Exhibit 10.64
SUBLICENSE AGREEMENT
No agreement is implied and this agreement is not binding unless this agreement
is signed and executed by all parties.
This Sublicense Agreement ("Agreement") is entered into as of October 27, 1999,
between FUNIMATION PRODUCTIONS, INC., a Texas corporation having its registered
office at ▇▇▇▇ ▇▇ ▇▇▇▇ ▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ U.S.A.
("Licensor") and Infogrames, Inc. a Delaware corporation having its principal
offices at ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
________________ ("Licensee").
W I T N E S S E T H :
WHEREAS, Licensor is the licensee of certain "Broadcasting Rights",
"Video Rights" and "Merchandising Rights" relating to the English version of the
"Film" and the "Property", identified more fully in Schedule A attached hereto;
and
WHEREAS, TOEI ANIMATION CO., LTD. ("Toei") is the owner of the
"Trademark" and other intellectual property rights relating to the Film and the
Property; and
WHEREAS, through its license from Toei, Licensor has the exclusive
power and authority to grant to Licensee within the "Licensed Territory"
identified in Schedule A attached hereto, the right, privilege and license to
use, manufacture and sell those types of "Licensed Products" which incorporate
or are otherwise based on the Film and the Property, said Licensed Products
being identified in Schedule A attached hereto, and to use the Trademark on or
in association with the Licensed Products; and
WHEREAS, Licensee has represented that it has the ability to
manufacture or have manufactured, market and distribute the Licensed Products in
the Licensed Territory and to exploit the Trademark on or in association with
the Licensed Products; and
WHEREAS, Licensee desires to obtain from Licensor the license to use,
manufacture and sell Licensed Products in the Licensed Territory and to exploit
the Trademark on or in association with the Licensed Products as indicated in
Schedule A; and
WHEREAS, both Licensee and Licensor are in agreement with respect to
the terms and conditions upon which Licensee shall use, manufacture and sell
Licensed Products and exploit the Trademark.
NOW, THEREFORE, in consideration of the promises and agreements set
forth herein, the parties, each intending to be legally bound, do hereby agree
as follows:
1. License.
(a) Licensor hereby grants to Licensee for the Term of
this Agreement as recited in Schedule A attached hereto, the exclusive right (as
defined in Schedule A) and license to use the Film and Property in connection
with the development, publishing, manufacture, sale, distribution and
advertisement of the Licensed Products, within the Licensed Territory only. It
is understood and agreed that this license shall pertain only to the Licensed
Products and does not extend to any other product or service. Licensed Product
are defined as those items listed in Schedule A, item 4, which are based upon
the Film and Property. In addition, Licensee shall have the non-exclusive right
and license to use the Film and Property in connection with the development,
publishing, manufacture, sale, distribution and
advertisement of electronic Dragonball Z Interactive Game strategy guides for
games associated with Licensee's games.
(b) Licensor hereby grants to Licensee for the Term of
this Agreement as recited in Schedule A attached hereto, an exclusive (except
for Bandai) license to use the Trademark on or in association with the Licensed
Products, as well as on packaging, promotional and advertising material
associated therewith, within the Licensed Territory only.
(c) Licensee shall not make, or authorize, any use,
direct or indirect, of the Licensed Products or the Trademark, like or similar,
in any other country outside the Licensed Territory and will not knowingly sell
the Licensed Products to persons who intend to resell the Licensed Products, or
exploit the Trademark, in any country outside the Licensed Territory.
(d) Licensee shall not sell or otherwise distribute the
Licensed Products to jobbers, wholesalers, distributors, retail stores or
merchants, whose sales or distributions are, or will be, made solely for
publicity purposes, combination sales, premiums, self liquidating offers
("SLO"), giveaways, vending, or similar methods of merchandising, or whose
business methods are questionable. For additional clarity, Licensee's rights do
not include the right to manufacture or market premium, promotional and SLO
items, except in connection with commercially reasonable promotional and
marketing activities directly associated with the Licensed Products as
authorized by Licensor. Licensor reserves the right to market premium,
promotional and SLO Licensed Products and is free to use any manufacturer.
(e) Licensed Products shall specifically exclude articles
associated directly or indirectly with any "Book Publishing Rights" and/or
"Music Publishing Rights" unless first approved in writing by Licensor. For
purposes hereof, the term "Music Publishing Rights" shall mean the right to
publish or perform music which is contained or presented in the Film, and the
term "Book Publishing Rights" shall mean the right to publish comic books, story
books, poster books, calendars and sticker albums or any other product based
upon the Property, the Film or the Trademark which tells a narrative story, but
shall not include any manuals, hints and/or tips for the Licensed Products, or
premiums associated with the Licensed Product, which are first approved in
writing by Licensor.
(f) Unless otherwise agreed in writing by the parties
hereto, Licensee shall not sublicense any of the rights sublicensed under this
Agreement, except that Licensee shall have the right to outsource manufacturing
and development to third parties, contracted by and approved by Licensor (not to
be unreasonably withheld), and shall have the right to outsource distribution in
any portion of the Territory where Licensee does not maintain its own
distribution network to a third party contracted by Licensee and approved by
Licensor, not to be unreasonably withheld. Licensor hereby approves the use of
Sega, Sony, Nintendo and Microsoft and each of their authorized manufacturers
for manufacturing hereunder.
(g) On Licensed Product and its associated packaging and
marketing materials, Licensee shall endeavor to adhere as faithfully as may be
practicable to the form in which the Property has appeared in the Film, making
due allowance for modifications necessitated by the change from one medium into
another. No substantial departures shall be made in the general appearance of
the Property or the Trademark without Licensor's prior written consent. It is
expressly agreed that the designs available to be exploited hereunder shall be
limited to the Property, and any designs from original comics, publishing items
or other products manufactured outside the Licensed Territory which do not
appear in the Film are not available for exploitation hereunder.
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(h) Licensee shall not change or permit any change of the
Property without obtaining the prior written consent of Licensor.
2. Term of this Agreement.
This Agreement and the provisions hereof, except as otherwise provided
herein, shall be in full force and effect commencing on the date of execution by
both parties and shall extend for a "Term" as recited in Schedule A attached
hereto.
3. Compensation.
(a)
(1) Upon the execution of this Agreement,
Licensee shall pay to Licensor an "Initial Guaranteed Minimum Royalty Advance"
in accordance with the terms of Schedule A attached hereto. This Royalty Advance
shall represent a non-refundable but recoupable advance against the royalty
which cumulatively accrues and becomes payable during the Term of this
Agreement.
(2) Licensee shall pay to Licensor a "Guaranteed
Minimum Royalty" in accordance with the terms of Schedule A attached hereto. The
Guaranteed Minimum Royalty shall represent a recoupable advance against the
Royalty which cumulatively accrues and becomes payable during the Term of this
Agreement.
(3) All Initial Guaranteed Minimum Royalty
Advance and Guaranteed Minimum Royalties paid by the Licensee to Licensor are
non-refundable notwithstanding the expiration or earlier termination of this
Agreement.
(b)
(1) During the Term of this Agreement, a
"Royalty" shall accrue with respect to each of the Licensed Products in the
percentage recited in Schedule A attached hereto, based on Licensee's "Net
Sales" (being hereafter defined) of each of the Licensed Products. Royalty
payments shall be due and payable on the first day following the expiration of
the first "Royalty Period" (hereafter defined) after Licensee recoups the
Guaranteed Minimum Royalties paid. For the avoidance of doubt, a Royalty payment
shall not be deemed late until more than thirty (30) days past due.
(2) "Net Sales" shall mean Licensee's gross
sales (the gross invoice amount billed customers) of Licensed Products less
bonafide discounts, allowances, and returns plus a fifteen percent (15%) reserve
for returns. The reserve shall be returned on a rolling, semi-annual basis. For
the avoidance of doubt, this means that a reserve for returns withheld in the
First Quarter shall be returned in the Third Quarter and so forth. No costs
incurred in the manufacturing, selling, advertising, and distributing of the
Licensed Products, uncollectible accounts or allowances for uncollectible
accounts shall be deducted in determining "Net Sales".
(3) A Royalty obligation shall accrue upon each
sale of a Licensed Product regardless of the time of collection by Licensee. For
purposes of this Agreement, a Licensed Product shall be considered "sold" upon
the date when such Licensed Product is billed, invoiced, shipped, or paid for,
whichever event occurs first.
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(4) If Licensee sells any Licensed Products to
any party affiliated with Licensee, or in any way directly or indirectly related
to or under the common control with Licensee, or sells any Licensed Product in a
transaction which is not bona fide, at a price which is less than the highest
price charged to other parties by Licensee, the Royalty payable to Licensor
shall be computed on the basis of the highest price charged to other parties by
Licensee.
(c)
(1) Licensee shall provide Licensor with a
written Royalty statement certified as accurate by a duly authorized officer of
Licensee on a quarterly basis, no later than thirty (30) days after the
termination of the preceding full "Royalty Period" (hereafter defined). Such
Royalty statement shall be in such form as is mutually agreed upon by Licensor
and Licensee and shall recite, on a country by country basis, the stock number,
item, units sold, description, quantity shipped, and Net Sales for each Licensed
Product. Such statements shall be furnished to Licensor whether or not any
Licensed Products were sold during the Royalty Period, or any Royalty payments
are or will be due and payable. For purposes hereof, "Royalty Periods" (being
based on Contract Year quarters) shall terminate on the last day of March, June,
September, and December, of each Contract Year during the Term of this Agreement
with the exception of the first and last Contract Year quarters which may be
"short" depending upon the effective date of this Agreement.
(2) The receipt or acceptance by Licensor of any
Royalty statement, or the receipt or acceptance of any Royalty payment made,
shall not prevent Licensor from subsequently challenging the validity or
accuracy of such statement or payment.
(d)
(1) All Royalty payments due hereunder shall be
made in United States currency drawn on a United States bank, unless otherwise
agreed by the parties.
(2) Late payments shall incur interest at the
rate of one and one-quarter percent (1.25%) per month or the maximum allowed by
law, whichever is lower, from the date such payments were originally due.
(3) All payments to be made by Licensee
hereunder shall be made without set off, condition or qualification, except as
specified in section (b)(2) above, and without deduction for or on account of
any tax, levy, impost, duty, charge, fee deduction, or withholding of whatever
nature.
(4) Upon expiration of this Agreement, or
earlier termination of this Agreement in the event of Licensee's breach of this
Agreement, all Royalty obligations shall be accelerated and shall immediately
become due and payable.
(5) Licensee's obligations for the payment of a
Royalty shall survive the expiration or earlier termination of this Agreement
(except a termination due to breach by Licensor of Section 23(a) below) and will
continue for so long as Licensee continues to sell or otherwise market the
Licensed Products.
4. Audit.
(a) Licensor shall have the right, upon at least five (5)
days written notice, to inspect Licensee's books and records and all other
documents and material in the possession of or under the control of Licensee
with respect to the subject matter of this Agreement, at the place where such
records
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are normally retained by Licensee, which such place shall be within the mainland
United States. Licensor shall have free and full access thereto for such
purposes and shall be permitted to make copies thereof and extracts therefrom.
This right to inspect includes, without limitation, Licensor's right to inspect
all consumer and other complaints pertaining to the Licensed Products.
(b) In the event that such inspection reveals a
discrepancy between the amount of Royalty owed Licensor and that which was
actually paid, Licensee shall pay such discrepancy, plus interest, calculated at
the rate of one and one-quarter percent (1.25%) per month or the maximum allowed
by law, whichever is lower. In the event that such discrepancy is in excess of
five percent (5%) over a period of at least two Royalty Periods as determined by
an independent certified public accountant working on a non-contingency basis,
Licensee shall also reimburse Licensor for the cost of such inspection including
any accountants' or attorneys' fees incurred in connection therewith.
(c) All books and records relative to Licensee's
obligations hereunder shall be maintained and kept accessible and available to
Licensor for inspection, within the mainland United States, for at least two (2)
years after termination of this Agreement. In addition Licensee shall retain for
a reasonable period of time such records as may be necessary in order to enable
Licensee and Licensor to defend lawsuits which may be instituted by third
parties.
(d) In the event that an investigation of Licensee's
books and records is made, certain confidential and proprietary business
information of Licensee may necessarily be made available to the person or
persons conducting such investigation. It is agreed that such confidential and
proprietary business information shall be retained in confidence by Licensor and
shall not be used by Licensor or disclosed to any third party without the prior
express written permission of Licensee unless required by law. It is understood
and agreed, however, that such information may be used in any proceeding based
on Licensee's alleged failure to pay its actual Royalty obligation(s). Licensor
shall have the right to inspect any record only once, and shall not conduct more
than one audit per year.
5. Licensee's Obligations.
(a) Licensee shall use its best efforts to promote,
market, sell and distribute the Licensed Products.
(b) Licensee shall be solely responsible for the
manufacture, production, marketing, sale and distribution of the Licensed
Products and will bear all related costs associated therewith.
(c) It is the intention of the parties that Licensee
shall design, market and ship the Licensed Products in all countries in the
Licensed Territory on or before the respective Phase 4 Date recited in Schedule
A. Failure to meet the respective Phase 4 Date without the prior written
approval of Licensor, shall constitute grounds for immediate termination of this
Agreement by Licensor as to the specific Item # of Licensed Product which did
not timely meet the Phase 4 Date, provided that any delay caused by Licensor, or
a third party, for the purpose of securing any required approvals, shall
automatically extend all subsequent Milestones for that version of the Licensed
Product, by an equivalent number of working days as the delay caused by
Licensor, or said third party.
(d) Licensee shall not utilize any dominant feature of
the Film, the Property and/or the Trademark on any product other than the
Licensed Products or approved premiums.
(e) Licensee shall use the English language on the
Licensed Products.
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(f) Licensee shall not grant sublicenses hereunder or
otherwise assign, transfer, alienate, encumber or charge any of its rights or
obligations hereunder without the express written consent of Licensor. Licensor
recognizes that Licensee may outsource development of the Licensed Products
and/or distribution of the Licensed Products outside of the United States (but
within the Territory), and agrees that it will promptly approve any reasonable
party chosen by Licensee for such purposes so long as such party is under
contract with Licensee. Licensee shall not sell any Licensed Product to another
party to incorporate the Licensed Product with another product to be marketed or
sold without the prior written approval of Licensor, not to be unreasonably
withheld.
(g) Licensor may purchase any Licensed Products at the
lowest prices (as sold or offered for sale) to any other party minus any sales
commissions, and agent fees, as available. Licensor may purchase any quantities
it desires for the same price, terms and conditions as distributors or retailers
who purchase maximum quantities minus any sales commissions and agent fees.
Licensor shall have the right to sell or distribute Licensed Products only
through Licensor's web sites, ▇▇▇.▇▇▇▇▇▇▇▇▇▇.▇▇▇ and ▇▇▇.▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ and
▇▇▇.▇▇▇▇▇▇▇▇.▇▇▇.
(h) Licensee hereby acknowledges that it is the intent of
the parties that this agreement is binding upon any subdistributors utilized by
Licensee. Licensor retains the right to approve Licensee's distribution scheme
for the Licensed Products, and in this connection, Licensor may require that any
subdistributor assumes the obligations of Licensee under this agreement in
writing.
(i) Upon Licensee's creation or improvement of any
Licensed Product, Licensed Product concept or Licensed Product design containing
new or improved artwork, Licensee shall furnish to Licensor within thirty (30)
days of its internal distribution, high quality, high resolution copies (digital
format preferred) of any artwork that has been created, purchased or improved by
Licensee and this artwork, to the extent it contains the Film or Property, shall
be the property of Licensor and Toei.
6. Advertising.
(a) Licensee agrees to advertise and promote the Licensed
Products commensurate with their other successful products but no less than what
is indicated in Schedule A.
(b) Licensee's advertising and promotional material and
other matter shall incorporate the elements of the Film and the Property in a
manner usually employed by the industry in the merchandising of products similar
to the Licensed Products. However, no such advertising material or other matter
shall be used by Licensee until after Licensee shall have first submitted such
advertising material and other matter to Licensor, and Licensor has approved
same in writing, which approval shall not be unreasonably withheld, nor delayed
longer than five (5) business days. Any disapproval shall be in writing and
shall state the reasons for such disapproval. In the event Licensor fails to
approve or offer the reasons for disapproval within the time frame set forth
above, the Phase Dates shall automatically extend as specified in Section 5(c)
above.
(c) Licensor expressly retains the right to conduct other
advertising, whether through Licensor, Licensee, other sublicensees or
otherwise.
(d) Licensor has the right to use the name, trademarks
and copyrights of Licensee solely for the purpose of promoting the Property.
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7. Notices, Quality Control, and Samples.
(a) The license granted hereunder is conditioned upon
Licensee's full and complete compliance with the marking provisions of the
trademark, patent and copyright laws of the United States and other countries
within the Licensed Territory.
(b) The Licensed Products, as well as all promotional,
packaging and advertising material relative thereto, shall include all
appropriate legal notices as required by Licensor to give appropriate notice to
the consuming public of Licensor's and Toei's respective rights, titles and
interests thereto. Licensee agrees that, unless otherwise expressly approved in
writing by Licensor, each usage of the Property shall be followed by either the
TM or the (R) Trademark Notice symbol, as designated in writing by Licensor, and
the following legend shall appear at least once on each Licensed Product and on
each piece of promotional and packaging material:
English Version: Licensed by FUNimation Productions, Inc.
Dragonball Z and all Dragonball Z characters (C) (year of manufacture) BIRD
STUDIO/SHUEISHA, ▇▇▇ ANIMATION
If a Licensed Product is particularly small, there may be a reasonable reduction
in the content which is subject to approval by Licensor. Licensee shall display
all notices in accordance with the requirements under the Universal Copyright
Convention and the Copyright Act or other laws of the respective countries
comprising the Licensed Territory including, without limitation, the regulations
thereunder.
In addition, all packaging for Licensed Product must include the logo of
Licensor.
(c) The Trademark and copyright notices, if possible,
should be permanently affixed to the Licensed Products and if not possible, then
on a tag permanently glued, sewn or otherwise attached to the Licensed Products,
in a place where the public could reasonably find them. The Trademark and
copyright notices should not be placed only on a hang tag.
(d) The Licensed Products shall be of a high quality
which is at least equal to comparable products manufactured and marketed by
Licensee, and in conformity with samples approved by Licensor, and be of such
style, appearance and quality as shall be reasonably adequate and suited to
their exploitation to the best advantage. If Licensor reasonably determines that
the quality of a class of the Licensed Products falls below such standard,
Licensee shall use commercially reasonable efforts to restore such quality.
Licensor shall have the right to terminate this Agreement pursuant to Subsection
10(c) of this Agreement, as to any category of Licensed Product for which is not
restored to the reasonably required quality. (e) Licensee shall finish to
Licensor the rough design and/or associated storyboards and representative
artwork first, and then the alpha, beta and gold master candidates, mock-ups of
packaging, advertising and promotional materials for each Licensed Product for
the purpose of obtaining Licensor's written approval on each respective stage,
before Licensee starts manufacturing or distribution. If Licensor fails to
respond by a written notice within twenty-four (24) days of receiving of a
proper submission for approval at any given stage, the required approval shall
be deemed to have been given for such stage.
(f) At least once during each calendar year, Licensee
shall submit to Licensor an additional twenty-four (24) sets of samples.
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(g) Licensee agrees to permit Licensor or its
representative to inspect at any time the facilities owned or controlled by
Licensee where the Licensed Products are being manufactured and packaged and
remove random samples for inspection on or off the premises. Licensor shall not
unreasonably interfere with Licensee's manufacturing operations.
8. Notice and Payment.
If, at any time after the execution of this Agreement, it shall become
necessary or convenient for one of the parties to deliver any notice, demand or
communication upon the other party, such notice, demand or communication shall
be in writing, signed by the party serving the same, personally delivered, or
sent by registered or certified United States mail, return receipt requested,
postage prepaid, or by a nationally recognized guaranteed overnight delivery
service providing for signed receipt of delivery, and (a) if intended for
Licensor, shall be addressed to:
FUNimation Productions, Inc.
▇▇▇▇ ▇▇ ▇▇▇▇ ▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
and (b) if intended for Licensee, shall be addressed to the Licensee contact as
stated in Schedule A or to such other address as either party may have furnished
to the other in writing as a place for the service of notice. Any notice shall
be deemed to have been delivered as of the time it is personally delivered, or
deposited in the United States mail or with such overnight delivery service.
9. Patents, Trademarks and Copyrights.
(a) Licensor may seek, in its own name or the name of
Toei, appropriate patent, trademark or copyright protections. Licensee shall not
seek any such protection without Licensor's prior written consent with respect
to the Film.
(b) It is understood and agreed that Toei and/or Licensor
shall retain all their respective rights, titles and interests in the Film, the
Property and any patent, copyright and trademark protections (including the
Trademark) in the same (collectively, the "Protections").
(c) Licensee acknowledges Toei's and Licensor's exclusive
and respective rights, titles and interests in the Film, the Property and the
Protections and, further, acknowledges that the Film, the Property and/or the
Protections are unique and original to Licensor and Toei and that Licensor and
Toei are the respective owners thereof, and Licensor has the exclusive
Broadcasting Rights, Video Rights and Merchandising Rights pertaining thereto
within the Licensed Territory. Licensee shall not, at any time during or after
the effective Term of this Agreement, dispute or contest, directly or
indirectly, Toei's or Licensor's exclusive and respective rights, titles and
interests to the Film, the Property and/or the Protections or the validity
thereof. The provisions of this paragraph shall also apply in case of
modifications or improvements to the Property or Licensed Products made by
mutual consent of the parties hereto. Licensee shall not in any way do anything
to infringe upon, harm, or contest Toei's or Licensor's respective proprietary
rights.
(d) Licensor acknowledges that the Licensed Products,
including the copyrights thereto, are unique and original to Licensee and that
Licensee is the owner thereof, including all
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underlying computer code, subject to the rights of Licensor and/or TOEI in the
Property and the Film. Notwithstanding the above and for the avoidance of doubt,
Licensee shall have no ownership interest in the Property or the Film itself.
(e) Promptly after the execution of this Agreement,
Licensor shall provide Licensee with such drawings, diagrams, sculptures and
other renderings of the Property as Licensor shall possess in such detail as to
enable Licensee, its permitted sublicensees and its contract developers and
manufacturers to utilize the Property in the development and manufacture of
Licensed Products. Promptly after Licensor has made or acquired any material
additions, improvements or changes to the Property, it shall provide Licensee
with such drawings, diagrams, sculptures and other renderings thereof as
Licensor shall possess in such detail as to enable Licensee and its permitted
sublicensees, and its contract developers and manufacturers to utilize such
additions, improvements and changes in the development and manufacture of
Licensed Products. If Licensee requests any additions, improvements or changes
with respect to the Property or requests any additional sculpting, packaging or
artwork, Licensor may, but shall not be obligated to, provide the same to
Licensee. The cost of providing any such requested additions, improvements,
changes in materials shall be borne by Licensee and such costs shall be prepaid
by Licensee.
(f) Licensee shall cooperate fully and in good faith with
Licensor and Toei for purpose of securing and preserving Toei's and Licensor's
rights, titles and interest in the Film, the Property and the Protections within
the Licensed Territory. Licensee shall assist Licensor and Toei to the extent
necessary in the procurement of any protection of any of Licensor's and Toei's
rights. Licensee shall forthwith notify Licensor of any possible improper or
unlawful use of the Film, the Property or the Protections by any third party.
Toei or Licensor, if either so desires, may commence or prosecute any claims or
suits in its own name. Any claims or lawsuits shall be prosecuted solely at the
cost and expense of Toei and all sums recovered, whether by judgment, settlement
or otherwise, shall be the property of Toei, Licensor or Licensee, as their
interests may appear; provided, however, Licensee shall not be entitled to any
portion of a recovery unless such recovery is made in connection with claims
pertaining specifically to the Licensed Products and Licensee shall have borne
an appropriate allocable share of the costs of prosecuting any such claims or
lawsuits, as determined by Toei and Licensor in the exercise of their reasonable
discretion. Upon request of Toei or Licensor, Licensee shall execute all papers,
testify on all matters, and otherwise cooperate in every way necessary and
desirable for the prosecution of any such lawsuit. The party bringing suit shall
reimburse Licensee for the expenses incurred as a result of its cooperation.
(g) In the event that Licensor elects to not prosecute a
claim to protect the Property, Licensee shall be entitled to prosecute a claim
based on use of the Property to protect its exclusivity interest in the Licensed
Products.
(h) Licensee acknowledges that the Film, the Property
and/or the Protections have acquired secondary meaning.
(i) Licensee agrees that its use of the elements of the
Film, the Property and/or the Protections inures to the benefit of Toei and
Licensor, respectively, and that the Licensee shall not acquire any rights in
the Film, the Property and/or the Protections.
(j) The parties agree to execute any documents reasonably
requested by the other party to effect any of the above provisions.
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10. Termination.
The following termination rights are in addition to the termination
rights provided elsewhere in this Agreement:
(a) Immediate Right of Termination. Licensor shall have
the right to immediately terminate this Agreement by giving written notice to
Licensee upon the occurrence any of the following events:
(1) Licensee fails to obtain or maintain product
liability insurance in the amount and of the type provided for herein and fails
to cure such failure within thirty (30) days of receipt of notice thereof; or
(2) Licensee files a petition in bankruptcy or
is adjudicated as bankrupt or insolvent, or makes an assignment for the benefit
of creditors, or an arrangement pursuant to any bankruptcy law, or if the
Licensee discontinues its business or a receiver is appointed for the Licensee
or for the Licensee's business and such receiver is not discharged within sixty
(60) days; or
(3) Licensee breaches any of the provisions of
this Agreement relating to the unauthorized assertion of rights in the Film, the
Property, the Licensed Products and/or the Protections; or
(4) Licensee fails to make timely payment of
Royalty when due and such failure continues for thirty (30) days after receipt
of notice thereof, it being understood that interest accruing from the original
date is not hereby waived; or
(b) Immediate Right to Terminate a Portion. Licensor
shall have the right to immediately terminate the portion(s) of the Agreement
relating to any of the respective type or category of Licensed Product(s) with
respect to any country in the Licensed Territory, if Licensee, for any reason:
(1) Fails to meet the Product Dates specified in
Schedule A regarding the particular type or category of Licensed Product; or
(2) After the commencement of manufacture and
sale of a particular Licensed Product in a particular country, Licensee fails to
continuously sell such Licensed Product for thirty (30) days thereafter.
(c) Right to Terminate on Notice. In instances other than
those otherwise contemplated under the terms of this Section 10, if either party
defaults in the performance of any provisions of this Agreement, then the
non-defaulting party may give written notice to the defaulting party that if the
default is not cured within a forty-five (45) day period, this Agreement shall
terminate immediately upon notice by the non-defaulting party. Notwithstanding
the previous sentence, the forty-five (45) day period shall be suspended for so
long as (i) the default is not capable of being cured within such forty-five
(45) day period and (ii) the defaulting party is actively engaged in attempting
to cure the default; provided, however, in no event shall the cure period exceed
ninety (90) days. Suspension shall end and termination may occur if, at any
time, the default becomes capable of being immediately cured and is not promptly
cured or the defaulting party ceases its attempts to cure the default.
Termination may be with respect to one or more types or categories of Licensed
Products under the Agreement. If termination is with respect to a single type or
category of Licensed Product, then the terms of the Agreement shall continue in
full force and effect with respect to any remaining Licensed Products.
10
11. Post Termination Rights.
(a) Not less than thirty (30) days prior to the expiration of this
Agreement or immediately upon earlier termination hereof, Licensee shall provide
Licensor with a complete "Inventory" which shall schedule all inventory of
Licensed Products then on-hand, whether in the form of work-in-progress or
finished goods.
(b) Upon expiration or earlier termination of this Agreement, except
for reason of a breach of Licensee's duty to comply with the quality control,
legal notice marking, wrongful claims of ownership of proprietary rights or
insurance requirements, Licensee shall be entitled, for an additional period of
six (6) months and on a non-exclusive basis, to continue to sell such Inventory,
provided Licensee can document that during the last six (6) months of the Term,
Licensee has not manufactured more than a quantity of seventy-five (75) percent
of each Licensed Product as compared to the quantity manufactured for the six
(6) month period beginning one year before the end of the Term and provided
Licensee can document that it has not and agrees that it will not participate in
the industry practice known as "dumping". Such sales shall be made subject to
all of the provisions of this Agreement and to an accounting for and the payment
of the Royalty payable with respect thereto. Such accounting and payment shall
be due and payable within thirty (30) days after the close of the said six (6)
month period.
(c) Upon the expiration or earlier termination of this Agreement,
all of the rights of Licensee under this Agreement shall forthwith terminate and
immediately revert to Licensor and Licensee shall immediately discontinue all
use of the elements of the Film, Property and the Protections, at no cost
whatsoever to Licensor.
(d) Upon early termination of this Agreement for any reasons
whatsoever, Licensee agrees to immediately return to Licensor all material
relating to the elements of the Film, the Property and the Protections
including, but not limited to, all artwork, color separations, prototypes and
the like, as well as any market studies or other tests or studies conducted by
Licensee with respect to the elements of the Film, the Property and the
Protections, at no cost whatsoever to Licensor. Molds, market studies and other
tests may be destroyed.
(e) Upon early termination of this Agreement, Licensee has fifteen
days (15) to file a dispute/claims against Licensor under the terms in section
16 or Licensee automatically forfeits all rights to make claims against Licensor
regarding this Agreement.
12. Goodwill.
Licensee recognizes the value of the goodwill associated with the elements
of the Film, the Property and the Protections and acknowledges that the elements
of the Film, the Property and the Protections and all rights therein including
the goodwill pertaining thereto, belong exclusively to Toei and Licensor,
respectively.
13. Indemnity.
(a) Licensor shall defend, indemnify and hold Licensee, its
subsidiaries, affiliates, directors, shareholders, trustees, officers, agents,
servants, subcontractors and employees (each referred to herein as an
"Indemnified Party" and collectively as the "Indemnified Parties") free and
harmless from any and all claims, demands, actions, causes of action, disputes,
indebtedness, liabilities, obligations, promises, judgments, contracts,
executions of any nature, damages, costs and expenses, whether based upon
contract, tort or otherwise, or arising pursuant to local, state or federal
statute, criminal or otherwise
11
and which arise out of or are related to any performance or non-performance of
this Agreement by Licensor or a breach of Licensor's warranties hereunder, or
any claim by a third party that the Property or Film infringes the copyright,
trademark, patent or other intellectual property right of such party
(collectively and severally referred to herein as the "Claims"). Licensor shall
pay or reimburse Licensee and each Indemnified Party on demand for all costs and
expenses (including, without limitation, reasonable accountants' fees,
attorney's fees and other expenses) which arise out of or in connection with any
Claims, whether or not formal legal action is instituted, and shall pay any and
all judgments that may be finally rendered on account thereof, including, but
not limited to, judgments awarding actual, exemplary or punitive damages.
(b) Licensee shall defend, indemnify and hold Licensor, its
subsidiaries, affiliates, directors, shareholders, trustees, officers, agents,
servants, subcontractors and employees (each referred to herein as an
"Indemnified Party" and collectively as the "Indemnified Parties") free and
harmless from any and all claims, demands, actions, causes of action, disputes,
indebtedness, liabilities, obligations, promises, judgments, contracts,
executions of any nature, damages, costs and expenses, whether based upon
contract, tort or otherwise, or arising pursuant to local, state or federal
statute, criminal or otherwise and which arise out of or are related to any
performance or non-performance of this Agreement by Licensee or a breach of
Licensee's warranties hereunder, or any claim by a third party that the items
described in section 9(d) (except claims based upon the Property of the Film),
infringes the copyright, trademark, patent or other intellectual property right
of such party (collectively and severally referred to herein as the "Claims").
Licensee shall pay or reimburse Licensor and each Indemnified Party on demand
for all costs and expenses (including, without limitation, reasonable
accountants' fees, attorney's fees and other expenses) which arise out of or in
connection with any Claims, whether or not formal legal action is instituted,
and shall pay any and all judgments that may be finally rendered on account
thereof, including, but not limited to, judgments awarding actual, exemplary or
punitive damages. The term "Claims" shall include, without limitation, Claims of
third parties based on: the manufacture or sale of the Licensed Products;
products liability; and Licensee's breach of the terms and provisions of this
Agreement.
14. Insurance.
Licensee shall, throughout the Term of this Agreement including any
extended Term, obtain and maintain at its own cost and expense from a qualified
insurance company licensed to do business in an appropriate state(s), an
insurance policy or policies covering general liability within the Licensed
Territory, inclusive of bodily injury, property damage, and personal injury,
naming Toei and Licensor as additional named insureds. Such policy shall provide
protection against any and all claims, demands and causes of action arising out
of any defects or failure to perform, alleged or otherwise, of the Licensed
Products or any material used in connection therewith or any use thereof. The
minimum amount of coverage provided by the policies are detailed in Schedule A.
The policies of insurance shall be deemed primary insurance and any insurance
obtained by Licensor shall be excess insurance not subject to exposure until the
coverage of Licensee's policy shall be exhausted. The policy shall provide for
fifteen (15) days prior written notice to Toei and Licensor from the insurer by
registered or certified mail, return receipt requested, in the event of any
intended modification, cancellation or termination thereof. Licensee agrees to
furnish Licensor a certificate of insurance evidencing same within thirty (30)
days after execution of this Agreement and, in no event, shall Licensee
manufacture finished goods, distribute or sell the Licensed Products prior to
receipt by Licensor of such evidence of insurance which shows coverage
throughout the Term.
15. Jurisdiction.
This Agreement shall be governed in accordance with the laws of the State
of Texas.
12
16. Disputes.
Any controversy or claim arising out of or relating to this agreement, or
the existence, validity, breach or termination thereof, whether during or after
its term, will be finally settled by compulsory arbitration in accordance with
the Commercial Arbitration Rules of the American Arbitration Association
("AAA"), as modified or supplemented below:
(i) The arbitration proceeding will take place in Fort Worth,
Texas, U.S.A.
(ii) The arbitration award shall be final and binding regardless of
whether one or the other parties fails or refuses to
participate in the arbitration. The arbitral award will be the
exclusive remedy of the parties for all claims, counterclaims,
issues or accounting presented or pled to the arbitrator(s).
(iii) The parties expressly agree that the AAA Optional Rules for
Emergency Measures shall apply to the proceedings.
17. Agreement Binding on Successors.
The provisions of this Agreement shall be binding upon and shall inure to
the benefit of the parties hereto, and where permitted, their sublicensees,
successors and assigns.
18. No Joint Venture.
Nothing contained herein shall be construed as a joint venture or shall
make one party the agent of the other party.
19. Assignability and use by Affiliates.
Except as otherwise provided herein, Licensee shall not grant sublicenses
hereunder or otherwise assign, transfer, alienate, encumber or charge any of its
rights or obligations hereunder without the express written consent of Licensor.
Notwithstanding anything to the contrary in this Agreement, any right that may
be exercised by Licensee hereunder may be exercised by Infogrames Entertainment,
S.A., or any entity which is 50% or more owned or controlled, directly or
indirectly, by Infogrames Entertainment S.A.
20. Waiver.
No waiver by either party of any default shall be deemed as a waiver of
any prior or subsequent default of the same or other provisions of this
Agreement.
21. Severability.
If any term, clause or provision hereof is held invalid or unenforceable
by a court of competent jurisdiction, such invalidity shall not affect the
validity or operation of any other term, clause or provision; and such invalid
term, clause or provision shall be deemed to be severed from the Agreement.
13
22. Integration.
This Agreement constitutes the entire understanding of the parties, and
revokes and supersedes all prior agreements between the parties, including any
option agreements which may have been entered into between the parties, and is
intended as a final expression of their agreement. It shall not be modified or
amended except in writing signed by the parties hereto and specifically
referring to this Agreement. This Agreement shall take precedence over any other
documents which may be in conflict with said Agreement.
23. Warrants and Representations.
(a) Licensor represents and warrants, to its best actual knowledge,
that it has an agreement with the sole and exclusive owner of the Property,
that, subject to Toei's right of approval as set forth in Section 7 and 9,
Licensor has the full, exclusive and unrestricted right and power to grant the
license hereby granted to Licensee, that neither Licensor nor any other party
has granted or will grant during the Term licenses of Licensed Products in the
Territory to persons other than Licensee and Bandai and that, to Licensor's
knowledge, the utilization of the "Artistic Rights and Elements" will not
infringe on any copyrights, trademarks or other proprietary rights of any other
person. Artistic Rights and Elements are defined as the trademarks, patents and
copyrighted materials associated with the Property supplied to Licensee from
Licensor for the incorporation or use with Licensed Products pursuant to this
Agreement. In addition, although the license granted hereunder relates only to
the Film and Property, Licensor represents and warrants that neither Licensor
nor any third party has granted or will grant during the Term, other than to
Bandai, the right to develop, publish, manufacture, sell, distribute or
advertise within the Licensed Territory Interactive Games, as defined, which are
created to operate on the platforms, as specified in Schedule A, that
incorporate any part of the Dragonball Z universe, including but not limited to,
the Dragonball Z trademark.
(b) Licensee represents and warrants that it has the power and
authority to enter into and to fully perform under this Agreement. Licensee
warrants and represents that to the best of its knowledge, it owns the complete
rights to any elements of the Licensed Product which Licensee has created
necessary for the purposes contemplated by this Agreement except for any
Artistic Rights and Elements provided to Licensee by Licensor. Licensee further
warrants and represents that there is no contract with any other person, firm or
corporation which will in any way interfere with Licensee's ability to perform
under this Agreement. Licensee additionally warrants and represents that the
Licensed Product, other than those Artistic Rights and Elements supplied by
Licensor, are not obscene, libelous or otherwise unlawful; to the best of its
knowledge do not infringe upon any trademark, trade name, patent or copyright;
and do not violate the private, civil or property rights, the right of privacy
or any other rights of any third party.
(c) Licensee makes no representation whatsoever regarding the
anticipated sales volume of the Licensed Products or the revenue to be earned by
Licensor hereunder, except the Guaranteed Minimum Royalty.
24. Distribution Limitations.
Licensee shall have the right to use any available distribution channels,
except that, and notwithstanding any other provisions contained within this
Agreement, Licensee does not have the rights and may not utilize amusement
parks, theme parks, internet (except Licensor's, Licensee's or their affiliates'
own web sites) and vending machine distribution and marketing avenues. Licensor
reserves all
14
rights in these areas except that Licensor's internet distribution rights are
limited as detailed in Section 5(g).
IN WITNESS WHEREOF, the parties hereto, intending to be legally bound
hereby, have each caused to be affixed hereto its or his/her hand and seal the
day indicated.
LICENSOR: LICENSEE:
FUNIMATION PRODUCTIONS, INC., INFOGRAMES, INC.,
a Texas corporation a Delaware corporation
By: /s/ ▇▇▇ ▇▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇ ▇▇▇▇▇
-------------------------- -------------------
Name: ▇▇▇ ▇▇▇▇▇▇▇▇ Name: ▇▇▇▇ ▇▇▇▇▇
Title: President Title: Senior Vice President
15
SCHEDULE A
Licensee:
-------------------
Licensee's Address:
-------------------
-------------------
Licensee Contact:
-------------------
Licensee Telephone:
-------------------
Licensee Telefax No.:
-------------------
Licensee Email:
-------------------
Licensee Web Site:
-------------------
1. Film.
FILM is defined as the first 179 English episodes of Dragon Ball Z
and the three Dragon Ball Z videotape movies "the Tree of Might", "the Dead
Zone" and "the World's Strongest" and any other English episodes of Dragon Ball
Z which are acquired by Licensor. Prequels and sequels are not part of FILM.
Licensor does not have book publishing rights and therefore artwork specifically
used by the book publishers may not be directly duplicated as part of the
definition of Property.
2. Property.
Property is defined as the title of the FILM, the characters
appearing therein, the names, designs, figures, storylines and drawings
connected with such characters and/or the FILM and works of fine art, such as
scenes and symbols, contained in the FILM.
3. Trademark.
The following Trademark forms a part of this Agreement:
Dragon Ball Z
Main Character Names
4. Licensed Products.
Licensed Products are defined as Interactive Role Playing Games
(RPG) and traditional arcade style Fighting Games whose primary gaming engines
and artificial intelligence (AI) reside on the end users gaming platform and
include electronic and printed hint books associated with Interactive Games
created by Licensee on the platforms listed below. For avoidance of doubt,
Licensed Products do not include games played or hosted exclusively online,
and/or whose primary gaming engine and Al reside on dedicated online servers.
Interactive Games are electronic game products that operate so that the user may
interact with the product in the traditional manner known in the industry as
video games. Licensed Products shall include one or more games on each of the
following platforms:
16
Item # Description Exclusivity Design Date Phase 1 Date Phase 2 Date Phase 3 Date Phase 4 Date
------ ----------- ----------- ----------- ------------ ------------ ------------ ------------
1 N/A
2 Interactive game for Exclusive October 31, December 1, March 1, 2001 June 1, 2001 Sept 1, 2001
the Nintendo Color 2000 2000
Gameboy platform.
3 Interactive game for Exclusive October 31, December 1, March 1, 2001 June 1, 2001 Oct l, 2001
the Sony Playstation 2000 2000
platform.
1-3 For further
clarification, the
above items do not
include dedicated
hand-held and tabletop
electronic games,
internet games (which
are games whose
primary game engine
resides on the web)
and electronic
versions of Trading
Card Games.
In addition, Licensee shall the right of first negotiation to expand the
Agreement to include other Interactive Game platforms during the term of this
agreement or any extension thereof. Licensor and Licensee shall negotiate such
expansion in good faith, and in the event Licensor and Licensee are unable to
reach agreement on the terms of such expansion, Licensee shall have the option
to enter into an expansion on terms no less favorable than Licensor offers such
additional Interactive Game platforms to any third party Licensee.
The term "Exclusivity" in the above table is defined as the fact that neither
Licensor nor any third party will grant a license to any third party (except
Bandai) that includes the right to develop, publish manufacture, sell,
distribute or advertise within the Licensed Territory, Licensed Products that
incorporate any part of the Dragonball Z universe, including but not limited to
the Dragonball Z trademark. If any dispute arises out of the interpretation of
the Licensed Product categories between Licensee, Licensor and/or third party,
Licensor has full authority and discretion to make the interpretation. In
addition, Licensor is not liable for any disputes, nor will any damages be
awarded to Licensee due to any dispute caused by non-identical description of
Licensed Product amongst any of Licensor's licenses. Any Exclusivity Licensee
may have on Licensed Product does not extend to premiums, promotions and SLOs as
described earlier in this Agreement. NOTWITHSTANDING ANYTHING TO THE CONTRARY,
THE RIGHTS GRANTED HEREIN ARE NON-EXCLUSIVE WITH RESPECT TO BANDAI. FOR THE
AVOIDANCE OF DOUBT, THIS MEANS THAT BANDAI MAY MAKE PRODUCTS THAT FIT THE
DESCRIPTION OF THE LICENSED PRODUCTS, AND MAY MARKET, SELL AND DISTRIBUTE SUCH
PRODUCTS WITHIN THE TERRITORY. ALSO, NOTWITHSTANDING ANYTHING TO THE CONTRARY,
ALL RIGHTS TO Dragonball and Dragon GT ARE NOT WITHIN
17
THE SCOPE OF THIS AGREEMENT AND ALL RIGHTS ASSOCIATED THEREWITH REMAIN STRICTLY
WITH LICENSOR.
5. Licensed Territory.
The following countries shall constitute the Licensed Territory:
U.S.A., its territories and possessions.
English speaking Canada.
Australia
New Zealand.
South Africa
6. Term.
This Agreement shall commence on the date this Agreement is executed
by both parties and shall be for a term expiring on June 30, 2003. The Term
shall be automatically extended to June 30, 2005 if Licensor has been paid by
Licensee more than $2 million in royalties before June 30, 2003, subject to any
extensions for delays as contemplated in the Agreement or, in the event of a
shortfall, Licensee pays the shortfall within fifteen (15) days of June 30, 2003
including any extensions thereto.
7. Initial Guaranteed Minimum Royalty Advance and Guaranteed Minimum
Royalty is as follows in the Licensed Territory (in U.S. dollars):
(i) $100,000 upon signing of this Agreement, and
(ii) $100,000 upon release of Licensed Product Item #1 or January 1,
2001, whichever occurs first, and
(iii) $100,000 upon release of Licensed Product Item #2 or March 1,
2001, whichever occurs first, and
(iv) $100,000 upon release of Licensed Product Item #3 or June 1,
2001, whichever occurs first.
8. Royalty Rate.
Royalty Rate as percentage
Licensed Product Item # of Net Sales
----------------------- --------------------------
#1 10%
#2 and #3 7.5%
For Licensed Product sold FOB a location outside the Licensed Territory,
Licensee shall pay an additional royalty of two points. For example, 9.5% of Net
Sales instead of 7.5% of Net Sales for Item #1.
18
9. Insurance Coverage Amounts.
The Insurance policies described in Paragraph 14 shall be US$1
million combined single limit with no deductible.
10. Delivery Materials/Information.
Licensor shall provide Licensee the following materials:
(a) Style guide for Film.
(b) If available, a copy of color slides, transparencies,
advertising and promotional materials which Licensee requests from Licensor, the
costs of obtaining, duplication and shipping to be born by Licensee.
11. Product Dates.
The Product Dates consist of the following four dates:
(a) Design Date: See the dates as listed in the Licensed
Product chart (Schedule A, section 4) for each Licensed Product. Design Date is
defined as the latest delivery date by which Licensee delivers to Licensor a
design of the Licensed Product which outlines the game play, strategies and key
design elements of the Licensed Product.
(b) Phase 1 Date: See the dates as listed in the Licensed
Product chart (Schedule A, section 4) for each Licensed Product. Phase 1 Date is
defined as the latest delivery date by which Licensee delivers to Licensor,
three dimensional models of the characters to be utilized within the Licensed
Product.
(c) Phase 2 Date: See the dates as listed in the Licensed
Product chart (Schedule A, section 4) for each Licensed Product. Phase 2 Date is
defined as the latest delivery date by which Licensee delivers to Licensor,
preliminary game play tests of all key character movements and abilities of the
characters utilized within the Licensed Product.
(d) Phase 3 Date: See the dates as listed in the Licensed
Product chart (Schedule A, section 4) for each Licensed Product. Phase 3 Date is
defined as the latest delivery date by which Licensee delivers to Licensor a
functioning Licensed Product which is ready to go into what is traditionally
know as "Beta testing".
(e) Phase 4 Date: See the dates as listed in the Licensed
Product chart (Schedule A, section 4) for each Licensed Product. Phase 4 Date is
defined as the first commercial shipment of the License Product.
12. Guaranteed Minimum Quantity.
Unless otherwise approved in writing by Licensor, Licensee agrees to
manufacture and ship a minimum quantity of twenty-thousand (20,000) of each
Licensed Product Item within ninety (90) days after Phase 4 date, or forfeit the
License for that Item.
19
13. Promotion.
Licensee agrees to use reasonable efforts to promote the Licensed
Products by displaying and promoting them to its main buyers of similar products
throughout the Term of this Agreement and to display and promote the Licensed
Products within Licensee's booth at trade shows it attends and at Licensee's
showrooms.
14. Advertising.
Licensee agrees to advertise the Licensed Products in a similar
fashion and amount that Licensee customarily does for its similar successful
products.
20