EXHIBIT 10.1
THIRD AMENDMENT TO AGREEMENT
THIS AMENDMENT TO AGREEMENT, dated this 30th day of July, 2001, between
UNITED FEATURE SYNDICATE, INC., d.b.a. UNITED MEDIA, a New York corporation with
its principal office at 200 Madison Avenue, 4th Floor, New York, New York 10016
("UM"), as exclusive worldwide licensing representative of PRECIOUS MOMENTS,
INC., an Illinois corporation with its principal office at 2170 Point Boulevard,
Suite 200, Elgin, Illinois 60123 ("Licensor"), and ENESCO GROUP, INC., a
Massachusetts corporation with its principal office at 225 Windsor Drive,
Itasca, Illinois 60143 ("Licensee"), is to evidence:
WHEREAS, pursuant to an agreement dated July 1, 1993, Licensor granted
Enesco Corporation, an Ohio corporation ("Enesco Ohio"), certain rights with
respect to the PRECIOUS MOMENTS property; and
WHEREAS, said agreement was amended by amendments dated December 29, 1997,
and January 22, 1999 (said agreement, as amended, being hereinafter referred to
as the "Agreement"); and
WHEREAS, Enesco Ohio assigned the Agreement to Licensee effective January
21, 2000; and
WHEREAS, since the Agreement was signed UM has become exclusive worldwide
licensing representative of Licensor; and
WHEREAS, the resolution of all issues relating to the granting of mass
market rights to Licensee, to the right of Licensor and UM to license the right
to manufacture, distribute, sell, and advertise KEEPSAKE ornaments, and to the
modification of the definition of "Licensed Products" under the Agreement, as
evidenced by a comprehensive and fully executed amendment to the Agreement, is a
condition subsequent to the granting (to the extent previously given) of product
approvals for Licensed Products intended by Licensee for the mass market channel
of distribution;
WHEREAS, the parties wish to amend the Agreement further in certain
respects;
NOW, THEREFORE, the Agreement is amended as follows:
1. Exhibits B-1 and B-2 are deleted and new Exhibits B-1 and B-2, attached
hereto and made a part hereof, substituted therefor.
2. Paragraph 25 is deleted and the following substituted therefor,
effective January 1, 2001:
"25. PAYMENTS, REPORTS, AND NOTICES. All royalty checks, which shall be
made payable to UM, and accounting statements shall be sent by Licensee to the
following address:
United Media
Attn: Controller, Licensing
P.O. Box 85271
Cincinnati, Ohio 45264
Copies of all royalty checks and accounting statements shall be sent
simultaneously to the following address:
United Media
Attn: Financial Manager, Licensing
200 Madison Avenue, 4th Floor
New York, New York 10016
Any notice given under this Agreement shall be in writing and shall be mailed by
first class mail, postage prepaid, to the parties at the following addresses:
TO LICENSOR: TO LICENSEE:
PRECIOUS MOMENTS, INC. ENESCO GROUP, INC.
Attn: Ms. Sara Pilafas Attn: President
2170 Point Boulevard, Suite 200 225 Windsor Drive
Elgin, Illinois 60123 Itasca, Illinois 60143
Copies of all notices to Licensor shall be sent to the following address:
UNITED MEDIA
Attn: Senior Vice President/Licensing
200 Madison Avenue, 4th Floor
New York, New York 10016
Copies of notices to Licensee shall be sent to the following address:
ENESCO GROUP, INC.
Attn: General Counsel
225 Windsor Drive
Itasca, Illinois 60143
Either party may change the address for notices by written notice to the other
parties. Any notice, statement, and/or payment given under this Agreement shall
be deemed given on the date of delivery, or, if sent by either registered or
certified mail, 24 hours after the date on which the envelope containing the
notice, properly addressed and postage prepaid, is deposited at the United
States Post Office during its business hours or is postmarked in a United States
Post Office or is delivered to an established commercial courier service."
3. The following new paragraph 34 is added:
"34. MASS MARKET RIGHTS.
"(a) Extension of Grant of License. Subject to all of the terms and
conditions of this paragraph 34, Licensor and UM hereby agree that the rights
granted Licensee under the provisions of subparagraphs 2(a) and 2(b) of this
Agreement shall be extended, effective as of the date of execution of the third
amendment to this Agreement, to the mass market channel of distribution;
provided, however, that Licensee shall have no right to distribute FIGURINES or
HANGING ORNAMENTS manufactured of porcelain bisque in the mass market channel of
distribution. Licensed Products sold by Licensee through the mass market channel
shall be
Page 2
separately identified on Licensee's royalty accountings rendered pursuant to
this Agreement to the extent such Licensed Products are sold F.O.B. Far East.
Independent of its royalty accountings, the Licensee shall also provide PMI and
UM, on a regular basis as reasonably requested by PMI and UM, the following
information concerning sales of the Licensed Products via the mass market
channel of distribution: number of skus sold to key accounts; types of skus sold
to key accounts; and sell-through performance of each sku.
"(b) Term for Mass Market Rights. Notwithstanding the provisions of
paragraph 3, the term of the grant of license with respect to mass market rights
shall commence on the date of execution of the third amendment to this Agreement
and end on December 31, 2007, and mass market rights shall not be subject to the
provisions of paragraph 3 relating to automatic renewals.
"(c) Standards for Foreign Mass Market Distributors; Foreign Distributors
Unacceptable to Licensor and UM. Licensee agrees that Licensed Products
distributed in the foreign mass market shall be distributed through distributors
whose standards of operation and quality of product presentation are consistent
with the wholesome nature and goodwill of the Property and in keeping with the
standards represented in the United States and Canada by such mass marketers as
Wal Mart, K Mart, and Target. Licensee acknowledges that the foreign mass market
distributors identified on Exhibit E, attached hereto and made a part hereof,
are unacceptable to Licensor and UM, and Licensee agrees not to distribute any
of the Licensed Products through said mass market distributors. Notwithstanding
the foregoing, Licensor and UM agree to give good faith consideration to any
request from Licensee to delete one of said mass market distributors from
Exhibit E.
"(d) Exploitation of Certain Rights by Licensor and UM. In consideration of
the rights granted Licensee under subparagraph 34(a), Licensee agrees that
Licensor and UM shall have the right to license to Hallmark Cards, Incorporated,
and its affiliates and subsidiaries throughout the Territory (`Hallmark') the
right to use the Precious Moments Artwork and Designs and the Licensed Marks in
connection with the manufacture, distribution, sale, and advertising, solely
through gift and card channels, of general KEEPSAKE hanging ornaments (the
`General Ornaments') and KEEPSAKE hanging ornaments that are part of a promotion
(the `Promotional Ornaments'). Such licenses to Hallmark in each country of the
Territory shall be subject to the following conditions, restrictions, and
limitations: (i) between three and six skus of the General Ornaments and between
three and six skus of the Promotional Ornaments shall be distributed during any
calendar year; provided, however, that Licensee agrees to give good faith
consideration to proposals from Licensor and UM to increase the quantity to up
to 12 skus of the General Ornaments and up to 12 skus of the Promotional
Ornaments in any calendar year where there is a creative justification for such
increase (e.g., a `Twelve Days of Christmas' promotion); (ii) Licensor and UM
shall use best efforts to encourage Hallmark in a country where Licensee is
actively marketing the Licensed Products to cross-promote its sales of the
General Ornaments and/or the Promotional Ornaments with the Licensed Products
and also to collaborate with Licensee on creative issues; (iii) neither the
General Ornaments nor the Promotional Ornaments shall be produced in porcelain
bisque; (iv) Licensor and UM shall contractually impose upon Hallmark the
requirement that the General Ornaments and the Promotional Ornaments be produced
and marketed by Hallmark in a manner the standards of operation and quality of
product presentation of which are consistent with the wholesome nature and
goodwill of the Property; and (v) no such license shall extend beyond December
31, 2007 (except that Licensor and UM shall be entitled to grant Hallmark a
reasonable non-exclusive sell-off period beyond that date)."
Page 3
4. A new Exhibit E, attached hereto and made a part hereof, is added.
5. The October 27, 1998, side letter relating to the Agreement shall be of
no further force and effect. The December 17, 1998, side letter relating to the
Agreement shall remain in full force and effect.
6. Except as expressly modified by this amendment, all terms and conditions
of the Agreement shall remain in full force and effect.
IN WITNESS WHEREOF, the parties have executed this third amendment to
agreement on the date set forth above.
UNITED FEATURE SYNDICATE, INC.,
d.b.a. UNITED MEDIA, as exclusive
worldwide licensing representative
of PRECIOUS MOMENTS, INC.
By /s/Joshua Kislevitz
------------------------------------------
Senior Vice President Title
ENESCO GROUP, INC.
By /s/M. Frances Durden
------------------------------------------
Vice President and Secretary Title
PRECIOUS MOMENTS, INC., acknowledges that it has reviewed and approves the
provisions of this third amendment to the Agreement.
PRECIOUS MOMENTS, INC.
By /s/Sara Pilafas
------------------------------------------
President Title
Page 4