1
Exhibit 10.43
AFFILIATED LABEL AGREEMENT
This affiliated label agreement dated as of July 1, 2000 (the "Effective
Date") is by and between Infogrames, Inc. ("II"), a Delaware corporation with
offices at 000 Xxxxx Xxxxxx, Xxx Xxxx, XX 00000, and Infogrames North America,
Inc. (Affiliate"), a California corporation with offices at 0000 Xxxxxxx Xxxxx
Xxxxxxxxx, Xxx Xxxx, Xxxxxxxxxx, 00000
RECITALS
A. II is in the business of manufacturing, marketing and distributing software
and related products.
B. Affiliate is in the business of publishing interactive software products.
C. Affiliate desires to deliver to II, and II desires to receive from Affiliate,
all of its software products for publication, sale and distribution by II.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained in this agreement and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereby
agree as follows:
1. DEFINITIONS
1.01 "Customers" means any individual or entity to whom Units are
distributed by II. Customers may include distributors, resellers and retailers.
1.02 "Developer" means any person or entity who owns or controls rights
including, without limitation, intellectual property rights, in a Title.
1.03 "End Users" means those persons who purchase for use one or more
Units from Customers.
1.04 "Markdown" means any reduction of the retail or wholesale selling
price of Units of any Version.
1.05 "Marketing Development Fund" or "MDF" means the costs associated with
the marketing and merchandising of each Version at Customer locations.
1.06 "Reserve" means the amount more fully described in Section 6.03(c)
below.
1.07 "Street Date" means the date on which a Version is initially made
available for sale to End Users in the Territory.
2
1.08 "Taxes" means any national, state or local sales, use, or other
taxes, customs duties, or similar tariffs and fees.
1.09 "Term" means the period during which this Agreement shall be in
effect, as set forth in Section 7 below.
1.10 "Territory" means the United States and its territories, possessions,
and military installations wherever situated, and Canada.
1.11 "Title" means each software product published by Affiliate during the
Term, together with all printed artwork, booklets, manuals, pamphlets or other
materials which refer or relate to each respective Title.
1.12 "Unit" means one (1) copy of each Version embodied on any storage
device embodied on PC CD-ROM, cartridge, or any other tangible medium now known
or later devised, fully packaged as a finished good and ready for shipment to
Customers.
1.13 "Version" means the Title as designed to operate with a particular
hardware, software or other interactive media environment or platform now known
or later devised. Examples of Versions include software products developed for:
the IBM PC platform utilizing the Windows 98 operating system; the IBM PC
platform utilizing the DOS operating system; the Apple Macintosh platform; and
console platform versions such as Sony Playstation and Nintendo 64.
1.14 "Wholesale Price" means the price charged by II to Customers per Unit
of each Version as mutually agreed to by Affiliate and II. The initial Wholesale
Price for each Version shall be set forth on Exhibit A.
2. GRANT OF RIGHTS
2.01 Rights Granted:
With respect to each Title, Affiliate hereby grants to II throughout the
Territory, during the Term, the sole and exclusive right:
a.) To sell and distribute Units to Customers in all channels of
retail distribution.
b.) To advertise, publicize and promote each Version by any means
and in all media now known or later devised.
c.) To use, publish and permit others to use and publish Affiliate's
trademarks, logos
2
3
and other proprietary markings in conjunction with the advertising, promotion
and sale of Units, subject to compliance with Affiliate's reasonable quality
control provisions.
d.) To use, publish and permit others to use and publish the
Developer's trademarks, logos and other proprietary markings and in conjunction
with the advertising, promotion and sale of the applicable Units.
e.) To sell and distribute each Version as "value" or "budget" products
in jewel cases or other economical packaging or to sublicense those rights to an
II-affiliated company, provided that if II decides to sell any Version within
(6) six months from the date of its Street Date, II shall obtain the prior
written approval of the Affiliate, such approval not to be unreasonably
withheld.
f.) To manufacture or contract for the manufacture of Units in
accordance with Section 3.01 below.
3. OBLIGATIONS OF II
3.01 Manufacture of Units.
a.) At the request of Affiliate and subject to Affiliate's
responsibilities set forth in Section 4 below, II shall manufacture or contract
for the manufacture of Units for any of those Versions listed on Exhibit A which
are developed for the CD-ROM format or any other additional or successor format
which is then capable of being manufactured by or on behalf of II, as determined
by II. Manufacturing services shall include duplicating that storage medium,
packaging, and related materials provided to II by Affiliate pursuant to this
agreement and assembling those materials into finished Units, or may include the
assembly of component parts previously manufactured and duplicated by Affiliate
(collectively, "Components") and delivered to II for assembly into finished
Units ("Manufacturing Services").
b.) If Affiliate desires to engage II to provide Manufacturing Services
for any Version, it shall notify II. If II is duplicating the storage medium,
Affiliate will deliver to II a "gold master" copy of the software for each
Version ("Master"), fully-tested by Affiliate in accordance with Section 4.05
below. In addition, Affiliate shall deliver camera-ready artwork of all
packaging materials, and other materials necessary for the manufacture of Units
by II on a SyQuest disk or on any other medium reasonably directed by II. If II
is assembling Components into Units, II shall issue a purchase order for the
number Components it requires. Affiliate shall
3
4
provide the foregoing materials to II no less then eight (8) weeks in advance of
the Street Date.
c.) If Affiliate fails to deliver on a timely basis the materials set
forth in subsection (b) above, in addition to any of its other rights and
remedies, II may adjust the Street Date accordingly, and Affiliate shall
promptly reimburse II any actual costs and expenses reasonably incurred by II,
as a result of that failure of timely delivery. Payment shall be made within
thirty (30) days of Affiliate's receipt of an II invoice evidencing those costs
and expenses.
d.) If II provides Manufacturing Services, II shall receive a
Manufacturing Fee, payable by Affiliate in accordance with Section 6.03(d)
below. "Manufacturing Fee" means the total of (i) the actual cost of goods for
each Unit for which II provides Manufacturing Services (for each Unit, its "Cost
of Goods") and (ii) five percent (5%) of the Cost of Goods.
3.02 Units Manufactured by Affiliate.
Pursuant to a written purchase order, II shall order from Affiliate from
time to time finished Units. The terms of that purchase order or any purchase
order issued by II, will govern that order, provided that if any terms conflict
with the terms of this agreement, the terms of this agreement will control.
3.03 Distribution and Warehousing.
a.) II shall use commercially reasonable efforts to distribute Units
to Customers.
b.) II shall be responsible for distributing and shipping Units to
Customers, pursuant to a written purchase order or via Electronic Data
Information ("EDI"), as applicable.
c.) At no additional cost to Affiliate, II shall provide adequate
and secure warehousing facilities for all Units.
d.) II shall be responsible for all billing, invoicing and related
administrative procedures associated with order taking, distribution and
shipping of the Units. II shall have the right to extend credit to its Customers
and shall bear any associated risk of repayment.
e.) II will promptly notify Affiliate in writing of any known
infringement of Affiliate's proprietary rights which comes to II's attention. II
agrees to cooperate, at Affiliate's expense, in connection with Affiliate's
reasonable efforts to protect its proprietary rights in the Titles.
4
5
3.04 Marketing.
a.) II shall include each Version in appropriate sales material and
appropriate Customer mailings.
b.) II shall provide recommendations and assist Affiliate, at no
expense to II, in developing strategies to be implemented by Affiliate to help
stimulate the sale of its Units.
c.) II will provide Affiliate with regular reports which shall include
the following information, if available: a summary of the number of Units
distributed to each Customer, sold through, and the number of Units returned
since the last report issued.
d.) II shall provide Affiliate with the option to obtain dedicated
display space for the Titles in II-sponsored display booths located at industry
trade shows for the sole purpose of promoting the Titles, subject to II's
participation in that trade show and space availability, as determined by II in
its sole discretion. For each trade show at which Affiliate desires to obtain
dedicated space, Affiliate shall submit to II a written request to so display
its Titles no later than eight (8) weeks prior to the commencement date of that
trade show. Affiliate will be charged for that dedicated display space and
related costs incurred by II on the basis of a percentage of display space used
for its Titles. All related travel accommodations, equipment, and other expenses
incurred by Affiliate will be at Affiliate's sole expense. Any special signage
must be furnished and installed by Affiliate at its expense, and approved in
writing by II in advance. In the event Affiliate does not desire dedicated
display space, or II determines that there is not enough available space for
Affiliate to display its Titles, II will display and promote the Titles as II
deems appropriate on a non-dedicated space basis at no cost to Affiliate.
e.) II will incorporate Affiliate's Titles into all appropriate
presentations given at regularly scheduled major account buyer meetings.
f.) II shall advise Affiliate on matters relating to marketing,
placement, promotion and sell-through of Titles by each Customer.
g.) II shall evaluate the commercial practicality of implementing
Markdowns and Affiliate's participation in associated Price Protection, MDF and
cooperative advertising programs established by II with its Customers and
consult with Affiliate with regard to those programs.
5
6
4. AFFILIATE'S RESPONSIBILITIES
4.01 Quality. Pursuant to a purchase order issued by II, Affiliate shall
deliver to II Units or Components, as applicable, which are of premium quality
in all respects so as to protect and enhance the prestige of the parties, the
Developers, the Titles and the goodwill associated with them. The Units and
Components will be delivered to II free of defects in material and workmanship
in all material respects. II has the right to spot check and inspect the Units
and Components delivered by Affiliate. II may return inspected Units and
Components to Affiliate in cases where II finds reasonably unacceptable defect
rates, which shall be defined as three percent (3%) or more of each shipment.
Affiliate acknowledges that such inspection does not relieve Affiliate of any of
its obligations concerning quality of the Units or the Components.
4.02 Packaging Design.
(a) Affiliate shall consult with and obtain II's approval of all packaging
design and artwork prior to manufacturing Units of each Version.
Approval by II shall not be unreasonably withheld.
(b) Affiliate will clearly xxxx the packaging of each Unit as to platform,
operating system, operating requirements such as memory, and bar code
information. Affiliate will shrink-wrap or otherwise provide secure closure for
all finished Units delivered to II. If II provides to Affiliate a label that
shows II's name and logo as distributor, Affiliate will affix the label to the
front of the outside of each Unit's packaging, provided that the label does not
obscure the title of the Title or the Affiliate's name or logo and is reasonable
in size.
4.03 Delivery of Units.
a.) Units or Components manufactured by Affiliate
(i) Affiliate will provide to II, FOB at II's Designated Warehouse
(as defined below), the ordered Units or Components by the date set forth in the
II purchase order, or for Titles to become commercially available to End Users
for the first time in the Territory, no less than twenty-one (21) days in
advance of the Street Date, to enable II to timely distribute those
6
7
Units to its Customers. In the event those Units or Components are not timely
delivered, the terms of Section 3.01(c) shall also apply with respect to those
Units delivered by Affiliate to II as finished Units.
(ii) Affiliate shall be responsible for adequately insuring the
Units for shipment FOB to II's warehouse located at Lancaster Distribution
Center, 0000 Xxxxxxxx Xxxxx, Xxxxxxxxx, XX ("Designated Warehouse").
(iii) II may cancel any Units which are to be delivered under any
purchase order, provided notice of cancellation is made in writing, no less than
thirty (30) days prior to the scheduled delivery date.
(iv) Affiliate agrees to maintain a sufficient inventory of Units or
Components, as applicable, at a level equal to the most recent II forecast of
sales of each Version. In the event Affiliate is unable to provide delivery of a
Version pursuant to a II purchase order within thirty (30) days after receipt of
that order, II may cancel such undelivered purchase order and any or all
subsequent purchase orders for that Version.
b.) II is not obligated to accept any partial delivery under any order. In
the event II accepts a partial delivery, the portion not shipped will be deemed
a separate order.
4.04 Technical Support: Affiliate will provide technical support for each
Version in the Territory to II, Customers and End Users. Technical support will
include, without limitation, warranty service and phone support via a local or
toll-free telephone number. Affiliate will have personnel knowledgeable of the
technical and application aspects of each Version available to answer support
questions during regular business hours. During the Term of this Agreement each
party agrees to inform the other promptly of any known defects or operational
errors affecting any Version.
4.05 Testing. Prior to delivery of Titles to II, Affiliate agrees to test
each Version to make certain that each Version is reasonably bug-free and fully
functional in the different configurations in which the Version is designated to
run and for all peripherals with which each Version is designated to work.
Without limiting the foregoing, if II is providing Manufacturing Services,
Affiliate shall prior to delivery to II so test each Master. Affiliate agrees to
provide II, upon delivery of the Units, or Master, as applicable, with each
Version's configuration testing reports prepared by Affiliate in the normal
course of its business, along with hint sheets and maps for all game, adventure,
simulation and role-playing Titles.
7
8
4.06 Changes. Affiliate will give II notice at least thirty (30) days
prior to any material modification to a Title or any Version, including, without
limitation, Affiliate's decision to discontinue or materially enhance any Title
or any Version. Affiliate shall promptly provide II with Master Disks embodying
all updates and enhancements, for Versions manufactured by II.
4.07 Marketing.
a.) Notwithstanding II's exclusive rights set forth in Section 2.01,
throughout the Term, Affiliate will use its commercially reasonable efforts to
advertise, market and promote the Titles throughout the Territory. Those efforts
(collectively, "Affiliate Marketing") shall include, but not be limited to:
(i) Advertising and publicizing each Version to Customers and
potential customers in trade publications, promoting each Title on Affiliate's
website, and issuing press releases:
(ii) Advertising and publicizing each Version to consumers in
consumer software publications and promoting each Version on Affiliate's
website.
(iii) procuring product reviews in leading consumer and trade PC and
Mac game and other appropriate software publications.
(iv) Participating in a reasonable number of Markdown programs,
co-op advertising and MDF opportunities recommended to it by II in accordance
with Section 3.04 above, only after the prior written approval from Affiliate,
which shall be given promptly and shall not be unreasonably withheld.
(b) Affiliate shall provide to II thirty (30) days prior to the Street
Date of each Version and upon reasonable request thereafter, at no cost to II,
the specified number copies of each of the following materials for purposes of
facilitating the promotion of that Version by II: 150 Units; 150 demonstration
copies; 500 specification sheets; 500 sell sheets; 100 new product retail
release launch kits and 150 copies of any other available promotional material.
In the event that Affiliate does not deliver promptly any of the foregoing
materials, II may utilize any Units from its inventory or manufacture those
materials, and deduct an amount equal to the cost of goods from the Reserve or
from any monies otherwise owed to Affiliate under this agreement.
8
9
4.08 Insurance.
During the Term of this agreement, Affiliate will at all times maintain at
its own cost comprehensive general liability insurance, product liability,
publisher's liability and errors and omissions insurance. Each policy shall have
coverage of at least five million dollars ($5,000,000). Each policy shall be in
a form reasonably acceptable to II and shall be issued by an insurance company
with a rating of A or better as set forth in the most current Best Insurance
Guide. Affiliate shall add II as an additional insured/ to each policy and will
furnish certificates evidencing that insurance within ten (10) days of the date
first set forth above. In the event there are claims against any existing
insurance policy with respect to any Version, Affiliate will procure additional
insurance coverage which is necessary to maintain the minimum level of coverage
described in this subsection.
5. TITLE AND RISK OF LOSS
Title to Units shall pass from Affiliate to II upon shipment to II's
Customers. Risk of loss for Units and Components shall pass to II from Affiliate
upon delivery to II's Designated Warehouse. For Units returned to II by II's
Customers for which title has passed to those Customers, title will pass from
the Customer to Affiliate upon return to II. Risk of loss will remain with II
until re-delivery to Affiliate of returned Units or Components.
6. COMPENSATION
6.01 Distribution Fee.
II shall be entitled to deduct a distribution fee of fifteen percent (15%)
from the of the Net Sales ("Distribution Fee"). "Net Sales" shall mean gross
revenue, less only sales tax, returns, markdowns, price protection and sales
adjustments.
6.02 Proceeds.
Affiliate shall be entitled to receive proceeds for each Unit sold to Customers
calculated on the basis of Net Receipts for each Unit, less returns (the
"Proceeds"). "Net Receipts" shall mean the applicable Wholesale Price of each
Unit, less the Distribution Fee and all other accounting and credit adjustments
permitted under this agreement.
9
10
6.03 Accounting.
a.) II shall submit both Proceeds due, if any, and itemized statements
to Affiliate within sixty (60) days after the end of each month of the Term,
regardless of whether any Proceeds are payable to Affiliate for that affected
calendar month. The statements shall contain the following, separately reported
for each Title: Unit sales, Taxes, Returns, MDF, and all other costs permitted
to be deducted under the terms of this agreement. The statements shall otherwise
show separately for each Title in detail all calculations reasonably necessary
for the computation of Proceeds and a cumulative reconciliation of the number of
Units manufactured, Units sold, and Units remaining in inventory. All Proceeds
shall be paid on one hundred percent of all retail sales as reported by II's POS
Customers (currently, principally Wal-Mart, Target and K Mart), less returns,
and on one hundred percent (100%) of shipments to all other Customers, less a
Reserve (as defined below) for returns. In addition, reductions shall be taken
for Taxes, Price Protection and MDF, if applicable, and if returns exceed the
Reserve. Affiliate acknowledges that Units may be returned for any reason,
including overstock or due to defects. At II's option, II will debit against
amounts otherwise due Affiliate during each accounting period, deduct from the
Reserve, or require Affiliate to reimburse II for, all returned Units. Affiliate
will pay all transportation and shipping charges associated with such returns to
Affiliate. In addition, in the event of a recall based solely on errors in the
software code for any Version, Affiliate will pay all costs associated with the
recall including but not limited to Handling Charges, End User notification
costs, Unit replacement costs, and all freight costs. The term "Handling
Charges" will mean, for each Unit returned as the result of a recall, reasonable
labor and administrative costs plus all of II's out-of-pocket costs including,
without limitation, shipping and insurance costs related to the return and, if
applicable, replenishment of such defective Units to and from II to Customers,
and to and from II to Affiliate.
b.) If the Wholesale Price of Units of any Version is lowered, Affiliate
will credit or refund to II, or II may deduct from monies otherwise payable to
Affiliate under this agreement, at II's option, the amounts credited or refunded
by II to its Customers by reason of the reduced Wholesale Price for the affected
Version ("Price Protection"). Affiliate acknowledges that II is dependent upon
prompt and reliable information from II's Customers to determine the inventory
to which Price Protection should apply. Affiliate agrees that (i) II shall have
the right to determine a good faith estimate of the inventory of its Customers,
and base the amount of Price Protection upon that estimate; and (ii) II may
adjust its estimate on a periodic basis as it receives additional information
from its Customers.
c.) The amount withheld for the Reserve shall be equal to twenty percent
(20%) of the
10
11
Proceeds payable to Affiliate during each monthly accounting period. The Reserve
shall be deducted from payments II owes to Affiliate under this agreement, to be
held in an interest-bearing account and applied by II for returned Units, Price
Protection (as defined in subsection (b) above), co-op advertising and any other
credits, refunds or other amounts owed to II under this agreement, including
those owed upon the expiration or earlier termination of this agreement.
d.) If II provides Manufacturing Services for any Units, Affiliate shall
pay to II the total Manufacturing Fee for those affected Units. II shall, at its
option, (i) offset the total Manufacturing Fee from Proceeds, in which case II
shall provide a detailed invoice reflecting the calculation of the Manufacturing
Fee along with each statement provided pursuant to subsection (c) above, or (ii)
invoice Affiliate for the total Manufacturing Fee at the end of each month
during which Manufacturing Services are provided. If II invoices Affiliate,
Affiliate shall pay the applicable Manufacturing Fee within forty-five (45) days
of its receipt of each invoice.
6.04 Audit
II shall maintain for a period of two (2) years after the end of the year
to which they pertain, complete records of the Units sold and distributed by II
in order to calculate and confirm II's payment obligations hereunder. Upon
reasonable prior notice, Affiliate will have the right, exercisable not more
than once every twelve (12) months, at Affiliate's expense, to examine or have
its agents examine, such books, records and accounts during II's normal business
hours to verify the payments due by II to Affiliate herein, subject execution of
II's standard confidentiality agreement by such agents; provided, however, that
execution of such agreement will not preclude such agents from reporting results
to Affiliate. No audit shall take place during the first three (3) weeks of any
quarterly accounting period. If an audit shall reveal an underpayment by II of
ten percent (10%) or more for the period audited, II shall pay to Affiliate the
amount of the underpayment and the reasonable expenses of the audit up to the
amount of the underpayment.
7. TERM
Subject to Section 8 below, the term of this agreement shall commence on
the initial release to Customers of the first Units distributed under this
agreement and terminate one (1) year from that date (the "Initial Term"), plus a
three(3) month sell-off period. The parties may mutually agree to extend the
Term for additional consecutive one (1) year periods by written agreement at
least ninety (90) days prior to the expiration of the Initial Term, or the
then-current
11
12
term (the Initial Term and any extensions, shall collectively be referred to as
the "Term").
8. TERMINATION
8.01 Termination for Breach. In the event of a material breach by either
party of this agreement, which breach is not cured within thirty (30) days after
written notice by the nonbreaching party, the nonbreaching party may, upon
written notice to the breaching party, terminate this agreement in its entirety
or only in respect to the Version to which the breach relates. Upon termination,
the nonbreaching party will have the right to pursue any remedies it may have at
law or in equity, and the nonbreaching party may from the date of notice of
breach pay into an interest bearing escrow account with a commercial bank any
cash payments due the breaching party hereunder as security for payment of any
damages arising from any breach by the breaching party of this agreement.
8.02 Immediate Termination.
Either party may immediately terminate this agreement if (i) a receiver
is appointed for the other party or its property; (ii) the other party becomes
insolvent or unable to pay its debts as they mature, or makes an assignment for
the benefit of its creditors; (iii) the other party seeks relief or if
proceedings are commenced against the other party or on its behalf under any
bankruptcy, insolvency or debtor's relief law, and those proceedings have not
been vacated or set aside within sixty (60) days from the date of their
commencement; or (iv) if the other party is liquidated or dissolved.
8.03 Effect of Termination. Upon termination of this agreement:
a.) Each party's obligation to pay the other party any amounts
which have or will become due will continue;
b.) For a period of one hundred eighty (180) days after such
termination, II may return all or any portion of the Units shipped to II's
Customers for full repayment of the Proceeds paid by II for those Units, and at
II's option, Affiliate will repay or II shall have the right to deduct from the
Reserve or other monies due to Affiliate, the applicable Proceeds.
c.) To the extent II's Customers do not return Units, and subject to
II's continued compliance with its payment obligations hereunder, such Customers
will retain the right to sell all of their inventory of the Units;
12
13
d.) II may apply any and all remaining Reserve (including interest)
against any amounts due II under this agreement for a period of one hundred and
eighty (180) days after such termination. At the end of such period, II shall
immediately return to Affiliate the balance of the Reserve and any interest
earned; and
e.) The rights and obligations under Sections 4.04, 4.08, 6, 8, 9, 10,
11, 12, and 13 will continue.
8.04 Partial Termination of this Agreement for Loss of Distribution
Rights.
In the event Affiliate loses the right to grant to II the rights to distribute
any Version under this agreement, then upon such loss of rights Affiliate shall
give II no less than forty-eight (48) hours written notice and it shall be
deleted from the coverage of this agreement. Upon such partial termination, II
may return all or any portion of its inventory and that of II's Customers in
accordance with the terms of this agreement. In the case of partial termination,
II shall be free to negotiate with, and obtain distribution rights from, the
holder of the distribution rights for such Version, as applicable.
9. FREEDOM TO COMPETE
Subject to the terms of this agreement, each party agrees that nothing in
this agreement will be construed as restricting or prohibiting either party from
lawfully competing with the other party in any other aspects of its business,
including, without limitation, development of and/or distribution of other
software products and services. Without limiting the generality of the
foregoing, each party acknowledges that the other party is in the business of
creating and publishing software products for a variety of hardware platforms
and related hardware products, that the other party maintains and continually
seeks relationships with other parties, and that the other party maintains and
continually seeks licensing or similar arrangements with other parties. Each
party agrees that nothing in this agreement will be construed as restricting or
prohibiting the other party from continuing its business in any lawful manner
and without limitation the other party may at its sole discretion at any time
during or after the term of this agreement (a) create, publish, manufacture,
market and distribute any other products, even if such products are competitive
to and similar to the Titles; and (b) enter into and maintain relationships with
any other party, even if such parties are competitors, or licensor of the other
party.
13
14
10. REPRESENTATIONS AND WARRANTIES
a.) Affiliate represents and warrants to II that:
i.) It has the right, full power and authority to enter into this
agreement, to carry out its terms and to grant the rights, licenses and
privileges granted in this agreement;
ii.) It is duly incorporated, valid and existing, in good
standing under the laws of the jurisdiction in which it was incorporated;
iii.) II shall not be required to make any payments of any nature
except as otherwise expressly set forth in this agreement;
iv.) Affiliate has all necessary rights, title, and interest in
and to the Titles and all other materials furnished to II under this
agreement, to xxxxx XX the rights granted hereunder;
v.) The Titles and all other materials furnished to II under this
agreement do not infringe upon, or misappropriate, any copyright, trade
secret or any other proprietary rights of any third party;
vi.) Each Version will perform substantially in accordance with
Affiliate's specifications and express warranties for each respective
Version;
vii) It has sufficient resources, equipment and expertise to
manufacture, publish and market the Titles in accordance with the terms of this
agreement;
viii.) It has not and shall not assign, transfer, lease, convey
or grant a security interest or otherwise similarly dispose of the Titles or
any related materials;
ix.) It shall not subdistribute or otherwise permit or grant any
third-party the right to manufacture, distribute, market or otherwise exploit
the Units, except as otherwise expressly agreed to in writing by II;
x.) The making of this agreement and the manufacture, advertisement,
distribution and sale of the Units and of related materials or services supplied
by Affiliate shall not infringe upon or violate any laws or regulations of any
nation within the Territory, or any agreement, right or obligation existing or
which shall exist between Affiliate or any other person, firm or
14
15
corporation;
xi.) It shall not manufacture or deliver any Units or components
or any related materials which do not meet the quality standards set forth in
Section 4.01;
xii.) Prior to delivery to II, it will obtain all necessary rights
from any and all hardware manufacturers (e.g., Sega, Sony and Nintendo) to
perform its obligations with respect to any Title or Version.
b.) II represents and warrants to Affiliate that:
i.) It has the right, full power and authority to enter into this
agreement, to carry out its terms and to grant the rights, licenses and
privileges granted in this agreement;
ii.) It is duly incorporated, valid and existing, in good
standing under the laws of the jurisdiction in which it was incorporated;
iii.) It has or shall obtain all necessary rights, title, and
interest in and to the materials furnished by it and incorporated into the
Units;
iv.) It has the capability to perform the Manufacturing Services
if applicable, and the distribution services as set forth in this agreement;
v.) The materials furnished by II under this agreement do not
infringe upon, or misappropriate, any copyright, trade secret or any other
proprietary rights of any third party; and
vi.) It has not and shall not assign, transfer, lease, convey or
grant a security interest or otherwise similarly dispose of the Units or
Components.
11. INDEMNIFICATION
11.01 Affiliate Indemnity. Affiliate agrees to indemnify, hold
harmless and defend II, its subsidiaries, affiliates and their respective
officers, directors and employees from and against all claims, losses, defense
costs (including reasonable attorneys' fees), judgments and other expenses
related to or arising out of: (a) the breach or alleged breach of its
representations, warranties and covenants; (b) any product liability with
respect to any Title; (c) the alleged infringement or violation of any
trademark, copyright, trade secret, patent or other proprietary
15
16
right with respect to any Title; and (d) any unfair trade practice, trade libel
or misrepresentation based on any promotional material, packaging, documentation
or other materials provided by Affiliate with respect to any Title. Provided
that Affiliate is fulfilling its indemnification obligations hereunder in good
faith, Affiliate shall have the right to control the defense and settlement of
any such claim at Affiliate's expense and to choose counsel for such purpose,
provided that Affiliate may not settle any such claim without II's prior written
consent, which will not be unreasonably withheld. II may retain counsel (at II's
sole option and expense) with respect to any such claim, and Affiliate shall
ensure that its counsel reasonably cooperates with II's counsel in the course of
such defense. If Affiliate does not fulfill its indemnification obligations in
good faith, II will have the right to defend and settle any claim for which it
was entitled to indemnification under this agreement and to receive
reimbursement from Affiliate for all of its costs in defending and settling such
claim. In case an infringement claim is finally judicially determined to be an
infringement, Affiliate will, at Affiliate's sole option: (i) procure a license
from any claimants with respect to the challenged Title or any Version that will
enable II to continue marketing that Title or any Version (ii) modify the
Version or Title so as to make it noninfringing, or (iii) buy back all inventory
of the affected Units of II and II's Customers at II's original purchase price
from Affiliate, pay all shipping and other charges associated with the return to
Affiliate of the Units, and terminate this agreement with respect to that Title
or Version.
11.02 II Indemnification. II agrees to indemnify, hold harmless and defend
Affiliate, its subsidiaries, affiliates and their respective officers, directors
and employees from and against all claims, losses, defense costs (including
reasonable attorneys' fees), judgments and other expenses arising out of: II's
representations, warranties and covenants. II's obligation to indemnify is
conditioned on Affiliate notifying II of any such claim as to which
indemnification will be sought promptly after Affiliate learns of such claim,
and providing II reasonable cooperation in the defense and settlement thereof.
Provided that II is fulfilling its indemnification obligations hereunder in good
faith, II shall have the right to control the defense and settlement of any such
claim at II's expense and to choose counsel for such purpose, provided that II
may not settle any such claim without Affiliate's prior written consent, which
will not be unreasonably withheld. Affiliate may retain counsel (at Affiliate's
sole option and expense) with respect to any such claim, and II shall ensure
that its counsel reasonably cooperates with Affiliate's counsel in the course of
such defense. If II does not fulfill its indemnification obligations in good
faith, Affiliate will have the right to defend and settle any claim for which it
was entitled to indemnification and to receive reimbursement from II for all of
its costs in defending and settling that claim.
11.03 LIMITATION OF LIABILITY.
16
17
BOTH PARTIES AGREE THAT TO THE EXTENT PERMISSIBLE BY APPLICABLE LAW, UNDER NO
CIRCUMSTANCES SHALL EITHER PARTY BE LIABLE TO THE OTHER PARTY FOR ANY
CONSEQUENTIAL, INCIDENTAL, SPECIAL DAMAGES OR LOST PROFITS, ARISING IN
CONNECTION WITH THIS AGREEMENT, OR, ON ACCOUNT OF ITS TERMINATION, EVEN IF
APPRAISED OF THE LIKELIHOOD OF SUCH DAMAGES OCCURRING.
12. CONFIDENTIALITY
12.01 Confidential Information. During the Term of this agreement,
Affiliate and II may be exposed to certain information that is confidential to
the other party and is not generally known to the public, including without
limitation (a) quantities, dollar volumes, and revenue of Units, (b) the terms
of this agreement including Wholesale Prices, marketing funds and like
information, and (c) business and marketing plans, future products, research and
development. Each party agrees respectively, that for a period of three (3)
years after its initial receipt of the other party's confidential information it
will not use in any way for its own account or the account of any third party,
nor disclose to any third party, any such confidential information without the
prior written consent of the other party, except to employees, agents,
contractors and like entities solely as required to fulfill the purposes of this
agreement, provided any such third parties agree in writing to be bound by the
confidentiality obligations under this agreement. Affiliate and II agree that
they will safeguard the confidential information which each party may receive
from the other party for the period set forth above with the same degree of care
used to protect its own information of a like nature but in no circumstances
less than reasonable care.
12.02 Non-Confidential Information.
Section 12.01 above shall not be applicable to any information: (a) which
is in the public domain or which becomes part of the public domain through no
fault on the part of the receiving party; (b) which is known to the receiving
party prior to the disclosure thereof by the disclosing party, as established by
documentary evidence; (c) which is lawfully received by the receiving party from
a third party who provided such information without breach of any separate
confidentiality obligation owed to the disclosing party; (d) which is disclosed
by the disclosing party to any third party without restriction on further
disclosure; and (e) which is independently developed by personnel having no
access to the disclosing party's confidential information as established by
documentary evidence.
17
18
13. GENERAL
13.01 Notices. Any notice required or permitted to be given or sent under
this agreement will be deemed delivered if hand delivered or if mailed, postage
prepaid, by registered, express or certified mail, return receipt requested, or
by any nationally-recognized private express courier, to either party at the
address listed above, or to such other address of which either party may so
notify the other.
13.02 Governing Law/Forum. This agreement will be deemed entered into in
New York, and will be governed by and interpreted in accordance with the
substantive laws of the State of New York. The parties agree that (i) any claim
of whatever character arising under this agreement or relating in any way,
directly or indirectly, to the dealings between them during the term of this
agreement shall be brought exclusively in a federal or state court of competent
jurisdiction in New York County in the State of New York and (ii) that any claim
that is filed in any other court shall be conclusively deemed as violating the
expressed intent of the parties.
13.03 Attorney's Fees. In the event any litigation is brought by either
party in connection with this agreement, the prevailing party will be entitled
to recover from the other party all the costs, reasonable attorneys' fees and
other reasonable expenses incurred by such prevailing party in the litigation.
13.04 Force Majeure. Neither party will be deemed in default of this
agreement to the extent that performance of its obligations, or attempts to cure
any breach is delayed or prevented by reason of any act of God, fire, natural
disaster, accident, act of government, shortages of material or supplies or any
other cause not being under the control of such party ("Force Majeure"),
provided that such party gives the other party prompt written notice thereof
promptly and uses its good faith effort to continue cure any breach. In the
event of such a Force Majeure, the time for the performance or cure will
extended for a period equal to the duration of the Force Majeure, but not in
excess of six (6) months.
13.05 Amendment. No amendment or modification of this agreement will be
made except by an instrument in writing signed by both parties. No failure of
either party to prosecute its right with respect to any single or continuing
breach of this agreement will act as a waiver of the right of that party to
later exercise any right or remedy with respect to that breach or any other
breach of this agreement by the other party.
13.06 Relationship. The relationship between II and Affiliate will be that
of independent contractors. Each party is not and shall not be deemed to be an
employee, agent, partner or legal representative of the other for any purpose
and shall not have any right, power or
18
19
authority to create any obligation or responsibility on behalf of the other.
13.07 Severability. If any provision of this agreement is found invalid or
unenforceable pursuant to judicial decree, such provision will be enforced to
the maximum extent permissible and the remainder of this agreement will remain
in full force and effect according to its terms.
13.08 Assignment. Affiliate may not assign any of its rights hereunder
without the prior written consent of II, which will no be unreasonably withheld.
13.09 Modifications to Exhibit A. The parties may modify the terms of
Exhibit A to reflect the addition, deletion or substitution of Titles, Versions,
Wholesale Prices, Street Dates and Projected Units, by notice sent in writing
via fax, email, regular or overnight mail, provided that any such notification
is sent by an authorized party and an acknowledgment of receipt and agreement to
its terms are evidenced in writing by a person authorized by the other party to
accept and respond to such notices. All such notices shall be deemed
incorporated into Exhibit A by reference and made a part of this agreement.
13.10 Goodwill. II covenants that all goodwill associated with the
trademarks relating to the Titles, other than trademarks of II shall inure
directly and exclusively to the benefit of Affiliate, as the case may be. II or
Affiliate shall not at any time acquire or claim any right, title or interest in
the other's trademarks or service marks other than those rights expressly
granted. All right, title or interest in either party's trademarks and service
marks which come into existence as a result, or during the term of, the exercise
by II or Affiliate of any right granted to it hereunder shall immediately vest
in the applicable party.
13.11 Entire Agreement. This agreement, the Exhibits attached hereto, and
II's purchase orders (subject to Section 3.02) state the entire agreement
between the parties relating to the subject matter of this agreement and
supersede any and all prior agreements and communications, written or oral. This
agreement may be executed by facsimile and in counterparts and shall constitute
a valid, binding agreement.
IN WITNESS WHEREOF, the parties hereto have executed the agreement by
their duly authorized representatives as set forth below.
Infogrames, Inc. Infogrames North America, Inc.
By: /s/ Denis Guyennot By: /s/ Xxxx Xxxxxx
Name: Xxxxx Guyennot Name: Xxxx Xxxxxx
Title: President Title: Chief Operating Officer
19
20
EXHIBIT A
Initial
Title/Version Wholesale Price Projected Units Street Date
------------- --------------- --------------- -----------
20
