Exhibit 10.3
Distribution Agreement
between
Infogrames Entertainment SA
and
Infogrames, Inc.
This Distribution Agreement (this "Agreement") is entered into by and
between Infogrames Europe SA (formerly Infogrames Multimedia SA) and Infogrames
Entertainment SA (together, "IESA") and Infogrames, Inc. ("Infogrames") as of
October 2, 20000 (the "Effective Date").
Whereas, IESA is in the business of publishing and marketing Products and
wishes to license Infogrames to distribute, publish and market Products owned or
controlled by IESA; and
Whereas, Infogrames wishes to obtain the right to distribute, publish and
market Products owned or controlled by IESA;
NOW THEREFORE, in consideration of the mutual covenants contained herein,
the parties hereby agree as follows:
1. Definitions
(a) "Chargeback" means deductions customers take against an
Infogrames invoice for price protection, promotions or
markdowns.
(b) "Confidential Information" means trade secrets, discoveries,
ideas, concepts, know-how, techniques, designs,
specifications, drawings, diagrams, data, computer programs,
business activities and operations. In order to be considered
"Confidential Information," the information must contain a
legend, such as "Confidential Information," "Confidential" or
"Proprietary," or if orally disclosed, such information shall
be considered and treated as Confidential Information only if
it is clearly identified at the time of disclosure as being
confidential and the disclosing party gives written notice
within 10 days after disclosure specifically reciting the
information orally disclosed and stating that such information
is Confidential Information.
(c) "Manufacturing Costs" means all reasonable direct costs of
manufacturing, including license fees paid to console product
manufacturers and in-bound transportation costs, for Products
sold and not returned.
(d) "Master" means a gold-master CD-ROM, cartridge or other
appropriate electronic medium of delivery which is of
sufficient quality to allow reproduction of the applicable
software product without any material degradation, plus the
applicable user manual and any and all documentation
reasonably necessary to exercise Infogrames' rights under this
Agreement, including without limitation, graphics in hard and
electronic copy.
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(e) "Merchandise" means goods and sundries bearing the names,
characters, themes or based on the storylines related to any
Product.
(f) "Net Revenues" means gross revenues received by Infogrames
from third parties, less any returns, Chargebacks, discounts,
rebates, Manufacturing Costs, taxes, duties, commissions,
insurance and transportation costs.
(g) "Products" means the Products (in any format, e.g. PC,
Macintosh, console, video, online play) which Infogrames (and
its subsidiaries) has the right to distribute in the
Territory, whether licensed or owned by IESA (or its
subsidiaries), and any demonstration versions and derivative
works thereof, including without limitation, rights to
merchandising, television, film, music, hint books, strategy
guides, sequels, add-ons and level packs.
(h) "Trademarks" means the trademarks, logos, service marks, trade
names and other proprietary markings owned by or licensed to
IESA in connection with any Product.
(i) "Territory" means the United States, Canada and their
territories and possessions.
(j) All capitalized terms not defined herein are as defined in the
Securities Purchase Agreement between the parties dated as of
November 15, 1999.
2. License: IESA hereby grants to Infogrames the exclusive right to
publish, manufacture, have manufactured, localized, adapt, market,
advertise, promote, publicize, distribute, sell, sublicense or
otherwise exploit the Products through all channels of distribution
in the Territory. Upon Infogrames' request, IESA shall provide
Infogrames with all materials reasonably necessary for Infogrames to
localize the Products, including without limitation, source code and
all related documentation, subject to their availability to IESA and
to third-party approval rights, as applicable.
3. Trademark License: Subject to any approvals as may be required by a
third party licensor, IESA hereby grants to Infogrames a
royalty-free, non-exclusive, non-transferable license to use IESA's
Trademarks in connection with the exercise of the license granted to
Infogrames pursuant to Paragraph 2 of this Agreement. IESA's
Trademarks and the goodwill associated therewith are and remain
IESA's exclusive property. Infogrames shall acquire no right, title
or interest in IESA's Trademarks or the goodwill associated
therewith, other than the limited license and right to use IESA's
Trademarks as set forth under this Agreement. All usage of IESA's
Trademarks by Infogrames shall inure to IESA's benefit. Infogrames
will use all reasonable efforts to ensure that all applicable and
reasonably necessary Trademarks used for a Product appear clearly on
the packaging and major advertising and promotional materials for
such Product.
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4. Purchase of Prepackaged Products: If IESA offers prepackaged
Products, Infogrames shall be entitled to purchase such prepackaged
Products at IESA's actual direct cost of manufacture, F.O.B.
Infogrames' warehouse. The prepackaged Products will be purchased on
a purchase order basis, under Infogrames standard purchase order
terms and conditions. Royalties due IESA for the subsequent sale of
such product are covered by the other terms and conditions of this
Agreement including but not limited to Paragraphs 7 and 14 below.
5. Return of Prepackaged Products: Infogrames shall be entitled to
return prepackaged Products purchased from IESA to IESA for a full
refund or credit, at Infogrames' option.
6. Delivery of Non-Prepackaged Products: IESA will deliver as soon as
practicable a complete English language NTSC Master of any Product
which is licensed to Infogrames under this Agreement for manufacture
by or for Infogrames pursuant to this Agreement.
7. Royalties on Products: Infogrames will pay to IESA a royalty on
distribution of Products which are manufactured by or for Infogrames
pursuant to the license granted herein calculated as follows:
(a) If a third party is entitled to royalties based on Infogrames'
distribution of the specific Product, then the royalty will be
the greater of (i) 30% of the Net Revenues Infogrames actually
receives from the distribution of such Product or (ii) 130% of
the royalty due to such third party (not including any
advance) actually paid by IESA to the third party for such
Product. IESA will inform Infogrames at the time such Product
is delivered to Infogrames of the amount of the royalty due to
such third party in writing.
(b) If the Product is internally developed by IESA, or any of its
subsidiaries, then the royalty will be 30% of the Net Revenues
Infogrames actually receives from the distribution of the
Product
(c) No royalties will be due from Infogrames to IESA for up to 500
units of each Product, to be used for promotional and
demonstration purposes.
(d) No royalties will be due from Infogrames to IESA for any
transfer or payment amongst IESA and its subsidiaries (and
their subsidiaries).
8. Obligation to Release Product. Infogrames shall actively commence
marketing and selling the Products within the Territory in
reasonable commercial quantities within three (3) months following
Infogrames' receipt of Masters. If Infogrames shall fail to have
commenced actively marketing and selling the Products in the
Territory within three (3) months following the receipt of Masters
with respect thereto, then IESA shall have the right, in addition to
any other rights which IESA may have hereunder, upon thirty (30)
days prior written notice to Infogrames, to declare such right
henceforth to be nonexclusive.
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9. Anti-Export Protection. Infogrames shall use commercially reasonable
efforts not to sublicense, distribute or sell any Products to any
distributor or customer who Infogrames knows, or could reasonably be
expected to know, intends to resell or export the Products outside
of the Territory. A license, sublicense, distributor or customer who
wrongfully resells or exports Products outside of the Territory is
referred to as an "Exporter." IESA shall have the right, in addition
to any other rights which it may have hereunder, to require
Infogrames to terminate any license, distribution agreement or
arrangement with any such Exporter who is wrongfully distributing
Products in violation of the rights of IESA.
10. Prohibition of Sublicensing; Derivative Works. Infogrames shall not
sublicense any of the rights granted to Infogrames hereunder without
IESA'S prior written consent, such consent not to be unreasonably
withheld. Infogrames shall not exploit derivative works related to
the Products, including without limitation rights to merchandising,
television, film, music, hint books, strategy guides, sequels,
add-ons and level packs, without IESA'S prior written consent, such
consent not to be unreasonably withheld. Notwithstanding the above,
IESA acknowledges that Infogrames maintains sublicensing agreements
with affiliates and/or third parties in certain countries within the
Territory as listed on Schedule A and that such sublicensing
agreements are deemed to be pre-approved with respect to the
publishing and distribution of Product within those countries that
is developed by IESA or its subsidiaries. Sublicensing to original
equipment manufacturing (OEMs) for exploitation in the Territory is
also deemed pre-approved for Product developed by IESA or its
subsidiaries. Such pre-approvals for sublicensing within the
Territory do not apply to Product developed by third parties.
11. Approval Rights: The Products as manufactured, advertised, sold,
distributed or otherwise disposed of by Infogrames under this
Agreement shall be of customary quality and shall be sold and
distributed in packaging acceptable to IESA and bearing IESA's
Trademarks and trade names. Such packaging may indicate that the
Products are distributed by Infogrames. Infogrames agrees to furnish
IESA free of cost, for IESA's reasonable approval as to quality and
style, samples of each Product together with its proposed packaging
prior to the Product's release for sale or distribution. The Product
shall not be sold or distributed by Infogrames without such
approval. IESA will approve or reject samples submitted by
Infogrames within ten (10) days of receipt of such samples: IESA's
failure to respond to requests for approval within ten (10) days
shall be deemed approval.
12. Ownership of Intellectual Property Rights. Notwithstanding anything
contained herein to the contrary and subject to the terms of this
Agreement, all artwork, designs and computer software embodying the
intellectual property embodied in the Products, or any reproduction
thereof, or any packaging or advertising materials, which are
designed, developed and/or created by Infogrames hereunder (or any
of its sublicenses, affiliates or subsidiaries), shall be, and
remain IESA's (or its affected third party's, as the case may be)
sole and exclusive property, inclusive of all copyrights and right
to copyright therein and thereto for the life of the copyright
therein; provided that during the term of this Agreement, Infogrames
shall have the exclusive right, license and privilege (without any
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compensation to IESA except as otherwise provided in this Agreement)
to use all such above described materials in connection with its
exploitation, sale and distribution of the Products.
Subject to the terms of this Agreement, Infogrames acknowledges and
agrees that: All copyrights, trademarks and service marks and rights
to same referred to in this Agreement in the name of and/or owned by
and/or licensed to IESA shall be and remain the sole and complete
property of IESA, or its affected third-party licensors, as the case
may be; that all such copyrights, trademarks and service marks and
rights to same in the name of or owned by any copyright proprietor
other than IESA or Infogrames shall be and remain the sole and
complete property of such copyright proprietor; that all trademarks
and service marks which, and/or the right to use which, arise out of
the license hereby granted to use the intellectual property embodied
in the Products shall be and remains the sole and complete property
of IESA (or its affected third-party licensors, as the case may be);
that Infogrames shall not at any time acquire or claim any right,
title or interest of any nature whatsoever in any such trademark or
service xxxx by virtue of this Agreement or of Infogrames' uses
thereof in connection with the Products; and that any right, title
or interest in or relating to any such trademark or service xxxx,
which comes into existence as a result of, or during the term of,
the exercise by Infogrames of any rights granted to it hereunder
shall immediately vest in IESA (or its affected third-party
licensor, as the case may be).
13. Taxes. All amounts due hereunder include any applicable taxes and
duties.
14. Payment Procedures: Infogrames will report to IESA the amount of
royalties due within sixty (60) days after the end of each calendar
quarter, and each such report will be accompanied by payment of such
amount; provided, however, that Infogrames shall be entitled to
credit the amounts to be paid by IESA to any amounts that IESA owes
to Infogrames under the agreement or security whatsoever. All
payments will be made in U.S. dollars.
15. Audit: Infogrames will keep accurate records of the basis for the
royalty determination and will make such records available to an
independent certified public accountant mutually agreed upon by the
parties for inspection during normal business hours, provided
however such inspection shall not interfere with Infogrames' normal
business activities. Such accountant shall be under an obligation of
confidentiality to Infogrames, and will only disclose to IESA
whether or not the royalty reports provided to IESA by Infogrames
were correct, and if not, the amount by which the royalty reports
are incorrect. No other information will be provided to IESA. If
Infogrames has underpaid the royalties due, Infogrames will promptly
pay the underpaid amount. If Infogrames has overpaid the royalties
due, Infogrames may elect, in its sole discretion, to either credit
such overpayment against royalties to come due in the future or
require IESA to refund such overpayment to Infogrames promptly.
Inspections shall be at IESA's cost, shall not occur more frequently
than once annually and shall not cover the same records more than
once; provided, however, that the reasonable cost of the inspection
will be reimbursed by Infogrames if the inspection discovers an
underpayment in excess of ten (10%) percent.
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16. IESA Warranties and Indemnity: IESA warrants and represents that
IESA has sufficient rights to the Products to grant Infogrames the
licenses under this Agreement and that any Product provided to
Infogrames under this Agreement does not and will not infringe any
third party proprietary right. If Infogrames is obligated to pay any
third party for rights reasonably necessary to exploit its rights
under this Agreement, IESA will reimburse Infogrames such amount
upon Infogrames' request. IESA warrants and represents that it has
the right to enter into this Agreement and that this Agreement and
IESA'S performance under this Agreement will not conflict or violate
any obligations IESA may have under an agreement with any third
party. IESA will indemnify Infogrames, and its affiliates, officers,
directors and employees, against claims, actions, demands,
liabilities, losses, damages, expenses (including reasonable
attorneys' fees and legal costs) related to alleged or actual
infringement of third party proprietary rights by the Products and
to alleged personal injury or property damage related to the
Products. IESA will indemnify Infogrames, and its affiliates,
officers, directors and employees, against any claims, liabilities,
losses, damages, injuries, costs, expenses, causes of action,
claims, demands, assessments and similar matters related to any
breach of IESA's warranties.
17. Infogrames Warranties and Indemnity: Infogrames warrants and
represents that it has the full power and authority to enter into
this Agreement. Except as contemplated hereby, Infogrames warrants
and represents that it will not assign, transfer, lease, convey or
grant a security interest in or otherwise similarly dispose of the
Products or any related materials. Infogrames warrants and
represents that it shall use its reasonable best efforts to protect
IESA's and any applicable third party's intellectual property rights
covered by this Agreement in the Territory against infringement.
Infogrames warrants and represents that the making of this Agreement
and the manufacture, marketing, sale and distribution of the
Products shall not infringe upon or violate any laws or regulations
of any nation with the Territory; any agreement, right or obligation
between Infogrames and any other person, firm or corporation; or any
rights of any third party. Infogrames will indemnify IESA, and its
affiliates, officers, directors and employees, against any claims,
liabilities, losses, damages, injuries, costs, expenses, causes of
action, claims, demands, assessments and similar matters related to
any breach of Infogrames' warranties.
18. Conditions on Indemnity Obligations: The indemnity obligations set
forth in this Agreement are conditioned upon the party claiming
indemnification (the "Indemnified Party") promptly notifying the
indemnifying party (the "Indemnifying Party") of the claim, allowing
the Indemnifying Party to control any defense or settlement of such
claim and assisting the Indemnified Party in the defense or
settlement so long as the Indemnifying Party reimburses the
Indemnified Party's reasonable expenses.
19. Term: The term of this Agreement will be the later of (a) seven
years or (b) the period of time during which IESA and its
subsidiaries hold at least twenty-five percent (25%) of the voting
stock of Infogrames.
20. Termination: This Agreement may be terminated by Infogrames in its
sole discretion upon ninety (90) days written notice to IESA. Either
party may terminate this Agreement
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for a material breach by the other party which has not been cured
within sixty days after the non-breaching party provided written
notice of such breach to the breaching party.
21. Effect of Termination: Upon termination of this Agreement, the
licenses granted hereunder will terminate, provided however, that in
the event such termination is for other than a breach by Infogrames,
the licenses will continue to the extent necessary for a period of
up to six (6) months to allow Infogrames to distribute its remaining
inventory of Products and to fulfill its obligations under any
agreement with a third party. Paragraphs 1, 3, 7, 9, 10, 12, 14-18
and 21-30 shall survive termination of this Agreement for any
reason.
22. Assignment: Infogrames may assign all or a portion of its rights
under this Agreement to its affiliates. In the event of a change in
control of Infogrames to a successor entity or any of its
affiliates, Infogrames may not assign this Agreement to any other
third party without IESA approval. Subject to the foregoing, the
provisions of this Agreement shall apply to and bind the successors
and permitted assigns of the parties. Any attempted assignment or
other transfer of this Agreement not in compliance with this
Paragraph 22 shall be null and void and shall be deemed to be a
material breach of this Agreement which is not capable of cure.
23. Confidentiality: Each party agrees that it will hold in strict
confidence and not disclose the Confidential Information of the
other party to any third party and to use the Confidential
Information of the other party for no purpose other than the
purposes expressly permitted by this Agreement. Each party shall
only permit access to the other party's Confidential Information to
those of its employees having a need to know and who have signed
confidentiality agreements containing terms at least as restrictive
as those contained in this Paragraph 23. Each party shall maintain
the confidentiality and prevent accidental or other loss or
disclosure of any Confidential Information of the other party with
at least the same degree of care as it uses to protect its own
Confidential Information but in no event with less than reasonable
care. A party's obligations of confidentiality under this Agreement
shall not apply to information which such party can document (i) is
in the public domain without the breach of any agreement or
fiduciary duty or the violation of any law, (ii) was known to the
party prior to the time of disclosure without the breach of any
agreement or fiduciary duty or the violation of any law, (iii) is
independently developed by the party prior to receiving such
Confidential Information without reference to any Confidential
Information, (iv) is required to be disclosed pursuant to a judicial
order, a requirement of a governmental agency or by operation of
law, provided that such party gives the other party written notice
of any such requirement immediately after learning of any such
requirement, and takes all reasonable measures to avoid or limit
disclosure under such requirements and to obtain confidential
treatment or a protective order and has allowed such other party to
participate in the proceeding. Upon written request by either party
hereto, the other party shall promptly return all documents and
other tangible materials representing the requesting party's
Confidential Information and all copies thereof. Notwithstanding
anything contained herein to the contrary, Infogrames reserves the
right to publicly disclose the terms of this
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Agreement if it determines in good faith that this is a material
agreement which must be filed with the Securities and Exchange
Commission.
24. Governing Law: The laws of the State of New York shall govern this
Agreement, without regard to conflicts of laws provisions thereof
and without regard to the United Nations Convention on Contracts for
the International Sale of Goods.
25. Relationship of Parties: The parties hereto expressly understand and
agree that the parties are independent contractors in the
performance of each and every part of this Agreement.
26. Amendment and Waiver. Except as otherwise expressly authorized
herein, any provision of this Agreement may be amended and the
observance of any provision of this Agreement may be waived only
with the written consent of the parties.
27. Headings. Headings and captions are for convenience only and are not
to be used in the interpretation of this Agreement.
28. Notices. All notices, statements, and reports required or permitted
by this Agreement shall be in writing and deemed to have been
effectively given and received; (i) five (5) business days after the
date of mailing if sent by registered or certified mail, postage
prepaid, with return receipt requested; (ii) when transmitted if
sent by facsimile, provided a confirmation of transmission is
produced by the sending machine and a copy of such facsimile is
promptly sent by another means specified in this Paragraph 28; or
(iii) when delivered if delivered personally or sent by express
courier service. Notices shall be addressed as follows:
If to IESA: If to Infogrames:
Infogrames Entertainment SA Infogrames, Inc.
00, xxx xx 0xx Xxxx 1943 417 Fifth Avenue
Villeurbanne, 69100 Xxx Xxxx, Xxx Xxxx 00000
France Attention: Xxxxx X. Xxxxxx
Attention: Xxxxxx Xxxxxxxx Telecopy: (000) 000-0000
Telecopy: (000 00) 000 000000 Confirm: (000) 000-0000
Confirm: (000 00) 000 000000
29. Entire Agreement. This Agreement supersedes all proposals, oral or
written, all negotiations, conversations, or discussions between or
among parties relating to the subject matter of this Agreement and
all past dealing or industry custom.
30. Severability. If any provision of this Agreement is held to be
illegal or unenforceable, that provision shall be limited or
eliminated to the minimum extent necessary so that this Agreement
shall otherwise remain in full force and effect and enforceable.
31. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of
which taken together shall constitute one and the same instrument.
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IN WITNESS WHEREOF, the Parties have executed this Agreement on the
Effective Date.
INFOGRAMES ENTERTAINMENT S.A. INFOGRAMES, INC.
By: /s/ Xxxxx Xxxxxxx By: /s/ Xxxxx X. Xxxxxx
-------------------------- --------------------------
Name: Xxxxx Xxxxxxx Name: Xxxxx X. Xxxxxx
-------------------------- --------------------------
Title: CEO Title: Sr. VP & CFO
-------------------------- --------------------------
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SCHEDULE A
PRE-APPROVED SUBLICENSING ARRANGEMENTS
AFFILIATION WITH
COUNTRY/TERRITORY ENTITY INFOGRAMES (IF ANY)
----------------- ------ -------------------
None.
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INFOGRAMES INTERACTIVE, INC.
00 Xxxxxx Xxxx
Xxxxxxx, Xx. 00000
November 12, 2002
Infogrames, Inc.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Re: Distribution Agreement
Gentlemen:
Reference is made to the Distribution Agreement (the "Inter-Company
Distribution Agreement") between and among Infogrames Europe, SA and Infogrames
Entertainment, SA (together, "IESA") and Infogrames, Inc. ("Inc.") dated as of
October 2, 2000. Capitalized terms used herein without definition have the
meanings provide in the Inter-Company Distribution Agreement. The undersigned
parties hereby agree as follows:
1. Although Infogrames Interactive, Inc. ("I-Cubed"), which is a
wholly-owned subsidiary of IESA, is not a signatory to the Inter-Company
Distribution Agreement, at all times since I-Cubed became a subsidiary of IESA
(i.e., as a result of the purchase by IESA of Hasbro Interactive, Inc., now know
as I-Cubed), the undersigned parties have been operating under and have
considered themselves bound by all terms and conditions contained in the
Inter-Company Distribution Agreement which are applicable to IESA or any
subsidiary thereof, including without limitation, those set forth in paragraph 3
below.
2. I-Cubed hereby agrees to be bound by all of the provisions of the
Inter-Company Distribution Agreement which are applicable to IESA or any
subsidiary thereof, including without limitation, (i) the exclusive right of
Inc. to publish, manufacture, have manufactured, localize, adapt, market,
advertise, promote, publicize, distribute, sell, sublicense or otherwise exploit
all Products which I-Cubed has the right to distribute in the Territory, whether
licensed or owned by I-Cubed, through all channels of distribution in the
Territory under Section 2 thereof, (ii) Inc.'s royalty free license to use
I-Cubed's Trademarks under Section 3 thereof, and (iii) Inc.'s right to purchase
prepackaged Products from I-Cubed under Section 4 thereof.
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INFOGRAMES INTERACTIVE, INC.
By: /s/ Xxxx X. Xxxxxxxx
-------------------------------
Name: Xxxx Xxxxxxxx
-----------------------
Its: Senior Vice President
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ACKNOWLEDGED AND AGREED:
INFOGRAMES, INC.
By: /s/ Xxxx X. Xxxxxxxx
----------------------------------
Name: Xxxx Xxxxxxxx
-------------------------
Its: Senior Vice President
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INFOGRAMES ENTERTAINMENT, SA
By: /s/ Xxxxx Xxxxxxx
----------------------------------
Name: Xxxxx Xxxxxxx
-------------------------
Its: CEO
-------------------------
INFOGRAMES EUROPE, SA
By: /s/ Xxxxx Xxxxxxx
----------------------------------
Name: Xxxxx Xxxxxxx
-------------------------
Its: CEO
-------------------------
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