EXHIBIT 10.1
VIDEO GAME DISTRIBUTION AGREEMENT
This Video Game Distribution Agreement (this "AGREEMENT") is entered into as of
August 9, 2002 (the "EFFECTIVE DATE") by and between Vivendi Universal Games,
Inc., a Delaware corporation, with its principal place of business at 0000
Xxxxxx Xxxxx, Xxx Xxxxxxx, Xxxxxxxxxx 00000 ("VUG"), and Interplay Entertainment
Corp., a Delaware corporation, with its principal place of business at 00000 Xxx
Xxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxx 00000 ("Interplay").
WHEREAS, Interplay has broad experience and unique talent and skill in the field
of video game development and publishing, and VUG has broad experience and
unique talent and skill in the field of video game reproduction, manufacture,
marketing, promotion, distribution and sale;
WHEREAS, Interplay is currently developing and owns or controls the video game
products described in SECTION 3 of EXHIBIT B, attached hereto, and wishes to
further develop and license these products to VUG, and VUG desires to receive
such license from Interplay, on an exclusive basis for the purposes of
reproduction, manufacture, marketing, promotion, distribution and sale, as
provided herein;
WHEREAS, VUG desires to utilize and rely on Interplay's broad experience, unique
talent and skill and to receive from Interplay, and Interplay desires to utilize
and rely on VUG's broad experience, unique talent and skill and to grant to VUG,
an exclusive license to the products listed in SECTION 3 of EXHIBIT B for the
purpose of reproduction, manufacture, marketing, promotion, distribution and
sale, as set forth herein.
NOW, THEREFORE, by reason of the foregoing premises and in consideration of the
mutual covenants and premises hereinafter set forth and for other valuable
consideration, the sufficiency of which is hereby acknowledged, the parties
hereto agree as follows:
1. DEFINITIONS. As used in this Agreement, the following terms shall have
the meanings set forth below:
1.1 MINIMUM GUARANTEE has the meaning given to it in SECTION 1.1
of EXHIBIT A, attached hereto.
1.2 APPROVED GOLD MASTER means (i) with respect to PC Partner
Products only, a Gold Candidate approved by VUG Customer Quality Care in
accordance with SECTION 3 below, and (ii) with respect to Non-PC Partner
Products, a Gold Candidate approved by the applicable Game Hardware Platform
Licensor in accordance with SECTION 3 below.
1.3 AUTHORIZED CHANNEL means the distribution channel, as
specified in SECTION 1 of EXHIBIT B, attached hereto, in which VUG is authorized
to reproduce, manufacture, market, promote, distribute and sell Partner
Products.
1.4 AUTHORIZED DEDUCTIONS shall have the meaning set forth in
SECTION 3 of EXHIBIT A, attached hereto.
*** Terms represented by this symbol are considered confidential. These
confidential terms have been omitted pursuant to a Confidential Treatment
Request filed with the Securities and Exchange Commission (`SEC") and have been
filed separately with the SEC.
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1.5 BETA VERSION means the version of a Partner Product which (a)
is in all material respects feature complete, playable and testable; (b)
contains opening credits and title screens; and (c) is substantially free of
Program Errors and ready for fine tuning.
1.6 CONFIDENTIAL INFORMATION has the meaning given to it in
SECTION 15.1 of this Agreement.
1.7 DEFAULT has the meaning given to it in SECTION 12.2 of this
Agreement.
1.8 DELETION NOTICE has the meaning given to it in SECTION 12.5.
1.9 DISCLOSING PARTY has the meaning given to it in SECTION 15.1
of this Agreement.
1.10 DOUBTFUL PRODUCT NOTICE has the meaning given to it in SECTION
12.5.
1.11 END-USER(S) means a person or entity that acquires the Partner
Product(s) for use rather than resale or distribution.
1.12 FINAL GROSS SALES PROJECTION has the meaning given to it in
SECTION 1.2 of EXHIBIT A.
1.13 GAME HARDWARE PLATFORM LICENSOR means a manufacturer of the
platform hardware upon which a Non-PC Partner Product is designed to play (e.g.,
Sega for Dreamcast, Sony for PlayStation 2, Nintendo for Game Cube and Game Boy
Advance, and Microsoft for Xbox).
1.14 GENERAL RESERVE has the meaning given to it in SECTION 3 of
EXHIBIT A.
1.15 GOLD CANDIDATE(S) means: (i) For PC-Partner Products, a master
copy of the object code and all Related Assets of and relating to the Partner
Product(s) once submitted to VUG Customer Quality Care in accordance with
SECTION 3 below and from which multiple copies of the Partner Product(s) may be
reproduced; and (ii) for Non-PC Partner Products, a master copy of the object
code and Related Assets that has been submitted to VUG Customer Quality Care in
accordance with SECTION 3 below and which has been submitted for approval by the
applicable Game Hardware Platform Licensor.
1.16 GROSS SALES REVENUES means the aggregate price of all Partner
Product Units shipped by or for VUG.
1.17 INDEMNIFIED PARTY has the meaning given to it in SECTION 19.3
of this Agreement.
1.18 INDEMNIFYING PARTY has the meaning given to it in SECTION 19.3
of this Agreement.
1.19 INITIAL MINIMUM GUARANTEE has the meaning given to it in
SECTION 1.1(i) of EXHIBIT A.
*** Terms represented by this symbol are considered confidential. These
confidential terms have been omitted pursuant to a Confidential Treatment
Request filed with the Securities and Exchange Commission (`SEC") and have been
filed separately with the SEC.
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1.20 INITIAL SHIPMENT means the period commencing from the first
commercial shipment of a Partner Product to VUG's various retailers and expiring
*** business days thereafter.
1.21 INTERPLAY PROCEEDS has the meaning given to it in SECTION 2.1
of EXHIBIT A.
1.22 IP RIGHTS has the meaning given to it in SECTION 13 of this
Agreement.
1.23 LICENSE has the meaning given to it in SECTION 2.1 of this
Agreement.
1.24 LICENSED TERRITORY means that geographic region described in
SECTION 2 of EXHIBIT B.
1.25 NET SALES has the meaning given to it in SECTION 2.2 of
EXHIBIT A, attached hereto.
1.26 NON-PC PARTNER PRODUCT means a Partner Product designed for
play on a Platform other than a personal computer system (e.g., PlayStation 2,
Game Cube, Game Boy Advance, Xbox).
1.27 PARTNER PRODUCT(S) means (i) Interplay's computer and/or video
game software product SKUs stated in SECTION 3 of EXHIBIT B, AND (ii) any and
all additional computer and/or video game products developed by or on behalf of
Interplay in its sole discretion and completed during the three (3) year period
following the Effective Date, including any and all sequels, new titles or
derivative works of previously published titles, together with all Related
Assets and any and all Program Error Corrections but only if and to the extent
that as of the Effective Date no third party already possesses such rights (or
such party subsequently waives such rights in their sole discretion). For
purposes of clarification, Partner Products shall not include computer and/or
video game products which are both developed and distributed/published by third
parties under sale or license from Interplay.
1.28 PC PARTNER PRODUCT means a Partner Product designed for play
on personal computer systems (e.g., IBM and Macintosh personal computers).
1.29 PARTNER PRODUCT CONCEPT AND DESCRIPTION DOCUMENT means, with
respect to each Partner Product, the document to be provided to VUG by Interplay
no later than the Six Month Evaluation, which sets forth the fundamental product
concept and description for such Partner Product.
1.30 PARTNER PRODUCT REQUIREMENTS DOCUMENT means, with respect to
each Partner Product, the document to be provided to VUG by Interplay no later
than the Six Month Evaluation, which sets forth the fundamental technology
requirements of such Partner Product.
1.31 PERIOD has the meaning given to it in SECTION 11.5 of this
Agreement.
1.32 PLATFORM means each of the following: personal computers or
"PC's" (regardless of manufacturer or operating system), XxxxXxxxxxx,
XxxxXxxxxxx 0, X00, XxxxXxxx, Game Boy, Game Boy Color, Game Boy Advance and
Xbox.
*** Terms represented by this symbol are considered confidential. These
confidential terms have been omitted pursuant to a Confidential Treatment
Request filed with the Securities and Exchange Commission (`SEC") and have been
filed separately with the SEC.
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1.33 PROGRAM ERROR(S) means any case where a Partner Product
abnormally and materially ceases functioning, produces material incorrect or
misleading information or erroneously interprets material information given to
it or does not function substantially in accordance with its technical
specifications described in the Partner Product Requirements Document; provided,
however that minor "bugs" generally acceptable within industry standards shall
not be considered Program Errors under this Agreement.
1.34 PROGRAM ERROR CORRECTION means a modification of, addition to
or deletion from any software component of a Partner Product (whether during
development or by patch available after commercial release) that had been
experiencing a Program Error, that causes such component to perform
substantially (i.e, within acceptable industry standards) in accordance with the
Partner Product's technical specifications described in the Partner Product
Requirements Document.
1.35 RECEIVING PARTY has the meaning given to it in SECTION 15.1 of
this Agreement.
1.36 RELATED ASSETS means all art assets, system specification
information, manual text and other ancillary materials necessary for VUG to
create the Partner Product packaging and manual.
1.37 ROYALTIES has the meaning given to it in SECTION 2 of EXHIBIT
A.
1.38 SECONDARY MINIMUM GUARANTEE has the meaning given to it in
SECTION 1.1(ii) of EXHIBIT A.
1.39 SELL-OFF PERIOD has the meaning given to it in SECTION
12.4(c).
1.40 SIX MONTH EVALUATION means a preliminary evaluation (in
accordance with SECTION 3) of the development of a Partner Product six (6)
months prior to the Submission Date for such Partner Product. During this
evaluation, Interplay shall submit to VUG the Partner Product Concept and
Description Document and the Partner Product Requirements Document for such
Partner Product. Based on the delivery of these items, VUG and Interplay shall
cooperate in good faith regarding the progress and development schedule of the
Partner Product. Furthermore, at this time, and in accordance with SECTION 1.2
of EXHIBIT A and SECTION 6, respectively, VUG shall formulate its initial Net
Sales projections and initial marketing budget at Initial Shipment for such
Partner Product.
1.41 SKU means, a version of a video game designed to operate on a
particular Platform. An example of a SKU is a version of a game designed to play
on the Sony PlayStation 2 Platform.
1.42 STATEMENT has the meaning given to it in SECTION 11.4 of this
Agreement. An example of such Statement is attached hereto and referred to as
EXHIBIT E.
1.43 SUBMISSION DATE has the meaning given to it in SECTION 3.1.
1.44 TERM has the meaning given to it in SECTION 12.1.
1.45 TERMINATION NOTICE has the meaning given to it in SECTION
12.5.
*** Terms represented by this symbol are considered confidential. These
confidential terms have been omitted pursuant to a Confidential Treatment
Request filed with the Securities and Exchange Commission (`SEC") and have been
filed separately with the SEC.
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1.46 THREE MONTH EVALUATION means the final evaluation (in
accordance with SECTION 3) of the development of the Partner Product to occur
three (3) months prior to the Submission Date for such Partner Product. During
this evaluation, Interplay shall submit to VUG a Beta Version for the Partner
Product. Based on the Beta Version and other meaningful consultation and
cooperation between the parties with respect to the progress of the Partner
Product, VUG will at such time submit to Interplay VUG's marketing strategy with
respect to such Partner Product and commit to a marketing budget with respect to
such Partner Product (in accordance with SECTION 6).
1.47 THREE MONTH GROSS SALES PROJECTION has the meaning given to it
in SECTION 1.2 of EXHIBIT A.
1.48 THIRD PARTY LICENSOR means any licensors or owner (other than
Interplay or VUG) of intellectual property that is used in any Partner Product.
For purposes of clarification, a Third Party Licensor may include a third-party
developer hired by Interplay to develop a Partner Product and which retains
certain credit rights, marketing approval rights, or other rights with respect
to the Partner Product.
1.49 THIRD PARTY LICENSE means any license by a Third Party
Licensor of intellectual property that is used in any Product.
1.50 VUG CUSTOMER QUALITY CARE means VUG's department or group that
reviews product compatibility and that shall ultimately be responsible for
accepting or rejecting Gold Candidates of PC Partner Products in accordance with
SECTIONS 3 and 4.
1.51 VUG AFFILIATE means a wholly-owned subsidiary or parent
company of VUG, provided such wholly-owned subsidiary or parent company of VUG
is in the interactive entertainment software business.
2. GRANT OF RIGHTS.
2.1 LICENSE TO DISTRIBUTE. Subject to the terms and conditions
contained in this Agreement, Interplay hereby grants to VUG and VUG hereby
accepts, the exclusive right, license and obligation during the Term and any
Sell-Off Period, to reproduce, manufacture (except during any Sell-Off Period),
market and promote (in any and all forms and media, including print, digital,
optical, and public performance and display), distribute copies of, and sell,
the Partner Product(s), on an individual-unit (i.e., non-bundled) and
packaged-goods basis via the Authorized Channels throughout the Licensed
Territory on terms that are reasonable and customary in the interactive
entertainment software industry, with the additional right to subcontract any or
all of the foregoing rights in accordance with SECTION 20.2 below (the above
grant of rights being hereinafter referred to as the "LICENSE").
2.2 DEFINITION UNDER U.S. BANKRUPTCY CODE. The License is intended
to be an intellectual property license within the scope of Paragraph 365(n) of
the U.S. Bankruptcy Code, as amended, and to the maximum extent, entitle VUG to
all of the protections provided thereunder.
*** Terms represented by this symbol are considered confidential. These
confidential terms have been omitted pursuant to a Confidential Treatment
Request filed with the Securities and Exchange Commission (`SEC") and have been
filed separately with the SEC.
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2.3 EXCLUSIVE LICENSE. Subject to the terms and conditions
contained in this Agreement (including SECTIONS 2.6, 2.7 and 2.8), Interplay
shall provide the License set forth in SECTION 2.1 exclusively to VUG during the
Term. Therefore, none of the rights Interplay provides under the License shall
be assigned, licensed, offered, transferred or otherwise provided by Interplay
to any third parties nor shall they be exercised by Interplay except as
expressly permitted by this Agreement.
2.4 TRADEMARK LICENSE. Subject to the terms and conditions
contained in this Agreement (including SECTION 2.8 below), Interplay hereby
grants to VUG and VUG hereby accepts a non-exclusive, non-transferable right and
license in the Licensed Territory to reproduce and use the trademarks associated
with the Partner Product(s) solely in connection with the reproduction,
manufacturing, marketing, promotion, distribution and sale of the Partner
Product(s) during the Term and any Sell-Off Period.
2.5 MANUFACTURING RIGHTS. With respect to all PC Partner Products,
in its capacity as distributor of each PC Partner Product, VUG will be solely
responsible for, and will pay all costs of (i) manufacturing the PC Partner
Product units to be distributed pursuant to this Agreement, including CD- and
DVD-materials (and any other component materials) and pressing, packaging
materials, printing of packaging and inserts, and pack-out, (ii) assembly of
finished-goods PC Partner Product units, and (iii) shipping, and securing
delivery of, completed finished-goods units of PC Partner Products to VUG's
distribution center, VUG's customers and/or End-Users. Subject to SECTION 3.2,
herein, with respect to all Non-PC Partner Products, VUG will be solely
responsible for all costs of (i) manufacturing the Non-PC Partner Product units
to be distributed pursuant to this Agreement, including CD- and DVD-materials
(and any other component materials) and pressing, Game Hardware Platform
Licensor royalties, packaging materials, printing of packaging and inserts, and
pack-out, (ii) assembly of finished-goods Non-PC Partner Product units (to the
extent the Game Hardware Platform Licensor allows VUG to, and VUG elects to,
perform any such assembly), and (iii) shipping, and securing delivery of,
completed finished-goods units of Non-PC Partner Products to VUG's distribution
center, VUG's customers and/or End-Users.
2.6 RESERVED RIGHTS. All rights not expressly granted to VUG in
this Agreement, including all rights outside the Licensed Territory, any
electric transmission rights (such as through cable, the Internet and any
on-line services), and all merchandizing rights of any kind whatsoever, are
specifically excluded from this Agreement and are retained and reserved by
Interplay. Interplay also reserves the right, without obligation, to publish
trailers and demos of the Partner Products (which trailers and demos will be
made available to VUG for its use hereunder in marketing the Partner Products)
in combination with other entertainment software products that are not Partner
Products under this Agreement. Any use by Interplay (or any licensee of
Interplay) of such reserved rights, or any portion thereof, shall not be deemed
unfair competition, nor interference with nor infringement of VUG's rights
hereunder. Without limiting the generality of the foregoing, Interplay
specifically reserves the right to authorize third parties to distribute Partner
Products with third-party software and/or hardware in the form of a single
combined product and selling such combined products in or outside of the
Licensed Territory and as a premium to augment the value of non-computer related
products and so-called "covermounts" in and outside the Licensed Territory ("OEM
LICENSES"); PROVIDED, HOWEVER, that Interplay agrees that it will not, without
the prior written approval of VUG, grant any OEM
*** Terms represented by this symbol are considered confidential. These
confidential terms have been omitted pursuant to a Confidential Treatment
Request filed with the Securities and Exchange Commission (`SEC") and have been
filed separately with the SEC.
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Licenses with respect to any Partner Product that authorize distribution of any
combined product that includes such Partner Product to commence earlier than ***
following Initial Shipment of such Partner Product by VUG hereunder.
2.7 INTERPLAY DIRECT SALES AND ONLINE SALES. Notwithstanding
anything to the contrary in this Agreement, Interplay shall be entitled to sell
Partner Products directly to End-Users through (i) Interplay's own direct sales
program, including offering the Partner Products for sale direct to End-Users
through Interplay's direct mailing programs, Interplay's telemarketing programs,
Interplay's websites and Interplay's on-line stores (and Interplay may engage
third-party subcontractors to fulfill orders that Interplay has itself received
directly from End-Users), and/or (ii) third-parties hired by Interplay to sell
the Partner Products online through their websites (e.g., Yahoo, Amazon).
Interplay shall have the right to purchase from VUG on a royalty-free basis, via
delivery to VUG of a standard purchase order finished-goods Partner Product
units at a price equal to VUG's actual manufacturing and shipping costs plus ***
($***) per unit . VUG shall be entitled to deduct amounts due VUG under this
Section from the Interplay Proceeds. VUG shall use its commercially reasonable
efforts to promptly fulfill Interplay's purchase orders.
2.8 APPROVAL BY LICENSORS. Notwithstanding any other provision of
this Agreement to the contrary, VUG's rights and obligations under this
Agreement with respect to each Partner Product will be (i) conditioned upon such
Partner Product having been approved for distribution in the Licensed Territory
by the appropriate Game Hardware Platform Licensor, if any, and by any
applicable content licensors (including any Third Party Licensors) and other
entities whose approval is legally or contractually required to allow the
distribution by VUG of the Partner Products and use by VUG of the trademarks
associated with the Partner Product, in the Licensed Territory; and Interplay
will use its diligent good faith efforts to secure such necessary approvals so
that the Partner Products may be marketed and distributed as provided in this
Agreement, and (ii) subject to any conditions and restrictions contained in any
Third Party Licenses.
3. DEVELOPMENT AND DELIVERY; RELEASE.
3.1 DELIVERY OF GOLD MASTERS. Interplay shall develop at its own
cost and deliver to VUG the Gold Candidate with respect to each Partner
Product(s) for acceptance in accordance with the dates set forth in EXHIBIT B
(the "SUBMISSION DATES"), or with respect to Partner Products where no
Submission Date is set forth in EXHIBIT B, then such Submission Date shall be
agreed upon by the parties in good faith. By the respective Submission Date for
any Gold Candidate of a PC Partner Product, such Gold Candidate shall
substantially conform to the technical specifications and descriptions set forth
in the corresponding Partner Product Requirements Document and the Partner
Product Concept and Description Document, and shall be free from material
Program Errors, and VUG has the right to test and approve or reject the Gold
Candidate accordingly and in accordance with the procedure described in SECTION
3.3 BELOW in order to determine if such Gold Candidate will be re-classified as
an Approved Gold Master. Interplay understands that during the process of
developing the Partner Product(s), Interplay shall be expected to meet with VUG
on a regular basis to discuss progress on the Partner Product(s) and receive
feedback and suggestions. With respect to Non-PC Partner Products, and after
delivery of the Gold Candidate, Interplay's only obligation to make changes to
such Gold Candidates (which Interplay shall perform at its own cost and expense)
shall be as
*** Terms represented by this symbol are considered confidential. These
confidential terms have been omitted pursuant to a Confidential Treatment
Request filed with the Securities and Exchange Commission (`SEC") and have been
filed separately with the SEC.
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required by the various Game Hardware Platform Licensors in order to obtain such
Game Hardware Platform Licensors' approvals, and, upon receipt of such approval
in accordance with SECTION 3.2 below, such Gold Candidate shall be deemed an
Approved Gold Master.
3.2 OBTAINMENT OF NECESSARY CONSENTS AND LICENSES. Interplay
shall, at its sole cost and expense (except with respect to royalties due to
Game Hardware Platform Licensors, which costs shall be VUG's sole
responsibility), obtain any and all necessary consents and licenses relating to
the development of the Partner Product(s) and their use by VUG, its customers
and End-User as contemplated by this Agreement, including any and all consents
and licenses required for any music, voices, names or likeness of characters or
third party copyrighted works or trademarks which are embodied in the Partner
Product(s). Interplay shall be solely responsible for making all necessary
submissions of the Gold Candidates of Non-PC Partner Products to the applicable
Game Hardware Platform Licensors for approvals, and Interplay shall provide VUG
with copies of all Game Hardware Platform Licensors' written feedback and/or
final approvals in a timely manner.
3.3 ACCEPTANCE OF GOLD CANDIDATES. Any Gold Candidate of a PC
Partner Product shall be accepted by VUG (and subsequently re-classified as an
Approved Gold Master) provided it substantially conforms to the technical
specifications and descriptions in its corresponding Partner Product
Requirements Documents and Partner Product Concept and Description Documents,
and such Gold Candidate shall be free from material Program Errors. After
Interplay submits to VUG a Gold Candidate of a PC Partner Product, VUG shall
have *** business days to (a) examine and test such Gold Candidate to determine
whether, in its reasonable judgment, it meets the acceptance criteria for such
Gold Candidate set forth in the preceding sentence, and (b) to notify Interplay
in writing of VUG's acceptance or rejection of such Gold Candidate. In the case
of any rejection, VUG shall provide Interplay along with such written rejection
a reasonable detailed written list of deficiencies in such Gold Candidate and
(if applicable) an explanation of why, in VUG's reasonable judgment, such Gold
Candidate will not be viewed by VUG as an Approved Gold Master. If VUG fails to
notify Interplay of VUG's acceptance or rejection within such *** business day
period, then such Gold Candidate shall be deemed approved by VUG and shall be
considered an Approved Gold Master. VUG and Interplay acknowledge and agree that
such *** day period and the acceptance or rejection of the Gold Candidate as
described herein shall not apply with respect to Gold Candidates of the Non-PC
Partner Products where the respective Game Hardware Platform Licensor shall
grant or withhold such approval. In no event shall a Gold Candidate of a Non-PC
Product be deemed approved without the express written approval of the
applicable Game Hardware Platform Licensor. In the case of a rejection of any
Gold Candidate of a PC Partner Product by VUG in accordance herewith (or of a
Non-PC Partner Product by the applicable Game Hardware Platform Licensor),
Interplay shall use its best efforts to consult with VUG in order to correct the
deficiencies to the reasonable satisfaction of VUG (or the applicable Game
Hardware Platform Licensor) and shall resubmit the Gold Candidate, as corrected,
within *** business days of VUG's rejection (or such longer period as to which
VUG may agree in writing and in its reasonable discretion based on the nature of
the rejection and extent of changes required) (or within such time as required
by the applicable Game Hardware Platform Licensor). This procedure shall iterate
until VUG (or the applicable Game Hardware Platform Licensor) accepts the Gold
Candidate; provided, however, that with respect to rejected Gold Candidate(s),
in the event that (i) Interplay fails to deliver a corrected acceptable Gold
Candidate of a PC Partner
*** Terms represented by this symbol are considered confidential. These
confidential terms have been omitted pursuant to a Confidential Treatment
Request filed with the Securities and Exchange Commission (`SEC") and have been
filed separately with the SEC.
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Product in a commercially reasonable time period following at least ***
rejections in accordance with the procedure described hereinabove, such that VUG
shall have sufficient time to examine, test and accept the corrected Gold
Candidate through its standard compliance testing process, or (ii) Interplay
fails to obtain final Game Hardware Platform Licensor approval within in a
commercially reasonable time period following at least *** rejections in
accordance with the procedure described hereinabove, then either VUG or
Interplay may terminate this Agreement with respect to such Partner Product
only, and without any liability therefor. In the event VUG elects to so
terminate the Partner Product, Interplay's sole liability with respect to such
terminated Partner Product shall be to reimburse VUG for its actual unrecouped
expenditures with respect to such Partner Product incurred through the date of
termination.
3.4 TIMELY MANUFACTURING/DISTRIBUTION OF PARTNER PRODUCTS. Subject
to VUG's receipt of any and all necessary Interplay and Third Party Licensor
approvals, and unless otherwise agreed to by Interplay in its reasonable
discretion, VUG agrees to commercially release each PC Partner Product within
*** days of VUG's receipt of the Approved Gold Master of such PC Partner
Product. Solely with respect to Non-PC Partner Products, VUG shall use
commercially reasonable efforts to (i) commence manufacturing in a timely
manner, but in no event later than *** days (subject to extension for any delays
caused by Interplay and/or the Game Hardware Platform Licensor) following
receipt of an Approved Gold Master, and (ii) release each Non-PC Partner Product
in a timely manner following receipt of substantially all manufactured units of
such Non-PC Partner Product, but in no event later than *** days of receipt of
substantially all manufactured units with respect to such Non-PC Partner
Product. For purposes of the foregoing sentence, "substantially" shall mean ***
percent (***%) or more of the units ordered for manufacture under a given
purchase order. Notwithstanding the foregoing, if Interplay has (for any reason)
delivered a Gold Candidate or Approved Gold Master after the dates set forth on
EXHIBIT B (or such date as has been agreed upon pursuant to SECTION 3.1 or
extended pursuant to SECTION 4.3 below), then VUG agrees to: (i) with respect to
PC Partner Products, commercially release such PC Partner Product within ***
days of VUG's receipt of the Approved Gold Master for such PC Partner Product;
or (ii) with respect to Non-PC Partner Products, commence manufacturing in a
timely manner, but in no event later than *** days (subject to extension for any
delays caused either by Interplay, if Interplay is required by the Game Hardware
Platform Licensor to commence manufacturing directly with the Game Hardware
Platform Licensor, and/or the Game Hardware Platform Licensor) following receipt
of an Approved Gold Master and commercially release each late Non-PC Partner
Product no later than *** days of receipt of substantially all manufactured
units with respect to such Non-PC Partner Product.
3.5 NO MODIFICATIONS OF PARTNER PRODUCT CODE BY VUG. In no event
shall VUG have the right to itself modify the Partner Product code in any
manner, and in no event shall VUG have the right to localize or require that
Interplay localize the Partner Product into any language (including French for
French Canadian End-Users).
4. PROGRAM ERRORS.
4.1 DURING DEVELOPMENT. Interplay shall use diligent good faith
efforts to deliver each Gold Candidate free of material Program Errors, and to
provide Program Error Corrections for any material Program Errors identified by
VUG in writing during VUG's testing of any Gold
*** Terms represented by this symbol are considered confidential. These
confidential terms have been omitted pursuant to a Confidential Treatment
Request filed with the Securities and Exchange Commission (`SEC") and have been
filed separately with the SEC.
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Candidate of a PC Partner Product in accordance with SECTION 3 above. Interplay
acknowledges and agrees that Interplay shall bear the sole cost and expense
associated with such Program Error Corrections.
4.2 FOLLOWING APPROVAL OF GOLD CANDIDATE. Interplay warrants that
each Gold Candidate shall be free from significant Program Errors. At VUG's
request, Interplay shall promptly investigate and use commercially reasonable
efforts to correct all material Program Errors in any Approved Gold Master PC
Partner Product(s) reported in writing by VUG, and deliver to VUG, at no charge
to VUG and as soon as practicable, an avoidance procedure or work-around to
solve or avoid any significant Program Error until a correction is achieved (if
commercially reasonable). Interplay shall continue to use its commercially
reasonable efforts to develop a Program Error Correction for any such material
Program Error, and when a Program Error Correction is achieved, Interplay shall
deliver to VUG all modifications necessary to implement such correction.
4.3 *** NON-DELIVERY OF GOLD CANDIDATE. At or prior to the Six
Month Evaluation for a particular Partner Product under development, Interplay
and VUG shall consult in good faith regarding the progress of Interplay's
development of the Partner Product and, at Interplay's request, attempt to agree
upon a reasonable extension of the applicable Gold Candidate Submission Date and
Gold Master Approval Date set forth in SECTION 3 of EXHIBIT B hereto. In the
event the parties are unable to mutually agree upon the extension requested by
Interplay, however, Interplay shall have the right to extend each such date ***
for a maximum of ***. Thereafter but prior to the then scheduled date for the
Three Month Evaluation date, if, notwithstanding Interplay's diligent efforts to
timely meet its delivery date obligations, Interplay anticipates it will require
additional extensions, Interplay shall so notify VUG and the parties shall again
in good faith attempt to agree upon a reasonable additional extension. In the
event that a Gold Candidate has not been received by VUG on or before the
respective dates set forth in SECTION 3 of EXHIBIT B (as they may have been
extended in accordance with this SECTION 4.3), VUG shall, in its sole discretion
and as its sole remedies, and until such time as it receives the Gold Candidate,
have the right to either (i) ***, or (ii) ***.
5. RESERVED.
6. MARKETING/MARKETING SUPPORT. As between VUG and Interplay, and subject
to the terms and conditions contained in this Agreement (including SECTIONS 2.6,
2.7 and 2.8), VUG shall ***, at its sole cost and expense, be *** responsible
for all sales, marketing and public relations with respect to the distribution
of the Partner Products via the Authorized Channels within the Licensed
Territories. VUG will use commercially reasonable, good-faith efforts, but in no
event less than efforts substantially equivalent to those employed by VUG in the
marketing and distribution of VUG-published products of like sales potential and
demographic target, to market and distribute the Partner Products, and solicit
and support sales of the Partner Products, throughout the Licensed Territory.
VUG will make all reasonable, good faith efforts to keep Interplay's sales team
apprised of VUG's sales force efforts and level of success in selling the
Partner Products. VUG acknowledges and agrees that with respect to each Partner
Product it shall spend an amount equal to the final marketing budget as
determined in the Three Month Evaluation; provided that, VUG agrees that the
final marketing budget for each Partner Product shall, at a minimum, allocate
(and VUG shall spend): (i) ***, and (ii) ***. By way of clarification, Interplay
acknowledges that such marketing expenditures and final strategy
*** Terms represented by this symbol are considered confidential. These
confidential terms have been omitted pursuant to a Confidential Treatment
Request filed with the Securities and Exchange Commission (`SEC") and have been
filed separately with the SEC.
Page 10
committed to by VUG shall include the format, components, assets and calendar as
detailed in the Three Month Evaluation, to be presented in form and substance as
detailed in the attached EXHIBIT D. Interplay acknowledges and agrees that VUG
shall have no obligation to pay for any marketing expenses incurred directly by
Interplay unless such expense has been explicitly approved in writing by VUG.
Notwithstanding the foregoing, Interplay shall provide VUG with reasonable
cooperation and support in VUG's efforts to market and promote the Partner
Products; provided that, unless expressly specified herein, such support shall
not require any out-of-pocket expenditures by Interplay.
6.1 WEB SITE PROMOTION. With respect to each Partner Product, as
long as the Partner Product is being marketed by VUG, Interplay shall (at its
own cost and expense) include a continuous, prominent promotional banner on each
relevant Interplay web site, with a direct link to VUG's Partner Product
marketing site; and
6.2 ASSETS. Subject to any conditions or restrictions in any
applicable Third Party License and the cooperation of any applicable Third Party
Licensor, Interplay shall provide assets, such as product information, screen
shots, company/employee bios, etc. as reasonably requested by VUG, for use by
VUG in support of VUG's sales, marketing and public relations efforts related to
the Partner Products, no later than *** days after VUG's request. In the event
that Interplay does not disclose any such conditions or restrictions on or prior
to the Three Month Evaluation, then VUG shall be entitled to deduct any actual
out-of-pocket costs and/or expenses incurred by VUG due to Interplay's failure
to disclose such conditions or restrictions from the Interplay Proceeds
otherwise payable to Interplay with respect to such Partner Product.
6.3 CONSUMER/TRADE SHOWS. For consumer/trade shows at which VUG
decides to maintain a display booth, VUG shall so notify Interplay promptly
after VUG has made such decision. In the event that Interplay thereafter gives
VUG a timely written request (in no event shall Interplay have less than ***
days after receipt of VUG's notice in which to reply, unless VUG's initial
decision is made within ***days of the scheduled consumer/trade show) to display
the Partner Products at VUG's display booth, VUG will, at its cost, provide a
reasonable amount of space in its booth for Interplay to display and promote the
Partner Products. All travel, accommodation, equipment, and other expenses
incurred by Interplay will be at Interplay's sole expense. In the event
Interplay does not desire to personally display the Partner Products at the VUG
display booth, VUG shall display and promote the Partner Products as VUG deems
appropriate (but consistent with its handling of VUG-published products of like
sales potential and demographic target) on a non-dedicated space basis at VUG's
expense.
7. PARTNER PRODUCT TESTING. Interplay shall use all commercially
reasonable efforts to ensure that each PC Partner Product runs in the various
hardware and software configurations in which the Partner Product is designed to
run, and with all peripherals with which the PC Partner Product is designed to
work, in a manner that is consistent with: (a) the Partner Product Requirements
Document, (b) the Partner Product Concept and Description Document, and (c) the
Partner Product's documentation prepared by Interplay. ***.
8. INSURANCE AND SECURITY.
8.1 LIABILITY INSURANCE. During the Term, Interplay and VUG each
shall at all times maintain at its own cost at least *** Dollars ($***) of
general liability insurance coverage
*** Terms represented by this symbol are considered confidential. These
confidential terms have been omitted pursuant to a Confidential Treatment
Request filed with the Securities and Exchange Commission (`SEC") and have been
filed separately with the SEC.
Page 11
available to cover claims against the Partner Products. Each party shall furnish
to the other certificates and/or other reliable information evidencing such
insurance coverage.
8.2 SECURITY INTEREST. Interplay hereby assigns, pledges and
grants to VUG, and VUG hereby accepts as of the Effective Date of this
Agreement, as security for the full performance by Interplay of its obligations
under this Agreement, a lien upon and security interest in all of Interplay's
right, title and interest in and to, but only with respect to all Partner
Products delivered to VUG by Interplay under this Agreement, including, without
limitation, all attendant rights growing out of any development agreements of
Interplay with third parties in respect of all Partner Product(s) delivered to
VUG by Interplay under this Agreement, and any and all rights to receive payment
(including all Minimum Guarantees) under the Agreement with respect to such
delivered Partner Product(s); provided, however, that VUG acknowledges and
agrees that such security interest shall only be in an amount equal to all of
VUG's actual unrecouped expenditures and unrecouped Minimum Guarantees
(including Initial Minimum Guarantees and Secondary Minimum Guarantees) owed to
VUG solely with respect to Partner Product(s), if any, to which VUG loses its
rights to distribute hereunder in accordance with SECTIONS 12.4(B) below.
Interplay shall do what is reasonably necessary to effectuate the foregoing and
ensure that VUG's security interest is properly perfected. In any event,
Interplay shall and does hereby provide VUG with a limited power of attorney in
order to effectuate and perfect the interests granted to VUG herein. VUG
acknowledges and agrees that in the event Interplay desires to obtain
third-party financing in order to sustain/support its business operations, and
such third-party financier requires VUG to subordinate its security interest
hereunder, VUG shall agree to subordinate its security interest to such
third-party's security interest.
8.3 NO INTENTION TO CREATE A SINGLE REMEDY. The parties agree that
VUG and Interplay may exercise any or all of their available remedies at law, in
equity or pursuant to this Agreement, and that except as otherwise expressly
limited by this Agreement, under no circumstance shall VUG and Interplay be
limited to any single remedy available to it.
9. ANTI-PIRACY EFFORTS. Interplay and VUG shall cooperate in all
commercially reasonable ways in anti-piracy and anti-counterfeiting efforts with
respect to the Partner Products and all intellectual property associated
therewith. Immediately upon discovery of any third-party infringement of such
intellectual property, the discovering party shall notify the other party of
such infringement, and the parties shall cooperate in prosecuting any action to
stop or otherwise mitigate the infringement.
Interplay agrees to cooperate with VUG's anti-piracy and anti-counterfeiting
efforts by: (a) using good faith efforts to obtain intellectual property
registrations to the intellectual property rights owned by Interplay and
relating to the Partner Products, as requested by VUG , (b) providing to VUG the
name of a designated officer of Interplay who shall serve as Interplay's primary
point of contact for cooperating with VUG in its anti-piracy efforts; and (c)
causing such officer of Interplay to execute such additional documents as may be
reasonably requested by VUG from time to time in connection with VUG's
anti-piracy efforts with respect to the Partner Products.
*** Terms represented by this symbol are considered confidential. These
confidential terms have been omitted pursuant to a Confidential Treatment
Request filed with the Securities and Exchange Commission (`SEC") and have been
filed separately with the SEC.
Page 12
10. PACKAGING, MARKETING MATERIALS AND LOGOS.
10.1 PRODUCTION OF SALES AND MARKETING MATERIALS. VUG shall be
responsible, at its sole cost and expense, for the production of all sales and
marketing materials and shall use commercially reasonable good faith efforts to
produce such materials of a quality consistent with similar products published
by VUG. Notwithstanding the foregoing, Interplay shall aid, assist and provide
VUG with any necessary documentation and information reasonably needed for VUG
to develop such materials, as set forth in SECTION 6.
10.2 PLACEMENT OF PROPER LABELS.
(a) COPYRIGHT AND TRADEMARK NOTICE. VUG agrees that it
shall cause to appear on each Partner Product unit label and the Partner Product
packaging, co-op advertising slicks, sell-sheets, and other sales and marketing
materials, the appropriate copyright and trademark notice provided to VUG by
Interplay (which notices shall contain applicable VUG references, subject to
VUG's reasonable approval) . In the event, because of the size of VUG's
marketing materials, VUG requests an abbreviated notice on such marketing
materials (excluding, however, the Partner Product unit label and packaging, for
which there shall be no such abbreviation), Interplay shall reasonably approve
such request. Interplay shall further provide VUG with any required Third Party
Licensor credits/artwork to be included with respect to Partner Product label,
packaging and marketing materials.
(b) ESRB LABELS. Interplay shall have the sole right and
responsibility to register the Partner Product(s) with the Entertainment
Software Rating Board ("ESRB"), and Interplay will provide VUG with a copy of
the ESRB's final rating determinations. VUG shall be required to place the
appropriate ESRB rating on all packaging, marketing and any other materials for
the Partner Product(s) as recommended and/or required by the ESRB.
Notwithstanding the foregoing, VUG shall assist Interplay in the registration
process to the extent reasonably requested by Interplay.
10.3 PLACEMENT OF VUG LOGO(S). Unless otherwise prohibited or
limited by the applicable Game Hardware Platform Licensor or pre-existing rights
of any applicable Third Party Licensor, Interplay acknowledges and agrees that
in its role as distributor of the Partner Products, VUG (or any VUG Affiliate,
in VUG's discretion) may include its name and logo (or such name and logo as
reasonably indicated by VUG which is intended to inform customers that VUG is
the distributor of the Partner Products) (i) on the back of the outside
packaging of the Partner Products and (ii) on all Partner Product marketing
materials, in a form and manner reasonably determined by VUG; provided, however
that such VUG name and logo (i) do not obscure the title of the Partner Product,
or Interplay's or its Third Party Licensors' names or logos, and (ii) are
reasonable in size compared to the size of the packaging, and, in any case,
appear less prominently than Interplay's and/or any required Third Party
Licensors' name or logo. VUG will also be entitled to include the URL of VUG's
online store and web site on the Partner Product packaging and/or marketing
materials.
10.4 WARRANTIES. VUG will distribute the Partner Products and
manual (and any other Partner Product documentation) with warranties and
disclaimers intact as provided by Interplay. VUG will not alter, erase, deface
or overprint any notice on any item provided by Interplay.
*** Terms represented by this symbol are considered confidential. These
confidential terms have been omitted pursuant to a Confidential Treatment
Request filed with the Securities and Exchange Commission (`SEC") and have been
filed separately with the SEC.
Page 13
10.5 INTERPLAY APPROVALS. Notwithstanding anything to the contrary
in this Agreement, Interplay (and, as applicable, its Third Party Licensors in
accordance with the terms of their respective Third Party Licenses) shall have
the right to review and approve all final Partner Product labels, packaging,
documentation, sales and marketing materials with respect to all trademark,
copyright, ESRB and other credits and notices, and all warranties and
disclaimers.
11. PRICE, PAYMENTS, ROYALTY STATEMENTS AND RISK OF LOSS/BAD DEBT.
11.1 INTERPLAY PROCEEDS AND MINIMUM GUARANTEES. As consideration
for the grant of License and the further obligations of Interplay as described
hereunder, VUG shall pay Interplay the Interplay Proceeds and Minimum Guarantees
defined in EXHIBIT A.
11.2 CURRENCY. All payments rendered hereunder by VUG to Interplay
shall be in United States currency only, and VUG payments shall be made by wire
transfer to Interplay's account.
11.3 NOT-FOR-RESALE COPIES OF THE PARTNER PRODUCT(S).
Notwithstanding anything to the contrary, VUG may manufacture and distribute a
reasonable number of not-for-resale copies of the Partner Product(s) (not to
exceed *** units per SKU without Interplay's advance approval, not to be
unreasonably withheld) for promotional purposes only at VUG's sole expense but
with no royalty payment obligation whatsoever to Interplay resulting from the
manufacture or distribution of such units. Interplay may reasonably request up
to *** copies of each Partner Product for promotional purposes free of charge
and on a royalty-free basis from VUG. In the event that Interplay reasonably
requests more than *** copies of such Partner Product, then Partner shall pay
VUG's actual cost of goods for such units beyond the initial *** units. Such
excess units shall also be on a royalty-free basis.
11.4 PAYMENTS AND STATEMENTS. VUG shall account to Interplay with
regard to the distribution of the Partner Product(s) within *** days following
the conclusion of each VUG accounting month *** hereunder. Each such accounting
("STATEMENT") shall be in writing and substantially in the form of the statement
attached hereto in EXHIBIT E, and shall contain the appropriate calculations
relating to the computation of Interplay Proceeds under this Agreement. VUG
agrees to include in such Statements any/all information (including COGS, and
advertising/marketing expenses) which may be necessary for Interplay to properly
calculate royalties owed by Interplay to its Third Party Licensors and/or
developers. Subject to VUG's recoupment of all Minimum Guarantees (as provided
in SECTION 1.3 of EXHIBIT A hereto), any Interplay Proceeds owed for the
corresponding Statement period shall be remitted and paid to Interplay by wire
transfer on or before the date the Statement is due. VUG agrees to provide
Interplay at least ***-days advance notice of any change in its accounting
month.
11.5 BOOKS OF ACCOUNT AND AUDITS. VUG shall keep books of account
relating to this Agreement and the licensing and distribution of the Partner
Product(s) on the same basis and in the same manner and for the same periods as
such records are customarily kept by VUG and reasonably sufficient for Interplay
to verify VUG's Statements and the Interplay Proceeds due hereunder. Interplay
may, upon *** business days' prior written notice to VUG, audit such records, at
VUG's offices and at Interplay's expense, with respect to such period as
Interplay specifies in its written notice (the "PERIOD"), in order to verify the
accuracy of the applicable Statement(s) rendered hereunder for such Period. Any
such audit *** shall take place only
*** Terms represented by this symbol are considered confidential. These
confidential terms have been omitted pursuant to a Confidential Treatment
Request filed with the Securities and Exchange Commission (`SEC") and have been
filed separately with the SEC.
Page 14
during reasonable business hours and in a manner so as not to unreasonably
interfere with VUG's normal business activities. In that regard, ***. In no
event (unless unreasonable delay is caused by VUG or its representatives) shall
any audit continue on-site at VUG's offices for longer than *** consecutive
business days nor shall such audit continue for more than *** days in the
aggregate. Audits shall not be made hereunder more frequently than *** per VUG
fiscal year and with a minimum of *** months between each audit, nor shall the
records supporting any Statement be audited more than ***. Except to the extent
necessary to enforce Interplay's rights hereunder, Interplay and its auditor
shall keep all of the information contained in VUG's books and records
confidential, shall not use such information for any purpose except verifying
the accuracy of the Statements, and shall not reveal such information to any
person other than employees, agents and/or representatives of Interplay or its
auditor who need to know such information in order for Interplay to verify the
accuracy of the Statements and who have agreed to keep such information
confidential in accordance herewith. Therefore, VUG may require Interplay's
auditor to execute a reasonable non-disclosure agreement before permitting such
auditor access to VUG's records. Interplay shall furnish VUG with a copy of
Interplay's auditor's report within *** days after the completion of such
report. Within *** business days following VUG's receipt of the auditor's
report, VUG shall promptly pay to Interplay any underpayment of Interplay
Proceeds previously payable under this Agreement, and Interplay shall promptly
pay to VUG any overpayment of Interplay Proceeds previously paid to Interplay
under this Agreement. In addition, VUG shall reimburse Interplay for all
reasonable documented costs incurred by Interplay to its auditor to conduct such
examination should an underpayment by VUG for the Period exceed both of the
following thresholds: (i) *** and (ii) ***.Furthermore, and ***, Interplay shall
be entitled to conduct an additional follow-up audit within the *** month period
following the first audit, without otherwise affecting Interplay's audit rights
for the fiscal year in which the follow-up audit is conducted. Notwithstanding
anything contained herein to the contrary, the audit rights described in this
SECTION 11.5 shall expire *** following the expiration or termination of this
Agreement; except that in the event of any federal or state tax audit of
Interplay within the *** following the expiration or termination of this
Agreement, Interplay shall be entitled to conduct an audit of VUG only if and to
the extent necessary for purposes of such audit.
11.6 TITLE AND RISK OF LOSS. As between VUG and Interplay, and
subject to Interplay's and any Third Party Licensor's ownership of the IP
Rights, title to all finished goods Partner Product units (except those
purchased and received by Interplay pursuant to SECTION 2.7 above), and all risk
of loss and damage thereto, shall at all times remain with VUG.
11.7 ***. ***, and, in accordance with its customary business
practices and in its best business judgment, VUG may, following delivery of
notice thereof to Interplay in each instance, ***. Notwithstanding the
foregoing, at the time of the Initial Shipment of each Partner Product, in order
to convey to consumers the high quality of such Partner Product, VUG will ***
interactive entertainment software products of comparable quality and sales
potential.
11.8 COLLECTIONS AND BAD DEBT. By way of clarification, VUG will be
responsible for all risk of collection of amounts owed by VUG's customers as a
result of VUG's activities under this Agreement, and VUG will not deduct any bad
debt expenses or associated write-offs incurred as a result of its activities
under this Agreement. Similarly, VUG will be entitled to retain 100% of any
early payment discounts allowed by VUG's subcontractors as a result of
*** Terms represented by this symbol are considered confidential. These
confidential terms have been omitted pursuant to a Confidential Treatment
Request filed with the Securities and Exchange Commission (`SEC") and have been
filed separately with the SEC.
Page 15
VUG's activities under this Agreement, and Interplay will not be entitled to
share in such discounts granted to VUG.
11.9 REPORTS AND FORECASTS. To the extent, and with the frequency,
that VUG routinely compiles or receives sales information reports with respect
to VUG-published products on an account-by-account basis, VUG will provide
Interplay with such reports, to the same extent and frequency, with respect to
each Partner Product. Such reports will provide such information as VUG's
current inventory of each Partner Product, a summary of all unit sales of each
Partner Product sold during the prior period, and whatever competitive product
and market analysis information as may be available to VUG and which VUG may
disclose without breaching any confidentiality obligation to any third party.
VUG will provide Interplay with weekly sell-through and inventory reports, to
the extent that such reports are routinely compiled by VUG for VUG-published
products. Any reports provided to Interplay hereunder shall be deemed to be the
property of Interplay and Confidential Information of Interplay (as provided in
SECTION 15.1 below); provided, however, that Interplay agrees to abide by any
confidentiality restrictions imposed on VUG by third parties furnishing any
information in such reports, when such restrictions have been communicated to
Interplay. VUG will also provide Interplay on a monthly basis with a three-month
rolling forecast of VUG's sales of Partner Products.
12. TERM AND TERMINATION.
12.1 TERM. This Agreement shall become effective on the Effective
Date, and shall expire three (3) years thereafter. Notwithstanding the
foregoing, with respect to each particular Partner Product, this Agreement shall
continue in full force for a period of two (2) years following VUG's first
commercial release of the Partner Product, regardless of whether such two (2)
year period goes beyond the three (3) year period stated herein. Collectively,
such three (3) year period plus the balance of any applicable two (2) year
period extending beyond such three (3) year period shall be collectively
referred to as the "TERM" with respect to each particular Partner Product.
12.2 TERMINATION BY EITHER PARTY FOR MATERIAL BREACH. Unless
otherwise specified in this Agreement, this Agreement may be terminated by a
non-breaching party upon ***business days written notice to the breaching party
of the occurrence of a material breach of any of the material terms, covenants,
representations and/or warranties of this Agreement which breach is not remedied
by the breaching party to the non-breaching party's reasonable satisfaction
within such *** business day notice period; provided, however, that except with
respect to a payment breach hereunder, if the nature of the breach is such that
it cannot reasonably be cured within such ***-business day period, the breaching
party shall have up to *** days to cure such breach (a "DEFAULT"). No such
termination shall be effective unless and until the party electing to terminate
delivers a notice of termination following expiration of the *** business day
(or otherwise herein specified) cure period, provided the Defaulting party does
not cure such Default prior to receipt of such termination notice. A material
breach under this SECTION 12.2 shall include a party's instituting or having
instituted against it any proceeding in bankruptcy or in reorganization or for
the appointment of a receiver or trustee or any other proceeding under any law
for the relief of debtors or if Interplay shall make an assignment for the
benefit of creditors, provided, however, that such proceeding is not dismissed
within *** days of its being filed.
*** Terms represented by this symbol are considered confidential. These
confidential terms have been omitted pursuant to a Confidential Treatment
Request filed with the Securities and Exchange Commission (`SEC") and have been
filed separately with the SEC.
Page 16
12.3 TERMINATION OF AGREEMENT OR PARTNER PRODUCT. Upon any Default,
and unless otherwise expressly provided in this Agreement, the non-Defaulting
party may, in its sole discretion, terminate this Agreement (i) in its entirety,
or (ii) with respect only to the particular Partner Product(s) associated with
the Default.
12.4 EFFECTS OF TERMINATION OR EXPIRATION. Upon any termination or
expiration of this Agreement in its entirety or with respect to a particular
Partner Product:
(a) CONTINUING OBLIGATION TO PAY AMOUNTS DUE. Each
party's obligation to pay the other party any amounts due hereunder, other than
then unpaid Minimum Guarantees with respect to the terminated Partner
Product(s), shall continue (e.g., VUG shall continue to timely pay Interplay all
Minimum Guarantees and Interplay Proceeds due with respect to any/all Partner
Product(s) not so terminated, and VUG shall continue to pay Interplay all
Interplay Proceeds due during any Sell-Off Period with respect to the terminated
Partner Product(s)).
(b) REFUND OF UNRECOUPED MINIMUM GUARANTEES. In the event
this Agreement (or a particular Partner Product) is terminated due to
Interplay's Default or rejected by Interplay pursuant to the U.S. Bankruptcy
Code, in addition to any rights and remedies available to VUG, Interplay shall
refund to VUG any and all unrecouped Minimum Guarantees with respect to such
terminated Partner Product(s), provided that VUG is unable to further exploit
the particular Partner Product for which the Minimum Guarantee was paid;
(c) SELL OFF PERIOD. Subject to SECTION 20.1, herein,
upon termination or expiration of this Agreement (or a particular Partner
Product), VUG and VUG's customers shall retain the non-exclusive right, subject
to all the other terms and conditions hereof, to sell off their remaining
inventories of the Partner Product(s) for a period of one hundred and eighty
(180) days following the expiration or termination of this Agreement (or the
particular Partner Product) (the "SELL-OFF PERIOD"); provided, however, that
upon termination of this Agreement (or a particular Partner Product) by
Interplay for a VUG Default, (i) Interplay shall have the right at any time
during the Sell-Off Period to purchase VUG's existing inventory from VUG at
VUG's actual out-of-pocket cost of goods therefor, which purchase may be of some
or all of such units, in Interplay's sole discretion.
(d) CANCELLATION OR LOSS OF RIGHTS. Subject to VUG's
rights under SECTION 18.3 below, in the event that Interplay cancels and/or
loses the right to grant to VUG the rights to distribute and sell any Partner
Product, such Partner Product shall be deleted from coverage under this
Agreement and VUG's sole remedy shall be to withhold from the Interplay Proceeds
for any Partner Product VUG's actual unrecouped expenditures, including any
unrecouped Minimum Guarantees, with respect to such cancelled and/or lost
Partner Product(s). Solely by way of clarification, nothing contained herein or
in this Agreement shall be deemed to give Interplay the unilateral right to
cancel VUG's rights granted herein with respect to any Partner Product that has
been commercially released by VUG. Notwithstanding the foregoing, VUG
acknowledges and agrees that Interplay may be forced to cancel VUG's rights due
to obligations under various Third Party Licenses. Furthermore, VUG acknowledges
and agrees that Interplay (in its own discretion) may cancel any Partner Product
in development by Interplay prior to delivery to VUG of an Approved Gold Master.
However, in such event, Interplay acknowledges and agrees that VUG shall be
entitled to withhold from the Interplay Proceeds with respect to any other
Partner Products an amount equal to VUG's actual, out of pocket expenditures
with
*** Terms represented by this symbol are considered confidential. These
confidential terms have been omitted pursuant to a Confidential Treatment
Request filed with the Securities and Exchange Commission (`SEC") and have been
filed separately with the SEC.
Page 17
respect to such cancelled Partner Product. Interplay expressly acknowledges and
agrees that with respect to any Partner Product cancelled by Interplay, as
contemplated in this SECTION 12.4(d), Interplay shall not publish or
commercially release, or authorize any third party to publish or commercially
release such cancelled Partner Product during the Term of this Agreement;
provided, however, that with respect to a Partner Product cancelled by Interplay
during development, and notwithstanding anything to the contrary herein,
Interplay shall not be prohibited from selling its ownership rights in the
cancelled Partner Product to a third party.
12.5 INITIAL SHIPMENT MINIMUM UNIT REQUIREMENT. Notwithstanding
anything to the contrary in this Agreement, with respect to each Partner Product
specifically identified in EXHIBIT B attached hereto, if VUG receives an
Approved Gold Master from Interplay, but projects (in its Final Gross Sales
Projection) an Initial Shipment of less than ***units of that Partner Product,
VUG shall notify Interplay of this determination in writing along with delivery
to Interplay of its Final Gross Sales Projection (such notice, a "DOUBTFUL
PRODUCT NOTICE"). Within *** of receiving a Doubtful Product Notice, Interplay
shall have the right, in its sole discretion, to delete such Partner Product
from this Agreement (as further described below) by giving VUG written notice of
deletion (a "DELETION NOTICE") within such *** following Interplay's receipt of
the corresponding Doubtful Product Notice. For each Partner Product so deleted,
Interplay's sole monetary obligation shall be to reimburse VUG for its actual
unrecouped expenditures with respect to such deleted Partner Product incurred by
or on behalf of VUG through the date of deletion, such unrecouped expenditures
to be payable to VUG within *** following VUG's receipt of the corresponding
Deletion Notice. Further, if Interplay so deletes *** Partner Products within
any consecutive *** period, then Interplay shall have the right, in its sole
discretion, to terminate this Agreement in its entirety by, delivering to VUG
along with Interplay's third or any subsequent Deletion Notice within any
consecutive *** period, written notice of such termination (a "TERMINATION
NOTICE"). *** In the event Interplay elects to so terminate the Agreement,
Interplay's sole monetary obligation to VUG shall be to reimburse VUG for its
actual unrecouped expenditures incurred by or on behalf of VUG through the date
of termination with respect to any then-unreleased Partner Products. Deleting a
Partner Product from this Agreement means that VUG shall no longer have the
right to reproduce, manufacture, market and promote, distribute copies of,
and/or sell that particular deleted Partner Product. For purposes of
clarification, Interplay's deletion rights under this SECTION 12.5 shall only
apply to Partner Product titles specifically identified in EXHIBIT B attached
hereto; provided, however, that any termination by Interplay of the Agreement in
its entirety pursuant to a Termination Notice delivered in accordance with this
SECTION 12.5 shall apply to all Partner Products under the Agreement.
13. INTERPLAY TRADEMARKS AND COPYRIGHTS. VUG acknowledges that other than
the licenses and rights set forth in this Agreement, as between VUG and
Interplay, Interplay retains all right, title and interest in and to the Partner
Product(s), and all intellectual property rights embodied therein (other than
VUG logos, copyrights, trademarks and intellectual property that are included in
the Partner Product packaging and/or manual), including all rights to the
titles, names, copyrights, trademarks, trade names, trade secrets, logos,
characters, artwork and code (collectively, the "IP RIGHTS") and agrees that
other than as expressly permitted by this Agreement VUG shall not at any time
during or after the Term of this Agreement assert or claim any interest in or do
anything that may adversely affect the validity or enforceability of any IP
Rights belonging to or licensed to Interplay with respect to the Partner
Products or which
*** Terms represented by this symbol are considered confidential. These
confidential terms have been omitted pursuant to a Confidential Treatment
Request filed with the Securities and Exchange Commission (`SEC") and have been
filed separately with the SEC.
Page 18
Interplay otherwise has provided to VUG pursuant to this Agreement. VUG shall
not exploit the intellectual property contained in the Partner Product(s) except
as specifically authorized by this Agreement, and VUG agrees that it will
neither apply for nor seek to obtain trademark registration for the Partner
Products. If VUG may be entitled to claim any ownership interest in the Partner
Products or any IP Rights associated therewith under any applicable law, then
VUG hereby assigns and agrees to assign exclusively to Interplay (or any
designee of Interplay), any and all of VUG's right, title and interest therein.
Any assignment of copyright hereunder includes all rights of paternity,
integrity, disclosure and withdrawal and any other rights that may be known as
or referred to as "moral rights" (collectively "MORAL RIGHTS"). To the extent
such Moral Rights cannot be assigned under applicable law and to the extent the
following is allowed by the laws in the various countries where Moral Rights
exist, VUG hereby waives such Moral Rights and consents to any action of
Interplay (or its designee) that would violate such Moral Rights in the absence
of such consent. Notwithstanding the foregoing, VUG shall have title to all
inventory of Partner Product units and VUG shall retain title and intellectual
property rights to trademarks and trade names of VUG that are used in connection
with the packaging, marketing, promotion and distribution of the Partner
Products.
14. SUPPORT. Interplay shall be responsible for rendering technical support
to End-Users regarding the Partner Product(s). Such support shall be equal to
efforts employed by Interplay to support other comparable Interplay products
distributed by third parties. The documentation for each Partner Product will
specify Interplay's customer support phone number and/or Internet site address
for technical support inquiries.
15. CONFIDENTIALITY.
15.1 CONFIDENTIAL INFORMATION. In the course of this Agreement, it
is anticipated that one party (the "RECEIVING PARTY") shall obtain confidential
or proprietary information (the "CONFIDENTIAL INFORMATION") belonging to the
other party (the "DISCLOSING PARTY"). The Receiving Party shall, in accordance
with SECTION 15.2 below, keep confidential and, except for the purpose of
fulfilling its obligations under this Agreement, refrain from using this
Confidential Information and any other information which the Receiving Party may
acquire with respect to the Disclosing Party's business, including, but not
limited to, information developed and relating to new products, pricing,
know-how, trade secrets, processes, and practices, design elements, character
profiles, unpublished copyrighted material, release dates, marketing, sales and
promotional strategies, computer code, data, manuals, specifications, processes,
methods, and the terms and conditions of this Agreement, unless and until such
Confidential Information: (i) becomes generally known or available by
publication, commercial use or otherwise through no fault of the Receiving
Party; (ii) is known by Receiving Party at the time of disclosure without
violation of any confidentiality restriction and without any restriction on
Receiving Party's further use or disclosure; (iii) is independently developed by
Receiving Party with reasonable documentation evidencing such development; or
(iv) is required to be disclosed by administrative or judicial/legal action,
provided that the Receiving Party, immediately after receiving notice of such
action, notifies Disclosing Party of such action to give Disclosing Party the
opportunity to seek any other legal remedies to maintain such confidential
information in confidence. Receiving Party shall not disclose to others, without
Disclosing Party's consent, the subject of this relationship without first
providing Disclosing Party with the opportunity to review and approve the
contemplated publication. This undertaking to restrain from use and keep
information confidential shall survive the expiration or termination of this
Agreement.
*** Terms represented by this symbol are considered confidential. These
confidential terms have been omitted pursuant to a Confidential Treatment
Request filed with the Securities and Exchange Commission (`SEC") and have been
filed separately with the SEC.
Page 19
Receiving Party shall require each of its employees performing services relating
to this Agreement to execute a similar confidentiality agreement. At the earlier
of the expiration or termination of this Agreement, Receiving Party shall cease
all further use of the Disclosing Party's Confidential Information, and shall,
at the Disclosing Party's option, promptly either return to Disclosing Party or
destroy all Confidential Information that is in tangible form, including all
drawings, specifications, manuals and other printed or reproduced material
(including information stored on machine readable media) provided by Disclosing
Party.
15.2 DUTY TO MAINTAIN CONFIDENTIALITY. Except as expressly approved
by the Disclosing Party, the Receiving Party agrees: (i) to hold the Disclosing
Party's Confidential Information in strict confidence as a fiduciary, and to
take all reasonable precautions to protect such Confidential Information; (ii)
not to divulge any such Confidential Information or any information derived
therefrom to any third person, other than its directors, officers, employees,
affiliates, attorneys, auditors, financial advisors, consultants, or prospective
investors or lenders, and, in the case of VUG, permitted third-party
subcontractors (collectively, the "REPRESENTATIVES"); provided, that in each
case such Representative shall be given access to the Confidential Information
only on a "need-to-know" basis and shall expressly agree in writing to retain
the Confidential Information in strictest of confidence; (iii) not to make any
use whatsoever at any time of such Disclosing Party's Confidential Information
for the benefit of any person other than the Disclosing Party or as expressly
contemplated by the Disclosing Party, and (iv) not to copy, reproduce or
directly or indirectly reverse engineer all or any part of such Disclosing
Party's Confidential Information. Notwithstanding anything to the contrary
herein, nothing in this SECTION 15 shall (i) prevent either party from making
any disclosure required by a public stock exchange, the Securities and Exchange
Commission or similar governmental or regulatory body, or (ii) prevent Interplay
from disclosing to its Third Party Licensors such information (e.g., sales
figures, COGS and marketing expenses incurred by VUG) necessary for Interplay to
satisfy its contractual reporting obligations and to remit royalties due its
Third Party Licensors with respect to the Partner Products.
16. COMPETING PRODUCTS. Interplay (subject to VUG's rights under SECTION 5
above) and VUG each understands and agrees that the other may enter into similar
agreements with third parties, including agreements relating to products that
may be deemed competing with the Partner Products. Interplay and VUG each
represents and warrants to the other that no such agreements shall interfere
with or cause such party to violate any of its other representations, warranties
and/or covenants made under this Agreement, and VUG represents and warrants to
Interplay that VUG shall throughout the Term and any Sell-Off Period treat the
Partner Products on at least an equal basis with such competing products.
17. LIMITATION OF LIABILITY. THE LIABILITY OF EITHER PARTY, IF ANY, FOR
DAMAGES FOR ANY CLAIM OF ANY KIND WHATSOEVER AND REGARDLESS OF THE LEGAL THEORY,
SHALL NOT INCLUDE COMPENSATION, REIMBURSEMENT OR DAMAGES ON ACCOUNT OF THE LOSS
OF PRESENT OR PROSPECTIVE PROFITS, EXPENDITURES, INVESTMENTS OR COMMITMENTS,
WHETHER MADE IN ESTABLISHMENT, DEVELOPMENT OR MAINTENANCE OF REPUTATION OR
GOODWILL OR FOR ANY OTHER REASON WHATSOEVER. IN NO EVENT SHALL EITHER PARTY BE
LIABLE FOR SPECIAL, INCIDENTAL, OR CONSEQUENTIAL
*** Terms represented by this symbol are considered confidential. These
confidential terms have been omitted pursuant to a Confidential Treatment
Request filed with the Securities and Exchange Commission (`SEC") and have been
filed separately with the SEC.
Page 20
DAMAGES, EVEN IF APPRISED OF THE LIKELIHOOD OF SUCH DAMAGES OCCURRING.
18. REPRESENTATIONS, WARRANTIES AND COVENANTS.
18.1 REPRESENTATIONS AND WARRANTIES BY VUG. VUG warrants and
represents that: (a) VUG (and the officers executing on its behalf) has full
right and power to enter into this Agreement; (b) neither the execution and the
delivery of this Agreement, nor the consummation of the transactions
contemplated hereby, will violate any agreement VUG has with any third party or
any constitution, statute, regulation, rule, injunction, judgment, order, decree
ruling, law, charge or other restriction of any government, governmental agency,
or court to which VUG is subject or any provision of its charter or bylaws; (c)
any and all marketing materials, sales and packaging of the Partner Product(s)
shall not contain any libelous or otherwise unlawful material or violate or
infringe upon any personal or proprietary right of any person or entity,
including any copyright, patent, trademark or other intellectual property rights
(and VUG hereby acknowledges that no approval by Interplay of the product
packaging and related marketing materials shall constitute an approval of any
such infringement); (d) VUG shall not distribute Partner Product(s) other than
as specifically provided herein; (e) VUG shall comply with all applicable laws,
statutes, regulations and rules related to its performance hereunder (including
product safety and advertising laws); (f) so long as this Agreement remains in
effect, and subject to SECTION 16 above, VUG shall not commit any act or enter
into any agreement with any third party which is inconsistent or in conflict
with this Agreement; and (g) with the exception of VUG's own security interest
pursuant to SECTION 8.2 above and VUG's inventory of the Partner Products, VUG
will not cause or allow any liens or encumbrances to be placed against, nor
grant any security interest in, the Partner Products.
18.2 REPRESENTATIONS AND WARRANTIES BY INTERPLAY. Interplay
warrants and represents that: (a) Subject to SECTION 20.13, Interplay (and the
officers executing on its behalf) has full right and power to enter into this
Agreement; (b) neither the execution and the delivery of this Agreement, nor the
consummation of the transactions contemplated hereby, will violate any agreement
Interplay has with any third party or any constitution, statute, regulation,
rule, injunction, judgment, order, decree ruling, law, charge or other
restriction of any government, governmental agency, or court to which Interplay
is subject or any provision of its charter or bylaws; (c) so long as this
Agreement remains in effect, and subject to SECTION 16 above, Interplay shall
not commit any act or enter into any agreement with any third party which is
inconsistent or in conflict with this Agreement; (c) the Partner Product(s) and
any and all other materials delivered by Interplay to VUG shall be original or
under a valid license to Interplay with right to provide the exclusive License
as set forth herein to VUG; (d) neither the execution and performance of this
Agreement by Interplay nor the Interplay transactions contemplated herein,
infringes, misuses, misappropriates or conflicts with the rights, including
copyright, patent and other intellectual property rights or contract rights,
licensed to or from, or owned by, a party other than Interplay; (e) the Partner
Product(s) and other materials delivered by Interplay to VUG shall not contain
any libelous or otherwise unlawful material or violate any commercial rights to
one's name and likeness, or any privacy or personal rights of any third party;
and (f) Interplay shall comply with all applicable laws (including product
safety laws, but only with respect to the Partner Product game code and
associated gameplay), statutes, regulations and rules related to its performance
hereunder.
*** Terms represented by this symbol are considered confidential. These
confidential terms have been omitted pursuant to a Confidential Treatment
Request filed with the Securities and Exchange Commission (`SEC") and have been
filed separately with the SEC.
Page 21
18.3 ADDITIONAL COVENANTS BY INTERPLAY. Interplay represents and
warrants to VUG that it is capable of and intends to be the developer (whether
such development is done in-house or by Third Party Licensors or subcontractors)
of the Partner Product(s), and that Interplay is responsible for all obligations
attendant upon such role. Accordingly, and subject to the terms of this
Agreement:
(a) COVENANT TO COMPETENTLY COMPLETE AND DELIVER PARTNER
PRODUCT(S). Interplay covenants and agrees the Partner Product(s): (i) shall
upon completion be marketable and have been prepared and developed with
reasonable diligence and skill; (ii) shall upon completion be of high quality in
all material respects; (iii) shall upon completion, and in accordance with
SECTION 3 above, comply in all material respects to the Partner Product
Requirements Documents, the Partner Product Concept and Description Documents,
and other specifications and descriptions contained in the written materials
accompanying them that have been provided by Interplay; (iv) would not receive a
rating of "AO" if submitted to the Entertainment Software Rating Board for
evaluation and rating and (v) subject to SECTION 4.3 above, shall be delivered
in accordance with all milestones, schedules or timelines and that Interplay
shall immediately notify VUG in the event that Interplay has reason to believe
that any Partner Product is not likely not to be in compliance with all
schedules or timelines, or is not likely to be compliant with the agreed upon
specifications;
(b) BREACH OF THIRD PARTY AGREEMENTS. Interplay further
represents, covenants and agrees that it shall not become in default of, and
shall promptly provide VUG with written notice should Interplay discover that it
is or it anticipates or it has been noticed to be in breach or in default of,
any of its contracts, agreements or obligations to which its Partner Product
assets are bound or with any of its Third Party Licensors relating to the
licensing of any know-how, intellectual property, component, tool, software,
technology or documentation required to develop the Partner Product(s). In the
event Interplay becomes in default (beyond any applicable cure period) under any
such third party agreement (thereby breaching this representation, warranty and
covenent) and loses distribution rights to the applicable Partner Product as a
result thereof (thereby causing VUG to lose its rights to the Partner Product),
then VUG's sole remedy shall be to recover from Interplay an amount equal to
(and VUG shall have the option to withhold from all Interplay Proceeds otherwise
due to Interplay under this Agreement an amount equal to) VUG's actual
unrecouped expenditures and unrecouped Minimum Guarantees (including Initial
Minimum Guarantees and Secondary Minimum Guarantees) owed to VUG solely with
respect to such lost Partner Product; in no event, however, shall VUG have the
right to terminate this Agreement as a result of Interplay's breach of its
representation, warranty or covenant made under this SECTION 18.3(b). In the
event that Interplay, in its sole discretion, requests VUG to cure any such
breach or default of a third party agreement described in this SECTION 18.3(b),
and, in the event VUG, in its sole discretion and upon advance notification to
Interplay, thereafter agrees to attempt to cure such breach or default on behalf
of Interplay, then (i) any such attempt by VUG to cure such breach or default
shall not release Interplay from any liability to VUG under this Agreement, and
(ii) Interplay shall repay to VUG, within *** days following VUG's payment
thereof, VUG's costs and expenses related to the cure by VUG of such breach or
default in accordance with this SECTION 18.3(b), and in the event Interplay
fails to timely do so, VUG shall have the right to pursue collection of such
amount from Interplay (and VUG shall have the option to withhold from all
Interplay Proceeds otherwise due to Interplay
*** Terms represented by this symbol are considered confidential. These
confidential terms have been omitted pursuant to a Confidential Treatment
Request filed with the Securities and Exchange Commission (`SEC") and have been
filed separately with the SEC.
Page 22
under this Agreement an amount equal to VUG's costs and expenses related to the
cure by VUG of such breach or default).
18.4 LIMITATION. EXCEPT FOR ANY WARRANTIES EXPRESSLY PROVIDED IN
THIS AGREEMENT, THE WARRANTIES STATED IN THIS SECTION 18 ARE THE SOLE AND
EXCLUSIVE WARRANTIES OF THE PARTIES HERETO, AND EACH PARTY HEREBY DISCLAIMS ANY
OTHER WARRANTY, EXPRESS OR IMPLIED, INCLUDING, WITHOUT LIMITATION, ANY WARRANTY
OF MERCHANTABILITY, OR FITNESS FOR A PARTICULAR PURPOSE.
19. INDEMNIFICATION.
19.1 INDEMNITY. VUG and Interplay each shall defend, indemnify and
hold harmless the other, its parent, affiliated companies and partners and their
respective officers, directors, employees and agents from and against any and
all liabilities, damages costs and fees (including reasonable attorney's fees)
for any third party claims or actions arising out of or relating to any breach
of its representations, warranties and covenants made hereunder.
19.2 ENJOINED DISTRIBUTION. In the event that VUG is enjoined from
manufacturing and/or distributing any Partner Product(s) due to a claim for
which Interplay is obligated to indemnify VUG pursuant to this Section,
Interplay shall, at Interplay's option: (i) ***; (ii) ***; or (iii) ***; or (iv)
***.
19.3 INDEMNIFIED ACTIONS. If any action shall be brought against
one of the parties hereto in respect to which indemnity may be sought against
the other party (the "INDEMNIFYING PARTY") pursuant to SECTION 19.1, the
Indemnifying Party's obligation to provide such indemnification shall be
conditioned on prompt notice of such claim (including the nature of the claim
and the amount of damages and nature of other relief sought) being provided to
the Indemnifying Party by the party against which such action is brought (the
"INDEMNIFIED PARTY"). The Indemnified Party shall cooperate with the
Indemnifying Party in all reasonable respects in connection with the defense of
any such action at the expense of the Indemnifying Party. The Indemnifying Party
may, upon written notice to the Indemnified Party, undertake to conduct all
proceedings or negotiations in connection with the action, assume the defense
thereof, including settlement negotiations in connection with the action, and
shall be responsible for the costs of such defense, negotiations and
proceedings. The Indemnifying Party shall have sole control of the defense and
settlement of any claims for which it provides indemnification hereunder,
provided that the Indemnifying Party shall not enter into any settlement of such
claim without the prior approval of the Indemnified Party, which approval shall
not be unreasonably withheld. The Indemnified Party shall have the right to
retain separate counsel and participate in the defense of the action or claim at
its own expense. In the event that the Indemnifying Party refuses or does not
promptly agree to assume control of the defense and settlement of any claim for
which it must provide indemnification hereunder, then the Indemnified Party
shall have sole control of the defense and settlement of such claim, and shall
have the right to enter into any settlement of such claim without the prior
approval of the Indemnifying Party.
*** Terms represented by this symbol are considered confidential. These
confidential terms have been omitted pursuant to a Confidential Treatment
Request filed with the Securities and Exchange Commission (`SEC") and have been
filed separately with the SEC.
Page 23
20. GENERAL PROVISIONS.
20.1 ASSIGNMENT. This Agreement is personal to Interplay and VUG.
Neither Interplay nor VUG may assign its rights or obligations under this
Agreement, by operation of law or otherwise, without the express written consent
of the other, which shall not be unreasonably withheld. Notwithstanding the
foregoing, either party may transfer or assign its rights and obligations
hereunder to any person acquiring such party by merger or acquiring all or
substantially all of such party's assets, without requiring the consent of the
other party; provided, however, that in the event of any such transfer or
assignment, or in the event of any other change of control (i.e., a transfer of
a controlling interest of fifty percent (50%) or more of the voting securities
of) of a party hereto, either party may, in their sole discretion, terminate
this Agreement upon delivery of notice to the other party (a "MUTUALLY
TERMINABLE TRANSFER"). Notwithstanding the SECTION 12.4(c), both parties
acknowledge and agree that in the event that this Agreement is terminated within
the first 12-month period after the Effective Date pursuant to a Mutually
Terminable Transfer as provided in this SECTION 20.1, VUG shall be entitled to a
Sell-Off Period equal to three hundred and sixty-five (365) days. In all other
aspects, such Sell-Off Period will be governed by SECTION 12.4(c). Any attempted
assignment except as allowed in this paragraph shall be null and void. Subject
to the foregoing, this Agreement shall be binding upon and inure to the benefit
of the successors and assigns of the parties hereto.
20.2 DELEGATION OF DUTIES. Subject to SECTION 20.1, VUG may
delegate any or all of its duties to one or more of its VUG Affiliates or
sub-contractors; provided that in each case such VUG Affiliates and
sub-contractors shall be acting on VUG's behalf and VUG shall remain primarily
responsible for its duties delegated under this Agreement.
20.3 INDEPENDENT CONTRACTOR. Nothing herein contained shall be
deemed to establish or otherwise create a relationship of partnership or joint
venture between Interplay and VUG (and/or its sub-contractors); it is understood
that both parties are independent contractors who cannot and shall not be deemed
an agent of the other party for any purpose whatsoever, and neither party nor
any of its agents or employees shall have any right or authority to assume or
create obligations of any kind, whether express or implied, on behalf of the
other party.
20.4 GOVERNING LAW. This Agreement shall be construed in accordance
with the substantive law of the State of California without regard to its
conflicts of law principles. The parties agree that any disputes arising out of
this agreement shall be resolved in the state or federal courts located within
Los Angeles County and the parties expressly consent to the personal
jurisdiction thereof.
20.5 NOTICES. All notices required or permitted under this
Agreement shall be in writing, shall reference this Agreement and shall be
deemed given: (i) when sent by facsimile to the facsimile number set forth below
and confirmed by machine printed receipt with a copy of the notice sent by
registered or certified mail; (ii) five (5) working days after having been sent
by registered or certified mail, return receipt requested, postage prepaid; or
(iii) one (1) working day after deposit with a commercial overnight carrier,
with written verification of receipt. All communications shall be sent to the
address set forth below, or to such other address as may be designated by a
party by giving written notice to the other party pursuant to this SECTION 20.5:
*** Terms represented by this symbol are considered confidential. These
confidential terms have been omitted pursuant to a Confidential Treatment
Request filed with the Securities and Exchange Commission (`SEC") and have been
filed separately with the SEC.
Page 24
IF TO INTERPLAY: WITH A COPY TO:
Interplay Entertainment Corp. Interplay Entertainment Corp.
Attention: Chief Executive Officer Attention: Legal Dept.
16815 Xxx Xxxxxx Avenue 00000 Xxx Xxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxx 00000 Xxxxxx, Xxxxxxxxxx 00000
Telephone: (000) 000-0000 Telephone: (000) 000-0000
Facsimile: (000) 000-0000 Facsimile: (000) 000-0000
IF TO UNIVERSAL: WITH A COPY TO:
Vivendi Universal Games, Inc. Vivendi Universal Games, Inc.
Attention: Chief Operating Officer Attention: Senior Counsel
0000 Xxxxxx Xxxxx 0000 Xxxxxx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx, 00000 Xxx Xxxxxxx, Xxxxxxxxxx, 00000
Telephone: 000-000-0000 Telephone: 000-000-0000
Facsimile: 000-000-0000 Facsimile: 000-000-0000
20.6 SURVIVAL. The rights and obligations set forth in Sections 1,
11.5, 12, 13, 15, 17, 19, and 20 shall survive the termination or expiration of
this Agreement or any determination that this Agreement or any portion hereof or
exhibit hereto is void or voidable.
20.7 FORCE MAJEURE. Neither party shall be liable for any delay in
any of its obligations pursuant to this Agreement resulting from any cause
beyond its reasonable control or caused by acts of God, fire, sabotage,
terrorism, acts of civil or military authorities, priorities, fires, strikes,
floods, epidemics, governmental action, rules or regulations, war, riot, delays
in transportation or shortages.
20.8 WAIVER. No waiver of any default or breach of this Agreement
by either party shall be deemed a continuing waiver or a waiver of any other
breach or default, no matter how similar.
20.9 SEVERABILITY. If a provision herein contained shall be held by
any court of competent jurisdiction to be illegal, void or unenforceable, the
parties shall first request that such court "blue line" such provision to make
it enforceable and carry out the parties' intent. If such remedy is not
available, such provision shall be of no force or effect while such infirmity
shall exist, but such infirmity shall have no effect whatsoever upon the binding
force or effectiveness of any of the other provisions hereof, it being the
intention of the parties hereto that had they, or either of them, known of such
infirmity, they would have entered into a contract, each with the other,
containing all of the other provisions hereof. In the event the infirmed
provision causes the contract to fail of its essential purpose, then the entire
Agreement shall fail and become void.
20.10 PARAGRAPH HEADINGS; INTERPRETATION. The headings in this
Agreement are inserted for convenience only and are not deemed a part of this
Agreement and shall not be considered in interpreting this Agreement. The word
"include" or "including" used in this Agreement shall describe examples of the
antecedent clause, and shall not be construed to limit the scope of such clause.
Unless specifically stated otherwise, any reference to a particular period of
days herein shall be interpreted as reference to calendar days; provided,
however, that if such period would otherwise end on a Saturday, Sunday or
generally recognized U.S. public holiday, then the period shall be deemed to end
on the next business day. Whenever reference is made herein to a particular
Section of this Agreement, it shall mean and include all subsections and
subparts thereof.
*** Terms represented by this symbol are considered confidential. These
confidential terms have been omitted pursuant to a Confidential Treatment
Request filed with the Securities and Exchange Commission (`SEC") and have been
filed separately with the SEC.
Page 25
20.11 ATTORNEY'S FEES. In the event of any litigation between the
parties hereto, the prevailing party shall be entitled to recover reasonable
attorney's fees in addition to other relief as the court may award.
20.12 EQUITABLE RELIEF. The parties acknowledge that each party's
performance of its respective obligations hereunder, the Partner Product(s) and
the intellectual property comprising such Partner Product(s), and the rights and
licenses granted to VUG hereunder are of a unique, unusual, extraordinary and
intellectual character which gives them a special value, the loss of and/or
damage to which may not be reasonably or adequately compensated in damages in an
action at law, that a material breach by either party of this Agreement may
cause the non-breaching party great and irreparable injury and damage and,
therefore, that the non-breaching party shall be entitled to seek injunctive
relief to prevent such injury or damage.
20.13 BOARD APPROVAL. Interplay and VUG acknowledge and agree that a
condition precedent to the effectiveness of this Agreement is the approval and
ratification of this Agreement by Interplay's Board of Directors. Such board
approval (or rejection, as applicable) shall be provided to VUG on or before
August 9, 2002.
20.14 NO OFFSET. Except as otherwise expressly provided in this
Agreement, any amounts due under this Agreement shall be paid with no right of
offset against any other amounts due under this Agreement. In no event shall any
amounts due under this Agreement be paid by offset against any amounts due under
any other agreements which may exist between the parties.
20.15 REQUESTS, CONSENTS AND APPROVALS. Unless otherwise expressly
provided in this Agreement, any consents and/or approvals requested of either
party pursuant to this Agreement shall not be unreasonably withheld, conditioned
or delayed. Without limitation, VUG acknowledges and agrees that it shall be
deemed "reasonable" for Interplay to withhold, condition and/or delay its
consent and/or approval as and when necessary for Interplay to comply with the
terms of any Third Party Licenses.
20.16 NO THIRD PARTY BENEFICIARIES. No person other than the parties
hereto and their permitted successors and assigns shall receive any benefits of
this Agreement.
20.17 ENTIRE AGREEMENT. This Agreement, including all Exhibits,
constitutes and contains the entire agreement between the parties with respect
to the subject matter hereof and supersedes any prior oral or written agreements
with respect to the subject matter hereof (for purposes of clarification, this
Agreement shall have no affect on the Existing Distribution Agreement, which
shall remain in full force and effect in accordance with its terms). Nothing
herein contained shall be binding upon the parties until this Agreement has been
executed by each and has been delivered to the parties. This Agreement may not
be changed, modified, amended or supplemented, except in writing signed by all
parties to this Agreement. Each of the parties acknowledges and agrees that the
other has not made any representations, warranties or agreements of any kind,
except as may be expressly set forth herein. This Agreement may be executed in
counterparts and delivered by facsimile.
*** Terms represented by this symbol are considered confidential. These
confidential terms have been omitted pursuant to a Confidential Treatment
Request filed with the Securities and Exchange Commission (`SEC") and have been
filed separately with the SEC.
Page 26
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and
year first above written.
VIVENDI UNIVERSAL GAMES, INC. INTERPLAY ENTERTAINMENT CORP.
BY: /S/ XXXX X'XXXX BY: /S/ HERVE CAEN
------------------------------------ ----------------------------
NAME: XXXX X'XXXX NAME: HERVE CAEN
TITLE: PRESIDENT, PPG TITLE: CEO & PRESIDENT
-------------------------------- -------------------------
DATE: 8/9/02 DATE: 8/9/02
-------------------------------- -------------------------
ACCOUNTING ACCOUNTING
CONTACT CONTACT
-------------------------------- -------------------------
*** Terms represented by this symbol are considered confidential. These
confidential terms have been omitted pursuant to a Confidential Treatment
Request filed with the Securities and Exchange Commission (`SEC") and have been
filed separately with the SEC.
Page 27
EXHIBIT A
INTERPLAY PROCEEDS AND MINIMUM GUARANTEES
1. MINIMUM GUARANTEE.
1.1 PAYMENT. With respect to each Partner Product, VUG shall pay
Interplay recoupable (solely in accordance with SECTION 1.1(ii) immediately
hereinbelow), but non-refundable (unless otherwise expressly provided in this
Agreement), minimum guarantee payment(s) (the "MINIMUM GUARANTEE(S)") (on a per
title basis) against future Interplay Proceeds otherwise due to Interplay, as
follows:
(i) within *** business days of receipt of an Approved
Gold Master, VUG shall pay to Interplay an amount equal to the product of *** of
(i) *** (with respect to Non-PC Partner Products) or (ii) *** (with respect to
PC Partner Products). *** of VUG's Final Gross Sales Projection (as determined
by VUG upon delivery of an Approved Gold Master and in accordance with SECTION
1.2 of this EXHIBIT A) for such Partner Product, multiplied by *** (as set forth
in SECTION 2.1 of this EXHIBIT A) (the "INITIAL MINIMUM GUARANTEE"); and
(ii) within *** business days after the Initial Shipment
of a Partner Product, and in the event that the product of ***(with respect to
Non-PC Partner Products) or ***(with respect to PC Partner Products) of VUG's
actual Gross Sales Revenue on Initial Shipment of the Partner Product,
multiplied by *** (as set forth in SECTION 2.1 of this EXHIBIT A), exceeds the
Initial Minimum Guarantee paid for such Partner Product, then VUG shall pay to
Interplay such difference (the "SECONDARY MINIMUM GUARANTEE").
1.2 PROJECTED GROSS SALES REVENUE. Interplay acknowledges and
agrees that, subject to SECTION 11.7 of the Agreement and the terms below in
this SECTION 1.2 of EXHIBIT A, final projected Gross Sales Revenues at Initial
Shipment (the "FINAL GROSS SALES PROJECTION") will be determined *** upon
receipt from Interplay of the Approved Gold Master. Notwithstanding the
foregoing, VUG will use good faith efforts in determining the Final Gross Sales
Projection for each Partner Product and will consult with Interplay in making
such projection(s). Projected Gross Sales Revenue for a Partner Product shall be
initially determined by VUG at the Six Month Evaluation. Following the Six Month
Evaluation, VUG shall at the Three Month Evaluation make a subsequent
determination of the projected Gross Sales Revenues at Initial Shipment (the
"THREE MONTH GROSS SALES PROJECTION"). VUG's Three Month Gross Sales Projection
shall be based on the anticipated marketing spend and strategy for the Partner
Product, VUG's assessment of the sales potential of that Partner Product (based
on the Beta Version), pricing in accordance with SECTION 11.7 of the Agreement,
prevailing market conditions and other relevant considerations which might
reasonably and customarily affect VUG's projected sales with respect to a
Partner Product. ***.
1.3 RECOUPMENT. The Minimum Guarantee for a particular Partner
Product shall be recoupable by VUG as follows: unless and until VUG recoups the
Minimum
*** Terms represented by this symbol are considered confidential. These
confidential terms have been omitted pursuant to a Confidential Treatment
Request filed with the Securities and Exchange Commission (`SEC") and have been
filed separately with the SEC.
Page 28
Guarantee, VUG shall be entitled to deduct *** from the Interplay Proceeds with
respect to such Partner Product. The parties agree that (i) such recoupment is
not to be construed as a set-off, and that (ii) except as expressly provided in
this agreement, the Minimum Guarantee(s) for one Partner Product shall not be
recoupable against Interplay Proceeds accrued for any/all other Partner Products
(i.e., there shall be no cross-collateralization).
2. DISTRIBUTION FEE.
2.1 PERCENT OF NET SALES PER PARTNER PRODUCT UNIT. Subject to
VUG's right of recoupment of all Minimum Guarantees paid by VUG to Interplay, as
set forth in SECTION 1.3 of EXHIBIT A, VUG shall pay Interplay the "Interplay
Proceeds." For the purposes of this agreement, the "Interplay Proceeds" shall be
defined as the Gross Sales Revenues less the General Reserve, less the following
distribution fee (which VUG shall be deemed to have earned as compensation for
the services provided herein (the "DISTRIBUTION FEE"))* from Net Sales of
Partner Products distributed to third parties as provided herein:
TITLE Platform Distribution Fee
------------------------- ----------------- ----------------------
1. PC ***
------------------------- ----------------- ----------------------
2. Non-PC ***
------------------------- ----------------- ----------------------
* Solely with respect to distribution of Partner Products via rental channels
(i.e., Blockbuster, Hollywood Video, etc.), VUG shall pay Interplay *** of gross
proceeds received by VUG. For purposes of clarification, there shall be no
General Reserve taken by VUG in calculating Interplay Proceeds on rental
revenues.
2.2 DEFINITION OF NET SALES. For the purposes of this Agreement,
"NET SALES" shall be defined as Gross Sales Revenues from the Partner
Product(s), less the General Reserve (as defined in SECTION 3 of this EXHIBIT
A).
3. GENERAL RESERVE. VUG will deduct the following amounts (the "GENERAL
RESERVE") against (i) returns, (ii) price protections, and (iii) post-sale
markdowns extended by VUG to its customers in the normal course (collectively
(i), (ii) and (iii), the "AUTHORIZED DEDUCTIONS") in the amount of *** of Gross
Sales Revenues with respect to all Non-PC Partner Products and *** with respect
to all PC Partner Products. ***. ***. ***.
*** Terms represented by this symbol are considered confidential. These
confidential terms have been omitted pursuant to a Confidential Treatment
Request filed with the Securities and Exchange Commission (`SEC") and have been
filed separately with the SEC.
Page 29
EXHIBIT B
1. AUTHORIZED CHANNEL(S):
1.1 Retail (including all rental revenue); and
1.2 Direct-to-consumer (including receiving orders over the
Internet, but delivering on a physical, packed-goods basis).
2. LICENSED TERRITORY: United States and Canada.
3. PARTNER PRODUCTS/DELIVERY DATES:
TITLE Platform: Submission Date(s) Approved Gold Master
for delivery of Delivery Date:
the Gold Candidate:
--------------------- ----------------- ------------------- --------------------
--------------------- ----------------- ------------------- --------------------
--------------------- ----------------- ------------------- --------------------
*** *** *** ***
--------------------- ----------------- ------------------- --------------------
*** *** *** ***
--------------------- ----------------- ------------------- --------------------
*** *** *** ***
--------------------- ----------------- ------------------- --------------------
--------------------- ----------------- ------------------- --------------------
*** *** *** ***
--------------------- ----------------- ------------------- --------------------
*** *** *** ***
--------------------- ----------------- ------------------- --------------------
*** *** *** ***
--------------------- ----------------- ------------------- --------------------
*** *** *** ***
--------------------- ----------------- ------------------- --------------------
*** *** *** ***
--------------------- ----------------- ------------------- --------------------
*** *** *** ***
--------------------- ----------------- ------------------- --------------------
*** *** *** ***
--------------------- ----------------- ------------------- --------------------
+
*** Terms represented by this symbol are considered confidential. These
confidential terms have been omitted pursuant to a Confidential Treatment
Request filed with the Securities and Exchange Commission (`SEC") and have been
filed separately with the SEC.
Page 30
EXHIBIT C
[RESERVED]
*** Terms represented by this symbol are considered confidential. These
confidential terms have been omitted pursuant to a Confidential Treatment
Request filed with the Securities and Exchange Commission (`SEC") and have been
filed separately with the SEC.
Page 31
EXHIBIT D
FORM OF VUG FINAL MARKETING STRATEGY STATEMENT
*** Terms represented by this symbol are considered confidential. These
confidential terms have been omitted pursuant to a Confidential Treatment
Request filed with the Securities and Exchange Commission (`SEC") and have been
filed separately with the SEC.
Page 32
EXHIBIT E
SAMPLE ROYALTY STATEMENT
*** Terms represented by this symbol are considered confidential. These
confidential terms have been omitted pursuant to a Confidential Treatment
Request filed with the Securities and Exchange Commission (`SEC") and have been
filed separately with the SEC.
Page 33
EXHIBIT F
SAMPLE MINIMUM GUARANTEE CALCULATIONS
*** Terms represented by this symbol are considered confidential. These
confidential terms have been omitted pursuant to a Confidential Treatment
Request filed with the Securities and Exchange Commission (`SEC") and have been
filed separately with the SEC.
Page 34
