Document:

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                                                                    EXHIBIT 10.1

                               SEVERANCE AGREEMENT

         SEVERANCE AGREEMENT (the "Agreement") entered into among Devon Energy
Corporation (the "Company") and James L. Payne (the "Executive"), dated August
29, 2000.

         WHEREAS, the Company has entered into that certain Agreement and Plan
of Merger by and among Devon Energy Corporation, Devon Merger Corporation, and
Santa Fe Snyder Corporation ("SFS"), dated as of May 25, 2000 (the "Merger
Agreement"); and

         WHEREAS, the parties entering into this Agreement are contemplated
under the Merger Agreement; and

         WHEREAS, the Executive is a key management employee of SFS; and

         WHEREAS, it is in the best interests of the Company and its
shareholders to induce the Executive to remain in the employ of SFS through the
Closing (as defined in the Merger Agreement) and to then accept employment with
the Company; and

         WHEREAS, the Company desires to induce the Executive to accept
employment with the Company on the Closing by providing to him additional
amounts of compensation in the event of his termination of employment with the
Company following the Closing for the reasons specified herein; and

         WHEREAS, the Executive desires to continue his employment with SFS
through the Closing and to accept employment with the Company on the Closing as
provided herein.

         NOW, THEREFORE, in consideration of the mutual covenants hereinafter
set forth and for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the Executive and the Company hereby agree as
provided below.

         1. Operation of Agreement. The purpose of this Agreement is to provide
to the Executive additional amounts of compensation in the event of the
termination of his employment with the Company following the Closing and prior
to his 65th birthdate for the reasons specified herein. Accordingly, the Company
and the Executive have entered into this Agreement in accordance with the terms
and provisions herein to provide such protection to the Executive. For the
purposes of this Agreement, where the following capitalized words and phrases
appear in this Agreement, they shall have the meanings set forth below unless a
difference context is clearly expressed herein.

                  (a) Disability. "Disability" shall mean a mental or physical
impairment of the Executive that entitles the Executive to disability benefits
under a long-term disability plan of the Company or an affiliate.

                  (b) Good Reason.  "Good Reason" shall mean:

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                           (i) the assignment to the Executive of any duties
inconsistent in any respect with the Executive's position (including status,
office, titles and reporting requirements -- in this regard the Executive shall
report solely to the Chief Executive Officer of the Company), authority, duties,
or responsibilities as Vice Chairman of the Company responsible for all
international operations of the Company and its subsidiaries and affiliates, or
any other action by the Company which results in a diminution in the Executive's
position, compensation, authority, duties or responsibilities, excluding for
this purpose an isolated, insubstantial and inadvertent action not taken in bad
faith and which is remedied by the Company promptly after receipt of notice
thereof given by the Executive;

                           (ii) any failure by the Company to comply with any of
the provisions of this Agreement, other than an isolated, insubstantial and
inadvertent failure not occurring in bad faith and which is remedied by the
Company promptly after receipt of notice thereof given by the Executive;

                           (iii) the Company's requiring the Executive to be
based at any office or location other than that which he occupied with SFS at
the Effective Date, or within 25 miles of such location, except for periodic
travel reasonably required in the performance of the Executive's
responsibilities with the Company;

                           (iv) any purported termination by the Company of the
Executive's employment otherwise than as expressly permitted by this Agreement;
and

                           (v) any failure by the Company to comply with and
satisfy Section 11(a) of this Agreement.

         2. Agreement Not Employment Contract. This Agreement shall be
considered solely as a "severance agreement" obligating the Company to pay to
the Executive certain amounts of compensation in the event and only in the event
of his termination of employment on or after the date of the Closing for the
reasons and at the times specified herein. Apart from the obligation of the
Company to provide the amounts of additional compensation as provided in this
Agreement, the Company shall at all times retain the right to terminate the
employment of the Executive since the obligation of the Company to the Executive
shall only be considered as an employment relationship which exists between the
Company and the Executive which may be terminated at will by either party
subject to the obligation of the Company to make payment as provided in this
Agreement.

         3. Termination of Agreement. This Agreement shall terminate upon the
first to occur of the following events:

                  (a) Cause. The termination of the Executive's employment by
the Company for "Cause." For purposes of this Agreement, termination of the
Executive's employment by the Company for Cause shall mean termination for one
of the following reasons: (i) the conviction of the Executive of a felony by a
federal or state court of competent jurisdiction; (ii) an act or acts of
dishonesty taken by the Executive and intended to result in substantial personal
enrichment of the

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Executive at the expense of the Company or its shareholders; or (iii) the
Executive's "willful" failure to follow a direct lawful written order from the
Chief Executive Officer of the Company within the reasonable scope of the
Executive's duties, which failure is not cured by the Executive within 30 days
after the receipt of written notice thereof given by the Company. Further, for
purposes of this Section 3(a): (1) no act, or failure to act, on the Executive's
part shall be deemed "willful" unless done, or omitted to be done, by the
Executive not in good faith and without reasonable belief that the Executive's
action or omission was in the best interest of the Company, and (2) the
Executive shall not be deemed to have been terminated for Cause unless and until
there shall have been delivered to the Executive a copy of the resolution duly
adopted by the affirmative vote of not less than three-fourths of the entire
membership of the Board of Directors of the Company (the "Board") at a meeting
of the Board called and held for such purpose (after reasonable notice to the
Executive and an opportunity for the Executive, together with the Executive's
counsel, to be heard before the Board), finding that in the good faith opinion
of the Board the Executive was guilty of conduct set forth in clauses (i), (ii),
or (iii) above and specifying the particulars thereof in detail.

                  (b) Voluntary Termination. The Executive terminates his
employment other than for death, Good Reason or Disability.

                  (c) Age 65. The Executive attains the age of 65 years.

                  Notwithstanding any provision in this Agreement to the
contrary, termination of this Agreement shall not alter or impair any rights or
benefits of the Executive (or his Beneficiary) (as defined below) that have
arisen under this Agreement on or prior to such termination.

         4. Notice of Termination of Employment. Any termination of employment
by the Company for Cause or by the Executive for Good Reason or Disability shall
be communicated by Notice of Termination to the other party hereto given in
accordance with Section 13 of this Agreement. For purposes of this Agreement, a
"Notice of Termination" means a written notice which (i) indicates the specific
termination provision in this Agreement relied upon, (ii) sets forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination of the Executive's employment under the provision so indicated and
(iii) if the termination date of the Executive's employment is other than the
date of receipt of such notice, specifies the termination date (which date shall
be not more than 15 days after the giving of such notice).

         5. Obligations of the Company Upon Termination On or Following the
Acquisition Date. If, during the term of this Agreement, (i) the Company shall
terminate the Executive's employment for any reason other than for Cause, (ii)
the employment of the Executive shall be terminated by the Executive for Good
Reason or a Disability, or (iii) the Executive shall die, then the Company shall
pay to the Executive (or his Beneficiary) in a lump sum, in cash within 30 days
after the date of termination of employment, an amount equal to the sum of (1)
the Executive's highest annual base salary with the Company or SFS, and (2) a
bonus equal to 140% of such highest annual base salary.

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         6. Certain Additional Payments by the Company.

                  (a) Anything in this Agreement to the contrary
notwithstanding, in the event it shall be determined that any payment or
distribution to or for the benefit of the Executive, whether paid or payable or
distributed or distributable pursuant to the terms of this Agreement or
otherwise, including, by way of example and not by way of limitation,
acceleration of the date of vesting, payment, rate of payment or right to future
payment under any plan, program or arrangement of the Company (a "Payment"),
would be subject to the excise tax imposed by Section 4999 of the Internal
Revenue Code of 1986, as amended (the "Code"), or any interest or penalties with
respect to such excise tax (such excise tax, together with any such interest and
penalties, are hereinafter collectively referred to as the "Excise Tax"), then
the Executive shall be entitled to receive an additional payment (a "Gross-Up
Payment") in an amount such that after payment by the Executive of all taxes
(including any interest or penalties imposed with respect to such taxes),
including any Excise Tax, imposed upon the Gross-Up Payment, the Executive
retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon
the Payments.

                  (b) Subject to the provisions of Section 6(c), all
determinations required to be made under this Section 6, including whether a
Gross-Up Payment is required and the amount of such Gross-Up Payment, shall be
made by KPMG LLP (the "Accounting Firm") which shall provide detailed supporting
calculations both to the Company and the Executive within 15 business days of
the receipt of notice from the Executive that there has been a Payment which
would be subject to the Excise Tax, or such earlier time as is requested by the
Company. The initial Gross-Up payment, if any, as determined pursuant to this
Section 6(b), shall be paid to the Executive within five days of the receipt of
the Accounting Firm's determination. If the Accounting Firm determines that no
Excise Tax is payable by the Executive, it shall furnish the Executive with an
opinion that he has substantial authority not to report any Excise Tax on his
federal income tax return. Any determination by the Accounting Firm shall be
binding upon the Company and the Executive. As a result of the uncertainty in
the application of Section 4999 of the Code at the time of the initial
determination by the Accounting Firm hereunder, it is possible that Gross-Up
Payment which will not have been made by the Company should have been made
("Underpayment"), consistent with the calculations required to be made
hereunder. In the event that the Company exhausts its remedies pursuant to
Section 6(c) and the Executive thereafter is required to make a payment of any
Excise Tax, the Accounting Firm shall determine the amount of the Underpayment
that has occurred and any such Underpayment shall be promptly paid by the
Company to or for the benefit of the Executive.

                  (c) The Executive shall notify the Company in writing of any
claim by the Internal Revenue Service that, if successful, would require the
payment by the Company of the Gross-Up Payment. Such notification shall be given
as soon as practicable but not later than ten business days after the Executive
knows of such claim, and shall apprise the Company of the nature of such claim
and the date on which such claim is requested to be paid. The Executive shall
not pay such claim prior to the expiration of the 30-day period following the
date on which the Executive gives such notice to the Company (or such shorter
period ending on the date that any payment of taxes which respect to such claim
is due). If the Company notifies the Executive in writing prior to the
expiration of such period that it desires to contest such claim, the Executive
shall:

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                           (i) give the Company any information reasonably
requested by the Company relating
to such claim,

                           (ii) take such action in connection with contesting
such claim as the Company shall reasonably request in writing from time to time,
including, without limitation, accepting legal representation with respect to
such claim by an attorney reasonably selected by the Company,

                           (iii) cooperate with the Company in good faith in
order effectively to contest such claim, and

                           (iv) permit the Company to participate in any
proceedings relating to such claim;

provided, however, that the Company shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest and shall indemnify and hold the Executive harmless, on an
after-tax basis, for any Excise Tax or other taxes, including interest and
penalties with respect thereto, imposed as a result of such representation and
payment of costs and expenses. Without limitation on the foregoing provisions of
this Section 6(c), the Company shall control all proceedings taken in connection
with such contest and, at its sole option, may pursue or forgo any and all
administrative appeals, proceedings, hearings and conferences with the taxing
authority in respect of such claim and may, at its sole option, either direct
the Executive to pay the tax claimed and sue for a refund or contest the claim
in any permissible manner. The Executive agrees to prosecute such contest to a
determination before any administrative tribunal, in a court of initial
jurisdiction and in one or more appellate courts, as the Company shall
determine; provided, however, that if the Company directs the Executive to pay
such claim and sue for a refund, the Company shall advance the amount of such
payment to the Executive, on an interest-free basis and shall indemnify and hold
the Executive harmless, on an after-tax basis, from any Excise Tax or other
taxes, including interest or penalties with respect thereto, imposed with
respect to such advance or with respect to any imputed income with respect to
such advance; and further provided that any extension of the statue of
limitations relating to payment of taxes for the taxable year of the Executive
with respect to which such contested amount is claimed to be due is limited
solely to such contested amount. Furthermore, the Company's control of the
contest shall be limited to issues with respect to which a Gross-Up Payment
would be payable hereunder and the Executive shall be entitled to settle or
contest, as the case may be, any other issue raised by the Internal Revenue
Service or any other taxing authority.

                  (d) If, after the receipt by the Executive of an amount
advanced by the Company pursuant to Section 6(c), the Executive becomes entitled
to receive any refund with respect to such claim, the Executive shall (subject
to the Company's complying with the requirements of Section 6(c)) promptly pay
to the Company the amount of such refund (together with any interest paid or
credited thereon after taxes applicable thereto). If, after the receipt by

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the Executive of an amount advanced by the Company pursuant to Section 6(c), a
determination is made that the Executive shall not be entitled to any refund
with respect to such claim and the Company does not notify the Executive in
writing of its intent to contest such denial or refund prior to the expiration
of thirty days after such determination, then such advance shall be forgiven and
shall not be required to be repaid and the amount of such advance shall offset,
to the extent thereof, the amount of Gross-Up Payment required to be paid.

         7. Non-exclusivity of Rights. Nothing in this Agreement shall prevent
or limit the Executive's participation in any benefit, bonus, incentive or other
plan or program provided by the Company or any of its affiliated companies and
for which the Executive may qualify, nor shall anything herein limit or
otherwise affect such rights as the Executive may have under any stock option or
other agreements with the Company or any of its affiliated companies. Amounts
which are vested benefits or which the Executive is otherwise entitled to
receive under any plan or program of the Company or any of its affiliated
companies at or subsequent to the date of termination of employment shall be
payable in accordance with such plan or program.

         8. Full Settlement. The Company's obligation to make the payments
provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any circumstances, including, without
limitation, any set-off, counterclaim, recoupment, defense or other right which
the Company may have against the Executive or others. In no event shall the
Executive be obligated to seek other employment by way of mitigation of the
amounts payable to the Executive under any of the provisions of this Agreement.

         9. Confidential Information.

                  (a) Requirement of Executive. The Executive shall hold in a
fiduciary capacity for the benefit of the Company all secret or confidential
information, knowledge or data relating to the Company or any of its affiliated
companies, and their respective businesses, which shall have been obtained by
the Executive during the Executive's employment by the Company or any of its
affiliated companies and which shall not be public knowledge (other than by acts
by the Executive or his representatives in violation of this Agreement). After
termination of the Executive's employment with the Company, the Executive shall
not, without the prior written consent of the Company, communicate or divulge
any such information, knowledge or data to anyone other than the Company and
those designed by it. In no event shall an asserted violation of the provisions
of this Section 9 constitute a basis for deferring or withholding any amounts
otherwise payable to the Executive under this Agreement.

                  (b) Additional Remedies. The Executive agrees that the remedy
at law for any breach or threatened breach of any covenant contained in this
Section 9 may be inadequate, and that the Company, in addition to such other
remedies as may be available to it, in law or in equity, shall be entitled to
injunctive relief without bond or other security pending arbitration under
Section 10.

         10. Arbitration: Legal Fees and Expenses. The parties agree that the
Executive's employment and this Agreement relate to interstate commerce, and
that any disputes, claims or

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controversies between the Executive and the Company which may arise out of or
relate to the Executive's employment relationship or this Agreement shall be
settled by arbitration. This agreement to arbitrate shall survive the
termination of this Agreement. Any arbitration shall be in accordance with the
Rules of the American Arbitration Association and shall be undertaken pursuant
to the Federal Arbitration Act. Arbitration will be held in Oklahoma City,
Oklahoma unless the parties mutually agree on another location. The decision of
the arbitrator(s) will be enforceable in any court of competent jurisdiction.
The parties agree that punitive, liquidated or indirect damages shall not be
awarded by the arbitrator(s). Nothing in this agreement to arbitrate, however,
shall preclude the Company from obtaining injunctive relief from a court of
competent jurisdiction prohibiting any on-going breaches by Executive of this
Agreement including, without limitation, violations of Section 9. If any contest
or dispute shall arise between the Company and the Executive regarding any
provision of this Agreement, the Company shall reimburse the Executive for all
legal fees and expenses reasonably incurred by the Executive in connection with
such contest or dispute, but only if the Executive is successful in respect of
one or more of the Executive's material claims or defenses brought, raised or
pursued in connection with such contest or dispute. Such reimbursement shall be
made as soon as practicable following the resolution of such contest or dispute
to the extent the Company receives reasonable written evidence of such fees and
expenses.

         11. Successors and Binding Effect.

                  (a) Successor Must Assume Agreement. The Company will require
any successor (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or assets of the
Company to expressly assume and agree to perform this Agreement in the same
manner and to the same extent that the Company would be required to perform it
if no such succession had taken place. If the Company fails to obtain such
assumption and agreement prior to the effectiveness of any such succession, this
Agreement shall nevertheless determine the Executive's entitlement to payment
hereunder. As used in this Agreement, "Company" shall mean the Company as herein
before defined and any successor to its business and/or assets as aforesaid
which assumes and agrees to perform this Agreement by operation of law or
otherwise.

                  (b) Binding Effect. This Agreement shall inure to the benefit
of and be enforceable by the Executive's personal or legal representatives,
executors, administrators, successors, heirs, distributees, devisees and
legatees. If the Executive should die while any amount would still be payable to
the Executive at the time of his death, all such amounts, unless otherwise
provided herein, shall be paid in accordance with the terms of this Agreement to
the Executive's devisee, legatee or other designee or, if there is no such
designee, to the Executive's estate (his "Beneficiary").

         12. Applicable Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Oklahoma, without reference to
principles of conflict of laws.

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         13. Notices. All notices and other communications hereunder shall be in
writing and shall be given by hand delivery to the other party, by registered or
certified mail, return receipt requested, or by overnight express delivery
service, postage prepaid, addressed as follows:

                  If to the Executive:

                  James L. Payne
                  840 Gessner, Suite 1400
                  Houston, TX 77024

                  If to the Company:

                  Devon Energy Corporation
                  20 North Broadway, Suite 1500
                  Oklahoma City, Oklahoma 73102-8260
                  Attn: President and Chief Executive Officer

or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.

         14. Alienation. The rights and benefits of, and payments to, the
Executive (or his beneficiary in the event of his death) under this Agreement
may not be anticipated, assigned (either at law or in equity), alienated or
subject to attachment, garnishment, levy, execution or other legal or equitable
process except as required by law. Any attempt by the Executive to anticipate,
alienate, assign, sell, transfer, pledge, encumber or charge the same shall be
void. The benefits of the Executive shall not in any manner be subject to the
debts, contracts, liabilities, engagements or torts of the Executive (or his
beneficiary in the event of his death).

         15. Right as General Creditor. The Executive acknowledges this
Agreement represents the Company's unfunded and unsecured obligation to pay
benefits set forth above. No provision of this Agreement shall be construed to
give the Executive any right except as a general creditor of the Company.

         16. Taxes to be Withheld. The Company may withhold from any amounts
payable under this Agreement such federal, state or local taxes as shall be
required to be withheld pursuant to any applicable law or regulation.

         17. Entire Agreement. This Agreement constitutes the entire agreement
among the parties with respect to the subject matter hereof and supersedes any
and all prior or contemporaneous oral and prior written agreements and
understandings.

         18. Amendment. This Agreement may not be amended, and no provision
hereof shall be waived, except by a writing signed by all the parties to this
Agreement, or, in the case of a waiver, by the party waiving compliance
therewith, which states that it is intended to amend or waive a provision of
this Agreement. Any waiver of any rights or failure to act in a specific
instance shall relate only to such instance and shall not be construed as an
agreement to waive any rights or failure to act in any other instance, whether
or not similar.

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         19. Enforceability. Should any provision of this Agreement be
unenforceable or prohibited by an applicable law, this Agreement shall be
considered divisible as to such provision which shall be inoperative, and the
remainder of this Agreement shall be valid and binding as though such provision
were not included herein.

         20. Counterparts. This Agreement may be executed in two or more
counterparts with the same effect as if the signatures to all such counterparts
were upon the same instrument, and all such counterparts shall constitute but
one instrument.

         21. Headings. All headings in this Agreement are for convenience only
and are not intended to affect the meaning of any provision hereof.

         IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.

"EXECUTIVE"                             /s/ James L. Payne
                                        ------------------
                                        James L. Payne

"COMPANY"                        DEVON ENERGY CORPORATION

                                 By:    /s/ J. Larry Nichols
                                        ---------------------
                                        J. Larry Nichols
                                        President and Chief Executive Officer

                                       9<PAGE>   1
EXHIBIT 10(w)

NOTE: THE OMITTED PORTIONS OF THIS DOCUMENT MARKED WITH AN ASTERISK ARE SUBJECT
      TO A CONFIDENTIAL TREATMENT REQUEST AND HAVE BEEN FILED SEPARATELY WITH
      THE SECURITIES AND EXCHANGE COMMISSION

                                LICENSE AGREEMENT

Date:    August 1, 2000

Re:      CONSUMER PRODUCTS LICENSE - DISNEY PROPERTIES

This license agreement, including one or more schedules ("Schedule") attached
hereto (such agreement and each such Schedule, jointly and severally, depending
on context, referred to herein as "Agreement"), is entered into by and between
Disney Enterprises, Inc. ("Disney"), with a principal place of business at 500
South Buena Vista Street, Burbank, California 91521, and THE FIRST YEARS, INC.
("Licensee"), with its principal place of business at One Kiddie Drive, Avon, MA
02322. Disney and Licensee agree as follows:

1.   MEANING OF TERMS

     A.   "LICENSED MATERIAL" means the graphic representations of the
          following:

          Such characters and depictions of such characters, and such still
          scenes and accompanying design elements, as may be designated by
          Disney, from those Disney properties as are licensed hereunder (the
          "Properties") and are the subject of separate written Schedule(s)
          attached hereto and incorporated herein by this reference, pursuant to
          such specifications as are set forth in the applicable Schedule(s) for
          each individual Property licensed hereunder. At the time of execution
          of this Agreement, there are three Schedules attached hereto.

     B.   "TRADEMARKS" (which is deemed to read "Trade marks" if applicable)
          means "WALT DISNEY", "DISNEY", the representations of Licensed
          Material included in Paragraph 1.A. above, the brand name(s) (if any)
          and logo(s) (if any) of the Properties in which Licensed Material
          included in Paragraph 1.A. above appears, and such other marks as are
          licensed hereunder, pursuant to the specifications stated in the
          applicable Schedule for each such Property.

     C.   "ARTICLES" means the items on or in connection with which the Licensed
          Material, the Trademarks, or both, are reproduced or used, and
          includes each and every stock keeping unit ("SKU") of each Article as
          are specified on the applicable Schedule for each Property licensed
          hereunder.

<PAGE>   2
The First Years, Inc.
CONSUMER PRODUCTS LICENSE - DISNEY PROPERTIES
Agreement dated August 1, 2000
Page 2

     D.   "MINIMUM PER ARTICLE ROYALTY" means for each Article identified herein
          which is sold the sum indicated herein:

               None.

     E.   "TERM" of this Agreement means the period commencing as of August 1,
          2000, and ending upon the expiration of the latest Schedule entered
          into hereunder. The term applicable for each specific Property
          licensed hereunder shall be the period commencing as of the Effective
          Date and ending on the Termination Date stated on the applicable
          Schedule for each such Property.

     F.   "TERRITORY" means the countries, regions or other geographic
          designations specified on each applicable Schedule.

     G.   "ROYALTIES" means a copyright royalty (no royalty is chargeable for
          use of the Trademarks) in the amounts set forth below in Paragraphs
          1.G.(1)(a), (b), and (c) and Royalties shall be further governed by
          the provisions contained in Paragraphs 1.G.(2)-(6):

             (1)(a) A royalty in the amount set forth on the applicable
                    Schedule for each Property for "F.O.B. In Sales" of
                    Articles. F.O.B. In Sales occur when Articles are shipped by
                    or on behalf of Licensee from a location within or outside
                    the Territory for delivery to a customer located in the
                    Territory; or

                (b) A royalty in the amount set forth on the applicable Schedule
                    for each Property for "F.O.B. Out Sales" of Articles. F.O.B.
                    Out Sales occur when Licensee's customer located in the
                    Territory takes title to the Articles outside the Territory,
                    bears the risk of loss of Articles manufactured and shipped
                    to the customer from outside the Territory, or both; or

                (c) if a Minimum Per Article Royalty has been specified in
                    Paragraph 1.D. above, and it would result in a higher
                    royalty to be paid for the Articles, Licensee agrees to pay
                    the higher royalty amount.

             (2)    The sums paid to Disney as Royalties on any sales to
                    Licensee's Affiliates shall be no less than the sums paid on
                    sales to customers not affiliated with Licensee.

<PAGE>   3
The First Years, Inc.
CONSUMER PRODUCTS LICENSE - DISNEY PROPERTIES
Agreement dated August 1, 2000
Page 3

             (3)    All sales of Articles shipped to a customer outside the
                    Territory pursuant to a distribution permission shall bear a
                    Royalty at the rate for F.O.B. Out Sales. However, sales of
                    Articles to Disney's Affiliates outside the Territory shall
                    bear a Royalty at the rate for F.O.B. In Sales.

             (4)    No Royalties are payable on the mere manufacture of
                    Articles.

             (5)    The full Royalty percentage shall be payable on close-out or
                    other deep discount sales of Articles, including sales to
                    employees.

             (6)    Royalties reported on sales of Articles which have been
                    returned to Licensee for credit or refund and on which a
                    refund has been made or credit memo issued may be credited
                    against Royalties due. The credit shall be taken in the
                    Royalty Payment Period in which the refund is given or
                    credit memo issued. Unused credits may be carried forward,
                    but in no event shall Licensee be entitled to a refund of
                    Royalties.

     H.   "NET INVOICED BILLINGS" means the following:

          (1)  actual invoiced billings (i.e., sales quantity multiplied by
               Licensee's selling price) for Articles sold, less "Allowable
               Deductions" as hereinafter defined.

          (2)  The following are not part of Net Invoiced Billings: invoiced
               charges for transportation of Articles within the Territory which
               are separately identified on the sales invoice, and sales taxes.

     I.   "ALLOWABLE DEDUCTIONS" means the following:

          (1)  volume discounts, and other discounts from the invoice price (or
               post-invoice credits) unilaterally imposed in the regular course
               of business by Licensee's customers, so long as Licensee
               documents such discounts (or credits) to Disney's satisfaction.
               In the event a documented unilateral discount (or credit) is
               taken with respect to combined sales of Articles and other
               products not licensed by Disney, and Licensee cannot document the
               portion of the discount (or credit) applicable to the Articles,
               Licensee may apply only a pro rata portion of the discount (or
               credit) to the Articles. Unilateral discounts or credits are
               never deductible if they represent items listed below in
               Paragraph 1.I.(2).

<PAGE>   4
The First Years, Inc.
CONSUMER PRODUCTS LICENSE - DISNEY PROPERTIES
Agreement dated August 1, 2000
Page 4

          (2)  The following are not Allowable Deductions, whether granted on
               sales invoices or unilaterally imposed as discounts or as
               post-invoice credits: cash discounts granted as terms of payment;
               early payment discounts; allowances or discounts relating to
               advertising; mark down allowances; new store allowances;
               defective goods allowances or allowances taken by customers in
               lieu of returning goods; costs incurred in manufacturing,
               importing, selling or advertising Articles; freight costs
               incorporated in the selling price; and uncollectible accounts.

     J.   "ROYALTY PAYMENT PERIOD" means each calendar quarterly period during
          the Term and during the sell-off period, if granted.

     K.   "ADVANCE" means the non-refundable sum(s), plus any applicable goods
          and services tax or other value added tax ("VAT"), payable by the
          date(s) indicated in Paragraphs 1.K.(1) and (2) below, as advances on
          Royalties to accrue in the following period(s):

               *
     L.   "GUARANTEE" means the sum(s), plus VAT if applicable, set forth in
          Paragraphs 1.L.(1) and (2) below, which Licensee guarantees to pay as
          minimum Royalties on Licensee's cumulative sales of Articles for the
          stated period. Any shortfall shall be payable with the Royalty
          statement due at the end of the applicable Guarantee period

               *
     M.   "SAMPLES" means the number of samples stated in the applicable
          Schedule for each Property from the first production run of each
          supplier of each SKU of each Article.

     N.   "PROMOTION COMMITMENT" means the following sum(s) which Licensee
          agrees to spend in the following way(s), in accordance with the
          provisions of Paragraph 16.A.:

               *

     O.   "MARKETING DATE" means the date(s) specified on the applicable
          Schedule for each Property by which the specified Article(s) shall be
          available for purchase by the public at the retail outlets authorized
          pursuant to Paragraph 2.A.

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     P.   "AFFILIATE" means, with regard to Licensee, any corporation or other
          entity which directly or indirectly controls, is controlled by, or is
          under common control with Licensee; with regard to Disney, "Affiliate"
          means any corporation or other entity which directly or indirectly
          controls, is controlled by, or is under common control with Disney.
          "Control" of an entity shall mean possession, directly or indirectly,
          of power to direct or cause the direction of management or policies of
          such entity, whether through ownership of voting securities, by
          contract or otherwise.

     Q.   "LAWS" means any and all applicable laws, rules, and regulations,
          including but not limited to, local and national laws, rules and
          regulations, treaties, voluntary industry standards, association laws,
          codes or other obligations pertaining to the grant and exercise of the
          license granted herein and to any of Licensee's activities under this
          Agreement, including but not limited to those applicable to any tax,
          and to the manufacture, pricing, sale, or distribution of the
          Articles.

     R.   "RETAILER" means independent and chain retail outlets which have
          storefronts and business licenses, and which customers walk into, not
          up to; "WHOLESALER" means a seller of products to retailers, not
          consumers, and includes the term "distributor"; "ETAILER" means
          internet-based retailers that sell products to consumers and which
          have few or no physical store locations. The following do not qualify
          as authorized sales outlets for Articles under this Agreement under
          any circumstances: swap meets, flea markets, street peddlers,
          unauthorized kiosks, and the like.

     S.   "MANUFACTURER" means any of Licensee's third-party manufacturers,
          factories, suppliers and facilities (and their sub-manufacturers,
          factories, suppliers and facilities), which reproduce or use the
          Licensed Material, the Trademarks, or both, on Articles, components of
          Articles, labels, hang-tags, packaging, or any other item related to
          the Articles, or which assemble the Articles, or which assemble a
          final product which includes one or more Articles.

     T.   "SCHEDULE" means each separate "Schedule to License Agreement" entered
          into between Disney and Licensee on a Property-by-Property (or other
          designated) basis, the terms of each of which are hereby incorporated
          herein by reference and made a part hereof as though fully set forth.
          The Schedule for each Property licensed hereunder shall state any and
          all contract terms as are specific to such Property.

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2.   RIGHTS GRANTED

     A.   (1)  In consideration for Licensee's promise to pay and Licensee's
               payment of all monetary obligations required hereunder, and
               Licensee's performance of all obligations required of Licensee
               hereunder for each Property that becomes the subject of a
               separate Schedule entered into between Disney and Licensee,
               Disney grants Licensee the non-exclusive right, during the term
               of the relevant Schedule for each subject Property, and only
               within the Territory, to reproduce the subject Licensed Material
               only on or in connection with the Articles, to use such specified
               Trademarks and uses thereof as may be approved when each SKU of
               the Articles is approved and only on or in connection with the
               Articles, and to manufacture, distribute for sale and sell the
               Articles as authorized by this Paragraph 2.

          (2)  Licensee will sell the Articles only to authorized customers in
               the Territory as specified herein or in the relevant Schedule for
               the subject Property, as applicable.

          (3)  Licensee may not sell the Articles by direct marketing methods,
               which includes but is not limited to, direct mail and
               door-to-door solicitation. Licensee may not sell the Articles to
               Retailers selling merchandise on a duty-free basis, or to
               Wholesalers for resale to such Retailers, unless such Retailer or
               Wholesaler has a then-current license agreement with Disney or
               any of Disney's Affiliates permitting it to make such duty-free
               sales.

          (4)  Licensee may sell the Articles to authorized customers for resale
               through the pre-approved mail order catalogs listed on the
               Catalog Schedule(s) to this Agreement, and Licensee shall pay
               Royalties on such sales at the rate specified for Retailers in
               the applicable Schedule.

          (5)  Licensee may sell the Articles to authorized Etailers for resale
               to consumers by computer online selling, and Licensee shall pay
               Royalties on such sales at the rate specified for Retailers in
               the applicable Schedule. From time to time, Licensee may request
               from Disney the then current list of pre-approved Etailers, which
               are the only Etailers to which Licensee is authorized to sell
               Articles. Authorized Etailers may display, promote and sell
               Articles on their online venues, subject to Disney's "eCommerce
               Creative

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               Requirements and Prohibitions." Sales may only be made to
               consumers physically located in the Territory.

          (6)  All rights not expressly granted to Licensee herein are reserved
               to Disney.

     B.   Unless Disney consents in writing, Licensee shall not sell or
          otherwise provide Articles for use as premiums (including those in
          purchase-with-purchase promotions), promotions, give-aways,
          fund-raisers, or entries in sweepstakes, or through unapproved direct
          marketing methods, including but not limited to, home shopping
          television programs, or to customers for inclusion in another product.
          Licensee shall not sell Articles to any customer which Licensee knows
          or reasonably should know engages in illegal business practices or
          ethically questionable distribution methods. If Licensee wishes to
          sell the Articles to customers for resale through mail order catalogs
          other than those listed on the Catalog Schedule hereto, Licensee must
          obtain Disney's prior written consent in each instance. However,
          Licensee may solicit orders by mail from Wholesalers or Retailers
          authorized herein or pursuant to the applicable Schedule for the
          subject Property, and Licensee may sell to Retailers which sell
          predominantly at retail, but which include the Articles in their mail
          order catalogs, or otherwise sell Articles by direct marketing methods
          as well as at retail.

     C.   In addition to the online selling permitted by authorized Etailers,
          Articles approved by Disney may be displayed and promoted on
          Disney-controlled on-line venues, only within the Territory. Articles
          approved by Disney also may be displayed and promoted on Licensee's
          own on-line venue, and may be displayed, promoted and sold on
          authorized Retailers' on-line venues, subject to Disney's applicable
          policies and guidelines; however, Licensee must obtain Disney's prior
          written approval of all creative and editorial elements of such uses,
          in accordance with the provisions of Paragraph 7 of this Agreement. If
          Licensee wishes to sell the Articles to any Etailers other than those
          listed on the pre-approved list provided by Disney, Licensee must
          obtain Disney's prior written consent in each instance. Any Etailer
          which violates Disney's eCommerce policies shall be deleted from the
          list of approved Etailers, and Licensee may not sell Articles to such
          Etailer after notice from Disney.

     D.   Unless Disney consents in writing, Licensee shall not give away or
          donate Articles to Licensee's accounts or other persons for the
          purpose of promoting sales of Articles, except for minor quantities or
          samples which are not for onward distribution.

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     E.   Nothing contained herein shall preclude Licensee from selling Articles
          to Disney or to any of Disney's Affiliates, or to Licensee's or
          Disney's employees, subject to the payment to Disney of Royalties on
          such sales.

     F.   Disney further grants Licensee the non-exclusive right to reproduce
          the Licensed Material and to use the approved Trademarks, only within
          the Territory, during the term of the relevant Schedule for each
          subject Property, on containers, packaging and display material for
          the Articles, and in advertising for the Articles.

     G.   Nothing contained in this Agreement shall be deemed to imply any
          restriction on Licensee's freedom and that of Licensee's customers to
          sell the Articles at such prices as Licensee or they shall determine.

     H.   Licensee recognizes and acknowledges the vital importance to Disney of
          the characters and other proprietary material Disney owns and creates,
          and the association of the Disney name with them. In order to prevent
          the denigration of Disney's products and the value of their
          association with the Disney name, and in order to ensure the
          dedication of Licensee's best efforts to preserve and maintain that
          value, Licensee agrees that, during the Term and any extension hereof,
          Licensee will not manufacture or distribute any merchandise embodying
          or bearing any artwork or other representation which Disney
          determines, in Disney's reasonable discretion, is confusingly similar
          to Disney's characters or other proprietary material.

3.   ADVANCE

     A.   Licensee agrees to pay the Advance, which shall be on account of
          Royalties to accrue during the Term , and only with respect to sales
          in the Territory; provided, however, that if any part of the Advance
          is specified as applying to any period less than the entire Term ,
          such part shall be on account of Royalties to accrue during such
          lesser period only. If said Royalties should be less than the Advance,
          no part of the Advance shall be repayable.

     B.   Royalties accruing during any sell-off period or extension of the Term
          or any term of any relevant Schedule shall not be offset against the
          Advance for any given Property unless otherwise agreed in writing.
          Royalties accruing during any extension of the Term or any other term
          shall be offset only against an advance paid with respect to such
          extended term.

     C.   In no event shall Royalties accruing by reason of any sales to Disney
          or any of Disney's Affiliates or by reason of sales outside the
          Territory pursuant to a

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          distribution permission be offset against the Advance for any given
          Property or any subsequent advance.

4.   GUARANTEE

     A.   Licensee shall, with Licensee's statement for each Royalty Payment
          Period ending on a date indicated in Paragraph 1.L. hereof defining
          "Guarantee" and in each relevant Schedule, or upon termination if the
          Agreement or the relevant Schedule for the subject Property is
          terminated prior to the end of the Term or the stated term of such
          Schedule, as applicable, pay Disney the amount, if any, by which
          cumulative Royalties paid on a Property-by-Property basis with respect
          to sales in the Territory during any period or periods covered by the
          subject Guarantee provision, or any Guarantee provision contained in
          any agreement extending the term hereof, fall short of the amount of
          the Guarantee for such period.

     B.   Advances for a Property applicable to Royalties due on sales in the
          period to which the Guarantee for said Property relates apply towards
          meeting the Guarantee for that Property.

     C.   In no event shall Royalties paid with respect to sales to Disney or to
          any of Disney's Affiliates, or with respect to sales outside the
          Territory pursuant to a distribution permission, apply towards the
          meeting of any Guarantee or any subsequent guarantee. If any sell-off
          period is granted under this Agreement, Royalties generated from sales
          during such period may not be applied towards the meeting of any
          Guarantee.

5.   PRE-PRODUCTION APPROVALS

     A.   As early as possible, and in any case before commercial production of
          any Article, Licensee shall submit to Disney for Disney's review and
          written approval (to utilize such materials in preparing a
          pre-production sample) all concepts, all preliminary and proposed
          final artwork, and all three-dimensional models which are to appear on
          or in any and all SKUs of the Article. Thereafter, Licensee shall
          submit to Disney for Disney's written approval a pre-production sample
          of each SKU of each Article. Disney shall endeavor to respond to such
          requests within a reasonable time, but such approvals should be sought
          as early as possible in case of delays. In addition to the foregoing,
          as early as possible, and in any case no later than sixty (60) days
          following written conceptual approval, Licensee shall supply to Disney
          for Disney's use for internal purposes, a mock-up, prototype or
          pre-production sample of each SKU of each Article on or in connection
          with

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          which the Licensed Material is used. Licensee acknowledges that Disney
          may not approve concepts or artwork submitted near the end of the term
          of the relevant Schedule for the subject Property, or concepts or
          artwork perceived to be for selling periods beyond the applicable
          Termination Date. Any pre-production approval Disney may give will not
          constitute or imply a representation or belief by Disney that such
          materials comply with any applicable Laws.

     B.   Approval or disapproval shall lie solely in Disney's discretion, and
          any SKU of any Article not so approved in writing shall be deemed
          unlicensed and shall not be manufactured or sold. If any unapproved
          SKU of any Article is being sold, Disney may, together with other
          remedies available to Disney, including but not limited to, immediate
          termination of this Agreement, by written notice require such SKU of
          such Article to be immediately withdrawn from the market. Any
          modification of any SKU of an Article, including, but not limited to,
          change of materials, color, design or size of the representation of
          Licensed Material must be submitted in advance for Disney's written
          approval as if it were a new SKU of an Article. Approval of any SKU of
          an Article which uses particular artwork does not imply approval of
          such artwork for use with a different Article. The fact that artwork
          has been taken from a Disney publication or a previously approved
          Article does not mean that its use will necessarily be approved in
          connection with an Article licensed hereunder.

     C.   If Licensee submits for approval artwork from an article or book
          manufactured or published by another licensee of Disney's or of any of
          Disney's Affiliates, Licensee must advise Disney in writing of the
          source of such artwork. If Licensee fails to do so, any approval which
          Disney may give for use by Licensee of such artwork may be withdrawn
          by giving Licensee written notice thereof, and Licensee may be
          required by Disney not to sell Articles using such artwork.

     D.   Licensee is responsible for the consistent quality and safety of the
          Articles and their compliance with applicable Laws. Disney will not
          unreasonably object to any change in the design of an Article or in
          the materials used in the manufacture of the Article or in the process
          of manufacturing the Articles which Licensee advises Disney in writing
          is intended to make the Article safer or more durable.

     E.   If Disney has supplied Licensee with forms for use in applying for
          approval of artwork, models, pre-production and production samples of
          Articles,

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          Licensee shall use such forms when submitting anything for Disney's
          approval.

     F.   If and as applicable, the likenesses and product application of the
          characters used on or in connection with the Articles are subject to
          any third party approvals Disney deems necessary to obtain, Disney
          will act as the liaison with such third parties during the approval
          process.

6.   APPROVAL OF PRODUCTION SAMPLES

     A.   Before shipping an Article to any customer, Licensee agrees to furnish
          to Disney, from the first production run of each supplier of each of
          the Articles, for Disney's approval of all aspects of the Article in
          question, the number of Samples with packaging which is hereinabove
          set forth, which shall conform to the approved artwork,
          three-dimensional models and pre-production sample. Approval or
          disapproval of the artwork as it appears on any SKU of the Article, as
          well as of the quality of the Article, shall lie in Disney's sole
          discretion and may, among other things, be based on unacceptable
          quality of the artwork or of the Article as manufactured. Any SKU of
          any Article not so approved shall be deemed unlicensed, shall not be
          sold and, unless otherwise agreed by Disney in writing, shall be
          destroyed. Such destruction shall be attested to in a certificate
          signed by one of Licensee's officers. Production samples of Articles
          for which Disney has approved a pre-production sample shall be deemed
          approved, unless within twenty (20) days of Disney's receipt of such
          production sample Disney notifies Licensee to the contrary. Any
          approval of a production sample attributable to Disney will not
          constitute or imply a representation or belief by Disney that such
          production sample complies with any applicable Laws.

     B.   Licensee agrees to make available at no charge such additional samples
          of any or all SKUs of each Article as Disney may from time to time
          reasonably request for the purpose of comparison with earlier samples,
          or for Disney's anti-piracy efforts, or to test for compliance with
          applicable Laws, and to permit Disney to inspect Licensee's
          manufacturing operations and testing records (and those of Licensee's
          Manufacturers) for the Articles in accordance with Paragraphs 11 and
          24.

     C.   Licensee acknowledges that Disney may disapprove any SKU of an Article
          or a production run of any SKU of an Article because the quality is
          unacceptable to Disney, and accordingly, Disney recommends that
          Licensee submit production samples to Disney for approval before
          committing to a

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          large original production run or to purchase a large shipment from a
          new supplier.

     D.   No modification of an approved production sample shall be made without
          Disney's further prior written approval. All SKUs of Articles being
          sold must conform in all respects to the approved production sample.
          It is understood that if in Disney's reasonable judgment the quality
          of any SKU of an Article originally approved has deteriorated in later
          production runs, or if the SKU has otherwise been altered, Disney may,
          in addition to other remedies available to Disney, by written notice
          require such SKU of the Article to be immediately withdrawn from the
          market.

     E.   The rights granted hereunder do not permit the sale of "seconds" or
          "irregulars". All Articles not meeting the standard of approved
          samples shall be destroyed or all Licensed Material and Trademarks
          shall be removed or obliterated therefrom.

     F.   Licensee is responsible for the consistent quality and safety of the
          Articles and their compliance with applicable Laws. Disney will not
          unreasonably object to any change in the design of an Article or in
          the materials used in the manufacture of the Article or in the process
          of manufacturing the Articles which Licensee advises Disney in writing
          is intended to make the Article safer or more durable.

     G.   Disney shall have the right, by written notice to Licensee, to require
          modification of any SKU of any Article approved by Disney under this
          or any previous agreement between the parties pertaining to Licensed
          Material. Likewise, if the Term of this Agreement is extended by
          mutual agreement, Disney shall have the right, by written notice to
          Licensee, to require modification of any SKU of any Article approved
          by Disney under this Agreement. It is understood that there is no
          obligation upon either party to extend the Agreement.

     H.   If Disney notifies Licensee of a required modification under Paragraph
          6.G. with respect to any SKU of a particular Article, such
          notification shall advise Licensee of the nature of the changes
          required, and Licensee shall not accept any order for any such Article
          until the subject SKU has been resubmitted to Disney with such changes
          and Licensee has received Disney's written approval of the Article as
          modified. However, Licensee may continue to distribute Licensee's
          inventory of the previously approved Articles until such inventory is
          exhausted (unless such Articles are dangerously defective or are
          alleged to be violative of any third party rights, as determined by
          Disney).

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     I.   Upon Disney's request, Licensee agrees to give Disney written notice
          of the first ship date for each Article.

     J.   If Disney has inadvertently approved a concept, pre-production sample,
          or production sample of a product which is not included in the
          Articles under this Agreement, or if Disney has inadvertently approved
          an Article using artwork or trademarks not included in the Agreement,
          such approval may be revoked at any time without any obligation
          whatsoever on Disney's part to Licensee. Any such product as to which
          Disney's approval is revoked shall be deemed unauthorized and shall
          not be distributed or sold by or for Licensee.

7.   APPROVAL OF PACKAGING, PROMOTIONAL MATERIAL, AND ADVERTISING

     A.   All containers, packaging, display material, promotional material,
          catalogs, and all advertising, including but not limited to,
          television advertising and press releases, for Articles must be
          submitted to Disney and receive Disney's written approval before use.
          To avoid unnecessary expense if changes are required, Disney's
          approval thereof should be procured when such is still in rough or
          storyboard format. Disney shall endeavor to respond to requests for
          approval within a reasonable time. Approval or disapproval shall lie
          in Disney's sole discretion, and the use of unapproved containers,
          packaging, display material, promotional material, catalogs or
          advertising is prohibited. Disney's approval of any containers,
          packaging, display material, promotional material, catalogs or
          advertising under this Agreement will not constitute or imply a
          representation or belief by Disney that such materials comply with any
          applicable Laws. Whenever Licensee prepares catalog sheets or other
          printed matter containing illustrations of Articles, Licensee will
          furnish to Disney five (5) copies thereof when they are published.

     B.   If Disney has supplied Licensee with forms for use in applying for
          approval of materials referenced in this Paragraph 7, Licensee shall
          use such forms when submitting anything for Disney's approval.

     C.   Disney has designed character artwork or a brand name logo(s) to be
          used by all licensees in connection with the packaging of all
          merchandise using the Licensed Material, and, if applicable, on hang
          tags and garment labels for such merchandise. Disney will supply
          Licensee with reproduction artwork thereof, and Licensee agrees to use
          such artwork or logo(s) on the packaging of the Articles, and, if
          applicable, on hang tags and garment labels, which

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          Licensee will have printed and attached to each Article at Licensee's
          cost. Disney recommends that Licensee source the hang tags and garment
          labels from Disney's authorized manufacturer (if any) of pre-approved
          hang tags and garment labels, the name of which will be provided to
          Licensee upon request. However, Licensee may use another manufacturer
          for the required hang tags and garment labels if the hang tags and
          garment labels manufactured are of equivalent quality and are approved
          by Disney in accordance with Disney's usual approval process. The
          packaging may be different for different distribution channels, and
          Licensee agrees to use the packaging designated by Disney for the
          applicable distribution channel.

8.   ARTWORK

     Licensee shall pay Disney, within thirty (30) days of receiving an invoice
     therefor, for Style Guides and for artwork done at Licensee's request by
     Disney or third parties under contract to Disney in the development and
     creation of Articles, display, packaging or promotional material (including
     any artwork which in Disney's opinion is necessary to modify artwork
     initially prepared by Licensee and submitted to Disney for approval,
     subject to Licensee's prior written approval) at Disney's then prevailing
     commercial art rates, plus VAT if applicable. Estimates of artwork charges
     are available upon request. While Licensee is not obligated to utilize the
     services of Disney's Art Department, Licensee is encouraged to do so in
     order to minimize delays which may occur if outside artists do renditions
     of Licensed Material which Disney cannot approve and to maximize the
     attractiveness of the Articles. Artwork will be returned to Licensee by
     overnight courier, at Licensee's cost (unless other arrangements are made).

9.   PRINT, RADIO OR TV ADVERTISING

     Licensee will obtain all approvals necessary in connection with print,
     radio or television advertising, if any, which Disney may authorize.
     Licensee represents and warrants that all advertising and promotional
     materials shall comply with all applicable Laws. Disney's approval of copy
     or storyboards for such advertising will not constitute or imply a
     representation or belief by Disney that such copy or storyboards comply
     with any applicable Laws. This Agreement does not grant Licensee any rights
     to use the Licensed Material in animation. Licensee may not use any
     animation or live action footage from the Property from which the Licensed
     Material comes without Disney's prior written approval in each instance. In
     the event Disney approves the use of film clips of the Property from which
     the Licensed Material comes, for use in a television commercial, Licensee
     shall be responsible for any re-use fees which may be applicable, including
     SAG payments for talent. No reproduction of the film clip footage shall be
     made except for inclusion, as approved

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     by Disney, in such commercial and there shall be no modifications of the
     film clip footage. All film clip footage shall be returned to Disney
     immediately after its inclusion in such commercial. Disney shall have the
     right to prohibit Licensee from advertising the Articles by means of
     television, billboards, or both. Such right shall be exercised within
     Disney's absolute discretion, including without limitation for reasons of
     overexposure of the Licensed Material.

10.  LICENSEE NAME AND ADDRESS ON ARTICLES

     A.   Licensee's name, trade name (or Licensee's trademark which Licensee
          has advised Disney in writing that Licensee is using) and Licensee's
          address (at least city and state or province) will appear on
          permanently affixed labeling on each Article and, if the Article is
          sold to the public in packaging or a container, printed on such
          packaging or a container so that the public can identify the supplier
          of the Article. On soft goods "permanently affixed" shall mean sewn
          on. RN or CA numbers do not constitute a sufficient label under this
          paragraph.

     B.   Licensee shall advise Disney in writing of all trade names or
          trademarks Licensee wishes to use on Articles being sold under this
          license. Licensee may sell the Articles only under mutually agreed
          upon trade names or trademarks.

11.  COMPLIANCE WITH APPROVED SAMPLES AND APPLICABLE LAWS AND STANDARDS

     A.   Licensee covenants that each Article and component thereof distributed
          hereunder shall be of good quality and free of defects in design,
          materials and workmanship, and shall comply with all applicable Laws,
          and such specifications, if any, as may have been specified in
          connection with this Agreement (e.g., Disney's Apparel Performance
          Specification Manual, if the Articles are items of apparel), and shall
          conform to the Sample thereof approved by Disney. Licensee covenants
          that it will comply with all applicable Laws in performing this
          Agreement, including but not limited to, those pertaining to the
          manufacture, pricing, sale and distribution of the Articles.

     B.   Without limiting the foregoing, Licensee covenants on behalf of
          Licensee's own manufacturing facilities, and agrees to require all
          Manufacturers to covenant by signing the Manufacturer's Agreement
          (referenced in Paragraph 24), as follows:

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          (1)  Licensee and the Manufacturers agree not to use child labor in
               the manufacturing, packaging or distribution of Disney
               merchandise. The term "child" refers to a person younger than the
               local legal minimum age for employment or the age for completing
               compulsory education, but in no case shall any child younger than
               fifteen (15) years of age (or fourteen (14) years of age where
               local law allows) be employed in the manufacturing, packaging or
               distribution of Disney merchandise. Licensee and the
               Manufacturers employing young persons who do not fall within the
               definition of "children" agree also to comply with any Laws
               applicable to such persons.

          (2)  Licensee and the Manufacturers agree only to employ persons whose
               presence is voluntary. Licensee and the Manufacturers agree not
               to use any forced or involuntary labor, whether prison, bonded,
               indentured or otherwise.

          (3)  Licensee and the Manufacturers agree to treat each employee with
               dignity and respect, and not to use corporal punishment, threats
               of violence, or other forms of physical, sexual, psychological or
               verbal harassment or abuse.

          (4)  Unless required by applicable Laws to treat a specific group of
               employees differently, Licensee and the Manufacturers agree not
               to discriminate in hiring and employment practices, including
               salary, benefits, advancement, discipline, termination, or
               retirement, on the basis of race, religion, age, nationality,
               social or ethnic origin, sexual orientation, gender, political
               opinion or disability.

          (5)  Licensee and the Manufacturers recognize that wages are essential
               to meeting employees' basic needs. Licensee and Manufacturers
               agree to comply, at a minimum, with all applicable wage and hour
               Laws, including minimum wage, overtime, maximum hours, piece
               rates and other elements of compensation, and to provide legally
               mandated benefits. If local Laws do not provide for overtime pay,
               Licensee and Manufacturers agree to pay at least regular wages
               for overtime work. Except in extraordinary business
               circumstances, Licensee and the Manufacturers will not require
               employees to work more than the lesser of (a) 48 hours per week
               and 12 hours overtime or (b) the limits on regular and overtime
               hours allowed by local law, or, where local law does not limit
               the hours of work, the regular work week in such country plus 12
               hours overtime. In addition, except in extraordinary business
               circumstances, employees will be entitled to

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               at least one day off in every seven-day period. Licensee and the
               Manufacturers agree that, where local industry standards are
               higher than applicable legal requirements, they will meet the
               higher standards.

          (6)  Licensee and the Manufacturers agree to provide employees with a
               safe and healthy workplace in compliance with all applicable
               Laws, ensuring, at a minimum, reasonable access to potable water
               and sanitary facilities, fire safety, and adequate lighting and
               ventilation. Licensee and the Manufacturers also agree to ensure
               that the same standards of health and safety are applied in any
               housing they provide for employees. Licensee and the
               Manufacturers agree to provide Disney with all information Disney
               may request about manufacturing, packaging and distribution
               facilities for the Articles.

          (7)  Licensee and the Manufacturers agree to respect the rights of
               employees to associate, organize and bargain collectively in a
               lawful and peaceful manner, without penalty or interference, in
               accordance with applicable Laws.

          (8)  Licensee and the Manufacturers agree to comply with all
               applicable environmental Laws.

          (9)  Licensee and the Manufacturers agree to comply with all
               applicable Laws, including those pertaining to the manufacture,
               pricing, sale and distribution of the Articles.

          (10) Licensee and the Manufacturers agree that Disney and its
               designated agents (including third parties) may engage in
               monitoring activities to confirm compliance with this Paragraph
               11, including unannounced on-site inspections of manufacturing,
               packaging and distribution facilities, and employer-provided
               housing, such inspections to include reviews of books and records
               relating to employment matters and private interviews with
               employees. Licensee and the Manufacturers agree to maintain on
               site all documentation necessary to demonstrate compliance with
               this Paragraph 11. Licensee agrees to promptly reimburse Disney
               for the reasonable cost of inspections performed pursuant to this
               Paragraph 11 when any of Licensee's manufacturing facilities or
               any Manufacturer does not pass the inspection(s). The amount
               reimbursed will not be pro-rated in the event the Manufacturer is
               also used by other licensees or vendors.

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          (11) Licensee and the Manufacturers agree to take appropriate steps to
               ensure that the provisions of this Code of Conduct are
               communicated to employees, including the prominent posting of a
               copy of the Code of Conduct for Manufacturers (copy attached) in
               the local language and in a place readily accessible to employees
               at all times.

     C.   Licensee agrees to be bound by the Code of Conduct for Licensees (copy
          attached). This includes, but is not limited to, taking appropriate
          steps, in consultation with Disney, and as required by Disney's
          Compliance Program for licensees, to develop, implement and maintain
          procedures to evaluate and monitor the Manufacturers it uses to
          manufacture the Articles or components thereof, and to ensure
          compliance with Paragraph 11.B., including but not limited to,
          unannounced on-site inspections of manufacturing, packaging and
          distribution facilities and employer-provided housing, reviews of
          books and records relating to employment matters and private
          interviews with employees. Licensee acknowledges that Disney may
          require a pre-approval compliance inspection of any Manufacturers
          Licensee wishes to use to produce the Articles, components, or related
          items.

     D.   Both before and after Licensee puts Articles on the market, Licensee
          shall follow reasonable and proper procedures for testing that
          Articles comply with all applicable product safety Laws, and shall
          permit Disney's designees to inspect testing, manufacturing and
          quality control records and procedures and to test the Articles for
          compliance with product safety and other applicable Laws. Licensee
          agrees to promptly reimburse Disney for the actual costs of such
          testing. Licensee shall also give due consideration to any
          recommendations by Disney that Articles exceed the requirements of
          applicable Laws. Articles not manufactured, packaged or distributed in
          accordance with applicable Laws shall be deemed unapproved, even if
          previously approved by Disney, and shall not be shipped unless and
          until they have been brought into full compliance therewith.

12.  DISNEY OWNERSHIP OF ALL RIGHTS IN LICENSED MATERIAL

     Licensee acknowledges that the copyrights and all other proprietary rights
     in and to Licensed Material are exclusively owned by and reserved to Disney
     or its licensors, if applicable to any Property. Licensee shall neither
     acquire nor assert copyright ownership or any other proprietary rights in
     the Licensed Material or in any derivation, adaptation, variation or name
     thereof. Without limiting the foregoing, Licensee hereby assigns to Disney
     all Licensee's worldwide right, title and interest in the Licensed Material
     and in any material objects consisting of or to the extent

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     that they incorporate drawings, paintings, animation cels, or sculptures of
     Licensed Material, or other adaptations, compilations, collective works,
     derivative works, variations or names of Licensed Material, heretofore or
     hereafter created by or for Licensee or any of Licensee's Affiliates. All
     such new materials shall be included in the definition of "Licensed
     Material" under this Agreement. If any third party makes or has made any
     contribution to the creation of any new materials which are included in the
     definition of Licensed Material under this Paragraph 12, Licensee agrees to
     obtain from such party a full assignment of rights so that the foregoing
     assignment by Licensee shall vest full rights to such new materials in
     Disney. Licensee further covenants that any such new materials created by
     Licensee or by any third party Licensee has engaged are original to
     Licensee or such third party and do not violate the rights of any other
     person or entity; this covenant regarding originality shall not extend to
     any materials Disney supplies to Licensee, but does apply to all materials
     Licensee or Licensee's third party contractors may add thereto. The
     foregoing assignment to Disney of material objects shall not include that
     portion of Licensee's displays, catalogs, or promotional material not
     containing Licensed Material, or the physical items constituting the
     Articles, unless such items are in the shape of the Licensed Material.

13.  COPYRIGHT NOTICE

     As a condition to the grant of rights hereunder, each Article and any other
     matter containing Licensed Material shall bear a properly located
     permanently affixed copyright notice in Disney's name (e.g., "(C) Disney"),
     or such other notice as Disney specifies to Licensee in writing. Licensee
     will comply with such instructions as to form, location and content of the
     notice as Disney may give from time to time. Licensee will not, without
     Disney's prior written consent, affix to any Article or any other matter
     containing Licensed Material a copyright notice in any other name. If
     through inadvertence or otherwise a copyright notice on any Article or
     other such matter should appear in Licensee's name or the name of a third
     party, Licensee hereby agrees to assign to Disney the copyright represented
     by any such copyright notice in Licensee's name and, upon request, cause
     the execution and delivery to Disney of whatever documents are necessary to
     convey to Disney that copyright represented by any such copyright notice.
     If by inadvertence a proper copyright notice is omitted from any Article or
     other matter containing Licensed Material, Licensee agrees at Licensee's
     expense to use all reasonable efforts to correct the omission on all such
     Articles or other matter in process of manufacture or in distribution.
     Licensee agrees to advise Disney promptly and in writing of the steps being
     taken to correct any such omission and to make the corrections on existing
     Articles which can be located.

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14.  NON-ASSOCIATION OF OTHER MATERIAL WITH LICENSED MATERIAL

     To preserve Disney's identification with Disney's Licensed Material and to
     avoid confusion of the public, Licensee agrees not to associate other
     characters or licensed properties with the Licensed Material or the
     Trademarks either on the Articles or in their packaging, or, without
     Disney's written permission, on advertising, promotional or display
     materials. If Licensee wishes to use a character which constitutes
     Licensee's trademark on the Articles or their packaging, or otherwise in
     connection with the Articles, Licensee agrees to obtain Disney's prior
     written permission.

15.  ACTIVE MARKETING OF ARTICLES

     Licensee agrees to manufacture (or have manufactured for Licensee) and
     actively offer for sale all the Articles and to actively exercise the
     rights granted herein. Licensee agrees that by the Marketing Date
     applicable to a particular Article or, if such a date is not specified in
     Paragraph 1.S., by six (6) months from the commencement of the term of the
     applicable Schedule or the date of any applicable amendment, shipments to
     customers of such Article will have taken place in sufficient time that
     such Article shall be available for purchase in commercial quantities by
     the public at the retail outlets in all distribution channels authorized
     pursuant to Paragraph 2.A. In any case in which such sales have not taken
     place or when the Article is not then and thereafter available for purchase
     in commercial quantities by the public, Disney may either invoke Disney's
     remedies under Paragraph 28, or withdraw such Article from the list of
     Articles licensed in this Agreement, or withdraw the applicable
     distribution channel, or withdraw such Article from the applicable
     Schedule, without obligation to Licensee other than to give Licensee
     written notice thereof.

16.  PROMOTION COMMITMENT

     A.   Promotion Commitment

          (1)  Licensee agrees to carry out the Promotion Commitment, as defined
               in Paragraph 1.N. The advertising and promotion activities
               required thereunder to promote the sale of the Articles shall
               include one or more of the following activities:

               -    point of purchase displays (not including packaging or other
                    individual product costs)
               -    media advertising

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               -    measurable public relations programs
               -    sampling
               -    contests and games approved in advance in writing by Disney
               -    trade shows, catalog or trade activities, fashion shows
               -    participation in group promotions organized by Disney
               -    other activities as agreed in advance in writing with Disney

               All promotional material is subject to the approval provisions of
               Paragraph 7 hereof.

          (2)  For purposes of determining Licensee's satisfaction of the
               Promotion Commitment, all consumer advertising and merchandising
               costs associated with the above-listed activities for the
               Articles, but not including packaging or other individual product
               costs, will be counted toward the requirement; provided, however,
               that any advertising discounts given in connection with
               cooperative advertising may not be included in the calculation.

          (3)  One time during each twelve (12) month period during the Term,
               Licensee also shall provide Disney with a statement describing
               the funds theretofore spent and consumer exposure provided as
               required in this Paragraph, together with a description of the
               manner in which such funds were spent, all of which information
               shall be broken down by country within the Territory, and
               provided in such detail as Disney may specify from time to time.
               Amounts spent in excess of the Promotion Commitment during any
               Royalty Payment Period may be credited against the Promotion
               Commitment for any other Royalty Payment Period occurring in the
               same annual twelve month period during the Term. If in any
               Royalty Payment Period Licensee has not satisfied the Promotion
               Commitment, Licensee (i) may carry forward such shortfall into
               the next succeeding Royalty Payment Period (other than in the
               case of a shortfall in the final Royalty Payment Period
               hereunder, in which case no carry forwards shall be permitted),
               or (ii) shall pay Disney the amount of such shortfall as
               liquidated damages; provided, however, no shortfall (or fraction
               thereof) may be carried forward more than twelve months. Licensee
               acknowledges that its expenditure of the Promotion Commitment as
               provided for herein increases the value of the business from
               which Disney benefits as licensor. Licensee and Disney agree that
               it is impracticable and extremely difficult to fix the actual
               damages which may proximately result from Licensee's failure to
               fulfill its obligation as provided for herein, and Licensee's
               liability for failure to do so

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               shall, for each Royalty Payment Period, be limited to and fixed
               at the sum of an amount equal to the shortfall between the amount
               Licensee actually spends on the Promotion Commitment during such
               Royalty Payment Period as theretofore reported to Disney and the
               amount required to be expended hereunder. Such cumulative amount
               shall be considered liquidated damages and not a penalty.

17.  TRADEMARK RIGHTS AND OBLIGATIONS

     A.   All uses of the Trademarks by Licensee hereunder shall inure to
          Disney's benefit. Licensee acknowledges that Disney (or its licensors,
          if applicable) is the exclusive owner of all the Trademarks, and of
          any trademark incorporating all or any part of a Trademark or any
          Licensed Material, and the trademark rights created by such uses.
          Without limiting the foregoing, Licensee hereby assigns to Disney all
          the Trademarks, and any trademark incorporating all or any part of a
          Trademark or any Licensed Material, and the trademark rights created
          by such uses, together with the goodwill attaching to that part of the
          business in connection with which such Trademarks or trademarks are
          used. Licensee agrees to follow Disney's instructions for proper use
          of the Trademarks and trademarks, and to execute and deliver to Disney
          such documents as Disney requires to protect and register the
          Trademarks and trademarks.

     B.   Licensee agrees not to use any Licensed Material or Trademarks, or any
          trademark incorporating all or any part of a Trademark or of any
          Licensed Material, on any business sign, business cards, stationery or
          forms (except as licensed herein), or to use any Licensed Material or
          Trademark as the name of Licensee's business or any division thereof,
          unless otherwise agreed by Disney in writing.

     C.   Nothing contained herein shall prohibit Licensee from using Licensee's
          own trademarks on the Articles or Licensee's copyright notice on the
          Articles when the Articles contain independent material which is
          Licensee's property. Nothing contained herein is intended to give
          Disney any rights to, and Disney shall not use, any trademark,
          copyright or patent used by Licensee in connection with the Articles
          which is not derived or adapted from Licensed Material, Trademarks, or
          other materials owned by Disney (or its licensors, if applicable).

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18.  REGISTRATIONS

     Except with Disney's written consent, neither Licensee nor any of
     Licensee's Affiliates will register or attempt in any country to register
     copyrights in, or to register as a trademark, service mark, design patent
     or industrial design, or business designation, any of the Licensed
     Material, Trademarks or derivations or adaptations thereof, or any word,
     symbol or design which is so similar thereto as to suggest association with
     or sponsorship by Disney or any of Disney's Affiliates. In the event of
     breach of the foregoing, Licensee agrees, at Licensee's expense and at
     Disney's request, immediately to terminate the unauthorized registration
     activity and promptly to execute and deliver, or cause to be delivered, to
     Disney such assignments and other documents as Disney may require to
     transfer to Disney all rights to the registrations, patents or applications
     involved.

19.  UNLICENSED USE OF LICENSED MATERIALS

     A.   Licensee agrees that Licensee will not use the Licensed Material, or
          the Trademarks, or any other material the copyright to which is owned
          by Disney in any way other than as herein authorized (or as is
          authorized in any other written contract in effect between the
          parties). In addition to any other remedy Disney may have, Licensee
          agrees that all revenues from any unauthorized use thereof, and all
          revenues from the use of any other copyrighted material of Disney's
          (or its licensors', if applicable) without written authorization from
          Disney, shall be immediately payable to Disney.

     B.   Licensee agrees to give Disney prompt written notice of any unlicensed
          use by third parties of Licensed Material or Trademarks, and that
          Licensee will not, without Disney's written consent, bring or cause to
          be brought any criminal prosecution, lawsuit or administrative action
          for infringement, interference with or violation of any rights to
          Licensed Material or Trademarks. Because of the need for and the high
          costs of an effective anti-piracy enforcement program, Licensee agrees
          to cooperate with Disney, and, if necessary, to be named by Disney as
          a sole complainant or co-complainant in any action against an
          infringer of the Licensed Material or Trademarks and, notwithstanding
          any right of Licensee to recover same, legal or otherwise, Licensee
          agrees to pay to Disney, and hereby waives all claims to, all damages
          or other monetary relief recovered in such action by reason of a
          judgment or settlement whether or not such damages or other monetary
          relief, or any part thereof, represent or are intended to represent
          injury sustained by Licensee as a licensee hereunder; in any such
          action against an infringer, Disney agrees to reimburse Licensee for
          reasonable expenses

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          incurred at Disney's request, including reasonable attorney's fees if
          Disney has requested Licensee to retain separate counsel.

20.  STATEMENTS AND PAYMENTS OF ROYALTIES

     A.   Licensee agrees to furnish to Disney by the 25th day after each
          Royalty Payment Period full and accurate statements on statement forms
          Disney designates for Licensee's use, showing all information
          requested by such forms separately for each Property licensed
          hereunder, including but not limited to, the name of the subject
          Property, the quantities, Net Invoiced Billings (reported in U.S.
          Dollars and, if the Territory includes any country other than the
          U.S., Net Invoiced Billings also should be reported in the currency
          invoiced to customers) and applicable Royalty rate(s) of Articles
          using Licensed Material from such Property invoiced during the
          preceding Royalty Payment Period, and the quantities and invoice value
          of Articles returned for credit or refund in such period, as well as
          sales forecasts (if requested), and the country of sale. At the same
          time Licensee will pay Disney all Royalties plus VAT (if applicable)
          due on billings shown by such statements. All monies owed to Disney
          shall be sent to the address identified in Paragraph 20.E., or, if
          requested by Disney, by electronic transfer to such account as Disney
          may designate. To the extent that any monies owed to Disney under this
          Agreement are not paid, Licensee authorizes Disney to offset any
          amount(s) which is due at any time against any sums which Disney or
          any of Disney's Affiliates may owe to Licensee or any of Licensee's
          Affiliates. No deduction or withholding from Royalties payable to
          Disney shall be made by reason of any tax. Any applicable tax on the
          manufacture, distribution and sale of the Articles shall be borne by
          Licensee. All payments are to be made in U.S. Dollars. In the event
          that an exchange rate is necessary, Licensee shall use the official
          buying rate of exchange as published in the Wall Street Journal, New
          York Edition, on the last business day of the applicable Royalty
          Payment Period, and Licensee shall identify such exchange rate on the
          Royalty reporting forms.

     B.   The statement forms Disney designates for Licensee's use may be
          changed from time to time, and Licensee agrees to use the most current
          form designated by Disney (including, for example, forms to be sent by
          electronic transmission). If it is necessary for Licensee to adapt its
          system to be able to report statements by electronic transmission, or
          to make payments by electronic transfer, all costs of such adaptation
          shall be borne entirely by Licensee. Licensee agrees to fully comply
          with all instructions supplied by Disney for completing any reporting
          forms, or adhering to any required format. Upon at least six (6)
          months' notice from Disney, the Royalty

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          Payment Period may be changed from quarterly to monthly, unless this
          Agreement already provides for a monthly Royalty Payment Period.

     C.   In addition to the other information requested by the statement forms,
          and any special requirements stated in the applicable Schedule for any
          Property licensed hereunder, Licensee's statement shall with respect
          to all Articles report separately:

          (1)  F.O.B. In Sales;

          (2)  F.O.B. Out Sales;

          (3)  sales of Articles outside the Territory pursuant to a
               distribution permission (indicating the country involved);

          (4)  Licensee's sales of Articles to any of Disney's licensees or
               Disney's Affiliates' licensees who are licensed to sell the
               Articles, and who are reselling such Articles and paying Disney
               royalties on such resales; in such cases, Licensee need only
               report the sales on the statements, because double royalties are
               not owed to Disney on these sales;

          (5)  sales of Articles to Disney or any of Disney's Affiliates;

          (6)  sales of Articles to Licensee's or Disney's employees;

          (7)  sales of Articles designating the Licensed Material used from
               each brand or property, motion picture, television series and
               other Property identified in Paragraph 1.B. hereinabove or in any
               Schedule attached hereto;

          (8)  sales of Articles to or for distribution through any mail order
               catalogs and any Etailers approved under this Agreement.

     D.   Sales of items licensed under contracts with Disney other than this
          Agreement shall not be reported on the same statement as sales of
          Articles under this Agreement.

     E.   Licensee's statements and payments, including all Royalties, shall be
          delivered to such address as Disney designates; currently, such
          address is: Wachovia South Metro Center, DEI Account, P.O. Box 101947,
          Atlanta, Georgia 30392. A copy of each statement must be sent to
          Disney at 500

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          South Buena Vista Street, Burbank, California 91521-6653, to the
          attention of the Contract Administrator, Consumer Products Division.
          If Licensee wishes to send statements and payments by overnight
          courier, the current address is: Wachovia South Metro Center, DEI
          Account, 3585 Atlanta Avenue, Hapeville, GA 30354, Attention Peggy
          Morris, Reference Lock box 101947. However, Advances should be mailed
          directly to Disney at 500 South Buena Vista Street, Burbank,
          California 91521-6653, to the attention of the Contract Administrator
          or Legal Department, Consumer Products Division.

     F.   From time to time, upon request by Disney, Licensee shall furnish to
          Disney's Credit Department, no later than seven days after such
          request, such financial reports, including balance sheets, statements
          of income and cash flows, as Disney deems necessary to evaluate
          Licensee's ongoing creditworthiness and ability to perform this
          Agreement.

21.  CONFIDENTIALITY

     Licensee represents and warrants that Licensee did not disclose to any
     third party the prospect of a license from Disney, and that Licensee did
     not trade on the prospect of a license from Disney, prior to full execution
     of this Agreement. Licensee agrees not to issue any press release regarding
     this Agreement or Disney without obtaining Disney's prior written consent.
     Licensee agrees to keep the terms and conditions of this Agreement
     confidential, and Licensee shall not disclose such terms and conditions to
     any third party without obtaining Disney's prior written consent; provided,
     however, that this Agreement may be disclosed on a need-to-know basis to
     Licensee's attorneys and accountants who agree to be bound by this
     confidentiality provision. In addition, Licensee may have access to
     information concerning Disney's or its Affiliates' business and operations,
     or information concerning works in progress, artwork, plots, characters or
     other matters relating to Disney's or its Affiliates' artistic creations,
     which information may not be accessible or known to the general public.
     Licensee agrees not to use or disclose such information to any third party
     without obtaining Disney's prior written consent. In the event Licensee is
     required to disclose this Agreement, or any part thereof, pursuant to any
     law, court order or process, the rules and regulations of any governmental
     department, agency or authority (including, but not limited to, the
     Securities and Exchange Commission) or any generally accepted accounting
     rules mandating disclosure in Licensee's financial statements, Licensee
     agrees to give Disney prior written notice and to use its best efforts to
     obtain confidential treatment of this Agreement. Upon Disney's request,
     Licensee agrees to incorporate Disney's comments into Licensee's request
     for confidential treatment, provided such request

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     and comments are received in writing by Licensee within five (5) business
     days after Disney's receipt of the notice referred to in the preceding
     sentence.

22.  INTEREST

     Royalties or any other payments due to Disney hereunder which are received
     after the due date shall bear interest at the rate of 18% per annum from
     the due date (or the maximum permissible by law if less than 18%).

23.  AUDITS AND MAINTAINING RECORDS

     A.   Licensee agrees to keep accurate records of all transactions relating
          to this Agreement and any prior agreement with Disney regarding the
          Licensed Material, including, without limitation, shipments to
          Licensee of Articles and components thereof, inventory records,
          records of sales and shipments by Licensee, and records of returns,
          and to preserve such records for the lesser of seven (7) years or two
          (2) years after the expiration or termination of this Agreement.

     B.   Disney, or Disney's representatives, shall have the right from time to
          time, during Licensee's normal business hours, but only for the
          purpose of confirming Licensee's performance hereunder, to examine and
          make extracts and photocopies from all such records, including the
          general ledger, invoices and any other records which Disney reasonably
          deems appropriate to verify the accuracy of Licensee's statements or
          Licensee's performance hereunder, including records of Licensee's
          Affiliates and unaffiliated sublicensees if they are involved in
          activities which are the subject of this Agreement. In particular,
          Licensee's invoices shall identify the Articles separately from goods
          which are not licensed hereunder. Licensee acknowledges that Disney
          may furnish Licensee with an audit questionnaire, and Licensee agrees
          to fully and accurately complete such questionnaire, and return it to
          Disney within the designated time. Disney's use of an audit
          questionnaire shall not limit Disney's ability to conduct any on-site
          audit(s) as provided above. Licensee acknowledges that an audit
          conducted by Disney or its representatives, may involve one or more
          license agreements at a time.

     C.   If in an audit of Licensee's records it is determined that there is a
          short fall of five percent (5%) or more in Royalties reported for any
          Royalty Payment Period, Licensee shall upon request from Disney
          reimburse Disney for the full out-of-pocket costs of the audit,
          including the costs of employee auditors calculated at U.S. $60 per
          hour per person for travel time during normal working hours and actual
          working time.

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     D.   If Licensee has failed to keep adequate records for one or more
          Royalty Payment Periods, Disney will assume that the Royalties owed to
          Disney for such Royalty Payment Period(s) are equal to a reasonable
          amount, determined in Disney's absolute discretion, which may be up to
          but will not exceed the highest Royalties owed to Disney in a Royalty
          Payment Period for which Licensee has kept adequate records; if
          Licensee has failed to keep adequate records for any Royalty Payment
          Period, Disney will assume a reasonable amount of Royalties which
          Licensee will owe to Disney, based on the records Licensee has kept
          and other reasonable assumptions Disney deems appropriate.

24.  MANUFACTURE OF ARTICLES BY THIRD PARTY MANUFACTURERS

     A.   Licensee agrees to supply Disney with the names and addresses of all
          of its own manufacturing facilities for the Articles. If Licensee at
          any time desires to use a third-party Manufacturer to produce the
          Articles, components of Articles, or related items bearing Licensed
          Material, Trademarks, or both, whether the third party is located
          within or outside the Territory, Licensee must, as a condition to the
          continuation of this Agreement, notify Disney of the accurate name and
          complete address of such Manufacturer and the Articles, components, or
          related items, and obtain Disney's prior written permission to do so.
          If Disney is prepared to grant permission, Disney will do so if each
          of Licensee's Manufacturers signs a Manufacturer's Agreement in a form
          which Disney will furnish to Licensee, and Disney receives all such
          agreements properly signed. Disney also may require a pre-approval
          compliance inspection of a Manufacturer prior to the production of any
          Articles, components, or other items involved. Licensee must
          immediately notify Disney if Licensee is no longer using a
          Manufacturer to manufacture the Articles, components, or related
          items.

            (A SAMPLE OF SAID AGREEMENT FORM IS AVAILABLE ON REQUEST)

     B.   If any such Manufacturer utilizes Licensed Material or Trademarks for
          any unauthorized purpose, Licensee shall cooperate fully in bringing
          such utilization to an immediate halt. If, by reason of Licensee's not
          having supplied the above mentioned agreements to Disney or not having
          given Disney the name of any Manufacturer, Disney makes any
          representation or takes any action and is thereby subjected to any
          penalty or expense, Licensee will fully compensate Disney for any cost
          or loss Disney sustains (in addition to any other legal or equitable
          remedies available to Disney).

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     C.   If any Manufacturer fails to pass a compliance inspection as
          referenced in Paragraph 11, and thereafter fails to remedy the cited
          failure(s) within the time designated by Disney, or if the
          Manufacturer otherwise breaches the Manufacturer's Agreement, the
          Manufacturer's Agreement for such Manufacturer may be terminated
          immediately by Disney, and Licensee shall not thereafter use such
          Manufacturer to manufacture Articles, components, or related items. In
          the case of a pre-approval compliance inspection, if a Manufacturer
          fails to pass the compliance inspection, and thereafter fails to
          remedy the cited failure(s) within the time designated by Disney,
          Licensee shall not use such Manufacturer to produce Articles,
          components or related items. If Licensee fails to notify Disney that
          it has ceased using a particular Manufacturer, and Disney or its
          designated agent conducts a compliance inspection of such
          Manufacturer, Licensee remains obligated to work with the Manufacturer
          to remedy any cited failure(s), or, in the alternative, the
          Manufacturer's Agreement shall be deemed terminated for purposes of
          Paragraph 28.B. (10), and Licensee shall promptly reimburse Disney for
          the reasonable cost of the compliance inspection.

25.  INDEMNITY

     A.   Licensee shall indemnify Disney during and after the term hereof
          against all claims, demands, suits, judgments, losses, liabilities
          (including settlements entered into in good faith with Licensee's
          consent, not to be unreasonably withheld) and expenses of any nature
          (including reasonable attorneys' fees) arising out of Licensee's
          activities under this Agreement, including but not limited to, any
          actual or alleged: (1) negligent acts or omissions on Licensee's part,
          (2) defect (whether obvious or hidden and whether or not present in
          any Sample approved by Disney) in an Article, (3) personal injury, (4)
          infringement of any rights of any other person by the manufacture,
          sale, possession or use of Articles, (5) breach on Licensee's part of
          any covenant, representation or warranty contained in this Agreement,
          or (6) failure of the Articles or by Licensee to comply with
          applicable Laws. The parties indemnified hereunder shall include
          Disney Enterprises, Inc., its licensors, if applicable, and its and
          their Affiliates and successors, and its and their officers,
          directors, employees and agents. The indemnity shall not apply to any
          claim or liability relating to any infringement of the copyright of a
          third party caused by Licensee's utilization of the Licensed Material
          and the Trademarks in accordance with the provisions hereof, unless
          such claim or liability arises out of Licensee's failure to obtain the
          full assignment of rights referenced in Paragraph 12.

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     B.   Disney shall indemnify Licensee during and after the term hereof
          against all claims, demands, suits, judgments, losses, liabilities
          (including settlements entered into in good faith with Disney's
          consent, not to be unreasonably withheld) and expenses of any nature
          (including reasonable attorneys' fees) arising out of any claim that
          Licensee's use of any representation of the Licensed Material or the
          Trademarks approved in accordance with the provisions of this
          Agreement infringes the copyright of any third party or infringes any
          right granted by Disney to such third party, except for claims arising
          out of Licensee's failure to obtain the full assignment of rights
          referenced in Paragraph 12. Licensee shall not, in any case, be
          entitled to recover for lost profits.

     C.   Additionally, if by reason of any claims referred to in Paragraph
          25.B., Licensee is precluded from selling any stock of Articles or
          utilizing any materials in Licensee's possession or which come into
          Licensee's possession by reason of any required recall, Disney shall
          be obligated to purchase such Articles and materials from Licensee at
          their out-of-pocket cost to Licensee, excluding overheads, but Disney
          shall have no other responsibility or liability with respect to such
          Articles or materials.

     D.   Disney gives no warranty or indemnity with respect to any liability or
          expense arising from any claim that use of the Licensed Material or
          the Trademarks on or in connection with the Articles hereunder or any
          packaging, advertising or promotional material infringes on any
          trademark right of any third party or otherwise constitutes unfair
          competition by reason of any prior rights acquired by such third
          party, other than rights acquired from Disney. It is expressly agreed
          that it is Licensee's responsibility to carry out such investigations
          as Licensee may deem appropriate to establish that Articles,
          packaging, and promotional and advertising material which are
          manufactured or created hereunder, including any use made of the
          Licensed Material and the Trademarks therewith, do not infringe such
          right of any third party, and Disney shall not be liable to Licensee
          if such infringement occurs.

     E.   Licensee and Disney agree to give each other prompt written notice of
          any claim or suit which may arise under the indemnity provisions set
          forth above. Without limiting the foregoing, Licensee agrees to give
          Disney written notice of any product liability claim made or suit
          filed with respect to any Article, any investigations or directives
          regarding the Articles issued by the U.S. Consumer Product Safety
          Commission ("CPSC") or other federal, state, provincial, or local
          consumer safety agency, and any notices sent by Licensee to, or
          received by Licensee from, the CPSC or other consumer

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          safety agency regarding the Articles within fourteen (14) days of
          Licensee's receipt or promulgation of the claim, suit, investigation,
          directive, or notice.

26.  INSURANCE

     Licensee shall maintain in full force and effect at all times while this
     Agreement and any Schedule(s) entered into hereunder are in effect and for
     three years thereafter commercial general liability insurance on a per
     occurrence form, including broad form coverage for contractual liability,
     property damage, products liability and personal injury liability
     (including bodily injury and death), waiving subrogation, with minimum
     limits of no less than two million dollars (US $2,000,000.00) per
     occurrence, and naming as an additional "insured" each party indemnified in
     Paragraph 25 hereof. Licensee also agrees to maintain in full force and
     effect at all times while this Agreement and any Schedule(s) entered into
     hereunder are in effect such Worker's Compensation Insurance as is required
     by applicable provincial or state law and, if Licensee is a U.S.-based
     licensee, Employer's Liability Insurance with minimum limits of one million
     dollars (US $1,000,000.00) per occurrence. All insurance shall be primary
     and not contributory. Licensee shall deliver to Disney a certificate or
     certificates of insurance evidencing satisfactory coverage and indicating
     that Disney shall receive thirty (30) days unrestricted prior written
     notice of cancellation, non-renewal or of any material change in coverage.
     Licensee's insurance shall be carried by an insurer with a BEST Guide
     rating of B + VII or better. Compliance herewith in no way limits
     Licensee's indemnity obligations, except to the extent that Licensee's
     insurance company actually pays Disney amounts which Licensee would
     otherwise pay Disney.

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27.  WITHDRAWAL OF LICENSED MATERIAL

     Licensee agrees that Disney may, without obligation to Licensee other than
     to give Licensee written notice thereof, withdraw from the scope of this
     Agreement any Licensed Material which by the Marketing Date or, if such a
     date is not specified in Paragraph 1.S., by six (6) months from the
     commencement of the term of the applicable Schedule or the date of any
     applicable amendment, is not being used on or in connection with the
     Articles. Disney may also withdraw any Licensed Material or Articles the
     use or sale of which under this Agreement would infringe or reasonably be
     claimed to infringe the rights of a third party, other than rights granted
     by Disney, in which case Disney's obligations to Licensee shall be limited
     to the purchase at cost of Articles and other materials utilizing such
     withdrawn Licensed Material which cannot be sold or used. In the case of
     any withdrawal under the preceding sentence, the Advances and Guarantees
     shall be adjusted to correspond to the time remaining in the term of the
     affected Schedule(s), or the number of Articles remaining under such
     Schedule(s), at the date of withdrawal.

28.  TERMINATION

     Without prejudice to any other right or remedy available to Disney:

     A.   Disney shall have the right at any time to terminate this Agreement
          (or any Schedule(s) entered into hereunder) by giving Licensee written
          notice thereof, if Licensee (i) fails to manufacture, sell or
          distribute the Articles in accordance with this Agreement, (ii) fails
          to timely furnish statements and timely pay Royalties or any other
          amounts due to Disney hereunder, (iii) fails to notify Disney of the
          accurate name and complete address of Licensee's manufacturing
          facilities or any Manufacturer of the Articles, (iv) fails to have any
          such Manufacturer execute the Manufacturer's Agreement, or (v)
          otherwise fails to comply with or perform any other obligation or
          covenant hereunder or breaches any other term of this Agreement (other
          than those set forth in Paragraph 28.B. below); provided that Licensee
          shall have thirty (30) days (or, in the case of non-payment of any
          monetary obligations due Disney under the Agreement within fifteen
          (15) days) after Disney sends Licensee written notice of termination
          to correct any such failure or breach capable of being corrected and
          avoid termination.

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     B.   Disney shall have the right at any time to terminate this Agreement
          immediately upon giving Licensee written notice thereof if one or more
          of the following events occur (provided, however, that with respect to
          clause (6) below such termination shall occur immediately without the
          need for any notice):

          (1)  if Licensee delivers to any customer without Disney's written
               authorization merchandise containing representations of Licensed
               Material or other material the copyright or other proprietary
               rights to which are owned by Disney other than Articles listed
               herein and approved in accordance with the provisions hereof;

          (2)  if Licensee delivers Articles outside the Territory or knowingly
               sells Articles to a third party for delivery outside the
               Territory, unless pursuant to a written distribution permission
               or separate written license agreement with Disney or any of
               Disney's Affiliates;

          (3)  if a breach occurs which is of the same nature, and which
               violates the same provision of this Agreement, as a breach of
               which Disney has previously given Licensee written notice;

          (4)  if Licensee breaches any material term of any other license
               agreement between the parties, and Disney terminates such
               agreement for cause;

          (5)  if Licensee breaches any surviving obligation under any other
               license agreement between the parties, even if such agreement has
               expired;

          (6)  if Licensee shall generally not pay its debts as such debts
               become due, or shall make a general assignment for the benefit of
               creditors; or any proceeding shall be instituted by or against
               Licensee seeking to adjudicate it as bankrupt or insolvent, or
               seeking liquidation, winding up, reorganization, arrangement,
               adjustment, protection, relief or composition of it or its debts
               under any law relating to bankruptcy, insolvency or
               reorganization or relief of debtors, or seeking the entry of any
               order for relief or the appointment of a receiver, trustee or
               other similar official for all or for any substantial part of its
               property or assets;

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          (7)  if Licensee is not permitted or is unable to operate Licensee's
               business in the usual manner, or is not permitted or is unable to
               provide Disney with assurance satisfactory to Disney that
               Licensee will so operate Licensee's business, as debtor in
               possession or its equivalent;

          (8)  if any event shall occur or condition shall exist under any
               agreement or instrument relating to institutional indebtedness or
               financial obligations owed by Licensee, including the failure to
               pay principal or interest thereon, and such event or condition
               shall continue after any applicable grace period specified in
               such agreement or instrument, and the effect of such event or
               condition is to accelerate, or to permit the acceleration of, the
               maturity of such indebtedness or obligations or otherwise cause,
               or to permit the holder thereof to cause, such indebtedness or
               obligations to mature;

          (9)  if Licensee, due to material changes in its financial position,
               or for other reasons, is unable to meet Licensee's obligations
               under this Agreement, or is unable to provide Disney with
               assurance satisfactory to Disney that Licensee will be able to
               meet such obligations;

          (10) if Licensee breaches any covenant set forth in Paragraph 11 of
               this Agreement; or

          (11) if more than three Manufacturer's Agreements are terminated in
               any twelve-month period by Disney for the Manufacturers' failure
               to pass compliance inspections as referenced in Paragraphs 11 and
               24.

     C.   If Disney terminates this Agreement pursuant to this Paragraph 28,
          Licensee shall not be permitted to seek injunctive relief to contest
          Disney's determination that a termination event has occurred or to
          otherwise affect Disney's full and absolute control of the Licensed
          Material and the Trademarks; provided however, Licensee may bring an
          action for damages, but prior to and during any such action, Disney
          shall have full and absolute control over the Licensed Material and
          the Trademarks.

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29.  RIGHTS AND OBLIGATIONS UPON EXPIRATION OR TERMINATION

     A.   Upon the expiration or termination of this Agreement, all rights
          herein granted to Licensee shall revert to Disney, any unpaid portion
          of the Guarantee shall be immediately due and payable (together with
          the Royalty statement due at such time), and Disney shall be entitled
          to retain all Royalties and other things of value paid or delivered to
          Disney. Licensee agrees that the Articles shall be manufactured during
          the term of each applicable Schedule in quantities consistent with
          anticipated demand therefor so as not to result in an excessive
          inventory build-up immediately prior to the end of the term thereof.
          Licensee agrees that from the expiration or termination of this
          Agreement Licensee shall neither manufacture nor have manufactured for
          Licensee any Articles, that Licensee will deliver to Disney any and
          all artwork (including Style Guides, animation cels and drawings)
          which may have been used or created by Licensee in connection with
          this Agreement, that Licensee will at Disney's option either sell to
          Disney at cost or destroy or efface any molds, plates and other items
          used to reproduce Licensed Material or Trademarks, and that, except as
          hereinafter provided, Licensee will cease selling Articles. Any
          unauthorized distribution of Articles after the expiration or
          termination of this Agreement or any applicable Schedule shall
          constitute copyright infringement.

     B.   If Licensee has any unsold Articles in inventory on the expiration or
          termination date of the applicable Schedule, Licensee shall provide
          Disney with a full statement of the kinds and numbers of such unsold
          Articles. If such statement has been provided to Disney and if
          Licensee has fully complied with the terms of this Agreement,
          including the payment of all Royalties due and the Guarantee, upon
          notice from Disney, Licensee shall have the right for a limited period
          of two (2) calendar months from such expiration or earlier termination
          date to sell off and deliver such Articles as authorized under
          Paragraph 2.A. Licensee shall furnish Disney statements covering such
          sales and pay Disney Royalties in respect of such sales. Such
          Royalties shall not be applied against the applicable Advance or
          towards meeting the applicable Guarantee. If the sell-off period is
          extended by Disney to a date which is not the last day of the Royalty
          Payment Period, Licensee's statement and Royalties for such sell-off
          period shall be due twenty-five (25) days after the last day of the
          sell-off period. All rights and remedies available to Disney during
          the Term shall be equally available to Disney during the sell-off
          period.

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     C.   In recognition of Disney's interest in maintaining a stable and viable
          market for the Articles during and after the Term and any sell-off
          period, Licensee agrees to refrain from "dumping" the Articles in the
          market during the Term and any sell-off period granted to Licensee.
          "Dumping" shall mean the distribution of product at volume levels
          significantly above Licensee's prior sales practices with respect to
          the Articles, and at price levels so far below Licensee's prior sales
          practices with respect to the Articles as to disparage the Articles;
          provided, however, that nothing contained herein shall be deemed to
          restrict Licensee's ability to set product prices at Licensee's
          discretion.

     D.   Except as otherwise agreed by Disney in writing, any inventory of
          Articles in Licensee's possession or control after the expiration or
          termination of the term of the applicable Schedule hereof and of any
          sell-off period granted hereunder shall be destroyed, or all Licensed
          Material and Trademarks removed or obliterated therefrom.

     E.   If Disney supplies Licensee with forms regarding compliance with this
          Paragraph 29, Licensee agrees to complete, execute and return such
          forms to Disney expeditiously. Licensee acknowledges that this will be
          necessary at the end of the term of each Schedule entered into under
          this Agreement.

     F.   Notwithstanding any provision to the contrary, in the case of
          termination under Paragraph 28.B. (6) or (7), in order to protect the
          value of the Articles and to avoid any disparagement of the Articles
          which could occur as a result of the circumstances of termination,
          Disney shall have the option, in Disney's absolute discretion, to
          purchase any or all unsold Articles in Licensee's inventory on the
          termination date at 20% over Licensee's cost of goods for such
          Articles (not including overhead).

30.  WAIVERS

     A waiver by either party at any time of a breach of any provision of this
     Agreement shall not apply to any breach of any other provision of this
     Agreement, or imply that a breach of the same provision at any other time
     has been or will be waived, or that this Agreement has been in any way
     amended, nor shall any failure by either party to object to conduct of the
     other be deemed to waive such party's right to claim that a repetition of
     such conduct is a breach hereof.

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31.  PURCHASE OF ARTICLES BY DISNEY

     If Disney wishes to purchase Articles, Licensee agrees to sell such
     Articles to Disney or any of Disney's Affiliates at as low a price as
     Licensee charges for similar quantities sold to Licensee's regular
     customers and to pay Disney Royalties on any such sales.

32.  NON-ASSIGNABILITY

     A.   This Agreement, and the rights granted hereunder to Licensee, are
          personal to Licensee, who was specifically chosen by Disney to be
          licensed hereunder because of Licensee's and certain employees'
          particular expertise and ability to design, produce and sell the
          Articles in ways which maximize the value of the Articles, and to
          otherwise perform the Agreement. Licensee shall not voluntarily or by
          operation of law assign, sub-license, transfer, encumber or otherwise
          dispose of all or any part of Licensee's interest in this Agreement
          (including, but not limited to, any encumbrance of the Articles)
          without Disney's prior written consent, to be granted or withheld in
          Disney's absolute discretion. Any attempted assignment, sub-license,
          transfer, encumbrance or other disposal without such consent shall be
          void and shall constitute a material default and breach of this
          Agreement. "Transfer" within the meaning of this Paragraph 32 shall
          include any merger or consolidation involving Licensee or any directly
          or indirectly controlling Affiliate(s) of Licensee ("Controlling
          Affiliate"); any sale or transfer of all or substantially all of
          Licensee's or its Controlling Affiliate(s)' assets; any transfer of
          Licensee's rights, obligations, or both, under this Agreement, to a
          division, business segment or other entity different from the one
          specifically referenced on page 1 hereof (or any sale or attempted
          sale of Articles under a trademark or trade name of such division,
          business segment or other entity); any public offering, or series of
          public offerings, whereby a cumulative total of thirty-three and
          one-third percent (33 1/3%) or more of the voting stock of Licensee or
          its Controlling Affiliate(s) is offered for purchase; and any
          acquisition, or series of acquisitions, by any person or entity, or
          group of related persons or entities, of a cumulative total of
          thirty-three and one-third percent (33-1/3%) or more of the voting
          stock of Licensee or its Controlling Affiliate(s), or the right to
          vote such percentage (or, if Licensee is a partnership, resulting in
          the transfer of thirty-three and one-third percent (33-1/3%) or more
          of the profit and loss participation in Licensee, or the occurrence of
          any of the foregoing with respect to any general partner of Licensee;
          or, if Licensee is a legal entity other than a corporation or
          partnership, resulting in the transfer of thirty-three and one-third
          percent (33-

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          1/3%) or more of the control of Licensee, or the occurrence of any of
          the foregoing with respect to any manager or administrator of the
          legal entity).

     B.   Licensee agrees to provide Disney with at least thirty (30) days prior
          written notice of any desired assignment of this Agreement or other
          transfer as defined in Paragraph 32.A. At the time Licensee gives such
          notice, Licensee shall provide Disney with the information and
          documentation necessary to evaluate the contemplated transaction.
          Disney's consent (if given) to any assignment of this Agreement or
          other transfer as defined in Paragraph 32.A. shall be subject to such
          terms and conditions as Disney deems appropriate, including but not
          limited to, payment of a transfer fee. The amount of the transfer fee
          shall be determined by Disney based upon the circumstances of the
          particular assignment or transfer, taking into account such factors as
          the estimated value of the license being assigned or otherwise
          transferred; the risk of business interruption or loss of quality,
          production or control Disney may suffer as a result of the assignment
          or other transfer; the identity, reputation, creditworthiness,
          financial condition and business capabilities of the proposed assignee
          or other entity involved in the transfer; and Disney's internal costs
          related to the assignment or other transfer; provided, however, in no
          event shall the transfer fee be in an amount less than U.S. $ * for
          each Disney license (or Schedule), brand and/or property (as
          applicable) involved in an assignment or other transfer, up to a
          maximum total fee of U.S. $ * per transfer for all affected Disney
          licenses (or Schedules), brands and/or properties (as applicable)
          within the Territory and Canada at the time of the subject transfer.
          The foregoing transfer fee shall not apply if this Agreement is
          assigned to one of Licensee's Affiliates as part of a corporate
          reorganization exclusively among some or all of the entities existing
          in Licensee's corporate structure when this Agreement is signed;
          provided, however, that Licensee must give Disney written notice of
          such assignment and a description of the reorganization.
          Notwithstanding the foregoing, a transfer fee will not be triggered by
          any of the following transfers of voting stock or other beneficial
          interest in Licensee, unless occurring as part of or in conjunction
          with a transaction that would trigger a transfer fee: (1)
          distribution(s) in the ordinary course of Licensee's business on
          employee or director stock option plans; or (2) transfers for estate
          planning purposes among the current shareholders of Licensee who are
          members of the Sidman family (including their spouses and children) as
          their interests appear when this Agreement is signed; or (3)
          repurchases of its own stock by Licensee as part of a corporate stock
          repurchase program but not including any issuer tender offer or
          exchange offer; provided, however, that Licensee shall maintain
          substantially the same management and continue to operate in
          substantially the same fashion as prior to any of the transfers
          described

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          above, and provided further, that in any event, any of the transfers
          described above shall remain subject to Disney's consent as set forth
          in Paragraph 32.A. The provisions of this Paragraph 32 shall supersede
          any conflicting provisions on this subject in any merchandise license
          agreement previously entered into between the parties for this
          Territory.

     C.   Licensee acknowledges that it has read and understands the Transfer
          Fee Policy attached hereto, which governs transfer fee procedures
          under this Agreement. The Transfer Fee Policy is incorporated herein
          by this reference.

     D.   Notwithstanding Paragraphs 32.A. and B., Licensee may, upon Disney's
          prior written consent, sublicense Licensee's rights, obligations, or
          both, under this Agreement, to any of Licensee's Affiliates, provided
          that each such Affiliate agrees to be bound by all of the terms and
          conditions of this Agreement, and provided that each such Affiliate
          agrees to guarantee Licensee's full performance of this Agreement
          (including, but not limited to, Paragraph 25) and to indemnify Disney
          for any failure of such performance, and further provided that
          Licensee and each such Affiliate agree to provide Disney with
          satisfactory documentation of such agreement(s), guarantee(s), and
          indemnification upon Disney's request therefor, and in a form
          satisfactory to Disney. Licensee hereby represents and irrevocably and
          unconditionally guarantees that any and all Affiliates sublicensed
          hereunder will observe and perform all of Licensee's obligations under
          this Agreement, including, but not limited to, the provisions
          governing approvals, and compliance with approved samples, applicable
          Laws, indemnification and all other provisions hereof, and that they
          will otherwise adhere strictly to all of the terms hereof and act in
          accordance with Licensee's obligations hereunder. Any involvement of
          an Affiliate in the activities which are the subject of this Agreement
          shall be deemed carried on pursuant to such a sublicense and thus
          covered by such guarantee; however, unless Licensee has obtained
          Disney's consent to sublicense an Affiliate in each instance, such
          Affiliate shall be deemed to be included in the term "Licensee" for
          all purposes under this Agreement, and Disney may treat such
          unapproved involvement of the Affiliate as a breach of the Agreement.
          In the event of any sublicense to an Affiliate hereunder, the
          reference in Paragraph 32.A. to "Controlling Affiliate" shall include
          such Affiliate sublicensee.

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33.  RELATIONSHIP

     This Agreement does not provide for a joint venture, partnership, agency or
     employment relationship between the parties, or any other relationship than
     that of licensor and licensee.

34.  CONSTRUCTION

     The language of all parts of this Agreement shall in all cases be construed
     as a whole, according to its fair meaning and not strictly for or against
     any of the parties. Headings of paragraphs herein are for convenience of
     reference only and are without substantive significance.

35.  MODIFICATIONS OR EXTENSIONS OF THIS AGREEMENT

     Except as otherwise provided herein, this Agreement can only be extended or
     modified by a writing signed by authorized representatives of both parties;
     provided, however, that certain modifications shall be effective if signed
     by the party to be charged and communicated to the other party.

36.  NOTICES

     All notices which either party is required or may desire to serve upon the
     other party shall be in writing, addressed to the party to be served at the
     address set forth on page 1 of this Agreement, and may be served personally
     or by depositing the same addressed as herein provided (unless and until
     otherwise notified), postage prepaid, in the United States mail. Such
     notice shall be deemed served upon personal delivery or upon the date of
     mailing; provided, however, that Disney shall be deemed to have been served
     with a notice of a request for approval of materials under this Agreement
     only upon Disney's actual receipt of the request and of any required
     accompanying materials. Any notice sent to Disney hereunder shall be sent
     to the attention of "Vice President, Licensing", unless Disney advises
     Licensee in writing otherwise.

37.  MUSIC

     Music is not licensed hereunder. Any charges, fees or royalties payable for
     music rights or any other rights not covered by this Agreement shall be
     additional to the Royalties and covered by separate agreement.

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38.  PREVIOUS AGREEMENTS

     This Agreement, and any confidentiality agreement Licensee may have signed
     pertaining to any of the Licensed Material, contains the entire agreement
     between the parties concerning the subject matter hereof and supersedes any
     pre-existing or contemporaneous agreement and any oral or written
     communications between the parties.

39.  CHOICE OF LAW AND FORUM

     This Agreement shall be deemed to be an executory agreement entered into in
     California and shall be governed and interpreted according to the laws of
     the State of California applicable to contracts made and to be fully
     performed in California. Any legal actions pertaining to this Agreement
     shall be commenced within the State of California and within either Los
     Angeles or Orange Counties, and Licensee consents to the jurisdiction of
     the courts located in Los Angeles or Orange Counties.

40.  EQUITABLE RELIEF

     Licensee acknowledges that Disney will have no adequate remedy at law if
     Licensee continues to manufacture, sell, advertise, promote or distribute
     the Articles upon the expiration or termination of the term of any
     applicable Schedule under this Agreement. Licensee acknowledges and agrees
     that, in addition to any and all other remedies available to Disney, Disney
     shall have the right to have any such activity by Licensee restrained by
     equitable relief, including, but not limited to, a temporary restraining
     order, a preliminary injunction, a permanent injunction, or such other
     alternative relief as may be appropriate, without the necessity of Disney
     posting any bond.

41.  GOODWILL

     Licensee acknowledges that the rights and powers retained by Disney
     hereunder are necessary to protect Disney's (or its licensors', if
     applicable) copyrights and property rights, and, specifically, to conserve
     Disney's (and its licensors', if applicable) goodwill and good name, and
     the name "Disney", and therefore Licensee agrees that Licensee will not
     allow the same to become involved in matters which will, or could, detract
     from or impugn the public acceptance and popularity thereof, or impair
     their legal status.

<PAGE>   42
The First Years, Inc.
CONSUMER PRODUCTS LICENSE - DISNEY PROPERTIES
Agreement dated August 1, 2000
Page 42

42.  POWER TO SIGN

     The parties warrant and represent that their respective representatives
     signing this Agreement have full power and proper authority to sign this
     Agreement and to bind the parties.

43.  SURVIVAL OF OBLIGATIONS

     The respective obligations of the parties under this Agreement, which by
     their nature would continue beyond the termination, cancellation or
     expiration of this Agreement, including but not limited to indemnification,
     insurance, payment of Royalties, audits, and Paragraph 29, shall survive
     termination, cancellation or expiration of this Agreement.

44.  SEVERABILITY OF PROVISIONS

     The terms of this Agreement are severable and the invalidity of any term of
     this Agreement shall not affect the validity of any other term.

Please sign below under the word "Agreed". When signed by both parties this
shall constitute an agreement between Disney and Licensee.

AGREED:

DISNEY ENTERPRISES, INC.

By:   /s/ Jeffery Fradin
    ----------------------------------

Title:   Vice President
       -------------------------------

Date:   9/20/00
      --------------------------------

THE FIRST YEARS, INC.

By:   /s/  Ronald J. Sidman
    ----------------------------------

Title:   President
       -------------------------------

<PAGE>   43
                                CATALOG SCHEDULE
                        (LIST OF PRE-APPROVED CATALOGS)

                          HOME FURNISHINGS/HOUSEWARES

                                    Upscale
                                    -------

                    Ballard Design
                    Casual Living
                    Celebration Fantastic
                    Chambers
                    Charles Keath
                    Chef's Catalog
                    Faith Mountain
                    Garnett Hill
                    Hand-in-Hand
                    Horchow
                    Kitchen & Home
                    Kitchen Kaboodle
                    Linda Anderson
                    Metropolitan Museum of Art
                    Museum of Fine Arts, Boston
                    Norm Thompson
                    Nursery Works
                    One Step Ahead
                    Potpourri
                    Reader's Digest Home Life
                    Ross-Simons
                    Seasons
                    Sensational Beginnings
                    Signals

This Catalog Schedule is subject to change. Disney reserves the right to add
catalogs to or delete catalogs from the Catalog Schedule without prior notice to
Licensee. Licensee agrees to cease selling Articles to a deleted catalog within
sixty (60) days after written notice of the deletion. Disney will consider new
catalogs requested by Licensee on a case-by-case basis.

05/01/98

<PAGE>   44
                                CATALOG SCHEDULE
                        (LIST OF PRE-APPROVED CATALOGS)

                          HOME FURNISHINGS/HOUSEWARES

                                    Upscale
                                    -------
                                  (Continued)

                    Smithsonian
                    Spiegel
                    Sugar Hill
                    The Cotton Gin
                    The Linen Source
                    The Paragon
                    The Right Start
                    The Wish List
                    Touch of Class
                    Touchstone
                    Trifles
                    Wireless

This Catalog Schedule is subject to change. Disney reserves the right to add
catalogs to or delete catalogs from the Catalog Schedule without prior notice to
Licensee. Licensee agrees to cease selling Articles to a deleted catalog within
sixty (60) days after written notice of the deletion. Disney will consider new
catalogs requested by Licensee on a case-by-case basis.

05/01/98

<PAGE>   45
                                CATALOG SCHEDULE
                        (LIST OF PRE-APPROVED CATALOGS)

                          HOME FURNISHINGS/HOUSEWARES

                                      Mass
                                      ----

                         Apple Creek
                         Armchair Shopper
                         Avon (EXCLU. PERSONAL CARE)
                         Domestications
                         Fingerhut
                         Lillian Vernon
                         Miles Kimball
                         Popular Club

This Catalog Schedule is subject to change. Disney reserves the right to add
catalogs to or delete catalogs from the Catalog Schedule without prior notice to
Licensee. Licensee agrees to cease selling Articles to a deleted catalog within
sixty (60) days after written notice of the deletion. Disney will consider new
catalogs requested by Licensee on a case-by-case basis.

05/01/98
<PAGE>   46

                          SCHEDULE TO LICENSE AGREEMENT

1.   Schedule #1 to License Agreement Dated August 1, 2000 between Disney
     Enterprises, Inc. and THE FIRST YEARS, INC. ("Agreement").

2.   Effective date of this Schedule: January 1, 2001.

3.   Termination date of this Schedule: *.

4.   Property: Winnie The Pooh characters (i.e., WINNIE THE POOH, CHRISTOPHER
     ROBIN, PIGLET, RABBIT, EEYORE, TIGGER, OWL, GOPHER, KANGA AND ROO), all in
     the style as designed by Disney, but only depictions of such characters,
     and accompanying design elements, as may be designated by Disney.

5.   Territory: The United States, United States PX's wherever located, and
     United States territories and possessions, excluding Puerto Rico,
     Commonwealth of Northern Mariana Islands and Palau. However, if sales are
     made to chain stores in the United States which have stores in Puerto Rico,
     such chain stores also may supply Articles to such stores in Puerto Rico.

6.   Marketing Date: By January 1, 2001, for all Articles.

7.   Royalty Advance payment(s) and due date(s): * .

8.   Royalty Guarantee increments during the term of this Schedule:

          *

9.   Royalty rate:

          *

10.  Articles:

     A.   FEEDING AND SOOTHING:

          (1)      Bottles
          (2)      Bibs (vinyl only)
          (3)      Cups
          (4)      Pacifiers and attachers
          (5)      Bowls
          (6)      Dishes
          (7)      Feeding utensils
          (8)      Snack containers
          (9)      Cool totes
          (10)     Placemats
          (11)     Floor mats
          (12)     Burp cloths

<PAGE>   47
Schedule 1 to Agreement dated Auguest 1, 2000
Page 2

          (13)     Toddler sports bottles

     B.   CARE AND SAFETY:

          (1)      Changing pads
          (2)      Carriers (front and back)
          (3)      Handheld showers
          (4)      Sponges
          (5)      Spout guards
          (6)      Shampoo visors
          (7)      Car organizers
          (8)      Non-activity crib lights
          (9)      Combs and brushes
          (10)     Night lights
          (11)     Car shades
          (12)     Diaper pins
          (13)     Tub thermometers
          (14)     Tub organizers
          (15)     Infant bath tubs
          (16)     Baby bathers
          (17)     Hooded towels
          (18)     Wash cloths/wash mitts
          (19)     Booster seats
          (20)     Step stools
          (21)     Infant toothbrushes and toothcare organizers
          (22)     Bed rails
          (23)     Monitors
          (24)     Scratch mitts
          (25)     Bath mats
          (26)     Hampers

     C.   PLAYTHINGS:

          (1)      Hand-held rattles
          (2)      Teethers
          (3)      Suction toys
          (4)      Linking toys
          (5)      Electronic hand-held toys (with rattle or squeaker functions)
          (6)      Bath toys
          (7)      Crib toys
          (8)      Foot rattles and wrist rattles
          (9)      Squeeze toys
          (10)     Infant rings
          (11)     Chime balls
          (12)     Bouncy seats
          (13)     Accessory toys (i.e., stroller toys, carrier toys and high
                   chair toys)

     For the period commencing * , and ending * , the SKU designs for Articles
     Numbers A.1, A.2, A.3, B.11 and C.1 shall be refreshed and renewed. For the
     period commencing

<PAGE>   48
Schedule 1 to Agreement dated Auguest 1, 2000
Page 3

     * , and ending * , the SKU designs for Articles Numbers A.4 through A.7,
     B.9, B.21 and C.2 shall be refreshed and renewed.

     Articles Numbers C.1 through C.13 shall be replaced as mutually agreed upon
     by Disney and Licensee during the designated planning process.

     One "marquee" Article utilizing the Property set forth in section 4 above
     shall be presented at the Juvenile Products Manufacturers Association
     (JPMA) during each calendar year of the term of this Schedule. For purposes
     of this Schedule, a "marquee" Article is defined as an Article which
     contains or includes an innovation or technological advance, or has
     strategic significance in the industry, as mutually determined by Disney
     and Licensee during mutually designated planning meetings.

     Licensee shall produce between one to two category "breakout" Articles
     utilizing the Property set forth in section 4 above during each calendar
     year of the term of this Schedule. For purposes of this Schedule, a
     "breakout" Article is defined as an existing Article which contains or
     includes a new innovative or technological feature or advancement, but on a
     lower level than a marquee Article, as mutually determined by Disney and
     Licensee during mutually designated planning meetings.

11.  Samples: Six (6) of each SKU of each Article.

12.  Distribution:

     Licensee will sell the Articles only to the following Retailers in the
     Territory for resale to the public in the Territory, or to Wholesalers in
     the Territory for resale to such Retailers: (1) mass market Retailers
     (including such Retailers as Target, Toys R Us, WalMart and Kmart), (2)
     value-oriented department stores (including such Retailers as Sears and
     Mervyn's), (3) value-oriented specialty stores, (4) drug store chains, and
     (5) supermarkets and food chains; provided, however, that Article Number
     C.13 may be sold only to the infant buyers of supermarkets and food chains.
     Articles Numbers A.1 through A.4, A.9, A.13, B.2, B.5, B.14, B.21, B.25,
     C.1, C.2, C.5 through C.8 and C.11 also may be sold to the following
     Retailers in the Territory for resale to the public in the Territory, or to
     Wholesalers in the Territory for resale to such Retailers: (1) upscale
     Retailers (including such Retailers as Robinsons-May, Nordstrom's and
     Bloomingdale's), (2) better specialty stores, and (3) mid-tier department
     stores (including such Retailers as J.C. Penney and Kohl's). Licensee will
     not sell the Articles to unauthorized Retailers or Wholesalers, or to
     warehouse clubs, convenience stores or gas stations. If there is a question
     as to whether a particular customer falls within any of the categories
     specified herein, Disney's determination shall be binding. Licensee may
     sell the Articles utilizing the Property set forth in section 4 above to
     customers for resale through the mass catalogs listed on the Mass Catalog
     Schedule to the Agreement, subject to Paragraph 2.A.(4) of the Agreement
     and this Schedule 1. In addition, Articles Numbers A.1 through A.4, A.9,
     A.13, B.2, B.5, B.14, B.21, B.25, C.1, C.2, C.5 through C.8 and C.11 may be
     sold to customers for resale through the upscale catalogs listed on the
     Upscale Catalog Schedule to the Agreement, subject to Paragraph 2.A.(4) of
     the Agreement and this Schedule 1.

13.  Special provisions:

     A.   Copyright notice:

<PAGE>   49
Schedule 1 to Agreement dated Auguest 1, 2000
Page 4

          Without limiting the provisions of Paragraph 13 of the Agreement,
          Licensee agrees to include on the Article, or the packaging for the
          Article, or the hang tag for the Article (if applicable), the
          following language: Based on the "Winnie The Pooh" works, copyright
          A.A. Milne and E.H. Shepard.

<PAGE>   50

                          SCHEDULE TO LICENSE AGREEMENT

1.   Schedule #2 to License Agreement Dated August 1, 2000 between Disney
     Enterprises, Inc. and THE FIRST YEARS, INC. ("Agreement").

2.   Effective date of this Schedule: January 1, 2001.

3.   Termination date of this Schedule: * .

4.   Properties: DISNEY CLASSICS, comprised of the following individual
     Properties (collectively, the "Disney Classics Properties"):

     A.   WALT DISNEY'S BAMBI characters, but only such characters and
          depictions of such characters, and accompanying design elements, as
          may be designated by Disney;
     B.   WALT DISNEY'S SLEEPING BEAUTY characters, but only such characters and
          depictions of such characters, and accompanying design elements, as
          may be designated by Disney;
     C.   WALT DISNEY'S SNOW WHITE AND THE SEVEN DWARFS characters, but only
          such characters and depictions of such characters, and accompanying
          design elements, as may be designated by Disney;
     D.   WALT DISNEY'S THE JUNGLE BOOK characters, but only such characters and
          depictions of such characters, and accompanying design elements, as
          may be designated by Disney;
     E.   WALT DISNEY'S CINDERELLA characters, but only such characters and
          depictions of such characters, and accompanying design elements, as
          may be designated by Disney;
     F.   WALT DISNEY'S DUMBO characters, but only such characters and
          depictions of such characters, and accompanying design elements, as
          may be designated by Disney;
     G.   WALT DISNEY'S LADY AND THE TRAMP characters, but only such characters
          and depictions of such characters, and accompanying design elements,
          as may be designated by Disney;
     H.   WALT DISNEY'S PINOCCHIO characters, but only such characters and
          depictions of such characters, and accompanying design elements, as
          may be designated by Disney;
     I.   WALT DISNEY'S ALICE IN WONDERLAND characters, but only such characters
          and depictions of such characters, and accompanying design elements,
          as may be designated by Disney;
     J.   WALT DISNEY'S PETER PAN characters, but only such characters and
          depictions of such characters, and accompanying design elements, as
          may be designated by Disney;
     K.   WALT DISNEY'S THE ARISTOCATS characters, but only such characters and
          depictions of such characters, and accompanying design elements, as
          may be designated by Disney;

<PAGE>   51
Schedule 2 to Agreement dated August 1, 2000
Page 2

     L.   DISNEY'S ALADDIN characters, but only such characters and depictions
          of such characters, and accompanying design elements, as may be
          designated by Disney;
     M.   DISNEY'S BEAUTY AND THE BEAST characters, but only such characters and
          depictions of such characters, and accompanying design elements, as
          may be designated by Disney;
     N.   DISNEY'S PRINCESS characters, but only such characters and depictions
          of such characters, and accompanying design elements, as may be
          designated by Disney.

5.   Territory: The United States, United States PX's wherever located, and
     United States territories and possessions, excluding Puerto Rico,
     Commonwealth of Northern Mariana Islands and Palau. However, if sales are
     made to chain stores in the United States which have stores in Puerto Rico,
     such chain stores also may supply Articles to such stores in Puerto Rico.

6.   Marketing Date: Any time during the term of this Schedule for all Articles
     using all Disney Classics Properties constituting the Properties.

7.   Royalty Advance payment(s) and due date(s): * .

8.   Royalty Guarantee increments during the term of this Schedule:

          *

9.   Royalty rate:

          *

10.  Articles:

     A.   FEEDING AND SOOTHING:

          (1)      Bottles
          (2)      Bibs (vinyl only)
          (3)      Cups
          (4)      Pacifiers and attachers
          (5)      Bowls
          (6)      Dishes
          (7)      Feeding utensils
          (8)      Snack containers
          (9)      Cool totes
          (10)     Placemats
          (11)     Floor mats
          (12)     Burp cloths
          (13)     Toddler sports bottles

     B.   CARE AND SAFETY:

          (1)      Changing pads

<PAGE>   52
Schedule 2 to Agreement dated Auguest 1, 2000
Page 3

          (2)      Carriers (front and back)
          (3)      Hand-held showers
          (4)      Sponges
          (5)      Spout guards
          (6)      Shampoo visors
          (7)      Car organizers
          (8)      Non-activity crib lights
          (9)      Combs and brushes
          (10)     Night lights
          (11)     Car shades
          (12)     Diaper pins
          (13)     Tub thermometers
          (14)     Tub organizers
          (15)     Infant bath tubs
          (16)     Baby bathers
          (17)     Hooded towels
          (18)     Wash cloths/wash mitts
          (19)     Booster seats
          (20)     Step stools
          (21)     Infant toothbrushes and toothcare organizers
          (22)     Bed rails
          (23)     Monitors
          (24)     Scratch mitts
          (25)     Bath mats
          (26)     Hampers

     C.   PLAYTHINGS:

          (1)      Hand-held rattles
          (2)      Teethers
          (3)      Suction toys
          (4)      Linking toys
          (5)      Electronic hand-held toys (with rattle or squeaker functions)
          (6)      Bath toys
          (7)      Crib toys
          (8)      Foot rattles and wrist rattles
          (9)      Squeeze toys
          (10)     Infant rings
          (11)     Chime balls
          (12)     Bouncy seats
          (13)     Accessory toys (i.e., stroller toys, carrier toys, and high
                   chair toys)

     For the period commencing * , and ending * , the SKU designs for Articles
     Numbers A.1, A.2, A.3, B.11 and C.1 shall be refreshed and renewed. For the
     period commencing *, and ending *, the SKU designs for Articles Numbers A.4
     through A.7, B.9, B.21 and C.2 shall be refreshed and renewed.

     Articles Numbers C.1 through C.13 shall be replaced as mutually agreed upon
     by Disney and Licensee during the designated planning process.

<PAGE>   53
Schedule 2 to Agreement dated Auguest 1, 2000
Page 4

     One "marquee" Article utilizing the Property set forth in section 4 above
     shall be presented at the Juvenile Products Manufacturers Association
     (JPMA) during each calendar year of the term of this Schedule. For purposes
     of this Schedule, a "marquee" Article is defined as an Article which
     contains or includes an innovation or technological advance, or has
     strategic significance in the industry, as mutually determined by Disney
     and Licensee during the designated planning process.

     Licensee shall produce between one to two category "breakout" Articles
     utilizing the Property set forth in section 4 above during each calendar
     year of the term of this Schedule. For purposes of this Schedule, a
     "breakout" Article is defined as an existing Article which contains or
     includes a new innovative or technological feature or advancement, but on a
     lower level than a marquee Article, as mutually determined by Disney and
     Licensee during the designated planning process.

11.  Samples: Six (6) of each SKU of each Article.

12.  Distribution:

     Licensee will sell the Articles only to the following Retailers in the
     Territory for resale to the public in the Territory, or to Wholesalers in
     the Territory for resale to such Retailers: (1) mass market Retailers
     (including such Retailers as Target, Toys R Us, WalMart and Kmart), (2)
     value-oriented department stores (including such Retailers as Sears and
     Mervyn's), (3) value-oriented specialty stores, (4) drug store chains, and
     (5) supermarkets and food chains; provided, however, that Article Number
     C.13 may be sold only to the infant buyers of supermarkets and food chains.
     Articles Numbers A.1 through A.4, A.9, A.13, B.2, B.5, B.14, B.21, B.25,
     C.1, C.2, C.5 through C.8 and C.11 also may be sold to the following
     Retailers in the Territory for resale to the public in the Territory, or to
     Wholesalers in the Territory for resale to such Retailers: (1) upscale
     Retailers (including such Retailers as Robinsons-May, Nordstrom's and
     Bloomingdale's), (2) better specialty stores, and (3) mid-tier department
     stores (including such Retailers as J.C. Penney and Kohl's). Licensee will
     not sell the Articles to unauthorized Retailers or Wholesalers, or to
     warehouse clubs, convenience stores or gas stations. If there is a question
     as to whether a particular customer falls within any of the categories
     specified herein, Disney's determination shall be binding. Licensee may
     sell the Articles utilizing the Property set forth in section 4 above to
     customers for resale through the mass catalogs listed on the Mass Catalog
     Schedule to the Agreement, subject to Paragraph 2.A.(4) of the Agreement
     and this Schedule 2. In addition, Articles Numbers A.1 through A.4, A.9,
     A.13, B.2, B.5, B.14, B.21, B.25, C.1, C.2, C.5 through C.8 and C.11 may be
     sold to customers for resale through the upscale catalogs listed on the
     Upscale Catalog Schedule to the Agreement, subject to Paragraph 2.A.(4) of
     the Agreement and this Schedule 2.

13.  Special provisions:

     A.   Alternative releases:

          Licensee acknowledges that the individual Disney Classics Properties
          constituting the Property are Disney's original animated features,
          some or all of which may be released on video during the term of this
          Schedule, and include any theatrical re-releases of said Disney
          Classics Properties. Licensee further acknowledges that Licensee's
          license hereunder does not extend to any live action versions of these

<PAGE>   54
Schedule 2 to Agreement dated Auguest 1, 2000
Page 5

          Disney Classics Properties (whether or not animation is included in
          such versions), any remakes, prequels or sequels of these Disney
          Classics Properties, any direct to video remakes, prequels or sequels
          of these or any other derivation or adaptation of these Disney
          Classics Properties in any media whatsoever. All of the foregoing
          variations shall be referred to as "Alternative Releases." In the
          event there is an Alternative Release of any of the Disney Classics
          Properties during the term of this Schedule, upon written notice from
          Disney, Licensee shall have the right to negotiate with Disney as to
          the terms and conditions applicable to a license for any such
          Alternative Release. If after good faith negotiations for up to thirty
          (30) days, the parties are not able to reach agreement as to the terms
          and conditions for any such license, Disney may, upon written notice
          to Licensee, withdraw the affected Disney Classics Property(ies) from
          the Licensed Material. In such case, Licensee will immediately cease
          manufacturing Articles using such Disney Classics Property(ies) except
          as necessary to fulfill orders in hand, and Licensee may continue to
          sell its then current inventory of Articles using such Disney Classics
          Property(ies) until the end of the term of this Schedule or ninety
          (90) days after Disney's written notice, whichever is earlier. Disney
          shall also consider, in good faith, whether there should be a
          reduction of the Guarantee because of the deletion of any Disney
          Classics Property.

     B.   Statements and Payments of Royalties:

          In addition to the information requested pursuant to Paragraph 20 of
          the Agreement, Licensee shall separately report all information
          required under the Agreement regarding the Disney's Princess Property,
          and may report collectively for all of the other Disney Classics
          Properties.

<PAGE>   55

                          SCHEDULE TO LICENSE AGREEMENT

1.   Schedule #3 to License Agreement Dated August 1, 2000 between Disney
     Enterprises, Inc. and THE FIRST YEARS, INC. ("Agreement").

2.   Effective date of this Schedule: August 1, 2000.

3.   Termination date of this Schedule: *.

4.   Property: Disney's Standard Characters (i.e., MICKEY MOUSE, MINNIE MOUSE,
     DONALD DUCK, DAISY DUCK, PLUTO and GOOFY, but not SPORT GOOFY), but only
     depictions of such characters, and accompanying design elements, as may be
     designated by Disney.

5.   Territory: The United States, United States PX's wherever located, and
     United States territories and possessions, excluding Puerto Rico,
     Commonwealth of Northern Mariana Islands and Palau. However, if sales are
     made to chain stores in the United States which have stores in Puerto Rico,
     such chain stores also may supply Articles to such stores in Puerto Rico.

6.   Marketing Date: By December 1, 2000, for all Articles.

7.   Royalty Advance payment(s) and due date(s): * .

8.   Royalty Guarantee increments during the term of this Schedule:

          *

9.   Royalty rate:

          *

10.  Articles:

     A.   FEEDING AND SOOTHING:

          (1)      Bottles
          (2)      Bibs (vinyl only)
          (3)      Cups
          (4)      Pacifiers and attachers
          (5)      Bowls
          (6)      Dishes
          (7)      Feeding utensils
          (8)      Snack containers
          (9)      Cool totes
          (10)     Placemats
          (11)     Floor mats
          (12)     Burp cloths
          (13)     Toddler sports bottles

<PAGE>   56
Schedule 3 to Agreement dated Auguest 1, 2000
Page 2

     B.   CARE AND SAFETY:

          (1)      Changing pads
          (2)      Carriers (front and back)
          (3)      Hand-held showers
          (4)      Sponges
          (5)      Spout guards
          (6)      Shampoo visors
          (7)      Car organizers
          (8)      Non-activity crib lights
          (9)      Combs and brushes
          (10)     Night lights
          (11)     Car shades
          (12)     Diaper pins
          (13)     Tub thermometers
          (14)     Tub organizers
          (15)     Infant bath tubs
          (16)     Baby bathers
          (17)     Hooded towels
          (18)     Wash cloths/wash mitts
          (19)     Booster seats
          (20)     Step stools
          (21)     Infant toothbrushes and toothcare organizers
          (22)     Bed rails
          (23)     Monitors
          (24)     Scratch mitts
          (25)     Bath mats
          (26)     Hampers

     C.   PLAYTHINGS:

          (1)      Hand-held rattles
          (2)      Teethers
          (3)      Suction toys
          (4)      Linking toys
          (5)      Electronic hand-held toys (with rattle or squeaker functions)
          (6)      Bath toys
          (7)      Crib toys
          (8)      Foot rattles and wrist rattles
          (9)      Squeeze toys
          (10)     Infant rings
          (11)     Chime balls
          (12)     Bouncy seats
          (13)     Accessory toys (i.e., stroller toys, carrier toys and high
                   chair toys)

     For the period commencing * , and ending * , the SKU designs for Articles
     Numbers A.1, A.2, A.3, B.11 and C.1 shall be refreshed and renewed. For the
     period commencing *, and ending *, the SKU designs for Articles Numbers A.4
     through A.7, B.9, B.21 and C.2 shall be refreshed and renewed.

<PAGE>   57
Schedule 3 to Agreement dated Auguest 1, 2000
Page 3

     Articles Numbers C.1 through C.13 shall be replaced as mutually agreed upon
     by Disney and Licensee during the designated planning process.

     One "marquee" Article utilizing the Property set forth in section 4 above
     shall be presented at the Juvenile Products Manufacturers Association
     (JPMA) during each calendar year of the term of this Schedule. For purposes
     of this Schedule, a "marquee" Article is defined as an Article which
     contains or includes an innovation or technological advance, or has
     strategic significance in the industry, as mutually determined by Disney
     and Licensee during the designated planning process.

     Licensee shall produce between one to two category "breakout" Articles
     utilizing the Property set forth in section 4 above during each calendar
     year of the term of this Schedule. For purposes of this Schedule, a
     "breakout" Article is defined as an existing Article which contains or
     includes a new innovative or technological feature or advancement, but on a
     lower level than a marquee Article, as mutually determined by Disney and
     Licensee during the designated planning process.

11.  Samples: Six (6) of each SKU of each Article.

12.  Distribution:

     Licensee will sell the Articles only to the following Retailers in the
     Territory for resale to the public in the Territory, or to Wholesalers in
     the Territory for resale to such Retailers: (1) mass market Retailers
     (including such Retailers as Target, Toys R Us, WalMart and Kmart), (2)
     value-oriented department stores (including such Retailers as Sears and
     Mervyn's), (3) value-oriented specialty stores, (4) drug store chains, and
     (5) supermarkets and food chains; provided, however, that Article Number
     C.13 may be sold only to the infant buyers of supermarkets and food chains.
     Articles Numbers A.1 through A.4, A.9, A.13, B.2, B.5, B.14, B.21, B.25,
     C.1, C.2, C.5 through C.8 and C.11 also may be sold to the following
     Retailers in the Territory for resale to the public in the Territory, or to
     Wholesalers in the Territory for resale to such Retailers: (1) upscale
     Retailers (including such Retailers as Robinsons-May, Nordstrom's and
     Bloomingdale's), (2) better specialty stores, and (3) mid-tier department
     stores (including such Retailers as J.C. Penney and Kohl's). Licensee will
     not sell the Articles to unauthorized Retailers or Wholesalers, or to
     warehouse clubs, convenience stores or gas stations. If there is a question
     as to whether a particular customer falls within any of the categories
     specified herein, Disney's determination shall be binding. Licensee may
     sell the Articles utilizing the Property set forth in section 4 above to
     customers for resale through the mass catalogs listed on the Mass Catalog
     Schedule to the Agreement, subject to Paragraph 2.A.(4) of the Agreement
     and this Schedule 3. In addition, Articles Numbers A.1 through A.4, A.9,
     A.13, B.2, B.5, B.14, B.21, B.25, C.1, C.2, C.5 through C.8 and C.11 may be
     sold to customers for resale through the upscale catalogs listed on the
     Upscale Catalog Schedule to the Agreement, subject to Paragraph 2.A.(4) of
     the Agreement and this Schedule 3.

<PAGE>   58

                               TRANSFER FEE POLICY

As provided in Paragraph 32.B. of the License Agreement, it is Disney's policy
to charge a transfer fee in connection with any permitted assignment of the
license or other "transfer," as that term is defined in Paragraph 32.A. The
amount of the transfer fee is based on the circumstances of the particular
assignment or transfer, taking into account such factors as:

     -    the estimated value of the license being assigned or involved in the
          transfer

     -    the risk of business interruption

     -    the risk of loss of quality, production or control

     -    the identity, reputation, creditworthiness, financial condition and
          business capabilities of the proposed assignee or entity involved in
          the transfer

     -    Disney's internal costs related to the assignment or transfer

At a minimum, the transfer fee will be U.S. $ * for each license, brand and/or
property (as applicable), and as agreed between Disney and The First Years, the
transfer fee may be in an amount up to a maximum total fee of U.S. $ * per
transfer for all affected licenses within the Territory and Canada at the time
of the subject transfer, subject to those exceptions stated in Paragraph 32.B.
of the License Agreement. No Licensee or any company involved with a Licensee in
an assignment or transfer situation should rely upon any express or implied
verbal representations that are purported to be made on Disney's behalf as to
the amount of any given fee to be assessed. Disney Licensing's Finance
Department will communicate the actual amount of the fee calculated in each
approved transaction.

In any prospective assignment or transfer situations, Licensees must inform the
persons and companies with which they are dealing that no assignment or transfer
may occur without Disney's prior written consent, to be granted or withheld in
Disney's absolute discretion, and that any approved transaction will also entail
a transfer fee. Licensees must give Disney at least 30 days prior written notice
of any desired assignment or other transfer, together with any information and
documentation necessary to evaluate the contemplated transaction. Licensees
should not endanger the closing of their desired transactions by failing to
comply with these provisions of the License Agreement.

If Disney grants consent to a proposed transaction subject to the payment of a
transfer fee, and the transaction is concluded but the transfer fee is not paid
within the designated time, the subject License Agreement(s) shall automatically
terminate and any Guarantee shortfall(s) shall be immediately due and payable to
Disney. If Disney does not grant consent to a proposed assignment or transfer
and the Licensee nevertheless closes the transaction, the subject License
Agreement(s) shall automatically terminate and any Guarantee shortfall(s) shall
be immediately due and payable to Disney.

Disney's consent to any assignment or other transfer should in no way be
understood to be a guarantee or promise by Disney of a grant of any future
license(s), as those determinations will continue to be made on a contract by
contract basis.

Licensees must keep confidential all of the terms and conditions of Disney's
determinations regarding any transfer, including but not limited to, the amount
of any transfer fee required, except to the extent that Licensee is required to
disclose the terms and conditions of Disney's determination regarding any
transfer pursuant to any law, court order or process, the rules and regulations
of any governmental department, agency or authority (including, but not limited
to, the Securities and Exchange Commission) or generally accepted accounting
rules mandating disclosure in Licensee's financial statements. However, Disney
shall be permitted to review such disclosures in advance of their publication to
verify accuracy and to verify that the confidential information so disclosed
does not extend beyond what is necessary.

<PAGE>   59

                        CODE OF CONDUCT FOR MANUFACTURERS

At The Walt Disney Company, we are committed to:

     -    a standard of excellence in every aspect of our business and in every
          corner of the world;
     -    ethical and responsible conduct in all of our operations;
     -    respect for the rights of all individuals; and
     -    respect for the environment.

We expect these same commitments to be shared by all manufacturers of Disney
merchandise. At a minimum, we require that all manufacturers of Disney
merchandise meet the following standards:

CHILD LABOR              Manufacturers will not use child labor.

                         The term "child" refers to a person younger than 15
                         (or 14 where local law allows) or, if higher, the
                         local legal minimum age for employment or the age for
                         completing compulsory education.

                         Manufacturers employing young persons who do not fall
                         within the definition of "children" will also comply
                         with any laws and regulations applicable to such
                         persons.

INVOLUNTARY LABOR        Manufacturers  will not use any forced or involuntary
                         labor, whether prison, bonded, indentured or otherwise.

COERCION AND
     HARASSMENT          Manufacturers will treat each employee with dignity
                         and respect, and will not use corporal punishment,
                         threats of violence or other forms of physical,
                         sexual, psychological or verbal harassment or abuse.

NONDISCRIMINATION        Manufacturers will not discriminate in hiring and
                         employment practices, including salary, benefits,
                         advancement, discipline, termination or retirement,
                         on the basis of race, religion, age, nationality,
                         social or ethnic origin, sexual orientation, gender,
                         political opinion or disability.

ASSOCIATION              Manufacturers will respect the rights of employees to
                         associate, organize and bargain collectively in a
                         lawful and peaceful manner, without penalty or
                         interference.

HEALTH AND SAFETY        Manufacturers will provide employees with a safe and
                         healthy workplace in compliance with all applicable
                         laws and regulations, ensuring at a minimum, reasonable
                         access to potable water and sanitary facilities, fire
                         safety, and adequate lighting and ventilation.

                         Manufacturers will also ensure that the same
                         standards of health and safety are applied in any
                         housing that they provide for employees.

<PAGE>   60

COMPENSATION             We expect manufacturers to recognize that wages are
                         essential to meeting employees' basic needs.
                         Manufacturers will, at a minimum, comply with all
                         applicable wage and hour laws and regulations,
                         including those relating to minimum wages, overtime,
                         maximum hours, piece rates and other elements of
                         compensation, and provide legally mandated benefits. If
                         local laws do not provide for overtime pay,
                         manufacturers will pay at least regular wages for
                         overtime work. Except in extraordinary business
                         circumstances, manufacturers will not require employees
                         to work more than the lesser of (a) 48 hours per week
                         and 12 hours overtime or (b) the limits on regular and
                         overtime hours allowed by local law or, where local law
                         does not limit the hours of work, the regular work week
                         in such country plus 12 hours overtime. In addition,
                         except in extraordinary business circumstances,
                         employees will be entitled to at least one day off in
                         every seven-day period.

                         Where local industry standards are higher than
                         applicable legal requirements, we expect
                         manufacturers to meet the higher standards.

PROTECTION OF THE
     ENVIRONMENT         Manufacturers will comply with all applicable
                         environmental laws and regulations.

OTHER LAWS               Manufacturers will comply with all applicable laws
                         and regulations, including those pertaining to the
                         manufacture, pricing, sale and distribution of
                         merchandise.

                         All references to "applicable laws and regulations"
                         in this Code of Conduct include local and national
                         codes, rules and regulations as well as applicable
                         treaties and voluntary industry standards.

SUBCONTRACTING           Manufacturers will not use subcontractors for the
                         manufacture of Disney merchandise or components
                         thereof without Disney's express written consent, and
                         only after the subcontractor has entered into a
                         written commitment with Disney to comply with this
                         Code of Conduct.
MONITORING AND
     COMPLIANCE          Manufacturers will authorize Disney and its
                         designated agents (including third parties) to engage
                         in monitoring activities to confirm compliance with
                         this Code of Conduct, including unannounced on-site
                         inspections of manufacturing facilities and
                         employer-provided housing; reviews of books and
                         records relating to employment matters; and private
                         interviews with employees. Manufacturers will
                         maintain on site all documentation that may be needed
                         to demonstrate compliance with this Code of Conduct.

PUBLICATION              Manufacturers will take appropriate steps to ensure
                         that the provisions of this Code of Conduct are
                         communicated to employees, including the prominent
                         posting of a copy of this Code of Conduct, in the
                         local language and in a place readily accessible to
                         employees, at all times.

<PAGE>   61

                          CODE OF CONDUCT FOR LICENSEES

At The Walt Disney Company, we are committed to:

     -    a standard of excellence in every aspect of our business and in every
          corner of the world;
     -    ethical and responsible conduct in all of our operations;
     -    respect for the rights of all individuals; and
     -    respect for the environment.

We expect these same commitments to be shared by all Disney licensees and the
manufacturers with which they work in the production of Disney merchandise. At a
minimum, we require that all Disney licensees meet the following standards:

CONDUCT OF
     MANUFACTURING       Licensees that engage directly in the manufacturing
                         of Disney merchandise will comply with all of the
                         standards set forth in Disney's Code of Conduct for
                         Manufacturers, a copy of which is attached.

                         Licensees will ensure that each manufacturer other
                         than the licensee also enters into a written
                         commitment with Disney to comply with the standards
                         set forth in Disney's Code of Conduct for
                         Manufacturers.

                         Licensees will prohibit manufacturers from
                         subcontracting the manufacture of Disney merchandise
                         or components thereof without Disney's express
                         written consent, and only after the subcontractor has
                         entered into a written commitment with Disney to
                         comply with Disney's Code of Conduct for
                         Manufacturers.

MONITORING AND
     COMPLIANCE          Licensees will take appropriate steps, in
                         consultation with Disney, to develop, implement and
                         maintain procedures to evaluate and monitor
                         manufacturers of Disney merchandise and ensure
                         compliance with Disney's Code of Conduct for
                         Manufacturers, including unannounced on-site
                         inspections of manufacturing facilities and
                         employer-provided housing; review of books and
                         records relating to employment matters; and private
                         interviews with employees.

                         Licensees will authorize Disney and its designated
                         agents (including third parties) to engage in similar
                         monitoring activities to confirm Licensees'
                         compliance with this Code of Conduct. Licensees will
                         maintain on site all documentation that may be needed
                         to demonstrate such compliance.

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