LICENSE AGREEMENT made this 2nd day of October, 1997, between the SMITHSONIAN
INSTITUTION ("Smithsonian") an educational, non-profit organization established
by the Congress of the United States in 1846 (20 U.S.C. 41 et seq.) and having
its principal offices at 1000 Jefferson Drive, S.W., Washington, D.C. 20560 and
SYNTHONICS TECHNOLOGIES, INC. ("Licensee") a California corporation having its
principal place of business at Westlake Village, California.
WHEREAS, Smithsonian desires to encourage the development of quality products
which are uniquely related to Smithsonian and its collections and which are in
keeping with the dignity, history, and traditions of Smithsonian, and which will
enable Smithsonian to further its mandate "for the increase and diffusion of
WHEREAS, Licensee is the developer of Rapid Virtual Reality(TM) technology and,
by using this innovative technology, desires to develop a unique CD-ROM for
commercial sale that contains high quality, three-dimensional images of
Smithsonian artifacts, while keeping with the dignity, history and traditions of
Smithsonian (the "Product");
WHEREAS, Licensee desires to acquire the right to use the name and the trademark
of Smithsonian upon and in connection with the Product; and,
WHEREAS, Smithsonian has the rights to said name, it having devolved under the
will of James Smithson, benefactor, and been designated by the Congress of the
United States as the official name of the Institution, and being well known and
recognized by the general public mind with the same Smithsonian, and it being
registered accordingly in the United States Patent and Trademark Office;
NOW, THEREFORE, in consideration of the premises and mutual Agreements herein
contained, the parties agree with each other as follows:
1. GRANT OF LICENSE.
a. Smithsonian grants to Licensee for the term of this Agreement, subject
to the terms and conditions herein contained, a personal and
non-transferable license to utilize the names "Smithsonian
Institution," and "Smithsonian" ("Names") and all Smithsonian images
and materials, but only for the Product and purposes set forth herein.
Synthonics Technologies, Inc. shall use the license granted hereunder
solely in connection with the design and development ("Development")
of the Product under the Licensee label.
b. Smithsonian agrees not to issue to any other party a license to use
its Names or the same images and materials in connection with the
production or sale of the same product covered by this Agreement.
2. SPECIFICATIONS OF THE PRODUCT.
a. The Product will be a high quality CD-ROM which presents a
cross-section of the most popular artifacts in each of the
Smithsonian's museums, with the general theme of "An Introduction to
the `Electronic Smithsonian'." The Smithsonian shall have final
approval concerning which artifact images shall appear on the Product.
b. The CD-ROM will contain images of at least 600 to 800 artifacts.
Licensee shall use its patented Rapid Virtual Reality (TM)technology
to represent at least seventy-five (75) artifacts by three-dimensional
models. The Smithsonian shall have final approval as to which
artifacts will be represented by three-dimensional models. The images
shall be accompanied by appropriate educational text, which shall be
approved by Smithsonian. The CD-ROM shall employ the latest multimedia
authoring tools to provide a full script around all three-dimensional
c. Synthonics agrees that Smithsonian may use the digitized images
appearing on the Product for any non-profit use.
d. Smithsonian encourages Licensee and all of its licensees to
manufacture the products in the United States of America or its
Territories in keeping with the spirit and intent of the Buy American
Act (ss.ss. 41 U.S.C. 10a et seq.).
e. It is understood that Licensee shall manufacture the Product in its
own factories, plants, or workshops in the United States of America or
its Territories. Any agency or sublicense, and/or any change in
country of manufacture must be approved based on a prior written
request by Licensee and prior written approval by Smithsonian.
Licensee agrees that the identification of the country of origin on
all copies of the Product shall be in conformance with all laws
governing manufacturing and said designated countries of origin shall
be limited to those countries as specified above or as approved by
f. In the event that Licensee subcontracts concerning elements or
components of the Products, Licensee agrees that, prior to any product
development or manufacture by a third party, it will execute a
Trademark and Design Protection Agreement (a sample of such and
suggested wording is incorporated into Schedule C) which, among other
things, will expressly prohibit said third party from using the name
and/or names of any Smithsonian program offices and/or Smithsonian
trademarks. In addition, such agreement will prohibit any third party
from exploiting in any manner its association with the Smithsonian,
its collections, products, or components or derivatives thereof. Each
of the above mentioned Trademark and Design Protection Agreements
shall be kept on file by Licensee.
g. Licensee agrees that every copy of the Product shall bear an
appropriate identification to avoid confusion in the public mind
between the images and the original artifacts. The form and use of
this identification must be approved, in advance, by Smithsonian.
h. Licensee further represents and warrants that the Product and all
copies of the Product have not been and shall not be produced or
manufactured, in whole or in part by convict, forced or child labor or
by any other matter prohibited by applicable law. Licensee shall
provide Smithsonian with any guarantee of compliance in such form as
Smithsonian may from time to time designate, with respect to the
Product, as required or permitted under any law, rule or regulation of
the United States and any other countries where the Product is
produced or delivered.
3. LICENSEE'S RESPONSIBILITIES.
a. Licensee shall produce the Product in accordance with the
specifications agreed upon by Smithsonian and set forth above, using
the highest professional quality materials.
b. Licensee shall employ research analysts as recommended by Smithsonian
to insure the accuracy of the images of the artifacts and the artifact
history included with the artifact images.
c. All costs associated with the development of the Product, whether
approved or disapproved at any stage by Smithsonian, shall be borne by
Licensee and Smithsonian has no responsibility for any such costs even
if the Product does not sell any copies or generate any revenue
d. Licensee shall use its best efforts to complete and design production
of the Product and have it available to the Smithsonian for
distribution on or before February 24, 1998, but in no event shall
complete production of the Product and have it available to the
Smithsonian for distribution later than March 10, 1998.
4. SMITHSONIAN RESPONSIBILITIES. Smithsonian shall:
a. Work with Licensee to agree to all specifications of the Product,
including all content on the Product, prior to the commencement of
production of the Product.
b. Provide all Smithsonian approvals in writing and as soon as
c. Allow Synthonics reasonable access to the artifacts selected and
approved to appear on the Product.
a. All manufacturing shall be fine quality and comply with the highest
product specifications, standards, and quality control procedures.
Licensee agrees to furnish Smithsonian with samples of the Products in
their consecutive planned stages of development for inspection and
judgment of accuracy, quality, style and appropriateness by curatorial
and other Smithsonian staff. No Product will be manufactured or sold
by Licensee until Smithsonian has given written approval at each
appropriate stage. There shall be a minimum of six (6) production
stages for the Smithsonian to approve prior to the approval of the
final sample of the Product, including, but not limited to, approval
of 1) the final storyboards for the Product; 2) list of assets to be
included on the Product; 3) the scripts, any final assets,
interactivity planning and initial packaging of the Product; 4)
alphaprototype CD and packaging; 5) the beta prototype CD; and, 6) a
sample of the final Product. Licensee agrees to make all changes,
modifications and revisions requested by Smithsonian during the
approval process. A mutually agreed upon timetable for concept and
design approvals is set forth in Schedule B and is hereby incorporated
into this contract. This schedule incorporates the time necessary to
meet Licensee's production schedule and to ensure proper review and
comment by Smithsonian's curatorial staff. Smithsonian agrees not to
unreasonably withhold approval or unreasonably delay notice of
disapproval to Licensee at any stage in conformance with the agreed
upon schedules. Approval of the final sample by Smithsonian will be
the last stage of approval. All final finished samples approved by
Smithsonian will be retained unchanged by Licensee and they may be
inspected by Smithsonian at any time during the term of this Agreement
or within two (2)years thereafter. Any deviation in quality or content
from the approved sample shall be grounds for Smithsonian to terminate
b. Licensee shall submit for Smithsonian's prior written approval:
galleys, drafts, and samples of all packaging associated with the
Product; and, galleys, drafts and samples of all text, images and
other content contained in or on the Product. Final packaging, text,
images and other content of the Product shall be approved in writing
by Smithsonian before final production may begin.
c. For the purposes of this Agreement, "promotional material" shall be
defined as any materials, whether audio, visual, or printed, designed
by Licensee and which is targeted to promote the Product. Licensee
shall submit for Smithsonian's prior written approval all promotional
materials. If Licensee intends to use any media whatsoever, Licensee
shall seek Smithsonian's written approval prior to doing so.
d. Licensee agrees that the Names possess a special, unique and
extraordinary character. If at any time Smithsonian deems that the
continued development, manufacture or sale of the Product or any
copies of the Product will harm, bring into disrepute, or affect the
integrity of the Names, or is not in keeping with the dignity, history
and traditions of the Smithsonian Institution, Smithsonian shall have
the right to withdraw its approval previously given. Licensee shall be
afforded the right to dispose of its remaining inventory of the item
in question for a period of six (6) months according to the terms of
Paragraph 19 herein.
e. Except as otherwise provided herein, Licensee shall not refer to
Smithsonian or any of its museums, organizations, or facilities in any
manner or through any medium, whether written, oral, or visual, for
any purpose whatsoever, including but not limited to advertising,
marketing, promotion, publicity or on any letterhead by any company.
Licensee shall be entitled to use the License granted hereunder only in the
United States of America and its territories.
7. LICENSE PERIOD.
The License granted hereunder shall be effective as of the date of this
Agreement and terminate three (3) years after the date of this Agreement,
unless sooner terminated in accordance with the terms and conditions of
this Agreement ("License Period").
a. The parties agree that the Product shall be initially marketed,
distributed and sold through Smithsonian outlets, including, but not
limited to, the Smithsonian museum shops, the Smithsonian catalogues,
and Smithsonian websites. The Product will be offered for sale through
in at least one (1) Smithsonian catalogue per year. The Product will
also be offered for sale on the Smithsonian website and in the
Smithsonian museum shops.
b. The Product shall be sold through Smithsonian outlets on consignment.
Synthonics shall provide sufficient copies of the Product, packaged
and ready for immediate sale to the public, to Smithsonian at no cost
to Smithsonian. Synthonics shall pay for the costs of shipping the
Product to Smithsonian for sale to the public. The parties will
mutually agree on quantities for initial and subsequent shipment to
the Smithsonian Institution.
c. Both parties are free to explore the possibility of other distribution
and sale through non-Smithsonian venues. Should one party desire to
market, distribute or sell the Product in a non-Smithsonian outlet, or
should one party locate a distributor who is ready and willing to
distribute the Product, the parties to this Agreement shall meet to
negotiate whether such distribution and/or sale of the Product is
desirable and feasible for both parties. Both Synthonics and the
Office of Contracting at Smithsonian must grant written approval to
engage in negotiations with a third party relating to the marketing,
distribution or sale of the Product by that third party. If
Smithsonian is to be a signatory on an agreement with a third party
for the marketing, distribution and/or sale of the Product, the Office
of Contracting at Smithsonian shall participate in all discussions and
negotiations with that third party. The Product will not be marketed,
sold or distributed in or by a non-Smithsonian outlet without the
written approval of both parties to this Agreement. The Contracting
Officer's Representative is not empowered to engage in such
discussions or negotiations, nor authorized to grant the approvals
required by this Paragraph.
d. Licensee shall promptly provide Smithsonian, at no charge, reasonable
quantities of the Products for purposes such as quality control,
museum collections, trademark registration and other related needs.
e. Licensee may distribute a limited number of copies of the Product to
demonstrate Licensee's technology to potential customers. Under no
circumstances shall Licensee sell or accept anything of value for
promotional copies of the Product. Licensee may also use the Names for
resume purposes only, which shall include 1) including the Names in an
alphabetical list of all active clients; 2) including the Names in an
alphabetical list of all clients within a specific category; and, 3)
including the Names in an alphabetical list of a significant and
representative sample of clients.
a. For the purpose of this Agreement, "sales proceeds" shall mean gross
or invoiced sales of copies of the Product less discounts and returns
actually made or allowed, and uncollectible accounts.
b. At the completion of the production stage of the Product, Licensee
shall submit to Smithsonian a detailed list of all direct development
costs for the Product. Licensee shall not include any profit or fee in
the declared development costs. Upon delivery and acceptance of the
list by Smithsonian, Licensee may retain all sales proceeds received
through the sale and marketing of the Product until it is reimbursed
for the listed development costs. The parties anticipate that the
development costs will not exceed $300,000.00. Licensee shall not be
entitled to reimbursement for more than $450,000.00 in developing
c. After Licensee is reimbursed for the development costs for the
Products, the parties shall each receive fifty percent (50%) of all
sales proceeds received in connection with the Product.
10. PAYMENTS AND STATEMENTS.
a. Procedure for Payments.
i. Payments from both parties shall be made monthly and shall be
accompanied by the Periodic Statement set forth in Paragraph
10.b. If the accumulated payment to one party from the other is
less than three hundred dollars ($300.00), such payment may be
deferred until the accumulated amount reaches three hundred
ii. Payments to Synthonics by Smithsonian should be mailed to the
Synthonics Technologies, Inc.
31324 Via Collinas
Westlake Village, CA 91362
iii. In the event that the Product is distributed through
non-Smithsonian outlets, payments to the Smithsonian should be
mailed to the following address:
S.I. Contract Number RC9-821003-0000
Washington, DC 20073-0561
All payments, statements and correspondence shall refer to the
Smithsonian Contract Number from page one of this Agreement.
b. Periodic Statements. Each party shall furnish to the other monthly a
complete and accurate statement, certified to be accurate by an
officer of Licensee, showing the number, description and gross sales
price and itemizing the allowable deductions from the gross sales
price of the Product distributed and/or sold by that party during the
preceding month. If Licensee withholds any moneys from Smithsonian for
reimbursing development costs pursuant to paragraph 9.b., above,
Licensee shall show such sum as an allowable deduction on its periodic
statement to Smithsonian.
c. Receipt or acceptance by one party of any of the statements furnished
by the other party pursuant to this Agreement or of any sums paid
hereunder by the other party shall not preclude that party from
questioning the correctness thereof at any time, and in the event that
any inconsistencies or mistakes are discovered in such statements or
payments, they shall immediately be rectified and the appropriate
payments shall be made. In the event that either party has a
reasonable basis for needing an independently certified statement,
which need cannot otherwise be met, and upon demand, the other party
shall at its own expense, but not more than one (1) time in any twelve
(12) month period, furnish to the requesting party a detailed
statement by an independent certified public accountant, showing the
number, description, gross sales price, itemized deductions from gross
sales price and net sales price of each Smithsonian Product
distributed and/or sold by that party up to the date of the requesting
11. BOOKS AND RECORDS.
Licensee shall keep accurate books of account and records covering all
transactions relating to the license hereby granted; Smithsonian and its
duly authorized representatives shall have the right at all reasonable
hours of the day to an examination of, including the right to make extracts
from and copies of, said books of account and records and of all other
documents and material in the possession or under the control of Licensee
with respect to the subject matter and the terms of this Agreement. To
facilitate inspection by Smithsonian of Licensee's books and records with
respect to the amounts due Smithsonian, Licensee will designate an
individual identification number which will be used exclusively in
connection with Smithsonian Products. Licensee shall retain duplicates of
all invoices to its customers for Smithsonian products. Smithsonian agrees
that it will conduct no more than one (1) examination pursuant to the terms
of this Agreement during any twelve (12) month period that this Agreement
is in effect. All books of account and records shall be kept available for
at least two (2) years after the termination of this License, or any
renewal thereof, and Licensee agrees to permit inspection by Smithsonian
during such two (2) year period under the conditions stated above and
Licensee shall pay for such inspection if the margin of error is in excess
of five (5%) percent.
12. WARRANTIES AND INDEMNIFICATIONS.
i. Smithsonian Warranties. Smithsonian warrants and represents that
it has the full right and authority to grant all of the rights
granted herein, that except as may be noted in a separate writing
from Smithsonian to Licensee, no permission is required of any
other party to filly enforce the rights granted herein; the use
of Smithsonian-provided materials is not a violation of the
copyright or any proprietary or personal right of any person or
entity or otherwise contrary to law; that it has not previously
assigned, pledged or otherwise encumbered the rights herein
granted to Licensee; that it will not grant to any other party a
license to use the same images and materials in connection with
the same products during the life of this Agreement. Nothing
herein shall bar Smithsonian from using other digitized images of
the same objects in other products centered on a different
ii. Licensee Warranties. Licensee warrants and represents that it has
the full right and authority to enter into this Agreement; that
none of the non-Smithsonian materials incorporated in the
completed Smithsonian products are a violation of the copyright,
patent right, or any proprietary or personal right of any person
or entity or otherwise contrary to law; that Licensee has fully
complied with all applicable laws and regulations both within and
outside the U. S. pertaining to the development, manufacture,
distribution, and sale of the Product including, without
limitation, consumer products safety laws and labeling
requirements applicable to the manufacture and sale of children's
toys, games, and activity kits; and that licensee has not nor
will not in any manner grant, assign, encumber, or dispose of any
of the rights granted herein except as provided herein.
b. Smithsonian hereby indemnifies Licensee and shall hold it harmless:
i. against any claims or suits asserting any proprietary rights in
an artifact or image from Smithsonian collections which Licensee
has reproduced pursuant to this Agreement, but only to the extent
of Licensee's out-of-pocket costs; and
ii. against any judgments or settlements arising out of use by
Licensee of the Names as authorized in this Agreement, but only
to the extent of such authorized use and only to the extent of
Licensee's actual out-of-pocket costs including reasonable
outside attorneys' fees; and provided further that Licensee shall
give prompt written notice to Smithsonian of any such claim or
suit, and provided further that Smithsonian shall have the option
to undertake and conduct the defense of any suit so brought.
Nothing contained in this subparagraph, or elsewhere in this
Agreement, shall create any liability on the part of Smithsonian
for any other claims or suits against Licensee.
iii. against any judgments or settlements arising out of a breach of
one of the warranties made above in Paragraph 13.a., but only to
the extent of Licensee's actual out-of-pocket costs including
reasonable outside attorneys' fees; Nothing contained in this
subparagraph, or elsewhere in this Agreement, shall create any
liability on the part of Smithsonian for any other claims or
suits against Licensee.
c. Licensee shall assist Smithsonian, to the extent necessary, in the
protection of any of Smithsonian's right to the Names, and
Smithsonian, if it so desires, may commence or prosecute at its own
expense any claims or suits in its own Names or in the name of
Licensee or join Licensee as a party thereto. Licensee shall notify
Smithsonian in writing of any infringements or imitations by others of
the Names on articles the same as and/or similar to the Smithsonian
Products. In the event that Smithsonian does not take action against
an infringer, Licensee may do so at its own expense and Smithsonian
will cooperate with Licensee in prosecuting any such action, provided,
however, that Licensee shall have given Smithsonian thirty (30) days
written notice of its intention to do so and Smithsonian shall not
have objected thereto in writing in that period, it being understood
that Smithsonian shall have the final determination whether or not any
action shall be taken on account of such infringements or imitations.
d. Licensee hereby agrees to indemnify, defend, and hold Smithsonian
harmless from any claim or suit arising or alleging to arise out of or
from the development of Smithsonian Products or arising out of a
breach of Licensee's warranties under the Licensee name, excepting
claims for which Smithsonian is indemnifying Licensee.
a. During the term of this Contract, Licensee shall secure and maintain
at a minimum the following amount of insurance coverage:
i. Commercial General Liability policy, including products
liability, in the minimum amount of two million ($2,000,000)
dollars per occurrence, to include coverage for bodily injury,
property damage, personal injury, advertising injury, contractual
liability and products and completed operations coverage.
ii. Media Professional Liability policy in the minimum amount of
three million ($3,000,000) dollars per occurrence, to include
coverage for defamation or harm to character, invasion or
infringement of right to privacy, infringement of copyright,
infringement of patent, plagiarism, piracy and misappropriation
of ideas committed in the dissemination of printed or other
b. Policies evidencing the above coverage shall include Smithsonian as an
Additional Insured and shall include or provide for insurance coverage
for liability assumed under this Contract. All such insurance policies
shall contain a minimum thirty (30) day notice requirement to
Smithsonian prior to cancellation. As evidence that Licensee has the
required coverage, original certificates of insurance or true copies
of the policies shall be presented to Smithsonian upon signing of the
Agreement and for review on a yearly basis. Smithsonian may also
request copies of the policies for further review and evaluation.
Before the expiration or cancellation of any insurance policy required
hereunder, Licensee shall mail to Smithsonian certificates of
insurance evidencing renewal or replacement coverage sufficient to
satisfy its obligations under this Section. If Smithsonian does not
receive this evidence of insurance coverage within a reasonable time
after this contract is signed, and/or if Licensee fails to maintain
the required insurance during the term of this Contract, Smithsonian
shall provide written notice of its intention to cancel this Agreement
unless this breach is remedied within five (5) business days. If the
breach is not remedied within five (5) business days, Smithsonian may
cancel this Agreement. If Smithsonian cancels pursuant to this
provision, Smithsonian shall not incur any liability or penalty. Upon
receipt of written notice of such cancellation, Licensee shall make
all remaining payments due and owing to Smithsonian, including but not
limited to royalties, under this Contract.
14. COPYRIGHT AND TRADEMARK.
a. Trademark. Licensee agrees to cause an appropriate statutory notice of
trademark registration to be affixed to or imprinted on each copy of
the Product wherever the federally registered trademarks, Smithsonian
and/or Smithsonian Institution are first used. Such notice shall be in
one of the following forms:
i. (R) placed on the right hand "shoulder" of the trademark and/or
ii. "This trademark is owned by the Smithsonian Institution and is
registered in the U.S. Patent and Trademark Office".
The Smithsonian logo shall not be changed, altered, moved, manipulated
or incorporated into another design and it shall stand separate and on
its own. Licensee agrees to submit an attachment sample containing the
Smithsonian logo and the Licensee logo before completion of the
product design stage.
Smithsonian agrees that Licensee may affix its own trademark to
Smithsonian Product(s), subject to Smithsonian's prior written
approval before completion of the product design stage.
b. Copyright. Licensee acknowledges that all materials produced pursuant
to this Agreement, which are based on artifacts and images from the
Smithsonian's collections, shall be deemed derivative products within
the meaning of the United States Copyright Act of 1976, as amended (17
U.S.C. section 101, et jug.), and all right, title and interest,
including copyright, shall be owned by Smithsonian. These materials
include but are not limited to designs, sketches, tracings, draft and
finished artwork, packaging, advertisements, instructions and
descriptive or textual materials. In the event such materials are
adjudged not to be derivative products, Licensee hereby transfers and
assigns to Smithsonian, for fair consideration, all rights, including
copyright, in all materials produced pursuant to this Agreement.
Licensee agrees to cause an appropriate copyright notice to appear on
all copyrightable materials produced as a result of this agreement,
including but not limited to, the product itself and any and all
advertising, packaging and/or promotional materials relating to the
product. Such copyright notice shall be in a form similar to the
(C) 1997 Smithsonian Institution
If requested by Smithsonian, Licensee shall secure and maintain United
States copyright registration in the name of Smithsonian within three
(3) months of the date of first publication of the Product, as the
term "first publication" is defined in the United States Copyright Act
of 1976, as amended. Licensee shall submit proper samples and/or forms
of the copyrighted material for copyright deposit purposes with the
United States Library of Congress. Licensee shall be responsible for
any and all costs associated with such registration and deposit.
c. Goodwill. Licensee recognizes the great value of the prestige,
publicity and good will associated with the Names, and in such
connection, acknowledges that such goodwill exclusively belongs to
Smithsonian and that the Names has acquired a secondary meaning in the
mind of the purchasing public as a source of museum services and
15. DISPOSAL OF SECONDS.
In the event a Product under a Smithsonian license fails to pass Licensee's
normal quality control inspection, or otherwise deviates from the standards
of the industry, that Product shall by physically destroyed and shall not
be otherwise sold, traded or given away.
16. SPECIFIC UNDERTAKINGS OF LICENSEE.
During the term of the License Period and thereafter Licensee agrees that:
a. It will not attack Smithsonian's rights in and to the Names and any
copyright or trademark pertaining thereto, nor will it attack the
validity of the License granted hereunder. It will not harm, misuse or
bring into disrepute the name and, in the development of Smithsonian
Product, will assist Smithsonian in preserving the integrity of the
Names. This obligation shall continue indefinitely following
expiration of the license;
b. It will ensure that the development of Smithsonian Products proceeds
in an ethical manner in keeping with the dignity and traditions of the
Smithsonian and in accordance with the terms and intent of this
c. It agrees not to discriminate in its business practices including but
not limited to hiring, marketing, sub-contracting and wholesaling on
the basis of race, creed, color, religion, sex, age, national origin,
handicap or for any other reason prohibited by Federal or applicable
a. Breach. Smithsonian may terminate this Agreement at any time if the
continued manufacture or sale of any Smithsonian Products will harm or
bring into disrepute the Names or the reputation and integrity of the
b. Material Breach. Smithsonian may terminate this Agreement in the event
of a material breach by Licensee provided that Licensee has been given
thirty (30) days written notice of such breach, the nature of the
breach has been identified, and Licensee has failed to cure, or to
attempt to cure, the asserted breach to the satisfaction of
Smithsonian within the notice period. Failure to meet deadlines in
Schedules shall constitute a material breach.
c. Default. It is understood that Licensee will commence in good faith
with the development of the Product and will actively continue with
the development, manufacture and sale of the Licensed Products in
accordance with Schedule B. If Licensee fails to have manufactured,
distributed or sold any Smithsonian Products in any two (2)
consecutive calendar quarters during the License Period, Smithsonian
shall have the right, in addition to all other remedies available to
it, to terminate this Agreement upon thirty (30) days prior written
notice. If the Licensed Products consist of more than one (1) product
and some but not all of such products are not actively distributed
and/or sold during any two (2) consecutive quarters, Smithsonian may
terminate the Agreement entirely or only as to those certain products
not being distributed and/or sold by Licensee. The effective date of
such termination shall be thirty (30) days following receipt of the
notice by Licensee.
d. Bankruptcy/Cessation of Business. In the event Licensee enters into
proceedings relating to bankruptcy, whether voluntary or involuntary,
Licensee agrees to furnish, by certified mail, written notification of
the bankruptcy to the Contracting Officer. This notification shall be
furnished within five (5) days of the initiation of the proceedings
relating to bankruptcy filing. This notification shall include the
date on which the bankruptcy petition was filed, the name and location
of the court where the petition was filed and the Smithsonian
Institution Contract Number as it appears on the first page of this
Agreement. This obligation remains in effect until final payment is
made under this Agreement. Upon receipt of such notice, and subject to
such approvals as may be required by the bankruptcy court and/or
trustee in bankruptcy, Smithsonian have the first and exclusive right
to purchase part or all of Licensee's remaining Smithsonian Products.
If Smithsonian chooses not to purchase the remaining Smithsonian
Products, Licensee may dispose of the remainder consistent with the
terms and conditions of this Agreement and/or the terms and conditions
of any arrangement ordered by the court and/or trustee.
e. Transfer. Smithsonian may terminate this Agreement effective
immediately, at its sole option, if Licensee sells or otherwise
disposes of substantially all of its business or assets to a third
party, or control of Licensee is transferred, or present management of
Licensee is changed, or no longer is involved directly in the
day-to-day supervision of Licensee's performance under this Agreement
unless Licensee shall have first obtained Smithsonian's prior written
permission to such transfer and/or changes.
f. Force Majeure. If by reason of the laws, regulations, acts, demands,
orders, or interpositions of any government or any subdivision or
agent thereof; or by acts of God, strike, fire, flood, weather,
explosion, accidents, war, rebellion, insurrection, terrorism or any
other cause beyond the control of either party whether similar or
dissimilar to the foregoing Licensee shall be delayed or prevented
from performing this Agreement, such delay or failure to perform shall
be excused during the continuance of and to the extent of such cause,
and the contract period for performance shall be extended for a period
equal to the duration of such cause. If such delay exceeds ninety (90)
days, either party hereto may terminate this Agreement, and all rights
and obligations hereunder shall cease, except that Licensee shall be
responsible for all sums due and owing as of the date of delay.
18. CONDUCT UPON TERMINATION.
a. Notice. Upon receipt of a notice of termination from Smithsonian,
Licensee shall cease the manufacture, sale, promotion and distribution
of the Licensed Products immediately, except for the sell-off period
as specified in paragraph l9.b. Licensee shall deliver to Smithsonian
within thirty (30) days of the date of termination a statement
indicating the number and description of Smithsonian Products on hand
or in process of being manufactured at the time of termination.
b. Sell-off. Licensee has the right to dispose of the remaining inventory
for six (6) months following the date of termination, including the
right to use promotional materials developed prior to termination, but
only for purposes directly relating to disposal of remaining inventory
with the prior written approval of Smithsonian. If Licensee intends to
dispose of remaining inventory at a discounted price, Licensee shall
notify Smithsonian in advance and afford Smithsonian the opportunity
to buy part or all such inventory at the reduced price. If Smithsonian
declines to buy the inventory, Licensee may sell it at the discounted
price, provided it pays Smithsonian in accordance with this Agreement.
Smithsonian shall have the right to conduct physical inventories
during the six (6) month disposal period following termination of this
Agreement and during normal business hours upon five days prior
written notice to Licensee.
c. Use of Name. Upon termination or expiration of this Agreement,
Licensee shall cease to use the Names and shall not exploit in any
manner its association with Smithsonian, except as authorized during
the sell-off period. These provisions shall survive termination and
expiration of this Agreement.
d. Production Materials. After providing a thirty (30) day advance
written notification to Smithsonian, Licensee shall destroy or, upon
Smithsonian request, deliver to Smithsonian all production materials
including molds, casts, dyes, plates, film or other photographic
material, or similar production necessities containing the Names and
first created as a result of this License.
e. Smithsonian Materials. Upon termination or expiration of this
Agreement, Licensee shall return all materials, including but not
limited to color transparencies, slides, photographs, files of
digitized images and text, or reference books provided by Smithsonian
for the development of the Products under this Agreement.
f. Payment. In the event the License granted hereunder is terminated for
any reason, each party shall pay immediately to the other any monies
owed but unpaid pursuant to this Agreement and, further, Licensee
shall pay Smithsonian in accordance with Paragraph 9 for all copies of
Products sold during the six (6) month sell-off period.
g. Rights. Upon termination or expiration of this Agreement, all rights
granted hereunder shall revert to Smithsonian.
19. CONDUCT UPON EXPIRATION OR RENEWAL OF THE LICENSE PERIOD.
Smithsonian shall send a notice of expiration or renewal to Licensee
approximately ninety (90) days prior to expiration of the license period.
Upon receipt of either notice, Licensee shall have fourteen (14) days from
receipt of the notice to respond in writing. Smithsonian may grant such
renewal in its sole discretion and may propose modifications of this
Agreement as it deems appropriate. Except as modified by the parties, the
terms and conditions applicable during the renewal term shall be the same
as those contained herein. In the event Licensee fails to respond within
the specified period of time or Smithsonian declines to grant renewal, the
Agreement shall be deemed terminated and the rights and obligations of
Licensee shall be governed by Paragraph 18, above.
20. RESERVATION OF RIGHTS.
Notwithstanding any provision contained herein to the contrary, Smithsonian
may license others, including but not limited to firms, individuals,
co-partnerships or corporations to use the Names and trademarks in
connection with other products and, except as specifically granted herein,
the Smithsonian reserves all rights pertaining to the Names and trademarks.
21. AUTHORIZED REPRESENTATIVES.
a. Contracting Officer For the purposes of liaison and direction in
contractual interpretation matters, dispute resolution, or for
modification of this Agreement, Licensee shall deal with and
Smithsonian shall be represented by the Smithsonian Contracting
Officer or his special designee.
b. Contracting Officer's Representative For purposes of liaison,
providing guidance and direction in daily operational matters,
granting approvals or withholding same and for general contract
coordination as detailed herein, the Smithsonian Institution
Contracting Officer shall be represented by J. Michael Carrigan,
External Affairs Officer, Office of the Provost.
c. Licensee' Representative ("Licensee") For purposes of liaison and
direction in daily operational matters, Licensee shall be represented
by F. Michael Budd, President & CEO, Synthonics Technologies, Inc., or
his/ her designated representative. The Licensee's Representative
shall be responsible for informing the staff of Licensee working on
Smithsonian Products about each and every provision of this contract,
including, but not limited to, Paragraph 5, above, Approvals.
d. Substitution of Representative Smithsonian and Licensee shall each
have the right to change their representatives and designees set forth
herein by providing notice pursuant to Paragraph 23 below. They shall
also advise one another in writing of any substitution for said
All correspondence, notices, royalty payments and all other written
communications related to this Agreement in any way shall be delivered by
U. S. certified mail, postage prepaid, return receipt requested, or a
similar carrier requiring signature and receipt.
All notices which shall be required to be sent by Smithsonian to Licensee
shall be sent to the following address:
Synthonics Technologies, Inc.
31324 Via Collinas
Westlake Village, CA 91362
All notices which shall be required to be sent by Licensee to Smithsonian
shall be sent to:
For Contract Coordination: For Contract Matters:
J. Michael Carrigan Contracting Officer
Office of the Provost Office of Contracting
Smithsonian Institution Smithsonian Institution
1000 Jefferson Drive, S. W., Rm. 230 955 L'Enfant Plaza, Suite P-114
Washington, DC 20024 Washington, DC 20560
With copy to:
Office of the General Counsel
1000 Jefferson Drive, S.W., Rm. 302
Washington, DC 20560
By providing notice pursuant to this paragraph, either party to this
Agreement may change the individuals and/or the address(es) for
correspondence, notices, or royalties that are to be sent.
23. NO PARTNERSHIP.
This Agreement does not constitute and shall not be construed as
constituting a partnership or joint venture between Smithsonian and
Licensee. Neither party shall have the right to obligate or bind the other
in any manner whatsoever and nothing herein contained shall give or is
intended to give any rights of any kind to any third persons.
24. NO ASSIGNMENT.
This Agreement and all rights and obligations herein are personal to
Licensee and shall not be assigned without Smithsonian's prior written
No amendments, modifications or waivers to this Agreement shall be valid
unless in writing and signed by all parties to this Agreement.
26. TIME IS OF THE ESSENCE.
The parties agree that time is of the essence in this Agreement, and that
adherence to the mutually-agreed schedule is vital to the performance of
the parties' respective obligations.
27. DISCLAIMER OF IMPLIED WAIVERS.
The failure of Smithsonian to insist upon the strict performance by
Licensee of any of RS the terms of this Agreement, or the acceptance by
Smithsonian of any payments, even partial payments, from Licensee with
knowledge of any default or breach thereof, shall not be construed as a
waiver by Smithsonian of its right to insist at any subsequent time upon
the full performance of any of the terms of this Agreement.
This Agreement shall be construed in accordance with the applicable Federal
laws and laws of the District of Columbia regardless of its place of
execution or performance.
29. NECESSARY SIGNATURES AND CONSENT.
This Agreement and attached Schedules A through C constitute the complete
understanding of the parties. This Agreement shall not be deemed effective,
final or binding upon Smithsonian or Licensee until signed by each of them
at the appropriate places at the conclusion of the annexed schedules.
The terms of this Agreement are severable. If any term or provision is
declared invalid, it shall not affect the remaining terms which shall
continue to be binding.
The Section headings hereof are for the convenience of the parties only and
shall not be used in the interpretation of this Agreement.
The recitals herein constitute an integral part of the Agreement reached
and are to be considered as such.
33. ENTIRE AGREEMENT.
This Agreement constitutes the entire agreement between the parties and
supersedes all previous agreements in this matter. There are no other
written or oral agreements, representations or understandings with respect
to the subject matter of this Agreement. This Agreement and its terms may
be amended, modified, or waived only by written agreement, signed by the
authorized representative of Licensee and the Contracting Officer,
Smithsonian Institution. This Agreement may not be assigned by either party
without the written consent of the other.
IN WITNESS WHEREOF, THE PARTIES hereto have signed this Agreement in
duplicate originals as of the day and year above written.
Accepted and agreed,
SMITHSONIAN INSTITUTION SYNTHONICS TECHNOLOGIES, INC.
/S/ John F. Coffee /S/ F. Michael Budd
By: John F. Coffee for By: F. Michael Budd
John Cobert Its: President & CEO
Its: Contracting Officer
Date: 10/2/97 Date: 10/2/97
SCHEDULE A: SMITHSONIAN PRODUCTS
As used herein the following words will have these definitions:
REPRODUCTION: A reproduction is a product which is an exact copy of the
ADAPTATION: An adaptation is a product which is a modification and/or
derivative of the original. Through flexible interpretation of the artifact, the
resulting product will have an appearance similar to the original, but may
differ in terms of one or more of the following: function, material, type of
manufacture and/or size or color.
CREATION: A creation is a product resulting from the use of the Smithsonian
Institution's collections and its mission as a source of inspiration and/or as a
reference point. Such an item need not focus on a particular object in the
collections, but rather might be a reflection of the collections as a whole.
SCHEDULE B: CONCEPT AND DESIGN APPROVALS
Approval Stages Month Day Year
Kick-off Date: October 3, 1997
Approval of the final Storyboards, which
shall be delivered to Smithsonian
no later than: October 17, 1997
Approval of the final lists of all
assets to be reproduced on the Product,
including, but not limited to, museum
artifacts, video clips and audio clips.
The final list shall state which
artifacts will be represented by
two-dimensional images and which
artifacts will be represented by
three-dimensional images. The final list
shall be delivered to Smithsonian
no later then: October 31, 1997
Approval of the Product's script
(all text which shall appear on the Product),
credits, interactivity planning, and
initial CD packaging, which shall
be delivered to Smithsonian no
later than: November 28, 1997
Approval of the alpha prototype CD
and packaging, which shall be
delivered to Smithsonian no later than: January 30, 1998
Approval of beta prototype CD and
packaging, which shall be delivered
to Smithsonian no later than: February 16, 1998
Approval of sample of final Product,
which shall be delivered to
Smithsonian no later than: February 24, 1998
If Smithsonian changes the date of any approval set forth above to a later date,
the remaining approval and delivery dates shall be similarly moved to a later
date. For example, if one approval date is moved back one (1) week, then all
remaining dates will also be moved back one (l) week.
Failure to meet scheduled deadlines as set forth herein, may be grounds for
termination pursuant to Paragraph 18 of this Agreement. Modification of the
scheduled deadlines may be made by mutual agreement between the parties.
SCHEDULE C: TRADEMARK AND DESIGN PROTECTION AGREEMENT
RE: Sample/Purchase Orders and Manufacturing Contracts for:
Dear Sir or Madam:
Our company may be entering into Sample/Purchase Order Contract or other
manufacturing arrangements with you in the near future and would like to take
this opportunity to call to your attention the basis upon which we will enter
Pursuant to our agreements, we may be providing you with certain designs
and artwork and requisitions for finished items (including samples), piece goods
and trim, packaging, business materials or labels, among other things. By
accepting our instructions, orders, or contracts, your firm agrees that it has
only a limited, non-transferable right to use any trademarks, characters,
designs, names, symbols, and/or other materials copyrighted, or owned by the
Smithsonian Institution or any of its affiliates. You agree that such Material
shall not be used by your firm at any time for any purpose other than that for
which they were placed in your trust, i.e. in fulfillment of sample/purchase
orders and/or manufacturing arrangements, and you shall exercise due diligence
so that they are not made available to third parties. No rights shall remain in
your firm or its employees or agents as to such material of Smithsonian and you
agree that to the extent your firm may acquire any rights to said material, such
rights shall revert to Smithsonian, or its affiliates, as the case may be,
without any further act of the parties hereunder. All materials containing the
aforementioned Material will be returned promptly at any time Smithsonian
requests such return, but in any event no later than when the finished product
is shipped to Licensee.
Please place the acknowledgment signature of two (2) of your executive
officers in the space provided below and return one signed copy of this letter
to the undersigned as soon as possible. Thank you for your cooperation.
[SPECIMEN ONLY -- DO NOT SIGN]