Exhibit 10.5
CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR
CERTAIN REDACTED PROVISIONS OF THIS AGREEMENT AND, WHERE
APPLICABLE, HAVE BEEN MARKED WITH AN ASTERISK (****) TO DENOTE
WHERE OMISSIONS HAVE BEEN MADE. THE CONFIDENTIAL PORTION HAS BEEN
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.
LICENSE AGREEMENT
This License Agreement (the
“Agreement”), dated as of October 5, 2006 (the
“Effective Date”), is made by and between EYE NET WORKS
INC., a Delaware corporation (“ENW”), and ARTIFICIAL
LIFE, INC., a Delaware corporation
(“Licensee”).
RECITALS
A. WHEREAS,
ENW owns or has the rights to license and promote the television
series “Big Brother” and “America’s Next
Top Model.”
B. WHEREAS,
Licensee is engaged in the design, production, distribution and
sale of interactive mobile games.
C. WHEREAS,
ENW wants to engage and license Licensee to create and distribute
interactive mobile games for the series on the terms and conditions
set forth herein.
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NOW, THEREFORE, the parties hereby
agree as follows:
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Capitalized terms used but not
defined elsewhere in this Agreement shall have the following
definitions:
“Bundled Sales” means
all sales of Licensed Mobile Games or Personalization Products in
which a Licensed Mobile Game or Personalization Product is sold in
combination with other products or services for a single price to
the end user for the combination as a whole and all sales through
end user subscription models.
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“CBS” means CBS
Broadcasting Inc.
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“Distribution Channels”
means (i) wireless carriers and mobile virtual network operators
(collectively, the “Carriers”), mobile telephone
handset manufacturers, and third party distributors with
contractual relationship with Carriers for on-Carrier deck
(“on deck”)
distribution through such Carriers
only, and (ii) direct to consumer sales through outlets wholly
owned or controlled by Licensee.
“Licensed Formats” means
BREW or Java-based mobile games for exclusive use on 2G, 2.5G,
2.75G, 3G, 3.5G and further generation mobile telephones, cellular
telephones and satellite telephones in 2D, 2.5D and 3D
versions.
“Licensed Mobile Games”
means a multi-level interactive mobile game for each of 2G, 2.5G,
2.75G, 3G, 3.5G and further generations of mobile telephone
technology for each of BB Season 7, BB Season 8, ANTM Season 7,
ANTM Season 8, ANTM Season 9 and ANTM Season 10, with reasonable
ongoing updates for each game in all generations of mobile
telephone technology. Any additional mobile games will require
ENW’s prior approval. The Licensed Mobile Games do not
include Personalization Products as defined below.
“Licensed Property”
means the following as made available by ENW to Licensee: (a) the
“Big Brother” name, all associated trademarks and
logos, and all titles, photos, video footage, art, scenarios,
scripts, plot elements, depictions of environmental settings and
costumes, and actual likenesses of the contestants in Season 7
and Season 8 of the television series entitled “Big
Brother” broadcast by CBS in the US (respectively, “BB
Season 7” and “BB Season 8” and, collectively,
including any partial seasons, “BB Seasons”), approved
copyrightable material, approved publicity rights, and approved
renderings of the likenesses of the BB Season 7 and BB Season
8 contestants and other intellectual property used in connection
with any episode of BB Season 7 or BB Season 8, and
(b) the “America’s Next Top Model” name, all
associated trademarks and logos, and all titles, photos, video
footage, art, scenarios, scripts, plot elements, depictions of
environmental settings and costumes, and actual likenesses of the
contestants in Season 7, Season 8, Season 9 and Season 10 of
the television series entitled “America’s Next Top
Model” broadcast by the CW in the US (respectively,
“ANTM Season 7,” “ANTM Season 8,”
“ANTM Season 9” and “ANTM Season 10” and,
collectively, including any partial seasons, “ANTM
Seasons”), approved copyrightable material, approved
publicity rights, and approved renderings of the likenesses of the
contestants in the ANTM Seasons and other intellectual property
used in connection with any episode of the ANTM Seasons. It is
understood that the Licensed Property does not include the license
of any music that is contained in the BB Seasons or ANTM Seasons
that is not wholly owned as a “work for hire” by ENW;
provided, further, if Licensee desires to use any music from the BB
Seasons or ANTM Seasons, such music shall first be approved by ENW
and then, in the event that such music is not wholly owned as a
“work for hire” by ENW, ENW and Licensee shall share
equally in the costs of all fees connected with such use as
provided in Section 7(c). The Licensed Property does not include
any rights to earlier or later seasons, non-US versions, sequels,
re-makes or spin-offs of “Big Brother” or
“America’s Next Top Model.”
“License Term” means
from the Effective Date until the earlier of (a) any early
termination date as provided under this Agreement, (b) for any
Licensed Mobile Games or Personalization Products relating to the
BB Seasons, June 1, 2008, or (c) for any Licensed Mobile Games
or Personalization Products relating to the ANTM Seasons, September
1, 2008; provided, however, that in the event that ENW postpones a
launch date pursuant to Section 4(a) or that a Milestone is
postponed pursuant to Section 6(c) of this Agreement, the date set
forth in
subsection (b) and/or (c), as
applicable, of this definition shall be extended for the applicable
Licensed Mobile Game(s) or Personalization Product(s) by the same
time period as the postponement, provided that such postponement is
not due to Licensee’s failure to deliver a Licensed Mobile
Game in a timely manner as set forth in the Milestones, as defined
below. For the avoidance of doubt, subject to Section 9(b), the
License Term includes any time during the License Term whether the
relevant season is on air or off air.
“Licensed Territory”
means (a) for BB Seasons, the United States only, and (b) for ANTM
Seasons, worldwide except for France and Germany.
“Personalization
Products” means mobile wallpapers, screensavers, true-tone
ringtones and single level BREW or Java-based interactive mobile
games (“mini-games”); provided, however, that all such
products derive directly from the Licensed Mobile Games and not
directly from the Licensed Property.
(a)
License of Licensed Mobile Games . ENW hereby grants to
Licensee the exclusive right to use the Licensed Property solely
for the limited purpose of the design, development, publication,
use, distribution and sale of the Licensed Mobile Games in the
Licensed Territory through the Distribution Channels, subject to
ENW’s approval rights in Section 6(a), during the License
Term on the terms set forth herein (the “License”), it
being understood that the right to use, distribute and sell the
Licensed Mobile Games shall be co-exclusive with ENW, with the
limited exception that ENW shall not distribute the Licensed Mobile
Games directly or indirectly on-deck via Carriers except with
Licensee’s prior approval; provided, however, that only ENW
has the right to negotiate with, and distribute Licensed Mobile
Games and Personalization Products through, any third party
distributor regarding distribution that is not on-deck
distribution. ENW also grants to Licensee the non-exclusive right
to use the Licensed Property for the limited purpose of the
promotion, advertisement and marketing of the Licensed Mobile Games
in the Licensed Territory through the Distribution Channels during
the License Term on the terms set forth herein, including, but not
limited to, ENW’s approval rights set forth in Section
6(b)(i). Licensee shall have the right to sublicense the
distribution rights granted hereunder subject to Section 6(a);
provided, however, no such sublicense shall relieve Licensee of any
of its obligations hereunder. Licensee further warrants and
represents that it shall require by contract with sublicensees that
such sublicensee shall be bound by and comply with the applicable
provisions of this Agreement.
(b)
Exclusivity . The License shall be exclusive to Licensee,
provided, however, that all rights granted herein to use the names,
trademarks and logos shall be non-exclusive, and provided further,
however, that it is understood that the Licensed Mobile Games
specifically exclude Personalization Products, wireless handset
clients, in-show interactivity (meaning interaction with television
viewers in connection with the television show broadcast),
ringtones, voicetones, video clips and any other wireless product,
service or application using the Licensed Property other than
interactive mobile games, and any game formats other than the
Licensed Formats, including, but not limited to, mini-games, games
played on a personal computer on the
internet or via a pre-recorded disc,
cartridge or other media, handheld games not for use on mobile
telephones, games for devices such as the Microsoft XBox, PS2, Game
Boy Advanced or Game Cube, board games, card games, slot machine
games or video lottery terminals, in all of which formats ENW
reserves the right to license the Licensed Property to third
parties.
(c)
Personalization Products . ENW also hereby grants to
Licensee a non-exclusive right to use the Licensed Property solely
for the limited purpose of the design, development, publication,
use, distribution and sale of Personalization Products directly to
consumers through Licensee’s wholly owned or controlled
mobile commerce storefronts or through Carriers during the License
Term on the terms set forth herein; provided, however, that each
such Personalization Product must be approved in writing by ENW in
its sole and absolute discretion prior to Licensee offering,
distributing or selling such Personalization Product, and no right
to promote such Personalization Products is granted hereunder; and
provided further, however, that all Personalization Products shall
be sold under ENW’s label and branding as directed by ENW and
that any Personalization Products distributed through Carriers must
be placed adjacent to the Licensed Mobile Games on the Carrier
portals. ENW shall not exploit any Personalization Product which
are not approved for Licensee’s exploitation, it being
understood between the parties that ENW shall have no limitation on
its exploitation of personalization products that do not derive
directly from the Licensed Mobile Games. All Personalization
Products shall be sold under the approved labeling and branding of
ENW or the applicable series title as determined by ENW. In
addition, “mini-games” may be sold under
Licensee’s branding (in addition to ENW’s) provided
that the exact manner in which Licensee’s branding appears
shall be subject to ENW’s approval which approval shall not
be unreasonably withheld. Licensee agrees that ENW shall have no
obligation to itself use any Licensee branding. Licensee shall
deliver to ENW the approved Personalization Products as developed
and ENW shall have the right to use, distribute, sell, promote,
advertise and market such Personalization Products developed by
Licensee hereunder subject to the terms of this Agreement.
(d)
Licensee License . Licensee grants to ENW the non-exclusive
right to use the Licensee Assets as defined in
Section 8(b)(ii) for the limited purpose of the use,
distribution, sale, promotion, advertisement and marketing of the
Licensed Mobile Games and Personalization Products during the
License Term and in accordance with the terms of this Agreement.
Each use of Licensee’s trade mark or trade name shall be
subject to Licensee’s prior written approval.
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3.
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RESERVATION OF
RIGHTS :
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ENW and its licensors retain all
rights to the Licensed Property not expressly granted
hereunder.
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4.
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LICENSEE’S
OBLIGATIONS :
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(a)
Milestones . Licensee shall create all of the Licensed
Mobile Games. For each Licensed Mobile Game, Licensee shall meet
the milestone requirements set forth on the attached
Schedule A
(the “Milestones”). Time
is of the essence to this Agreement. Licensee shall notify ENW as
early as possible if it anticipates missing a Milestone, although
such notice shall not relieve Licensee of its obligation to meet
the Milestones. The parties understand and acknowledge that
Licensee shall not be held responsible for delays in the launch of
distribution on-deck over mobile networks or failure to meet any
Milestones because of delays caused by the network operators, ENW
or Local Broadcasters that are outside of Licensee’s control.
The dates set forth in the Milestones notwithstanding, ENW shall
have the right in its sole and absolute discretion to postpone the
launch date of all Licensed Mobile Games associated with either
“Big Brother” or “America’s Next Top
Model,” in which event all subsequent deadlines as well as
the License Term for such Licensed Mobile Games shall be postponed
for the same time period, provided further, that if the launch of a
Licensed Mobile Game is postponed by ENW for more than six (6)
months, the aggregate sum of the Guaranteed Payments shall be
reduced by US $10,000 for each additional month of delay after such
six-month period, provided that such postponement is not due to
Licensee’s failure to deliver a Licensed Mobile Game in a
timely manner as set forth in the Milestones except as set forth in
this clause.
(b)
Quality Levels, Updates and Features . Licensee shall use
its best efforts to create the Licensed Mobile Games at the highest
industry standards for creative design and game play at each
generation level of mobile telephone technology, and deliver such
Licensed Mobile Games to ENW immediately as available. Licensee
shall use its best efforts to design the Licensed Mobile Games to
allow for updates, including prompt updates to reflect events on
the television shows, and to be easily reproducible for other
“Big Brother” and “America’s Next Top
Model” seasons or properties for handsets that allow such
immediate updates. For each Licensed Mobile Game, Licensee shall
create at least one update or sequel per calendar year to maintain
quality levels consistent with the latest technological
developments and highly creative game play. Licensee shall create
the Licensed Mobile Games for at least all of the mobile telephone
handsets listed on the attached Schedule B at the highest
possible quality level per handset, for BREW and Java handsets in
2G, 2.5G, 2.75G, 3G, 3.5G and further generations of mobile
telephone technology and developed in 2D, 2.5D and 3D versions.
Each Licensed Mobile Game may include “push” messaging
features as mutually approved by the parties, including MMS/SMS/IVR
message prompts in the United States and Canada and in other
countries as permitted by Carriers. Licensee shall perform
localizing and language-versioning of the Licensed Mobile Games at
ENW’s reasonable direction. Upon ENW’s request,
Licensee shall integrate ENW sponsors and advertisers into the
Licensed Mobile Games, under such terms to be negotiated in good
faith between ENW and Licensee. At ENW’s request, Licensee
shall use its best efforts to create multi-player competition
functions for a Licensed Mobile Game, including the ability to
track scores and results throughout the applicable broadcast
season, and Licensee shall use its best efforts to ensure that,
upon ENW’s or a Carrier’s request, access to such
multi-player competition functions may be denied to end-users of
particular states in the United States or certain countries
internationally to comply with applicable laws, rules and
regulations.
(c)
Distribution . Licensee shall distribute the Licensed Mobile
Games through the Distribution Channels throughout the License
Term, subject to ENW’s approval rights set forth in Section
6(a). Licensee acknowledges and agrees that distribution of the
Licensed Mobile Games and Personalization Products may be subject
to coordination with local television broadcasters (the
“Local Broadcasters”), which coordination will be in
ENW’s sole control and
discretion. Any distribution of
Licensed Mobile Games or Personalization Products that directly or
indirectly affects or involves Local Broadcasters, including but
not limited to, on and off-deck Carrier placement, shall be at the
sole discretion of ENW, and will be under ENW’s direction,
including but not limited to Carriers, third party distributors,
launch dates, involvement of Local Broadcasters and other relevant
terms. In addition, prior to distribution in any new country other
than Japan, Spain and Russia, Licensee shall consult with ENW,
which, if it so elects after consultation with the Local
Broadcaster, shall have the right to require Licensee (i) to
negotiate exclusively for at least a 30-day period with the
Distribution Channel designated by ENW prior to negotiations with
other Distribution Channels in the territory, and (ii) to use
its best efforts to execute a distribution agreement with such
Distribution Channel, or other Distribution Channel if negotiations
with the designated Distribution Channel fail, that satisfies any
concerns raised by notice to Licensee from ENW. Licensee
acknowledges and agrees that only ENW may approach and coordinate
with the Local Broadcasters. Licensee shall deliver, or permit the
download of, at least 50 royalty-free copies of each Licensed
Mobile Game to ENW for its own use provided that such copies shall
not be sold to any third parties.
(d)
Security . Licensee agrees to use, apply and maintain, and
to require Distribution Channels to use, apply and maintain,
industry standard or better technology and procedures designed to
ensure that the Licensed Mobile Games, the Personal Information as
defined below in subsection (g) and the Licensed Property remain
reasonably secure, and are not accessed, used, copied, transferred
or distributed in any way contrary to the terms of this Agreement
or applicable law. Provided that Licensee is in compliance with the
foregoing, Licensee shall not be liable for any unauthorized
access, use, copy, transfer or distribution of the Licensed Mobile
Games or Personalized Products by third parties. ENW agrees to use
the same level of security in its exploitation of the Personal
Information or Licensed Mobile Games.
(e)
Digital Rights Management . Licensee agrees to use, apply
and maintain industry standard or better technology to ensure that
end users’ use of the Licensed Mobile Games or
Personalization Products shall be limited to personal use on each
such end user’s own authorized mobile telephone and that the
end user shall not have the ability to playback, transfer,
disseminate or forward the Licensed Mobile Games or Personalization
Products on or to any device other than such authorized mobile
telephone. Provided that Licensee is in compliance with the
foregoing, Licensee shall not be liable for any such misuse by
third parties. ENW agrees to use the same level of security in its
exploitation of the Personalization Products or Licensed Mobile
Games.
(f)
Placement . Licensee shall not place, and shall prohibit by
contract any Distribution Channel from placing, any advertisements
in the Licensed Mobile Games without ENW’s prior written
consent. Licensee shall not place, and shall prohibit by contract
any Distribution Channel from placing, any advertisements on a page
where the Licensed Mobile Games or Personalized Products are shown
or listed other than on the top or and bottom of such page without
ENW’s prior written consent. Licensee shall not permit, and
shall prohibit by contract any Distribution Channel from
permitting, the Licensed Mobile Games to be advertised or marketed
with or placed adjacent to, beside, within the same
“channel” or otherwise near any other content that is
reasonably considered to be pornographic, salacious, or otherwise
appealing to prurient interests. Provided that Licensee is in
compliance with the foregoing, Licensee shall
not be liable for any breach of this
clause by a Distribution Channel.
(g)
End User and Personal Information . Where permitted by
applicable law, each party shall have access to and the right to
use the following data which the other party agrees to provide to
the first party (where applicable) on a real-time basis as
reasonably available to and sharable by the other party and in a
written report to be provided on not less than a monthly basis,
with specific information for each Licensed Mobile Game or
Personalization Product distributed by the other party: (i) the
number of unique end users downloading or otherwise purchasing the
Licensed Mobile Games or Personalization Products; (ii) the number
of downloads or other purchase of the Licensed Mobile Games or
Personalization Products via each Distribution Channel; (iii) to
the extent possible, the exact times and dates of downloads of the
Licensed Mobile Games or Personalization Products if and when such
information is gathered or collected by the other party; (iv) any
other reasonable information the other party collects in connection
with the Licensed Mobile Games or Personalization Products except
for personal end user information such as name, telephone numbers
and any other personally identifiable information, and (v) for
subscription sales, analysis of subscription duration and churn
rate. All of the foregoing data shall be referred to individually
and collectively as “End User Data,” and all “End
User Data” as it relates to Licensed Mobile Games or
Personalization Products shall be referred to herein as “ENW
Data”. ENW shall own all right and interest in and to ENW
Data. ENW hereby grants to Licensee a non-exclusive license to use
any ENW Data for internal reporting and research purposes and to
satisfy Licensee’s reporting obligations to ENW as set forth
in this Agreement. Licensee shall not sell, trade, transfer,
exchange, barter, offer, or otherwise provide any ENW Data to any
third party including, without limitation, any ratings service that
tracks and compiles use and receipt of any wireless content. The
parties’ use of any End User Data shall comply with all
applicable laws and regulations. Each party shall use industry
standard or better levels of care, and shall comply with all
applicable laws, rules or regulations, in the gathering, use,
maintenance and protection of all information regarding end users
(the “Personal Information”), and shall require
Distribution Channels to do the same. No Personal Information will
be used by either party or its Distribution Channels for any
purpose outside the scope of this Agreement or prohibited by any
applicable law. All Personal Information shall belong exclusively
to ENW. Licensee shall deliver all Personal Information to ENW or
its authorized designee promptly upon written request from ENW, and
shall, subject to final accounting and billing requirements, upon a
written confirmation by ENW, promptly and permanently delete the
Personal Information from its own files at the expiration or
earlier termination of the Agreement. All Personal Information,
including, but not limited to mobile phone numbers, from end users
shall be permanently deleted by each party in compliance with all
applicable laws, rules or regulations.
(h)
Delivery . Upon launch of every Licensed Mobile Game
(including updates) or Personalization Product throughout the
License Term, Licensee shall deliver to ENW copies of all Licensed
Mobile Games and Personalization Products in a mutually approved
format (including delivery of any and all graphic, visual and audio
elements in electronic format). For the avoidance of doubt,
Licensee shall not be required to deliver the underlying object
code or source code of the Licensed Mobile Games or Personalized
Product to ENW.
(i)
Customer Support . Licensee will be responsible for all
requests for support from
on-deck end users relating to the
Licensed Mobile Games and Personalization Products, including an
email address for inquiries and complaints and any other customer
support required by Distribution Channels where Licensee
distributed the Licensed Mobile Game or Personalization Product,
and support regarding game play for off-deck end users distributed
by ENW or its technology supplier provided that ENW or its
technology supplier shall be the first line of support for such
sales and shall pass any such customer queries together with all
necessary information and details regarding game play to Licensee.
Licensee will use reasonable efforts to respond to such requests
for support from end users promptly.
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5.
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ENW’S MARKETING
OBLIGATIONS :
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During the License Term, ENW shall
**** as ENW deems appropriate in its discretion. In addition,
during the License Term, **** (a) provide **** (b) use
commercially reasonable efforts to have the CW provide ****
(c) provide **** (d) use commercially reasonable efforts to
have the and (e) **** throughout the License Term and use
commercially reasonable efforts to provide **** and promote
the****throughout the License Term. The format, content, length and
timing of all such promotion and marketing ****.
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(a)
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Distribution Approvals
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(i) Licensee
shall submit in writing to ENW each proposed Distribution Channel
for ENW’s prior written approval, such approval only to be
withheld or delayed pending coordination with Local Broadcasters
under Section 4(c) and not to be unreasonably withheld or delayed.
ENW will not use its approval rights under this Section 6(a)(i) to
frustrate the intent of this Agreement. ENW may choose to
distribute Licensed Mobile Games and/or Personalization Products
through Licensee’s mobile commerce storefront as a
CBS-branded, CW-branded or otherwise branded (in ENW’s sole
discretion) storefront the exact position, size and format of which
shall be subject to the parties’ mutual approval, and the
timing of which shall be as soon as commercially reasonable after
ENW’s request. ENW shall not modify the Licensed Mobile Games
and/or Personalization Products without Licensee’s prior
written approval.
(ii) In
addition, Licensee shall submit to ENW for its records each
agreement between Licensee and a Distribution Channel relating to
the distribution of the Licensed Mobile Games or Personalization
Products. Each such agreement with a Distribution Channel shall
provide that (A) the Distribution Channel may distribute
Licensed Mobile Games and/or Personalization Products only in the
Licensed Territory during the License Term on the other applicable
terms set forth herein, and (B) such Distribution Channel
shall be bound by and shall comply with the applicable provisions
of this Agreement as if such Distribution Channel were the Licensee
hereunder, including but not limited to the provisions of Sections
4(d)-(g) and 6(b)(i)-(ii).
(iii) Licensee
shall not distribute Bundled Sales without ENW’s prior
written approval of the Bundled Sale, including, but not limited
to, the other products or services in any Bundled Sale, and the
identity of any other entity associated with any such Bundled
Sale.
(iv) Licensee
shall distribute and exploit the Licensed Mobile Games (and
Personalization Products, if any are approved by ENW) according to
ENW’s direction in all respects, including, but not limited
to, launch dates, branding, marketing, content and involvement of
Local Broadcasters, and ENW may disapprove of any exploitation not
in accordance with such direction. Licensee shall attempt in good
faith to negotiate arrangements with the manufacturers of mobile
telephones for the pre-installment of the Licensed Mobile Games on
their mobile telephone handsets prior to sale with revenues to be
shared with ENW in accordance with this Agreement. Licensee
acknowledges and agrees that it shall not offer, and shall not
permit Distribution Channels to offer, Licensed Mobile Games or
Personalization Products free of charge to end users, including in
Bundled Sales, absent ENW’s prior written
approval.
(b)
Approval of Marketing . Licensee shall submit in writing to
ENW for ENW’s approval in its sole and absolute discretion
all of the following:
(i) Any
promotional, marketing or branding materials or media plans, which
ENW may coordinate in its discretion with Local Broadcasters,
including the manner in which the Licensed Property may appear on
any packaging, promotional materials, online sites, labels,
advertising, publicity and display materials of any kind used in
connection with a Licensed Mobile Game or Personalization Product;
provided, however, that the parties agree that the Licensed Mobile
Games and mini-games may include the statement “Brought to
you by CBS Digital Media and developed by Artificial Life.”
and may include an “About Us” section providing
information about Licensee, CBS and their website(s). ENW shall not
and shall not permit any third party to remove such statement or
information from the Licensed Mobile Games or mini-games without
Licensee’s prior written consent.
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(ii)
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Any use of ENW, CBS or CW names,
trademarks or logos.
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ENW’s approval of each of
these items shall be in its sole and absolute discretion. ENW shall
use its best efforts to respond within ten (10) business days.
Failure to respond shall be deemed disapproval of an
item.
(c)
Milestone and Creative Concept Approvals . Licensee shall
submit to ENW for its approval the Licensed Mobile Games as part of
and in accordance with each item set out in the Milestones (each, a
“Creative Approval Item”). For each Milestone, Licensee
shall promptly provide ENW with samples or representative footage
of the Licensed Mobile Game (in its then current stage of
development) and each related piece of packaging and related
materials. ENW shall approve or disapprove each Creative Approval
Item within eight (8) business days after its receipt (the
“Review Period”). ENW’s failure to respond within
the Review Period shall be deemed as approval. The number of days
that occur between the end of the Review Period and the date on
which ENW approves or disapproves (including deemed disapproval)
the Creative
Approval Item shall be added to each
subsequent Milestone for that Licensed Mobile Game. If ENW
explicitly disapproves of a Creative Approval Item, ENW shall
provide to Licensee its reasons for the disapproval in its written
notice of disapproval. Licensee will then have a period of fifteen
(15) days within which to submit a revised creative concept to ENW
for its approval. Within the Review Period for the revised creative
concept, ENW will have the right to approve the concept, disapprove
it with reasons. If ENW disapproves, the process for revision as
aforesaid shall be repeated. If after the second revision, ENW
still disapproves the revised concept, ENW shall have the right to
terminate this Agreement in writing in its sole discretion with
regard to the Licensed Mobile Game(s) at issue. In the event of
such termination, all provisions of Section 14 shall apply, except
that Licensee shall have the right to the adjustment of the
Guaranteed Payments paid to date, and/or demand an immediate refund
of all or part of any Guaranteed Payment already paid, such
adjustment or refund as calculated in accordance with the formula
in Section 13(d), provided that ENW shall not be required to refund
any amount of Guaranteed Payments already paid if the sum of the
Guaranteed Payments already paid to ENW is less than the aggregate
amount of Guaranteed Payments after adjustment. ENW shall exercise
its rights of creative approval in good faith and not to frustrate
the intention of this Agreement. Approvals will not be unreasonably
withheld. Approval by ENW shall not relieve Licensee of any of its
agreements, indemnities and warranties hereunder.
(d)
Other Approvals . Except as otherwise provided in this
Agreement and except for approvals under subsections (b) and (c),
ENW shall make good faith efforts to respond to requests for its
approval within ten (10) business days from receipt of the request.
ENW’s failure to respond within such 10-day period shall be
deemed disapproval of the item.
7.
GUARANTEED PAYMENTS, REVENUE SHARES, ACCOUNTING AND
AUDIT :
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(a), (b)(i)-(ii)
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See attached Schedule C
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(b) (iii)
Payment . Revenue Shares shall be payable on a quarterly
basis throughout the License Term, within forty-five (45) days
after the close of each respective calendar year quarter based on
Net Revenues actually received by each party during such quarter.
In the event that Licensee accrues Revenue Shares due to ENW in
accordance with the terms hereof, Licensee shall first recoup the
Guaranteed Payments paid to date from the accrued Revenue Shares
before any Revenue Share shall become payable to ENW. In addition,
ENW shall remit to Licensee the ENW Sales Recoupment until such
time as the Guaranteed Payments paid to date have been fully
recouped.
(iv)
Accounting . Within forty-five (45) days after the close of
each calendar quarter commencing with the calendar quarter during
which the first Licensed Mobile Game is released (i.e., August 31,
2006),, Licensee and ENW shall each furnish to the other complete
and accurate statements of its sales of Licensed Mobile Games and
Personalization Products, the calculation of Net Revenues, and
Revenue Shares due the other party broken out by the respective
television series in the Licensed Property (“Quarterly
Reports”). Quarterly Reportsshall be accompanied by the
Revenue Shares due for such quarter, if any; provided,
