LICENCE AGREEMENT TERM SHEET
Exhibit
99.1
Date:
06/10/06
TERM
SHEET
1. Parties:
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(a)
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VCL Communications GmbH ("VCL") of Xxxxxxxxxxxxxx Xxx. 00, 00000
Xxxxxx,
Xxxxxxx represented by its Managing Director, Xxxxx Xxxx;
and
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(b)
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New Medium Enterprises, Inc. ("NME") of VMD House; 195, the Vale;
Xxxxxx
X00XX; United Kingdom represented by its EVP BD, Xxxxxxxxx
Xxxxxx-Xxxxxxx
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2. Pictures:
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Motion
Pictures, available in the High Definition format and listed in Schedule
A
hereto, and all motion pictures with respect to which VCL owns or
controls
the necessary rights to license NME hereunder and in respect to which
NME
has exercised its first option to acquire non-exclusive VMD-rights.
VCL
indemnifies NME from any copyright infringement from any claims and
demands made by third parties.
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3.
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Authorised
Formats:
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Versatile
Multilayer Disc (VMD) as described in Schedule B hereto only. The
VMDs
manufactured and distributed by NME shall be of first-class quality
and
shall conform to the visual and audio quality of the Delivery Material
supplied by VCL. The selection of the service company to be commissioned
with manufacturing and duplication and replication of the VMDs is
subject
to VCL´s prior approval not to be unreasonably
withheld.
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4.
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Territory:
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German-speaking
Europe
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5.
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Term:
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In
respect of each Picture, a period of three years from the acceptance
by
NME of the Delivery Materials in accordance with the terms of clause
11
below.
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VCL
may
at any time terminate NME´s rights with respect to any particular Picture if
either:
(a)
VCL´s
home video rights to that Picture expire or are terminated;
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(b)
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VCL determines that such termination is prudent to minimise possible
damage from any threatened or pending claim, demand, action or
processing;
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(c)
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VCL for any other reason deletes such Picture from VCL´s distribution at
the wholesale level.
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At
the
end of the Term NME shall give VCL the opportunity to purchase any and all
of
NME´s then-existing inventory of VMDs embodying the Pictures and all related
packaging, labels, advertising etc.If VCL does not accept such opportunity
NME
will have the non-exclusive right during a six (6) month period to sell-off
any
inventory of VMDs. At the end of the sell-off period, NME will erase or destroy
all remaining VMDs and all related packaging, labels, advertising
etc.
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6.
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Rights
Licensed:
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VCL
grants to NME a non-exclusive licence to manufacture, distribute
and sell
VMDs for the home use and non-public exhibition in the Territory
during
the Term in accordance with the terms and conditions herein set forth.
The
licence comprises the right to bundle the VMDs with VMD-players and
other
hardware required for play-back of VMDs subject to VCL´s prior approval.
NME may not assign or transfer any of the rights to a third party
without
VCL´s written approval.
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NME
guarantees that it will use the Pictures listed in Schedule A to
manufacture at least 7,500 Bundle Boxes that shall be distributed
for
promotional and sales purposes in a bundle with the VMD player. All
Pictures listed in Schedule A must be used to create the 5 film Bundle
Box; but a Hollywood blockbuster title if available may be used within
the
bundle for mutual promotion.
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7,500
Bundle Boxes will be guaranteed to be manufactured, but the Catalogue and the
distribution of separate titles can take effect after the first phase bundled
roll-out.
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7.
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Licence
Fee:
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NME
shall pay to VCL a fixed amount of € 3,00 for each VMD manufactured for
bundling purposes only. Regarding catalogue titles, VMD titles licenced
to
NME by VCL, VCL shall receive a royalty of 25% of all incoming net
revenue. The license fee for bundling VMDs shall fall due six months
after
NME has started to manufacture VMDs for the Bundle Boxes. The licence
fee
for catalogue titles shall fall due upon manufacturing of the respective
VMD.
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In
the
event that after 2 years following the execution of this agreement NME has
manufactured less VMDs for bundling purposes than guaranteed under Paragraph
6
NME shall pay the difference between the fees actually paid and the sum payable
for the guaranteed amount of bundles.
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10.
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Statements
and Accounting:
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Accounting
shall begin three months after NME has started to manufacture VMD
for the
Territory, however not later than June 30, 2007. All accounting shall
be
furnished monthly within 15 days after the end of each calendar month.
The
official statement will be furnished within 45 days after the end
of each
calendar quarter for the first two years and semi-annually thereafter.
NME
will keep and maintain complete and accurate records of the number
of VMDs
manufactured and the manufacturing dates for each title; VCL may
examine
and copy on its own or through its representatives these records
but not
more frequently than twice a year.
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11.
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Delivery:
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VCL
will deliver to NME in respect of each Picture by loan the materials
detailed in Schedule D hereto (the "Delivery Materials"). Legal title
to
all Delivery Material provided to NME shall remain in VCL subject
only to
possession and control by NME until the necessary masters are created
by
NME. Copyright in and to any material created by NME shall vest in
VCL
subject to NME´s right to exploit such copyright on the terms of the
Agreement during the Term.
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NME
shall
notify its approval or disapproval of all Delivery Material within 10 working
days of their receipt, otherwise the material shall be deemed approved. In
the
event that the Delivery Materials are not approved by NME then VCL shall grant
to NME laboratory access to the required Delivery Materials. If neither an
internegative, interpositive, nor a low contrast print are available NME shall
be able to disapprove the Delivery Materials and VCL shall within 10 working
days of receipt of such notice offer to substitute an alternative title. In
the
event that NME shall not agree to substitute an alternative title VCL shall
reimburse any advance previously paid by NME in respect to the relevant
Picture.
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12.
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Marketing
and Promotional Plans:
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NME
shall consult with VCL regarding NME´s marketing and promotional strategy
for the Pictures and the VMD format. All packaging, labels, advertising
etc. in relation to the VMD are subject to VCL´s prior approval which will
not be unreasonably withheld. The VCL and NME (including HD VMD licence
logo) logos will be used at all times during marketing and promotional
ventures.
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13.
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NME
shall not distribute any VMDs unless such VMD and all related packaging,
labels, advertising etc. contain the copyright and/or trademark notices
and all credits required by VCL
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14.
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Default
and Termination:
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In
the event that one of the parties is in default the other party will
give
the party in default written notice and fix a time limit of 5 business
days after receipt of the notice to cure any default. If the default
is
incapable of cure, or if the party in default fails to cure within
the
time provided the other party in addition to any other rights or
remedies
may terminate this Agreement as to any or all Pictures licensed hereunder.
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15.
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Miscellaneous:
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(a)
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This
Agreement shall be governed by German law; any controversy or claim
shall
be brought and resolved exclusively in the Courts of
Munich.
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(b)
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All
other terms and conditions shall be pursuant to VCL´s standard terms and
conditions for similar arrangements. This Term Sheet shall be binding
in
its entirety.
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AGREED
AND ACCEPTED BY:
/s/
Xxxxx Xxxx
Xxxxx
Xxxx
VCL
COMMUNICATIONS GmbH
/s/
Xxxxxxxxx Xxxxxx-Xxxxxxx
Xxxxxxxxx
Xxxxxx-Xxxxxxx
NEW
MEDIUM ENTERPRISES, INC.
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