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Exhibit 10.3
Distribution Agreement
between
Infogrames Entertainment SA
and
Infogrames, Inc.
This
Distribution Agreement (this "Agreement") is entered into by
and
between Infogrames Europe SA (formerly
Infogrames Multimedia SA) and Infogrames
Entertainment SA (together, "IESA") and
Infogrames, Inc. ("Infogrames") as of
October 2, 20000 (the "Effective
Date").
Whereas,
IESA is in the business of publishing and marketing Products
and
wishes to license Infogrames to distribute,
publish and market Products owned or
controlled by IESA; and
Whereas,
Infogrames wishes to obtain the right to distribute, publish
and
market Products owned or controlled by
IESA;
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) which Infogrames (and
its subsidiaries) has the right to distribute in the
Territory, whether licensed or owned by IESA (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
IESA
in connection with any Product.
(i) "Territory"
means the United States, Canada and their
territories and possessions.
(j) All
capitalized terms not defined herein are as defined in the
Securities
Purchase Agreement between the parties dated as of
November 15, 1999.
2.
License:
IESA hereby grants to Infogrames the exclusive right to
publish, manufacture, have manufactured, localized, adapt,
market,
advertise, promote, publicize, distribute, sell, sublicense or
otherwise exploit the Products through all channels of
distribution
in the Territory. Upon Infogrames' request, IESA 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 IESA
and
to third-party approval rights, as applicable.
3.
Trademark
License: Subject to any approvals as may be required by a
third party licensor, IESA hereby grants to Infogrames a
royalty-free, non-exclusive, non-transferable license to use
IESA's
Trademarks in connection with the exercise of the license granted
to
Infogrames pursuant to Paragraph 2 of this Agreement. IESA's
Trademarks and the goodwill associated therewith are and remain
IESA's exclusive property. Infogrames shall acquire no right,
title
or interest in IESA's Trademarks or the goodwill associated
therewith, other than the limited license and right to use
IESA's
Trademarks as set forth under this Agreement. All usage of
IESA's
Trademarks by Infogrames shall inure to IESA's benefit.
Infogrames
will use all reasonable efforts to ensure that all applicable
and
reasonably necessary Trademarks used for a Product appear clearly
on
the packaging and major advertising and promotional materials
for
such Product.
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4.
Purchase
of Prepackaged Products: If IESA offers prepackaged
Products, Infogrames shall be entitled to purchase such
prepackaged
Products at IESA's actual direct cost of manufacture, F.O.B.
Infogrames' warehouse. The prepackaged Products will be purchased
on
a purchase order basis, under Infogrames standard purchase
order
terms and conditions. Royalties due IESA for the subsequent sale
of
such product are covered by the other terms and conditions of
this
Agreement including but not limited to Paragraphs 7 and 14
below.
5.
Return of
Prepackaged Products: Infogrames shall be entitled to
return prepackaged Products purchased from IESA to IESA for a
full
refund or credit, at Infogrames' option.
6.
Delivery
of Non-Prepackaged Products: IESA will deliver as soon as
practicable a complete English language NTSC Master of any
Product
which is licensed to Infogrames under this Agreement for
manufacture
by or for Infogrames pursuant to this Agreement.
7.
Royalties
on Products: Infogrames will pay to IESA 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 IESA to the third party for such
Product. IESA 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 IESA, or any of its
subsidiaries, then the royalty will be 30% of the Net Revenues
Infogrames actually receives from the distribution of the
Product
(c) No royalties
will be due from Infogrames to IESA 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 IESA for any
transfer or payment amongst IESA and its subsidiaries (and
their subsidiaries).
8.
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 IESA shall have the right, in addition to
any other rights which IESA may have hereunder, upon thirty
(30)
days prior written notice to Infogrames, to declare such right
henceforth to be nonexclusive.
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9.
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 license, sublicense, distributor or customer
who
wrongfully resells or exports Products outside of the Territory
is
referred to as an "Exporter." IESA 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 IESA.
10.
Prohibition of
Sublicensing; Derivative Works. Infogrames shall not
sublicense any of the rights granted to Infogrames hereunder
without
IESA'S 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 IESA'S prior written consent,
such
consent not to be unreasonably withheld. Notwithstanding the
above,
IESA 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 IESA or its subsidiaries. Sublicensing to
original
equipment manufacturing (OEMs) for exploitation in the Territory
is
also deemed pre-approved for Product developed by IESA or its
subsidiaries. Such pre-approvals for sublicensing within the
Territory do not apply to Product developed by third parties.
11.
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 IESA and bearing IESA's
Trademarks and trade names. Such packaging may indicate that
the
Products are distributed by Infogrames. Infogrames agrees to
furnish
IESA free of cost, for IESA's 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. IESA will approve or reject samples submitted by
Infogrames within ten (10) days of receipt of such samples:
IESA's
failure to respond to requests for approval within ten (10)
days
shall be deemed approval.
12.
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 sublicenses, affiliates or subsidiaries), shall be, and
remain IESA's (or its affected third party's, as the case may
be)
sole and exc
