EXHIBIT 10.16
SOFTWARE PROGRAMMING SERVICES AGREEMENT
This Agreement for video game software programming
(hereinafter the "Agreement") is made and entered into as of the
11th day of April, 1997 by and between Adrenalin Entertainment, a
division of Western Technologies, a California Corporation, with
offices at 0000 Xxxxxxxxx Xxxxxx, Xxx Xxxxxxx, XX 00000
(hereinafter the "Developer"), and THQ, Inc., a New York
Corporation, with offices at 0000 X. Xxxxxxx Xxxxxxxx, Xxxxx 000,
Xxxxxxxx, XX 00000 (hereinafter the "Company").
W I T N E S S E T H :
In consideration of the promises and covenants made herein
by each party to the other, the parties agree as follows:
ARTICLE 1
DEFINITIONS AND GENERAL
DESCRIPTION OF SERVICES
1.1 The following terms shall have the following meanings
when used in this Agreement and the Appendices attached hereto
and made a part hereof:
(a) "Final Delivery Date" shall mean the date set
forth on Appendix C attached hereto on or before which the Final
Work Product must be delivered to the Company.
(b) "Final Work Product" shall mean Work Product in a
condition ready for submission to THQ, Inc. and Sony for
approval.
(c) "Licensed Materials" shall mean the property
described in Appendix A attached hereto which the Company has
licensed from the Licensor in connection with the development of
Software Devices.
(d) "Licensor" shall mean the person from whom the
Company is licensing the Licensed Materials.
(e) "Milestones" shall mean the date on which the
parties entered into this Agreement and all subsequent dates set
forth on Appendix C, on or prior to which the Developer is
required to submit to the Company Work Product meeting the
requirements set forth for that Milestone, until THQ, Inc. and
Sony approve of the Final Work Product.
(f) "Software Devices" shall mean video game
cartridges or discs which embody the Final Work Product and
operates through the Target System.
(g) "Specifications" shall mean the detailed game
description, in the form of Appendix A annexed hereto, provided
by the Company to the Developer, which Specifications shall be
the sole property of the Company.
(h) "Target System" shall mean the computer system or
video game system described in Appendix A on which the Software
Devices will operate.
(i) "Territory" shall mean throughout the world.
(j) "Work Product" shall mean computer source code,
object code, graphic materials, music, sound effects,
documentation created by the Developer and all other materials
developed and used by the Developer in connection with the
Services (Defined in Section 1.2 below). Specifically excluded
from this definition should be pre-existing source and object
code, utilities, operating systems, algorithms and development
tools to which Developer holds copyright, patent and other
rights.
1.2 The Developer agrees to provide the Company with all
video game software programming services, in accordance with the
Milestones herein established, which are necessary for the
development of the Software Devices to be used and played on the
Target System (hereinafter the "Services"). The Services shall
include, but are not limited to, product design, programming,
graphics and animation development, documentation, alpha testing,
beta testing, and "bug correction", as may be more fully set
forth on Appendices A and B.
ARTICLE 2
DEVELOPMENT OF WORK PRODUCT
2.1 The Work Product, developed hereunder by the Developer
shall be delivered to the Company on or before each Milestone set
forth in Appendix C, in such form as required for submission at
the relevant Milestone. Within ten (10) working days after
receipt of the Developer's Work Product, the Company shall
evaluate such Work Product to determine, in its Company's sole
discretion, whether the Work Product is acceptable and complies
with the requirements established for such Milestone,
notwithstanding the requirements of the preceding sentence, the
parties agree that the Company's approval of the Work Product is
subject to the contractual requirements of third parties and,
therefore, Milestone 8 is subject to possible delays.
2.2 In the event that the Work Product submitted for
approval is rejected by the Company for any reason, the Company
shall advise the Developer of such rejection and shall set forth
the necessary modification(s). The Developer will, at no
additional cost to the Company, promptly make such
modification(s) and resubmit the Work Product, as so modified, to
the Company for approval. This process shall be repeated until
the Work Product is approved by the Company.
2.3 Notwithstanding anything to the contrary contained
herein, if (i) the Developer fails to submit the Work Product to
the Company on or before the date of a relevant Milestone or (ii)
such Work Product is submitted, but is not in a form acceptable
to the Company, within thirty-five (35) days after such
Milestone,, such shall be deemed a material breach of this
Agreement by the Developer. If such breach is not cured, as
provided in Section 12.2 hereafter (except that with respect to
the thirty-five (35) day period described above, the Developer
shall have only ten (10) days to cure such breach), the Company,
in addition to any other remedies it may have, in equity or at
law, shall be entitled to terminate the project without any
further compensation.
2.4 Each installment of the advance (the "Advance")
described in Appendix C, if any, shall be due and payable to the
Developer within thirty (30) days after the Company's approval
and acceptance of the Work Product at each Milestone. If the
payment of an installment of the advance exceeds thirty (30) days
after the Company's approval and acceptance, the Company will pay
a 1.5% penalty of the installment, and shall pay a similar 1.5%
penalty for each thirty (30) days thereafter until the
installment is paid.
ARTICLE 3
FINAL DELIVERY AND ACCEPTANCE
3.1 The Final Work Product, including, without limitation,
a copy of the final version of the annotated source code in
machine and human readable forms, shall be delivered to the
Company on or before the Final Delivery Date set forth in
Appendix C. The Developer shall not deliver the Final Work
Product until it has been thoroughly tested by the Developer and
is certified by the Developer to be free of errors (commonly
known as "bugs"). Within twenty (20) working days after the
receipt of the Developer's Final Work Product, the Company shall
evaluate such Final Work Product to determine, in its sole
discretion, whether or not the Final Work Product is ready for
submission to THQ, Inc. and Sony. Notwithstanding the
requirements of the preceding sentence, the parties agree that
the Company's approval of the Work Product is subject to the
contractual requirements of third parties, and is therefore
subject to possible delays.
3.2 In the event that the Final Work Product is rejected
by the Company for any reason, the Company will advise the
Developer, in writing, in what respects the Final Work Product
requires modification. The Developer will, at no additional cost
to the Company, promptly make such modifications. The Final Work
Product, as modified, shall then be resubmitted to the Company
for approval. This process shall be repeated until the Final
Work Product is approved by the Company.
3.3 Notwithstanding anything to the contrary herein, if
(i) the Developer fails to submit the Final Work Product to the
Company on or before the Final Delivery Date or (ii) the Final
Work Product is submitted, but is not in a form acceptable to the
Company, within thirty-five (35) days after the Final Delivery
Date, such shall be deemed a material breach of this Agreement by
Developer. If such breach is not cured, as provided in Section
12.2 hereafter (except that with respect to the thirty-five (35)
day period described above, the Developer shall have only ten
(10) days to cure such breach), the Company, in addition to any
other remedies it may have, in equity or at law, shall be
entitled to terminate the project without any further
compensation.
3.4 Concurrent with its submission of the Final Work
Product, the Developer shall deliver to the Company all
information necessary to enable the Company to produce necessary
documentation (including, but not limited to a User's Manual)
pertaining to the Final Work Product and its use in the Software
Devices. Such information shall be in the form of written
documentation pertinent to the technical performance of the
Software Devices and their use on the Target System. The
Developer hereby warrants the accuracy of all such information
provided.
3.5 Any installment of Advance payable to the Developer by
the Company is also set forth on Appendix C. Said installment is
due and payable within thirty (30) days after the Company's
approval and acceptance of the Final Work Product. If the
payment of an installment of the Advance exceeds thirty (30) days
after the Company's approval and acceptance, the Company will pay
a 1.5% penalty of the installment, and shall pay a similar 1.5%
penalty for each thirty (30) days thereafter until the
installment is paid.
ARTICLE 4
SUBMISSION TO THQ, INC.
4.1 Any installment of the Advance payable to the
Developer by the Company, upon THQ, Inc.'s approval is also set
forth on Appendix C. Said installment is due and payable within
thirty (30) days after THQ, Inc.'s approval of the Final Work
Product. If the payment of an installment of the Advance exceeds
thirty (30) days after the Company's approval and acceptances,
the Company will pay a 1.5% penalty of the installment, and shall
pay a similar 1.5% penalty for each thirty (30) days thereafter
until the installment is paid.
ARTICLE 5
ROYALTIES
5.1 The Company shall pay royalties to the Developer, as
set forth on Appendix B annexed hereto, on the Company's sales of
Software Devices embodying the Final Work Product. These
royalties pertain solely to the Company's sale of the Software
Devices described in this Agreement.
5.2 Royalties payable to the Developer hereunder shall be
earned when the Company invoices customer for units for the
Software Devices embodying the Final Work Product, less quarterly
adjustments for credits and returns.
5.3 No royalties shall be payable hereunder with respect
to (i) Software Devices embodying the Final Work Product used for
promotional purposes or furnished free to the trade, press or for
public relations use, provided that no more than two percent (2%)
of the Software Devices embodying the Final Work Product will be
used for such purposes; or (ii) Software Devices embodying the
Final Work Product furnished free or sold to distributors, sub-
distributors, dealers, or others for less than the actual per
unit manufacturing cost of the applicable Software Devices.
5.4 No royalties will be paid to the Developer until the
Company has recouped the total Advance set forth in Appendix C
calculated using the Schedule of Royalties set forth in Appendix
B.
ARTICLE 6
ROYALTY ACCOUNTINGS
6.1 The Company will compute the Developer's royalties
hereunder on a calendar year quarterly basis. Within forty-five
(45) days after the last day of each quarterly accounting period,
the Company shall deliver to the Developer a statement covering
such royalties and will pay any royalties owed simultaneously
with delivery of the statement.
6.2 The Company will maintain books and records which
report the sales of Software Devices embodying the Final Work
Product. Developer may examine these books and records, as
provided in this paragraph only. The Developer may make such
examinations during regular business hours and upon reasonable
notice only. Each examination will take place at the place the
Company normally keeps the books and records to be examined. The
Developer shall be limited to two (2) such examinations each
twelve (12) months, during the term of this Agreement and for one
(1) year thereafter.
6.3 If the Developer has any objection to a royalty
statement, specific notice must be given to the Company within
one (1) year after the date the Developer receives the applicable
statement. Each royalty statement will become conclusively
binding on the Developer at the end of that period, and the
Developer will to have the right to institute any action against
the Company in connection with any royalty accounting, or to
institute an action against the Company for royalties in
connection with sales of the Software Devices embodying the Final
Work Product, unless the action is commenced within the above
time period.
6.4 In connection with any claims by the Developer that
additional monies are payable by the Company under this Agreement
and based upon examination of the Company's books and records in
connection with Section 6.2 hereof (hereinafter "Claim"), the
Company will not be deemed in breach of this Agreement unless
within sixty (60) days of the Company's receipt of the
Developer's written Claim, together with sufficient documentation
to support the Developer's Claim, sent by certified mail, return
receipt requested, the Company shall neither (i) pay such
additional monies claimed by the Developer, not (i) contest such
Claim, in whole or in part, by written notice to the Developer.
In the event the Company contests the Claim, it will not be
deemed in breach of this Agreement unless such Claim has been
reduced to a final non-appealable judgment by a court of
competent jurisdiction and the Company will have failed to pay
the Developer the amount thereof within thirty (30) days after
the Company shall have received notice of the entry of such non-
appealable judgment.
ARTICLE 7
ASSIGNMENT OF RIGHTS; OWNERSHIP OF WORK PRODUCT
7.1 The Services being performed by the Developer are done
at the Company's request and the resultant Work Product shall be
considered a work made for hire within the meaning of the
copyright laws of the United States and any foreign jurisdiction
recognizing such right of authorship, and, to the extent that the
Work Product is not deemed to be a work made for hire, the
Developer hereby assigns to the Company all right, title and
interest to the exclusive rights to the Work Product free from
any claims of the Developer or any third-party; provided,
however, for the pre-existing source and object code, utilities,
operating systems, algorithms and development tools to which
Developer holds copyright, patent and other rights, Developer
hereby grants Company a non-exclusive, royalty free license for
the term of copyright, patent and other rights therein.
7.2 In addition, the Developer, upon its submission to the
Company of the information and documentation used in connection
with the creation of the User's Manuals, shall assign to the
Company all right, title and interest to the exclusive rights to
such information and documentation free from any claims of the
Developer or any third party.
7.3 The rights assigned the Company hereunder shall give
the Company or any third party designated by the Company, the
unlimited right to manufacture and sell the Software Devices
embodying the Final Work Product, by any method in which the
Company desires, and to use any trademarks, trade names or labels
in connection therewith. In the event that any properties
contained in the Work Product shall be deemed to be owned by the
Developer, this Developer shall license the Company to use all of
such properties for the term of this Agreement. Notwithstanding
anything to the contrary contained herein, the Company shall have
no obligation to manufacture, market, promote or sell any
Software Devices embodying the Final Work Product.
ARTICLE 8
INTELLECTUAL PROPERTY ASSIGNMENT &
DEVELOPER'S WARRANTIES
8.1 Subject to the Developer's retained rights provided in
Paragraphs 1.1(j) and 7.1 elsewhere in this Agreement, from the
date the Work Product is initially delivered to the Company,
copyright in the Work Product, in the Territory, will be deemed
assigned by Developer to the Company. On or around such date,
the Developer shall execute an assignment of copyright in a form
reasonably acceptable to the Company evidencing the foregoing
transfer. The Company shall have the right to register, in the
office of the Register of Copyrights of the United States, and in
any other jurisdiction in the Territory, all or any part of the
Work Product in its name as the owner thereof. The same rights
shall apply with respect to the Developer's delivery of the
information and documentation used in connection with the
creating of the User's Manual.
8.2 The Developer warrants and represents that it has the
right and authority to enter into this Agreement and to fully
perform all of its obligations hereunder.
8.3 The Developer warrants that the Work Product (other
than those elements, if any, provided to the Developer by the
Company) is a wholly owned original work of authorship developed
by its employees, or under their direct supervision, and does not
infringe upon the copyrights of any person, firm or corporation.
Developer also warrants that the pre-existing source and object
code, utilities, operating systems, algorithms and development
tools to which Developer holds copyright, patent and other
rights, to which Developer has granted the Company a non-
exclusive, royalty free license for the term of copyright, patent
and other rights therein, that Developer owns such the rights
granted as a license and that such license and Company's use
thereunder shall not violate any other party's rights or
contracts between Developer and other parties.
8.4 The Developer warrants and represents that the
Developer, commencing on execution of this Agreement and
continuing until the expiration or earlier termination of this
Agreement, at no charge to the Company, will promptly correct any
programming defects in the Work Product or Final Work Product.
ARTICLE 9
COMPANY'S WARRANTIES
9.1 The Company warrants and represents that it has the
right and authority to enter into this Agreement and to fully
perform all of its obligations hereunder.
9.2 The Company warrants that it has acquired all rights
in the Licensed Material and that the Developer's use of the
Licensed Material will not infringe upon the rights of any other
person, firm or corporation.
ARTICLE 10
INDEMNIFICATIONS
10.1 The Developer will indemnify and hold the Company, its
directors, officers, employees and agents harmless from and
against all liabilities, losses, damages, costs and expenses
(including, but not limited to, reasonable attorney's fees),
arising out of or associated with any written demand letter and
subsequent negotiations, any legal action or claim filed in a
court of law, or arbitration arising out of a breach of
Developer's warranties under this Agreement and/or the
Developer's activities or negligence in creating the Software
Device as set forth hereunder.
10.2 The Company will give the Developer prompt notice of
any claim arising due to any breach of any of Developer's
warranties given hereunder. The Company will have the right to
participate in its defense or settlement with counsel of
Company's and Developer's mutual choice, and all costs and
expenses therefor will be borne by the Developer.
10.3 The Company will indemnify and hold the Developer, its
directors, officers, employees and agents harmless against any
losses, liabilities, damages and expenses (including reasonable
attorney's fees) which they or any of them incur or be obligated
to pay in any action, claim or proceeding against them or any of
them, in connection with or arising out of (a) the Company's
breach of any of its representations or warranties herein or (b)
the Company's marketing, advertising, sales, distribution and/or
other exploitation of the Software Devices which embody the Final
Work Product, in whole or in part or (c) the Company's fault or
negligence in connection with the transactions completed by this
Agreement. The provisions of this Section 10.3 shall not apply
to any claim which arises as a result of a breach of any
representation or warranty made by the Developer herein.
ARTICLE 11
EXCUSABLE DELAY (FORCE MAJEURE),
DELAY OF COMPLETION
11.1 In the event either party is prevented from fulfilling
its material obligations hereunder or said obligations are
materially interfered with by reason of events of war, fire,
flood, earthquake, explosion, or other natural disaster, such
obligation which cannot be performed shall be delayed until it
can be performed. The party claiming excusable delay must
promptly notify the other party of such delay. If the delay
continues for more than thirty (30) days, the other party may
terminate this Agreement by giving fifteen (15) days prior
written notice to the delaying party, provided that the Agreement
will not terminate if the party claiming excusable delay
substantially performs the material obligation which has been
delayed within such fifteen (15) day period.
ARTICLE 12
TERM OF AGREEMENT; BREACH
12.1 This Agreement shall become effective on the date this
Agreement is signed and shall remain effective as long as the
said product remains for sale by the Company.
12.2 In the event of a material breach of this Agreement by
either party, the non-breaching party may (reserving cumulatively
all other rights and remedies at law or in equity unless
expressly stated herein) terminated this Agreement by giving
thirty (30) days prior written notice. Notwithstanding the
foregoing, this Agreement will not terminate at the end of the
notice period if the party in breach has cured the breach about
which it has been notified. In the event that the Company
terminates this Agreement as a result of a material breach of
this Agreement by the Developer, the Developer shall not be
entitled to any royalties or other compensation, directly or
indirectly related to the Software Devices, by reason of this
Agreement or otherwise. Excepting those advances previously paid
or earned by the developer.
12.3 The Company may cancel this Agreement at any time
prior to the Final Delivery Date, without case, by providing the
Developer with written notice of such cancellation. In the event
of such cancellation, the Company's sole obligation and liability
shall be to pay the Developer (i) installments of any Advance
payable to the Developer for all Milestones completed prior to
the date of such cancellation and (ii) the installment of the
Advance, if any, which the Developer would have received upon its
completion of the Milestone immediately following such
cancellation. Such payments shall be the exclusive remedy with
respect to the Company's termination of this Agreement without
cause.
ARTICLE 13
ASSIGNMENT
13.1 This Agreement and the Appendices will be binding on
the parties' respective successors and permitted assigns.
13.2 The Developer may not assign this Agreement and/or any
of the rights or obligations hereunder without the prior written
consent of the Company; provided, however, Developer may assign
its rights to receive royalties under this Agreement subject to
Company's approval not to be unreasonably withheld.
13.3 The Company may assign this Agreement to any person,
upon written notification to the Developer, provided, however,
such assignment shall not relieve the Company of its obligations
hereunder, unless assignee agrees to accept such obligations in
writing.
ARTICLE 14
RELATIONSHIP OF THE COMPANY AND THE DEVELOPER
14.1 The Developer is an independent contractor. The
Developer is not the Company's employee or agent. The Developer
will not be entitled to compensation for its Services except as
provided in the Agreement and the Appendices. The Developer, and
the Company shall be responsible for the payment of its
employees' compensation, disability benefits, unemployment
insurance, and for withholding income taxes and social security.
The Developer shall not be entitled to receive any benefits
provided by the Company to its employees.
14.2 The Developer shall not have any authority to make
agreements or representations on the Company's behalf or to hold
itself out to be the Company's employee, agent or servant.
14.3 The Developer agrees to indemnify and hold the Company
and its directors, officers and employees harmless from and
against all claims, liabilities or obligations asserted against
any of them for the Company's not withholding taxes or making
unemployment and worker compensation payments and the like, as a
result of the Developer's independent contractor status. Such
indemnification shall include any penalties and interest asserted
thereon as well as the payment of the reasonable attorney's fees.
ARTICLE 15
EQUIPMENT PROVIDED TO DEVELOPER
15.1 The Company may provide the Developer with the use (at
Developer's place of business) of development board systems
adequate to perform the Service.
15.2 The Developer shall not utilize such equipment for any
reason other than the performance of the Services for the Company
hereunder. Any other use shall be deemed a material breach of
this Agreement. In the event that the Company shall terminate
this Agreement as a result of such breach, pursuant to the
provisions of Section 12.2 hereof (except that there shall be no
cure period for any breach pursuant to this Section 15.2), in
addition to any other remedies it may have, in equity or in law,
the Company shall be entitled to terminate the project without
any further compensation.
ARTICLE 16
CONFIDENTIAL INFORMATION
16.1 During the term of this Agreement and for a period of
three (3) years from the expiration or earlier termination of
this Agreement, the Developer will regard and preserve as
strictly confidential all information and material, including
specifications, software design notice, marketing information,
manufacturing information, and customer or client information,
provided to the Developer by the Company in connection with the
Developer's Services (hereinafter "Confidential Information of
the Company" or "Information").
16.2 The Developer further acknowledges and agrees that, in
the event of a breach of threatened breach of this Article 16,
the Company shall have no adequate remedy in money or damages
and, accordingly, shall be entitled to preliminary, permanent and
other injunctive relief without having to post bond or prove
irreparable injury.
16.3 The Company and the Developer agree that the Developer
will have no obligation in connection with specific Confidential
Information of the Company to the extent, but only to the extent
that (i) such Information is already known to the Developer, free
from any obligation to keep such Information confidential, at the
time it is obtained from the Company, (ii) such Information is or
becomes publicly known in the trade or otherwise through no
wrongful act of the Developer, or (iii) such Information is
rightfully received by the Developer from a third party without
restriction and without breach of this Agreement.
16.4 Upon request of the Company, upon completion of
Services, or upon termination of this Agreement as otherwise
provided herein, all Confidential Information of the Company will
be returned to the Company. The Developer will not retain any
copies of any Confidential Information of the Company after such
Information is returned to the Company.
16.5 The Developer agrees to cause all of its employees who
are employed in the development of the Work Product and/or will
have access to any Confidential Information to enter into a
Confidentiality Agreement in the form of Appendix D annexed
hereto.
ARTICLE 17
GENERAL
17.1 This Agreement and the Appendices shall be construed
in accordance with the laws of the State of California applicable
to agreements executed and to be wholly performed therein. The
parties hereto agree that any dispute arising out of or relating
to this Agreement may be instituted and prosecuted in the courts
of competent jurisdiction of the State of California located in
Los Angeles County, and the parties hereto irrevocably submit to
the jurisdiction of said courts and waive any rights to object to
or challenge the appropriateness of said forums.
17.2 Except as otherwise provided in this Agreement and/or
the Appendices, this Agreement and/or the Appendices can be
modified, amended, or any provision waived by only a written
instrument signed by the Company and by an authorized
representative of the Developer.
17.3 This Agreement, combined with the Appendices, is the
entire Agreement between the parties in connection with the
subject matter of the Agreement and the Appendices; it
incorporates, replaces and supercedes all prior agreements,
promises, proposals, representations, understandings and
negotiations, written or not, between the parties in connection
therewith.
17.4 In the event any one or more of the provisions of this
Agreement or the Appendices are unenforceable, it will be
stricken from this Agreement, but the remainder of the Agreement
and Appendices will be unimpaired.
17.5 The headings in this Agreement are for purposes of
reference only.
17.6 Upon first publication of the Software Devices which
embody the Final Work Product, the Company will provide the
Developer with twenty-four (24) gratis copies of the Software
Devices. Thereafter, the Developer will be permitted to purchase
such reasonable additional quantities as required at the
Company's lowest wholesale prices, plus applicable shipping
charges.
17.7 THQ, Inc. will provide Developer's logo on packaging
and manual, with sign-off privileges for Developer's
representation of said logos. Location of logo is subject to
THQ, Inc.'s and Sony's discretion.
17.8 As of sixty (60) days prior to final delivery of
products, the Developer will support any known hardware devices.
The Developer makes no warranties as to the compatibility of the
hardware devices appearing at retail after said date.
IN WITNESS WHEREOF, the parties hereto, each acting under
due and proper authority, and intending to be legally bound, have
executed this Agreement on the date first above written.
AGREED & ACCEPTED BY ADRENALIN ENTERTAINMENT,
A DIVISION OF WESTERN TECHNOLOGIES, INC.
By:s/Xxx Xxxxx III
Xxx Xxxxx III duly authorized and as
President of Western Technologies, Inc.
AGREED & ACCEPTED BY THQ, INC.
By:s/Xxxxx Xxxx
Xxxxx Xxxx, duly authorized and as
Vice President of Product
Development of THQ, Inc.
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