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EXHIBIT 7
DISTRIBUTION AGREEMENT
BETWEEN
INFOGRAMES ENTERTAINMENT S.A.
AND
GT INTERACTIVE SOFTWARE CORP.
This Distribution Agreement (this "Agreement") is entered into by and
between Infogrames Entertainment S.A. and GT Interactive Software Corp. ("GTIS")
as of December __, 1999 (the "Effective Date").
Whereas, GTIS is in the business of publishing and marketing Products
and wishes to license Infogrames to distribute, publish and market Products
owned or controlled by GTIS; and
Whereas, Infogrames wishes to obtain the right to distribute, publish
and market Products owned or controlled by GTIS;
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) "Costs" means all reasonable costs, employee expenses, cost of
materials, fees or other expenses related to the manufacture,
distribution, publishing and marketing of the Products,
including without limitation, materials, labor, overhead,
shipping, insurance, license fees, transmission and taxes and
duties.
(d) "Master" means a gold master cd-rom which is of sufficient
quality to allow reproduction of the applicable software
product without any material degradation, plus the applicable
user manual.
(e) "Merchandise" means goods and sundries bearing the names,
characters,
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themes or based on the storylines related to any Product.
(f) "Net Revenues" means gross revenues, less any returns,
Chargebacks, discounts, rebates, Costs, commissions, taxes,
duties, insurance and transportation costs.
(g) "Products" means the Products (in any format, e.g. PC,
Macintosh, console, video, online play) to which GTIS has the
right to distribute such Products in the Territory, whether
licensed or owned by GTIS, 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
GTIS in connection with any Product.
(i) "Territory" means all countries currently comprising the
European Economic Union plus Australia, New Zealand
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(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: GTIS hereby grants to Infogrames the exclusive right to,
directly or indirectly, publish, manufacture, have manufactured,
market, advertise, promote, publicize, distribute, sell, sublicense or
otherwise exploit the Products through all channels of distribution in
the Territory, subject to rights granted in any license agreement dated
prior to November 11, 1999 (the "Pre-existing Agreements"). GTIS shall
not renew the Pre-existing Agreements nor allow the Pre-existing
Agreements to automatically renew.
3. Trademark License: GTIS hereby grants to Infogrames a royalty-free,
non-exclusive, non-transferable license to use GTIS' Trademarks in
connection with the exercise of the license granted to Infogrames
pursuant to Paragraph 2 of this Agreement. GTIS' Trademarks and the
goodwill associated therewith are and remain GTIS' exclusive property.
Infogrames shall acquire no right, title or interest in GTIS'
Trademarks or the goodwill associated therewith, other than the limited
license and right to use GTIS' Trademarks as set forth under this
Agreement. All usage of GTIS' Trademarks by Infogrames shall inure to
GTIS' 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.
4. Termination of License Agreements: Immediately after the Closing, GTIS
agrees to terminate any and all license agreements between GTIS and any
European Company
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Subsidiary as of December 31, 1999.
5. Purchase of Prepackaged Products: If GTIS offers prepackaged Products,
Infogrames shall be entitled to purchase such prepackaged Products from
GTIS at either (a) GTIS' actual cost of manufacture (excluding
overhead), plus 15% or (b) the actual amount paid by GTIS' to the third
party vendor, less any rebates, Chargebacks and credits for returns,
plus 15%. The prepackaged Products will be purchased on a purchase
order basis, under Infogrames standard purchase order terms and
conditions.
6. Return of Prepackaged Products: Infogrames shall be entitled to return
prepackaged Products purchased from GTIS to GTIS for a full refund or
credit, at Infogrames' option.
7. Delivery of Non-Prepackaged Products: GTIS will deliver as soon as
practicable a complete Master of any Product which is licensed to
Infogrames under this Agreement for manufacture by or for Infogrames
pursuant to this Agreement.
8. Royalties on Non-Prepackaged Products: Infogrames will pay to GTIS 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, and the royalty to such
third party is based on a percentage of net revenues or net
sales, then the royalty will be 30% of the Net Revenues
Infogrames actually receives from the distribution of such
Product.
(b) If a third party is entitled to royalties based on Infogrames'
distribution of the specific Product, and the royalty to such
third party is a fixed price, then the royalty will be 130% of
the royalty due to such third party (not including any
advance) actually paid by GTIS to the third party for such
Product. GTIS 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.
(c) If the product is internally developed by GTIS then the
royalty will be 30% of the Net Revenues Infogrames actually
receives from the distribution of the Product.
(d) No royalties will be due from Infogrames to GTIS for up to 50
units of each Product, to be used for promotional and
demonstration purposes.
9. Taxes. All amounts due hereunder include any applicable taxes and
duties.
10. Payment Procedures: Infogrames will report to GTIS the amount of
royalties due within 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
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the amounts to be paid by GTIS to any amounts that GTIS owes to
Infogrames under any other agreement or security whatsoever. All
payments will be made in French Francs.
11. 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 GTIS whether
or not the royalty reports provided to GTIS by Infogrames were correct,
and if not, the amount by which the royalty reports are incorrect. No
other information will be provided to GTIS. 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 GTIS to refund such
overpayment to Infogrames promptly. Inspections shall not occur more
frequently than once annually and shall not cover the same records more
than once.
12. GTIS Warranties and Indemnity: GTIS warrants and represents that any
product provided to Infogrames under this Agreement does not and will
not infringe any third party proprietary right and that GTIS has
sufficient rights to such products to grant Infogrames the licenses
under this Agreement. GTIS warrants and represents that it has the
right to enter into this Agreement and that this Agreement and GTIS'
performance under this Agreement will not conflict or violate any
obligations that GTIS may have under an agreement with any third party.
GTIS 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. GTIS 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 GTIS' warranties.
13. Infogrames Warranties and Indemnity: Infogrames warrants and represents
that it has the full power and authority to enter into this Agreement.
Infogrames will indemnify GTIS, 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.
14. 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 Indemnifying Party in the defense or settlement
so long as the Indemnifying Party reimburses the Indemnified Party's
reasonable expenses.
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15. Term: The term of this Agreement will be the later of (a) seven years
or (b) the period of time during which Infogrames and its subsidiaries
hold at least a twenty-five percent in the voting stock of GTIS.
16. Termination: This Agreement may be terminated by Infogrames in its sole
discretion upon sixty days written notice to GTIS. Either party may
terminate this Agreement 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.
17. Effect of Termination: Upon termination of this Agreement, the licenses
granted hereunder will terminate, provided however, that the licenses
will continue to the extent necessary to allow Infogrames to distribute
its remaining inventory of Products and to fulfill its obligations
under any agreement with a third party. Paragraphs 1, 11, 12, 13, 16 -
28 shall survive termination of this Agreement for any reason.
18. Assignment: Infogrames may assign all or a portion of its rights under
this Agreement to (a) its affiliates or (b) in the event of a change in
control of Infogrames, to third parties. GTIS may not assign this
Agreement to any third party. 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 18 shall be null
and void and shall be deemed to be a material breach of this Agreement
which is not capable of cure.
19. Disposition of European Operations: GTIS agrees that upon execution of
this Agreement, it will take all actions necessary to dispose, as soon
as practicable, of its existing publishing and distribution operations
in the Territory and those of Company Subsidiaries in the Territory.
20. 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 20.
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
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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.
21. Governing Law: The laws of France 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. In any action or proceeding to enforce rights under this
Agreement, the prevailing party shall be entitled to recover costs and
attorneys' fees.
22. 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.
23. 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.
24. Headings. Headings and captions are for convenience only and are not to
be used in the interpretation of this Agreement.
25. 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 25; or (iii) when delivered if delivered
personally or sent by express courier service.
Notices shall be addressed as follows:
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If to Infogrames: If to GTIS:
Infogrames Entertainment S.A. GT Interactive Software Corp.
00, xxx xx 0xx Xxxx 1943 417 Fifth Avenue
Villeurbanne, 69100 Xxx Xxxx, Xxx Xxxx 00000
France Attention: Xxxxxx Xxxxxxx
Attention: Xxxxxx Xxxxxxxx Telecopy: (000) 000-0000
Telecopy: (000 00) 000 000000 Confirm: (000) 000-0000
Confirm: (000 00) 000 000000
And with a copy to:
Attention: Xxxxxxxx Xxxxxxx Xxxxxx Xxxxx Xxxxxxxx & Xxxxxxx LLP
Telecopy: (011 33) 472 655059 000 Xxxxx Xxxxxx
Confirm: (000 00) 000 000000 Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxx, Esq.
with a copy to: Telecopy: (000) 000-0000
Confirm: (000) 000-0000
Pillsbury Madison & Sutro LLP
000 Xxxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxxxx X. Xxxxxxxx, Esq.
Xxxxxx X. Xxxxxxxxx, Esq.
Telecopy: (000) 000-0000
Confirm: (000) 000-0000
26. 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.
27. 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.
28. 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.
IN WITNESS WHEREOF, the Parties have executed this Distribution Agreement on the
Effective Date.
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INFOGRAMES ENTERTAINMENT S.A. GT INTERACTIVE SOFTWARE CORP:
By: _____________________________ By: ______________________________
Name: ___________________________ Name: ____________________________
Title: __________________________ Title: ___________________________
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