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DISTRIBUTION AGREEMENT
BETWEEN
INFOGRAMES ENTERTAINMENT S.A.
AND
GT INTERACTIVE SOFTWARE CORP.
This Distribution Agreement (this "Agreement") is entered into by and
between Infogrames Multimedia S.A. and Infogrames Entertainment S.A.
(collectively, "Infogrames") and GT Interactive Software Corp. ("GTIS") as of
December 16, 1999 (the "Effective Date").
Whereas, GTIS is in the business of publishing and marketing Products
and wishes to license Infogrames to distribute, publish and market Products
owned or controlled by GTIS; and
Whereas, Infogrames wishes to obtain the right to distribute, publish
and market Products owned or controlled by GTIS;
NOW THEREFORE, in consideration of the mutual covenants contained
herein, the parties hereby agree as follows:
1. Definitions
(a) "Chargeback" means deductions customers take against an Infogrames
invoice for price protection, promotions or markdowns.
(b) "Confidential Information" means trade secrets, discoveries, ideas,
concepts, know-how, techniques, designs, specifications, drawings,
diagrams, data, computer programs, business activities and
operations. In order to be considered "Confidential Information," the
information must contain a legend, such as "Confidential
Information," "Confidential" or "Proprietary," or if orally
disclosed, such information shall be considered and treated as
Confidential Information only if it is clearly identified at the time
of disclosure as being confidential and the disclosing party gives
written notice within 10 days after disclosure specifically reciting
the information orally disclosed and stating that such information is
Confidential Information.
(c) "Manufacturing Costs" means all reasonable direct costs of
manufacturing, including license fees paid to console product
manufacturers and in-bound transportation costs, for Products sold
and not returned.
(d) "Master" means a gold master CD-ROM, cartridge or other appropriate
electronic medium of delivery which is of sufficient quality to allow
reproduction of the applicable software product without any material
degradation, plus the applicable user manual and any and all
documentation reasonably necessary to exercise Infogrames' rights
under this Agreement, including without limitation, graphics in hard
and electronic copy.
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(e) "Merchandise" means goods and sundries bearing the names, characters,
themes or based on the storylines related to any Product.
(f) "Net Revenues" means gross revenues received by Infogrames from third
parties, less any returns, Chargebacks, discounts, rebates,
Manufacturing Costs, taxes, duties, commissions, insurance and
transportation costs.
(g) "Products" means the Products (in any format, e.g. PC, Macintosh,
console, video, online play) to which GTIS (and its subsidiaries) has
the right to distribute such Products in the Territory, whether
licensed or owned by GTIS (or its subsidiaries), and any
demonstration versions and derivative works thereof, including
without limitation, rights to merchandising, television, film, music,
hint books, strategy guides, sequels, add-ons and level packs.
(h) "Trademarks" means the trademarks, logos, service marks, trade names
and other proprietary markings owned by or licensed to GTIS in
connection with any Product.
(i) "Territory" means all countries currently comprising Europe,
including without limitation all countries included in the European
Union.
(j) All capitalized terms not defined herein are as defined in the
Securities Purchase Agreement between the parties dated as of
November 15, 1999.
11. License: GTIS hereby grants to Infogrames the exclusive right to publish,
manufacture, have manufactured, localize, adapt, market, advertise,
promote, publicize, distribute, sell, sublicense or otherwise exploit the
Products through all channels of distribution in the Territory, subject to
rights granted in any license agreement dated prior to November 11, 1999
(the "Pre-existing Agreements"). GTIS shall not renew the Pre-existing
Agreements nor allow the Pre-existing Agreements to automatically renew.
Upon Infogrames' request, GTIS shall provide Infogrames with all materials
reasonably necessary for Infogrames to localize the Products, including
without limitation, source code and all related documentation, subject to
their availability to GT and to third-party approval rights, as applicable.
12. Trademark License: GTIS hereby grants to Infogrames a royalty-free,
non-exclusive, non-transferable license to use GTIS' Trademarks in
connection with the exercise of the license granted to Infogrames pursuant
to Paragraph 2 of this Agreement. GTIS' Trademarks and the goodwill
associated therewith are and remain GTIS' exclusive property. Infogrames
shall acquire no right, title or interest in GTIS' Trademarks or the
goodwill associated therewith, other than the limited license and right to
use GTIS' Trademarks as set forth under this Agreement. All usage of GTIS'
Trademarks by Infogrames shall inure to GTIS' benefit. Infogrames will use
all reasonable efforts to ensure that all applicable and reasonably
necessary Trademarks used for a Product appear
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clearly on the packaging and major advertising and promotional materials
for such Product.
12. Termination of License Agreements: Immediately after the Closing, GTIS
agrees to terminate any and all license agreements between GTIS and any
European Company Subsidiary effective as of such date that Infogrames and
GTIS mutually agree Infogrames will commence publishing and distributing
GTIS' Products, but in no event later than March 31, 2000.
13. Purchase of Prepackaged Products: If GTIS offers prepackaged Products,
Infogrames shall be entitled to purchase such prepackaged Products at GTIS'
actual direct cost of manufacture, F.O.B. GTIS' warehouse. The prepackaged
Products will be purchased on a purchase order basis, under Infogrames
standard purchase order terms and conditions. Royalties due GTIS for the
subsequent sale of such product are covered by the other terms and
conditions of this Agreement including but not limited to Paragraphs 8 and
15 below.
14. Return of Prepackaged Products: Infogrames shall be entitled to return
prepackaged Products purchased from GTIS to GTIS for a full refund or
credit, at Infogrames' option.
15. Delivery of Non-Prepackaged Products: GTIS will deliver as soon as
practicable a complete Master of any Product which is licensed to
Infogrames under this Agreement for manufacture by or for Infogrames
pursuant to this Agreement. The Master for all Products will include
English, German, French, Spanish and Italian language versions (except and
unless Infogrames and GTIS mutually agree that the sales potential for a
Product in one or more of these languages is not sufficient to economically
justify translation of the Product, in which case the versions in those
specific languages may be omitted).
16. Royalties on Products: Infogrames will pay to GTIS a royalty on
distribution of Products which are manufactured by or for Infogrames
pursuant to the license granted herein calculated as follows:
(a) If a third party is entitled to royalties based on Infogrames'
distribution of the specific Product, then the royalty will be the
greater of (i) 30% of the Net Revenues Infogrames actually receives
from the distribution of such Product or (ii) 130% of the royalty due
to such third party (not including any advance) actually paid by GTIS
to the third party for such Product. GTIS will inform Infogrames at
the time such Product is delivered to Infogrames of the amount of the
royalty due to such third party in writing.
(b) If the Product is internally developed by GTIS, or any of its
subsidiaries, then the royalty will be 30% of the Net Revenues
Infogrames actually receives from the distribution of the Product.
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(c) No royalties will be due from Infogrames to GTIS for up to 500 units
of each Product, to be used for promotional and demonstration
purposes.
(d) No royalties will be due from Infogrames to GTIS for any transfer or
payment amongst Infogrames Entertainment S.A. and its subsidiaries
(and their subsidiaries).
5. Obligation to Release Product. Infogrames shall actively commence marketing
and selling the Products within the Territory in reasonable commercial
quantities within three (3) months following Infogrames' receipt of
Masters. If Infogrames shall fail to have commenced actively marketing and
selling the Products in the Territory within three (3) months following the
receipt of Masters with respect thereto, then GTIS shall have the right, in
addition to any other rights which GTIS may have hereunder, upon thirty
(30) days prior written notice to Infogrames, to declare such right
henceforth to be nonexclusive.
6. Anti-Export Protection. Infogrames shall use commercially reasonable
efforts not to sublicense, distribute or sell any Products to any
distributor or customer who Infogrames knows, or could reasonably be
expected to know, intends to resell or export the Products outside of the
Territory. A licensee, sublicensee, distributor or customer who wrongfully
resells or exports Products outside of the Territory is referred to as an
"Exporter." GTIS shall have the right, in addition to any other rights
which it may have hereunder, to require Infogrames to terminate any
license, distribution agreement or arrangement with any such Exporter who
is wrongfully distributing Products in violation of the rights of GTIS.
7. Prohibition of Sublicensing; Derivative Works. Infogrames shall not
sublicense any of the rights granted to Infogrames hereunder without GTIS'
prior written consent, such consent not to be unreasonably withheld.
Infogrames shall not exploit derivative works related to the Products,
including without limitation rights to merchandising, television, film,
music, hint books, strategy guides, sequels, add-ons and level packs,
without GTIS' prior written consent, such consent not to be unreasonably
withheld. Notwithstanding the above, GTIS acknowledges that Infogrames
maintains sublicensing agreements with affiliates and/or third parties in
certain countries within the Territory as listed on Schedule A and that
such sublicensing agreements are deemed to be pre-approved with respect to
the publishing and distribution of Product within those countries that is
developed by GTIS or its subsidiaries. Sublicensing to original equipment
manufacturers (OEMs) for exploitation in the Territory is also deemed
pre-approved for Product developed by GTIS or its subsidiaries. Such
pre-approvals for sublicensing within the Territory do not apply to Product
developed by third parties.
8. Approval Rights. The Products as manufactured, advertised, sold,
distributed or otherwise disposed of by Infogrames under this
Agreement shall be of customary quality and shall be sold and
distributed in packaging acceptable to GTIS and bearing GTIS'
Trademarks and trade names. Such packaging may indicate that the
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Products are distributed by Infogrames. Infogrames agrees to furnish
GTIS free of cost, for GTIS' reasonable approval as to quality and
style, samples of each Product together with its proposed packaging
prior to the Product's release for sale or distribution. The Product
shall not be sold or distributed by Infogrames without such approval.
GTIS will approve or reject samples submitted by Infogrames within ten
(10) days of receipt of such samples; GTIS' failure to respond to
requests for approval within ten (10) days shall be deemed approval.
8. Ownership of Intellectual Property Rights. Notwithstanding anything
contained herein to the contrary and subject to the terms of this
Agreement, all artwork, designs and computer software embodying the
intellectual property embodied in the Products, or any reproduction
thereof, or any packaging or advertising materials, which are
designed, developed and/or created by Infogrames hereunder (or any of
its sublicensees, affiliates or subsidiaries), shall be, and remain
GTIS' (or its affected third party's, as the case may be) sole and
exclusive property, inclusive of all copyrights and right to copyright
therein and thereto for the life of the copyright therein; provided
that during the Term of this Agreement, Infogrames shall have the
exclusive right, license and privilege (without any compensation to
GTIS except as otherwise provided in this Agreement) to use all such
above described materials in connection with its exploitation, sale
and distribution of the Products.
Subject to the terms of this Agreement, Infogrames acknowledges and agrees
that: All copyrights, trademarks and service marks and rights to same
referred to in this Agreement in the name of and/or owned by and/or
licensed to GTIS shall be and remain the sole and complete property of
GTIS, or its affected third-party licensors, as the case may be; that all
such copyrights, trademarks and service marks and rights to same in the
name of or owned by any copyright proprietor other than GTIS or Infogrames
shall be and remain the sole and complete property of such copyright
proprietor; that all trademarks and service marks which, and/or the right
to use which, arise out of the license hereby granted to use the
intellectual property embodied in the Products shall be and remains the
sole and complete property of GTIS (or its affected third-party licensors,
as the case may be); that Infogrames shall not at any time acquire or claim
any right, title or interest of any nature whatsoever in any such trademark
or service xxxx by virtue of this Agreement or of Infogrames' uses thereof
in connection with the Products; and that any right, title or interest in
or relating to any such trademark or service xxxx, which comes into
existence as a result of, or during the Term of, the exercise by Infogrames
of any rights granted to it hereunder shall immediately vest in GTIS (or
its affected third-party licensor, as the case may be).
9. Taxes. All amounts due hereunder include any applicable taxes and duties.
10. Payment Procedures: Infogrames will report to GTIS the amount of royalties
due within sixty (60) days after the end of each calendar quarter, and each
such report will be accompanied by payment of such amount; provided,
however, that Infogrames shall be
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entitled to credit the amounts to be paid by GTIS to any amounts that GTIS
owes to Infogrames under any other agreement or security whatsoever. All
payments will be made in U. S. dollars.
10. Audit: Infogrames will keep accurate records of the basis for the royalty
determination and will make such records available to an independent
certified public accountant mutually agreed upon by the parties for
inspection during normal business hours, provided however such inspection
shall not interfere with Infogrames' normal business activities. Such
accountant shall be under an obligation of confidentiality to Infogrames,
and will only disclose to GTIS whether or not the royalty reports provided
to GTIS by Infogrames were correct, and if not, the amount by which the
royalty reports are incorrect. No other information will be provided to
GTIS. If Infogrames has underpaid the royalties due, Infogrames will
promptly pay the underpaid amount. If Infogrames has overpaid the royalties
due, Infogrames may elect, in its sole discretion, to either credit such
overpayment against royalties to come due in the future or require GTIS to
refund such overpayment to Infogrames promptly. Inspections shall be at
GTIS' cost, shall not occur more frequently than once annually and shall
not cover the same records more than once; provided, however, that the
reasonable cost of the inspection will be reimbursed by Infogrames if the
inspection discovers an underpayment in excess of ten (10%) percent.
11. GTIS Warranties and Indemnity: GTIS warrants and represents that GTIS has
sufficient rights to the Products to grant Infogrames the licenses under
this Agreement and that any Product provided to Infogrames under this
Agreement does not and will not infringe any third party proprietary right.
If Infogrames is obligated to pay any third party for rights reasonably
necessary to exploit its rights under this Agreement, GTIS will reimburse
Infogrames such amount upon Infogrames' request. GTIS warrants and
represents that it has the right to enter into this Agreement and that this
Agreement and GTIS' performance under this Agreement will not conflict or
violate any obligations that GTIS may have under an agreement with any
third party. GTIS will indemnify Infogrames, and its affiliates, officers,
directors and employees, against claims, actions, demands, liabilities,
losses, damages, expenses (including reasonable attorneys' fees and legal
costs) related to alleged or actual infringement of third party proprietary
rights by the Products and to alleged personal injury or property damage
related to the Products. GTIS will indemnify Infogrames, and its
affiliates, officers, directors and employees, against any claims,
liabilities, losses, damages, injuries, costs, expenses, causes of action,
claims, demands, assessments and similar matters related to any breach of
GTIS' warranties.
12. Infogrames Warranties and Indemnity: Infogrames warrants and represents
that it has the full power and authority to enter into this Agreement.
Except as contemplated hereby, Infogrames warrants and represents that it
will not assign, transfer, lease, convey or grant a security interest in or
otherwise similarly dispose of the Products or any related materials.
Infogrames warrants and represents that it shall use its reasonable best
efforts to protect GTIS' and any applicable third party's intellectual
property rights covered by this Agreement in the Territory against
infringement. Infogrames warrants and represents that the making of this
Agreement and the manufacture, marketing, sale and distribution
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of the Products shall not infringe upon or violate any laws or regulations
of any nation with the Territory; any agreement, right or obligation
between Infogrames and any other person, firm or corporation; or any rights
of any third party. Infogrames will indemnify GTIS, and its affiliates,
officers, directors and employees, against any claims, liabilities, losses,
damages, injuries, costs, expenses, causes of action, claims, demands,
assessments and similar matters related to any breach of Infogrames'
warranties.
12. Conditions on Indemnity Obligations: The indemnity obligations set forth in
this Agreement are conditioned upon the party claiming indemnification (the
"Indemnified Party") promptly notifying the indemnifying party (the
"Indemnifying Party") of the claim, allowing the Indemnifying Party to
control any defense or settlement of such claim and assisting the
Indemnifying Party in the defense or settlement so long as the Indemnifying
Party reimburses the Indemnified Party's reasonable expenses.
13. Term: The term of this Agreement will be the later of (a) seven years or
(b) the period of time during which Infogrames and its subsidiaries hold at
least twenty-five percent (25%) of the voting stock of GTIS.
14. Termination: This Agreement may be terminated by Infogrames in its sole
discretion upon ninety (90) days written notice to GTIS. Either party may
terminate this Agreement for a material breach by the other party which has
not been cured within sixty days after the non-breaching party provided
written notice of such breach to the breaching party.
15. Effect of Termination: Upon termination of this Agreement, the licenses
granted hereunder will terminate, provided however, that in the event such
termination is for other than a breach by Infogrames, the licenses will
continue to the extent necessary for a period of up to six (6) months to
allow Infogrames to distribute its remaining inventory of Products and to
fulfill its obligations under any agreement with a third party. Paragraphs
1, 3, 8, 10, 11, 13, 15-19 and 22-32 shall survive termination of this
Agreement for any reason.
16. Assignment: Infogrames may assign all or a portion of its rights under this
Agreement to (a) its affiliates or (b) in the event of a change in control
of Infogrames, to the successor entity or any of its affiliates. Infogrames
may not assign this Agreement to any other third party without GTIS
approval. Subject to the foregoing, the provisions of this Agreement shall
apply to and bind the successors and permitted assigns of the parties. Any
attempted assignment or other transfer of this Agreement not in compliance
with this Paragraph 23 shall be null and void and shall be deemed to be a
material breach of this Agreement which is not capable of cure.
17. Disposition of European Operations: GTIS agrees that upon execution of this
Agreement, it will take all actions necessary to dispose, as soon as
practicable, of its existing publishing and distribution operations in the
Territory and those of Company Subsidiaries in the Territory.
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18. Confidentiality: Each party agrees that it will hold in strict confidence
and not disclose the Confidential Information of the other party to any
third party and to use the Confidential Information of the other party for
no purpose other than the purposes expressly permitted by this Agreement.
Each party shall only permit access to the other party's Confidential
Information to those of its employees having a need to know and who have
signed confidentiality agreements containing terms at least as restrictive
as those contained in this Paragraph 20. Each party shall maintain the
confidentiality and prevent accidental or other loss or disclosure of any
Confidential Information of the other party with at least the same degree
of care as it uses to protect its own Confidential Information but in no
event with less than reasonable care. A party's obligations of
confidentiality under this Agreement shall not apply to information which
such party can document (i) is in the public domain without the breach of
any agreement or fiduciary duty or the violation of any law, (ii) was known
to the party prior to the time of disclosure without the breach of any
agreement or fiduciary duty or the violation of any law, (iii) is
independently developed by the party prior to receiving such Confidential
Information without reference to any Confidential Information, (iv) is
required to be disclosed pursuant to a judicial order, a requirement of a
governmental agency or by operation of law, provided that such party gives
the other party written notice of any such requirement immediately after
learning of any such requirement, and takes all reasonable measures to
avoid or limit disclosure under such requirements and to obtain
confidential treatment or a protective order and has allowed such other
party to participate in the proceeding. Upon written request by either
party hereto, the other party shall promptly return all documents and other
tangible materials representing the requesting party's Confidential
Information and all copies thereof. Notwithstanding anything contained
herein to the contrary, GTIS reserves the right to publicly disclose the
terms of this Agreement if it determines in good faith that this is a
material agreement which must be filed with the Securities and Exchange
Commission.
19. Governing Law: The laws of France shall govern this Agreement, without
regard to conflicts of laws provisions thereof and without regard to the
United Nations Convention on Contracts for the International Sale of Goods.
20. Relationship of Parties. The parties hereto expressly understand and agree
that the parties are independent contractors in the performance of each and
every part of this Agreement.
21. Amendment and Waiver. Except as otherwise expressly authorized herein, any
provision of this Agreement may be amended and the observance of any
provision of this Agreement may be waived only with the written consent of
the parties.
22. Headings. Headings and captions are for convenience only and are not to be
used in the interpretation of this Agreement.
23. Notices. All notices, statements, and reports required or permitted by this
Agreement shall be in writing and deemed to have been effectively given and
received; (i) five (5) business days after the date of mailing if sent by
registered or certified mail, postage
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prepaid, with return receipt requested; (ii) when transmitted if sent by
facsimile, provided a confirmation of transmission is produced by the
sending machine and a copy of such facsimile is promptly sent by another
means specified in this Paragraph 25; or (iii) when delivered if delivered
personally or sent by express courier service. Notices shall be addressed
as follows:
If to Infogrames: If to GTIS:
Infogrames Entertainment S.A. GT Interactive Software Corp.
00, xxx xx 0xx Xxxx 1943 417 Fifth Avenue
Villeurbanne, 69100 Xxx Xxxx, Xxx Xxxx 00000
France Attention: Xxxxxx Xxxxxxx
Attention: Xxxxxx Xxxxxxxx Telecopy: (000) 000-0000
Telecopy: (000 00) 000 000000 Confirm: (000) 000-0000
Confirm: (000 00) 000 000000
And with a copy to:
Attention: Xxxxxxxx Xxxxxxx Xxxxxx Xxxxx Xxxxxxxx & Xxxxxxx LLP
Telecopy: (011 33) 472 655059 000 Xxxxx Xxxxxx
Confirm: (000 00) 000 000000 Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxx, Esq.
With a copy to: Telecopy: (000) 000-0000
Confirm: (000) 000-0000
Pillsbury Madison & Sutro LLP
000 Xxxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxxxx X. Xxxxxxxx, Esq.
Xxxxxx X. Xxxxxxxxx, Esq.
Telecopy: (000) 000-0000
Confirm: (000) 000-0000
23. Entire Agreement. This Agreement supersedes all proposals, oral or written,
all negotiations, conversations, or discussions between or among parties
relating to the subject matter of this Agreement and all past dealing or
industry custom.
24. Severability. If any provision of this Agreement is held to be illegal or
unenforceable, that provision shall be limited or eliminated to the minimum
extent necessary so that this Agreement shall otherwise remain in full
force and effect and enforceable.
25. Counterparts. This Agreement may be executed in one or more counterparts,
each of which shall be deemed an original, but all of which taken together
shall constitute one and the same instrument.
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IN WITNESS WHEREOF, the Parties have executed this Distribution
Agreement on the Effective Date.
INFOGRAMES ENTERTAINMENT S.A. GT INTERACTIVE SOFTWARE CORP:
By: _____________________________ By: _______________________________
Name: ___________________________ Name: _____________________________
Title: __________________________ Title: ____________________________
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