Exhibit 10.69
AMENDMENT FIVE
This Amendment (the "Amendment Five") is entered into as of February 21,
2003 between FUNIMATION PRODUCTIONS, LTD., a Texas limited partnership having
its registered office at 0000 XX Xxxx 000, Xxxxx 000, Xxxx Xxxxx, Xxxxx 00000
U.S.A. ("Licensor") and Infogrames, Inc., a Delaware corporation having its
principal offices at 000 Xxxxx Xxxxxx, Xxx Xxxx, XX 00000 ("Licensee").
W I T N E S S E T H:
WHEREAS, Licensor and Licensee entered into a Sublicense Agreement dated
October 27, 1999, which was subsequently amended by Amendment One dated April
20, 2002, and was further amended by Amendment Two dated June 15, 2002, and was
further amended by Amendment Three dated September 20, 2002, and was further
amended by Amendment Four dated November 13, 2002 (the Sublicense Agreement as
amended shall hereafter be referred to as the "Agreement");
WHEREAS, both Licensee and Licensor are in agreement with respect to the
terms and conditions upon which to enter into this Amendment Five to amend the
Agreement; and
NOW, THEREFORE, in consideration of the promises and agreements set forth
herein, the parties, each intending to be legally bound, do hereby agree as
follows:
1. Advertising.
(a) Commencing on the effective date of this Amendment Five (the
"Effective Date"), Licensee shall, during each twelve month period from the
Effective Date during the Term, spend no less than an amount equal to five
percent (5%) of Licensee's Net Sales of Licensed Products during such twelve
month period to purchase television advertising slots and shall use such
advertising slots to advertise the Licensed Products (the "Advertising
Budget"). Notwithstanding the foregoing, in no event shall the amount required
to be spent by Licensee pursuant to this paragraph exceed Two Million Five
Hundred Thousand Dollars ($2,500,000). For clarity, only amounts spend directly
on purchases of television airtime for the exhibition of television commercials
advertising the Licensed Products shall be considered in determining whether
Licensee has met its Advertising Budget obligation. Licensee shall provide to
Licensor a detailed quarterly report regarding such advertising expenditures.
In the event that Licensee spends less than the amount required under this
paragraph during any twelve month period, Licensee shall spend the balance of
such amount to advertise the Licensed Products within the first six (6) months
of the following twelve month period; to the extent that Licensee does not
spend the balance in such manner, Licensee shall pay the balance to Licensor as
additional Royalty.
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(b) Commencing on the Effective Date, during the Term, Licensor shall
have the exclusive right to control the selection of outlets where seventy-five
percent (75%) of the Advertising Budget will be placed by Licensee (the
"Controlled Advertising Budget"). Licensor's control of the Controlled
Advertising Budget shall be limited to choosing the networks, stations, or
other outlets with which the Controlled Advertising Budget is spent, but
Licensee shall be responsible for the negotiation of rates, time slots,
purchase of advertising time and all other matters relating to the Controlled
Advertising Budget. Licensor shall consult with Licensee regarding the
selection of outlets where Licensee will place the Controlled Advertising
Budget, and Licensor's selection of outlets (as outlined above) shall (i) be
commercially reasonable, (ii) be in accordance with Licensee's reasonable media
strategies for the titles being advertised, as promulgated by Licensee from
time to time, and (iii) focus on teen and/or children's programming.
(c) During the Term, Licensee shall consult with Licensor regarding
Licensee's spending of up to four million dollars ($4,000,000) of television
advertising expenditures relating to Licensee's products, including products
containing intellectual property licensed to Licensee by Licensor, and Licensee
shall use reasonable efforts to follow Licensor's consultation as long as it is
in accord with Licensee's media strategies for the titles being advertised, as
promulgated from time to time by Licensee. Except as set forth in the preceding
sentence and in paragraph (b) above, Licensee shall control and be responsible
for everything relating to the expenditure of such amount, including but not
limited to the choosing of networks, stations and other outlets with which such
amount is spent, the negotiation of rates, time slots, and all other matters.
2. Subject to the terms and conditions of this Amendment Five and of the
Agreement, the definition of Licensed Products (as stated in Schedule A,
Paragraph 4 of the Agreement) is hereby expanded to include the following two
(2) additional Licensed Product items based on the Property and/or the Film:
(a) Licensed Product item #11: one (1) interactive "role-playing" style
game for the PlayStation2 platform (tentatively titled "Adventures of Goku"; and
(b) Licensed Product item #12: one (1) interactive "fighting" style game
(previously published by Bandai) for the Playstation platform (titled "Ultimate
Battle 22").
3. The Royalty Rate (as stated in Schedule A, Paragraph 8 of the Agreement)
applicable to Licensed Product items #11 and #12 shall be:
(a) for total unit sales per any such individual Licensed Product item
for up to five hundred thousand (500,000) units of such individual Licensed
Product item, eight and one-half percent (8.5%) of Net Sales, except that with
regard to any of such Licensed
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Product sold FOB a location outside the Licensed Territory the Royalty Rate
shall be ten and one-half percent (10.5%) of Net Sales; and
(b) for total unit sales per any such individual Licensed Product item in
excess of five hundred thousand (500,000) units of such individual Licensed
Product item, ten percent (10%) of Net Sales, except that with regard to any of
such Licensed Product sold FOB a location outside the Licensed Territory the
Royalty Rate shall be twelve percent (12%) of Net Sales.
For the purpose of clarity, 3(b) above shall apply only to any given Licensed
Product item covered by this Amendment Five if sales of such individual Licensed
Product item exceed 500,000 units of that individual Licensed Product item, and
3(b) above shall not apply to sales of any other Licensed Product item covered
by this Amendment Five until sales of such individual Licensed Product item
have exceeded 500,000 units.
4. With respect to Licensed Product item #11 Licensee shall pay to Licensor an
advance of three hundred thousand dollars ($300,000) and with respect to
Licensed Product item #12 Licensee shall pay to Licensor an advance of one
hundred thousand dollars ($100,000), each payable as stated herein. The advance
for each Licensed Product item shall be non-refundable but recoupable against
future royalties payable to Licensor for sales of such Licensed Product item.
The advance for each Licensed Product item shall be payable as follows:
(a) For Licensed Product item #11: one hundred and fifty thousand dollars
($150,000) upon execution of this Amendment Five and one hundred and fifty
thousand dollars ($150,000) on the date Licensed Product item #11 is first
available for purchase by the public or on May 15, 2004, whichever occurs first;
and
(b) For Licensed Product item #12: fifty thousand dollars ($50,000) upon
execution of this Amendment Five and fifty thousand dollars ($50,000) on the
date Licensed Product item #12 is first available for purchase by the public or
on April 25, 2003, whichever occurs first.
5. With respect to Licensed Product item #11, the Product Dates (as stated in
Schedule A, Paragraph 11 of the Agreement) shall be:
(a) Design Date: Concept Document
(b) Phase 1 Date: 3-D Models
(c) Phase 2 Date: 05/15/04 - Alpha
(d) Phase 3 Date: 07/01/04 - Beta
(e) Phase 4 Date: 08/17/04 - Gold
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6. With respect to Paragraph 5(e) above, this Product Date is based on
Licensor's response (whether approval or disapproval) to Licensee's approval
submissions taking place within fourteen (14) days of Licensor's receipt of
such submissions, and such Product Date shall be extended by one day for each
day any of Licensor's approval responses exceed such 14 day period up to a
cumulative maximum of sixty (60) days.
7. With respect to Licensed Product item #12, the Product Date(s) (as stated in
Schedule A, Paragraph 11 of the Agreement) shall be the following: the Licensed
Product shall ship to retailers on or before April 25, 2003.
8. With respect to Licensed Product item # 11, Licensee shall have options, for
ninety (90) days following the initial commercial release of such product, to
elect to port such product to the GameCube and/or the Xbox platforms (the option
for each of such platforms shall be considered a separately exercisable option).
Licensee shall exercise such options, if at all, by providing Licensor with
written notice thereof within such 90 day period. However, in order for the
exercise of such options (or either of them) to be effective, they must be
ratified by the following: (a) Toei concept approval, provided that Licensor
shall have a duty to assist as necessary in obtaining such approval(s), and (b)
Licensee's payment to Licensor, within 10 days of Licensee's receipt of Toei
concept approval as set forth above, of an additional advance of fifty thousand
dollars ($50,000) per platform so exercised within such 90 day period. In the
event such options (or either of them) is exercised and ratified as set forth
above, such optioned product(s) shall be deemed Licensed Product(s) and Licensee
shall pay Licensor an additional fifty thousand dollars ($50,000) per platform
exercised on the date such ported product is first available for purchase by the
public on such platform. The advance for each exercised option port product
shall be non-refundable but recoupable against future royalties payable to
Licensor for sales of such Licensed Product item. The royalty rate for such
Licensed Product item(s) shall be as described in Paragraph 3 of this Amendment
Five.
9. Paragraph 6 of Schedule A of the Agreement ("Term"), as amended in Amendment
Three, is hereby amended and wholly restated to read as follows:
The Agreement shall commence on the date the Agreement was first executed by
both parties and shall be for a term expiring on June 30, 2005. The Term shall
be automatically extended to August 15, 2006 if total unit sales of all
Licensed Products during the period beginning March 1, 2003 and ending June 30,
2005 are equal to or greater than two million (2,000,000) units.
10. Products similar to the "Atari 10-in-1 TV Games" product, which is produced
by Jakk's Pacific under license from Licensee, are excluded from the definition
of Licensed Products and do not form a part of the Agreement. For clarity, these
products are
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interactive video games in which the game electronics and game software are
contained within a hand-held unit.
Except as amended herein, all of the other terms and conditions of the Agreement
shall be in full force and effect. In the event of any inconsistency,
incongruity or conflict, the terms and conditions of this document shall
prevail.
IN WITNESS WHEREOF, the parties hereto, intending to be legally bound
hereby, have each caused to be affixed hereto its or his/her hand and seal the
day indicated.
LICENSOR:
FUNIMATION PRODUCTIONS, LTD.,
a Texas limited partnership
By: /s/ Xxxxxx X. Xxxxxxx
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Name: Xxxxxx X. Xxxxxxx
Title: Director of Licensing
LICENSEE:
Infogrames, Inc.
a Delaware corporation
By: /s/ Xxxx X. Xxxxxxxx
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Name: Xxxx X. Xxxxxxxx
Title: Sr. Vice President
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