CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION / BRILLIANT DIGITAL
ENTERTAINMENT, INC. CONFIDENTIAL
This agreement ("Agreement") is entered into as of July 14, 1998, ("Effective
Date") by and between CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION, having a place of business at
CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION ("CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION ") and Brilliant Digital Entertainment
Corporation, having a place of business at 0000 Xxxxxxx Xxxxxx Xxxxxxxxx, Xxxxx
000, Xxxxxxxx Xxxxx, Xxxxxxxxxx, 00000 ("Publisher") on behalf of themselves and
their respective worldwide subsidiaries.
BACKGROUND
A. CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION plans to release a processor having
CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION technology. Publisher is developing
software which is able to use these enhanced capabilities.
B. CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION is willing to provide Publisher with
assistance and funds, and to receive distribution rights to the
software. Publisher is willing to undertake the development activities
and grant the rights set out in this Agreement.
AGREEMENT
CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION and Publisher agree as follows:
1. PUBLISHER'S EFFORTS
1.1. THE TITLES. The "Titles" to be developed and delivered under this Agreement
are the initial CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION scaleable episodes of the Titles and
each of the first three subsequent additional episodes (if any) of each
Title, made during the term of this Agreement, named CONFIDENTIAL
INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
PAGE 1
CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION / BRILLIANT DIGITAL
ENTERTAINMENT, INC. CONFIDENTIAL
COMMISSION, CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION, CONFIDENTIAL INFORMATION OMITTED AND
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION and a fourth
Title to be determined and agreed upon by the parties no later than
November 1, 1998 (the TBD Title). The features the first episode of each of
the four Titles must posses are more particularly described in the Product
Requirements Document ("PRD") set forth in Attachment A. The Titles include
all versions for all PC platforms, and include all updates and enhancements
thereof made during the term of this Agreement and the collateral material
specified in Attachment B.
1.2. COMMITMENT TO DEVELOP. Publisher shall use commercially reasonable efforts
to develop and deliver to CONFIDENTIAL INFORMATION OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION the Titles according
to the milestones set forth in Section 3 and the Development Schedule and
specifications contained in the PRD. The CONFIDENTIAL INFORMATION OMITTED
AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION and
CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION Titles, must, at a minimum, noticeably demonstrate
to an end user the advantages of running the Titles on an CONFIDENTIAL
INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION processor containing CONFIDENTIAL INFORMATION OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION technology, a
CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION, and CONFIDENTIAL INFORMATION OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION and associated
graphics cards vs. an CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION Processor running at
CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION with a CONFIDENTIAL INFORMATION OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION and an CONFIDENTIAL
INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION and associated graphics card. The CONFIDENTIAL INFORMATION
OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
and the TBD Title must at a minimum, noticeably demonstrate the advantages
of it on an CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION Processor containing CONFIDENTIAL
INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION running at
PAGE 2
CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION / BRILLIANT DIGITAL
ENTERTAINMENT, INC. CONFIDENTIAL
CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION, with a CONFIDENTIAL INFORMATION OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION and CONFIDENTIAL
INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION and associated graphics card VS. an CONFIDENTIAL INFORMATION
OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
Processor containing CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION running at CONFIDENTIAL
INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION, with a CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION and an CONFIDENTIAL INFORMATION
OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
and associated graphics card.
1.3. LANGUAGES. CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION and CONFIDENTIAL INFORMATION OMITTED AND
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION will be ready
and available for purchase by retailers CONFIDENTIAL INFORMATION OMITTED
AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION in the
following languages:
1.4. DIALOGUE AND TEXT: U.S. English, CONFIDENTIAL INFORMATION OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
1.5. SUBTITLES AND TEXT: CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION.
1.6. CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION and the TBD Title will be ready and available for
purchase by retailers in U.S. English on or before CONFIDENTIAL INFORMATION
OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION,
and on or before CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION in the following languages:
PAGE 3
CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION / BRILLIANT DIGITAL
ENTERTAINMENT, INC. CONFIDENTIAL
1.7. DIALOGUE AND TEXT: CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION.
1.8. SUBTITLES AND TEXT: CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION.
1.9. PROGRAM REVIEW. CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION, Publisher and any third party(s)
working on the Titles for Publisher shall meet at least twice a month
(either in person or by telephone conference) to review the progress of the
Titles' development, including the milestones set out in the Development
Schedule and the compliance of the Titles with the PRD.
2. TECHNICAL ASSISTANCE FROM CONFIDENTIAL INFORMATION OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. CONFIDENTIAL
INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION is currently helping Publisher optimize and port some of its
products to the CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION microprocessor architecture under a
separate Source Code License Agreement ("SLA") effective April 27, 1998
between the parties. Any technical contributions to the Titles made by
CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION hereunder shall be considered Modifications under
that SLA and subject solely to its terms.
CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION agrees that an Application Engineer will
coordinate the technical resources needed from CONFIDENTIAL INFORMATION
OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION to
assist with code optimizations and will be made reasonably available to
Publisher as needed.
3. ADVANCES OF FUNDS
3.1. AMOUNT AND TIMING. CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION will advance certain funds,
totaling CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE
PAGE 4
CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION / BRILLIANT DIGITAL
ENTERTAINMENT, INC. CONFIDENTIAL
SECURITIES AND EXCHANGE COMMISSION ($CONFIDENTIAL INFORMATION OMITTED AND
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION) to Publisher
for delivery of 3 Titles, CONFIDENTIAL INFORMATION OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION, CONFIDENTIAL
INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION, and CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION. If CONFIDENTIAL INFORMATION OMITTED
AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION and
Publisher mutually agree upon the specific details of a fourth Title (which
is currently referred to as "Title to be determined") no later than
November 1, 1998, then CONFIDENTIAL INFORMATION OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION will advance
additional funds totaling CONFIDENTIAL INFORMATION OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION upon CONFIDENTIAL
INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION acceptance of the milestones identified below (collectively, the
"Funds"). CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION will advance the Funds to Publisher in
the amounts specified below CONFIDENTIAL INFORMATION OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION after Publisher's
accomplishing and delivering, subject to CONFIDENTIAL INFORMATION OMITTED
AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION reasonable
satisfaction and acceptance not to be unreasonably withheld, each of the
following milestones:
PAGE 5
CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION / BRILLIANT DIGITAL
ENTERTAINMENT, INC. CONFIDENTIAL
CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION
3.2. USE OF FUNDS. The Funds shall only be used for development of the Title
until the final deliverable hereunder is accepted by CONFIDENTIAL
INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.
4. CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PARTICIPATION IN MARKETING
4.1. MARKETING. If accepted and timely delivered, CONFIDENTIAL INFORMATION
OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION will include the Title prominently in CONFIDENTIAL
INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION CONFIDENTIAL INFORMATION OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION marketing
efforts and, at CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION sole discretion, may
include Publisher in other appropriate marketing activities.
4.2. LICENSE. To the extent it actually possesses the right to do so,
Publisher grants to CONFIDENTIAL INFORMATION OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION a royalty-free,
world-wide license, with the right to sublicense, to copy,
demonstrate, prepare derivative works of, and display and perform
publicly the Title and its collateral artwork and documentation in
connection with CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION marketing activities for
the Title as well as any other CONFIDENTIAL INFORMATION OMITTED AND
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION marketing
activities. This license, however, is contingent upon CONFIDENTIAL
INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION receiving written approval from Publisher each
time CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION wishes to exercise its rights
hereunder. Publisher will grant such requests if it has the right to
do so.
PAGE 6
CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION / BRILLIANT DIGITAL
ENTERTAINMENT, INC. CONFIDENTIAL
4.3. Other Titles. CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION and Publisher may develop
or market products which are directly competitive with the Title.
5. CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION RECOUPMENT OF THE FUNDS
5.1. "Revenue Copy" means a sale, license, or other distribution of
one copy of a Title for which Publisher receives revenue.
5.2. ROYALTY ON REVENUE COPIES. CONFIDENTIAL INFORMATION OMITTED AND
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
shall earn a royalty on each Revenue Copy distributed by or
through Publisher according to the rate schedule below, but not
to exceed $CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION (or $CONFIDENTIAL
INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION if additional funds for which the second
sentence of section 3.1 provides, are not advanced by
CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION) for Revenue Copies sold,
licensed, or otherwise distributed in the United States and not
to exceed $CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION (or $CONFIDENTIAL
INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION if additional funds for which the second
sentence of section 3.1 provides, are not advanced by
CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION) for Revenue Copies sold,
licensed, or otherwise distributed elsewhere.
CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION
5.3. RESERVES. Publisher shall be entitled to retain a reasonable
reserve for product returns and discounts, not to exceed
CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE
PAGE 7
CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION / BRILLIANT DIGITAL
ENTERTAINMENT, INC. CONFIDENTIAL
SECURITIES AND EXCHANGE COMMISSION% of the amount otherwise
payable under section 5.1. Such reserve shall be liquidated no
later than CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION following the
CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION in which the reserve was
retained.
5.4. ADVERTISING. Until the funds have been recouped, CONFIDENTIAL
INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION will also receive from Publisher CONFIDENTIAL
INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION% of Publisher's CONFIDENTIAL INFORMATION
OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION revenues from advertising on CD ROM versions of the
Titles and on web pages devoted to the Titles, minus CONFIDENTIAL
INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION (CONFIDENTIAL INFORMATION OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION% of
CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION revenues). These revenues
apply towards CONFIDENTIAL INFORMATION OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION recoupment
of the Funds. If Publisher derives revenue from web pages on
which the Titles and other properties are advertised,
CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION will receive CONFIDENTIAL
INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION% of CONFIDENTIAL INFORMATION OMITTED AND
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
revenues for the percentage of advertising revenue derived from
the Titles specifically.
5.5. WEB LINKING. Publisher will provide a link and generate visits
from its World Wide Web page to another World Wide Web page that
CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION will, from time to time
specify ("click throughs").
5.5.1.CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE
PAGE 8
CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION / BRILLIANT DIGITAL
ENTERTAINMENT, INC. CONFIDENTIAL
COMMISSION and Publisher will agree on the specific terms of
this web linking plan no later than CONFIDENTIAL INFORMATION
OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION for BTS titles and CONFIDENTIAL
INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION for Holiday titles.
5.6. DISCOUNTED TITLE PURCHASES. For a period of CONFIDENTIAL
INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION years after the Effective Date, CONFIDENTIAL
INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION shall have the option, at its sole
discretion, to purchase copies of the Titles at a CONFIDENTIAL
INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION% discount off the best distributor discount
(minimum of CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION% ), for re-sale by
CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION. CONFIDENTIAL INFORMATION
OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION will apply the CONFIDENTIAL INFORMATION OMITTED AND
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION%
discount towards the recoupment of the Funds for each unit
subsequently sold by CONFIDENTIAL INFORMATION OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION or
CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION designated agent.
5.7. USE OF AN CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION LOGO. Publisher will,
at CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION request, use an CONFIDENTIAL
INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION logo on the Titles' packaging in a manner
specified by CONFIDENTIAL INFORMATION OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION and
according to standard CONFIDENTIAL INFORMATION OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION logo
licensing terms.
PAGE 9
CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION / BRILLIANT DIGITAL
ENTERTAINMENT, INC. CONFIDENTIAL
Publisher will not use an CONFIDENTIAL INFORMATION OMITTED AND
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION logo
unless so requested to do so by CONFIDENTIAL INFORMATION OMITTED
AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
5.8. FUNDS RECOUPMENT CAP. The maximum aggregate amount payable to
CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION under section 5 as royalties,
as advertising revenues, and as discounts shall not exceed the
actual amount of funds paid to publisher by CONFIDENTIAL
INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION under section 3.1. The discounts may continue
to be provided subject to Section 5.5 following full recoupment
of funds.
6. MONEY
6.1. MANNER OF PAYMENT. All payments shall be made in US dollars, and
shall be sent to the address specified in this Agreement.
Payments shall be made by wire transfer or, if no wire transfer
instructions are given, by check drawn on a U.S. bank. A party
may specify revised instructions and address by written notice to
the other.
6.2. PAYMENTS TO CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION. Payments to
CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION shall be by wire transfer to
CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION for the account of
CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION, General Account CONFIDENTIAL
INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION.
6.3. PAYMENTS TO PUBLISHER. Payments to Publisher shall be made by
wire transfer to: CONFIDENTIAL INFORMATION OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION, ABA#:
CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION, Attn: CONFIDENTIAL
INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION, CONFIDENTIAL INFORMATION OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE
PAGE 10
CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION / BRILLIANT DIGITAL
ENTERTAINMENT, INC. CONFIDENTIAL
COMMISSION, Account Name: Brilliant Digital Entertainment,
Account #: CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION.
6.4. STATEMENTS. Within CONFIDENTIAL INFORMATION OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION after the
end of each calendar quarter during the term of this Agreement
Publisher shall pay any amounts due and shall deliver to
CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION at the addresses set out in
this Agreement a report which sets out:
6.4.1. The period covered;
6.4.2. The number of copies of each Title distributed hereunder;
6.4.3. The number of Revenue Copies, 6.4.4. The balance of the
Funds; and 6.4.5. The balance of accounts receivable on the
Titles.
6.5. RECORDS AND AUDITING. Each party shall maintain complete and
accurate records of the activities performed under this Agreement
(including records of sales and distribution) for a period of
three (3) years after the completion thereof. Records relating to
the performance of this Agreement shall be made available in
confidence to other party's independent certified public
accountants (or equivalent for non-U.S. jurisdictions) upon
reasonable notice, which records may be used for the sole purpose
of auditing a party's compliance with the Agreement. In the event
that a shortfall greater than 10% is discovered in royalties paid
by a party, such audit shall be at the audited party's expense,
and such party shall promptly make up the difference.
6.6. TAXES. Each party shall be solely responsible for its own taxes,
including any applicable sales taxes and customs duties on items
acquired under this Agreement. To the extent, if any, that the
applicable taxing authority requires withholding of taxes based
on payments made hereunder, the paying party shall withhold such
taxes and provide the payee with the documentation reasonably
necessary to claim a credit therefor.
7. TERM, TERMINATION, WHAT IF SOMETHING GOES WRONG
7.1. TERM OF AGREEMENT. This Agreement's term commences as of the
Effective Date and terminates on the later of March 31, 2003 or
the last day of the calendar year in which CONFIDENTIAL
INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION fully recoups the Funds, unless earlier
terminated or unless extended by agreement of the parties.
PAGE 11
CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION / BRILLIANT DIGITAL
ENTERTAINMENT, INC. CONFIDENTIAL
7.2. BREACH. Either party may terminate this Agreement by written
notice if the other party is in material breach of any of its
terms and fails to cure such breach within thirty days of written
notice of such breach.
7.3. DELAY. Publisher shall promptly notify CONFIDENTIAL INFORMATION
OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION of any anticipated delay in meeting the Development
Schedule. If it appears that there will be a delay in having one
or more Titles delivered and accepted as set out in this
Agreement, then CONFIDENTIAL INFORMATION OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION and
Publisher shall meet to discuss an appropriate course of action
in good faith before exercising any of the remedies set out
below. Both parties shall use reasonable judgment and efforts to
rearrange development and ingredient delivery schedules to deal
with setbacks, such as unavailability of specific technology
ingredients or difficulty in developing the Titles. 7.3.1. If
Publisher's delay is due to causes beyond its
reasonable control then the remaining dates for Publisher's
deliverables, and all other dates calculated from those
date(s), shall be extended by a reasonable amount of time,
not in any case to exceed three months in the aggregate or
the period of any delay in CONFIDENTIAL INFORMATION OMITTED
AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION providing technology labeled "Critical."
If the Delay will be over ninety days, then CONFIDENTIAL INFORMATION
OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION may terminate the Agreement by written notice to Publisher.
7.4. CONVENIENCE. In addition to the provisions above, CONFIDENTIAL
INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION may, at its sole discretion, terminate this
Agreement without cause by written notice to Publisher. If
CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION chooses to terminate this
Agreement without cause, Publisher shall be entitled to retain
all Funds provided by CONFIDENTIAL INFORMATION OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION to
Publisher before the effective date of termination, and
CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION shall have no rights in
Publisher's Titles.
PAGE 12
CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION / BRILLIANT DIGITAL
ENTERTAINMENT, INC. CONFIDENTIAL
7.5. EFFECT OF TERMINATION. Upon any termination of this Agreement for
any reason: 7.5.1. Publisher shall on CONFIDENTIAL INFORMATION
OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION written request, return all materials that
CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION had provided hereunder. 7.5.2.
The provisions of Section 8 shall survive termination. 7.5.3. Any
third-party licenses directly or indirectly granted by a party
under this Agreement shall survive such termination, provided,
that the party granting such license shall be responsible for any
royalties earned on the license under this Agreement. 7.5.4.
Publisher may retain that portion of the Funds paid prior to
termination, but if termination is other than for Convenience or
for breach by CONFIDENTIAL INFORMATION OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION, and
Publisher releases, licenses or otherwise commercializes the
Titles in any format or medium, Publisher shall return the
previously advanced Funds to CONFIDENTIAL INFORMATION OMITTED AND
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION at a
rate of $CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION per retail Revenue
Copy or $CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION per OEM Revenue Copy
until the entire amount of previously advanced Funds is repaid to
CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
7.6. RIGHTS. Subject to the limitations in Section 4.2, Publisher
warrants and represents that it has or shall obtain all rights
necessary to undertake the activities described in this Agreement
and to grant the licenses described herein. Publisher shall
promptly notify CONFIDENTIAL INFORMATION OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION of any
charge or claim of infringement of any third party's right
relating to development or distribution of the Titles.
7.7. NOT A MUNITION. Publisher warrants and represents that the
Titles, including any updates or revisions, contains and shall
contain no encryption or other capabilities that renders it
subject to the US's
PAGE 13
CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION / BRILLIANT DIGITAL
ENTERTAINMENT, INC. CONFIDENTIAL
International Traffic and Arms Regulation (ITAR) set forth at 22
C.F.R., Section 120 et seq. or any successor or foreign
counterpart regulations.
7.8. SUITS BASED ON TITLES. Publisher shall defend, indemnify, and
hold CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION and its customers harmless
from and against any suit or proceeding brought against
CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION, its subsidiaries or
customers, based upon the development or distribution of Titles,
including any claim that the Titles infringes any third-party
intellectual property right (a "Claim"). Publisher's indemnity
will include all damages and costs awarded, including attorneys'
fees, and settlement costs, provided that CONFIDENTIAL
INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION shall not settle any claim without
Publisher's consent. 7.8.1. The indemnified party shall promptly
notify Publisher of
any Claim and will provide information, assistance, and
cooperation in defending against it (at Publisher's
expense).
7.8.2. The indemnified party will have the right to participate
in the defense of any Claim, at its own expense.
7.8.3. If there appears, in CONFIDENTIAL INFORMATION OMITTED AND
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
opinion, to be a reasonable likelihood that distribution of
any portion of the Titles may be found to infringe the
rights of any third party, then CONFIDENTIAL INFORMATION
OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION may terminate the Agreement or
Publisher, at its expense, will either (i) obtain for
CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION or its customers the
right to continue to use such Titles as contemplated herein,
(ii) modify such Titles so that it becomes non-infringing,
but without materially altering its functionality, or (iii)
replace such Titles with a functionally equivalent
non-infringing Titles, all at CONFIDENTIAL INFORMATION
OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION option.
7.8.4. This indemnity shall not apply to portions of the Titles
prepared or provided by the indemnified party.
7.8.5. Publisher's total liability under this section shall not
exceed the amount of Funds provided by CONFIDENTIAL
INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION under this agreement.
PAGE 15
CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION / BRILLIANT DIGITAL
ENTERTAINMENT, INC. CONFIDENTIAL
8. WARRANTS. As partial consideration for CONFIDENTIAL INFORMATION
OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION obligations under Section 2 of this Agreement and the
requirements under "Next Step" in clause 6 ("Application Feature
Specifications") of the "CONFIDENTIAL INFORMATION OMITTED AND
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
Brilliant Digital Entertainment Technical Production Requirements
Document" attached hereto as Attachment A, Publisher has granted
to CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION a Warrant, attached hereto as
Attachment D.
9. GENERAL PROVISIONS
9.1. CONFIDENTIAL TERMS. Except as otherwise provided herein,
each party shall maintain other party's confidential
disclosures in confidence pursuant to CNDA #89580. Neither
party may disclose the existence or terms of this Agreement
without the prior written consent of the other party except
as required by law or as required by section 401(a),
"Immediate Public Disclosure of Material Information," of
the American Stock Exchange Company Guide. Any such required
disclosure(s) will be to the most limited extent allowable.
9.2. TITLE. Except for the licenses expressly provided here, or
in a "shrink wrap" or other written license, no licenses are
granted by either party, either expressly or by implication,
to any intellectual property of the other. Notwithstanding
CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION ownership in the
copyrights in the CONFIDENTIAL INFORMATION OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
Technology, Publisher shall own all copyrights in its own
original work, including its own Titles.
9.3. RELATIONSHIP OF PARTIES. The parties are not partners or
joint venturers, or liable for the obligations, acts, or
activities of the other.
9.4. AMENDMENTS AND ASSIGNMENTS. Any change, modification or
waiver to this Agreement must be in writing and signed by an
authorized representative of each party. Neither party may
assign this Agreement or any portion of this Agreement to
any other party without the other's prior written consent.
9.5. MERGER AND WAIVER. This Agreement is the entire agreement
between the parties with respect to the development and
distribution of the Titles, and it supersedes any prior or
contemporaneous agreements and negotiations
PAGE 15
CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION / BRILLIANT DIGITAL
ENTERTAINMENT, INC. CONFIDENTIAL
relating thereto. No waiver of any breach or default shall
constitute a waiver of any subsequent breach or default.
9.6. LIMITED LIABILITY. Neither party shall be liable to the
other for lost profits, expected revenues, or development or
support costs arising from any termination of this
Agreement. IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE
OTHER FOR LOSS OF PROFITS, DATA, OR USE OR ANY SPECIAL,
CONSEQUENTIAL OR INCIDENTAL DAMAGES, HOWEVER CAUSED, EVEN IF
ADVISED OF THE POSSIBILITY OF SUCH DAMAGE. THE PARTIES
ACKNOWLEDGE THAT THESE LIMITATIONS ON POTENTIAL LIABILITIES
WERE AN ESSENTIAL ELEMENT IN SETTING CONSIDERATION UNDER
THIS AGREEMENT.
9.7. EXPORT. Neither party shall export the Titles or the
CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION in violation of US or
other applicable law.
9.8. NOTICES AND REQUESTS. All notices and requests required or
made under this Agreement must be in writing and shall be
personally delivered or if mailed postage prepaid, certified
or registered mail, or overnight courier to the addresses
listed below: CONFIDENTIAL INFORMATION OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
9.9. CHOICE OF LAW. Any claim based on this Agreement shall be
governed by the laws of Delaware, and shall be subject to
the exclusive jurisdiction of the state and federal courts
located there.
9.10.ATTACHMENTS. The following Attachments are incorporated by
reference into this Agreement:
9.10.5 Attachment D-- Warrants
IN WITNESS OF THEIR AGREEMENT, the parties have caused the
Agreement to be executed below by their authorized
representatives.
CONFIDENTIAL INFORMATION OMITTED BRILLIANT DIGITAL ENTERTAINMENT, INC.
AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION BY: /S/ XXXXXXX XXXX
----------------
XXXXXXX XXXX
CHIEF FINANCIAL OFFICER
By: /S/
------------------------------
CONFIDENTIAL INFORMATION
OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND
EXCHANGE COMMISSION
VICE-PRESIDENT
