EXHIBIT 4.18
AGREEMENT FOR MANUFACTURE AND SALE OF U-WINK BEAR VENDING MACHINES
(1) ▇▇▇▇-FRUIT GAMES LIMITED (company number) whose registered office is at
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇ ("the Licensee"); and
(2) U-WINK, CALIFORNIA, INC. (Company number ▇▇-▇▇▇▇▇▇▇) whose registered
office is at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ("the
Licensor").
BACKGROUND
The Licensor, uWink California, Inc., owns certain intellectual property rights
in the U-Wink Bear Vending machine. The Licensee, ▇▇▇▇-Fruit Games Limited and
it's Affiliates are companies manufacturing and distributing similar machines.
The Licensor wishes to grant the Licensee the exclusive right to manufacture and
distribute the Products throughout the Territory on the following terms and
conditions.
1. DEFINITIONS
1.1 In this Agreement the following expressions have the following meanings
unless inconsistent with the context:
"Accounting Period": ▇▇▇▇-Fruit Games periodic accounting periods which
occur every 28 or 35 days
"Affiliate": any subsidiaries (part of wholly owned) of the Licensee or
its ultimate holding companies (or any subsidiary of such holding
companies). including without limit RLMS.
"Product": that machine known at the date of this Agreement as the
U-Wink Bear Vending machine (also known as Boxter Bears)(the "Current
Product") and any other interactive stuffed animal vending machines
developed and offered for sale by Licensor during the term of this
Agreement.
"Territory": the European Union
"Commencement Date": the date that the whole of this Agreement comes
into force and effect pursuant to clause 8.1
2. RIGHTS GRANTED
2.1 The Licensor grants the Licensee and its Affiliates the exclusive right
to manufacture and distribute the Products throughout the Territory at
whatever price the Licensee sees fit. This grant includes without
limitation the right to modify and develop the Product (including its
design) and to create new derivatives of it.
3. OBLIGATIONS OF LICENSOR
3.1 The Licensor shall enhance the underlying software in each Product to
provide a security system protecting the Product which is acceptable to
the Licensee.
3.2 As routine software updates for the Product are developed by Licensor,
the Licensor will provide copies of them (together with all source code
for the same) to Licensee free of charge. The Licensor also undertakes
to provide updated software (together with related source code) for the
Product as requested by the Licensee on a free of charge basis and in a
timely manner where there are software errors materially affecting the
functionality of the Product
3.3 The Licensor undertakes to provide updated software (together with
related source code) for the Product as requested by the Licensee on a
free of charge basis and in a timely manner
3.4 The Licensor shall make available to the Licensee such information as
the Licensee may need (including without limit applicable ▇▇▇▇ of
Materials, CAD drawings and full supplier details) to manufacture the
Product
3.5 The Licensor shall supply to the Licensee at the Licensee's expense such
components as may be required to manufacture the Product. The price to
be paid by Licensee shall be Licensor's cost (being the cost of
materials, labour and transport as supported by their supplier's
invoice). The price agreed for certain items is shown in Appendix 1.
Payment shall be made on Open Account 60 days after receipt of the
goods.
3.6 The Licensor undertakes to maintain a distribution arrangement for the
end users of the Product within the Territory:
3.6.1 To provide starter and refill packs of bears and merchandise to
enable the successful operation of the Product within the
Territory
3.6.2 To fulfill end user orders within 5 working days of receipt of
order
3.6.3 To charge the end user a reasonable price for such packs (being
limited to the cost of materials and labour in producing the
component plus a 30% contribution towards fixed costs and
profit)
The Licensee may at any time upon reasonable notice enter onto the
Licensor's site to inspect its premises, records and documents in order
to ascertain the Licensee's conformance with this Agreement.
3.7 At the Licensee's request, the Licensor shall enter into an agreement
with the Licensor and a UK-based third party escrow agent upon terms
reasonably acceptable to the Licensee under which all source and other
code relating to the Product shall be deposited with the escrow agent.
4. OBLIGATIONS OF LICENSEE
4.1 The Licensee shall use reasonable endeavours to manufacture and
distribute the Product in the Territory
5. WARRANTIES AND INDEMNITY
5.1 The Licensor warrants that:
5.1.1 it has or has obtained the necessary rights, licenses and
authority to grant the rights given under this Agreement, and
5.1.2 its own all intellectual property rights in the Product and the
Licensee's use thereof will not infringe the rights of any third
party. Licensee acknowledges that the Licensor is pursuing
applicable intellectual property protection internationally for
the Product and agrees not to register or assist others to
register any trademark that would be confusingly similar to the
Licensor's trademarks. The Licensor shall indemnify the Licensee
in full for and against any losses it suffers or incurs as a
result of any breach of Clause 5.1 or any other clause of this
Agreement, provided notice of any such claim is given to
Licensor within 30 working days; and further, the Licensee shall
not be responsible for the settlement of any claims for which it
has an indemnification obligation under Clause 5.1.
5.1.3 In the unlikely event of the Licensor going into liquidation or
otherwise becoming subject to any of the events referred to in
clause 8.2.2 then the Licensee (without prejudice to any other
of its rights) may upon serving written notice on the Licensor
purchase any intellectual property rights needed to continue
manufacture and distribution of the Product for the value of $1.
6. LIABILITY/DAMAGES
6.1 Neither party to this Agreement shall have any liability to the other
party for any indirect or consequential loss howsoever cause arising out
of or in connection with this Agreement.
7. PAYMENTS
7.1 In consideration of the rights granted under clause 2, the Licensee
shall during the continuance of this Agreement pay to the Licensor a
royalty of (pounds)800 per Product sold by Licensee on the first 499
Products sold by it, (pounds)600 for each of the next 1500 Products sold
and (pounds)500 for each subsequent Product sold
7.2 The Licensee shall make an advance payment to the Licensor of $200,000.
This will consist of a payment of:
7.2.1 $25,000 upon signing this Agreement,
7.2.2 a further $50,000 three months after the Commencement Date
(subject to sales reaching a minimum of 100 machines), and
7.2.3 a further $125,000 three months after payment being made under
clause 7.2.2 (subject to sales reaching a minimum of 200
machines),
any of which may be paid by the Licensee or its Affiliates. This payment
shall be an advance and shall be offset against royalties becoming due
under clause 7.1 (and therefore no royalties need be paid by the
Licensee until royalties becoming payable under this Agreement exceed in
aggregate $200,000)
7.3 During the term of this Agreement, the Licensee shall deliver to the
Licensor, no later than the 15th day following the last day of each
Accounting Period, a report that describes in reasonable detail the
Products sold be the Licensee and the royalties earned by the Licensor
during such Accounting Period.
7.4 Upon receipt of the account provided by the Licensee pursuant to clause
7.3, the Licensor shall deliver a VAT invoice to the Licensee's
registered office address above for the amount set out in such account.
The invoice shall be payable by the Licensee within 45 (forty five) days
of receipt of invoice
7.5 All payments are stated exclusive of VAT (but inclusive of all other
taxes and duties to the extent becoming payable)
8. TERM AND TERMINATION
8.1 This Agreement (save for clauses 7.2.1, 8.3 and 10 which shall come into
force upon the date of this Agreement) shall come into force upon the
following conditions being fulfilled to the Licensee's reasonable
satisfaction:
8.1.1 the delivery by the Licensor to the Licensee's premises of a
Current Product (together with all related documentation) that
in the opinion of the Licensor is fully fit for purpose and in
full working order,
8.1.2 The Licensor has provided all the necessary assistance to the
licensee to enable a complete and working machine to a UK
specification to be produced.
8.1.3 the distribution network referred to in clause 3.6 being
established, and
8.1.4 the Licensor by 31st January 2005 enhancing the underlying
software in the Current Product to provide a security system
protecting the Current Product which is acceptable to the
Licensee, together the "Conditions". If all the Conditions have
not been fulfilled by 31st January 2005 then the Licensee shall
have the right to either terminate this Agreement or extend the
date by when the Conditions have to be fulfilled, by notice in
writing to the Licensor. Once the whole of this Agreement is in
force it shall run (unless terminated in accordance with clause
8.2) for a period of 3 years from the Commencement Date (the
"Initial Term") and beyond that period until terminated by
either party effective upon six (6) months' prior written notice
to the other party.
8.2 Either party may forthwith terminate this Agreement by notice to the
other in any of the following events:
8.2.1 if the other party commits a material breach of this Agreement
and where such breach is capable of remedy, fails to remedy such
breach within 30 days from service on the other of a written
notice specifying the breach and requiring it to be remedied; or
8.2.2 if the other party enters into liquidation or has an
administrator, administrative receiver, or like person appointed
over its assets or any material part of its assets or shall
enter into any voluntary arrangement with its creditors. If any
of the above events occur to the Licensor then the Licensee may
without prejudice to any of its other rights take a licence of
the rights granted under this Agreement upon the same terms as
are granted under this Agreement up to the end of the Initial
Term.
8.3 The Licensor shall use its best endeavours to do what is necessary to
fulfill the Conditions as soon as reasonably practicable.
9. CONSEQUENCES OF TERMINATION
9.1 Any termination of this Agreement shall be without prejudice to any
rights accrued in favour of either party prior to the date of
termination
9.2 Upon the date of termination of this Agreement howsoever occasioned:
9.2.1 the Licensee shall cease the manufacture and distribution of
Products, except for completing any outstanding sales orders and
utilising any committed stocks (provided that the sale of such
products will also attract a royalty payment unless they are
sold at distressed prices in which case there will be no royalty
payable)
9.2.2 each party shall promptly return to the other any documents or
materials in its possession or control which belong to the other
party or which were provided solely for the purposes of this
Agreement
9.2.3 any royalty payments due to the Licensor prior to the date of
termination of this Agreement shall be paid by the Licensee in
accordance with clause 7.
10. CONFIDENTIALITY
10.1 Each party agrees with the other:
10.1.1 to keep information which is deemed by the other to be
confidential ("Confidential Information") in strict confidence
and secrecy;
10.1.2 not to use the Confidential Information save for complying with
its obligations under this Agreement; and
10.1.3 not to disclose the same to a third party other than:
10.1.3.1 the disclosing party's professional advisers or
Affiliates who are under a similar duty to protect
Confidential Information; or
10.1.3.2 any third party having a legal right to obtain
disclosure thereof.
10.2 The restrictions contained in clause 10.1 shall apply both during the
term of and for 5 (five) years after the termination of this Agreement
but shall not apply to information or knowledge which:
10.2.1 has in its entirety become public knowledge otherwise than
through any unauthorised disclosure or other breach of such
restriction;
10.2.2 the other party has consented in writing to being disclosed; or
10.2.3 is or has been independently developed by the other party
without reference to or use of the Confidential Information.
11. NOTICES
11.1 All notices made or that are required under this Agreement shall be in
writing and shall be sent to the addresses set out on the front page of
this Agreement (or such other addresses as may be notified from time to
time) by first class pre-paid letter or fax transmission, or delivered
by hand and shall be deemed to have been received: 48 hours after the
date of mailing (by first class post,), immediately upon delivery (by
hand), and immediately upon transmission (by fax).
11.2 Notices to be sent to Licensee shall be marked for the attention of the
Finance Director, and notices to the Licensor shall be sent to the
attention of the CFO.
12. FORCE MAJEURE
12.1 Neither party shall be liable for any delay in performing any of its
obligations under this Agreement if such delay is caused by a Force
Majeure Event and such party shall be entitled to a reasonable extension
of time for the performance of its obligations
12.2 A "Force Majeure Event" means an event beyond the reasonable control of
the affected party including, without limitation, strike, lock-out,
labour dispute (but excluding strikes, lockouts and labour disputes
involving employees of the affected party or its subcontractors), act of
God, war, terrorism, riot, civil commotion, malicious damage (but
exlcuding malicious damage involving the employees of the affected party
or its subcontractors) compliance with a law or governmental order,
rule, regulation or direction, accident, fire, flood and storm
13. ASSIGNMENT
13.1 Except as expressly permitted by this Agreement neither party shall
assign the benefit or delegate the burden of this Agreement without
prior written consent of the other party which consent shall not be
unreasonably withheld or delayed.
13.2 The Licensee may, without the consent of the Licensor, assign or
sub-license all or any of its rights hereunder to any company which is
an Affiliate.
14. GENERAL
14.1 This Agreement constitutes the entire agreement, and supersedes any
previous agreements, between the parties relating to the subject matter
of this Agreement. Neither party has relied upon or has any action
against the other in respect of any representations, whether written or
oral, made to it in respect of this Agreement except a fraudulent
misrepresentation.
14.2 A variation of this Agreement is valid only if it is in writing and
signed by or on behalf of each party.
14.3 No delay or indulgence by either party in enforcing the provisions of
this Agreement shall prejudice the rights of that party nor shall any
waiver of its rights operate as a waiver in relation to any subsequent
breach.
14.4 If any provision of this Agreement shall be held by a Court of competent
jurisdiction to be unenforceable such provision shall be struck out and
the remainder thereof shall stand in full force and effect.
14.5 The parties do not intend that any of its terms will be enforceable by
virtue of the Contract (Rights of Third Parties) ▇▇▇ ▇▇▇▇ by any person
not a party to it.
15. DISPUTE RESOLUTION
15.1 The formation, construction, performance, validity and all aspects
whatsoever of this Agreement shall be governed by English law.
15.2 Both parties submit to the exclusive jurisdiction of the English Courts
to hear and decide any suit, action or proceedings, and to settle any
disputes, which may arise out of or in connection with this Agreement.
Signed for and on behalf of Licensor
------------------------------------
Date:
Signed for and on behalf of Licensee
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Date:
Price of components
Motors $8.75
I/O Board $180
Spirals $7.10
