PARTNER AGREEMENT
Exhibit 10.1
Portions of this Exhibit 10.1 marked by a [__] have been omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.
Partner Agreement (the “Agreement”) is entered into by and between The Estate of Xxxxxxx Xxxxxx LLC (hereinafter “ABG”), a Delaware limited liability company, and Pulse Evolution Corporation (hereinafter “Partner”), a Nevada corporation, and is effective on October 1, 2014 (“Effective Date”).
(a) | Intellectual Property Rights. For purposes of this Agreement, “Intellectual Property Rights” shall mean any and all proprietary rights of any kind, tangible or intangible, now known or hereafter existing, including without limitation copyrights, neighboring rights and moral rights; trade secret; trademark; and patent and other intellectual property rights, and all registrations, and applications thereof now or hereafter in force throughout the universe. | |
(b) | Work For Hire. Partner acknowledges that all Services performed by Partner (including, without limitation, any and all consultants, employees, persons or entities engaged by Partner or rendering services to or through Partner) are at the direction of and specifically for the use of ABG. All Deliverables created or performed by Partner shall constitute Works Made For Hire under the copyright laws of the United States, and ABG shall own full and exclusive rights in all such Deliverables. If Deliverables are deemed not a Work Made for Hire, then Partner hereby transfers, assigns and conveys all rights, title and interest (specifically excluding any intellectual property that is owned by partner and can be separated from ABG, intellectual property, hereinafter defined as “Partner Property”) in and to the results and proceeds of the Services and Deliverables to ABG and ABG shall own all Intellectual Property Rights contained therein. Partner agrees without further consideration to execute, and to cause any and all consultants, employees, persons or entities engaged by Partner or rendering services to Partner to execute any document reasonably requested by ABG to further evidence or attest to the vesting of such rights in ABG. Partner shall and hereby does waive, to the maximum extent permitted by law, the benefits of any provision of law known as droit moral or any similar law in any jurisdiction, including 17 U.S.C. §106A, and agree not to permit or prosecute any action or suit on the grounds that the work product or Deliverables as used by ABG or any other party constitutes an infringement of Partner’s droit moral. For the avoidance of doubt, ABG shall not be able to license any Partner property to a third party without the consent of Partner for commercial purposes. | |
(c) | Projects Developed. ABG will enter into license agreements with Targets, and Partner will enter into Development Agreements with Targets the funding for which shall be borne by third-parties or Targets, such as production companies, brand sponsors and/or financial investors. ABG and Partner will not be responsible for the animation and production costs related to the development and/or production of Projects. In the event either or both of such parties desire to become investors in Projects, such investments shall be subject to separate agreements. | |
(d) | Partner Materials. Partner shall retain ownership of the technology, materials and media which are separable from ABG Property and are used in the performance of Services and the execution of Projects, including but without limitation development done directly for Targets, and/or creation of Projects (“Partner Materials”). ABG shall be entitled to use the Partner Materials on a perpetual, irrevocable, assignable, sub-licensable, worldwide basis in or in connection with the ABG Property subject only to ABG paying Partner the Partner IP Royalty. |
1 |
(e) | ABG Materials. ABG agrees to provide Partner with the information, and material listed on Exhibit A (the “ABG Materials”). ABG hereby grants Partner a limited, nonexclusive, license to use, copy, modify and create derivative works based on the ABG Materials solely as the same is necessary for Partner’s performance of Partner’s obligations under this Agreement and provided that all such use, copying and modification shall be in strict accordance with ABG’s instructions and for the sole benefit of ABG. ABG reserves all rights not expressly granted herein. Partner agrees that it shall not, by virtue of this Agreement, acquire any rights in any Deliverables or ABG Materials or any other asset or property of ABG, whether tangible or intangible, and whether or not created by Partner or Partner Group (collectively, “ABG Property”), and if it has acquired such interest, it hereby assigns such interest back to ABG. Partner agrees not to assert any rights inconsistent with ABG’s ownership of the ABG Property. Subject to ABG’s prior written approval as to the content and timing, Partner may promote the relationship created by this agreement, on Partner website, social media accounts and prospective client pitch materials during the Term, and only in pitch meetings after expiration of the Term. In no instance shall Partner reveal the business terms contained in this Agreement or any Confidential Information (as defined below). Partner’s use of any materials shall be subject to Partner’s clearance of all third party rights (if applicable) and shall be without any warranty from ABG. During the Term and at all times thereafter, ABG will not attack any right, title or interest Partner has in or to any Partner Property. | |
(f) | During the Term and at all times thereafter, Partner will not attack any right, title or interest ABG has in or to any Intellectual Property, including, without limitation, the rights to any persona and related trademarks, including, without limitation the right of publicity and/or any rights arising under Section 1125 of the Xxxxxx Act or any other similar law. During the Term and at all times thereafter, Partner will not misuse or bring into disrepute the name and character of ABG, the ABG Property or any of the affiliated or related entities or properties of either. |
(i) in accordance with ABG’s specifications; (ii) in a professional manner, using the highest standards of workmanship, care, good faith and integrity; and (iii) in accordance with all applicable laws, ordinances, regulations and orders, including without limitation federal, state or local laws of the United States or any other country, and Partner shall obtain all permits, registrations and licenses required to comply with such laws, ordinances, regulations and orders; (b) none of the Deliverables, or any part thereof will (i) contain libelous, injurious or unlawful material; or (ii) infringe the copyright, patent, trademark, trade name, trade secret or other proprietary rights of any third party; (c) the Deliverables and Services are free and clear of any and all mortgages, liens or other encumbrances; and (e) neither the execution of this Agreement nor the performance of Services or delivery of Deliverables violates or will violate any contractual right of any third party.
6. Insurance Both parties shall procure and maintain insurance in an amount of at least one million dollars ($1,000,000 U.S.) per occurrence and three million dollars ($3,000,000 U.S.) in the aggregate naming the other party as an additional insured, to defend and protect the parties against third-party claims for personal injury, death, property damage, negligent design, other liability claims or any advertising injury arising out of or in connection with the Services and Deliverables or either party’s use thereof. In the event that any insurance policy required hereunder includes or permits a waiver of subrogation, such waiver shall apply to the other party. In the event that such waiver is required by a third party agreement, then this Agreement shall be deemed to require such waiver. Any claims covered by the other party’s insurance policies shall not be offset or reduced in any amount whatsoever by any other insurance which either party may independently maintain. Either party shall notify the other party of all claims regarding the results and proceeds of Partner’s Services and/or the Deliverables.
(ii) Within thirty (30) days following the execution of this Agreement, both parties shall provide each certificates of insurance certifying that the other party and any other entity specified by ABG, have been added as additional insureds to each of the insurance policies set forth above. Before any proposed cancellation or material modification in the coverage the insurance carrier will give the certificate holder(s) not less than thirty (30) days’ prior written notice thereof. Upon receipt of any such notification, the certification holder shall, in their sole discretion, have the right, to: declare a material breach of this Agreement (which must be cured prior to any insurance lapse or result in a termination of this Agreement which termination shall take effect on the last day of coverage, notwithstanding any provision of this Agreement to the contrary) and/or the right, but not the obligation, to purchase replacement insurance from an insurance carrier of their choice, and the applicable party agrees to pay all costs thereof immediately upon request by the other, failing which they may deduct the cost from any monies payable to the other party hereunder.
- 2 - |
9.
Exclusivity. (i) Project development provided by Partner to Targets or ABG under the terms of this agreement
are exclusive for the first nine (9) months and then non-exclusive for the rest of the Term. ABG is permitted to engage any third
parties to render the same or similar Services. Nothing contained herein shall obligate ABG to use the Deliverables. Except for
the GMR set forth in Exhibit A, neither party makes any representation or warranty to the other about the popularity or success,
or revenue which may be derived from this Agreement. (ii) during the period of exclusivity ABG will not enter into negotiations
or agreements with regard to Xxxxxxx Xxxxxx with any third party company that is engaged in either holographic-like projection
technology or visual effects animation for Live Events and television advertising.
10. [__]
(a) Automatic Termination for Repetitive Breach. If Partner breaches a provision of this Agreement, and subsequently breaches the same provision a second time (a “ Repetitive Breach “), this Agreement shall be deemed automatically terminated, with all amounts, including but not limited to any Guaranteed Minimum Royalties for the then-current-Term and any and all ABG Development Royalties payable hereunder becoming due and payable immediately.. ABG shall provide written notice of the initial breach.
(b) ABG’s Right to Suspend or Terminate. ABG shall have the right to suspend its performance hereunder and/or terminate this Agreement in its entirety upon the occurrence of any of the following events, including, without limitation:
(i) The failure of Partner to make any payment required to be made under this Agreement, which failure is not cured within five (5) business days of Partner’s receipt of written notice from ABG specifying the nature of such failure with particularity; or
(ii) The breach by Partner of any of its representations or warranties herein or the failure of Partner to comply with any of the other terms of this Agreement or otherwise discharge its duties hereunder, and such breach or failure is not cured within fifteen (15) days of Partner’s receipt of written notice from ABG specifying the nature of such breach or failure with particularity; or
- 3 - |
(iii) Any act of gross negligence or wanton misconduct by Partner, and such action is not corrected within ten (10) days of Partner’s receipt of written notice from ABG specifying the nature of such action with particularity; or
(iv) The making by Partner of an assignment for the benefit of creditors, or the filing by or against Partner of any petition under any federal, national, state or local bankruptcy, insolvency or similar Laws, if such filing shall not have been dismissed or stayed within sixty (60) day after the date thereof; or
(v) The failure of Partner to generate the Minimum Net Revenue as set forth in the Summary of Commercial Terms with respect to any Contract Year.
(vi) Partner hereby acknowledges that Partner shall not have an opportunity to cure any material breach which by its terms, cannot be cured, including, without limitation, any failure to make the Minimum Net Revenue; release of products using/including ABG Property without prior approval from ABG; the use of Advertising and Promotional materials on or in connection with Deliverables which were not approved by ABG; and/or the failure of Partner to assist with intellectual property maintenance in the manner provided by ABG. For the avoidance of doubt late payments; and unintentional releases of products and promotional material by a third party shall not be deemed an incurable breach.
(c) Partner’s Right to Suspend or Terminate. Partner shall have the right to suspend its performance hereunder or terminate this Agreement in its entirety upon the occurrence of the breach by ABG of any of its representations or warranties herein or the failure of ABG to comply with the terms of this Agreement or otherwise discharge its duties hereunder, and such breach or failure is not cured within thirty (30) business days of ABG’s receipt of written notice from Partner specifying the nature of such breach or failure with particularity.
12. Approvals, Quality Standards.
(a) | Approval. “Approval(s)” or “Approved” shall mean ABG’s prior written consent, which may be given or withheld in ABG’s reasonable discretion. | |
(b) | Approval Rights. ABG shall have the right to approve all elements of the Deliverables and any advertising elements. All submissions under this Agreement shall be made in such a manner as ABG shall prescribe from time to time. | |
(c) | Partner shall create and submit to ABG, ideas, rough and final images. Partner shall not publicly disseminate any ABG Property or Deliverables unless and until ABG has fully and finally Approved the same. Each time Partner makes any change, the elements must be re-submitted for Approval. | |
(d) | Prior to the broadcast, publication, posting, public distribution and/or use thereof of sample concepts, designs and samples (“Advertising Element”) of any advertisement or other promotional material (each, an “Advertisement”) which is intended to be used in conjunction with the sales presentations by Partner, shall submit the Advertising Element to ABG for its Approval. Once an Advertising Element has been approved, Partner need not submit variations of that Advertising Element for re-approval when such variations are merely of size or date and the like; provided, however, that any substantive changes to the Advertising Element must be approved in advance pursuant to this Section 12. | |
(e) | Disclaimer. Partner acknowledges that it shall bear the responsibility for and expense of compliance with the Approval requirements hereunder. Partner further acknowledges that the Approval or disapproval of any Advertising Elements, Deliverables and/or ABG Property uses may be based, without limitation, solely on subjective aesthetic standards. This approvals process shall not be deemed a legal review, but purely as a process meant to verify that the use of the ABG Property has been done in a manner that complies with this Agreement. Any Approval shall not waive, diminish or negate Partner’s indemnification obligations to ABG herein. | |
(f) | Brandbook & Style Guides. ABG shall provide Partner with a brand book and/or Style Guide, which is subject to seasonal updates and other changes from time to time (“Style Guide”). Partner shall follow the rules set forth in the Style Guide. | |
(g) | Third Party Acts. Partner will use its best efforts to ensure that its subcontractors abide by the terms of this Agreement. All acts of any such subcontractors shall be deemed to be the acts of the Partner for all purposes of this Agreement. | |
(h) | Goodwill and Quality Standards. Partner acknowledges that, if the Deliverables or Advertising Elements are of inferior quality in material and/or workmanship, then the substantial goodwill, which ABG has built up and now possesses in the ABG Property, will be impaired. Accordingly, Partner warrants to ABG that the Deliverables and Advertising Elements will maintain the high standards, appearance and quality of the Approved versions. If there is a substantial or material departure from the Approved versions of anything using the ABG Property then ABG shall have the right, in the reasonable exercise of its sole and absolute discretion, to withdraw the Approval. |
- 4 - |
- 5 - |
This Agreement is accepted by each of the Parties as of the date executed by both parties below:
The Estate of Xxxxxxx Xxxxxx LLC | Pulse Evolution Corporation | |
000 Xxxx 00xx Xx, Xxxxx 0000 | 00000 XX Xxxxxxx Xxx., Xxxxx 000 | |
XX, XX 00000 | Xxxx Xx. Xxxxx XX 00000 |
/s/ Xxxxx XxXxxxx | /s/ Xxxx X. Xxxxxx | |
Authorized signature | Authorized signature |
Xxxxx XxXxxxx, COO & General Counsel | Xxxx Xxxxxx, Chairman | |
Print name and title | Print name and title | |
10/6/2014 | October 6, 2014 | |
Date | Date |
- 6 - |
EXHIBIT A
This Exhibit A is subject to the terms and conditions of that certain Partner Agreement (the “Agreement”) between The Estate of Xxxxxxx Xxxxxx LLC (hereinafter “ABG”), a Delaware limited liability company, and Pulse Evolution Corporation (hereinafter “Partner”), a Nevada corporation, dated October 1, 2014.
1. Term:
(a) | The “Initial Term” shall mean the period beginning on the Effective Date and ending December 31, 2019. |
(i) | “Contract Year 1” shall mean the Effective Date through December 31, 2015. | |
(ii) | “Contract Year 2” shall mean January 1, 2016 through December 31, 2016. | |
(iii) | “Contract Year 3” shall mean January 1, 2017 through December 31, 2017. | |
(iv) | “Contract Year 4” shall mean January 1, 2018 through December 31, 2018. | |
(v) | “Contract Year 5” shall mean January 1, 2019 through December 31, 2019. |
(b) | Provided that Partner is not in breach of the Agreement, and provided that Minimum Net Revenues of at least [___], Partner shall have one (1) option to renew the Agreement (“ Renewal Term Option “) on the terms set forth herein for a consecutive period of five (5) years (the “ Renewal Term ” numbered consecutively). Partner shall exercise its Renewal Term Option not less than three (3) months and not more than twelve (12) months in advance of the expiration of the Initial Term. |
2. The Initial Term and the Renewal Term are hereinafter individually and collectively referred to as the “Term” and individually as a “ Contract Period “. For the purposes of the Agreement, a “ Calendar Quarter ” shall mean each of the following three (3) month periods during a given calendar year: from January 1 through March 31; from April 1 through June 30; from July 1 through September 30; and from October 1 through December 31.
3. Description of Services provided by Partner during the Term: Partner will create and present sales presentations to third parties (“Targets”), for use in the commercial exploitation of Virtual Xxxxxxx in commercials and live entertainment. When a Target enters an agreement with Partner, ABG and Target will work directly on a licensing agreement for the Intellectual Property Rights, and Partner and Target work together on an agreement for Partner’s development services for the Project (“Development Agreement”).
4. Launch Fee and Royalties:
(a) | Launch Fee: Partner shall pay ABG a Launch Fee of One Million Dollars ($1,000,000) payable, in lieu of cash, in the form of Two Million Eight Hundred Thousand unregistered, common shares (OTC “PLFX”) of Partner (“Equity Launch Fee Shares”) issuable upon execution of this Agreement. Partner shall be obligated to file, and cause to become effective, a registration statement with the Securities Exchange Commission, such that the Equity Launch Fee Shares will be fully registered and freely tradable no later than April 1, 2015. ABG shall also be entitled to anti-dilution protection, calculated on a weighted average basis, reflective of the imputed value of the Launch Fee of $0.35 per share. | |
Make-Whole
Provision: In the event the value of the Equity Launch Fee Shares is less than [One Million Dollars ($1,000,000), based on the
most recent 5-day average closing price as of April 1, 2015, or if for any reason the Equity Launch Fee Shares are not registered
and freely tradable as of April 1, 2015, ABG shall be entitled to exchange the Equity Launch Fee Shares for a cash payment by
Partner to ABG equal to One Million Dollars ($1,000,000)], such exchange right continuing for the benefit of ABG through December
31, 2015. | ||
(b) | Revenue Share of Target agreements: ABG to pay Partner [___] (“Partner IP Royalty”) and keep [___] (“ABG IP Royalty”) of [__] from deals with a Target that are secured by Partner during the Term. | |
(c) | Partner to pay ABG a [___] royalty (“ABG Development Royalty”) and keep [___] (“Partner Development Royalty”) of [__]. | |
(d) | For purposes of this Agreement both Partner IP Royalty and ABG Development Royalties are collectively referred to as “ Royalties “. All Royalties actually earned by ABG shall be used to recoup the balance of the GMR in each Contract Year, to the extent Royalties earned by ABG exceed the GMR, ABG shall be entitled to keep such excess. |
- 7 - |
(i) | Either party will only be liable for payments to the other party in cases where payment is actually received from Target. | |
(ii) | As used herein the term “[___] Royalty Revenue” shall mean [__]. |
(e) | All Royalties shall be paid to Partner within thirty (30) days after the conclusion of each Calendar Quarter. |
5. The “Guaranteed Minimum Royalty(ies)” for Partner to retain the rights to provide Services (also known as the “GMR(s)”) shall mean non-returnable advances recoupable against Royalties due in the same Contract Year.
(i) | For each Contract Year during the Term, the GMR’s payable to ABG by Partner shall be: |
Contract Year | GMR | |
1 | [___] | |
2 | [___] | |
3 | [___] | |
4 | [___] | |
5 | [___] |
* GMR for Contract Year 1 shall be payable [___].
(i) | For each Renewal Term (if any): (A)) [___] of the GMR of the final Contract Year of the prior Contract Period | |
(ii) | In the event that the annual Royalties earned by ABG exceed the annual GMR paid by Partner under this Agreement, ABG shall retain the ABG Royalties. |
(ii) | Partner hereby acknowledges that the GMR is payable to ABG even if Partner fails to develop sell or market during the Term, and is a condition of ABG entering into the Agreement. Except for the Launch Fee set forth in Section 4 above, Partner shall pay the GMR to ABG [__]. In the events that the [__] Royalty exceeds the [__] portion of the GMR, Partner shall pay the Royalties in excess of the previously paid portion of the GMR to ABG [__]. |
6. “Minimum Net Revenues” shall be defined as Gross Revenues received from Targets by ABG.
Contract Year | Minimum Net Revenues | |
1 | [___] | |
2 | [___] | |
3 | [___] | |
4 | [___] | |
5 | [___] |
(a) | If [___] is earned in Net Revenues in Contract Year 5, Partner shall receive the right for one (1) five year option to renew the Agreement (“Renewal Term Option “). If Renewal Term is exercised, Minimum [___] Revenues for the Renewal Term shall be: |
Contract Year | Minimum Net Revenues | |
6 | [___] | |
7 | [___] | |
8 | [___] | |
9 | [___] | |
10 | [___] |
7. Territory: Worldwide
- 8 - |
The Estate of Xxxxxxx Xxxxxx LLC | (“Partner”) Pulse Evolution Corporation | |||
By: | By: | |||
Printed Name: | Printed Name: | |||
Title: | Title: | |||
Date: | Date: | |||
- 9 - |