EXHIBIT 10.3
[CONFIDENTIAL PORTIONS OMITTED]
DATED 14 JANUARY 2002
AARDMAN ANIMATIONS LIMITED(1)
- AND -
BAM ENTERTAINMENT LIMITED(2)
- AND -
BAM ENTERTAINMENT, INC.(3)
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LICENCE AND OPTION
AGREEMENT
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XXXXXXX XXXX
00 XXXXXXX XXXXXX
XXXXXX XXXXXX
XXXXXX XX0X 0XX
DIRECT TEL: 000 0000 0000
DIRECT FAX: 000 0000 0000
DIRECT E-MAIL: XXXXXXXXXXXX@XXXXXXXXXXX.XXX
REF: JXC/62787/WB1-58187-1
INDEX OF CLAUSES AND SCHEDULES
1. DEFINITIONS AND INTERPRETATION................................................. 1
2. LICENCE........................................................................ 7
3. OPTION: SCOPE.................................................................. 7
4. OPTION: PROCEDURE.............................................................. 8
5. CONSIDERATION.................................................................. 9
6. ROYALTIES...................................................................... 11
7. ROYALTY ACCOUNTING............................................................. 12
8. ATTRIBUTION.................................................................... 14
9. EXPLOITATION................................................................... 14
10. LICENSOR'S APPROVAL RIGHTS..................................................... 15
11. LICENSOR'S WARRANTIES.......................................................... 15
12. LICENSEE'S WARRANTIES.......................................................... 17
13. INDEMNITIES.................................................................... 18
14. INTELLECTUAL PROPERTY.......................................................... 18
15. CONFIDENTIAL INFORMATION....................................................... 20
16. KEY EXECUTIVES................................................................. 21
17. CONSULTATION AND COOPERATION................................................... 21
18. TERM AND TERMINATION........................................................... 22
19. CONSEQUENCES OF TERMINATION.................................................... 22
20. FORCE MAJEURE.................................................................. 23
21. ASSIGNMENT..................................................................... 24
22. LIABILITY...................................................................... 24
23. NOTICES........................................................................ 24
24. GENERAL........................................................................ 25
25. LAW AND JURISDICTION........................................................... 26
SCHEDULE I: THE XXXXXXX & GROMIT PROPERTIES IN EXISTENCE AS AT THE COMMENCEMENT DATE.. 27
SCHEDULE II: PROPERTIES REFERRED TO IN CLAUSE 3.1.1(A)................................ 28
SCHEDULE III: PROPERTIES REFERRED TO IN CLAUSE 3.1.2(A)............................... 29
SCHEDULE IV: THE PRIOR LICENCES....................................................... 31
PART A: XXXXXXX & GROMIT PRIOR LICENCES............................................... 31
PART B: NON-XXXXXXX & GROMIT PRIOR LICENCES........................................... 31
SCHEDULE V: STOCK VALUATION........................................................... 32
SCHEDULE VI: ROYALTY RATES............................................................ 33
SCHEDULE VII: LICENSOR TRADE MARKS.................................................... 34
THIS AGREEMENT is made this 14th day of January 2002
BETWEEN:
1. AARDMAN ANIMATIONS LIMITED a limited company incorporated under the laws
of England and Wales under company number 2050843 the address of whose
registered office is Gas Xxxxx Xxxx, Xxxxxxx XX0 0XX, Xxxxxx Xxxxxxx
("Licensor") of the first part; and
2. BAM ENTERTAINMENT LIMITED a limited company incorporated under the laws
of England and Wales under company number 04112030 the address of whose
registered office is 00 Xxxxxxxxxx Xxxxxx, Xxxx, Xxxx & Xxxxxxxx XX0 0XX
Xxxxxx Xxxxxxx ("Licensee") of the second part; and
3. BAM ENTERTAINMENT, INC., a corporation incorporated under the laws of
the State of Delaware whose principal office is located at 000 Xxxx
Xxxxx Xxxxx Xxxxxx, Xxxxx 000, Xxx Xxxx, Xxxxxxxxxx XX 95113, United
States of America ("Grantor") of the third part.
WHEREAS
(A) Licensor owns intellectual property rights in creative properties,
characters and story boards.
(B) Licensee and Grantor publish entertainment software products.
(C) Licensee is a wholly-owned subsidiary of Grantor.
(D) On or about 9 November 2001 Licensor and Licensee signed a written
agreement whereby Licensor granted to Licensee a licence in some, and an
option over other, Interactive Entertainment Rights ("the Initial
Agreement").
(E) The Initial Agreement recited that Licensor and Licensee intended that
it be superseded by a more detailed agreement between Licensor, Licensee
and Grantor.
(F) The parties have agreed that the Initial Agreement be superseded by this
Agreement.
OPERATIVE PROVISIONS:-
1. DEFINITIONS AND INTERPRETATION
1.1 The following terms shall have the following respective meanings when
used in the Agreement unless the context otherwise requires:-
"AGREEMENT": this Agreement including its recitals and schedules;
"ADVANCE": as defined in Clause 5.1;.
"AFFILIATE": any entity which (i) a party Controls or (ii) Controls a
party or (iii) is under common Control with a party;
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"BETA": a version of a Program which is "99% final" in the sole opinion
of Licensee, with: all base languages implemented; all game elements
implemented; all Intellectual Property and legal messages in place; and
no material Errors;
"CLAIM": as defined in Clause 13;
"CLEARANCE SALE": the sale of any Product by Licensee or any of its
Affiliates at a wholesale price less than its Cost of Manufacture in any
part of the Territory with the intention of discontinuing its
Exploitation in that part;
"COMMENCEMENT DATE": 9 November 2001;
"COMMERCIAL CHARACTERS": as defined in Clause 3.2;
"COMMERCIAL RELEASE": the time when a Product is first made available by
a retailer or otherwise for purchase by end-users in any country or
jurisdiction within the Territory;
"CONTRIBUTOR": a programmer, director, producer, actor, performer,
musician, singer, designer, technician or any other person employed or
contracted on whatever basis to provide materials, services or
performances in connection with the creation or development of any
Licensed Property;
"CONTROL": as defined in section 840 of the Income and Corporation Taxes
Xxx 0000;
"COST OF MANUFACTURE": all reasonable costs paid by Licensee and/or any
of its Affiliates to any third party (which shall exclude payment from
one of its Affiliates to another) for designing, manufacturing and/or
delivering any Product to its point of Exploitation, including the cost
of duplication, printing, raw materials, manufacture, handling, packing,
shipping, transportation, insurance, import duties, labour costs, and
any applicable taxes, duties, levies and assessments whether local,
national, supranational or otherwise howsoever;
"CURRENCY": United States dollars;
"DREAMWORKS": DreamWorks LLC a limited liability corporation
incorporated under the laws of the State of Delaware whose principal
place of business is situated at 0000 Xxxxxx Xxxxxx, Xxxxxxxx,
Xxxxxxxxxx, XX 00000, Xxxxxx Xxxxxx of America and/or any of its
Affiliates;
"EXPLOITATION": production, reproduction, performance, promotion,
publicity, development, publication, manufacture, marketing,
advertisement, distribution, licensing, sub-licensing, importation,
exportation, translation, Merchandising, localisation, display, rental,
lease, lending, sale and any other form of commercial exploitation, and
the authorisation of any third party to do any of the foregoing;
"EXPLOIT" shall be interpreted accordingly; and "Merchandising" shall be
interpreted to the effect that Licensee shall be entitled to merchandise
Products save that nothing herein shall grant or be deemed to grant to
Licensee any other merchandising rights in relation to any Property;
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"FEATURE FILM": a Property which is a single film (as defined in Part I
of the Copyright Designs and Patents Act 1988) whose duration is no less
than 70 (seventy) minutes;
"FORCE MAJEURE": as defined in Clause 20.1;
"FORMAT": any of the following, whether operating in stand-alone or
networked configuration, regardless of storage media, whether hand-held
or otherwise, and whether now in existence or hereafter invented:
personal computers; domestic electronic games consoles; personal mobile
gaming platforms (including mobile telephones); personal digital
assistants; set-top boxes; and the internet;
"FRONTIER": Frontier Developments Limited a limited company incorporated
under the laws of England and Wales under company number 2892559 the
address of whose registered office is Saxon Farm, Xxxx Xxxxxx, Xxxx,
Xxxxxxxxx, XX0 0XX, Xxxxxx Xxxxxxx;
"INFORMATION": as defined in Clause 15.1.1;
"INITIAL AGREEMENT": as defined in Recital (D);
"INITIAL TERM": the period from the Commencement Date to the 5th (fifth)
anniversary of the Signature Date;
"INSOLVENCY": any of the following in relation to any party: the
appointment of or the application to a court for the appointment of a
liquidator, administrator, manager, administrative receiver or receiver;
any proposal by the party for or the entering into of a scheme of
arrangement or composition with or for the benefit of creditors; any
reorganisation, moratorium or other administration involving its
creditors; a resolution or proposed resolution to wind it up; where the
value of its assets is less than the amounts of its liabilities
including any contingent or prospective liabilities; becoming unable to
pay its debts as and when they fall due; where execution or other
process issued on a judgment, decree or order of any court in favour of
any creditor of the party in respect of a liability of the same is
returned unsatisfied in whole or in part; ceasing to carry on business;
or undergoing any procedure comparable or analogous to any of the
foregoing under the laws of any competent jurisdiction; and "Insolvent"
shall be construed accordingly;
"INTELLECTUAL PROPERTY": all intellectual property rights throughout the
Territory whether currently in existence or otherwise and whether vested
or contingent, including copyright, rights in the nature of copyright,
moral rights, database right, trade marks, designs, design rights,
patents, utility models, logos, trade secrets, know-how, confidential
processes and information, inventions, discoveries and improvements,
trading and business names, moral rights, get-up, rights in internet
domain names and any rights in the nature of intellectual property
rights (in each case whether registered or not and including
applications for registration thereof) and all rights or forms of
protection of a similar or analogous nature or having equivalent or
similar effect or any other matters which may subsist in any part of the
Territory;
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"INTERACTIVE ENTERTAINMENT RIGHTS": the rights to Exploit Products in
any Format, including the rights to use on or in connection with such
Products (a) any Licensor Trade Marks and other Intellectual Property
owned or controlled by Licensor properly associated with the respective
Properties from which any Product derives and (b) (subject only to
Licensee's obligations under Clause 9.6) the names, likenesses,
biographies, photographs and recorded voices of all persons or
characters appearing in or properly associated with the respective
Properties from which any product derives;
"IP ACTION": as defined in Clause 14.2.2;
"IP CLAIM": as defined in Clause 14.1;
"KEY EXECUTIVES": Xxxxx Xxxx of 0 Xx Xxxxxx Xxxx, Xxxxxxxx Xxxx, Xxxxxxx
XX0 0XX and Xxxx Xxxx of Xxxxxx Xxxxxxx, Xxxxxxxx Xxxx, Xxxxxxx, Xxxxxxx
XX0 0XX;
"LICENCE": as defined in Clause 2.1;
"LICENSED PROPERTY": any Property that is the subject of the Licence
and/or any Option Licence. The Xxxxxxx and Gromit Properties and any
derivatives from, and sequels to, them shall together be deemed to be a
single Licensed Property for the purposes of this Agreement. Further,
any derivatives from, and sequels to, a Property shall together with the
original Property be deemed to be a single Licensed Property;
"LICENSED RIGHT": any Interactive Entertainment Right or other right
licensed by Licensor to Licensee hereunder;
"LICENSEE": as defined above;
"LICENSOR": as defined above;
"LICENSOR'S AGENT": Marjacq Micro Limited, a limited company
incorporated under the laws of England and Wales under company number
34508500 the address of whose registered office is 00 Xxxxxxxxxx Xxxx,
Xxxxxxx, Xxxxxxxxx XX0 0XX;
"LICENSOR TRADE MARKS": those trade marks, logos, names and other signs
(registered or unregistered) belonging to Licensor, of which those in
existence as at the Commencement Date are specified in Schedule VII;
"MANUFACTURER": (in respect of the video game platform on which any
Product is to be playable) the manufacturer of the hardware for that
platform;
"NET RECEIPTS": 100% of the actual monies credited to or received in the
Territory by Licensee or any of its Affiliates directly and identifiably
from any Exploitation of any Interactive Entertainment Right less (a)
any credits, returns, xxxx-xxxxx, rebates and trade and other discounts
actually given or allowed to any re-seller or distributor and (b) any
royalties paid or payable to any Manufacturer in relation to the
Exploitation of any Product;
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"NON-XXXXXXX AND GROMIT PRIOR LICENCES": those licences of Properties
other than Xxxxxxx and Gromit Properties granted by Licensor to third
parties prior to the Commencement Date as further particularised in Part
B of Schedule IV.
"NOTICE OF AVAILABILITY": as defined in Clause 4.2;
"OPTION": as defined in Clause 3.1;
"OPTION LICENCE": as defined in Clause 4.4;
"OPTION LICENCE TERM": as defined in Clause 4.4;
"OPTION NOTICE": as defined in Clause 4.3;
"PRIOR LICENCES ": Xxxxxxx and Gromit Prior Licences and Non-Xxxxxxx and
Gromit Prior Licences;
"PRODUCT": an interactive computer software game for consumer use based
on any Property and/or featuring any of a Property's characters or
situations;
"PROGRAM": (in respect of any Product) the computer program upon which
the Product is based, including all object codes, security devices,
listings and graphics;
"PROMPTLY": as soon as practicable and in any event within 5 (five)
Working Days after the relevant event provided that where the approval
of Licensor is required and has been requested, such period shall be
extended by such period of time as Licensor takes in order to approve or
reject the matter in respect of which its approval has been sought;
"PROPERTY": any creative work material invention character or storyboard
created, designed or developed by or on behalf of Licensor prior to or
during the Term, including literary works, dramatic works, musical
works, artistic works, sound recordings, films, broadcasts, cable
programmes (as the foregoing are defined in Chapter I of the Copyright,
Designs and Patents Act 1988), audiovisual works, televisual works and
internet works;
"QUARTER": (a) each 3 (three)-month period in the Term ending on a
Quarter Day, and (b) the period from the Operative Date to the next
Quarter Day, and (c) the period from the last Quarter Day of the Term to
the Termination Date;
"QUARTER DAYS": 31 March, 30 June, 30 September and 31 December;
"ROYALTY STATEMENT": as defined in Clause 7.1;
"ROYALTIES": as defined in Clause 6.1;
"SHORT FILM": a Property which constitutes (a) a film (as defined in
Chapter I of the Copyright Designs and Patents Act 1988) of less than 70
(seventy) minutes duration or (b) a series of films (as defined as
aforesaid) whose individual episodes are less than 70 (seventy) minutes
in duration in aggregate;
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"SIGNATURE DATE": the date when the Agreement is signed by the parties
or (if they sign it on different dates) the latest of such dates;
"TERM": the period from the Commencement Date to the Termination Date
inclusive;
"TERRITORY": the world;
"TERMINATION DATE": the date of expiry or termination (howsoever caused)
of the Agreement;
"XXXXXXX AND GROMIT PRIOR LICENCES": those licences of Xxxxxxx and
Gromit Properties granted by Licensor to third parties prior to the
Commencement Date as further particularised in Part A of Schedule IV;
"XXXXXXX AND GROMIT PROPERTIES": all Properties featuring or
incorporating the characters "Xxxxxxx" and/or "Gromit", of which those
originated by or on behalf of Licensor in existence as at the
Commencement Date are specified in Schedule I;
"WARRANT": warrant granting the right to purchase 1 (one) share of the
common stock of Grantor at the valuation specified in Schedule V;
"WORKING DAY": any day other than: a Saturday or a Sunday or any public
holiday in England and Wales.
1.2 In this Agreement (except where the context otherwise requires):-
1.2.1 any reference to a Recital, Clause or Schedule is to the relevant
recital, clause or schedule of or to the Agreement, and any reference to
a sub-clause or paragraph is to the relevant sub-clause or paragraph of
the Clause or Schedule in which it appears;
1.2.2 the Schedules are integral parts of the Agreement. In the event of any
conflict between a term of a Schedule and a term elsewhere in the
Agreement the latter shall prevail;
1.2.3 the headings of indices clauses and Schedules are included for
convenience only and shall not affect the interpretation of the
Agreement;
1.2.4 references to the "parties" or a "party" are references respectively to
(a) Licensor of the one part and (b) Licensee and Grantor of the other
part, and any obligation hereunder of the party of the second part shall
be deemed to have been performed if performed by Licensee and/or
Grantor;
1.2.5 the expressions "Licensor", "Licensee" and "Grantor" shall include
(where appropriate) their respective successors in title and permitted
assigns;
1.2.6 Licensor shall not unreasonably withhold or delay the giving of any
consent or approval which Licensee and/or Grantor is required hereunder
to seek from it;
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1.2.7 unless the context otherwise requires: words denoting the singular shall
include the plural and vice versa; references to a gender shall include
all other gender; references to persons shall include bodies corporate,
unincorporated associations, firms and partnerships in each case whether
or not having a separate legal personality; and references to the word
"include" or "including" are to be construed without limitation; and
1.2.8 any reference to a statute, statutory provision or subordinate
legislation ("legislation") shall (except where the context otherwise
requires) be construed as referring to such legislation as amended and
in force from time to time and to any legislation which enacts or
consolidates (with or without modification) any such legislation.
2. LICENCE
2.1 Subject only to Clause 2.2 Licensor hereby grants to Licensee a sole and
exclusive licence throughout the Territory during the Initial Term of
the Interactive Entertainment Rights in the Xxxxxxx and Gromit
Properties on the terms hereof ("the Licence").
2.2 The Licence shall exclude any Interactive Entertainment Right that is
the subject of any Xxxxxxx and Gromit Prior Licence, but only for the
duration of the latter.
3. OPTION: SCOPE
3.1 Licensor hereby grants to Licensee a sole and exclusive option ("the
Option") (the procedure for whose operation is specified in Clause 4)
during the Initial Term throughout the Territory in respect of the
following Interactive Entertainment Rights:
3.1.1 Interactive Entertainment Rights in any Property constituting a Feature
Film except (a) those Properties subject to Licensor's written
agreements dated 24 May 1999 and 30 May 1999 with DreamWorks as further
particularized in Schedule II as at the Commencement Date (save that for
the avoidance of doubt any such Properties constituting Xxxxxxx and
Gromit Properties shall, notwithstanding the foregoing, be included in
the Licence), and (b) those Properties featuring substantially the same
characters as any Short Film included in the Option during the Initial
Term that Licensee has declined to option;
3.1.2 (subject to Clause 3.2) Interactive Entertainment Rights (a) in any
Property in which Licensor retains any such Rights (and to the extent
that Licensor retains them) at the Commencement Date (as further
particularized in Schedule III as at the Commencement Date), or (b) in
any Short Film made by or on behalf of Licensor during the Initial Term;
and
3.1.3 (save only to the extent (if at all) expressly excluded therefrom by the
Agreement) the Interactive Entertainment Rights in all other Properties
in existence as at the Commencement Date or coming into existence during
the Initial Term.
-7-
3.2 The Option shall not extend to work commissioned from and/or created by
Licensor specifically for any advertising campaign on behalf of any of
its commercial clients ("Commercial Characters"). However to the extent
that Licensor owns or controls any Interactive Entertainment Right in
any Commercial Character and Licensee wishes to Exploit any such
Interactive Entertainment Right with the agreement of Licensor's
commercial clients or otherwise, Licensor shall Promptly introduce
Licensee to the relevant commercial client and make reasonable
endeavours to procure that such Right is licensed to Licensee before
offering any such Right to another interactive game publisher (in
connection with which Licensor shall follow the procedure, mutatis
mutandis, stipulated in sub-clauses (a), (b) and (c) of Clause 5.4).
3.3 The Option shall not extend to any Interactive Entertainment Right which
is the subject of any non-Xxxxxxx and Gromit Prior Licence, but only for
the duration of the latter. Notwithstanding the foregoing the existence
of a Non-Xxxxxxx and Gromit Prior Licence shall not prevent Licensee
from exercising the Option in respect of other Interactive Entertainment
Rights in the Property that is the subject of the said Prior Licence.
4. OPTION: PROCEDURE
4.1 During the Initial Term Licensor shall not offer any Interactive
Entertainment Rights that are included within the scope of the Option to
any third party unless Licensee has declined to exercise the Option over
them in accordance with this Clause 4.
4.2 During the Initial Term Licensor shall Promptly notify to Licensee
details of all its TV, film and internet projects and of all other
Properties to which the Option applies, and serve on Licensee prior to
the commencement of principal photography thereof a copy of the script
or storyboard or character designs, film or other creative material for
any said Property, and copies of all other relevant material in
Licensor's possession (including chain-of-title documentation and
proposed schedule for release) together with a notice stating that the
Property is available for the exercise of the Option ("Notice of
Availability"). Notices of Availability for Properties existing or in
production at the Commencement Date shall be served on Licensee on or
before the Signature Date and Licensor shall use best endeavours to
Promptly serve on Licensee further details of such Properties upon
request. For the avoidance of doubt this Clause 4.2 shall not apply in
respect of any Property developed by or on behalf of Licensor as
referred to in Clause 3.1.1(a) with a view to offering it to DreamWorks
as a Feature Film until either a) DreamWorks has rejected such a
Property or b) Licensor has decided not to offer the Property to
DreamWorks.
4.3 Licensee may exercise its Option on each Property at any time up to 90
(ninety) days after the date of service on it of the applicable Notice
of Availability by serving notice on Licensor ("Option Notice").
Licensee may expressly decline the Option on any Property by serving
notice on Licensor. In the event that Licensee does not serve an Option
Notice on Licensor within the said 90 (ninety)-day period the Option on
that Property shall be deemed declined.
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4.4 If Licensee exercises the Option on any Property pursuant to Clause 4.3,
it shall automatically be granted by Licensor with effect from the date
of the applicable Option Notice until the 5th (fifth) anniversary
thereof ("Option Licence Term") a sole and exclusive licence throughout
the Territory of the Interactive Entertainment Rights therein (subject
only to such derogations, if any, as are applicable by virtue of Clause
3 provided that such derogations were specified in the Notice of
Availability) upon the terms hereof ("Option Licence").
4.5 Licensor covenants that at the request of Licensee it shall Promptly and
unconditionally do or procure that there shall be done or such acts and
execute or procure that there shall be executed all such documents as
may be reasonably necessary or desirable in Licensee's opinion to secure
the confirmation or perfection of the grant to Licensee of any Option
Licence.
4.6 If the Option has been declined (or deemed declined pursuant to Clause
4.3 by Licensee in respect of any Property Licensor shall be entitled to
offer the Interactive Entertainment Rights in that Property to any third
party.
5. CONSIDERATION
5.1 In consideration of the grant of the Licence Licensee shall (subject
always to Licensor's material compliance with its obligations and
warranties hereunder) pay to Licensor in the following instalments the
sum of US$ [*] ("the Advance") in advance of and recoupable from
Royalties, which shall be payable as follows and which shall (without
prejudice to any claim by Licensee against Licensor for damages in the
event of breach of the Agreement by Licensor) be non-returnable:
5.1.1 US$ [*] on the Commencement Date (receipt of which the Licensor
acknowledges);
5.1.2 US$ [*] on the Signature Date;
5.1.3 US$ [*] within 60 (sixty) days after the Signature Date;
5.1.4 US$ [*] on the date of notification to Licensee of Licensor's concept
approval (as such term is understood in the interactive entertainment
industry) of the Product based on any Xxxxxxx and Gromit Property
produced by or on behalf of Licensee for the Nintendo GameBoy Advance
format;
5.1.5 US$ [*] on the date of notification to Licensee of Manufacturer's or
Licensor's approval of the first Product based on any Xxxxxxx and Gromit
Property produced by or on behalf of Licensee for any platform other
than Nintendo GameBoy Advance;
5.1.6 US$ [*] on the shipment by Licensee or any of its Affiliates or any
sub-licensee of Licensee of the first 128-bit Product (or more advanced
console Product, if earlier) produced by or on behalf of Licensee based
upon any Xxxxxxx and Gromit Property.
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[*] Confidential portion omitted and filed separately with the Commission.
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5.2 In consideration of the grant of the Licence and of any Option Licence
Grantor shall grant to Licensor up to [*] Warrants as set out below:
5.2.1 [*] Warrants on the Signature Date;
5.2.2 [*] Warrants within 60 (sixty) days after the Signature Date;
5.2.3 [*] Warrants within 7 (seven) Working Days after the earlier of the
following dates: (a) the date of service on Grantor by Licensor of a
copy of the greenlight notice (as such term is understood in the film
industry) by DreamWorks for any Feature Film based on or featuring the
characters of Xxxxxxx and Gromit or (b) the date of service on Grantor
of notification that principal photography of the said Feature Film has
commenced;
5.2.4 [*] Warrants on the service by Licensee of an Option Notice for any
Short Film or other Property not being a Xxxxxxx and Gromit Property;
and
5.2.5 [*] Warrants (or the balance of [*], if fewer) on the service on
Licensor by Licensee of an Option Notice for a Feature Film.
5.3 The valuation of each Warrant shall be calculated pursuant to Schedule
V.
5.4 In the event that Licensee wishes to exercise the Option in respect of
one, two, three or four Properties during the Term no advance or option
fee or other consideration shall be payable by Licensee to Licensor in
respect thereof over and above what is specified in Clause 5.2. In the
event that Licensee wishes to exercise the Option in respect of any
Property in excess of four Properties during the Term, the parties shall
attempt in good faith to agree an option fee or advance for such
Property, failing which Licensor may offer to license the Interactive
Entertainment Rights in such Property to any third party save that
Licensor undertakes (a) Promptly to notify to Licensee full details of
any bid for any such licence received by Licensor from any third party
and (b) to provide to Licensee no less than 15 (fifteen) days in which
to match any such bid and (c) (if Licensee matches the said bid within
the said period) forthwith to grant to it an Option Licence in respect
of the said Property.
5.5 Except as may be agreed between the parties in writing as provided in
Clause 5.4 or otherwise no advances shall be payable or recoupable in
respect of Properties optioned by Licensee pursuant to Clauses 5.2.4 or
5.2.5 other than the grant of Warrants as specified therein. The value
of Warrants shall not be recoupable from Royalties.
5.6 Licensor acknowledges and agrees that the consideration payable to it
hereunder takes into account and includes a payment in respect of rental
and lending rights and that such payment constitutes equitable and
adequate consideration therefor and constitutes and satisfies in full
any and all rights which Licensor has, or may at any time during the
Term have, to receive equitable, adequate or other remuneration for the
exercise by or behalf of Licensee of the said rights in respect of any
Licensed Property.
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[*] Confidential portion omitted and filed separately with the Commission.
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6. ROYALTIES
6.1 Subject always to Licensor's material compliance with its obligations
and warranties hereunder Licensee shall pay to Licensor in the Currency
royalties based on Net Receipts less Cost of Manufacture in respect of
all Products Exploited by Licensee or any of its Affiliates in the
Territory during the Term at the rates specified in Schedule VI
("Royalties").
6.2 Notwithstanding anything herein to the contrary Licensee shall be
unconditionally entitled to recoup all instalments of the Advance paid
by it to Licensor pursuant to Clause 5.1 against the Royalties (if any)
payable by Licensee to Licensor pursuant to Clause 6.1 in respect of
Exploitation of Xxxxxxx and Gromit Properties. For the avoidance of
doubt, advances paid in respect of a specific Property shall not be
recoupable from Royalties due in relation to a different Property.
6.3 Licensee shall be entitled to recoup all Advances paid to Licensor
hereunder against the Royalties (if any) payable to Licensor hereunder
as specified in Clause 6.1. For the avoidance of doubt Licensee shall
not be entitled to recoup any Advance more than once.
6.4 Notwithstanding anything herein to the contrary, Licensee shall not be
obliged to pay any Royalties to Licensor in respect of Products (a) used
free of charge for bona fide promotional purposes, or (b) furnished free
to the trade, press or for public relations use, or (c) sold as a
Clearance Sale Devices, or (d) lost, stolen, damaged or destroyed.
6.5 Licensee shall pay to Licensor in accordance with Clause 7(a) [*] of any
advance of or on account of royalties or any good or valuable
consideration credited to or received by Licensee or any of its
Affiliates for the grant of a sublicence in whole or in part of any
Interactive Entertainment Right, and (b) sublicence royalties calculated
in accordance with Clause 6.6.
6.6 Sublicence royalties shall be calculated on the basis of sublicensees'
reports to or receipts by Licensee or its Affiliates, Exploitation
reported by sublicensees being treated as Net Receipts for this purpose
(whether or not actually received by Licensee). In the event that the
value or quantity of units Exploited cannot be determined from such
sublicensees' reports, it shall be assumed for the purpose of royalty
calculations that the Net Receipts attributable to the Exploitation of a
Product are equal to the mean of that (excluding returns) reported by
Licensee for sales of Product of that format by Licensee or any of its
Affiliates in the most recent prior period in which such Exploitation
has taken place and Licensee's royalty statement shall (where
applicable) state what assumption has been made.
6.7 Licensee may recoup the amount of any portion of a sublicence advance
paid to Licensor pursuant to Clause 6.5 from sublicence royalties due to
Licensor under Clause 6.5 pursuant to that sublicence and/or in respect
of the Property or Product to which the sub-licence relates but not
otherwise.
6.8 Notwithstanding anything herein to the contrary:-
------------------
[*] Confidential portion omitted and filed separately with the Commission.
-11-
6.8.1 no consideration for its grant of the rights granted hereunder to
Licensee and Grantor shall be payable to Licensor hereunder other than
the Advances and (to the extent applicable) the Warrants and the
Royalties , which Licensor acknowledges shall constitute a full and
final discharge of Licensee's obligations to it hereunder;
6.8.2 Except by way of cross-collateralisation of Royalties and Advances
between different Licensed Properties Licensee shall be entitled to pay
any Advance, Royalty or other sum payable to Licensor hereunder subject
to any set-off, deduction or counter-claim by Licensee and/or Grantor
against Licensor under the Agreement; and
6.8.3 in the event of any material breach of the Agreement or Insolvency by
Licensor Licensee and Grantor shall be entitled without liability and
without prejudice to their other remedies hereunder to suspend the
payment to Licensor of any Advance and/or Royalty and the grant to
Licensor of any Warrant that would otherwise have been payable or
grantable (as the case may be) to Licensor provided that any such
suspension shall be effective only for so long as Licensor's breach has
not been remedied.
6.9 Licensee shall have the right to establish reserves (not to exceed [*]
of Net Receipts) for returns and defective Products. Unused reserves
shall be liquidated within 12 (twelve) months of being established if
not applied to returns and defective Products.
6.10 To the extent that Licensee receives Net Receipts in a currency other
than the Currency, such Receipts shall for the purpose of calculating
Royalties be converted to the Currency at the rate prevailing for the
purchase of the Currency with such other currency as designated by
Licensee's bankers on the date when the Receipt is first received by the
Licensee.
7. ROYALTY ACCOUNTING
7.1 Licensee shall within 30 (thirty) days after each Quarter Day during the
Term serve on Licensor and Licensor's Agent a full and complete
statement containing the following information in respect of the
Exploitation of the Properties and the Products by Licensee and its
Affiliates during the preceding Quarter ("Royalty Statement"): all (if
any) moneys owing to Licensor, the numbers of Products manufactured and
sold, details of all deductions including reserves, returns and damaged
copies and Costs of Manufacture, and details of sublicenses (including
copies of sublicenseees statements to Licensee in the period) under the
Agreement.
7.2 Royalties shall (subject to the terms and conditions hereof) be paid by
Licensee to Licensor simultaneously with the service of the relevant
Royalty Statement, provided that for each Licensed Property the advance
(if any) and sub-licence advances (if any) shall be set-off against and
deducted from Royalties accruing in relation to that Licensed Property.
7.3 Licensee shall during the Term keep full and proper books of account
relating to the Exploitation of its rights under the Agreement and
Licensor or its
------------------
[*] Confidential portion omitted and filed separately with the Commission.
-12-
representative shall during the Term and for a period of 3 (three) years
afterwards have the right during normal business hours and on not less
than 15 (fifteen) days' notice to examine and take copies of such books
of account no more frequently than once per calendar year at the
premises where Licensee normally keeps them and subject always to
Licensor's confidentiality obligations under Clause 15. In the event
that such audit or inspection reveals any deficiency in moneys paid to
Licensor under this Agreement then Licensee shall pay the same to
Licensor together with interest from the date first due calculated with
monthly rests at a rate of 2% (two per centum) above the prime or base
rate from time to time charged to Licensor by its bankers and if such
underpayment is in excess of [*] of sums due to Licensor Licensee shall
pay all reasonable costs incurred by Licensor directly as a result of
such inspection. Licensee shall reimburse to Licensor any such
deficiency and pay to Licensor any such costs within 30 (thirty) days
after the date of service on it by Licensor of documentary evidence
thereof. Save as aforesaid any exercise by Licensor of its rights under
this Clause 7.3 shall be at its own cost and expense.
7.4 If Licensor has any objection to a Royalty Statement, it shall notify
full details thereof to Licensee within 3 (three) years after the date
of service on Licensor of the said Statement. Each Royalty Statement
will become conclusively and irrevocably binding on Licensor (save where
facts are subsequently discovered by audit or otherwise that are
inconsistent with it) at the end of the said period and (save as
aforesaid) Licensor will have no right to institute any action against
Licensee in connection with any Royalty accounting relating to such
Statement, or to institute an action against Licensee for Royalties
relating to such Statement in connection with any Exploitation of
Products, unless the action is commenced within the said time period.
7.5 All Advances, Royalties and other sums payable to Licensor hereunder are
exclusive of any value added, sales or other tax which may be applicable
in any part of the Territory.
7.6 If Licensee is required by law to withhold any tax or any other sum from
any Advances, Royalties or any other sums payable to Licensor hereunder
the Licensee shall use its reasonable endeavours to serve on Licensor
(a) evidence as to Licensee's obligations to make such withholding, and
(if it is the case) that the said withholding has been made, and (b)
such documentation and information as Licensor may reasonably require
for the purpose of the Licensor obtaining any available tax credit in
the United Kingdom.
7.7 Payments due to Licensor hereunder shall be paid via
7.7.1 US dollar cheque drawn on a United States bank made out to `Aardman
Animations Limited' and sent to the following address:
Aardman Animations Ltd
XX Xxx 0000-00000
Xxxxxxxxxxxx
XX 00000-00000
XXX
------------------
[*] Confidential portion omitted and filed separately with the Commission.
-13-
7.8 If exchange control or other restrictions prevent or threaten to prevent
the remittance to Licensor of any money payable under the Agreement,
Licensee shall (save to the extent that it is prohibited from so doing
by any applicable law, regulation or standard) Promptly advise the
Licensor in writing and follow Licensor's instructions in respect of the
money to be remitted including if required depositing the same with any
bank or other person designated by the Licensor at such location as may
be designated by Licensor.
8. ATTRIBUTION
8.1 All Products shall be marketed under (inter alia) such of the Licensor
Trade Marks as (a) Licensor shall have notified to Licensee with
sufficient advance notice and (b) are practicable to be included in
connection with the said marketing. The packaging of the Products shall
show that they are published by Licensee under licence.
8.2 The covers, sleeves and/or jackets of all Products, and all publicity,
promotional and advertising material relating thereto, shall bear such
credits, copyright and trade xxxx notices as (a) Licensor shall have
notified to Licensee with sufficient advance notice and (b) are
practicable to be included thereon.
9. EXPLOITATION
9.1 Licensee shall have no obligation hereunder to Exploit any Interactive
Entertainment Right licensed to it hereunder and, without prejudice to
the generality of the foregoing, disclaims any warranty to Licensor that
any level of sales of the Products will be achieved by it.
9.2 Notwithstanding anything to the contrary herein and save for the Prior
Licences and Properties excluded under Clause 3.1.1 and Clause 3.2
Licensor shall not in the Territory Exploit any Product or exercise any
rights granted to Licensee and/or Grantor hereunder or authorise any
third party to do any of the foregoing.
9.3 Except as otherwise expressly provided herein Licensee shall be solely
and exclusively entitled at its sole discretion to determine the manner
and method in which the Products are Exploited.
9.4 Licensor shall comply with any reasonable request from Licensee to
support the promotion, publicity, marketing and advertising of the
Products by or on behalf of Licensee. Licensee shall reimburse
Licensor's reasonable and documented costs and expenses of so doing
within 30 (thirty) days of having been notified of them.
9.5 The parties acknowledge that publishing is a speculative venture, and
Licensee makes no warranty to Licensor that any, or any particular,
level of sales of the Products shall be achieved.
9.6 Licensee shall be responsible for the cost of obtaining clearances of
any relevant rights in respect of the names, likenesses, biographies,
photographs and recorded voices of performers and other real persons
appearing in any of the Properties for
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use in the Products. Licensor shall give all reasonable assistance to
Licensee in obtaining such clearances.
10. LICENSOR'S APPROVAL RIGHTS
10.1 Licensor shall have prior approval at its sole discretion of character
models, packaging and sleeves, themes, and gameplay and final approval
of Beta. Licensor shall have approval (not to be unreasonably withheld
or delayed) of any developer including the Licensee or any of its
Affiliates used by Licensee for a Property (in connection with which
Licensor irrevocably and unconditionally approves Frontier as the
Developer of the Programme entitled Xxxxxxx & Gromit 1: Zoo Game).
Licensor shall have approval of sub-licences (not to be unreasonably
withheld or delayed), and shall have approval (not to be unreasonably
withheld or delayed)] of marketing plans and concepts and of all
marketing and of all marketing methods and channels in which Licensee
wishes to make use of any Licensor Trade Marks and approval of all
marketing, publicity and advertising materials. Except where Licensor's
approval is requested for fundamental changes in either game or
marketing concepts, approval for the inclusion of any element within a
particular game or marketing plan shall not be withdrawn or varied by
Licensor once granted.
10.2 Subject to events of Force Majeure and to compliance by Licensor with
its material obligations hereunder Licensee undertakes that it shall
prior to 31 March 2002 serve on Licensor approval scripts and a demo for
a Game Boy Advance game, and shall use its best endeavours to do so on
or before the Signature Date. For the avoidance of doubt the payment by
BAM to Aardman of the instalment of the Advance specified in Clause
5.1.4 shall fall due on 31 March 2002 or the date of the approval of
said presentation by Aardman (whichever earlier).
11. LICENSOR'S WARRANTIES
Licensor warrants represents and undertakes to Licensee that:-
11.1 it has the full, unconditional and irrevocable right and authority to
enter into the Agreement and to fully perform all of its obligations
hereunder and (without prejudice to the generality of the foregoing) has
(subject only to Clause 9.6) obtained all consents relating to the
content of all Licensed Properties required under the Copyright, Designs
and Patents Xxx 0000 and all other legislation which may be required for
the Exploitation of the Products by or on behalf of Licensee;
11.2 it is and will be during the Term the sole and exclusive owner
throughout the Territory of all rights (including Intellectual Property
rights) in and to all Licensed Properties and Licensed Rights and
Licensor Trade Marks, and has not done or permitted and will not do or
permit any act or omission which would impair or diminish the validity
or duration of any such right;
11.3 it is solvent and not subject to or threatened by any Insolvency;
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11.4 the Key Executives and all other Contributors employed or engaged by or
on behalf of Licensor or any of its Affiliates are qualifying persons
within the meaning of the Copyright, Designs and Patents Xxx 0000;
11.5 neither the performance of its obligations hereunder nor its agreement
so to do is or shall be in breach of or prevented or restricted by or
conditional on any express or implied obligation binding upon it or a
breach, violation or infringement of any laws, rights or regulations,
civil or criminal or otherwise, in any part of the world or give rise to
any third party claim for compensation pursuant to any legal entitlement
anywhere in the Territory (whether in force as at the Signature Date or
at any time thereafter);
11.6 all Licensed Properties will during the Term:-
11.6.1 be (a) wholly-owned original works of authorship developed by it or its
employees or (b) works in respect of which Licensor enjoys all such
licences and authorisations necessary to enable Licensee to Exploit them
as if they were works falling within Clause 11.6.1 (a) without any
further cost or expense and
11.6.2 be free and clear of any and all claims, liens, charges or encumbrances
which may adversely affect any Licensed Right and
11.6.3 contain nothing which infringes any right of publicity, privacy or
personality or which is obscene and/or libellous or which breaches any
duty of confidence or constitutes any contempt of court anywhere in the
Territory;
11.7 the exercise of the Licensed Rights by or on behalf of Licensee in
accordance with the terms hereof will not (a) infringe any Intellectual
Property or other proprietary right of any person anywhere in the
Territory or (b) breach, violate or infringe any laws or regulations,
civil or criminal or otherwise, in any part of the Territory or give
rise to any third party claim for compensation pursuant to any legal
entitlement anywhere in the Territory (whether in force at the Signature
Date or at any time thereafter) or (c) oblige Licensee or any of its
Affiliates or any licensee of the foregoing to make any payment to any
person other than as specified herein and as referred to in the
definition of "Cost of Manufacture";
11.8 save as disclosed hereunder it has not entered into and will not during
the Term enter into any agreement, arrangement or understanding (whether
legally enforceable or not) (a) for the assignment, transfer or
licensing or otherwise permitting the Exploitation of any Licensed Right
or (b) which prevents, restricts or otherwise inhibits Licensee's
freedom to Exploit any Licensed Right in accordance with the terms
hereof or (c) which may conflict with any obligation of Licensor or any
right of Licensee or Grantor hereunder;
11.9 to the best of its knowledge and belief:-
11.9.1 no Licensed Right is currently being infringed, misused or used without
authorisation by any third party or has been so infringed, misused or
used without authorisation prior to the Signature Date;
-16-
11.9.2 no third party has threatened any such infringement, misuse or
unauthorised use; and
11.9.3 there is no present or prospective IP Claim in respect of any Licensed
Right;
11.10 it has neither by any act or omission caused or permitted anything to be
done, nor has knowingly withheld from Licensee knowledge of any
circumstances, that might endanger the validity of any Licensed Right or
the ability of Licensee to enforce or Exploit it in accordance with the
terms hereof;
11.11 the Licensed Rights shall provide to Licensee any and all rights of
Licensor to Exploit the Licensed Properties throughout the Territory in
interactive entertainment software format.
12. LICENSEE'S WARRANTIES
Licensee warrants represents and undertakes to Licensor that:-
12.1 it has the full, unconditional and irrevocable right and authority to
enter into the Agreement and to fully perform all of its obligations
hereunder;
12.2 it is solvent and not subject to or threatened by any Insolvency;
12.3 it will ensure that the Products carry all proper copyright notices and
credits as notified to it by Licensor;
12.4 (without prejudice to Licensor's warranties in Clause 11) the Products
shall be manufactured, sold and distributed in accordance with all
applicable laws and standards and shall not be accompanied by any
defamatory, malicious, false, licentious or blasphemous material or any
actual firearms, tobacco, alcohol or drugs or so as to bring Licensor
into disrepute;
12.5 (without prejudice to Licensor's warranties in Clause 11) it shall (as
between the parties) be responsible for obtaining all certifications,
registrations and approvals from statutory or regulatory authorities for
release and distribution of the Products in the Territory (but for the
avoidance of doubt excluding certifications, negotiations and approvals
relating to Licensor Trade Marks and other Intellectual Property owned
or controlled by Licensor);
12.6 (subject to Clause 9.6) it shall ensure that it has obtained and paid
for all licences, clearances and authorisations from third parties to
produce the Products;
12.7 it shall not do or omit to do or permit there to be done any act which
may render invalid the Property or any right of copyright or other
rights licensed under the Agreement;
12.8 it shall during the Term maintain at its own expense product liability
insurance (which shall name Licensor as co-insured and co-payee) in the
amount of US$3,000,000 (three million US dollars) or sterling equivalent
in the aggregate and for each claim to protect Licensee and Licensor
against any and all claims actions losses or damages arising out of any
actual or alleged defects in the
-17-
Product such product liability insurance being from a reputable
recognised insurance company and prior to manufacturing the Products
Licensee shall supply for Licensor's retention a copy of all policy
documentation relating thereto. In addition the policy shall be Promptly
endorsed so that cancellation or material alteration shall not take
place without the written consent of Licensor;
12.9 Licensee shall not knowingly manufacture or distribute any defective or
sub-standard Products or publicity material relating thereto and shall
ensure that at its own expense all products and said publicity material
are of the highest standards used in the industry and (without prejudice
to Licensor's warranties in Clause 11) shall conform with all applicable
laws and standards.
13. INDEMNITIES
Each party ("the First Party") hereby agrees at all times (both during
and after the Term) fully and effectively to indemnify the other party
("the Other Party") and to keep it so indemnified from and against any
and all losses, costs, expenses, damages and liabilities (including any
damages or compensation paid by the Other Party on the advice of its
legal advisers to compromise or settle any Claim and any legal costs or
expenses incurred by the Other Party) which it or any of its directors
officers employees or agents may sustain or incur arising directly or
indirectly from any action, claim, suit or proceeding (together "Claim")
brought, made or threatened by any third party against any of the
foregoing persons resulting from any actual or alleged breach by or on
behalf of the First Party of any of its warranties expressed or implied
herein PROVIDED ALWAYS that (notwithstanding anything to the contrary
herein):-
13.1 the First Party shall be exclusively entitled to contest, defend or
settle any Claim;
13.2 the Other Party shall Promptly notify to the First Party details of any
Claim (whether actual, suspected or threatened) that comes to its
attention;
13.3 the Other Party shall at the request and expense of the First Party
provide to the First Party all reasonable assistance for the purpose of
contesting defending or settling any Claim;
13.4 the Other Party shall not (by any act or omission) admit liability or
otherwise prejudice or jeopardise the First Party's actual or potential
defence to any Claim; and
13.5 the said indemnity is subject to the Other Party's duty to mitigate all
of its said losses, costs, expenses, damages and liabilities.
14. INTELLECTUAL PROPERTY
14.1 In the event of any actual, threatened or suspected claim by any third
party against Licensee and/or Licensor in any part of the Territory
(whether or not in the form of or accompanied by legal proceedings) that
the actual or intended Exploitation of any Product infringes the
Intellectual Property rights or any other rights of the said third party
anywhere in the Territory ("IP Claim"):-
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14.1.1 Licensor shall Promptly notify to Licensee all details of the IP Claim
of which it is or becomes aware;
14.1.2 Licensor shall at Licensee's request Promptly and unconditionally
provide to Licensee all reasonable assistance for the purpose of
contesting, defending or settling the IP Claim, including modifying any
part of the Property in suit in order to remove it from the scope of the
IP Claim;
14.1.3 Licensor shall not (by any act or omission) admit liability or otherwise
prejudice or jeopardise the actual or potential defence of either party
to any IP Claim;
14.1.4 Licensee shall be entitled to retain any costs awarded against or paid
by said third party and to recoup any of its unreimbursed expenses from
any damages or other compensation paid or awarded in respect of the IP
Claim, after which the balance (if any) of such damages or other
compensation shall be considered Net Receipts; and
14.1.5 nothing in this Clause 14.1 shall prejudice any of Licensee's rights
against Licensor under Clauses 11 or 13 in connection with any IP Claim.
14.2 In the event of any actual, threatened or suspected infringement by any
third party in the Territory of the Intellectual Property in any
Licensed Right:-
14.2.1 Licensor shall Promptly notify to Licensee all details of any such
infringement of which it is or becomes aware;
14.2.2 Licensee shall (subject only to the service of prior notice on Licensor)
be entitled to take such action in any part of the Territory against the
third party on behalf of itself or on behalf of itself and Licensor
(whether or not in the form of legal proceedings) as it deems
appropriate ("IP Action"). The said entitlement shall be sole and
exclusive save where (a) Licensee fails to take such action after a
reasonable period of time has elapsed after having been requested so to
do by Licensor, and/or (b) where the infringement extends to
Intellectual Property Rights in a Licensed Property in addition to
Interactive Entertainment Rights, in either of which cases the said
entitlement shall be non-exclusive;
14.2.3 Licensor shall at Licensee's request and reasonable expense Promptly and
unconditionally provide to Licensee all reasonable assistance in
connection with any IP Action; and
14.2.4 Licensee shall be entitled to retain any costs, expenses, damages or
other compensation awarded against or paid by the said third party in
connection with the resolution or settlement of any IP Action.
14.3 In respect of the grant of the Licence and of all Option Licences, and
without prejudice to Clause 8 or Clauses 12 and 13 , Licensor hereby
irrevocably and unconditionally waives in favour of Licensee and its
Affiliates and licensees and the successors and assigns of the foregoing
all moral rights within the meaning of Chapter IV of Part I of the
Copyright, Designs and Patents Xxx 0000 and of all legislation or laws
anywhere in the Territory of similar or equivalent effect and
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warrants that it has procured all persons referred to in Clause 11.4 so
to waive the same.
15. CONFIDENTIAL INFORMATION
15.1 Save as may be required by operation of law or the rules of The Stock
Exchange or by any governmental, regulatory or judicial authority of
competent jurisdiction each party ("the First Party"):
15.1.1 shall keep strictly confidential information of a confidential,
proprietary or sensitive nature received, obtained or learned from the
other party before or since the Operative Date pursuant to or in
preparation or contemplation of its performance of the Agreement
relating to the other party ("the Other Party") or any of its Affiliates
or to any of the officers, servants, agents, customers or suppliers of
any of the foregoing persons or to the business of any of the foregoing
persons or to any Product or Property, and whether or not expressly
designated confidential and/or in tangible format ("Information");
15.1.2 shall not without the Other Party's prior written consent use or permit
or cause any Information to be used save for the direct purposes of the
Agreement; and
15.1.3 shall not without the Other Party's prior written consent disclose or
permit or cause any Information to be disclosed to any person other than
to those of its officers, directors, contractors, employees or
professional advisers (a) who need to be informed thereof to enable the
First Party to perform its obligations hereunder or to take advice
thereon and (b) who have been informed of the Information's
confidentiality and directed to keep it confidential and (c) who are
under an enforceable obligation of confidentiality to the First Party.
15.2 For the purpose of this Clause 15 the terms of the Agreement shall be
deemed to be Information received by one party from the other.
15.3 The First Party shall forthwith notify to the Other Party any actual,
suspected or threatened use or disclosure of the Other Party's
Information in contravention of this Clause 15 of which it becomes aware
and shall render such assistance to restrain such use as the Other Party
may request.
15.4 Each Party shall all use reasonable endeavours to procure that none of
its officers, directors, servants or agents is responsible for any act
or omission which (if it were responsible for it) would constitute a
breach of any of the provisions of this Clause 15.
15.5 Each Party further acknowledges and agrees that, in the event of a
breach or threatened breach of this Clause 15, the other party may have
no adequate remedy in money or damages and, accordingly may be entitled
to preliminary, permanent and other injunctive relief.
15.6 Notwithstanding the foregoing the First Party will have no obligation in
connection with specific Information to the extent, but only to the
extent that:-
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15.6.1 is in the public domain at the time that it is received, obtained or
learned by the First Party;
15.6.2 it subsequently becomes part of the public domain through no wrongful
act of the First Party, or
15.6.3 it is received by the First Party from a third party who is lawfully
authorised to disclose the same without breach of the Agreement and/or
of any obligation to the Other Party.
16. KEY EXECUTIVES
Licensee shall be entitled to terminate (at its discretion) the
Agreement or the Option in the event that either Key Executive should
cease to be either employed by or an active creative consultant for
Licensor ("Cessation"). Licensor shall Promptly notify Licensee of any
Cessation in respect of either Key Executive and Licensee shall have 30
(thirty) days from the date of service thereof to exercise its said
entitlement. If Licensee fails to notify Licensor of its intention to do
so during the said 30-day period or declines to terminate the Option
Licensee shall not be entitled to terminate the Option upon the
provisions of this clause save in the event of a Cessation in respect of
the other Key Executive.
17. CONSULTATION AND COOPERATION
17.1 Licensor and Licensee shall consult each other in good faith in
concerning the creation, development and marketing of the Properties and
of any Products developed pursuant to the Agreement. Without prejudice
to the generality of the foregoing, Licensor shall inform Licensee of
the status of pre-production, production and post-production of each
Licensed Property no less frequently than monthly, and shall serve on
Licensee regular production status reports during the period of
principal photography and post-production of each Licensed Property.
17.2 Each party ("the first party") shall make reasonable efforts to procure
that the other party has access in advance to the marketing plans and
advertising materials prepared by or on behalf of the first party in
connection with Exploitation of the Properties or any Products. Without
prejudice to the generality of the foregoing Licensor shall use all
reasonable endeavours to provide to Licensee free access to all
publicity and advertising materials prepared by or on behalf of Licensor
in connection with the theatrical or televisual release of any Licensed
Property, and agrees that Licensee may use such materials free of charge
to Exploit any Products developed in connection with such Licensed
Property.
17.3 Neither party shall make any press or public announcement concerning the
Agreement without consulting the other in advance.
17.4 Licensee shall during the Term and for 3 (three) years thereafter keep
full and proper chain-of-title documentation for each Licensed Property
and Licensee or its representative shall during the Term and for 3
(three) years thereafter have the right during normal business hours and
on not less than 15 (fifteen) days' notice to examine and take copies of
such documentation at the premises where
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Licensor normally keeps them, and subject always to Licensee's
confidentiality obligations under Clause 15.
18. TERM AND TERMINATION
18.1 This Agreement shall come into force on the Commencement Date and,
subject to premature termination as specified herein, shall expire on
the latest of the following dates:-
18.1.1 (if no Option Licence has been granted to Licensee) the date of expiry
of the Initial Term, or
18.1.2 (if any Option Licences have been granted to Licensee) the date of
expiry of the Option Licence Term of the last Option Licence to have
been granted to Licensee.
18.2 Each party shall be entitled to terminate the Agreement summarily by the
service of notice on the other if:-
18.2.1 the other commits any breach of any of its obligations or warranties
hereunder and, in the case of a breach capable of remedy, has failed to
remedy the same within 30 (thirty) days after the service on it by the
first-mentioned party of notice particularising the breach and requiring
its remedy and containing a warning of such party's intention to
terminate; or
18.2.2 the other becomes Insolvent.
18.3 Licensee shall be entitled to terminate the Agreement summarily by the
service of notice on Licensor if Licensor undergoes or announces its
intention to undergo any change of Control which results in a majority
of the ordinary voting shares in Licensor being transferred to a person
who is a publisher of interactive entertainment software.
18.4 For the purpose of this Clause 18 a breach shall be considered capable
of remedy if the party in breach can perform the obligation in question
in all respects other than as to time of performance (provided that time
of performance is not of the essence). For the avoidance of doubt the
dates for the performance of the obligations of Licensee and Grantor
under the Agreement shall not be of the essence unless agreed in writing
to the contrary between the parties.
18.5 The rights to terminate the Agreement given by this Clause 18 shall be
without prejudice to any other right or remedy of either party in
respect of the breach concerned (if any) or any other breach.
19. CONSEQUENCES OF TERMINATION
19.1 In the event of termination of the Option by Licensee pursuant to Clause
16 the Agreement shall continue in force save that subject to accrued
rights and liabilities of the parties (if any) Clauses 3, 4, 5.2, 5.3
and 5.4 shall cease to have effect.
-22-
19.2 On expiry of the Initial Term all rights licensed to Licensee under the
Licence shall immediately revert to Licensor, provided that if expiry
takes place subsequent to Commercial Release of any Product for which
all relevant approvals have been obtained, Licensee shall have the right
to sell units of the Product in stock or already irrevocably ordered
from manufacturers for a period of 12 (twelve) months after the date of
expiry of the Initial Term, provided that it shall continue to account
for Royalties in accordance with the Agreement.
19.3 On the expiry of the Initial Term or (if earlier) termination of the
Option by Licensee pursuant to Clause 16 the right to exercise the
Option under the Agreement shall immediately revert to Licensor, but
without prejudice to the entitlement of Licensee to exercise in
accordance with the terms hereof for the remainder of its Option Licence
Term any Option Licence granted to Licensee during the Initial Term.
19.4 On expiry or termination of the Agreement for whatever cause:
19.4.1 all rights licensed to Licensee under the Agreement shall immediately
revert to Licensor, provided that if termination takes place subsequent
to Commercial Release of any Product for which all relevant approvals
have been obtained, Licensee shall have the right to sell units of the
Product in stock or already irrevocably ordered from manufacturers for a
period of 12 (twelve) months after the Termination Date, provided it
shall continue to account for Royalties in accordance with the
Agreement;
19.4.2 expiry or termination shall be without prejudice any rights accrued in
favour of either party in respect of any breach committed prior to the
Termination Date by the other party including (without limitation) any
breach giving rise to termination hereof.
19.5 Clauses 1, 7, 13, 15, 17.4, 19, 22, 23, 24 and 25 and any other
provision of this Agreement whose terms or context require its survival
shall survive the expiry or termination of this Agreement.
20. FORCE MAJEURE
20.1 Neither party shall be under any liability to the other party in any way
whatsoever for destruction, damage or delay arising from circumstances
beyond its reasonable control, including war, rebellion, civil
commotion, strikes, lock-outs and industrial disputes, fire, theft,
explosion, earthquake, act of God, flood, drought or bad weather, the
unavailability of deliveries, supplies, products, disks or other media
or the requisitioning or other act or order by any government
department, council or other constituted body (together "Force
Majeure"). Notwithstanding the forgoing, each party shall use all
reasonable endeavours to continue to perform, or resume performance of,
such obligations hereunder for the duration of such Force Majeure.
20.2 If either party is affected by Force Majeure, it shall promptly notify
the other in writing of the nature and extent of the circumstances in
question, and the length of time for which it is estimated such
circumstances shall subsist.
-23-
20.3 In the event that either party is affected by Force Majeure for a period
of more than 30 (thirty) days the other party may terminate the
Agreement summarily upon notice to the first party.
21. ASSIGNMENT
21.1 Subject to Clause 21.2 neither party may without the prior written
consent of the other (not to be unreasonably withheld or delayed) give,
bargain, sell, assign, transfer, charge, sub-contract, delegate or
otherwise dispose of any of its rights or obligations hereunder.
21.2 It shall be unreasonable for Licensor to withhold or delay its consent
to any gift, bargain, sale, assignment, transfer, charge,
sub-contracting, delegation or other disposal of any of the rights or
obligations of Licensee or Grantor hereunder to an Affiliate of either
of the foregoing who (in the case of a gift, bargain, sale, assignment
or transfer) agrees in writing to assume all of the assignor's
obligations hereunder.
21.3 Any sub-contracting or delegation by either party of any of its
obligations hereunder shall not relieve it of those obligations, for
which it will at all times remain primarily responsible and liable to
the other party for the conduct of its sub-contractors.
22. LIABILITY
22.1 Subject only to Clause 22.2, and notwithstanding anything herein to the
contrary, neither Licensee nor Grantor shall be under any liability
hereunder or otherwise to Licensor for any loss (whether direct or
indirect) of profits, time, business, goodwill or anticipated savings or
for any incidental, indirect, special, consequential or punitive loss or
damage whether foreseeable or unforeseeable whatsoever or howsoever
caused.
22.2 Neither Licensee nor Grantor excludes or restricts liability for death
or personal injury resulting from its own negligence.
22.3 Licensor acknowledges that the Licensed Rights are of a special, unique,
unusual, extraordinary and intellectual character giving them a peculiar
value, the loss of which cannot be reasonably or adequately compensated
in damages in an action at law, and that a breach hereof by Licensor
will or may inflict irreparable injury and damage on Licensee and/or
Grantor who may thereby be entitled to injunctive and other equitable
relief to restrain the same.
23. NOTICES
23.1 All notices, demands, claims, requests, invoices, consents, approvals,
reports, recommendations or other communications (collectively referred
to herein as "notices") given or made by one party to or on the other
hereunder shall (unless expressed to the contrary herein) be in writing
(which shall include email).
23.2 Unless expressed to the contrary herein all notices served by one party
on the other shall be delivered by hand or sent by pre-paid first class
post or by facsimile
-24-
transmission or by e-mail transmission at or to the other's address
given at the head hereof or to the other's fax number given in Clause
23.5 or to the other's e-mail address given in Clause 23.6 or at or to
such other address or number as the other may notify to the serving
party with a copy to Licensor's Agent.
23.3 If either party changes its address for service or its fax number or its
e-mail address it may serve notice thereof on the other, but
notwithstanding anything herein to the contrary no such notice shall
take effect until or unless actually received by the other party.
23.4 The date of service of notices served hereunder shall be:
23.4.1 (for notices served by hand) the day of delivery or (if the same is not
a Working Day) the next Working Day thereafter;
23.4.2 (for notices served by pre-paid post) 2 (two) days after the date of
posting; and
23.4.3 (for notices served by facsimile or e-mail transmission) the day of
transmission or (if the same is not a Working Day and/or if transmission
takes place after 17:00 hours) the next Working Day thereafter, provided
that a confirmation copy thereof is sent by registered post to the other
party at its said address within 24 (twenty-four) hours after
transmission.
23.5 The respective fax numbers of the parties and Licensor's Agent are as
follows:-
23.5.1 Licensee and Grantor: 01225 329241
23.5.2 Licensor: 0117 908 6677
23.5.3 Licensor's Agent: 020 7935 9115
23.6 The respective e-mail addresses of the parties and Licensor's Agent are
as follows:-
23.6.1 Licensee and Grantor: xxxxxx@xxx0xxx.xxx
23.6.2 Licensor: xxxx.xxxxxx@xxxxxxx.xxx
23.6.3 Licensor's Agent: xxxxxx@xxxxxxx.xxx
23.7 Neither party shall prevent or delay the service on it of a notice
hereunder or attempt to do so.
24. GENERAL
24.1.1 All rights in any Property neither expressly granted to Licensee herein
nor expressly subject to the Options granted to Licensee herein are
reserved to the Licensor.
24.2 This Agreement shall operate to the entire exclusion of the Initial
Agreement and any other agreements and understandings of any kind made
or given by the parties before the Commencement Date relating to the
subject matter hereof
-25-
which are hereby superseded and of no further legal effect, and shall
constitute the entire contract between the parties concerning the
subject matter hereof.
24.3 No variation of the Agreement shall be effective unless set forth in
writing and signed by a duly authorised representative of each party.
24.4 Except as expressly provided herein all conditions, warranties,
representations,, indemnities, guarantees and other terms implied by
statute or common law are hereby excluded to the fullest extent
permitted by law. No party has entered into the Agreement in reliance
upon any representation, warranty or undertaking of the other party
which is not expressly set out or referred to herein. Nothing in this
Clause 24.4 shall exclude any liability for fraud or fraudulent
misrepresentation.
24.5 No forbearance, delay or indulgence by either party in enforcing the
provisions of the Agreement shall prejudice or restrict its rights, nor
shall any waiver by either party of a breach hereof by the other party
operate as a waiver of any subsequent breach of the same or any other
provisions hereof. No such waiver shall be effective unless it is
writing and has been signed by the party against whom it is asserted.
24.6 No right, power or remedy herein conferred upon or reserved for either
party is exclusive of any other right, power or remedy available to it
and each such right, power or remedy shall be cumulative.
24.7 The parties are not partners or joint venturers or in a relationship of
employer and employee or in a relationship of principal and agent. Save
as expressly authorised hereby (if at all) neither party has any right
or authority to act on behalf of the other party or to make any
representation on its behalf and will not represent that it has such
right or authority.
24.8 Each of the terms of the Agreement shall be construed as independent of
every other such term to the effect that if any such term shall be
determined by any judicial, arbitral, regulatory or other public
authority of competent jurisdiction to be invalid, unlawful, void,
voidable or unenforceable such term shall be severed from the remaining
terms hereof without effect thereon which such remaining terms shall
continue to be valid, lawful and enforceable to the fullest extent
permitted by law.
24.9 The provisions of the Agreement are personal to the parties and are not
intended to confer any rights of enforcement on any third party. The
Contracts (Rights of Third Parties) Act 1999 shall not apply to this
Agreement or any of its provisions.
24.10 Each party shall bear its own costs and expenses in relation to the
preparation, execution and carrying into effect of this Agreement.
25. LAW AND JURISDICTION
The construction, validity and performance of this Agreement shall be
governed in all respects by English law and the parties hereby agree to
submit to the exclusive jurisdiction of the courts of England and Wales.
-26-
SCHEDULE I: THE XXXXXXX & GROMIT PROPERTIES IN EXISTENCE
AS AT THE COMMENCEMENT DATE
The Short Films:
A GRAND DAY OUT,
THE WRONG TROUSERS, and
A CLOSE SHAVE
all directed by Xxxx Xxxx
together with derivative products in print media based on them.
-27-
SCHEDULE II: PROPERTIES REFERRED TO IN CLAUSE 3.1.1(a)
Chicken Run
Hare and Tortoise
-28-
SCHEDULE III: PROPERTIES REFERRED TO IN CLAUSE 3.1.2(a)
Morph
Xxxxxxx and Gromit
Rabbits
Xxx the Runt
Deadline
Blobs
Angry Kid
Creature Comforts
Heat Electric characters
Pib and Pog
Wat's Pig
Stagefright
Hum Drum
My baby Just Cares for Me
War Story
Going Equipped
Next
Xxxx
Ident
Loves me love me not
Not without my handbag
Minotaur and Little Nerkin
Xx Xxxxx
Owzat
Pop
Babylon
-29-
On Probation
Sales Pitch
Palmy Days
Early Bird
Late Edition
Confessions of a Foyer Girl
Down and Out
Happiness Bear
Get me Outta Here
Chump
Mr. Nobody
Xxxxx the Sheep
-30-
SCHEDULE IV: THE PRIOR LICENCES
PART A: XXXXXXX & GROMIT PRIOR LICENCES
----------------------------- --------------------------------- --------------- --------------
PROPERTY PRODUCT LICENSEE EXPIRY DATE
----------------------------- --------------------------------- --------------- --------------
Xxxxxxx & Gromit Funpack (CD-ROM) BBC Worldwide 30/10/2004
Xxxxxxx & Gromit ClipArt (CD-ROM) BBC Worldwide 30/10/2004
Xxxxxxx & Gromit Print-o-matic (CD-ROM) BBC Worldwide 30/06/2004
Xxxxxxx & Gromit Cracking Animator (CD-ROM) BBC Worldwide 30/06/2004
----------------------------- --------------------------------- --------------- --------------
PART B: NON-XXXXXXX & GROMIT PRIOR LICENCES
----------------------------- --------------------------------- --------------- --------------
PROPERTY PRODUCT LICENSEE DURATION
----------------------------- --------------------------------- --------------- --------------
SMart Morph CD-ROM BBC 30/9/2005
Angry Kid Online Game Choirboy Aardman Perpetuity
Angry Kid Online Game Bored Game Aardman Perpetuity
----------------------------- --------------------------------- --------------- --------------
-31-
SCHEDULE V: STOCK VALUATION
Common stock of Grantor in respect of which Warrants are granted to Licensor
hereunder shall for the purposes of the Agreement be priced as the average of
the closing sales price of Grantor's common stock as reported on the Nasdaq
National Market System (or such other exchange as Grantor's common stock is then
quoted on the United States of America) for the 5 (five) -- day trading period
immediately preceding the date of grant.
-32-
SCHEDULE VI: ROYALTY RATES
1. XXXXXXX AND GROMIT PROPERTIES
1.1 non-hand-held platforms
0 - 250,000 units [*]%
250,001 - 500,000 units [*]%
Above 500,000 units [*]%
The rates shall be applied in tranches, and shall be cumulative across
all non-hand-held platforms and every Xxxxxxx and Gromit Product.
1.2 hand-held platforms (other than mobile phones): [*]% to 250,000 units
sold and [*]% thereafter.
1.3 sequels to Products referred to in paragraphs 1.1 and 1.2: [*]%.
1.4 mobile telephones (and sequels thereto): to be negotiated in good faith.
2. Short Films and any other Properties (other than Feature Films and
excluding Properties distributed on national US television channels)
over which the Option is exercised:
2.1 non-hand-hand platforms: 0 - 250,000 units [*]% 251,000 - 500,000 units
[*]% Above 500,000 units [*]% The rates shall be applied in tranches,
and shall be cumulative across all non hand-held platforms for each
separate Property.
2.2 hand-held platforms (other than mobile telephones): [*]% to 250,000
units sold and [*]% thereafter.
2.3 sequels to Products referred to in paragraphs 2.1 and 2.2: [*]%.
2.4 mobile telephones (and sequels thereto): to be negotiated in good faith.
3. Feature Films (and any other Properties distributed on national US
television channels) over which the Option is exercised.
3.1 non-hand-held platforms: 0 - 250,000 units [*]% 250,000 - 500,000 units
[*]% Above 500,000 units [*]% The rates shall be applied in tranches,
and shall be to be cumulative across all non hand-held platforms for
each separate Property.
3.2 hand-held platforms (other than mobile telephones): [*]% to 250,000
units sold and [*]% thereafter.
3.3 sequels to Products referred to in paragraphs 3.1 and 3.2: [*]%.
3.4 mobile telephones (and sequels thereto): to be negotiated in good faith.
------------------
[*] Confidential portion omitted and filed separately with the Commission.
-33-
SCHEDULE VII: LICENSOR TRADE MARKS
TRADEMARKS SUMMARY
XXX THE RUNT - WORD XXXX & DEVICE MARKS AS FOLLOWS
[RUNT LOGO]
[XXX THE RUNT LOGO]
Main characters -- Xxx, Xxx Xxx, Xxxxx, Xxxxx
--------------------------------------------------------------------------------
XXXXXXX & GROMIT
[XXXXXXX & GROMIT LOGO]
WORD XXXX
Main characters -- Xxxxxxx, Gromit, Feathers XxXxxx, Xxxxx, Wendolene, Preston
Films: A Grand Day Out, The Wrong Trousers, A Close Shave
-34-
--------------------------------------------------------------------------------
CREATURE COMFORTS - WORD XXXX ONLY
--------------------------------------------------------------------------------
AARDMAN & STAR
[AARDMAN & STAR LOGO]
DEVICE XXXX
--------------------------------------------------------------------------------
MORPH
--------------------------------------------------------------------------------
RABBITS!
--------------------------------------------------------------------------------
ANGRY KID
-35-
IN WITNESS WHEREOF the parties have set their hands the day and year first above
written.
SIGNED by )
) /s/ Xxxx Xxxxxx
duly authorised for and on behalf of ) -----------------------------------
AARDMANANIMATIONS )
LIMITED )
-----------------------------------
Witness signature: /s/ Xxxxxxx Xxxxxx
Witness name: Xxxxxxx Xxxxxx
Address: Gas Xxxxx Xxxx
Xxxxxxx XX0 0XX
Occupation: PA to Xxxx Xxxxxx
SIGNED by ) ------------------------------------
) /s/ Xxx Xxxxx
duly authorised for and on behalf of ) Xxx Xxxxx
BAM ENTERTAINMENT ) Director
LIMITED )
Witness signature: /s/ X X Xxxxxx
------------------------------------
Witness name: Xxxxxxx Xxxxxx
Address: 0000 Xxxxxxx Xxxx Xxxxx
Xxxxxx Xxxx, XX 00000
XXX
Occupation: Chartered Accountant
-36-
SIGNED by ) /s/ Xxx Xxxxx
) ------------------------------------
duly authorised for and on behalf of ) Xxx Xxxxx
BAM ENTERTAINMENT, INC. ) President
Witness signature: /s/ X X Xxxxxx
------------------------------------
Witness name: Xxxxxxx Xxxxxx
Address: 0000 Xxxxxxx Xxxx Xxxxx
Xxxxxx Xxxx, XX 00000
XXX
Occupation: Chartered Accountant
-37-
