EXHIBIT 10.10
COOPERATION AGREEMENT
between
HAPPY ZONE ENTERTAINMENT CORPORATION (HZE) AS SPONSOR
and
MSH ENTERTAINMENT CORPORATION (MSHE) AS CONTRACTOR
THIS COOPERATION AGREEMENT ("Agreement") is made and entered into this 1st day
of September 1996, by and between Happy Zone Entertainment Corporation (HZE) a
California corporation, (hereinafter "Sponsor") and MSH Entertainment
Corporation (MSHE) a Utah corporation, (hereinafter "Contractor"):
WITNESSETH:
WHEREAS, Sponsor desires to engage Contractor from time to time pursuant to one
or more Project Work Statements to develop, create, test, and deliver certain
programming materials as works made for hire, and Contractor is interested in
accepting such engagements, subject to the parties' further agreement on the
scope and terms of each such Project Work Statement; and
WHEREAS, Sponsor and Contractor mutually desire to set forth in this Agreement
certain terms applicable to all such Project Work Statement engagements;
NOW, THEREFORE, Sponsor and Contractor, intending to be legally bound, hereby
agree as follows:
Section 1
GENERAL TERMS
In consideration of the Contractors receipt of an equity ownership interest of
6,000,000 shares of the common stock of the Sponsor, and the exclusive right to
be a Contractor to Sponsor, the Contractor agrees to the following specific
terms and conditions and this total agreement.
1.1 Product and Property Rights. Sponsor shall have first right of refusal to
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all children's projects and properties which are presented to Sponsor and
Contractor from outside parties and created in-house by either of the parties.
The Contractor shall have the right to independently pursue any children's
projects which are not accepted for production by Sponsor.
1.2. Exclusive Contractor. During the period of this agreement the Contractor
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shall be the exclusive Contractor to Sponsor for production services and other
related services which from time to time the Sponsor shall, under a PWS, engage
the Contractor to perform such activities under this MWS.
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1.3 Work Statements (MWS and PWS). This agreement is the Master Work Agreement
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and the Master Work Statement hereinafter the (MWS). All projects which
Contractor performs will be Project Work Statements (PWS) which are subordinate
to and an addendum to this MWS.
1.4 Conflict of Interest. All parties are aware and accept that both Sponsor
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and Contractor are in the business of development, production, distribution and
related activities associated with the entertainment industry and that from time
to time conflicts of interest will arise between the parties in pursuit of
opportunities. Both parties agree to use fairness and cooperation in the
resolution of these opportunities.
1.5 Property Ownership Rights. Consistent with other sections of this
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agreement the Sponsor shall maintain all property ownership rights associated
with its activities, including but not limited to: development, production,
publication and distribution; of such items as, but not limited to: games,
merchandising, toys, music rights, publishing, software publishing, book
publishing, TV, cable, satellite, radio, internet, video, CD-ROM, motion picture
and others.
1.6 License Rights to Animation Management System. Subject to mutually agreed
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upon compensation, Contractor herewith grants to Sponsor a perpetual end user
license to the Animation Management System and production software which is
being developed by Contractor.
1.7 Facilities and Equipment. Subject to mutually agreed upon compensation,
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Contractor shall provide Sponsor with office space, equipment and other
facilities associated with operation of its business.
1.8 Management Services. All parties are aware and accept that a major part,
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and possible all, senior management team of the Sponsor are also members of the
Contractors management team.
1.9 Management Change. Without the written consent of a majority of the Board
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of Directors of the Sponsor, during the period of this agreement, Contractor
agrees not to change the rules, responsibilities and title of ▇▇▇▇▇▇ ▇▇▇▇▇,
Chairman, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, President, ▇▇▇▇ ▇▇▇▇▇▇▇, Chief Financial Officer
and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Chief Counsel. The Contractor agrees to cooperate with
the Sponsor in the development of conditional warranty rights, conditional
access to share voting control of Contractor and other actions and agrees to
execute all procedures, documents and conditional rights to any and all equity
ownership in Contractor which will insure the enforcement of this right.
1.10 Capital Commitment. The Contractor agrees to loan Sponsor such capital,
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from time to time, as the Sponsor requests to provide for operating and working
capital.
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All parties agree this is a Master Work Agreement and that the Contractor is
performing Works For Hire for the Sponsor and that when used in this Agreement
and in each Project Work Statement issued hereunder, the terms shall have the
following meanings:
1.11 Code and Data. If not otherwise specified, "Code" shall include both
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Object Code and Source Code. "Code" shall include any Maintenance Modifications
or Basic Enhancements thereto in existence from time to time, and shall include
Major Enhancements thereto when added to the Code in connection with a Project
Work Statement. As used in this definition the term "Object Code" means a
machine-readable form of the Code and the term "Source Code" means human-
readable form of the Code and related system documentation, including all
comments and any procedural code such as job control language. "Data" shall
mean all data in all forms of media which is required to operate the product or
deliver the product or support in any way the deliverable product or properties.
1.12 Deliverables. All Video tapes, Digital Files, Data Digital Tapes,
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Computer Code, Documentation, and other materials developed for or delivered to
Sponsor by Contractor under this Agreement and under any Project Work Statement
issued hereunder.
1.13 Derivative Work. A work that is based upon one or more pre-existing
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works, such as a revision, modification, translation, abridgment, condensation,
expansion, or any other form in which such pre-existing works may be recast,
transformed, or adapted, and which, if prepared without authorization of the
owner of the copyright in such pre-existing work, would constitute a copyright
infringement. For purposes hereof, a Derivative Work shall also include any
compilation that incorporates such a pre-existing work.
1.14 Documentation. User manuals and other written materials that relate to
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particular Data and Code, including materials useful for design (for example,
logic manuals, flow charts, and principles of operation). Documentation shall
include any Maintenance Modifications of Basic Enhancements thereto in existence
from time to time, and shall include Major Enhancements thereto when added to
the Documentation in connection with a Project Work Statement issued hereunder.
1.15 Enhancements. Changes or additions, other than Maintenance Modifications,
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to Code, Data and related Documentation, including all new releases, that
improve functions, add new functions, or significantly improve performance by
changes in system design or coding.
1.16 Error. Any error, problem, or defect resulting from (1) an incorrect
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functioning of Code, or Data, or (2) an incorrect or incomplete statement or
diagram in Documentation, if such error, problem, or defect renders the Code or
Data inoperable, causes the Code or Data to fail to meet the specifications
thereof, causes the Documentation to be inaccurate or incomplete in any material
respect, causes incorrect results, or causes incorrect functions to occur when
any such materials are used.
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1.17 Maintenance Modifications. Any modifications or revisions, other than
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Enhancements, to the Data, Code or Documentation that correct errors, and/or
support new releases of the product.
1.18 Project Work Statement. A purchase order of Sponsor, a proposal of
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Contractor, or another written instrument that is signed on behalf of both
parties by their authorized representatives; and contains either actually, or
incorporate by reference, the following five mandatory items: (1) Descriptions
and/or specifications of the services to be performed and the Deliverables to be
provided to the Sponsor; (2) The name and address of a Technical Coordinator for
both the Sponsor and Contractor; (3) The amount, schedule, and method of
payment; (4) The time schedule for performance and for delivery of the
Deliverables; (5) Completion and acceptance criteria for the Deliverables. In
addition, when applicable, the Project Work Statement may include: (1)
Provisions for written and/or oral progress reports by Contractor; (2) Detailed
functional and technical specifications and standards for all services and
Deliverables, including quality standards; (3) Documentation standards; (4) A
list of any special equipment to be procured by Contractor or provided by
Sponsor for use in performance of the work; (5) Plans, story boards and scripts;
and (6) Such other terms and conditions as may be mutually agreed on between the
parties.
Section 2
CONTRACT ADMINISTRATION
2.1 Contract Coordinators. Upon execution of this Agreement, each party shall
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notify the other party of the name, business address, and telephone number of
its Contract Coordinator. The Contract Coordinator of each party shall be
responsible for arranging all meetings, visits, and consultations between the
parties that are of a non-technical nature. The Contract Coordinators shall
also be responsible for receiving all notices under this Agreement and for all
administrative matters such as invoices, payments, and amendments.
2.2 Technical Coordinators. Each Project Work Statement shall state the name,
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business address, and telephone number of the Technical Coordinators of each
party. The Technical Coordinators of each party designated for a particular
Project Work Statement shall be responsible for technical and performance
matters, and transmission and receipt of Deliverables and of technical
information between the parties, insofar as they relate to such Project Work
Statement.
2.3 Issuance of Project Work Statements. The initial Project Work Statement(s)
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agreed to by the parties are set forth as attachments to this Agreement.
Additional Work Statements, regardless of whether they relate to the same
subject matter as the initial Project Work Statement(s), shall become effective
upon written execution by authorized representatives of both parties.
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Section 3
CHANGES
3.1 Project Work Statement. Changes in any Project Work Statement or in any of
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the Specifications or Deliverables under any Project Work Statement shall become
effective only when a written change request is executed by authorized
representatives of both parties.
3.2 Minor Changes. Change requests that do not substantially affect the nature
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of Deliverables, their performance, or their functionality, and that do not
change schedules by more than a few days or dollar amounts by more than one (1%)
percent of the statement of work may be requested and/or accepted by the
parties' Technical Coordinators.
3.3 Major Changes. All other change requests with respect to this Agreement,
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any Project Work Statement, or any Specifications or Deliverables must be
requested and/or accepted by both parties' Contract Coordinators.
3.4 Acceptance. Contractor may not decline to accept any change requests that
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reduce the cost of performance, provided that an equitable adjustment in
compensation is made for the out-of-pocket costs of any performance or
preparation already undertaken. Contractor further may not decline any change
requests that increase the cost or magnitude of performance, provided that the
changes are supported with a commensurate increase in compensation. The Sponsor
agrees to cooperate with Contractor in scheduling revisions in delivery dates
caused by any increase in tasks and resources required by Contractors to fulfill
the change request of Sponsor.
Section 4
NOTICE
4.1 Performance Notice. Contractor agrees to notify Sponsor promptly of any
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factor, occurrence, or event coming to its attention that may affect
Contractor's ability to meet the requirements of any Project Work Statement
issued under this Agreement, or that is likely to occasion any material delay in
delivery of Deliverables. Such notice shall be given in the event of any loss
or reassignment of key employees, threat of strike, or major equipment failure.
4.2 Opportunity Notice. Contractor agrees to notify Sponsor of any and all
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children's projects which are presented to Contractor or which are identified
in-house by Contractor.
4.3 Pass Notice. Sponsor agrees to notify Contractor in writing of any and all
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children's project opportunities which the Sponsor chooses to pass over to
Contractor. Upon delivery of such written notice Sponsor waives all first right
of refusal rights to the subject project.
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Section 5
COMPENSATION
Amounts and modes of payment for all services to be performed and Deliverables
shall be set forth in each Project Work Statement. The mode of payment shall be
one of the following:
5.1 Fixed Price. If Contractor quotes a price for particular services or
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Deliverables and such price is specified without qualification in the applicable
Project Work Statement, the amount quoted shall be deemed a fixed price. Unless
the Project Work Statement provides for progress payments or deferral of payment
until after completion, Sponsor shall pay the full amount of the fixed price
upon Contractor's satisfactory completion of the specified services or upon
Sponsor's acceptance of particular Deliverables. A Project Work Statement may
alternatively provide for payment to be based on a fixed price for certain
services to be rendered over a specified period of time. Unless otherwise
specified in the Project Work Statement, such payment for periodic services
shall accrue on a monthly basis and be prorated for any partial periods.
5.2 Time and Materials. For services and Deliverables that are not suitable
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for payment on the basis of a fixed price, the Project Work Statement may
provide for payment on the basis of time and materials. Payment under this
method shall be determined according to the hourly rates set for Contractor's
employees by skill level in the Statement of Rates set forth in Exhibit A to the
specific Project Work Statement. The Statement of Rates differentiates the
employees of Contractor assigned to Project Work Statements issued hereunder
according to their skill level, designating each employee as to a specific skill
classification. Sponsor shall have the right to challenge the classification of
any particular employee by review of such employee's work experience, training,
and performance. If the parties cannot agree upon a mutually acceptable
classification of any such employee, Contractor shall not assign such employee
to any of the Project Work Statements issued hereunder.
5.3 Time and Materials Subject to Fixed Ceiling. For certain Project Work
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Statements, time and materials charges pursuant to the Statement of Rates may be
authorized subject to a maximum aggregate amount, designated as the level of
effort expected or imposed for particular services or Deliverables. Contractor
shall use all reasonable effort to complete the specified services and/or
Deliverables for no more than such aggregate amount. Furthermore, should
Contractor determine at any time that it may be necessary to exceed such
aggregate amount, Contractor shall immediately notify Sponsor in writing. In
such notice, Contractor shall set forth Contractor's best estimate of the cost
to complete the services and/or Deliverables. Following receipt of such notice,
Sponsor shall instruct Contractor to halt work with respect to such services
and/or Deliverables, to continue on a time and materials basis, or to suspend
work pending further negotiation of a fixed price for completion.
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5.4 Statement of Rates. The hourly rates prescribed by the Statement of Rates
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shall be in lieu of compensation or reimbursement for any costs or burden
incurred by Contractor, including (without limitation) occupancy, supplies,
utilities, payroll, management, and overhead. Unless specifically defined and
granted in a Project Work Statement, no royalty or profit-sharing whatsoever is
to be provided Contractor for the Deliverables. Rates quoted by Contractor in
its Statement of Rates are subject to change upon advance notice, provided that
any such change shall have no effect upon rates or charges for work already
rendered or scheduled to be rendered under a project which has been commenced
under a Project Work Statement.
Section 6
INVOICING
6.1 Submittal. Contractor shall submit invoices to Sponsor for payment for
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work and/or Deliverables at such time or times as payment becomes due under each
Project Work Statement. Invoices shall be net 30 days and shall be addressed to
Sponsor's Contract Coordinator. Invoices shall be submitted no more frequently
than monthly for charges due or accruing in each calendar month.
6.2 Content. Invoices shall specifically refer to the Project Work Statement
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to which they relate. Whenever an invoice includes charges for time and
materials, the invoice shall indicate the names, skill levels, and hours of the
employees performing the work. Each invoice shall separately set forth travel
expenses (if any) authorized by Sponsor for reimbursement. Supporting
documentation (such as receipts for air travel, hotels, and rental cars) called
for by Sponsor's standard reimbursement policies shall accompany any such
invoice. Any extraneous terms on Contractor's invoices shall be void and of no
effect.
Section 7
RECORDS AND AUDIT
Contractor shall maintain complete and accurate accounting records in accordance
with sound accounting practices to substantiate Contractor's charges under each
Project Work Statement and on each invoice. Such records shall include payroll
records, job cards, attendance cards, and job summaries. Contractor shall
preserve such records for a period of at least three years after completion of
the work. Sponsor shall have access to such records for purposes of audit,
either through its own representatives or through an accounting firm selected
and paid by Sponsor. Any such review of Contractor's records shall be conducted
at reasonable times, and no more than twice annually, during normal business
hours.
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Section 8
MOST FAVORED CUSTOMER
Contractor warrants to Sponsor that the charges established under this Agreement
and all Project Work Statements issued hereunder shall not exceed those offered
or imposed with respect to similar services provided to other customers of
Contractor. If during the term of this Agreement, Contractor offers or accepts
lower charges for similar services involving other customers under similar terms
and conditions, Contractor shall so notify Sponsor and remit as a credit to
Sponsor the difference between the amount of the payments theretofore made by
Sponsor for such similar services and the amount that would have been payable if
such lower charges had been in effect.
Section 9
EXPENSES
Except as expressly agreed otherwise by Sponsor in a Project Work Statement,
Contractor shall bear all of its own expenses arising from its performance of
its obligations under this Agreement and each Project Work Statement issued
hereunder, including (without limitation) facilities, work space, utilities,
management, clerical, reproduction services, supplies, and related items.
Section 10
REPORTS
10.1 Monthly Reports. Contractor agrees to provide to Sponsor at least monthly
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a written report of the progress of the work required under each Projects Work
Statement issued hereunder, any anticipated problems (resolved or unresolved),
and any indication of delay in fixed or tentative schedules.
10.2 Quarterly Reports. Approximately once every three months, the parties
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shall meet for a formal progress presentation, during which Contractor's
management shall describe the status of the work required under each Project
Work Statement issued hereunder. Such presentation shall provide projections of
the time of completion and the status of Contractor's services and Deliverables,
and shall address any problems that have come to Contractor's attention and
Contractor's views as to how such problems may be resolved.
10.3 Site Visits. Contractor shall, from time to time and upon reasonable
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notice, allow access to its premises by Sponsor for purposes of design reviews,
"walk-throughs," and discussions by Sponsor with management and personnel of
Contractor concerning the status and conduct of work being performed under any
Project Work Statements issued hereunder.
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Section 11
DELIVERY AND ACCEPTANCE
Contractor shall deliver all Deliverables, upon completion, to Sponsor's
Technical Coordinator for review, testing and acceptance. Contractor shall
memorialize such delivery in a Delivery Confirmation, which sets forth the
nature and condition of the Deliverables, the medium of delivery, and the date
of delivery. Sponsor's Technical Coordinator shall countersign such Delivery
Confirmation in order to indicate its receipt of the contents described therein,
and the Delivery Confirmation shall thereupon be transmitted to the parties'
Contract Coordinators. Unless a different procedure for reviewing, testing and
acceptance is set forth in a Project Work Statement, Sponsor's Technical
Coordinator shall commence acceptance, reviewing and testing following its
receipt of the Deliverables. Upon completion of such activities, Sponsor shall
issue to Contractor's Technical Coordinator notice of acceptance or rejection of
the Deliverables. In the event of rejection, Sponsor shall provide reasons for
rejection to Contractor's Technical Coordinator in reasonable detail.
Contractor shall use all reasonable effort to correct any deficiencies or
nonconformities and resubmit the rejected items as promptly as possible.
Section 12
OWNERSHIP AND RIGHTS
12.1 Ownership of Work Product. All Deliverables shall be owned by Sponsor and
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shall be considered works made for hire. Sponsor shall own all rights to and in
the Deliverables and undelivered, in work, properties including all United
States and international copyrights.
12.2 Vesting of Rights. With the sole exception of any pre-existing works
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identified in Section 12.3 hereof, Contractor agrees to assign, and hereby
assigns, to Sponsor, its successors and assigns, ownership of all rights to and
in the Deliverables and undelivered, in work, properties including all United
States and international copyrights in each and every Deliverable. Insofar as
any such Deliverable, by operation of law, may not be considered a work made for
hire, from time to time, upon Sponsor's request, Contractor and/or its personnel
shall confirm such assignment by execution and delivery of such assignments,
confirmations of assignment, or other written instruments as Sponsor may
request. Sponsor, its successors and assigns, shall have the right to obtain
and hold in its own name all copyright registrations and other protection that
may be available for Deliverables and work in progress.
12.3 Pre-existing Works. In the event that any Deliverable constitutes a
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Derivative Work of any pre-existing work, Contractor shall ensure that the
Project Work Statement pertaining to such Deliverable so indicates by reference
to (1) the nature of such pre-existing work, (2) its owner, (3) any restrictions
or royalty terms applicable to Contractor's use of such pre-existing work or
Sponsor's exploitation of the Deliverable as a Derivative Work thereof, and (4)
the source of Contractor's authority to employ the pre-
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existing work in the preparation of the Deliverable. Before initiating the
preparation of any such Deliverable that is a Derivative Work of a pre-existing
work, Contractor shall cause Sponsor, its successors and assigns, to have and
obtain the irrevocable, nonexclusive, worldwide, royalty-free right and license
to, or such other restrictive rights as the Sponsor may obtain, which shall be
provided to the Contractor in writing, as to the (1) use, execute, reproduce,
display, perform, distribute internally or externally, sell copies of, and
prepare Derivative Works based upon all pre-existing works and Derivative Works
thereof, and (2) authorize or sublicense others from time to time to do any or
all of the foregoing.
12.4 Patent License. In addition, Contractor hereby grants to Sponsor, its
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successors and assigns, the royalty-free, worldwide, nonexclusive right and
license under any patents owned by Contractor, or with respect to which
Contractor has a right to grant such rights and licenses, to the extent required
by Sponsor to exploit the Deliverables and exercise its full rights in the
Deliverables, including (without limitation) the right to make, use, and sell
products and services based on or incorporating such Deliverables.
12.5 Majority Ownership. Should changes occur in the current controlling
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ownership or current senior management of MSHE, upon such event HZE reserves the
right to issues shares of common stock of HZE to current minority owners of HZE
at a ratio of 3 new shares of HZE for every currently owned share of HZE.
Execution of this right will result in MSHE becoming a minority shareholder of
HZE.
Section 13
INVENTIONS
13.1 Invention Defined. An "Invention" shall mean any idea, design, concept,
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technique, invention, discovery, or improvement, whether or not patentable, made
solely or jointly by Contractor and/or Contractor's employees, or jointly by
Contractor and/or Contractor's employees with one or more employees of Sponsor,
during the term of this Agreement and in the performance of any work under any
Project Work Statement issued hereunder, provided that either the conception or
reduction to practice thereof occurs during the term of this Agreement and in
the performance of work under a Project Work Statement issued hereunder.
13.2 Vesting of Rights. Contractor hereby assigns to Sponsor, its successors
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and assigns, all Inventions, together with the right to seek protection by
obtaining patent rights therefor and to claim all rights or priority thereunder,
and the same shall become and remain Sponsor's property whether or not such
protection is sought. Contractor shall promptly make a complete written
disclosure to Sponsor of each Invention not otherwise clearly disclosed to
Sponsor in the pertinent Deliverables, specifically pointing out features or
concepts that Contractor believes to be new or different. Contractor shall,
upon Sponsor's request and at Sponsor's expense, cause patent applications to be
filed thereon, through solicitors designated by Sponsor, and shall forthwith
sign all such applications over to Sponsor, its successors and assigns.
Contractor shall give Sponsor
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and its solicitors all reasonable assistance in connection with the preparation
and prosecution of any such patent applications and shall cause to be executed
all such assignments or other instruments or documents as Sponsor may consider
necessary or appropriate to carry out the intent of this Agreement.
13.3 Avoidance of Infringement. In performing services under this Agreement,
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Contractor agrees to avoid knowingly designing or developing any items that
infringe one or more patents or other intellectual property rights of any third
party. If Contractor becomes aware of any such possible infringement in the
course of performing work under any Project Work Statement issued hereunder,
Contractor shall so notify Sponsor promptly in writing.
Section 14
CONFIDENTIAL INFORMATION
14.1 Confidential Information of Contractor. From time to time Contractor may
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provide its own confidential business and technical information to Sponsor in
connection with the work to be performed by Contractor under Project Work
Statements issued hereunder. Such information shall be designated as
confidential upon or prior to disclosure by Contractor. All confidential
written materials shall be marked with the legend "MSHE - Confidential."
Sponsor shall use its best efforts to prohibit any use or disclosure of
Contractor's confidential information, except as necessary to perform work under
the Project Work Statements issued hereunder.
14.2 Confidential Information of Sponsor. From time to time Sponsor may
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provide its own confidential business and technical information to Contractor in
connection with the work to be performed by Contractor under Project Work
Statements issued hereunder. Such information shall be designated as
confidential upon or prior to disclosure by Sponsor. In addition, the
preparation and specifications of the Deliverables shall in all instances be
treated as confidential, unless and until disclosed publicly by Sponsor. All
confidential written materials shall be marked with the legend "HZE -
Confidential." Contractor shall use its best efforts to prohibit any use or
disclosure of Sponsor's confidential information, except as necessary to perform
work under the Project Work Statements issued hereunder.
Section 15
AGREEMENTS WITH EMPLOYEES
Contractor shall obtain and maintain in effect written agreements with each of
its employees and consultants who participate in any of Contractor's work under
any Project Work Statements issued hereunder. Such agreements shall contain
terms sufficient for Contractor to comply with all provisions of this Agreement
and to support all grants and assignments of rights and ownership hereunder.
Such agreements also shall impose an obligation of confidentiality on such
employees with respect to Sponsor's confidential information.
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Section 16
REPRESENTATIONS AND WARRANTIES
The Parties hereby make the following representations and warranties for the
benefit of Parties, as a present and ongoing affirmation of facts in existence
at all times when this Agreement or any Project Work Statement issued hereunder
is in effect:
16.1 No Conflict. Subject to the common management and conditioned warrant
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rights to equity ownership of Contractor, share voting rights and other
conditions defined by this agreement, Sponsor represents and warrants that it is
under no obligation or restriction, nor will it assume any such obligation or
restriction, that does or would in any way interfere or conflict with, or that
does or would present a conflict of interest concerning, the work to be
performed by Contractor under this Agreement and each Project Work Statement
issued hereunder.
16.2 Ownership Rights. Contractor represents and warrants (1) that, except as
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provided in Section 12.3 hereof with respect to certain identified pre-existing
works licensed to Sponsor, it is the sole author of all works employed by
Contractor in preparing any and all Deliverables; (2) that it has full and
sufficient right to assign or grant the rights and/or licenses granted in the
Deliverables pursuant to this Agreement; (3) that no Deliverables, including any
pre-existing works addressed in Section 12.3 hereof, have been published under
circumstances that have caused a loss of copyright therein; and (4) that no
Deliverables, including any pre-existing works addressed in Section 12.3 hereof,
infringe any patent, copyright, trademark, or other intellectual property rights
(including trade secrets), or privacy or similar rights, of any third party, nor
has any claim (whether or not embodied in an action, past or present) of such
infringement been threatened or asserted, nor is such a claim pending, against
Contractor (or, insofar as Contractor is aware, any entity from which Contractor
has obtained such rights).
16.3 Conformity, Performance, and Compliance. Contractor represents and
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warrants (1) that all Deliverables shall be prepared in a workmanlike manner and
with professional diligence and skill, (2) that all Deliverables will function
on the video system, computers and equipment and with the operating systems and
software for which they are designed, (3) that all Deliverables will conform to
the specifications and functions set forth in the Project Work Statements
relating thereto, and (4) that Contractor will perform all work called for by
each Project Work Statement issued hereunder in compliance with applicable law.
Section 17
TERM AND TERMINATION
17.1 Term of Agreement. This Agreement shall be effective upon the date
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specified at the beginning of this Agreement, and shall remain in force for a
period of ten years with the full complete and sole right of the Sponsor to
extend the agreement for and additional ten years, unless otherwise terminated
as provided herein; provided, however, that this
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Agreement shall continue to remain in effect with respect to any Project Work
Statements already issued hereunder at the time of such termination, until such
Project Work Statements are themselves terminated and performance thereunder is
completed.
17.2 Termination of Project Work Statements. Sponsor may, at its sole option,
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terminate any or all Project Work Statements outstanding, or any portion
thereof, upon 15 days written notice. Upon receipt of notice of such
termination, Contractor shall inform Sponsor of the extent to which performance
has been completed through such date, and collect and deliver to Sponsor
whatever work product then exists in a manner prescribed by Sponsor. Contractor
shall be paid for all work performed through the date of termination, provided
that such payment shall not be greater than the payment that would have become
due if the work had been completed. Contractor may not terminate any Project
Work Statement once Contractor has entered into such Project Work Statement.
17.3 Survival. In the event of any termination of this Agreement, Sections 1,
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9, and 11 through 18 hereof shall survive and continue in effect and shall inure
to the benefit of and be binding upon the parties and their legal
representatives, heirs, successors, and assigns.
Section 18
MISCELLANEOUS
18.1 Force Majeure. Either party shall be excused from delays in performing or
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from its failure to perform hereunder to the extent that such delays or failures
result from causes beyond the reasonable control of such party; provided,
however, that in order to be excused from delay or failure to perform, such
party must act diligently to remedy the cause of such delay or failure.
18.2 No Agency. Contractor, in rendering performance under Project Work
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Statements issued hereunder from time to time, is acting solely as an
independent Contractor. Sponsor does not undertake by this Agreement or
otherwise to perform any obligation of Contractor, whether by regulation or
contract. In no way is Contractor to be construed as the agent or acting as the
agent of Sponsor in any respect, any other provisions of this Agreement or any
Project Work Statements issued hereunder notwithstanding.
18.3 Multiple Counterparts. This Agreement may be executed in several
----------------------
counterparts, all of which taken together shall constitute one single Agreement
between the parties.
18.4 Section Headings; Exhibits. The section and subsection headings used
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herein are for reference and convenience only, and shall not enter into the
interpretation hereof. The exhibits referred to herein and attached hereto, or
to be attached hereto, including all Project Work Statements issued hereunder
from time to time, are incorporated herein to the same extent as if set forth in
full herein.
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18.5 Required Approvals. Where agreement, approval, acceptance, or consent by
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either party is required by any provision of this Agreement, such action shall
not be unreasonably delayed or withheld.
18.6 No Waiver. No delay or omission by either party hereto to exercise any
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right or power occurring upon any noncompliance or default by the other party
with respect to any of the terms of this Agreement shall impair any such right
or power or be construed to be a waiver thereof. A waiver by either of the
parties hereto of any of the covenants, conditions, or agreements to be
performed by the other shall not be construed to be a waiver of any succeeding
breach thereof or of any covenant, condition, or agreement herein contained.
Unless stated otherwise, all remedies provided for in this Agreement shall be
cumulative and in addition to and not in lieu of any other remedies available to
either party at law, in equity, or otherwise.
18.7 Authority of Contractor. Contractor has the sole right and obligation to
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supervise, manage, contract, direct, procure, perform, or cause to be performed
all work to be performed by Contractor hereunder unless otherwise provided
herein.
18.8 Governing Law. This Agreement shall be governed by and construed in
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accordance with the laws of the State of California.
18.9 Entire Agreement. This Agreement and the exhibits annexed hereto,
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together with the Project Work Statements issued from time to time hereunder,
constitute the entire agreement between the parties. No change, waiver, or
discharge hereof shall be valid unless it is in writing and is executed by the
party against whom such change, waiver, or discharge is sought to be enforced.
18.10 Notices. Under this Agreement, if one party is required to give notice
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to the other, such notice shall be deemed given if mailed by US mail, first
class, postage prepaid, and addressed to the undersigned at the stated address
or to such other parties or addresses as from time to time the parties so
designate.
18.11 No Assignment. Neither party may, without the prior written consent of
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the other party, assign or transfer this Agreement or any obligation incurred
hereunder, except by merger, reorganization, consolidation, or sale of all or
substantially all of such party's assets. Any attempt to do so in contravention
of this Section shall be void and of no force and effect.
//
//
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IN WITNESS WHEREOF, Sponsor and Contractor have caused this Agreement to be
signed and delivered by their duly authorized officers.
CONTRACTOR:
MSH Entertainment Corporation
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Phone: ▇▇▇-▇▇▇-▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
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▇▇▇▇▇▇ ▇▇▇▇▇, Chairman
SPONSOR:
Happy Zone Entertainment Corporation
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Phone: ▇▇▇-▇▇▇-▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
By: /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
----------------------
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, President
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OUTLINE OF PROJECT WORK STATEMENT
1. General
a. Identification of parties and date of execution
b. Reference to Master Work Statement Agreement by date and title
2. Names of Technical Coordinators
3. Summary of Purpose for Project Work Statement
a. General description of work or services
b. Acknowledgment of classification as a work made for hire
c. General description of pre-existing works, if any
4. Identification of Pre-existing Works
5. Equipment and Programming to Be Provided by Sponsor, if Any
6. Other Contractor Resources
a. If desired, provision for the Contractor's commitment of its own staff,
facilities, and other resources by nature or item
7. Description of Deliverables
a. Description of functional and technical specifications of code and
documentation, including reference to any specific enhancements that
may be sought
b. Description of prototype or components to be delivered
c. Inclusion of copies of the reports of all project reviews, inspections,
and tests conducted during the course of performance
d. Provision for treatment of property or development environment
8. Special Terms (if Any)
9. Payment Terms and Schedule
10. Schedule and Performance Milestones
11. Acceptance, Review and Testing Procedures
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