EXHIBIT 10.19
DISTRIBUTION AGREEMENT
THIS DISTRIBUTION AGREEMENT is entered into this 29th day of September 1995 by
and between BRILLIANT INTERACTIVE IDEAS PTY LTD and Australian Company (BII) and
OCEAN OF AMERICA INC., a California company (OCEAN).
WHEREAS OCEAN is in the business of publishing and distributing computer
software in the USA and world-wide. And BII is in the business of developing
interactive multimedia software products. OCEAN is desirous of having BII
develop various software products for publishing and distribution.
NOW THEREFORE THE PARTIES do agree as follows:
1. BII shall develop a range of CD-ROM software titles for OCEAN
hereinafter referred to as the "Products" (as attached hereto on
Attachment A).
2(a). The Products shall be delivered in object code in a form compatible
with IBM PC running under Windows V3.x, as well as Macintosh from
Apple Computer, and shall be reasonably fit for the purposes intended.
BII shall ensure to the best of our ability that the Products are
compatible with Windows 95 within a reasonable time frame of the
release of Windows 95 into the market, such time frame to be agreed to
jointly between OCEAN and BII.
2(b). BII agrees to rectify all software bugs which are defined as
programming errors in the Products, reported by OCEAN within a
reasonable time frame commensurate with the nature of the software
bug.
3. BII grants to OCEAN the right to reproduce, publish, distribute and
display the Products in North America and Europe, including the United
Kingdom. OCEAN shall not be entitled to make any alterations to the
object code of the Products without the written consent of BII.
4(i). The rights to publish as granted in clause 3 above are the exclusive
retail rights for the territories named in 3 above and shall not
conflict with any other rights granted by BII.
4(ii). BII further grants to OCEAN OEM and bundle rights to the Products for
the territory of North America and Europe including the United
Kingdom. These rights are independent of the other rights as granted
above.
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4(iii). BII reserves the right to enter into OEM and bundle deals for the
Products in the territory of North America and Europe including the
United Kingdom on the Apple Macintosh computer and Apple Macintosh
compatible computers. BII agrees to pay OCEAN CONFIDENTIAL INFORMATION
OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION % of the revenue generated from such OEM and bundle
agreements on a quarterly basis (March, June, September and December)
within 45 days from the end of the quarter.
5(i). OCEAN shall pay to BII a royalty of CONFIDENTIAL INFORMATION OMITTED
AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION % of
the Net Revenue received by OCEAN for each Product sold under clause 3
and 4(i) above and CONFIDENTIAL INFORMATION OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION % of the Net
Revenue received by Ocean for each Product sold under clause 4(ii)
above. Net Revenue is defined as gross revenue actually received by
OCEAN from the sale of Products less cash and credit returns, warranty
replacements, bad debts written off as unrecoverable, sales tax or VAT
and freight charges to OCEAN'S customers for shipment of Products. No
royalty shall be due on Products distributed at no charge to
distributors, sub distributors, dealers or others for promotional or
evaluation purposes.
5(ii). OCEAN shall pay to BII the royalties due under clause 5(i) above, each
calendar quarter (March, June, September and December) within 45 days
after the end of each calendar quarter. Such royalty payments are
subject to the advances as contained in clause 6 below.
5(iii). Ocean shall provide BII a quarterly sales and royalty report,
certified as correct by an authorized officer of OCEAN (the Certified
Sales and Royalty Report) when remitting the royalty payments as
detailed in clause 5(ii) above. Where royalties payable are offset
against advances then the Certified Sales and Royalty report shall
still be provided to BII within 45 days from the end of the calendar
quarter.
5(iv). OCEAN shall be entitled to withhold from all royalty payments,
excluding the advance as contained in clause 6 below, sums otherwise
payable hereunder, a returns reserve, against anticipated returns of
Products sold, which reserve shall not exceed ten percent (10%) of all
amounts due hereunder for the two most recent calendar quarters,
without adjustment for reserve, and which reserve shall be reviewed
quarterly in light of the actual returns of the preceding two
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(2) quarters. The excess (short-fall), if any, of such reserve balance
at the time of such quarterly review over (under) the actual aggregate
amount of returns for such period shall be credited to (debited
against) the next royalty payment due to BII.
6. OCEAN shall pay to BII a sum of USD CONFIDENTIAL INFORMATION OMITTED
AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION being
a non-refundable development advance to be recouped against royalties
due to BII, for each Product sold under clause 5 above. The advance
shall be payable as follows:
(a) USD CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION on CONFIDENTIAL
INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION;
(b) USD CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION on CONFIDENTIAL
INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION;
(c) USD CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION on CONFIDENTIAL
INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION;
(d) USD CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION on CONFIDENTIAL
INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION;
(e) USD CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION on CONFIDENTIAL
INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION;
(f) USD CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION on CONFIDENTIAL
INFORMATION OMITTED AND
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FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
7. OCEAN guarantees to release the Products to retailers no later than
October 31, 1995 (Retail Marketing Date) for the Products to be
delivered under clause 8 (a) below and November 30, 1995 for the
Products to be delivered under clause 8 (b) below, subject to the
Products being delivered on time. Any delay in receipt of the Products
shall automatically result in a corresponding delay in the Retail
Marketing Date, subject to any force majeure.
8. BII shall deliver the finished Products to OCEAN as follows:
(a) CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION Products no later than
CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION;
(b) CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION Products no later than
CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
Any delay in the delivery date of the finished Product shall cause a
corresponding delay in the Retail Marketing Date. In the event that
OCEAN requests any changes to the Products where such changes are an
enhancement to the Product and not rectification of software bugs,
then these shall be at the expense of OCEAN and shall be treated as a
further advance against royalties and shall be recoupable against
retail product sales.
9. OCEAN shall use it's best commercially reasonable endeavors to promote
and expand the sale of the Products in all parts of North America and
Europe and in all sectors of the market on the maximum possible scale
by all reasonable means.
10. OCEAN shall keep complete and accurate records regarding the
production, replication and distribution of the Products and shall
upon 10 days notice from BII allow BII or it's agent to inspect all of
these records and other related documents during normal working hours.
In the event of any discrepancies being noted OCEAN agrees to pay BII
within 10 days all additional moneys owing and where the discrepancy
exceeds 5% of the amount that is due to BII Ocean agrees to pay all
costs
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incurred by BII in conducting the inspection of OCEAN's records. BII's
ability to conduct the above mentioned inspection is restricted to
once every year and on termination of this Agreement for any reason
whatsoever.
11. BII may terminate this Agreement immediately upon giving written
notice to OCEAN if:
(a) OCEAN falls to make any payment when due or otherwise breaches
this Agreement and has not rectified such breach within 14 days
of notice from BII; or
(b) OCEAN dissolves, liquidates or if bankruptcy, insolvency,
winding up or reorganization procedures are commenced by OCEAN
or are brought against OCEAN and such proceedings are not set
aside within 30 days of their commencement.
12. If this Agreement is terminated for any reason, OCEAN shall:
(a) immediately return all masters of the Products to BII; and
(b) have the right to sell its existing stocks of the Products for
a period of six (6) months from the date the Agreement is
terminated subject to payment to BII of all royalties due under
this agreement.
13. BII shall be responsible for any and all other royalties due on the
Products to third parties including music royalties, animation
royalties and licensing royalties.
14. BII provides no warranty as to names being used including the name
Brilliant Interactive Ideas in the territories in which OCEAN
distributes. In the event a name change is needed for legal reasons
then the parties shall consult as to the new name and BII shall make
the necessary changes with the cost of any requisite name changes
being split evenly and any moneys paid by OCEAN shall be treated as an
advance against retail sales royalties. BII warrants that it is not
aware of any contraventions caused by the names that are used.
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In the event that OCEAN believes, in any country within the territory,
that the copyrights on the Products should be on the Products should
be registered or that the trademarks used in the Products should be
registered, BII shall promptly obtain (and maintain throughout the
term) at BII's expense, such copyrights or trademarks in such country.
If within CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION of such request, BII has not
provided OCEAN with written proof that the applications for such
registrations have been made OCEAN shall be entitled to file such
applications in such countries in BII's name and at BII's expense.
15(i). The names used are the property of BII and OCEAN shall have no claim
to these or any other names being used.
BII retains any and all of the copyrights contained in the Products
and OCEAN shall have no rights in the copyrights or other intellectual
rights contained in the Products. All Products shipped shall reflect
the appropriate copyrights which shall be provided to OCEAN
simultaneously with the masters. Any press release or advertisement
for the Products shall reference BII as the developer and shall
contain the appropriate copyright notices as provided. Ocean shall be
entitled to commence.
15(ii). BII hereby authorizes OCEAN to take any and all action that OCEAN
deems necessary to protect and enforce BII's copyright in the
products. Where as a result of such action by OCEAN damages are
awarded then OCEAN shall be entitled to recover from the damages all
costs incurred as a result of the action and any residual amount
remaining shall be split equally between OCEAN and BII.
16. Left Blank
17. BII represents and warrants that the Products, as delivered to OCEAN,
will not infringe the patent, copyright, trademark, trade secret or
other proprietary or privacy rights of any third party. Each party
shall fully indemnify the other (and its affiliates, shareholders,
directors, officers, employees and agents) against all losses, costs,
charges and expenses arising from such party's negligence in
connection with this Agreement.
18. Each party shall treat as confidential all information of a
confidential nature of the other party which comes into its possession
under this Agreement.
19. The term of this Agreement shall be for a period of CONFIDENTIAL
INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION (CONFIDENTIAL INFORMATION OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION) years from the
date of signing
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of this Agreement with OCEAN being granted an option to renew the
Agreement for a further CONFIDENTIAL INFORMATION OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION (CONFIDENTIAL
INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION) year period provided that the total royalty
payments paid to BII under clause 5 above exceeds US$ CONFIDENTIAL
INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION at the end of the first CONFIDENTIAL INFORMATION
OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION (CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION) years. In the event that the
option to renew is not exercised by OCEAN then all rights shall revert
back to BII.
20. This Agreement shall be governed by the laws of the State of
California.
By their signatures below the parties agree to be bound by the terms of this
Agreement.
/s/ ▇▇▇ ▇▇▇▇▇ /s/ ▇▇▇▇ ▇▇▇▇▇▇
__________________________ ---------------------------------
Ocean of America, Inc. Brilliant Interactive Ideas Pty Ltd
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ATTACHMENT A
The Products are:
A. Kids Theatre
1. Plates are People Too
2. The Gumball Shop
3. Play Ball ▇▇▇▇▇▇▇
▇. Craftpax
1. Activity Pack
2. Trix
C. Beyond 2000 Interactive
1. Dream Machines and Their Designers
2. 101 Ways to Save Our Planet.
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