EXHIBIT 10.46
AMENDMENT NUMBER 4 OF INTERNATIONAL DISTRIBUTION AGREEMENT
This Amendment Number 4 of the International Distribution Agreement
dated February 10, 1999 (this "Amendment") is entered into as of August 6, 2003
but is retroactively effective as of January 1st, 2002 (the "Effective Date"),
by Interplay Entertainment Corp., a Delaware corporation ("INTERPLAY") and
Avalon Interactive Group Limited, a corporation formed under the laws of England
and Wales ("AVALON"), with reference to the following facts:
RECITALS
A. Avalon Interactive Group Ltd is the successor in interest to
Virgin Interactive Entertainment ("Virgin"). For the purpose of reading
Agreements and associated papers these two names are one and the same and
constitute one and the same company.
B. The parties entered into an International Distribution
Agreement dated February 10, 1999, subsequently amended on July 1, 1999, January
1, 2000, and April 9, 2001 (collectively, the "Agreement"), under which Avalon
obtained from Interplay the right to distribute Interplay products in certain
territories.
C. The parties desire to amend the Agreement further.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual agreements and promises
set forth herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
I. Section l(b) of the Agreement is augmented with the following
provision: Prior to entering into any of the following:
Any sublicensing of any rights granted to Avalon under the Agreement
Any deal not covered within the Distribution Agreement
Avalon shall seek approval from Interplay in writing by using the form attached
hereto, entitled "Contract Authorization Request". Section I of the Contract
Authorization Request form shall be properly filled out and sent to Interplay
for approval; if approved by Interplay, Avalon may enter into the deal, but must
resubmit the Contract Authorization Request form with Section III completed for
Interplay's records. Interplay shall not be obligated to provide Avalon, or the
third party to the deal, any relevant materials or documents necessary to
execute the agreement between Avalon and such third party until all elements of
the Contract Authorization Request form process are completed.
II. Section 4(d) of the Agreement is deleted in its entirety and replaced
with the following:
"(d) EXPENSE REIMBURSEMENTS. Interplay shall pay for
the direct costs of manufacturing the Products (which shall,
for the avoidance of doubt, include the costs of goods and
any expenses generated for the creation of the Products,
including but not limited to, the creation of packaging,
manuals, inserts, labels, translations, and agency
commissions (Agency commission solely in Austria and
Portugal)) or having the Products manufactured
and shipped to Avalon's warehouse under Section 5. In each
case, such payment will be made in accordance with Section
5(k)(C) of the Agreement, with respect to Products on video
game console systems, or Section 2 of Exhibit B of the
Agreement, as amended, with respect to personal computer
Products. Interplay shall not have any obligation to pay any
other fee, expense or other amount to Avalon or Avalon's
vendors for the services to be provided by Avalon under
Section 5 or otherwise, except as expressly provided in
Exhibit B."
III. Section 4(f) of the Agreement is deleted in its entirety and replaced
with the following: "Intentionally deleted."
IV. Section 5(c) of the Agreement is deleted in its entirety and replaced
with the following:
"(c) MARKETING. Avalon shall provide marketing and
public relations for the Products in the Territory on behalf
of Interplay in accordance with the following:
(A) MARKETING PLANS
(i) INTERPLAY TO PROVIDE EUROPEAN
RELEASE SCHEDULE AND LIST OF MARKETING ELEMENTS TO
AVALON Interplay shall provide to Avalon a full
European release schedule and the list of main
marketing Elements available to be mentioned in the
general marketing and product plans on an annual
basis. For the purpose of Marketing Plans "Elements"
shall be understood to be, but not limited to,
marketing materials such as Box Art, Screen Shots,
Texts, Graphic designs, Pictures, Gameplay Outline,
Cheat Codes, etc... Interplay shall deliver its
first full European release schedule and the list of
main marketing Elements available to be mentioned in
the general marketing and product plans to Avalon
within ten (10) business days from the actual
signing of this Amendment 4, irrespective of the
Effective Date of this Amendment. Updates of the
European release schedule are to be provided by
Interplay to Avalon on a bi-weekly basis.
(ii) AVALON TO SUPPLY MARKETING PLANS
FOR INTERPLAY'S APPROVAL. Avalon shall provide to
Interplay two types of marketing plans: 1) a twelve
(12) month general marketing plan for each calendar
year (January through December) during the term of
this agreement (or with respect to the general plan
for 2003, from the date this amendment is signed by
the parties through December 2003); and 2) a
product-specific marketing plan for each Product,
detailing Avalon's proposed country by country
marketing efforts. The general marketing plan shall
include, without limitation, all projected sales,
promotional activities (including, among other
things, advertising, public relations, trade shows
and direct mailings, for all Products and detailed
by countries under this Agreement. Each product
specific marketing plan shall include the specific
list of Elements, expected from Interplay, which
condition its proper realization. The first Avalon
general marketing plan and product specific
marketing plan shall be provided by Avalon to
Interplay within thirty (30) days from Interplay's
delivery of the European release schedule and the
list of main marketing Elements available to be
mentioned in the general marketing and
product-specific plans. Each general and
product-specific
marketing plan shall be updated on a quarterly basis
and the changes submitted for Interplay's written
approval.
(iii) In the event Interplay does not
provide to Avalon the said schedule and list of
Elements, Avalon shall no longer be bound by the
specific content of the said marketing and product
plans. In the event Interplay does not provide,
within a reasonable time frame around the agreed
date, to Avalon the specific Elements that are
agreed upon in the marketing plan submitted by
Avalon and approved by Interplay, then Avalon shall
not be bound by the specific content of the said
marketing and product plan.
(iv) APPROVAL PROCESS: Each marketing
plan identified above shall be submitted to
Interplay for its review prior to implementation and
no marketing plan may be implemented until Avalon
receives Interplay's prior written approval.
Interplay must either approve or reject these plans
within ten (10) business days of receipt of the
submitted plans. In the event Interplay fails to
either give its approval or reject a marketing plan
within the ten business day time period, the plans
shall be deemed approved. In the event of a
rejection, Interplay shall forthwith provide Avalon
with the grounds for such rejection.
(v) Avalon shall be responsible for
and shall provide all marketing, advertising,
promotion and public relations for the Products in
the Territory in accordance with the Marketing
Plans. All costs and charges of marketing,
advertising and promotion of the Products,
including, without limitation, third party costs and
charges associated with implementation of the
Marketing Plans, shall be the responsibility of, and
paid for directly by, Avalon pursuant to Section
5(c)(B) below.
(B) With respect to the Products under this
Agreement, Avalon agrees to spend a minimum of eleven percent
(11% )(for the period beginning on January 1, 2002 and ending
on June 30, 2003, the minimum marketing allowance is 10%) of
the projected Net Sales (as defined below in Section III of
this Amendment), which shall be determined and mutually
agreed to in advance in writing by and between Avalon and
Interplay, on marketing, advertising and public relations
in the Territory (the "MINIMUM MARKETING ALLOWANCE") subject
to adjustment to actual net sales at the end of a quarter.
The Minimum Marketing Allowance to be allocated as follows:
(i) three percent (3%) of the Minimum Marketing Allowance
shall be applied towards internal marketing costs in
connection with the personnel engaged in the marketing,
advertising and public relations a the Products as well as
other internal costs ("INTERNAL MINIMUM MARKETING
ALLOWANCE")(for the period beginning January 1, 2002, and
ending July 31, 2003, the Internal Minimum Marketing
Allowance shall be 2%); and (ii) the remaining eight percent
(8%) of the Minimum Marketing Allowance shall be applied
towards all marketing, advertising and public relations costs
incurred in favor of third parties by or on behalf of Avalon
in the Territory, including, without limitation, print,
television, radio and other advertising and co-op and MDF
funds ("External Minimum Marketing Allowance"). The parties
agree that only actual, out of pocket costs incurred by
Avalon shall be applied toward meeting Avalon's
Minimum Marketing Allowance obligation. It is expressly
understood and acknowledged between Interplay and Avalon,
that in the event Avalon exceeds its Minimum Marketing
Allowance obligations at any time during the Term of this
Agreement, Interplay shall not have any obligation to pay any
fees, expenses or reimburse Avalon for such excesses. Any
portion of the External Minimum Marketing Allowance not spent
by Avalon during any quarter during the Term of this
Agreement (hereinafter defined as "UNEXPLOITED MINIMUM
MARKETING ALLOWANCE") shall be added to the External Minimum
Marketing Allowance for the following quarter. For purposes
of the preceding sentence, expenditures shall be deemed to
have occurred at the time the marketing activity to which the
expenditure is applied is invoiced, not when the cost thereof
is actually paid. In the event there is any Unexploited
Minimum Marketing Allowance remaining at the end of each
calendar year during the Term, Avalon shall pay to Interplay
within thirty (30) days after the end of such calendar year,
the total Unexploited Minimum Marketing Allowance for such
calendar year. Furthermore, upon termination or expiration of
this Agreement, Avalon shall pay to Interplay within thirty
(30) days of the termination or expiration of this Agreement,
any and all Unexploited Minimum Marketing Allowance. The
Internal Minimum Marketing Allowance shall be reviewed by
Interplay and Avalon at the end of each twelve (12) month
period from the execution of this Amendment. After review by
Interplay and Avalon, the parties may mutually agree in
writing to amend the Internal Minimum Marketing Allowance."
Notwithstanding anything contained herein or in the
Agreement, the parties hereby mutually agree and acknowledge
that although the formalities set forth hereinabove above
under paragraph (A) with respect to the general marketing
plan and product specific plan were not followed by Avalon or
Interplay prior to August 2003, the parties tacitly agreed
upon all aspects in relation to the said general marketing
plan and product specific marketing plan. Accordingly, for
the sake of clarity, the parties hereby agree that Minimum
Marketing Allowance hereinabove set forth shall apply to
Avalon for the year 2002. Any Unexploited Minimum Marketing
Allowance shall be imputed to the year 2003. Within 30 days
of the execution of this Amendment, Avalon shall provide to
Interplay, all marketing information and expenditures for the
period January 1, 2002 through December 31, 2002, that are
necessary to calculate the amount of any, Unexploited Minimum
Marketing Allowance for that period.
(C) Within ten (10) days after the end of each
quarter during the Term, Avalon shall provide Interplay with
monthly reports detailing expenses incurred for each Product
under the Marketing Plans, together with supporting
documentation thereof, and these are to be reconciled on a
quarterly basis."
V. Section 5(d) of the Agreement is deleted in its entirety and replaced
with the following:
"(d) ADVERTISING AND PROMOTION. On behalf of
Interplay and at its direction, Avalon shall promote the sale
of Products throughout the Territory in accordance with the
applicable Marketing Plans and Interplay's reasonable
directions."
VI. Section 5(j) of the Agreement is deleted in its entirety and replaced
with the following:
"(j) PUBLIC RELATIONS. Avalon shall provide public
relations for the Products in the Territory on behalf of
Interplay in accordance with the Marketing Plan. Avalon
agrees to maintain and manage a public relations
infrastructure throughout the Territory of a size and quality
consistent with industry standards."
VII. Section 6 of the Agreement as amended remains in full force and effect.
VIII. Section 1 of Exhibit "B" of the Agreement is deleted in its entirety
and replaced with the following:
"1. PAYMENT. For the period beginning January 1, 2002 and
ending June 30, 2003, Avalon shall pay to Interplay
seventy-five percent (75%) of the Net Sales (as defined
below) for Products Sold under this Agreement. Avalon shall
retain the remaining twenty-five percent (25%) of the Net
Sales ("AVALON PROCEEDS"). For the period beginning July 1,
2003 through the balance of the term of the agreement, Avalon
shall pay to Interplay seventy-four percent (74%) of the Net
Sales (as defined below) for Products Sold under this
Agreement and Avalon shall retain the remaining twenty-six
percent (26%) of the Net Sales ("AVALON PROCEEDS"). All such
payments shall be paid to Interplay on the 20th day of the
second month immediately following the month in which the
Products are shipped or invoiced by Avalon to its customers,
whichever is earlier. (For example: if Product is shipped or
invoiced in the month of January, payment will be due on the
20th of March). Avalon shall bear the risk of the bad debt of
its customers.
"Net Sales" shall mean the gross wholesale price of
the Products invoiced or shipped by Avalon in the
distribution of the Products less:
(i) Any applicable taxes on the sale or license
of the Products, other than taxes based solely on Avalon's
income and tax withholdings to the extent creditable by
Avalon.
(ii) Any Interplay-authorized markdown
allowances and/or retroactive discounts and rebates, on the
terms set forth in Section 5(f) of this Agreement.
(iii) Amounts for returns, such as credits or
defectives, on the terms set forth in Section 5(f) of this
Agreement."
IX. Notwithstanding anything to the contrary in the Agreement, Interplay
shall no longer be responsible for and shall not provide marketing, advertising,
public relations and promotion of the Products. For purposes of clarity, any and
all costs of such marketing, advertising, public relations and promotion of the
Products (collectively, "Marketing Costs") shall be paid by Avalon pursuant to
Section 5(c)(B) of the Agreement. Avalon shall not deduct from its payments to
Interplay any of its past or current Marketing Costs.
X. Section 2. to the Amendment to International Distribution Agreement
dated April 9th of 2001
is deleted in its entirety.
XI. MISCELLANEOUS. The Agreement and subsequent written Amendments
constitute the entire agreement between the parties on the subject matter hereof
and thereof, and no amendment of the terms herein or therein shall be valid
unless made in a written document signed by the parties. California law shall
govern the interpretation and enforcement of this Amendment without reference to
conflicts of laws principles. Unless otherwise defined herein, terms used herein
shall bear the same respective meanings ascribed to such terms in the Agreement.
Except as amended hereby, the Agreement remains in full force and effect. This
Amendment may be executed in counterparts and may be delivered by facsimile,
each of which shall be deemed an original, but ALL of which together shall
constitute one and the same instrument. This Amendment shall not be binding
until signed by both parties.
Wherefore, the parties hereto have executed this Amendment as of the
date first written
"AVALON"
AVALON INTERACTIVE GROUP LIMITED
BY:
---------------------------
ITS:
Date:
"INTERPLAY*
Interplay Entertainment Corp
BY:
---------------------------
ITS: CEO
Date: April 14, 2003
SECTION I
REQUEST FOR APPROVAL TO SUBLICENSE OR ENTER INTO AN AGREEMENT: The International
Distribution Agreement dated February 10, 1999, as amended (the "International
Distribution Agreement"), by and between Interplay and Avalon, prohibits Avalon
from entering into any kind of agreement such as sublicensing its rights
thereunder without the consent of Interplay. Avalon hereby requests Interplay's
consent to consider the following proposal with respect to the product(s)
described below in accordance with the terms described below and otherwise
subject to the terms of the International Distribution Agreement.
DEAL INFORMATION:
CONTRACTING PARTIES:
THIRD PARTY CONTACT INFORMATION:
TERM:
TERRITORY:
EXCLUSIVITY:
PRODUCES) AND PLATFORMS):
CASH INFLOWS AND TIMING:
i. Advances/Guarantees:
ii. Royalties:
CASH OUTFLOWS:
DETAILED SUMMARY OF PROPOSED CONTRACT AND PARTY
RIGHTS/RESPONSIBILITIES: DOCUMENTS AND MATERIALS NEEDED FROM INTERPLAY
DURING EXECUTION OF THE PROPOSED CONTRACT: TERMINATION PROVISIONS:
ASSIGNMENT/TRANSFER PROVISIONS: LAW VENUE:
SUBMITTED BY: _________ of Avalon Date:
SECTION II
INTERPLAY AUTHORIZATION: With the signatures below, Interplay authorizes Avalon
to enter into the above described contract negotiation and agreement, provided
that: (i) such agreement expressly provides that in the event Avalon loses its
rights to the Product(s) for any reason, such agreement shall terminate
immediately upon the loss of such rights; (ii) Avalon shall be expressly
prohibited from cross-collateralizing and/or offsetting any amounts due with
respect to this agreement as against any amounts due pursuant to any other
agreements between Interplay, on the one hand, and Avalon, on the other hand,
including without limitation the International Distribution Agreement; (iii)
notwithstanding the terms of the International Distribution Agreement,
Interplay's royalties with respect to the Product(s) shall be as follows:
__________________________; and (iv) Interplay shall have the right to review
and approve (which approval Interplay shall not unreasonably withhold or delay)
the final form of such agreement prior to execution.
Interplay Management
