for
the following purposes: (i) to refile two (2) exhibits ("Exhibits") to the Form
10-K with certain non-confidential portions in such Exhibits unredacted, and
(ii) to file Exhibit A to Exhibit 10.43 which was inadvertently omitted from
such Exhibit when filed with the Form 10-K.
2
<PAGE>
PART IV
-------
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.
---------------------------------------------------------------
(a) The following documents are filed as part of this report:
(3) Exhibits.
--------
INDEX TO EXHIBITS
-----------------
<TABLE>
<CAPTION>
Exhibit Description
Number
- --------- -----------------------------------------------------------------
<S> <C>
10.43(1) Product Development and License Agreement by and between Registrant
and Machina, Inc. dated September 7, 1995.
10.47 Amendment dated February 29, 1996 to Accounts Receivable Management and Security
Agreement dated as of July 31, 1995 by and between Registrant and BNY Financial
Corporation.
10.50(1) License Agreement by and between Registrant and Mrs. Fields Development
Corporation dated September 30, 1995.
</TABLE>
- ----------------------
(1) Confidential treatment has been requested with respect to certain portions
of this exhibit. Omitted portions have been filed separately with the
Securities and Exchange Commission.
3
<PAGE>
SIGNATURE
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Amendment No. 1 on
Form 10-K/A to be signed on its behalf by the undersigned, thereunto duly
authorized in the City of Pleasanton, State of California, on September 18,
1996.
YES! Entertainment Corporation
By: /s/ Bruce D. Bower
----------------------------------
Bruce D. Bower
Executive Vice President, General
Counsel and Secretary
4
<PAGE>
EXHIBIT 10.43
PRODUCT DEVELOPMENT AND LICENSE AGREEMENT
This Product Development and License Agreement (the "Agreement") is entered
into as of September 7, 1995 (the "Effective Date") by and among YES!
Entertainment Corporation (including its affiliates and subsidiaries), with its
principal place of business at 3875 Hopyard Road, Suite 375, Pleasanton,
California 94588 ("YES!"), and Machina, Inc., a California corporation, located
at 21 South Park, San Francisco, California 94107 ("Licensor").
WITNESSETH:
WHEREAS, YES! desires to have certain product design concepts developed and
certain development work undertaken in order to implement such product design
concepts for the children's and youth markets; and
WHEREAS, YES! desires to receive an exclusive license to such product
concepts and other property rights embodied in the development work provided
under this Agreement; and
WHEREAS, Licensor desires to provide such services and to license such
rights to YES! on the terms and conditions set forth below;
NOW THEREFORE, for and in consideration of the mutual covenants and
promises set forth below, the parties agree as follows:
1. 1.1 License. Licensor grants to YES! a license (including the
-------
right to sublicense) to the concept of a line of self-contained, electro-
mechanical arcade-like games that are contained in a compact plastic housing,
including modifications to or derivatives thereof, and specifically including
but not limited to the implementations of such product concept described on
Exhibit A (the "Product"). This license shall be exclusive for the children's
and youth market. This license shall be non-exclusive for all other markets.
1.2 Scope of License. The license conveyed in this Section 1
----------------
encompasses all proprietary rights in the Product, including but not limited to,
trade secrets (including Confidential Information as defined by this Agreement),
copyrights, and patents. Such license includes, but is not limited to, the
rights to make, have made, use, sell, distribute, copy, modify, have modified,
create derivative works, display, or sublicense the Product.
1.3 Title. Licensor shall retain all right, title and interest
-----
in and to any proprietary rights owned by Licensor and not licensed to YES!
pursuant to this Agreement. All proprietary rights of Licensor incorporated in
the Product shall be licensed to YES! as provided in Section 1.1.
2. SERVICES. It is understood that Licensor shall use its best efforts
--------
in the performance of its development obligations (the "Services") under this
Agreement. The Product and Services shall be treated as Confidential
Information of YES! as provided in Section 9 and shall be licensed to YES!
[*CONFIDENTIAL TREATMENT REQUESTED]
<PAGE>
as provided by Section 1. Licensor shall fully guarantee and be responsible for
its own and any other necessary party's obligations (including, but not limited
to, the performance of Services and the granting of licenses) under this
Agreement. Licensor shall provide all necessary licenses (including necessary
third party licenses) and documentation to effectuate the licenses provided for
by this Agreement.
3. ADDITIONAL SERVICES. The terms and conditions for additional Services
-------------------
beyond the services provided by Licensor in connection with the development of
the implementations of the Products described in Exhibit A may be as mutually
---------
agreed by YES! and Licensor. It is understood that this Section 3 applies only
to the providing of Services by Licensor; nothing in this Section 3 shall limit
YES!'s rights under this Agreement, including the license in Section 1.
4. WARRANTY. Licensor represents and warrants that it has full and
--------
exclusive power and authority to enter into this Agreement and to grant the
rights licensed hereby, and that no consent of any third party is required in
connection herewith. Licensor hereby represents and warrants that the rights
granted hereunder do not interfere in any way with the rights granted to any
third party. Licensor further warrants that the Product shall be free from
errors, except those errors directly resulting from faulty specifications
provided by YES! or work completed by YES!. If the Product contains any errors
(except those directly resulting from faulty specifications provided by YES!),
then Licensor, at its own expense, shall promptly ensure that the Product is
free from errors. Licensor represents and warrants to YES! that it has taken
all necessary actions to grant the rights provided for by this Agreement.
5. INDEMNITY. Licensor will indemnify YES! against and hold YES!
---------
harmless from any reasonable loss, cost, liability or expense (including court
costs and the reasonable fees of attorneys and other professionals)
(collectively "Legal Costs") arising out of, or resulting from, (i) any breach
of or inaccuracy in Section 4 hereof or (ii) any claim of any person or entity
that the Product or any implementation thereof infringes any intellectual
property right (including copyright, trademark, trade secret, or patent) of any
third party. YES! shall be entitled to deduct from any payments otherwise owing
to Licensor, including payments owing Licensor under any other agreement to
which YES! and Licensor are parties, any Legal Costs incurred by YES! as a
result of an infringement claim as described in this Section 5, but YES! shall
have no right to recover more than [*] percent ([*]%) of any amounts previously
paid to Licensor under this or any other Agreement by and between or among YES!
and Licensor; provided, however, that in no event shall Licensor's total
liability under this Section 5 exceed the total royalties paid or payable to
Licensor under this Agreement, including the Advance Against Royalties or any
other fees paid to Licensor hereunder or in connection herewith. YES! shall add
Licensor as an additional insured under its general liability insurance policy.
6. LIMITATION OF LIABILITY. EXCEPT FOR A BREACH OF CONFIDENTIALITY
-----------------------
OBLIGATIONS IN SECTION 9 OR FOR THE INFRINGEMENT INDEMNITY IN SECTION 5, IN NO
EVENT SHALL LICENSOR'S OR YES!'S LIABILITY OF ANY KIND TO ANY OTHER PARTY
INCLUDE ANY SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES.
[*CONFIDENTIAL TREATMENT REQUESTED]
-2-
<PAGE>
7. COMPENSATION.
------------
7.1 Definition. For purposes of this Agreement, "Net Sales" shall
----------
mean the gross sales price received by YES! on its sales of the Product to non-
subsidiary customers, less: (i) customary rebates, cash and trade discounts, and
reserves and/or credits for returns and allowances, (ii) transportation charges,
including shipping and insurance, and (iii) sales or other excise taxes imposed
upon and paid by seller with respect to such sales. Notwithstanding the
foregoing, the sales by YES! subsidiaries to unaffiliated third parties shall be
considered Net Sales, subject to all exceptions to Net Sales listed in
Subsections (i), (ii), and (iii) of this Section 7.1.
7.2 Royalties. Provided that YES! chooses to market the Product,
---------
including modifications to or derivatives thereof, and specifically including
the implementations of the Product described in Exhibit A, YES! shall pay to
---------
Licensor a royalty on Net Sales of the Product sold by YES! (including its
affiliates and subsidiaries) ("Earned Royalties"). Subject to the provisions of
Sections 7.4, 7.5 and 7.6, the royalty rate shall be as follows:
(a) Initial Sales. Until such time as there shall have been
-------------
paid to or generated for the account of Licensor royalties in an amount not
greater than [*] dollars ($[*]), the Advance Against Royalties actually paid to
Licensor pursuant to Section 7.3 hereof, the royalty rate on Net Sales shall be
[*] percent ([*]%).
(b) Subsequent Sales. At such time as there shall have been
----------------
paid to or generated for the account of Licensor royalties in an amount equal to
or greater than [*] dollars ($[*]), the royalty rate on Net Sales shall decrease
to and thereafter shall be [*] pecent ([*]%).
7.3 Advance Against Royalties. Subject to the terms of this Section
-------------------------
7.3, YES! shall advance Licensor up to [*] dollars ($[*]) (the "Advance Against
Royalties"). The Advance Against Royalties shall be paid in accordance with and
to the extent provided for by this Section 7.3:
(a) Guaranteed Advance. Of the Advance Against Royalties,
------------------
[*] dollars ($[*]) shall be paid as follows:
(i) [*] dollars ($[*] shall be paid not later than
September 7, 1995 (previous reciept of which Licensor hereby acknowledges);
(ii) [*] dollars ($[*] shall be paid on the execution
hereof; and
(iii) [*] dollars ($[*] shall be paid not later than
December 22, 1995.
[*CONFIDENTIAL TREATMENT REQUESTED]
-3-
<PAGE>
(b) Variable Advance. The remaining [*] dollars ($[*]) of the
----------------
Advance Against Royalties (the "Variable Advance") shall be paid to Licensor in
accordance with and to the extent provided by the following:
(i) in the event that final product packages for all
of the SKUs set forth at Exhibit A are released to Entertainment Products, Ltd.
---------
not later than February 29, 1996, the entire Variable Advance shall be paid to
Licensor within three (3) business days thereof.
(ii) in the event that Section 7.3(b)(i) does not
apply, but final product packages for not less than three of the SKUs set forth
at Exhibit A are released to Entertainment Products, Ltd. not later than
February 29, 1996, then [*] dollars ($[*]) of the Variable Advance shall be paid
to Licensor within ([*]) business days thereof.
(iii) in the event that Sections 7.3(b)(i) or (ii) do
not apply, but final product packages for all of the SKUs set forth at Exhibit A
---------
are released to Entertainment Products, Ltd. not later than June 1, 1996, then
(1) [*] dollars ($[*]) of the Variable Advance shall be paid to Licensor within
[(*]) business days thereof and (2) Licensor shall provide to YES! a credit of
[*] dollars ($[*]) toward product development and engineering fees incurred
during the balance of 1996 (provided that in the event that less than [*]
dollars ($[*]) of product development and engineering fees are incurred on
behalf of YES! by Licensor during the balance of 1996, the unused balance shall
be converted into a credit against royalties owing to Licensor by YES!).
(iv) in the event that Sections 7.3(b)(i), (ii) or
(iii) do not apply, but final product packages for three of the SKUs set forth
at Exhibit A are released to Entertainment Products, Ltd. not later than June 1,
---------
1996, then (1) [*] dollars ($[ ]) of the Variable Advance shall be paid to
Licensor within [(*]) business days thereof and (2) Licensor shall provide to
YES! a credit of [*] dollars ($[*]) toward product development and engineering
fees incurred during the balance of 1996 (provided that in the event that less
than [*] dollars ($[*]) of product development and engineering fees are incurred
on behalf of YES! by Licensor during the balance of 1996, the unused balance
shall be converted into a credit against royalties owing to Licensor by YES!).
(v) in the event that neither Sections 7.3(b)(i),
(ii), (iii) or (iv) apply, then (1) none of the Variable Advance shall be paid
to Licensor and (2) Licensor shall provide to YES! a credit of [*] dollars
($[*]) toward product development and engineering fees incurred during the
balance of 1996 (provided that in the event that less than [*] dollars ($[*]) of
product development and engineering fees are incurred on behalf of YES! by
Licensor during the balance of 1996, the unused balance shall be converted into
a credit against royalties owing to Licensor by YES!).
7.4 Combination Products. In the event that the Product is sold in
--------------------
combination with another product or component whose sale and use is not covered
by this Agreement, Net Sales
[*CONFIDENTIAL TREATMENT REQUESTED]
-4-
<PAGE>
from such sales for purposes of calculating the amounts due under this Agreement
shall be as reasonably allocated by YES! between the Product and such other
product, based upon their relative importance and proprietary protection.
7.5 Nonroyalty Sales. No royalty shall be payable under this
----------------
Agreement with respect to sales of the Product for use in research and/or
development, in trials or as samples or that are otherwise sold in less than
full commercial sales.
7.6 Multiple Royalties. In the event that YES! pays a license fee or
------------------
royalty to a third party with respect to the Product (including, but not limited
to, a license fee or royalty for the rights to the use of a character), the
royalty to Licensor shall be [*] percent ([*]%) of Net Sales.
7.7 Effect of Advance Against Royalties. The Advance Against
-----------------------------------
Royalties shall be considered an advance payment of and shall be credited
against Earned Royalties.
7.8 Timing. All Earned Royalty payments shall be due within thirty
------
(30) days of the end of each quarter (the quarters shall end on March 31, June
30, September 30, and December 31). Interest shall accrue on any payments not
paid when due at the rate of [*] percent ([*]%) per month.
7.9 Inspection of Records. Licensor shall have the right, upon
---------------------
reasonable notice, during regular business hours and not more than once a year,
to examine and make extracts or copies of YES!'s books and records relating to
the sale of the Product.
8. TAXES. It will be Licensor's obligation to pay all taxes due on the
-----
compensation that Licensor receives under this Agreement, and Licensor will
indemnify YES! and hold YES! harmless from any obligation to pay any type of
taxes (including taxes on net income), fines or penalties, insurance or other
obligation imposed in connection with any payments made to Licensor by YES!
pursuant to this Agreement.
9. CONFIDENTIALITY.
---------------
9.1 Definition. "Confidential Information" means any proprietary
----------
information, technical data or know-how, including, but not limited to, that
which relates to research, products and services, customers, markets, software,
developments, inventions, processes, engineering, marketing or finances, which
Confidential Information is disclosed by a party directly or indirectly in
writing, orally, or by inspection of software code, equipment, or other
materials. The Product and Services, including all associated intellectual
property rights (including, but not limited to, trade secrets, copyrights, and
patents), shall be considered the Confidential Information of YES!.
Confidential Information shall not include information that: (a) was generally
known and available in the public domain through no fault of the receiving
party; (b) was known to the receiving party at the time of disclosure as shown
by the files of the receiving party in existence immediately prior to the time
of disclosure (provided that this exclusion will not apply to Confidential
Information which will become
[*CONFIDENTIAL TREATMENT REQUESTED]
-5-
<PAGE>
the property of YES! pursuant to this Agreement); (c) is disclosed with the
prior written approval of the disclosing party; (d) was independently developed
by the receiving party without any use of the Confidential Information of the
disclosing party, and by employees or other agents of the receiving party who
have not been exposed to the Confidential Information of the disclosing party;
or (e) becomes known to the receiving party from a source other than the
disclosing party without breach of this Agreement by the receiving party and
otherwise not in violation of the disclosing party's rights.
9.2 Non-Disclosure of Confidential Information. Each party agrees
------------------------------------------
not to use any Confidential Information disclosed by another party for its own
use or for any purpose except for the objectives of this Agreement. The parties
agree not to disclose Confidential Information of another party to third parties
or to their own employees except those employees who are required to have the
information in order to carry out this Agreement. The party agrees that it will
take all reasonable measures to protect the secrecy of and avoid disclosure or
use of Confidential Information of the other parties in order to prevent such
Confidential Information from falling into the public domain or the possession
of persons other than those persons authorized by this Agreement to have any
such information, which measures shall include the highest degree of care that
each party utilizes to protect its own Confidential Information of a similar
nature.
9.3 Return of Materials. All copies of Confidential Information in
-------------------
tangible form which are in the possession of a receiving party will be promptly
returned to the disclosing party after the objective of this Agreement has been
attained or rejected or at any time upon request of the disclosing party.
9.4 Notice Regarding Unauthorized Use of Confidential Information.
-------------------------------------------------------------
If any party to this Agreement has reason to believe that another party to this
Agreement (or any third party) is using or disclosing the Confidential
Information of a disclosing party in contravention of the purposes of this
Agreement, such party will inform the disclosing party of the suspected use.
10. TERMINATION.
-----------
10.1 Term and Renewal. This Agreement shall commence upon the
----------------
Effective Date and shall continue until terminated as provided in this Section
10. This Agreement will expire on the third anniversary of the date (the
"Shipment Date") of the first shipment of the Product in commercial quantities
to YES! from Hong Kong or such other shipping locale form which the Product is
shipped in commercial quantities directly to YES!. This Agreement may be renewed
for [*] ([*]) days successive one (1) year periods at YES!'s sole option;
provided that, unless otherwise agreed to by Licensor, YES shall have by the
Shipment Date paid to or accrued for the account of Licensor not less than [*]
dollars ($[*]) in Earned Royalties (including the Advance Against Royalties);
and provided further that, unless otherwise agreed to by Licensor, not less than
$[*] per year shall have been paid to or accrued for the account of Licensor in
each subsequent year in connection with sales of the Product, including all
derivatives or implementation thereof, in order for YES! to renew this Agreement
for the year following.
[*CONFIDENTIAL TREATMENT REQUESTED]
-6-
<PAGE>
10.2 Material Breach. In the event of any material breach of this
---------------
Agreement by either party, if such breach is not corrected within thirty (30)
days after written notice of such breach is given to the party in breach by the
party not in breach, this Agreement may be terminated immediately by written
notice to that effect to the party in breach by the party not in breach.
10.3 Termination for Convenience. This Agreement may be terminated
---------------------------
for convenience by YES! upon sixty (60) days prior written notice to Licensor.
10.4 Survival. Sections 4, 5, 6, 8, 9, 10.5, 11, 12, and 13 shall
--------
survive termination of this Agreement.
10.5 Sell-Off Period. YES! shall have the right to sell the Product
---------------
under this Agreement for one (1) year following termination of this Agreement
for any reason (the "Sell-Off Period"); provided, however, that YES! shall
continue to pay to Licensor Earned Royalties as provided in Section 7.
10.6 Sale of Materials at Termination. Upon termination of the Sell-
--------------------------------
Off Period, Licensor shall have a one time option to purchase from YES! all
tooling, molds, and other materials then owned by YES! for production of the
Products at the then current fair market value of such tooling, molds, and other
materials; provided, however, in no event may Licensor enter into the children's
and youth market for the Product until one (1) year after the end of the Sell-
Off Period.
11. NOTICES. All notices required or permitted under this Agreement shall
-------
be in writing, shall reference this Agreement and shall be deemed given: (a)
when delivered personally; (b) when sent by telex or facsimile confirmed by
registered or certified mail, return receipt requested, postage prepaid; (c)
three (3) days after having been sent by registered or certified mail, return
receipt requested, postage prepaid; or (d) one (1) day after deposit with a
commercial overnight carrier specifying next day delivery, with written
confirmation of receipt. All communications shall be sent to the address first
set forth above and addressed to the attention of Bruce Bower, if to YES!, and
Ralph Osterhout, if to Licensor, or such other address or individual(s) as may
be designated by each party from time-to-time pursuant to this Section 11.
12. ARBITRATION. Any dispute or claim arising out of or in relation to
-----------
this Agreement shall be finally settled by binding arbitration in Alameda
County, California, under the Commercial Rules of the American Arbitration
Association as presently in force ("Rules") and by three (3) arbitrators
appointed in accordance with said Rules. Judgment on the award rendered may be
entered in any court of competent jurisdiction. The parties may apply to any
court of competent jurisdiction or by the appointed arbitrators for temporary or
permanent injunctive relief, without breach of this Section 12 and without any
abridgment of the powers of the arbitrators.
13. MISCELLANEOUS. The waiver of a breach of any term hereof shall in no
-------------
way be construed as a waiver of any other term or breach hereof. The parties to
this Agreement are independent contractors, and no employment relationship or
joint venture is created by this Agreement. If any provision of this Agreement
shall be held by a court of competent jurisdiction to
-7-
<PAGE>
be contrary to law, the remaining provisions of this Agreement shall remain in
full force and effect. This Agreement shall inure to the benefit of and be
binding upon each party's successors and assigns. Licensor may not assign its
rights under this Agreement without the prior written consent of YES!, which
consent will not be unreasonably withheld. This Agreement is governed by the
laws of the State of California without reference to conflict of laws
principles. This Agreement may be signed in counterparts.
-8-
<PAGE>
THIS AGREEMENT (INCLUDING ALL EXHIBITS) IS THE ENTIRE AGREEMENT BETWEEN THE
PARTIES RELATING TO THE SUBJECT MATTER HEREOF AND NO WAIVER OR MODIFICATION OF
THIS AGREEMENT SHALL BE VALID UNLESS IN WRITING SIGNED BY EACH PARTY.
YES! ENTERTAINMENT CORPORATION
By: /s/ Bruce D. Bower
-------------------------------------------
Bruce D. Bower
Executive Vice President & General Counsel
TEAM MACHINA
By: /s/ Ralph Osterhout
-------------------------------------------
Ralph Osterhout, President
-9-
<PAGE>
EXHIBIT A
<PAGE>
MINI ARCADE GAMES
AIR WARS
[GRAPHICAL DEPICTION OF PRODUCT]
SHOOT DOWN THE FIGHTER JET AS IT MANEUVERS IN THE AIR
. FIGHTER JET CIRCLES THE FIELD, MOVING HIGHER AND LOWER AS IT ROTATES
. AIM THE GUN TO FIRE AT THE PLANE
. EVERY HIT SCORES A POINT AND SOUND EFFECTS
. FIVE HITS AND YOU WIN!
<PAGE>
MINI ARCADE GAMES
DARE DEVILS
[GRAPHICAL DEPICTION OF PRODUCT]
BLAST THROUGH THE HOOP
. THE HOOP ROTATES, MOVING THE BARRIER WITH IT
. TIME YOUR TAKEOFF JUST RIGHT -- AVOID THE BARRIER
. TWO AT A TIME -- DON'T HIT THE OTHER DARE DEVIL
. SOUND EFFECTS WITH EVERY ATTEMPT
<PAGE>
MINI ARCADE GAMES
KNUCKLE HEADS
[GRAPHICAL DEPICTION OF PRODUCT]
KNOCK OUT YOUR OPPONENT
. ARMS SWING THROUGH THE AIR WITH EVERY PUNCH
. SOUND EFFECTS FOR EVERY HIT AND EVERY MISS
. AIM FOR THE HEAD WITHOUT LETTING YOUR OPPONENT BLOCK
<PAGE>
MINI ARCADE GAMES
HOT RODDERS
[GRAPHICAL DEPICTION OF PRODUCT]
HOT RAD RACING WITH SPLIT SECOND RESPONSE TIME
. THE LIGHT TREE SCROLLS TO GREEN AND YOU'RE OFF
. HEAR THE SCREECHING TIRES AND REVVING ENGINES
. START TOO SOON AND IT'S A FALSE START
. SEE WHOSE HOT ROD HAS THE HOTTEST WHEELS
<PAGE>
EXHIBIT 10.47
BNY FINANCIAL CORPORATION
A WHOLLY OWNED SUBSIDIARY OF THE BANK OF NEW YORK
NEW YORK'S FIRST BANK - FOUNDED 1784 BY ALEXANDER HAMILTON
1290 AVENUE OF THE AMERICAS
NEW YORK, N.Y. 10104
212-408-7000
February 29, 1996
Yes! Entertainment Corporation
3875 Hopyard Road
Suite 375
Pleasanton, California 94588
Dear Gentlemen/Ladies:
Reference is made to the Accounts Receivable Management and Security
Agreement between us, dated as of July 31, 1995, as supplemented and amended
(the "Agreement"). All capitalized terms used herein, but not defined herein,
shall have the meanings given to such terms in the Agreement.
It is hereby agreed that effective as of the date hereof and
notwithstanding anything to the contrary contained therein, the Agreement shall
be amended as follows:
(i) The definition of "Maximum Loan Amount" or "Maximum Revolving Amount"
as set forth in Section 1 of the Agreement is restated in its entirety as
follows:
"Maximum Loan Amount" or "Maximum Revolving Amount" means thirty
million (U.S.) dollars (USD $30,000,000)."
(ii) The definition of "Term" as set forth in Section 1 of the Agreement
is restated in its entirety as follows:
"Term" means the Closing Date through July 31, 1999 subject to
acceleration upon the occurrence of an Event of Default hereunder or other
termination hereunder."
(iii) The definition of "Receivables Advance Rate" as set forth in the
definition of "Receivables Availability" in Section 1 of the Agreement shall be
amended and increased from "up to sixty percent (60%)" to "up to seventy percent
(70%)."
(iv) The definition of "L/C Sublimit" as set forth in Section 2(k) of the
Agreement shall be amended and increased from "eight million (U.S.) dollars (USD
$8,000,000) in the aggregate at any time, less any Reserves" to "sixteen million
(U.S.) dollars (USD $16,000,000) in the aggregate at any time, less any
Reserves."
<PAGE>
February 29, 1996
Yes! Entertainment Corporation
Page 2
(v) The last sentence of Section 17 of the Agreement regarding the
"Required Percentage," with respect to the calculation of the early termination
fee is restated in its entirety as follows:
"For the purposes hereof, Required Percentage shall mean (a) $1,000,000
from the Closing Date through July 30, 1996, (b) $600,000 from July 31,
1996 through July 30, 1997 and (c) $200,000 from July 31, 1997 through July
30, 1999."
It is hereby further agreed that, in consideration of our executing this
amendment and upon the execution of this amendment, you shall pay to us, and we
may charge to your account, a fee in the amount of $25,000 in addition to all
amounts due to us pursuant to the Agreement. Such fee shall be deemed an
Obligation under the Agreement.
Except as otherwise set forth herein, the Agreement shall remain in full
force and effect in accordance with its terms.
If you are in agreement with the foregoing, please so indicate by signing
and returning the enclosed copy of this amendment.
Very truly yours,
BNY FINANCIAL CORPORATION
By: /s/ Mary E. Duffy
--------------------------------
Title: Assistant Vice President
AGREED:
YES! ENTERTAINMENT CORPORATION
By: /s/ Sol Kershner
-------------------------------
Title: Chief Financial Officer
<PAGE>
EXHIBIT 10.50
LICENSE AGREEMENT
THIS LICENSE AGREEMENT (this "AGREEMENT") is made this _____ day of
September, 1995, by and between MRS. FIELDS DEVELOPMENT CORPORATION ("MRS.
FIELDS"), a Delaware corporation, and YES! ENTERTAINMENT CORPORATION
("LICENSEE"), a California corporation.
W I T N E S S E T H:
WHEREAS, Mrs. Fields has invented and acquired and will continue to develop
and acquire certain proprietary knowledge, trade secrets, techniques, recipes,
formulations of ingredients and processes related to the composition,
production, marketing and sale of cookies and other food products commonly sold
at Mrs. Fields cookie stores;
WHEREAS, Mrs. Fields and Licensee desire to enter into this Agreement to
allow Licensee to utilize Mrs. Fields' techniques and processes for the sale of
Licensed Products (as defined below) under certain of the trade names and
trademarks used by Mrs. Fields and upon the terms and conditions hereafter set
forth;
NOW THEREFORE, in consideration of the premises and the covenants and
agreements contained herein and other valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
1. Definitions.
-----------
(a) "Competitive Business" means any business operating or granting
franchises or licenses to others to operate a fresh baked cookie, pastry, bakery
or baked dessert outlet. The term Competitive Business shall not include
Licensee's marketing and sales of goods and services under trademarks owned by
Licensee.
(b) "Licensed Names and Marks" means the trade names, trademarks and
service marks listed and described in Exhibit B.
(c) "Licensed Products" means the items, articles and/or food products
described on Exhibit A attached hereto or any other products which, pursuant to
the terms of this Agreement become "Licensed Products."
(d) "Licensed Territory" means the world.
(e) "Licensed Trade Secrets" means all transferable techniques,
processes, methods of production and commercialization, training methods, and
know-how pertaining to and necessary or useful in relation to the composition,
production and sale of Licensed Products. Licensed Trade Secrets shall be deemed
to include, as and when available, all additional techniques, processes, methods
of production and commercialization and other know-how and/or
<PAGE>
improvements thereto, whether acquired or reduced to practice by Mrs. Fields
before or after the date hereof which relate to the Licensed Trade Secrets and
which are necessary or useful for the formulation, composition, production and
sale of Licensed Products. Licensed Trade Secrets shall not include, and except
as set forth in this Agreement, Licensee shall have no right, title, interest or
license in, the recipes or formulations for the Licensed Products.
(f) "Protected Information" means the Licensed Trade Secrets and Mrs.
Fields' recipes, formulations, systems, programs, procedures, manuals,
confidential reports and communications, lists of customers and clients,
marketing techniques and arrangements, mailing lists, purchasing information,
pricing policies, quoting procedures, financial information, employee, customer,
supplier and distributor data, all of the materials or information relating to
the business or activities of Mrs. Fields which are not generally known to
others engaged in similar businesses or activities, and all modifications,
improvements and enhancements which are derived from or relate to Licensee's
access to or knowledge of any of the above enumerated materials or information
(whether or not any of the above are reduced to writing or whether or not
patentable or protectable by copyright) which Licensee receives, receives access
to, conceives or develops or has received, received access to, conceived or
developed, in whole or in part, directly or indirectly, in connection with
Licensee's license hereunder. Information which is independently developed by
Licensee, or which was already in the possession of Licensee prior to the date
of this Agreement and which was not obtained in connection with this
transaction, or information which is or becomes part of the public domain
without breach of (i) this Agreement, (ii) any other agreement or instrument to
which Licensee is a Party or a beneficiary, or (iii) any duty owed to Mrs.
Fields by Licensee, shall not be considered Protected Information hereunder.
(g) "Net Sales" shaft mean the gross sales price invoiced by YES! on
its sales of Licensed Products to non-subsidiary customers, less the following
amounts (provided they are directly attributable to the sale of the Licensed
Products): (i) customary rebates, cash and trade discounts, and reserves and/or
credits for returns and allowances or accounts, (ii) transportation charges,
including shipping and insurance and (iii) sales or other excise taxes imposed
upon and paid by a seller with respect to such sales. Notwithstanding the
foregoing, the sales by YES! subsidiaries to unaffiliated third parties shall be
considered Net Sales, subject to all exceptions to Net Sales listed in
subsections (i), (ii), and (iii) hereof.
(h) "Restricted Person" means Licensee, any subsidiary, parent, or
affiliate of Licensee, or any director, 5% or more shareholder, partner or
officer of any of the foregoing.
(i) "System Standards" shall have the meaning set forth in paragraph 7
hereof.
(j) "Term" shall have the meaning set forth in paragraph 11(a) hereof.
2. Grant of License, Development Activities And License Fees And
-------------------------------------------------------------
Royalties.
---------
(a) Mrs. Fields hereby grants to Licensee and Licensee hereby accepts
from Mrs. Fields, upon the terms and conditions hereinafter specified, an
exclusive right and license to
-2-
<PAGE>
employ the Licensed Trade Secrets and the Licensed Names and Marks during the
Term to produce and sell the Licensed Products throughout the Licensed
Territory, only through retail channels of distribution.
(b) The license granted pursuant to this Agreement shall be exclusive
to Licensee and Mrs. Fields shall not have the right to license any other party
to offer for sale or sell the Licensed Products under the Licensed Names and
Licensed Marks or any other trademarks or servicemarks the rights to which are
or become vested in Mrs. Fields, including but not limited to for sale to retail
outlets. However, Mrs. Fields shall not be precluded from, and hereby expressly
retains the right to offer for sale and sell, and license others to offer for
sale and sell, any products or services other than the Licensed Products under
the Licensed Names and Marks and to own, operate and grant to others the right
to operate cookie stores or other stores or outlets selling products other than
the Licensed Products under the Licensed Names and Marks on such terms and
conditions as Mrs. Fields, in its sole discretion, deems appropriate.
(c) Mrs. Fields shall at its own expense develop food products and
recipes therefor for inclusion with or to be sold as adjunct or collateral
products of the Licensed Products. All such development activities shall be
undertaken in conjunction with Licensee and shall be deemed a collaborative
effort of Mrs. Fields and Licensee. All rights in and to any recipes developed
hereunder shall vest exclusively in Mrs. Fields and shall be deemed Licensed
Trade Secrets hereunder.
(d) Licensee shall pay to Mrs. Fields a nonrefundable license fee in
the amount of [*] Dollars ($[*]), ("License Fee") payable as follows:
(i) [*] Dollars ($[*]) shall be paid to Mrs. Fields upon execution
of this Agreement;
(ii) [*] Dollars ($[*]) shall be paid to Mrs. Fields not later
than January 1, 1996;
(iii) [*] Dollars ($[*]) shall be paid to Mrs. Fields not later
than February 1, 1996; and
(iv) [*] Dollars ($[*]) shall be paid to Mrs. Fields not later
than July 1, 1996.
(e) Licensee shall pay to Mrs. Fields a royalty on Net Sales of
Licensed Products sold or otherwise distributed for consideration by Licensee
(including its affiliates and subsidiaries) ("Earned Royalties"). The royalty
rate on Net Sales shall be [*] percent ([*]%) for so long as Licensee shall have
paid to or accrued to the account of Mrs. Fields Earned Royalties (exclusive of
the License Fee) of not more than [*] Dollars ($[*]); thereafter, the royalty
rate on Net Sales shall be [*] percent ([*]%).
[*CONFIDENTIAL TREATMENT REQUESTED]
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<PAGE>
(f) All Earned Royalty payments shall be due within thirty (30) days
of the end of each quarter (the quarters shall end on March 31, June 30,
September 30 and December 31). Together with each quarterly payment, Licensee
will provide Mrs. Fields with a report setting forth the basis for the quarterly
payment. In the event of late payment, Licensee shall also pay interest on the
full amount of such late payment from the date on which such payment was due at
the rate of [*]% per full month overdue.
(g) In the event that a Licensed Product is sold in combination with
another product or component whose sales and use is not covered by this
Agreement, Net Sales from such sales for purposes of calculating the amounts due
under this Agreement shall be as reasonably allocated by Licensee between such
Licensed Product and such other product, based upon their relative importance
and proprietary protection. Any such allocation shall be determined in
consultation with and be subject to the approval of Mrs. Fields.
(h) No royalty shall be payable under this Agreement with respect to
sales of Licensed Products for in trials or as samples.
(i) This License is not intended to convey to Mrs. Fields the rights
to, and Mrs. Fields acknowledges that it has no and will not acquire rights in,
the design, trade dress (other than the Licensed Names or Marks), industrial
design or engineering or other intellectual property (including patentable or
copyrightable intellectual property) of or incorporated in the Licensed
Products. Mrs. Fields acknowledges that such rights are the property of
Licensor, as between Mrs. Fields and Licensor.
3. Transfer of Licensed Trade Secrets And Assistance. Mrs. Fields agrees
-------------------------------------------------
to transmit the Licensed Trade Secrets to Licensee by any reasonable means upon
request.
4. Confidentiality.
---------------
(a) Licensee understands that the Protected Information disclosed to
Licensee by Mrs. Fields under this Agreement is secret, proprietary and of great
value to Mrs. Fields, which value may be impaired if the secrecy of the
Protected Information is not maintained.
(b) Mrs. Fields has taken and will continue to take reasonable
security measures to preserve and protect the secrecy of the Protected
Information and Licensee agrees to take all measures reasonably necessary,
including, without limitation, the measures hereinafter specified, to protect
the secrecy of such information in order to prevent it from falling into the
public domain or into the possession of persons not bound to maintain the
secrecy of such information.
(c) Licensee agrees not to disclose the Protected Information obtained
pursuant to this Agreement, either directly or indirectly, to any person or
entity, including any subsidiary or affiliate of Licensee (other than (i)
Licensee's key officers and employees and (ii) the key employees of
Entertainment Products, Ltd., a subsidiary of Licensee, and each of such
[*CONFIDENTIAL TREATMENT REQUESTED]
-4-
<PAGE>
employees only to the extent disclosure is necessary for employment of the
Licensed Trade Secrets), during the term of this Agreement or at any time
following the expiration or termination of this Agreement.
(d) Licensee shall exercise all other reasonably necessary precautions
to safeguard the secrecy of the Protected Information disclosed pursuant hereto
and to prevent the unauthorized disclosure thereof to anyone other than (i)
Licensee's key officers and employees and (ii) the key employees of
Entertainment Products, Ltd., a subsidiary of Licensee, and each of such
employee only to the extent is necessary to disclose the same for production and
sale of the Licensed Products, and (iii) any third parties to whom disclosure of
the same is necessary for production and sale of Licensed Products, provided
that Mrs. Fields has approved of such third parties.
(e) If Mrs. Fields sustains its burden of proof that Licensee has
disclosed, divulged, revealed, reported, published, transferred or used, for any
purpose whatsoever, except as authorized herein, any Protected Information, and
Licensee shall assert as a defense that such information (i) was already known
to Licensee prior to the execution of this Agreement, (ii) was independently
developed by Licensee, (iii) was disclosed to or by third parties without
violation of this Agreement or similar agreements, (iv) was already in the
public domain prior to the execution of this Agreement, or (v) entered the
public domain without violation of this Agreement, Licensee shall bear the
burden of proof in establishing such defense.
(f) Mrs. Fields hereby agrees that any information which it receives
from Licensee which would be within the scope of the definition of Protected
Information if it related to Mrs. Fields, shall be treated as confidential by
Mrs. Fields, and Mrs. Fields hereby agrees to be bound by the terms of this
Agreement with respect to any such information it receives from Licensee, to the
same extent that Licensee is bound by the terms of this Agreement with respect
to Protected Information.
5. Publicity. Licensee and Mrs. Fields agree not to issue any press
---------
release or other public announcement of this Agreement or the transactions
contemplated herein without the prior written approval by each party hereto of
the issuance of such announcement and the text thereof. In the event any such
press release or other public announcement shall be required by law, Licensee
and Mrs. Fields agree to issue such release or announcement only after
consulting in good faith with one another with respect to the form and substance
of such release or announcement.
6. Inspection of Records. Mrs. Fields shall have the right at any time
---------------------
during business hours, and with reasonable advance notice to Licensee, to
inspect and audit, or cause to be inspected and audited, the business records,
bookkeeping and accounting records, sales and other records relating to the sale
of Licensed Products and the books and records of Licensee as they pertain to
Licensed Products, all in a manner so as not to disrupt the normal business
operations of Licensee. Licensee shall fully cooperate with Mrs. Fields's
representatives and independent accountants to conduct any such inspection or
audit.
-5-
<PAGE>
7. System Standards. Licensee acknowledges and agrees that in the course
----------------
of the operation of the licensed business certain specifications, standards and
operating procedures will apply (the "System Standards"). Therefore, Licensee
will sell the Licensed Products in accordance with each and every System
Standard or may request Mrs. Fields approval for a variation from the System
Standard which approval shall not be unreasonably withheld. System Standards
may regulate any one or more of the following:
(i) approved and disapproved Licensed Products;
(ii) use of the Licensed Names and Marks;
(iii) participation in reasonable market research and testing of new
products and service development programs prescribed by Mrs. Fields;
Licensee hereby agrees that System Standards prescribed from time to time and
communicated to Licensee in writing, shall constitute provisions of this
Agreement as if fully set forth herein, except to the extent such provisions are
inconsistent with the express terms or essential purpose of this Agreement. All
references to this Agreement shall include all System Standards as periodically
modified.
8. Undertakings by Licensee. Licensee represents, acknowledges, agrees,
------------------------
covenants and warrants as follows:
(a) Unless Mrs. Fields consents in writing, Licensee shall use the
Licensed Trade Secrets and the Names and Marks:
(i) only for the purposes of and pursuant to this Agreement;
(ii) only in a manner consistent with the scope of the relevant
registration of the Licensed Names and Marks, as prescribed by Mrs. Fields;
(iii) only in the manner permitted and prescribed by Mrs. Fields
as set forth herein; and
(iv) only with respect to Licensed Products.
(b) Licensee recognizes the value of the good will associated with
the Licensed Products, Names and Marks and acknowledges that the Licensed Trade
Secrets, Products, Names and Marks and all rights therein and good will
pertaining thereto belong exclusively to Mrs. Fields.
(c) Licensee will not, during the term of this Agreement or
thereafter, attack the title or any rights of Mrs. Fields in and to the Licensed
Trade Secrets, Products, Names and
-6-
<PAGE>
Marks or attack the validity of this Agreement, any other license agreement to
which Mrs. Fields is a party and/or the Licensed Trade Secrets, Products, Names
and Marks.
(d) Licensee will assist Mrs. Fields, at Mrs. Fields' cost and
expense, to the extent necessary in the procurement of any protection or to
protect any of Mrs. Fields' rights to the Licensed Names and Marks, and Mrs.
Fields, if it so desires, may commence or prosecute any claims or suits in its
own name or join Licensee as a party thereto. Licensee shall notify Mrs. Fields
in writing of any infringements or imitations by others of the Licensed Names
and Marks which may come to Licensee's attention, and Mrs. Fields shall have the
sole right to determine whether or not any action shall be taken on account of
any such infringements or imitations at Mrs. Fields' cost and expense. Licensee
shall not institute any suit or take any action on account of any such
infringements or imitations.
(e) Licensee will do nothing to destroy, impair or in any way impede
the effect and validity of the Licensed Names and Marks.
(f) Licensee will so conduct and operate the licensed business so as
to preserve the business integrity and good reputation of Mrs. Fields; and
Licensee will refrain from all activity involving any significant risk of
bringing any of the Licensed Names and Marks into disrepute or in any way
damaging any of the Licensed Names and Marks.
(g) For the protection of the consumer public and for the further
protection of the good will and trade reputation of Mrs. Fields, Licensee will
only sell Licensed Products which are consistent with the good quality,
reputation and business integrity of Mrs. Fields. All Licensed Products
manufactured, advertised, and sold by Licensee under the Licensed Names and
Marks shall be subject to and in compliance with the quality control standards,
procedures, specifications, formulations and recipes of Mrs. Fields.
(h) The Licensed Products and other products produced and sold by
Licensee shall be of high quality and standard, comparable with that of products
sold at Mrs. Fields' own stores, and of such style, appearance and quality as to
be adequate for the protection and enhancement of the Licensed Names and Marks
and the good will pertaining thereto; will be prepared and sold in accordance
with all applicable laws; and shall not reflect adversely upon the good name of
Mrs. Fields or the Licensed Names and Marks. It is understood that the Licensed
Products which are baked goods will ultimately be prepared in a toy oven. The
foregoing standards, as applied, shall allow for the toy nature of the Licensed
Products.
(i) Mrs. Fields may request representative samples of Licensed
Products from Licensee and if, at any time, Mrs. Fields deems the quality of
such products to be below the standards of quality historically and currently
observed by Mrs. Fields for use with the Licensed Products, Mrs. Fields may so
notify Licensee, in writing, and Licensee will promptly bring such sub-standard
products up to the quality standards set by Mrs. Fields. Mrs. Fields' right to
oversee the quality of the Licensed Products herein shall not in any way
replace, supersede, or substitute for the quality control required to be
exercised by Licensee hereunder. The exercise of any action
-7-
<PAGE>
of quality control by Mrs. Fields shall be for its sole and exclusive benefit.
Mrs. Fields shall not be responsible to Licensee for any liability arising out
of the exercise or failure to exercise quality control.
(j) Mrs. Fields shall have the right to inspect any of the artwork,
signs, logos. packaging and advertising using the Licensed Names and Marks
(collectively the "Signs") to determine whether the Signs are consistent with
the Licensed Names and Marks and are being used in a manner which promotes the
good reputation and business integrity of Mrs. Fields. If Mrs. Fields determines
that such Signs or the use thereof are not consistent with the Licensed Names
and Marks or do not promote the good reputation or business integrity of Mrs.
Fields, and Mrs. Fields so notifies Licensee of the same, Licensee shall
thereafter take such steps or actions as may be necessary to correct the Signs.
At Licensee's request, Mrs. Fields will inspect the Signs and approve or
disapprove the use of such Signs, as the case may be, prior to their use. Once
Licensee has received approval of any Signs by Mrs. Fields, Mrs. Fields agrees
not to revoke or withdraw such approval. Such approval will be deemed only to
extend to the Sign as submitted to Mrs. Fields for approval by Licensee, and any
material change, alteration, or other revision to such Sign shall require
further approval by Mrs. Fields.
(k) That any modification, improvement or enhancement by Licensee to
the Licensed Trade Secrets, Names and Marks (whether or not approved or
developed with the advice or support of Mrs. Fields), shall be the exclusive
property of Mrs. Fields, and that any Licensed Products that are materially
modified, enhanced or improved shall be sold only with the prior approval of
Mrs. Fields.
(l) Licensee will only use ingredients, formulas and supplies that
conform to the standards and specifications designated by Mrs. Fields. Any non-
proprietary products or ingredients purchased by Licensee shall be purchased and
shall comply with all of Mrs. Fields' specifications with respect to such
products.
(m) Licensee has full power and authority under its Articles of
Incorporation and Bylaws to enter into this Agreement and the transactions
contemplated hereby, and that the entering into of this Agreement does not
contravene, infringe upon or constitute a default under any agreement or
covenant to which Licensee is a party or violate or conflict with any law or
regulation by which it is bound.
(n) No filing, registration, approval or consent heretofore not
obtained of any governmental agency or instrumentality or of any stock exchange
authority is required for the authorization, delivery or performance by Licensee
of this Agreement.
(o) Licensee shall during term of Agreement obtain and maintain at its
own cost and expense standard Comprehensive General Liability Insurance naming
Mrs. Fields as an additional named insured. Upon request, Licensee shall furnish
Mrs. Fields with adequate proof of the foregoing insurance coverage.
-8-
<PAGE>
9. Undertakings of Mrs. Fields. Mrs. Fields represents, acknowledges,
---------------------------
agrees, covenants, and warrants as follows:
(a) That Mrs. Fields has full right and power under its Bylaws and
Certificate of Incorporation to grant Licensee the license as contemplated
herein, and perform the same and that the execution of this Agreement by Mrs.
Fields does not infringe upon or constitute a default under any agreement or
covenant to which Mrs. Fields is a party or violate or conflict with any law or
regulation by which it is bound;
(b) That Mrs. Fields has all rights, title and interest in and to the
Licensed Names and Marks and has the power and authority to grant the license
set forth herein;
(c) That Mrs. Fields will take (or cause to be taken) at its cost all
steps necessary to:
(i) maintain the confidentiality of the Licensed Trade Secrets
in accordance with all relevant laws;
(ii) prepare, execute, and file all documents, notices,
applications, registrations and timely renewals hereof or other documents
required or necessary for the protection of the Licensed Names and Marks; and
(iii) defend the Licensed Names and Marks.
(d) No filing, registration, approval or consent heretofore not
obtained by any governmental agency or instrumentality or of any stock exchange
authority is required for the authorization, execution, delivery or performance
by Mrs. Fields or this Agreement.
(e) That presently and in the future Mrs. Fields may operate and/or
license others to operate restaurant operations or other food service outlets
under various trade names, and that nothing in this Agreement shall be deemed to
restrict Mrs. Fields from operating or licensing any restaurant or other
operation under any trade name or at any location.
(f) That Mrs. Fields will use its best efforts to develop recipes and
formulas and such other activities and concepts as are appropriate for
children's use with the Licensed Products.
10. Product Purchases. Licensee shall purchase all food to be sold in
-----------------
conjunction with Licensed Products from Mrs. Fields, a supplier designated or
approved by Mrs. Fields, or distributors designated or approved by Mrs. Fields.
Any required approval shall not be unreasonably withheld.
-9-
<PAGE>
11. Term and Termination.
--------------------
(a) The initial term of this Agreement shall commence on the date
hereof and shall terminate on the fifth annual anniversary of the date of the
first shipment (the "Shipment Date") of the Licensed Products in commercial
quantities directly to Licensee. This Agreement may be renewed for a second five
(5) year period at Licensee's sole option; provided that, unless otherwise
agreed to by Mrs. Fields, Licensee shall have by the fifth anniversary of the
Shipment Date paid to or accrued for the account of Mrs. Fields not less than
[*] dollars ($[*]) in Earned Royalties or other fees (including the License Fee)
and that Licensee is in full compliance with all of the terms and conditions of
this Agreement.
(b) If (i) Licensee defaults in the payment of any portion of the
License Fee or the Earned Royalties or other material obligation to Mrs. Fields
when the same becomes due and payable hereunder, and Licensee fails to pay such
amount within ten (10) business days after notice that it is due and payable; or
(ii) Licensee fails to perform in accordance with any other material terms or
conditions contained in this Agreement and such default continues unremedied for
thirty (30) days after Licensee receives written notice of default, then this
Agreement and the license granted hereunder may be terminated upon written
notice by Mrs. Fields effective upon receipt of such notice, without prejudice
to any and all other rights and remedies Mrs. Fields may have hereunder or by
law provided, and all rights of Licensee hereunder shall cease.
(c) If Licensee is determined by a court of law having jurisdiction
thereover to be "insolvent" within the meaning of the U.S. Bankruptcy Act, or
files a petition in bankruptcy or for reorganization, or takes advantage of any
insolvency statute, or makes an assignment for the benefit of creditors, or
undertakes any similar action, under any federal, state or foreign bankruptcy,
insolvency or similar law, then in any such event this Agreement shall
immediately terminate as to Licensee and the license herein granted shall not
constitute an asset in reorganization, bankruptcy, or insolvency which may be
assigned or which may accrue to any court or creditor appointed referee,
receiver, or committee.
(d) If Mrs. Fields becomes insolvent or bankrupt or fails to perform
in accordance with any material term or condition of this Agreement, and such
default continues unremedied for thirty (30) days after Mrs. Fields receives
written notice of default, then this Agreement and the License granted hereunder
may be terminated upon notice by Licensee effective upon receipt of such notice,
without prejudice to any and all other rights and remedies Licensee may have
hereunder or by law provided. However, such event shall not terminate Licensee's
rights hereunder, including specifically the license granted under section 2
hereunder.
(e) On any cancellation, termination or expiration of this Agreement
as to Licensee, Licensee agrees to pay within thirty (30) days thereof to Mrs.
Fields all amounts due and owing hereunder and to return all Protected
Information, confidential documents and other material supplied by Mrs. Fields
to Licensee and agrees never to use, disclose to others, nor assist others in
using the Licensed Trade Secrets or other Protected Information. Licensee agrees
to cooperate fully with Mrs. Fields in the return of all such documents and
materials, and to take all
[*CONFIDENTIAL TREATMENT REQUESTED]
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<PAGE>
reasonable steps requested by Mrs. Fields to prevent the disclosure or use of
such documents or materials by unauthorized persons acting by, through or under
Licensee following termination of this Agreement.
(f) Upon cancellation, termination or expiration of this Agreement,
Licensee shall forthwith discontinue all use of the Licensed Names and Marks and
will be deemed to have automatically and irrevocably assigned, transferred, and
conveyed to Mrs. Fields any rights, equities, good will, tides or other rights
in and to the Licensed Trade Secrets, Names and Marks which may have been
obtained by Licensee or which may have vested in Licensee in pursuance of any
endeavors covered hereby, and Licensee will execute any instruments reasonably
requested by Mrs. Fields to accomplish or confirm the foregoing. Any such
assignment, transfer or conveyance shall be without consideration other than the
mutual covenants and considerations of this Agreement. Notwithstanding the
foregoing, Licensee shall have the right to continue for a period or twelve (12)
months after the cancellation termination or expiration of this Agreement to
sell or otherwise dispose of any units of the Licensed Product which are in
Licensee's inventory as of the date of such expiration or termination. At the
end of the sell-off period, Licensee shall offer Mrs. Fields the right for
thirty (30) days to purchase the remaining inventory of the Products in part or
in its entirety at cost, including allocable overhead.
(g) Upon any cancellation, termination or expiration of this
Agreement, the parties shall not be relieved of their obligations under
paragraphs 4, 11(e), 11(f), 12 and 13 hereof.
12. Indemnification.
---------------
(a) Mrs. Fields agrees to indemnify, defend and hold License harmless
from any claims, liabilities, lawsuits, demands, actions, damages and expenses
(including reasonable attorneys fees) (collectively, "Damages") arising from or
out of any breach of the agreements, covenants, representations or warranties of
Mrs. Fields contained in this Agreement, other than any such Damages which arise
due to the negligence or wrongful acts of Licensee.
(b) Licensee agrees to indemnify, defend and hold Mrs. Fields harmless
from and against any and all Damages arising from or out of (i) any breach of
the agreements, covenants, representations, or warranties of Licensee contained
in this Agreement, (ii) any damages or injury to any person, including, but not
limited to customers, employees of Licensee, and members of the public, suffered
and incurred due to the production or sale of the Licensed Products (unless such
Damages result from a recipe, process or manner of sale proscribed or developed
by Mrs. Fields), (iii) products liabilities claims or defective manufacturing of
the Licensed Products, other than any such claims to the extent attributable to
the negligence of Mrs. Fields, or (iv) the activities hereunder of Licensee,
other than any such Damages to the extent attributable to the negligence of Mrs.
Fields.
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<PAGE>
13. Binding Effect, Assignment.
--------------------------
(a) The terms, covenants and conditions of this Agreement shall inure
to the benefit of, and shall be binding upon, the parties hereto and their
respective successors and permitted assigns.
(b) Licensee may assign its rights and obligations hereunder to any
subsidiary, parent company, or subsidiary of a parent company, provided,
however, that notwithstanding the foregoing, such arrangement shall not alter
the liability of Licensee hereunder, and Licensee shall remain primarily
responsible to Mrs. Fields for the performance of Licensee's obligations under
this Agreement. In the event of any default by an assignee hereunder, or any
successor thereof, in the performance of any of the terms of this Agreement,
Mrs. Fields may exercise its remedies directly against Licensee without the
necessity of exhausting any remedies against an assignee hereunder, or any other
such assignee or successor.
(c) Any assignment, sublicense or other transfer by Licensee of any of
its rights under this Agreement without the prior written consent of Mrs. Fields
(which consent shall be in Mrs. Fields' reasonable discretion) is prohibited and
will be deemed to be null and void.
(d) Mrs. Fields may assign its rights and obligations hereunder to any
subsidiary, parent company, or subsidiary of a parent company.
(e) Nothing contained herein shall be construed to limit Mrs. Fields'
ability and right to assign any royalties or payments received hereunder as
security for indebtedness; provided that any such assignment shall not affect
Licensee's rights under this Agreement.
14. Advertising and Promotional Documentation and Expenses.
------------------------------------------------------
(a) Mrs. Fields shall have the right, not to unreasonably be withheld,
to approve or disapprove any and all advertising used, or proposed to be used,
by Licensee in promotion of any of the Licensed Products. Prior to the use of
any material, whether written for print media or for television or radio spots,
Licensee will submit such material to Mrs. Fields for its approval. If Mrs.
Fields has not disapproved of such advertising within five (5) days from its
receipt of such advertising material, such advertising material will be deemed
approved.
(b) Licensee agrees that all advertising, promotion and marketing by
Licensee shall be completely clear and factual and not misleading and shall
conform to the highest standards of ethical marketing and promotion policies
which may be prescribed from time to time by Mrs. Fields. Licensee further
agrees to use the registration symbol of "(R)" in connection with its use of the
Licensed Names and Marks which are registered trademarks. Licensee agrees to
refrain from any business or marketing practice which may be injurious to the
business of Mrs. Fields, and the good will be associated with the Licensed Names
and Marks.
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<PAGE>
15. Notices. All notices provided by this Agreement shall be in writing
-------
and shall be given by overnight courier, facsimile transmission, or by personal
delivery, by one party to the other, addressed to such other party at the
applicable address set forth below, or to such other address as may be given for
such purpose by such other party by notice duly given hereunder. Notice shall
be deemed properly given on the date of delivery:
To Licensee: YES! Entertainment Corporation
3875 Hopyard Road, Suite 375
Pleasanton, CA 95688
Attn: General Counsel
To Mrs. Fields: Mrs. Fields Development Corporation
462 W. Bearcat Drive
Salt Lake City, Utah 84115
Attention: Sr. Vice President of Franchising
FAX (801) 463-2176
16. General Provisions.
------------------
(a) It is understood and agreed by the parties hereto that this
Agreement does not create a fiduciary relationship between them, that Mrs.
Fields and Licensee are and shall be independent contractors and that nothing in
this Agreement is intended to make either party a general or special agent,
joint venturer, partner or employee of the other for any purpose whatsoever.
(b) Licensee shall not employ any of the Licensed Names and Marks in
signing any contract or applying for any license or permit or in a manner that
may result in Mrs. Fields' liability for any of Licensee's indebtedness or
obligations, nor may Licensee use the Licensed Names and Marks in any way not
expressly authorized by Mrs. Fields. Except as expressly authorized in writing,
neither Mrs. Fields nor Licensee shall make any express or implied agreements,
warranties, guarantees or representations or incur any debt in the name or on
behalf of the other, represent that their relationship is other than licensor
and licensee or be obligated by or have any liability under any agreements or
representations made by the other that are not expressly authorized in writing.
(c) Mrs. Fields shall execute the form of Licensor Waiver letter
attached to this Agreement as Exhibit C.
---------
(d) Except as expressly provided to the contrary herein, each
paragraph, term and provision of this Agreement, and any portion thereof, shall
be considered severable and if, for any reason, any such provision of this
Agreement is held to be invalid, contrary to or in conflict with any applicable
present or future law or regulation in a final, unappealable ruling issued by
any court, agency or tribunal with competent jurisdiction in a proceeding to
which Mrs. Fields is a party, that ruling shall not impair the operation of, or
have any other effect upon, such other
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<PAGE>
portions of this Agreement as may remain otherwise intelligible, which shall
continue to be given full force and effect and bind the parties hereto, although
any portion held to be invalid shall be deemed not to be a part of this
Agreement from the date the time for appeal expires, if Licensee is a party
thereto, otherwise upon Licensee's receipt of a notice of non-enforcement
thereof from Mrs. Fields.
(e) If any applicable and binding law or rule of any jurisdiction
requires a greater prior notice of the termination of this Agreement than is
required hereunder, or the taking of some other action not required hereunder,
or if, under any applicable and binding law or rule of any jurisdiction, any
provision of this Agreement is invalid or unenforceable, the prior notice and/or
other action required by such law or rule shall be substituted for the
comparable provisions hereof, and Mrs. Fields shall have the right, in its sole
discretion, to modify such invalid or unenforceable provision to the extent
required to be valid and enforceable. Licensee and Mrs. Fields each agree to be
bound by any promise or covenant imposing the maximum duty permitted by law
which is subsumed within the terms of any provision hereof, as though it were
separately articulated in and made a part of this Agreement, that may result
from the striking of any of the provisions hereof, any portion or portions
hereof which a court may hold to be unenforceable in a final decision to which
Mrs. Fields is a party, or from reducing the scope of any promise or covenant to
the extent required to comply with such a court order. Such modifications to
this Agreement shall be effective only in such jurisdiction, unless Mrs. Fields
elects to give them greater applicability, and shall be enforced as originally
made and entered into in all other jurisdictions. Neither Mrs. Fields nor
Licensor is presently aware of any applicable binding law or rule of any
jurisdiction that conflicts with any of the provisions of this Agreement.
(f) Mrs. Fields and Licensee may by written instrument unilaterally
waive or reduce any obligation of or restriction upon the other under this
Agreement, effective upon delivery of written notice thereof to the other or
such other effective date stated in the notice of waiver. Any waiver granted by
either party shall be without prejudice to any other rights such party may have.
(g) Mrs. Fields and Licensee shall not be deemed to have waived or
impaired any right, power or option reserved by this Agreement (including,
without limitation, the right to demand exact compliance with every term,
condition and covenant herein or to declare any breach thereof to be a default
and to terminate this Agreement prior to the expiration of its term) by virtue
of any custom or practice of the parties at variance with the terms hereof; any
failure, refusal or neglect of Mrs. Fields or Licensee to exercise any right
under this Agreement or to insist upon exact compliance by the other with its
obligations hereunder.
(h) Neither Mrs. Fields nor Licensee shall be liable for loss or
damage or deemed to be in breach of this Agreement if their failure to perform
obligations results from:
(i) compliance with any law, ruling, order, regulation,
requirement or instruction of any federal, state, municipal or foreign
government or any department or agency thereof;
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<PAGE>
(ii) acts of God;
(iii) fires, strikes, embargoes, war or riot; or
(iv) any other similar event or cause.
Any delay resulting from any of said causes shall extend performance accordingly
or excuse performance, in whole or in part, as may be reasonable, except that
said causes shall not excuse payments of amounts owed at the time of such
occurrence.
(i) Notwithstanding anything to the contrary contained in this
Agreement, Mrs. Fields and Licensee shall each have the right in a proper case
to obtain temporary restraining orders and temporary or preliminary injunctive
relief from a court of competent jurisdiction. Each party agrees that the other
may have such temporary or preliminary injunctive relief without bond.
(j) The rights of Mrs. Fields and Licensee hereunder are cumulative
and no exercise or enforcement by Mrs. Fields or Licensee of any right or remedy
hereunder shall preclude the exercise or enforcement by Mrs. Fields or Licensee
of any other right or remedy hereunder to which Mrs. Fields or Licensee is
entitled by law to enforce.
(k) All disputes arising out of or relating to this agreement may,
upon mutual consent of the parties, be finally settled by binding arbitration in
Salt Lake City, Utah if brought by Mrs. Fields or in Alameda County, California
if brought by Licensee, under the Rules of Arbitration of the American
Arbitration Association by one arbitrator appointed in accordance with said
Rules. Judgement on the award rendered by the arbitrator may be entered in any
court having jurisdiction thereof.
(l) If a claim for amounts owed by Licensee to Mrs. Fields or its
affiliates is asserted in any arbitration or judicial proceeding or appeal
thereof, or if Mrs. Fields or Licensee is required to enforce this Agreement in
an arbitration or a judicial proceeding or appeal thereof, the party prevailing
in such proceeding shall be entitled to reimbursement of its costs and expenses,
including reasonable accounting and legal fees, whether incurred in preparation
for, or in contemplation of the filing of any written demand, claim, action,
hearing or proceeding to enforce the obligations of this Agreement.
(m) Except to the extent governed by the United States Trademark Act
of 1946 (Lanham Act, 15 U.S.C. (S)(S) 1051 et seq.) or other federal law, this
------
Agreement, and the relationship between Licensee and Mrs. Fields, shall be
governed by the laws of the State of Utah.
(n) Licensee and Mrs. Fields hereby irrevocably consent and agree
that any legal action, suit or proceeding arising out of or in any way in
connection with this Agreement, or which is an appeal therefrom, may be
instituted or brought in the Federal District Court for the District of Utah or
otherwise heard in Salt Lake City if brought by Mrs. Fields and may be
instituted or brought in the Federal District Court for San Francisco or
otherwise heard in San
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<PAGE>
Francisco if brought by Licensee, and Licensee and Mrs. Fields hereby
irrevocably consent and submit to, for themselves and in respect of their
property, generally and unconditionally, the jurisdiction of such Court or
Arbiter, and to all proceedings in such Court or Arbiter. Further, Licensee and
Mrs. Fields irrevocably consent to actual receipt of any summons and/or legal
process at their respective addresses as set forth in this Agreement as
constituting in every respect sufficient and effective service of process in any
such legal action or proceeding. Licensee and Mrs. Fields further agree that
final judgment in any such legal action, suit or proceeding shall be conclusive
and may be enforced in any other jurisdiction, whether within or outside the
United States of America, by suit under judgment, a certified or exemplified
copy of which will be conclusive evidence of the fact and the amount of the
liability.
(o) Except with respect to the indemnification obligations contained
herein, the parties waive to the fullest extent permitted by law any right to or
claim for any punitive or exemplary damages against the other and agree that, in
the event of a dispute between them, the party making a claim shall be limited
to recovery of any actual damages it sustains.
(p) Except for claims for which Licensee or Mrs. Fields are entitled
to indemnification herein, any and all claims arising out of or relating to this
Agreement or the relationship among the parties hereto shall be barred unless an
action or legal proceeding is commenced within one (1) year from the date
Licensee or Mrs. Fields knew or should have known the fact giving rise to such
claims.
(q) The headings of the several sections and paragraphs hereof are for
convenience only and do not define, limit or construe the contents of such
sections or paragraphs.
(r) This Agreement and the Exhibits hereto represent the entire
agreement between Mrs. Fields and Licensee with respect to the subject matter
hereof and supersede any prior agreements and negotiations between the parties.
(s) This Agreement may be executed simultaneously in two counterparts,
each of which shall be deemed an original, but both of which together shall
constitute one and the same agreement, binding upon both parties hereto,
notwithstanding that both parties are not signatories to the original or the
same counterpart.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
"LICENSEE"
YES! ENTERTAINMENT CORPORATION
By: /s/ Bruce D. Bower
----------------------------
Its: Executive Vice President
---------------------------
"MRS. FIELDS"
MRS. FIELDS DEVELOPMENT CORPORATION
By: /s/ Larry A. Hodges
----------------------------
Its: President and C.E.O.
---------------------------
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<PAGE>
EXHIBIT A
LICENSED PRODUCTS
Children's cooking and food preparation appliances.
Children's cooking and kitchen ware.
Food products developed by Mrs. Fields for use with the children's cooking and
food preparation appliances.
<PAGE>
EXHIBIT B
LIST OF LICENSED TRADE NAMES, TRADEMARKS AND SERVICE MARKS
<PAGE>
INTL CL: 30
PRIOR U.S. CL.: 46
REG. NO. 1,256,315
UNITED STATES PATENT AND TRADEMARK OFFICE REGISTERED NOV. 1. 1983
- ----------------------------------------- -----------------------
TRADEMARK
PRINCIPAL REGISTER
<TABLE>
<CAPTION>
<C> <S>
Mrs. Fields' Chocolate Chippery (California corporation) No claim is made to the exclusive right to use
2935 Whipple Rd. the word "Cookies", apart from the mark as shown.
Union City, Calif. 94587
For: BAKERY GOODS - NAMELY, COOKIES "Mrs. Fields" is the name of a living individual
AND BROWNIES, in CLASS 30 (U.S. Cl.46). whose consent is of record.
First use Nov. 15, 1981; in commerce Nov. 15,
1981. Ser. No. 368,469, filed Jun. 7, 1982.
Owner of U.S. Reg. Nos. 1,197,025, 1,206,373 and others. JESSIE N. MARSHALL, Examining Attorney
</TABLE>
Title in Mrs. Fields Cookies, a California corporation
Declaration Under Sec. 8 & 15: 1989
-2-
<PAGE>
INT. CL.: 42
PRIOR U.S. CL.: 101
REG. NO. 1,241,619
UNITED STATES PATENT AND TRADEMARK OFFICE REGISTERED JUN. 7, 1983
- ----------------------------------------- -----------------------
SERVICE MARK
PRINCIPAL REGISTER
REGISTERED FOR A TERM OF 20 YEARS FROM June 7, 1983
<TABLE>
<CAPTION>
<C> <S>
Mrs. Fields' Chocolate Chipppery (California corporation) No claim is made to the e xlusive right to use
2935 Whipple Rd. the word "Cookies", apart from the mark as shown.
Union City, Calif. 94587
For: RETAIL BAKERY STORE SERVICES, in Mrs. Fields is the name of a particular living
CLASS 42 (U.S. Cl. 101). individual whose consent is of record.
First use Nov. 15, 1981; in commerce Apr. 15,
1982. Ser. No. 368,475, filed Jun. 7, 1982.
Owner of U.S. Reg. Nos. 1,197,025, 1,207,441 and others. DOMINIC J. SALEMI, Examiner
</TABLE>
Title in Mrs. Fields Cookies, a California Corporation
Dec. 1988
Certified to be a true copy of the registration issued by the
United States Patent and Trademark Office, which registration is in full
for and effect.
-3-
<PAGE>
INT. CL.: 42
PRIOR U.S. CL.: 101
REG. NO. 1,299,149
UNITED STATES PATENT AND TRADEMARK OFFICE REGISTERED OCT. 2, 1984
- ------------------------------------------ -----------------------
SERVICE MARK
PRINCIPAL REGISTER
<TABLE>
<CAPTION>
<C> <S>
Mrs. Fields Chocolate Chippery (California corporation) For: RETAIL BAKERY STORES SERVICES, in
Suite F200 CLASS 42 (U.S. Cl. 101).
1500 Kearns Blvd.
Park City, Utah 84060 First use Nov. 15, 1981; in commerce Apr. 15, 1982.
Owner of U.S. Reg. Nos. 1,197,025, 1,241,619 and others.
Ser. No. 449,876, filed Oct. 26, 1983.
SHEILA ROBINSON, Examiner
</TABLE>
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