ARCHITECTURAL DEVELOPMENT AND ASSISTANCE AGREEMENT
This agreement ("Agreement") is entered into as of July 14, 1998, ("Effective
Date") by and between Intel Corporation, having a place of business at 0000
Xxxxxxx Xxxxxxx Xxxx., Xxxxx Xxxxx, Xxxxxxxxxx, 00000 ("Intel ") and Brilliant
Digital Entertainment Corporation, having a place of business at 0000 Xxxxxxx
Xxxxxx Xxxxxxxxx, Xxxxx 000, Xxxxxxxx Xxxxx, Xxxxxxxxxx, 00000 ("Publisher") on
behalf of themselves and their respective worldwide subsidiaries.
BACKGROUND
A. Intel plans to release a processor having [*] technology. Publisher is
developing software which is able to use these enhanced capabilities.
B. Intel is willing to provide Publisher with assistance and funds, and to
receive distribution rights to the software. Publisher is willing to
undertake the development activities and grant the rights set out in this
Agreement.
AGREEMENT
Intel and Publisher agree as follows:
1. PUBLISHER'S EFFORTS
1.1. THE TITLES. The "Titles" to be developed and delivered under this
Agreement are the initial [*] scaleable episodes of the Titles and each of
the first three subsequent additional episodes (if any) of each Title,
made during the term of this Agreement, named Superman, Xena, Kiss and a
fourth Title to be determined and agreed upon by the parties no later than
November 1, 1998 (the TBD Title). The features the first episode of each
of the four Titles must posses are more particularly described in the
Product Requirements Document ("PRD") set forth in Attachment A. The
Titles include all versions for all PC platforms, and include all updates
and enhancements thereof made during the term of this Agreement and the
collateral material specified in Attachment B.
1.2. COMMITMENT TO DEVELOP. Publisher shall use commercially reasonable efforts
to develop and deliver to Intel the Titles according to the milestones set
forth in Section 3 and the Development Schedule and specifications
contained in the PRD. The Superman and Xena Titles, must, at a minimum,
noticeably demonstrate to an end user the advantages of running the Titles
on an Intel processor containing [*] technology, a [*], and [*] and
associated graphics cards vs. an Intel Processor running at [*] with a [*]
and an [*] and associated graphics card. The Kiss and the TBD Title must
at a minimum, noticeably demonstrate the advantages of it on an Intel
Processor containing [*] running at [*], with a [*] and [*] and associated
graphics card vs. an Intel Processor containing [*] running at [*], with a
[*] and an [*] and associated graphics card.
1.3. LANGUAGES. Superman and Xena will be ready and available for purchase by
retailers before June 1, 1999 in the following languages:
1.4. DIALOGUE AND TEXT: U.S. English, [*].
* THE ASTERISK SYMBOL REPLACES INFORMATION THAT HAS BEEN DELETED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST
FOR AN ORDER GRANTING CONFIDENTIAL TREATMENT.
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1.5. SUBTITLES AND TEXT: [*].
1.6. KISS and the TBD Title will be ready and available for purchase by
retailers in U.S. English on or before October 1, 1999, and on or before
November 1, 1999 in the following languages:
1.7. DIALOGUE AND TEXT: [*].
1.8. SUBTITLES AND TEXT: [*].
1.9. PROGRAM REVIEW. Intel, Publisher and any third party(s) working on the
Titles for Publisher shall meet at least twice a month (either in person
or by telephone conference) to review the progress of the Titles'
development, including the milestones set out in the Development Schedule
and the compliance of the Titles with the PRD.
2. TECHNICAL ASSISTANCE FROM INTEL. Intel is currently helping Publisher
optimize and port some of its products to the Intel microprocessor
architecture under a separate Source Code License Agreement ("SLA")
effective April 27, 1998 between the parties. Any technical contributions
to the Titles made by Intel hereunder shall be considered Modifications
under that SLA and subject solely to its terms.
Intel agrees that an Application Engineer will coordinate the
technical resources needed from Intel to assist with code optimizations
and will be made reasonably available to Publisher as needed.
3. ADVANCES OF FUNDS
3.1. AMOUNT AND TIMING. Intel will advance certain funds, totaling [*] ($[*])
to Publisher for delivery of 3 Titles, Superman, Xena, and Kiss. If Intel
and Publisher mutually agree upon the specific details of a fourth Title
(which is currently referred to as "Title to be determined") no later than
November 1, 1998, then Intel will advance additional funds totaling [*]
upon Intel's acceptance of the milestones identified below (collectively,
the "Funds"). Intel will advance the Funds to Publisher in the amounts
specified below [*] after Publisher's accomplishing and delivering,
subject to Intel's reasonable satisfaction and acceptance not to be
unreasonably withheld, each of the following milestones:
* THE ASTERISK SYMBOL REPLACES INFORMATION THAT HAS BEEN DELETED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST
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DATE (TO BE USED
TITLE(S) MILESTONE AS A GUIDE) PAYMENT
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n/a Contract Signing [*]
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Engine optimization
and preliminary
title artwork for
Superman and Xena Alpha September 20, 1998 [*]
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Code Drop for
(Xena and Superman) Advisory Testing September 20, 1998
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Superman and Xena Comdex Demo Code October 20, 1998
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January '99 Launch
Superman Demo January 1, 1999 [*]
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January '99 Launch
Xena Demo January 1, 1999 [*]
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Superman Beta January 20, 1999 [*]
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Xena Beta January 20, 1999 [*]
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2nd code drop for
Superman and Xena advisory testing-- March 1, 1999 [*]
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English version
Superman available in retail June 1, 1999 [*]
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English version
Xena available in retail June 1, 1999 [*]
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all other
languages
available for
distribution to or
Superman in retail June 1, 1999 [*]
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ALL OTHER
LANGUAGES
AVAILABLE FOR
DISTRIBUTION TO OR
XENA IN RETAIL JUNE 1, 1999 [*]
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Kiss and TBD
preliminary Title
Artwork and Engine
optimizations Alpha December 20, 1998 [*]
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Kiss Beta March 20, 1999 [*]
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TBD Title Beta March 20, 1999 [*]
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Kiss E3 Demo Code May 20, 1999 [*]
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TBD Title E3 Demo Code May 20, 1999 [*]
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Kiss English
Kiss version October 1, 1999 [*]
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English Version
TBD Title available in retail October 1, 1999 [*]
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all other
languages
Kiss available in retail November 1, 1999 [*]
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all other
languages
TBD Title available in retail November 1, 1999 [*]
--------------------------------------------------------------------------------
* THE ASTERISK SYMBOL REPLACES INFORMATION THAT HAS BEEN DELETED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST
FOR AN ORDER GRANTING CONFIDENTIAL TREATMENT.
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3.2. USE OF FUNDS. The Funds shall only be used for development of the Title
until the final deliverable hereunder is accepted by Intel.
4. INTEL PARTICIPATION IN MARKETING PARTICIPATION IN MARKETING
4.1. MARKETING. If accepted and timely delivered, Intel will include the Title
prominently in Intel's [*] marketing efforts and, at Intel's sole
discretion, may include Publisher in other appropriate marketing
activities.
4.2. LICENSE. To the extent it actually possesses the right to do so, Publisher
grants to Intel a royalty-free, world-wide license, with the right to
sublicense, to copy, demonstrate, prepare derivative works of, and display
and perform publicly the Title and its collateral artwork and
documentation in connection with Intel's marketing activities for the
Title as well as any other Intel marketing activities. This license,
however, is contingent upon Intel receiving written approval from
Publisher each time Intel wishes to exercise its rights hereunder.
Publisher will grant such requests if it has the right to do so.
4.3. OTHER TITLES. Intel and Publisher may develop or market products which are
directly competitive with the Title.
5. INTEL'S RECOUPMENT OF THE FUNDS
5.1. "Revenue Copy" means a sale, license, or other distribution of one copy of
a Title for which Publisher receives revenue.
5.2. ROYALTY ON REVENUE COPIES. Intel shall earn a royalty on each Revenue Copy
distributed by or through Publisher according to the rate schedule below,
but not to exceed $[*] (or $[*] if additional funds for which the second
sentence of section 3.1 provides, are not advanced by Intel) for Revenue
Copies sold, licensed, or otherwise distributed in the United States and
not to exceed $[*] (or $[*] if additional funds for which the second
sentence of section 3.1 provides, are not advanced by Intel) for Revenue
Copies sold, licensed, or otherwise distributed elsewhere.
[*]
5.3. RESERVES. Publisher shall be entitled to retain a reasonable reserve for
product returns and discounts, not to exceed [*]% of the amount otherwise
payable under section 5.1. Such reserve shall be liquidated no later than
[*] following the [*] in which the reserve was retained.
* THE ASTERISK SYMBOL REPLACES INFORMATION THAT HAS BEEN DELETED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST
FOR AN ORDER GRANTING CONFIDENTIAL TREATMENT.
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5.4. ADVERTISING. Until the funds have been recouped, Intel will also receive
from Publisher [*]% of Publisher's [*] revenues from advertising on CD ROM
versions of the Titles and on web pages devoted to the Titles, minus [*]
([*]% of [*] revenues). These revenues apply towards Intel's recoupment of
the Funds. If Publisher derives revenue from web pages on which the Titles
and other properties are advertised, Intel will receive [*]% of [*]
revenues for the percentage of advertising revenue derived from the Titles
specifically.
5.5. WEB LINKING. Publisher will provide a link and generate visits from its
World Wide Web page to another World Wide Web page that Intel will, from
time to time specify ("click throughs").
5.5.1. Intel and Publisher will agree on the specific terms of this web
linking plan no later than 9/20/98 for BTS titles and 5/20/99 for
Holiday titles.
5.6. DISCOUNTED TITLE PURCHASES. For a period of [*] years after the Effective
Date, Intel shall have the option, at its sole discretion, to purchase
copies of the Titles at a [*]% discount off the best distributor discount
(minimum of [*]% ), for re-sale by Intel. Intel will apply the [*]%
discount towards the recoupment of the Funds for each unit subsequently
sold by Intel or Intel's designated agent.
5.7. USE OF AN INTEL LOGO. Publisher will, at Intel's request, use an Intel
logo on the Titles' packaging in a manner specified by Intel and according
to standard Intel logo licensing terms. Publisher will not use an Intel
logo unless so requested to do so by Intel.
5.8. FUNDS RECOUPMENT CAP. The maximum aggregate amount payable to Intel under
section 5 as royalties, as advertising revenues, and as discounts shall
not exceed the actual amount of funds paid to publisher by Intel under
section 3.1. The discounts may continue to be provided subject to Section
5.5 following full recoupment of funds.
* THE ASTERISK SYMBOL REPLACES INFORMATION THAT HAS BEEN DELETED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST
FOR AN ORDER GRANTING CONFIDENTIAL TREATMENT.
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6. MONEY
6.1. MANNER OF PAYMENT. All payments shall be made in US dollars, and shall be
sent to the address specified in this Agreement. Payments shall be made by
wire transfer or, if no wire transfer instructions are given, by check
drawn on a U.S. bank. A party may specify revised instructions and address
by written notice to the other.
6.2. PAYMENTS TO INTEL. Payments to Intel shall be by wire transfer to [*] for
the account of Intel Corporation, General Account [*].
6.3. PAYMENTS TO PUBLISHER. Payments to Publisher shall be made by wire
transfer to: [*], ABA#: [*], Attn: [*], [*], Account Name: Brilliant
Digital Entertainment, Account #: [*].
6.4. STATEMENTS. Within [*] after the end of each calendar quarter during the
term of this Agreement Publisher shall pay any amounts due and shall
deliver to Intel at the addresses set out in this Agreement a report which
sets out:
6.4.1. The period covered;
6.4.2. The number of copies of each Title distributed hereunder;
6.4.3. The number of Revenue Copies,
6.4.4. The balance of the Funds; and
6.4.5. The balance of accounts receivable on the Titles.
6.5. RECORDS AND AUDITING. Each party shall maintain complete and accurate
records of the activities performed under this Agreement (including
records of sales and distribution) for a period of three (3) years after
the completion thereof. Records relating to the performance of this
Agreement shall be made available in confidence to other party's
independent certified public accountants (or equivalent for non-U.S.
jurisdictions) upon reasonable notice, which records may be used for the
sole purpose of auditing a party's compliance with the Agreement. In the
event that a shortfall greater than 10% is discovered in royalties paid by
a party, such audit shall be at the audited party's expense, and such
party shall promptly make up the difference.
6.6. TAXES. Each party shall be solely responsible for its own taxes, including
any applicable sales taxes and customs duties on items acquired under this
Agreement. To the extent, if any, that the applicable taxing authority
requires withholding of taxes based on payments made hereunder, the paying
party shall withhold such taxes and provide the payee with the
documentation reasonably necessary to claim a credit therefor.
* THE ASTERISK SYMBOL REPLACES INFORMATION THAT HAS BEEN DELETED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST
FOR AN ORDER GRANTING CONFIDENTIAL TREATMENT.
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7. TERM, TERMINATION, WHAT IF SOMETHING GOES WRONG
7.1. TERM OF AGREEMENT. This Agreement's term commences as of the Effective
Date and terminates on the later of March 31, 2003 or the last day of the
calendar year in which Intel fully recoups the Funds, unless earlier
terminated or unless extended by agreement of the parties.
7.2. BREACH. Either party may terminate this Agreement by written notice if the
other party is in material breach of any of its terms and fails to cure
such breach within thirty days of written notice of such breach.
7.3. DELAY. Publisher shall promptly notify Intel of any anticipated delay in
meeting the Development Schedule. If it appears that there will be a delay
in having one or more Titles delivered and accepted as set out in this
Agreement, then Intel and Publisher shall meet to discuss an appropriate
course of action in good faith before exercising any of the remedies set
out below. Both parties shall use reasonable judgment and efforts to
rearrange development and ingredient delivery schedules to deal with
setbacks, such as unavailability of specific technology ingredients or
difficulty in developing the Titles.
7.3.1. If Publisher's delay is due to causes beyond its reasonable control
then the remaining dates for Publisher's deliverables, and all other
dates calculated from those date(s), shall be extended by a
reasonable amount of time, not in any case to exceed three months in
the aggregate or the period of any delay in Intel's providing
technology labeled "Critical."
7.3.2. If the Delay will be over ninety days, then Intel may terminate the
Agreement by written notice to Publisher.
7.4. CONVENIENCE. In addition to the provisions above, Intel may, at its sole
discretion, terminate this Agreement without cause by written notice to
Publisher. If Intel chooses to terminate this Agreement without cause,
Publisher shall be entitled to retain all Funds provided by Intel to
Publisher before the effective date of termination, and Intel shall have
no rights in Publisher's Titles.
7.5. EFFECT OF TERMINATION. Upon any termination of this Agreement for any
reason:
7.5.1. Publisher shall on Intel's written request, return all materials
that Intel had provided hereunder.
7.5.2. The provisions of Section 8 shall survive termination.
7.5.3. Any third-party licenses directly or indirectly granted by a party
under this Agreement shall survive such termination, PROVIDED, that
the party granting such license shall be responsible for any
royalties earned on the license under this Agreement.
7.5.4. Publisher may retain that portion of the Funds paid prior to
termination, but if
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termination is other than for Convenience or for breach by Intel,
and Publisher releases, licenses or otherwise commercializes the
Titles in any format or medium, Publisher shall return the
previously advanced Funds to Intel at a rate of $[*] per retail
Revenue Copy or $[*] per OEM Revenue Copy until the entire amount of
previously advanced Funds is repaid to Intel.
7.6. RIGHTS. Subject to the limitations in Section 4.2, Publisher warrants and
represents that it has or shall obtain all rights necessary to undertake
the activities described in this Agreement and to grant the licenses
described herein. Publisher shall promptly notify Intel of any charge or
claim of infringement of any third party's right relating to development
or distribution of the Titles.
7.7. NOT A MUNITION. Publisher warrants and represents that the Titles,
including any updates or revisions, contains and shall contain no
encryption or other capabilities that renders it subject to the US's
International Traffic and Arms Regulation (ITAR) set forth at 22 C.F.R.,
Section 120 et seq. or any successor or foreign counterpart regulations.
7.8. SUITS BASED ON TITLES. Publisher shall defend, indemnify, and hold Intel
and its customers harmless from and against any suit or proceeding brought
against Intel, its subsidiaries or customers, based upon the development
or distribution of Titles, including any claim that the Titles infringes
any third-party intellectual property right (a "Claim"). Publisher's
indemnity will include all damages and costs awarded, including attorneys'
fees, and settlement costs, provided that Intel shall not settle any claim
without Publisher's consent.
7.8.1. The indemnified party shall promptly notify Publisher of any Claim
and will provide information, assistance, and cooperation in
defending against it (at Publisher's expense).
7.8.2. The indemnified party will have the right to participate in the
defense of any Claim, at its own expense.
7.8.3. If there appears, in Intel's opinion, to be a reasonable likelihood
that distribution of any portion of the Titles may be found to
infringe the rights of any third party, then Intel may terminate the
Agreement or Publisher, at its expense, will either (i) obtain for
Intel or its customers the right to continue to use such Titles as
contemplated herein, (ii) modify such Titles so that it becomes
non-infringing, but without materially altering its functionality,
or (iii) replace such Titles with a functionally equivalent
non-infringing Titles, all at Intel's option.
7.8.4. This indemnity shall not apply to portions of the Titles prepared or
provided by the indemnified party.
7.8.5. Publisher's total liability under this section shall not exceed the
amount of Funds provided by Intel under this agreement.
* THE ASTERISK SYMBOL REPLACES INFORMATION THAT HAS BEEN DELETED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
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8. WARRANTS. As partial consideration for Intel's obligations under Section 2 of
this Agreement and the requirements under "Next Step" in clause 6 ("Application
Feature Specifications") of the "Intel Brilliant Digital Entertainment Technical
Production Requirements Document" attached hereto as Attachment A, Publisher has
granted to Intel a Warrant, attached hereto as Attachment D.
9. GENERAL PROVISIONS
9.1. CONFIDENTIAL TERMS. Except as otherwise provided herein, each party shall
maintain other party's confidential disclosures in confidence pursuant to
CNDA #89580. Neither party may disclose the existence or terms of this
Agreement without the prior written consent of the other party except as
required by law or as required by section 401(a), "Immediate Public
Disclosure of Material Information," of the American Stock Exchange
Company Guide. Any such required disclosure(s) will be to the most limited
extent allowable.
9.2. TITLE. Except for the licenses expressly provided here, or in a "shrink
wrap" or other written license, no licenses are granted by either party,
either expressly or by implication, to any intellectual property of the
other. Notwithstanding Intel's ownership in the copyrights in the Intel
Technology, Publisher shall own all copyrights in its own original work,
including its own Titles.
9.3. RELATIONSHIP OF PARTIES. The parties are not partners or joint venturers,
or liable for the obligations, acts, or activities of the other.
9.4. AMENDMENTS AND ASSIGNMENTS. Any change, modification or waiver to this
Agreement must be in writing and signed by an authorized representative of
each party. Neither party may assign this Agreement or any portion of this
Agreement to any other party without the other's prior written consent.
9.5. MERGER AND WAIVER. This Agreement is the entire agreement between the
parties with respect to the development and distribution of the Titles,
and it supersedes any prior or contemporaneous agreements and negotiations
relating thereto. No waiver of any breach or default shall constitute a
waiver of any subsequent breach or default.
9.6. LIMITED LIABILITY. Neither party shall be liable to the other for lost
profits, expected revenues, or development or support costs arising from
any termination of this Agreement. IN NO EVENT SHALL EITHER PARTY BE
LIABLE TO THE OTHER FOR LOSS OF PROFITS, DATA, OR USE OR ANY SPECIAL,
CONSEQUENTIAL OR INCIDENTAL DAMAGES, HOWEVER CAUSED, EVEN IF ADVISED OF
THE POSSIBILITY OF SUCH DAMAGE. THE PARTIES ACKNOWLEDGE THAT THESE
LIMITATIONS ON POTENTIAL LIABILITIES WERE AN ESSENTIAL ELEMENT IN SETTING
CONSIDERATION UNDER THIS AGREEMENT.
9.7. EXPORT. Neither party shall export the Titles or the Intel in violation of
US or other applicable law.
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9.8. NOTICES AND REQUESTS. All notices and requests required or made under this
Agreement must be in writing and shall be personally delivered or if
mailed postage prepaid, certified or registered mail, or overnight courier
to the addresses listed below:
--------------------------------------------------------------------------
TO INTEL TO PUBLISHER
Intel Corporation,
0000 Xxxxxxx Xxxxxxx Xxxx.,
Xxxxx Xxxxx, Xxxxxxxxxx 00000
ATTN.: GENERAL COUNSEL
--------------------------------------------------------------------------
DIRECT ROYALTY STATEMENTS TO: DIRECT ROYALTY STATEMENTS TO:
Post Contract Management, SC4-210,
Intel Corporation,
0000 Xxxxxxx Xxxxxxx Xxxx.,
Xxxxx Xxxxx, Xxxxxxxxxx 00000
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9.9. CHOICE OF LAW. Any claim based on this Agreement shall be governed by the
laws of Delaware, and shall be subject to the exclusive jurisdiction of
the state and federal courts located there.
9.10. ATTACHMENTS. The following Attachments are incorporated by reference into
this Agreement:
9.10.5 Attachment D-- Warrants
IN WITNESS OF THEIR AGREEMENT, the parties have caused the Agreement to be
executed below by their authorized representatives.
INTEL CORPORATION BRILLIANT DIGITAL ENTERTAINMENT, INC.
BY: /S/ XXXXXX XXXXXXX BY: /S/ XXXXXXX XXXX
-------------------- ---------------------
XXXXXX XXXXXXX XXXXXXX XXXX
VICE-PRESIDENT CHIEF FINANCIAL OFFICER
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