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Execlusive Patent License Agreement

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Sectors: Specialty Retail
Governing Law: Missouri, View Missouri State Laws
Effective Date: March 12, 2001
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EXCLUSIVE PATENT LICENSE AGREEMENT


This Agreement made as of the 12th day of March, 2001 by and between Tonyco, Inc., a corporation duly organized and existing under the laws of the state of Michigan, having its principal place of business at 181 West Marshall, Ferndale, Michigan 48220 (hereinafter referred to as "Tonyco") and Build-A-Bear Workshop, Inc., a corporation duly organized and existing under the laws of the state of Delaware, having its principal place of business at 1954 Innerbelt Business Center Drive, St. Louis, MO 63114 (hereinafter referred to as "Build-A-Bear").


RECITALS


WHEREAS, Tonyco is the owner by assignment of U.S. Patent No. 6,109,196 entitled METHOD OF CLOSING A STUFFED TOY AFTER STUFFING;


WHEREAS, Build-A-Bear is, among other things, in the business of providing goods and services wherein a customer selects a skin/shell toy for stuffing via a multitude of different retail venues such as in a store environment, via catalogs, over the internet, or other related venues and the toy is thereafter stuffed and closed in the retail environment or by the customer at home or elsewhere;


WHEREAS, Tonyco has charged Build-A-Bear with infringement of U.S. Patent No. 6,109,196;


WHEREAS, Tonyco and Build-A-Bear are desirous of settling the infringement issue between them relating to U.S. Patent No. 6,109,196 and, as a result thereof, Build-A-Bear is desirous of obtaining an exclusive license within a field of use defined hereafter under U.S. Patent No. 6,109,196 and under any other divisional, continuation, continuation-in-part, reissued, or re-examined applications based upon U.S. Patent No. 6,109,196 and any patents that may result therefrom, including any foreign patents corresponding thereto and any extensions or additions thereof and Tonyco is willing to grant to Build-A-Bear such a license on the terms and conditions set forth below;


NOW, THEREFORE, in consideration of the mutual premises and covenants contained herein, the parties agree as follows:


ARTICLE I. DEFINITIONS


For the purposes of this Agreement, unless the context clearly or necessarily requires otherwise, the following terms shall have the meaning set forth below:


1.1 "Parties" shall mean both Tonyco and Build-A-Bear, and the
"Party" shall mean either of them.


1.2 "Licensed Patent" shall mean U.S. Patent No. 6,109,196
entitled METHOD OF CLOSING A STUFFED TOY. AFTER STUFFING" and
any foreign patents or foreign patent applications
corresponding thereto, any continuations,
continuations-in-part, divisionals, reissues, re-examinations,
extensions or additions thereof, and any improvements thereto.


Exclusive Patent License Agreement Tonyco, Inc. - Build-A-Bear Workshop, Inc. Page 2 of 9


1.3 "Licensed Method" shall mean any method or part thereof, the
manufacture, use, sale, offer for sale, or importation of
which is covered by one or more valid claims of the Licensed
Patent.


1.4 "Licensed Field of Use" shall mean any use of the Licensed
Method in retail stores or other Retail Venues wherein the
consumer selects the skin/shell toy for stuffing and the toy
is thereafter stuffed and closed in accordance with the
Licensed Method in the retail environment. Licensed Field of
Use will also include a kit including a skin/shell toy for
stuffing where said kit is provided in a retail store or
otherwise sold or provided to a consumer. Sales of any
plurality of unstuffed skin/shells alone or in kit form, to a
single customer, in a retail store or other Retail Venue,
shall fall within the Licensed Field of Use. Bulk sales of
unstuffed skin/shells alone or in kit form to retailers,
jobbers and wholesalers for stuffing by those parties for
resale in stuffed form shall not fall within the Licensed
Field of Use.


1.5 "Retail Venue(s)" shall mean, but is not limited to, any
location or medium for selecting a skin/shell toy for stuffing
including phone orders, mail order, catalogs,
on-line/internet/websites, kiosks, discount chains, buying
parties, buying clubs, direct marketing, door-to-door sales
and the like.


1.6 "Territory" shall mean worldwide.


1.7 "Improvement" shall mean any new, improved or modified method
or process relating to the Licensed Method.


ARTICLE 2. GRANT OF LICENSE


2.1 Tonyco hereby grants to Build-A-Bear an exclusive license, for
an initial term of three (3) years and with an option to
extend this exclusive license as set forth in Article 4 below,
with the right to sublicense, to manufacture, have
manufactured on its behalf, use, sell and offer to sell under
the Licensed Patent the Licensed Method in the Territory
within the Licensed Field of Use. Tonyco shall not grant other
licenses under the Licensed Patent within the Licensed Field
of Use. Build-A-Bear shall advise Tonyco in writing of the
grant of any sublicense under the Licensed Patent and shall
provide Tonyco with a copy of any such license.


2.2 Tonyco hereby retains the right to grant other licenses
outside of the Licensed Field of Use granted to Build-A-Bear.
However, in this regard, Tonyco further agrees that it will
not grant any rights to any other licensees under the Licensed
Patent for use outside of the Licensed Field of Use granted to
Build-A-Bear which will allow such licensees to directly or
indirectly sell or otherwise provide pre-laced unstuffed
skin/shell toys made in accordance with the teachings of the
Licensed Patent to competitors of Build-A-Bear or to anyone or
any entity who


Exclusive Patent License Agreement Tonyco, Inc. - Build-A-Bear Workshop, Inc. Page 3 of 9


will complete or allow completion of the stuffing process in a
retail store or other Retail Venue pursuant to the Licensed
Method (hereinafter collectively "Retail Operator") or to
anyone or entity who in turn will sell or distribute such
products to another party or parties in the chain of
distribution that will ultimately result in sale or
distribution to a Retail Operator. Tonyco will not grant
rights to such licensees which would allow them to directly or
indirectly sell or otherwise provide pre-laced unstuffed
skin/shell toys in kit form for ultimate purchase by
consumers. Tonyco further agrees that it will not sell
unstuffed skin/shell toys alone or in kit form to retailers.


ARTICLES. CONSIDERATION


3.1 In consideration of the rights and license granted to
Build-A-Bear by Tonyco under this Agreement, Build-A-Bear
agrees to pay Tonyco a total sum of seven-hundred
fifty-thousand dollars ($750,000) as follows:


3.1.1 Within ten (10) days from the execution of this
Agreement, at least two-hundred fifty-thousand
dollars ($250,000) of such total sum;


3.1.2 Within one (1) year from the execution of this
Agreement, at least two-hundred fifty-thousand
dollars ($250,000), or the remaining balance, of such
total sum; and


3.1.3 Within two (2) years from the execution of this
Agreement, the remaining balance of such total sum,
if any.


3.2 Build-A-Bear agrees that each payment provided in paragraphs
3.1.2 and 3.1.3 above shall include interest on the unpaid
balance of the total sum due at the rate of ten percent (10%)
per year simple interest until the total amount of
seven-hundred fifty-thousand dollars ($750,000) has been paid.


3.3 Build-A-Bear has the right to accelerate payments and pay
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