The Children's Place Retail Stores Inc. said Thursday it missed several deadlines to remodel and refresh numerous stores in the Disney Store chain and expects to miss more deadlines.Under a long-term license agreement with Walt Disney Co. (nyse: DIS - news - people ), Children's Place operates the Disney Store retail chain in the U.S. and Canada. On June 8, Children's Place agreed to an amended license deal that included a timetable to renovate and upgrade hundreds of Disney stores.The discussions began after Disney said Children's Place failed to comply with some terms for the agreement, including obligations for renovation and maintenance.Children's Place said it has been unable to meet several of the deadlines in the remodeling timetable. The company also said it has identified various deadlines during the third and fourth quarters of fiscal year 2007 that it is likely to miss.Shares of Children's Place dropped $5.45, or 16.5 percent, to $27.57 in afternoon trading. The stock has traded between $12.46 and $15.63 during the past 52 weeks.The company said it is in talks with Disney to postpone the due dates of some of the remodeling obligations. In consideration for the changes, the companies have also discussed additional changes to the original license agreement, including allowing Disney to relocate its flagship store in Manhattan.The companies are also considering loosening restrictions on Disney's ability to grant direct licenses to other retailers, so that they apply only to retailers primarily focused on selling children's merchandise.

Children's Place said there is no guarantee that its talks with Disney will result in an agreement or deferment of its remodeling obligations.Until an amended agreement is signed, Children's Place said it will be in breach of the June letter agreement, which allows Disney to demand remedies or cancel the license deal altogether.The breach also constitutes a cross-default under the secured credit facility for the Disney Store chain, which entitles lenders to exercise their contractual remedies.(Based on a corrected statement from the company, this version CORRECTS details of license talks.)