Document:

Exhibit 10.10

 

SOFTWARE PUBLISHING AND DISTRIBUTION AGREEMENT

Disney Aladdin Chess Adventure

This Publishing and Distribution Agreement (this “Agreement”) is made as of the 18th day of April, 2005, by and between Strategy First Inc., a Canadian corporation (“STRATEGY”), whose principal place of business is at 147 St. Paul West, Suite 210, Montreal, Quebec (Canada) H2Y 1Z5 and Red Mile, a U.S. corporation (“RED MILE”), whose principal place of business is at 4000 Bridgeway, Suite 101, Sausalito, CA 94965, U.S.A.

 

RECITALS

Whereas, RED MILE is a developer of computer game programs operable on various computer and video game consoles and systems; and

Whereas, STRATEGY is in the business of developing, producing, distributing, publishing and licensing computer software programs and video games and related documentation for use on the Systems; and

Whereas, STRATEGY desires a license to distribute the Products, and RED MILE desires to grant a license to distribute the Products.

AGREEMENT

In consideration of the foregoing recitals and the mutual agreements and promises set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows:

	
            1.
 	
            DEFINITIONS.
 

The following terms, unless the context requires otherwise, have the following meanings:

	
            a.
 	
            “Alpha” means the software includes all of the game’s major components, although not at final speed or with final data. All levels will run in the game engine, including lighting, collisions, and game play. All puzzles, random creature hot spots, and creature obstacles will be fully testable, including all bosses. It will also include NPCs and NPC interactions. The game will still have major bugs (i.e. crash bugs). All levels will be playable, although bugs may prevent playing any particular level from start to finish without resorting to cheats. In-game cinematics will be integrated and the game interfaces will be functional. Any additional visual and audio changes need to be made during this phase, and placeholders for art and voiceovers or sound effects may be necessary. In
short, all game elements are accounted for either by being present in the build or by being represented by placeholders.
 
	
            b.
 	
            “Beta” means the software includes all of the game’s major components in place and running with final speed and data. It will include all changes, modifications, alterations, and additions agreed to by STRATEGY and RED MILE based upon review and testing of the Alpha Milestone. The game will still have bugs, but major bugs (i.e. crash bugs) will have been addressed, including those impeding Player 
 

 

1

 

 

progression in the game. All levels are playable from start to finish. Note that assets are ‘frozen’ and implemented. Game runs on final media. Final audio is included. All necessary install materials have either been delivered to STRATEGY so that an install can be made by STRATEGY or, if agreed to by STRATEGY and RED MILE, the RED MILE has in place an install that meets all Publisher requirements.

	
            c.
 	
            “Bug” means a repeatable phenomenon of unintended events or actions during the running of the software under normal conditions that results in: (i) the being unable to perform repeatedly and without interruption; (ii) a material detriment to the functionality of the software; (iii) a material detriment to the visual representation or sound of the software; or (iv) the destruction or corruption of data.
 
	
            d.
 	
            “Chargeback” means deductions customers take against a STRATEGY invoice for price protection, promotions, allowances, or markdowns.
 

	
            e.
 	
            “DISNEY” means Disney Interactive Inc. now known as Buena Vista Games.
 

	
            f.
 	
            “End-Users” means those customers who acquire the Products for their internal use and not for redistribution, re-marketing, time-sharing, or service bureau use.
 
	
            g.
 	
            “Gold Master” means the final version of the program as approved by both STRATEGY and RED MILE as suitable for duplication and shipping. It includes all changes, modifications, alterations, and additions agreed to by STRATEGY and RED MILE based upon review and testing of the Beta Milestone and/or previous Release Candidate(s).
 
	
            h.
 	
            “Manufacturing Costs” means all reasonable direct costs of manufacturing, including in-bound transportation costs.
 
	
            i.
 	
            “Net Revenues” means gross revenues received by STRATEGY from its Distribution partner and other third parties for Software and/or Merchandise actually sold to End-Users, less Distribution fees of twenty-two percent (22%), returns, Chargebacks, discounts, co-op, MDFs, rebates, customer allowances, Manufacturing Costs, taxes, duties, commissions, insurance, transportation costs, the DISNEY royalty as defined in Section 7.c., and reserves for Chargebacks and returns taken by third parties; provided, however, that the subsequent release of the reserve for Chargebacks and returns shall be considered as a part of Net Revenues upon such release of any remaining reserves. 
 
	
            j.
 	
            “Merchandise” means STRATEGY guides and telephone hint or gaming assistance relating to the Software.
 

	
            k.
 	
            “Products” means, collectively, the Software and the Merchandise.
 

	
            l.
 	
            “Release Candidate” means the final version of the program has been approved by the RED MILE, but not yet approved by STRATEGY, as suitable for duplication and shipping. It includes all changes, modifications, alterations, and additions agreed to by STRATEGY and RED MILE based upon review and testing of the Beta Milestone. If approved by STRATEGY, this build becomes the Gold Master. If not approved, the next build is also a Release Candidate with a number designator (Release Candidate 1, Release Candidate 2, etc.)
 

 

2

 

 

 

 

	
            m.
 	
            “Software” means the computer program(s) set forth in Exhibit “A” (attached hereto and incorporated herein) operating on the Windows 98, Windows 2000, and Windows XP operating systems and does not include any derivative works or other versions thereof, including, without limitation, any merchandising, television, film, music, sequels, add-ons, level packs.
 
	
            n.
 	
            “Territory” means the entire World with the exception of the former CSIS countries, namely, Russia, Ukraine, Belarus, Estonia, Latvia, Lithuania, Moldova, Kazakhstan, Kirghizia, Georgia, Armenia, Azerbaijan, Turkmenia, Tajikistan and Uzbekistan, which former CSIS countries shall be retained by RED MILE.
 

	
            2.
 	
            LICENSE GRANTS
 

	
            a.
 	
            Distribution. RED MILE hereby grants to STRATEGY, and STRATEGY hereby accepts, an exclusive license to publish, manufacture (subject to 2f below), market, promote, publicize, distribute and sell the Products throughout the Territories for the Term through any and all means of standard retail and/or End User on-line distribution.
 

	
            b.
 	
            OEM Bundling Transactions. STRATEGY may not do bundling or OEM deals.
 

	
            c.
 	
            DEVELOPER Trademarks and Trade Names. RED MILE hereby grants to STRATEGY, and STRATEGY hereby accepts, an exclusive license in the Territory during the Term to use, publish and permit others to use and publish RED MILE’s name as associated with the software solely as well as any names of or trademarks associated with or embodied in the software or any reproduction or simulation thereof and, subject to any contractual restrictions of which RED MILE has advised STRATEGY from time to time, the script, speech, images, characters, characterizations, designs, graphics, artwork, and other characteristics associated with the Software, all of the above solely and exclusively in connection with the sale, advertising, distribution and
exploitation of the Products. Further, subject to approval from DISNEY, STRATEGY shall have the similar rights to use the Disney and Aladdin trademarks. 
 
	
            d.
 	
            Packaging and Promotional Material. RED MILE hereby grants to STRATEGY, and STRATEGY hereby accepts, a non-exclusive license, for advertising, publicity and promotional purposes with respect to STRATEGY’s sale of the Products, to permit the reasonable use of all artwork, textual material and other materials used for or by RED MILE in connection with the Software, including advertising, packaging and wrapping materials (collectively, “Packaging and Promotional Materials”) created by RED MILE in connection therewith. Nothing in the grant of licenses to STRATEGY shall limit RED MILE’s right to self-market their products.
 
	
            e.
 	
            Sublicensing. STRATEGY shall have the exclusive (even as to RED MILE) license in the Territory to sublicense the rights set forth in this Agreement.
 
	
            f.
 	
            Manufacturing. STRATEGY shall have each manufacturer, whether manufacturing directly for STRATEGY or for a sublicensee, to complete and send to RED MILE Exhibits “E” and “F” of this Agreement and comply with these exhibits. 
 

 

3

 

 

STRATEGY understands that non-compliance with this requirement would give Disney the right to immediately terminate its agreement with RED MILE and RED MILE would be required to immediately terminate this Agreement. 

	
            3.
 	
            TERM
 

This Agreement shall become effective on the date hereof and, unless sooner terminated pursuant to the terms of this Agreement, shall continue in full force and effect until December 31, 2007 (the “Term”). The Agreement may be renewed by the mutual written agreement of both Parties hereto.

	
            4.
 	
            RIGHT OF FIRST REFUSAL
 

Prior to executing any agreements with any other party RED MILE shall offer to STRATEGY for a period of thirty (30) days the right to publish (i) a sequel (the “Sequel”) to any program, (ii) modifications of any program to include additional features or gameplay (“Add-Ons”), and (iii) versions of the Program suitable for play on other platforms (including but not limited to, the PS-2, X-Box, Game Cube, etc.), upon terms satisfactory to RED MILE.

	
            5.
 	
            RED MILE`S OBLIGATIONS
 

	
            a.
 	
            Delivery. Upon a date mutually agreed upon by the parties, RED MILE shall deliver to STRATEGY two (2) complete Masters of each of the programs and, if the game has copy protection, CD checks, or other game verification systems, one (1) complete Master without these systems. The Masters for the programs will be the English language version then available. STRATEGY shall have final approval of the commercial acceptability of the Program(s). 
 
	
            b.
 	
            Demo Version. RED MILE shall use its best commercial efforts to deliver to STRATEGY thirty (30) days prior to STRATEGY’s first shipments of the Product(s) an interactive demonstration version of the Program(s) on a medium requested by STRATEGY for reproduction and use in the marketing and promotion of the Program(s) in the Territory. The demonstration version shall demonstrate all material functionality, interface design and audio and graphical direction of the Program(s).
 
	
            c.
 	
            Game Design and Walk-Through. RED MILE shall use its best commercial efforts to deliver to STRATEGY a thorough walk-through of the game and the completed Game Design Documentation upon delivery of the Beta version of the software or within thirty (30) days of the signing of this agreement if the Beta version of the software has already been completed. These documents must have sufficient detail to give STRATEGY complete understanding of all of the concepts and components of game play so that STRATEGY will be in a position to render complete technical assistance to its customers and End Users.
 
	
            d.
 	
            Localization. RED MILE shall provide whatever existing localized assets it has to STRATEGY as well as whatever existing instructions exist. RED MILE will use reasonable commercial efforts to assist STRATEGY in localizing the Product.
 
	
            e.
 	
            Localization Kit. RED MILE shall provide STRATEGY with a localization kit thirty (30) days prior to completion of Gold Master or twenty (20) days after signing this Agreement if the Gold Master is already completed or its completion is anticipated less than thirty (30) days after the Agreement is signed.
 

 

 

4

 

 

 

	
            f.
 	
            Integration. RED MILE shall integrate all translations provided by STRATEGY within ten (10) days of receipt by RED MILE. STRATEGY shall have final approval of the commercial acceptability of the localized Program(s). RED MILE shall at its expense, recompile the translated and localized materials so that the Software is in the formats and languages as specified by STRATEGY and is otherwise suitable (for content or otherwise) for use in the countries designated by STRATEGY.
 	
             

	
            g.
 	
            Marketing/PR. RED MILE shall cooperate with STRATEGY in its efforts to promote and advertise the Product. RED MILE shall deliver screen shots, hi-res graphics, manual text and graphics, concept art and any other reasonable materials that would assist STRATEGY in the marketing and promotion of the Product.
 	
             

	
             
	
            i.
 	
            All marketing and public relations materials created by STRATEGY are subject to approval of RED MILE and DISNEY, which DISNEY may approve in its sole discretion. Any materials not specifically approved by DISNEY are deemed disapproved and use of such materials will be deemed a material breach of this Agreement.
 
	
             
	
            ii.
 	
            STRATEGY shall provide DISNEY with 200 units of each version of the Product free of charge and will provide RED MILE with 20 copies free of charge.
 
	
            h.
 	
            Quality Assurance. RED MILE will use its best commercial efforts to deliver a quality Master to STRATEGY. STRATEGY shall perform its own quality testing of the Software, and shall have sole discretion in determining the commercial acceptability of the Software.
 	
             

	
            i.
 	
            Gold Master.    STRATEGY acknowledges that they are licensing a completed game that has been approved by DISNEY. The only change to the English language game shall be removal of the Sierra splash screen and insertion of a STRATEGY FIRST splash screen. This change will require review and approval by DISNEY.  
 	
             

					

	
            j.
 	
            Server Costs and Matchmaking Services. The product has no online component.
 

	
            k.
 	
            Copy Protection. The product as delivered to STRATEGY is not intended to be copy protected. If STRATEGY wishes to implement copy protection at its own cost, RED MILE shall use reasonable commercial efforts to assist.
 
	
            l.
 	
            Developer Materials Document. RED MILE will provide to STRATEGY a full and completed DEVELOPER MATERIALS DOCUMENT (DMD) within fifteen (15) days of the date of this Agreement. If the DMD is not complete or deemed acceptable, STRATEGY shall return said document indicating where the document is incomplete. RED MILE shall have ten (10) days then to complete the document. The DMD is required in order for STRATEGY to begin producing, marketing, and promoting the software. The DMD shall be attached to this Agreement as Exhibit “
 

 

	
            6.
 	
            STRATEGY’S OBLIGATIONS
 

	
            a.
 	
            Distribution. STRATEGY shall use its best efforts to sell and distribute the Products subject to the terms of this Agreement. STRATEGY shall sell the Products at price(s) mutually determined by both STRATEGY and RED MILE prior to the scheduled release. STRATEGY may make decisions with respect to returns and 
 

 

5

 

 

price protection in conformance with prevailing industry standards and procedures. STRATEGY will use its reasonable commercial best efforts to publish each title two (2) months after it has accepted the Gold Master. STRATEGY will use it’s best efforts to get as wide a geographical distribution as possible prior to release.

	
            b.
 	
            Warehousing. STRATEGY, or a third party on behalf of STRATEGY, shall provide warehousing for the Products, fulfill orders (i.e. provide “pick, pack and ship” services) and manage, process and restock returns of the Products, if any.
 
	
            c.
 	
            Invoice and Collection. STRATEGY, or a third party on behalf of STRATEGY, shall invoice and collect from End-Users or distributors for the Products distributed pursuant to this Agreement.
 
	
            d.
 	
            Marketing. RED MILE shall cooperate with STRATEGY in the development of the marketing plan for the sale and advertising of the Products (the “Marketing Plan”). STRATEGY shall manage and implement co-op advertising programs and marketing as STRATEGY determines in its reasonable discretion. With respect to the Marketing Plan, STRATEGY shall spend no less than the minimum marketing sum and no more than the maximum marketing sum (the “Marketing Expenses”) shown on Exhibit “A” in the marketing and advertising of the Products and pursuant to the dates set forth in the Marketing Plan; provided, however, that such Marketing Expenses may be increased or decreased by the parties by mutual agreement. No more than thirty-three percent (33%) of
the Marketing Expenses may be STRATEGY’S internal marketing expenses; at least sixty-seven (67%) percent must be direct out-of-pocket expenses spent with third parties. As part of the Marketing Plan, STRATEGY shall, (i) design advertising and collateral materials to attract customers for the Software, and (ii) provide suitable press releases and public relations efforts for the initial release of the Software. The parties acknowledge that all materials created under this Section require the approval of DISNEY.
 
	
            e.
 	
            End-User Support. STRATEGY shall, provide End-Users of the Products in the Territory with reasonable technical support via the telephone and E-Mail and such costs shall be solely borne by STRATEGY. RED MILE shall provide STRATEGY with such information and training required for STRATEGY to perform such End User support. Reasonable travel and lodging costs incurred by RED MILE to provide such training shall be borne solely by STRATEGY. 
 

 

	
            7.
 	
            ROYALTIES
 

	
            a.
 	
            Advance Royalties. Within ten days of both Parties signing this Agreement, Strategy shall pay to Red Mile a non-refundable, recoupable, advance royalty in the amount of  xxxxxx . An invoice shall be submitted to STRATEGY by RED MILE, and this advance royalty shall be wire-transferred to RED MILE by STRATEGY in accordance with RED MILE’s wire instructions. This advance royalty is recoupable by STRATEGY who shall hold back actual royalties earned and payable as the result of actual sales until the advance royalty is fully recouped.
 
	
            b.
 	
            Payment of Royalties. For and in and consideration of the licenses and other rights granted hereunder, STRATEGY shall pay to RED MILE as royalties, for any sales by STRATEGY, 50% of the Net Revenue, plus the DISNEY royalty as defined 
 

 

6

 

 

below. In no case shall the payment to RED MILE for each unit sold be less than the DISNEY royalty.

	
            c.
 	
            Minimum Royalty Per Unit Sold. Notwithstanding the equal sharing of Net Revenue as defined in this Agreement, Strategy acknowledges that the minimum royalty payable to DISNEY per unit sold shall be xxxxxx for all countries except Europe and xxxxxx Euro for Europe. 
 
	
            d.
 	
            Royalty Payments and Statements. Royalties shall be computed based on the currency of the United States of America, and shall be paid in the currency of the United States of America. For purposes of the preceding sentence, the exchange rate used to convert any Net Receipts into American currency shall be the exchange rate actually charged to STRATEGY by the party converting such Net Receipts into American currency. Royalties shall be calculated at or near the end of every quarter based upon the distribution and sales reports that STRATEGY receives from its distribution partners. A written statement providing a complete, itemized description of the calculation of the Royalties paid for the preceding quarter (a “Royalty Statement”) shall accompany each Royalty payment, or shall be sent
alone within such period if no Royalties are due for such quarter. Statements as to royalties payable hereunder shall be sent by STRATEGY to RED MILE, together with payment of any royalties earned by RED MILE.
 
	
            e.
 	
            Payment Schedule. STRATEGY shall pay the Royalties to RED MILE quarterly as follows: (a) each quarter ending in March, Royalties shall be paid on or before May 20th after such quarter, (b) each quarter ending in June, Royalties shall be paid on or before August 20th after such quarter, (c) each quarter ending in September, Royalties shall be paid on or before November 20th after such quarter, and (d) each quarter ending in December, Royalties shall be paid on or before February 20th after such quarter.
 
	
            f.
 	
            Return Credit. In connection with each quarterly accounting period, STRATEGY shall have the right to retain, as a reserve against charges, credits, or returns, such portion of payable royalties as shall be reasonable in STRATEGY’s best business judgment, but not to exceed fifteen percent (15%) of such payable royalties. Each reserve so established shall be liquidated and paid, to the extent it is not reduced for actual or potential returns and credits, on the first anniversary of the date such reserve was first taken.
 
	
            g.
 	
            Final and Binding Effect. RED MILE shall be deemed to have consented to all Royalty Statements and all other accountings rendered by STRATEGY hereunder, and each such Royalty Statement or other accounting shall be conclusive, final and binding, shall constitute an account stated and shall not be subject to any questions for any reason whatsoever, unless specific objection in writing, setting forth the basis thereof, is given by RED MILE to STRATEGY within two (2) years after RED MILE’s actual examination of the Royalty Statements, if any, pursuant to this Agreement. No action, suit, or proceeding of any nature with respect to any Royalty Statement or other accounting rendered by STRATEGY hereunder may be maintained against STRATEGY unless such action, suit or proceeding is commenced against
STRATEGY in a court of competent jurisdiction within two (2) 
 

 

7

 

 

years after RED MILE’s actual examination of the Royalty Statements, if any, pursuant to this Agreement.

	
            h.
 	
            Examination of Royalty Statements. STRATEGY shall maintain, at its executive offices, which are presently in Montreal, Canada, books of account concerning sales of the Products hereunder. RED MILE may examine or, at RED MILE’s sole expense, appoint an independent certified accountant to examine STRATEGY’s said books relating to the sale of the Products hereunder no more than once each calendar year, solely for the purpose of verifying the accuracy thereof, only during STRATEGY’s normal business hours and upon ten (10) days’ prior written notice. RED MILE shall notify STRATEGY in writing within ninety (90) days after it or its independent certified accountant has completed such examination if RED MILE believes that STRATEGY’s books are not accurate, and supply STRATEGY with
a report including a description of any and all alleged inaccuracies contained therein. RED MILE, STRATEGY and their respective representatives shall keep all information obtained in such examination confidential and to use such information solely for the purpose of this Section. If any additional monies are shown to be payable by STRATEGY to RED MILE based upon an examination and such amount shown due exceeds ten percent (10%) of the Royalties previously paid by STRATEGY in relation to the particular Statement(s) which may be the subject of the examination, STRATEGY shall reimburse the reasonable costs of such examination and fees and expenses related thereto, as and when paid by RED MILE, plus interest at the lesser of twelve percent (12%), or the maximum lawful rate on such unpaid amount to be computed from the first date such monies were to have been accounted for.
 
	
            i.
 	
            Payment Pursuant to Examination Rights. With respect to any claim by RED MILE that additional monies are payable by STRATEGY to RED MILE pursuant to this Agreement based upon an examination by RED MILE of STRATEGY’s books and records, STRATEGY shall not be deemed in breach of this Agreement unless within thirty (30) days after STRATEGY’s receipt of RED MILE’s written claim that additional monies are due and payable together with a copy of the examination report prepared in connection with such examination, STRATEGY shall either: (1) pay such additional monies so claimed by RED MILE, or (2) contest such claim, in whole or in part, by written notice to RED MILE specifying in reasonable detail the grounds for contesting such claim. In the event STRATEGY shall
so contest any such claim, STRATEGY shall not be deemed in breach of this contract unless such claim shall have been reduced to a judgment by a court of competent jurisdiction or resolved by binding arbitration and STRATEGY shall have failed to pay RED MILE the amount thereof within ten (10) business days after STRATEGY shall have received notice of the entry of such final non-appealable judgment.
 

	
            8.
 	
            OWNERSHIP
 

	
            a.
 	
            The Products. With respect to the Products, this Agreement only grants to STRATEGY a license to offer a license to such Products to STRATEGY’s customers and does not transfer to STRATEGY any right, title or interest in or to any therein, notwithstanding any “purchase” or “sale” or similar language contained therein.
 

 

 

8

 

 

 

	
            b.
 	
            Trademarks. Notwithstanding the grant of licenses herein, STRATEGY hereby acknowledges and agrees that RED MILE owns the copyright and other rights to the Products, and any packaging, advertising and promotional material produced by RED MILE and delivered to STRATEGY for the Products. 
 

	
            9.
 	
            PRODUCT LABELING
 

	
            a.
 	
            Copyright Notice. STRATEGY shall cause to be affixed, conspicuously and legibly on all Packaging and Promotional Materials, including without limitation, any advertising, collateral materials, press releases or public relations efforts, appropriate copyright notices in the name of RED MILE and DISNEY.
 
	
            b.
 	
            Labeling. Pursuant to the grant of license in this Agreement, the Products shall be distributed in the Territory under STRATEGY’s name and label and STRATEGY may assert attribution as publisher and distributor of the Products. STRATEGY shall cause to be affixed, conspicuously and legibly on all Packaging and Promotional Materials, including without limitation, any advertising, collateral materials, public relations efforts, or Internet web sites, the RED MILE logo and other logos of developers of the Products as may be reasonably be requested (all subject to the restrictions contained in this Agreement).
 

	
            10.
 	
            CONFIDENTIALITY
 

	
            a.
 	
            Proprietary Information. Each party acknowledges and agrees that certain information which it may receive from the other party will be Proprietary Information to the disclosing party. “Proprietary Information” shall mean: (i) the fact that the disclosing party intends to develop or have developed any particular or other product; (ii) any information concerning or related to the Products; (iii) any information concerning the terms and conditions of this Agreement, except without the prior written consent of the other party, which shall not be unreasonably withheld,; (iv) nonpublic information concerning the business or finances of the disclosing party; and (v) any other information which if disclosed to a third party could adversely affect a
competitive advantage of the disclosing party. 
 
	
            b.
 	
            Protection. Each party agrees, both during and after the term of this Agreement, to use the Proprietary Information of the other party only in connection with its rights and obligations under this Agreement, and not to, directly or indirectly, reproduce such Proprietary Information or distribute or disclose such Proprietary Information, except to employees or consultants who have a need to know such Proprietary Information in connection with the performance of the obligations and exercise of the rights under this Agreement, and to hold in confidence all Proprietary information of the other party and to use is best efforts to prevent the unauthorized copying, use and/or disclosure of the other party’s Proprietary Information.
 
	
            c.
 	
            No Nondisclosure Obligation. Each party’s respective obligation to hold the other party’s Proprietary Information in strict confidence shall not apply to any information that: (i) becomes known to the general public without a breach of the nondisclosure obligations of this Agreement; (ii) is disclosed by the owner of the Proprietary Information to others without restriction on disclosure; (iii) is obtained from a third party without breach of a nondisclosure obligation; or (iv) must be 
 

 

9

 

 

disclosed in connection with any suit, action or other dispute related to this Agreement or is otherwise required to be disclosed by law.

	
            d.
 	
            Irreparable Harm. Each party agrees that the unauthorized use or disclosure of the disclosing party’s Proprietary Information may cause irreparable injury to the disclosing party. Accordingly, both parties agree that the remedy at law for any breach of this Section 10 may be inadequate and, in recognition thereof, agree that the party suffering from the unauthorized use or disclosure shall be entitled to ex party injunctive relief to prevent any such breach or the threat of such a breach.
 

	
            11.
 	
            REPRESENTATIONS AND WARRANTIES
 

	
            a.
 	
            RED MILE’s Representations and Warranties. RED MILE represents and warrants to STRATEGY as follows:
 	
             

	
             
	
            i.
 	
            Power and Authority. RED MILE possesses (i) all rights necessary to grant the exclusive license granted by this Agreement without liability to any third party, and (ii) full power and authority to carry out its obligations hereunder.
 
					

ii.  No Breach. During the Term, the performance of RED MILE’s duties hereunder will not breach any separate agreement by which RED MILE is bound, or violate or infringe any rights of any third party. So long as this Agreement remains in effect, RED MILE shall not commit any act or enter into any agreement or understanding with any third party which is inconsistent or in conflict with the terms of this Agreement. 

iii.  No Liens. There are no liens, claims, or encumbrances against the Software or any part thereof which would derogate from or be inconsistent with the rights and licenses granted to STRATEGY herein. RED MILE represents and warrants that it is, and at all times during the term of this Agreement will be, the holder of all consents necessary for it to perform its obligations hereunder.

iv.  No Litigation. There is presently no litigation or other claim, pending or threatened, nor any fact which may be the basis of any claim, against the Software. RED MILE has not taken any action or failed to take any action which would interfere with the rights of STRATEGY under this Agreement. 

	
            b.
 	
            STRATEGY’s Representations and Warranties. STRATEGY represents and warrants to RED MILE as follows:
 	
             

	
             
	
            i.
 	
            Power and Authority. STRATEGY possesses the full power and authority to enter into this Agreement and to carry out its obligations hereunder and this Agreement constitutes the valid and binding obligation of STRATEGY, enforceable in accordance with its terms.
 
					

ii.  No Breach. During the Term, the performance of STRATEGY’s duties hereunder will not breach any separate agreement by which STRATEGY is bound, or violate or infringe any rights of any third party. So as long as this Agreement remains in effect, STRATEGY shall not commit any act or enter into any agreement or understanding with any third party which is inconsistent or in conflict with the terms of this Agreement. 

 

10

 

 

 

iii.  Valid corporaton. STRATEGY is a corporation, validly existing and in good standing under the laws of the jurisdiction it was incorporated.

iv.  Fiscally sound. STRATEGY is financially sound and fiscally capable of performing its obligations and any material change in such status shall be immediately communicated to RED MILE in writing.

 

	
            12.
 	
            SOFTWARE BUGS
 

For a period of six (6) months following the delivery of Master by RED MILE under this Agreement, the software shall be reasonably free of all Bugs. If, within such period, STRATEGY reasonably determines that the software is not free from Bugs, RED MILE shall, at its sole expense and within thirty (30) days after receipt of written notice of any such condition, make whatever corrections are commercially reasonable to correct the Bugs, and promptly redeliver to STRATEGY one (1) corrected gold master of the on CD-ROM. 

	
            13.
 	
            INDEMNIFICATION
 	
             

	
             
	
            a.
 	
            RED MILE Indemnification
 
				

	
            i.
 	
            RED MILE shall hold harmless, defend and indemnify STRATEGY, its directors, officers, agents and employees for any and all claims, losses, costs, liabilities or expenses (including reasonable attorneys’ fees and applicable fees attributable to End Users for which STRATEGY may be required to provide refunds) relating to or arising from: (i) any breach by RED MILE of any representation, warranty or covenant of this Agreement; (ii) any negligent act or omission of RED MILE; (iii) access to or use of the Products infringes upon or violates any copyright, patent, trademark, or other intellectual property right; and (iv) any unfair trade practice, title or misrepresentation based on any promotional material, documentation or other material provided by RED MILE with respect to the Products; provided however, that: (x)
STRATEGY promptly notifies RED MILE in writing of the claim; (y) RED MILE has sole control of the defence and all related settlement negotiations, subject to obtaining the agreement of STRATEGY to any final settlement; and (z) STRATEGY reasonably provides RED MILE with the assistance, information and authority necessary to perform the above.
 
	
            ii.
 	
            RED MILE shall have no liability for any claim of infringement to the extent based on: (a) access to or use of a superseded or altered release of the Products if such infringement would have been avoided by access to or use of a current unaltered release of the Products; or (b) the combination, operation or use of the Products with programs or data not furnished by RED MILE if such infringement would have been avoided without such programs or data.
 
	
            iii.
 	
            In the event the Products are held or is believed by RED MILE to infringe, RED MILE shall have the option, at its expense, to: (i) modify the Products to be non-infringing; (ii) obtain for STRATEGY a license to continue the distribution and license of the Products; (iii) substitute the Products with other or material reasonably suitable to STRATEGY; (iv) buy 
 

 

11

 

 

back all infringing Products at a price agreed to by STRATEGY; or if (i) - (iv) are not commercially reasonable for RED MILE, then (v) terminate the license rights granted hereunder, the whole without limiting STRATEGY’s recourses hereunder.

 

	
            b.
 	
            STRATEGY Indemnification
 

	
            i.
 	
            STRATEGY shall hold harmless, defend and indemnify RED MILE, its directors, officers, agents and employees for any and all claims, losses, costs, liabilities or expenses (including without limitation reasonable attorneys’ fees) relating to or arising from: (i) any breach by STRATEGY of any representation, warranty or covenant of this Agreement; (ii) any negligent act or omission of STRATEGY; (iii) any use by STRATEGY or End User of any product not provided by RED MILE but used in combination with access to and use of the Product, if such claim would have been avoided by the exclusive access to and use of the Product; (iv) STRATEGY’s failure to include or reasonably enforce the required contractual terms set forth herein in each End User License Agreement; and (v) any claim that arises from any representation,
warranty or covenant by STRATEGY to End Users beyond that which is provided by RED MILE pursuant to this Agreement; provided however, that: (x) RED MILE promptly notifies STRATEGY in writing of the claim; (y) STRATEGY has sole control of the defence and all related settlement negotiations, subject to obtaining the agreement of RED MILE to any final settlement; and (z) RED MILE reasonably provides STRATEGY with the assistance, information, and authority necessary to perform the above.
 

	
            14.
 	
            FREEDOM TO COMPETE
 

Subject to the provisions of the Agreement, each party acknowledges and agrees that nothing herein shall be construed as restricting or prohibiting either party from lawfully competing with the other party in any other aspects of its business, including, without limitation, the development, marketing and/or distribution of other products and services. Without limiting the generality of the preceding sentence, each party acknowledges that the other party is in the business of designing, developing and exploiting both directly and indirectly various products and that each party maintains and continuously seeks licensing and distribution relationships with third parties. Each party agrees that nothing in this Agreement will be construed as restricting or prohibiting such party from continuing its business in any lawful manner. Each party may in its sole discretion at any time during or
after the term of this Agreement (i) design, develop, manufacture, market, publish, license, distribute, and otherwise exploit any products or services, even if such products or services are competitive with or similar to any of the other party’s products, subject only to the other party’s respective copyrights, patent rights, and other proprietary rights in and to the other party’s Products, and/or (ii) enter into and maintain licensing and distribution relationships with any persons or entities, even if such third parties are competitors or licensees of the other party.

	
            15.
 	
            TERMINATION
 

 

 

12

 

 

 

	
            a.
 	
            RED MILE Breach. In the event that RED MILE fails to deliver the final Gold Master to STRATEGY for up to three (3) months after the date mutually agreed upon pursuant to Section 5(a.), or RED MILE otherwise materially breaches this Agreement with respect to the Products hereunder and such breach is not cured within thirty (30) days after receipt of notice from STRATEGY of such breach, then, without in any way limiting any of STRATEGY’s other rights and remedies in such event, and notwithstanding any provision to the contrary contained herein, STRATEGY shall have the right at its sole election to terminate this Agreement
 
	
            b.
 	
            STRATEGY Breach. In the event STRATEGY materially breaches this Agreement and such breach is not cured within thirty (30) days after receipt of notice from RED MILE of such breach, then, without in any way limiting any of RED MILE’s other rights and remedies in such event, and notwithstanding any provision to the contrary contained herein, RED MILE shall have the right at its sole election to terminate this Agreement. 
 

	
            c.
 	
            Automatic Termination.
 

	
            i.
 	
            Bankruptcy. In the event either party to this Agreement files a petition in bankruptcy or is adjudged a bankrupt, or if a petition in bankruptcy is filed against such party and is not dismissed within sixty (60) days of the institution of such proceeding, or if such party becomes insolvent, or makes an assignment for the benefit of creditors, or if any receiver appointed for such party or its business is not discharged within sixty (60) days (for convenience, the “bankrupt or insolvent party”), the other party shall have the right to terminate this Agreement, upon written notice to the bankrupt or insolvent party.
 
	
            ii.
 	
            Breach by STRATEGY of material terms which causes DISNEY to terminate the RED MILE Agreement with DISNEY.
 

	
            16.
 	
            EFFECT OF TERMINATION
 

Upon expiration of the Term of this Agreement, all exclusive rights granted to STRATEGY under this Agreement shall forthwith revert to RED MILE with the following consequences:

	
            a.
 	
            STRATEGY shall continue to pay all Royalties which become due and payable.
 

	
            b.
 	
            In the case of termination not for breach, STRATEGY will be entitled to a sell-off period of ninety (90) days to sell and distribute all existing stocks of the product(s) as at the date of termination or on the expiration of the Term, on a non-exclusive basis and in accordance with the terms of this agreement and RED MILE shall thereafter be free to engage others to distribute the Products in the Territory or to distribute them itself and STRATEGY shall not thereafter advertise, distribute or sell the Products, and will cease all display, advertising and use of RED MILE’s Property. In the case of termination due to a breach by STRATEGY, STRATEGY shall immediately cease selling the Product and destroy any unsold inventory.
 
	
            c.
 	
            STRATEGY shall return to RED MILE all materials and any copies or reproductions thereof furnished to STRATEGY by RED MILE hereunder or give satisfactory evidence of their destruction.
 

 

 

13

 

 

 

	
            d.
 	
            Sublicenses. Any valid termination of this Agreement shall not affect any valid sub-licenses granted by STRATEGY pursuant to this Agreement, which shall continue in full force and effect for the full duration of their terms. 
 

	
            17.
 	
            GENERAL PROVISIONS
 

	
            a.
 	
            Notice. All notices, statements and/or payments to be given to the parties hereunder shall be addressed to the parties at the addresses set forth on the first page hereof or at such other address as the parties shall designate to each other in writing from time to time. All notices shall be in writing and shall either be served by personal delivery (to an officer of each company), mail, or facsimile (if confirmed by mail or personal delivery of the hard copy), all charges prepaid. Except as otherwise provided herein, such notices shall be deemed given when personally delivered, all charges prepaid, or on the date ten (10) days following the date of mailing, except that notices of change of address shall be effective only after the actual receipt
thereof.
 
	
            b.
 	
            Assignment. This Agreement shall inure to the benefit of, and shall be binding upon, the successors and assigns of each party hereto. Notwithstanding the foregoing, STRATEGY shall not assign any rights or obligations hereunder without the prior written consent of RED MILE, which it may withhold in its sole discretion. RED MILE may assign its rights or obligations hereunder without the prior written consent of STRATEGY.
 
	
            c.
 	
            Entire Agreement. The entire understanding between the parties hereto relating to the subject matter hereof is contained herein. There are no representations, warranties, terms, conditions, undertakings or collateral agreements, express, implied or statutory, between the parties other than expressly set forth in this Agreement. This Agreement cannot be changed, modified, amended or terminated except by an instrument in writing executed by both STRATEGY and RED MILE. The Exhibits annexed hereto constitute a part of this Agreement. The headings and captions used herein are inserted for convenience of reference only and shall not affect the construction or interpretation of this Agreement. This Agreement shall not be deemed effective, final or binding upon RED MILE or STRATEGY until
signed by each of them. Only the final, executed Agreement is admissible as the written agreement between the parties and prior drafts, if any, incorporating revisions or original language may not be used, and shall not be admissible as evidence for any purpose in any litigation that may arise between the parties. 
 
	
            d.
 	
            Modifications. No waiver, modification or cancellation of any term or condition of this Agreement shall be effective unless executed in writing by the party charged therewith. No written waiver shall excuse the performance of any act other than those specifically referred to therein and shall not be deemed or construed to be a waiver of such terms or conditions for the future or any subsequent breach thereof. Except as otherwise provided in this Agreement, all rights and remedies herein or otherwise shall be cumulative and none of them shall be in limitation of any other right or remedy.
 
	
            e.
 	
            Relationship of Parties. This Agreement does not constitute and shall not be construed as constituting a partnership or joint venture between RED MILE and STRATEGY. Neither STRATEGY nor RED MILE shall have any right to obligate 
 

 

14

 

 

or bind the other in any manner whatsoever, and nothing herein contained shall give or is intended to give any rights of any kind to any third persons.

	
            f.
 	
            Governing Law and Venue. The validity, construction, interpretation, and performance of this Agreement shall be governed by and construed in accordance with the laws of the Province of Quebec, Canada.
 
	
            g.
 	
            Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original and all of which shall constitute but one and the same document.
 
	
            h.
 	
            Survival. The expiration of this Agreement shall not impair the rights or obligations of either party hereto which shall have accrued hereunder prior to such expiration or termination.
 
	
            i.
 	
            Cooperation. Each of the parties hereto agrees to execute all such further instruments and documents and to take all such further action as the other party may reasonably require in order to effectuate the terms and purposes of this Agreement as stated herein.
 
	
            j.
 	
            Invalid Provision. If any provision of this Agreement shall be held or deemed to be invalid, inoperative or unenforceable in any jurisdiction or jurisdictions, because of conflicts with any constitution, statute, rule or public policy or for any other reason, such circumstance shall not have the effect of rendering the provision in question unenforceable in any other jurisdiction or in any other case or circumstance or of rendering any other provisions herein contained unenforceable to the extent that such other provisions are not themselves actually in conflict with such constitution, statute or rule of public policy, but this Agreement shall be reformed and construed in any such jurisdiction or case as if such invalid, inoperative or unenforceable provision had never
been contained herein and such provision reformed so that it would be enforceable to the maximum extent permitted in such jurisdiction or in such case.
 
	
            k.
 	
            French-language clause. The parties have required that this agreement and all documents, notices and communications relating to this agreement and to the subject matters arising therefrom be in the English language. / Les parties ont exigé que la présente convention et tous les documents, avis, et communications rattachés à cette convention et aux questions qui en découlent soient rédigés en anglais.
 

 

 

 

 

15

 

 

 

 

IN WITNESS WHEREOF, the parties hereto have signed this Agreement as of the date defined in the preamble hereto.

RED MILE: 

RED MILE

	
            By:
 	
            _/s/ Ed Roffman_________
 

Name: Ed Roffman

Title: CFO

STRATEGY:

STRATEGY FIRST INC.

	
            By:
 	
            _/s/ Don McFatridge____
 
	
            Name:
 	
            Don McFatridge
 	
             

Title:          President

 

16

 

 

 

EXHIBIT “A”

 

Software

 

Disney Aladdin Chess Adventure

 

 

Minimum/Maximum Marketing Expenses

 

Minimum xxxxxx, Maximum xxxxxx

 

 

17

 

 

 

 EXHIBIT “B”

 

DISNEY ALADDIN CHESS ADVENTURE

 

Task List

This list is a full description of changes, additions, alterations, and corrections STRATEGY has requested be made to the Software. 

 

None

 

18

 

 

 

EXHIBIT “C”

 

DISNEY ALADDIN CHESS ADVENTURE

 

Developer Materials Requirement List

 

The following is a list of materials that are required for Strategy First to publish your title. Please note that the list is extensive and some of the items are ongoing. Try to provide as much of the items requested to ensure a smooth release of the product.

Contact Information

This should include contact names, emails and phone numbers of the key personnel within your company. Contact information should be broken down by Production contacts, Marketing and PR Contacts and Art/Graphic Design contacts.

Purpose: To ease communication between Marketing, Production and Development.

 

Full Title Specifications Document

Please note if anything should not be revealed to End-Users.

This document should include the following:

	
            1)
 	
            Technical Specifications including minimum and recommended system requirements, multiplayer protocols, supported API’s, graphics and sound features including how lighting and textures are handled, special effects, animation formats, animation process – by hand or motion capture, world interactivity, collision rules, physics effects, scripting systems, level building tools, memory handling, localization tools and preparations, other input devices, sound formats, and how music is stored.
 
	
            2)
 	
            To the extent available, RED MILE shall provide Game Design including level, mission, scenario and/or campaign designs (Incl. Confirmed number), puzzles, solutions and options, spawn points, enemy descriptions and statistics, weapon descriptions and statistics, description of skills and attributes, combat rules, AI definitions, reactions, and rules, character interactions, concept and storyline, all game texts including voiceover scripts, multiplayer details, and scenario/campaign editor functionality (if applicable).
 

	
            3)
 	
            List of Product Features
 

Purpose: To be used in product analysis and review, product positioning, marketing materials, promotion, packaging and to begin creation of the marketing plan. 

 

All copyright notices, trademarks or patents issued for product

Purpose: To be used on all packaging and sales material to satisfy legal requirements.

 

Documentation of all licensed software tools used

Purpose: To be included in all packaging to satisfy legal requirements.

 

Links to Existing Company Website

Purpose: To begin web promotion with links between Strategy First’s web site and RED MILE’s web site.

Offensive material content

The game contains no offensive material content.

Purpose: Used for game submission to the Entertainment Software Rating Board (ESRB).

 

19

 

 

 

Compilation of all previous press exposure

There is none

Purpose: To be used for product positioning and to create a consistent promotional plan.

 

Completed developer product and competitive product analysis

There is none.

Purpose: To be used for product’s positioning, marketing and promotional plan development.

 

Game interface mock-up, button artwork or special screens

	
            Will be created by STRATEGY FIRST from game
 

Purpose: To be used for website and marketing collateral.

 

All available rendered or partial artwork

This should include: textures, 2D/3D character images, screenshots, Max files with Plug-ins (if possible), backgrounds and logos in file formats: TIF, EPS, JPG, PSD. All artwork should be provided in hi-res format wherever possible.

Purpose: To begin product marketing collateral: packaging, sell sheets, ads, box and web design

 

	
            All packaging (Completed or not)
 

Purpose: To be used for packaging if required.

 

Manual documentation

Purpose: To be used for the manual and website content.

 

Technical details of game CD manufacturing

The game fits on one CD. There is no copy protection.

Purpose: To be used for press releases and possible press tours.

 

Details of current playable game version

Purpose: To be used for press releases and possible press tours.

 

20

 

 

 

EXHIBIT “D”

 

DISNEY ALADDIN CHESS ADVENTURE

 

Offensive Material Guidelines

 

Below represents a list of some of the elements that the ESRB commonly evaluates in a product. Notice that there are many elements that can contribute to the content of the game, not just the gameplay itself. To get an accurate sense of the finished game, ESRB evaluates pertinent content from the game. Pertinent content would be any content that accurately reflects either the most extreme or intense content of the final product (in terms of relevant rating criteria such as violence, language, sexuality, gambling, and alcohol, tobacco, and drug use), and the final product as a whole.

 

Destruction

Explosions, physical damage and other audio or visual elements of destruction.

 

Violence

All elements of damage design, including blood effects, gore, death animations, post mortem damage effects, and screams. 

 

Failure

Demonstrate what happens when the player dies, crashes, or goes out-of-bounds.

 

Profanity

Profanity is always pertinent content that must be submitted. ESRB must be provided with an accurate and audible representation of the profanity and its frequency.

 

Soundtrack/Lyrics

Soundtracks frequently contain profanity or adult themes. 

 

Controlled Substances

Use, implied use, or reference to drugs, alcohol, or tobacco is always pertinent content. Even in the background, these activities can potentially influence a game’s rating.

 

Gambling

Gambling, including instructional lessons and simple ambiance, can contain pertinent content that must be submitted.

 

Sexuality

Nudity, innuendo, suggestive themes and explicit sexual activities — these are types of pertinent content that must be submitted to ESRB.

 

Characters

Character options, models, and profiles, such as revealing clothes or suggestive character biographies, are often a source of pertinent content.

 

21

 

 

 

Vehicles/Weapons

Look carefully at vehicle/weapon sounds, options, and models since these elements often contain pertinent content that must be rated.

 

Supplements

Pertinent content in bonus material, guidebooks, manuals, and other supplements packaged with the game must be consistent with the final product, or else submitted for review.

 

Cut-scenes

FMVs, cut-scenes, in-game movies, and starting/ending sequences often give the most accurate sense of a final product, and should be submitted as pertinent content.

 

 

22

 

 

 

EXHIBIT E

 

Form of Consent Agreement

Reference is made to that certain Publishing and Development Agreement, dated as of May 27, 2003 by and between Disney Interactive, Inc. (“Disney”) and Red Mile Entertainment (“Red Mile”) (the “Agreement”), relating to, among other things, the development, manufacture, packaging and distribution by Red Mile of certain interactive computer software products of Disney indicated below (the “Authorized Products”). Red Mile has asked Disney to consent, pursuant to Section 12.2 of the Agreement, to the engagement by Red Mile of a third party to provide certain services in connection with the development, manufacture, packaging and/or distribution of an Authorized Product.

Disney hereby consents to the engagement by Red Mile of the third party named below (the “Subcontractor”) to render the services indicated below for the account of Red Mile, provided that (1) the Subcontractor shall execute Disney’s form of Subcontractor Agreement; (2) a complete and executed copy of such agreement shall be delivered to Disney within ten (10) days of the date thereof; and (3) the Subcontractor shall fully comply in all respects with such agreement. Failure of any of the foregoing conditions shall entitle Disney to immediately terminate the Agreement and require that all materials in the possession or control of Red Mile or Subcontractor containing or capable of displaying any intellectual property of Disney be immediately delivered to Disney or destroyed to Disney’s satisfaction. This consent shall not be deemed to
constitute a waiver of compliance by Disney with respect to any other term, provision or condition of the Agreement.

Name and Address of Subcontractor:

Territory of Manufacture:

Expiration of Agreement:

(unless earlier terminated or extended]

Authorized Product(s): (or components thereof)

IN WITNESS WHEREOF, the duly authorized representatives of each of the parties hereto have executed this Consent Agreement as of the                                          
                         day of,__.

 

	
            DISNEY INTERACTIVE, INC.
 	
            RED MILE:
 

 

	
            By: ____________________________
 	
            By:
 

 

	
            Date:_
 	
            ___________________________
 	
            Date:_
 

 

	
            Title: _________________________________  
 	
            Title:______________________________
 

 

 

 

 

23

 

 

 

EXHIBIT F

 

Form of Subcontractor Agreement

Name and Address of Subcontractor:

Services:

	
            Licensee:
 	
            Red Mile Entertainment (“Red Mile”)
 

Expiration Date of Agreement: (unless earlier terminated or extended)

Authorized Product(s):

	
            Disney Properties:  
 	
            All scenes and characters (together with their likenesses and names) and designs
 

(including without limitation marks and logos), and all art, animation, video and other audiovisual material, sound, music and text (including without limitation fonts), owned or licensed by Disney which are depicted or used in the Authorized Product(s).

Ladies and Gentlemen:

In order to induce Disney Interactive, Inc. (“Disney”) to consent to the engagement by Red Mile of the undersigned subcontractor (“Subcontractor”) to provide the Services in connection with the manufacture, packaging or distribution of the Authorized Product, the Subcontractor signing below covenants and agrees that (except as may be authorized under a separate Disney Manufacturer’s Agreement or license):

1.            The Subcontractor will not manufacture the Authorized Product to the order of anyone but Red Mile, will invoice only Red Mile, will not ship to anyone other than Red Mile or Red Mile’s designees and will not ship after the expiration date of the Agreement.

2.       The Subcontractor will not subcontract production of the Authorized Product or components thereof

without Disney’s written consent.

3.       The Subcontractor will not (without Disney’s written consent) manufacture merchandise utilizing any of the Disney Properties listed above or any other properties the copyright or trademark to which is owned by Disney, other than the Authorized Product in accordance with the Agreement.

 

24

 

 

 

	
            4.
 	
            The Subcontractor will not publish or cause the publication of pictures of the Authorized Product in
 

any publication or promotional material, nor advertise the fact that it is permitted to manufacture Authorized

Product, nor use the name “Disney” or any variant thereof without Disney’s prior written consent.

 

5.         In manufacturing the Authorized Product, the Subcontractor will comply with all applicable local and national laws and regulation, treaties, voluntary industry standards, codes or other obligations (collectively, “Laws”), including but not limited to, applicable health and safety standards and labor laws for manufacturing operations. Specifically, the Subcontractor covenants that:

(a)        The Subcontractor will not use child labor in the manufacturing, packaging or distribution of Disney merchandise. The term “child” refers to a person younger than the local legal minimum age for

employment or the age for completing compulsory education, but in no case shall any child younger than

fifteen (15) years of age (or fourteen (14) years of age where local law allows) be employed in the

manufacturing, packaging or distribution of Disney merchandise. The Subcontractor employing young persons who do not fall within the definition of “children” agrees also to comply with any Laws applicable to such persons.

(b)        The Subcontractor agrees only to employ persons whose presence is voluntary. The Subcontractor agrees not to use any forced or involuntary labor, whether prison, bonded, indentured or otherwise.

	
            (c)
 	
            The Subcontractor agrees to treat each employee with dignity and respect, and not to use
 

corporal punishment, threats of violence, or other forms of physical, sexual, psychological or verbal harassment or abuse.

	
            (d)
 	
            The Subcontractor agrees not to discriminate in hiring and employment practices, including
 

salary, benefits, advancement, discipline, termination, or retirement, on the basis of race, religion, age,

nationality, social or ethnic origin, sexual orientation, gender, political opinion or disability.

(e)        The Subcontractor recognized that wages are essential to meeting employees’ basic needs. The Subcontractor agrees to comply, at a minimum, with all applicable wage and hour Laws, including minimum wage, overtime, maximum hours, piece rates and other elements of compensation, and to provide legally mandated benefits. If local Laws do not provide for overtime pay, the Subcontractor agrees to pay at least regular wages for overtime work. Except in extraordinary business circumstances, the Subcontractor will not require employees to work more than the lesser of (1) 48 hours per week and 12 hours overtime or (2) the limits on regular and overtime hours allowed by local law, or, where local law does not limit the hours of work, the regular work week in such country plus 12 hours overtime.  In addition, except in
extraordinary business circumstances, employees will be entitled to at least one day off in every seven-day period. The Subcontractor agrees that, where local industry standards are higher than applicable legal requirements, it will meet the higher standards.

	
            (f)
 	
            The Subcontractor agrees to provide employees with a safe and healthy workplace in
 

compliance with all applicable Laws, ensuring, at a minimum, reasonable access to potable water and sanitary

facilities, fire safety, and adequate lighting and ventilation. The Subcontractor also agrees to ensure that the

same standards of health and safety are applies in any housing it provides for employees. The Subcontractor agrees to provide Disney with all information Disney may request about manufacturing, packaging and distribution facilities for the Products.

 

25

 

 

 

(g)        The Subcontractor agrees to respect the rights of employees to associate, organize and bargain collectively in a lawful and peaceful manner, without penalty or interference, in accordance with applicable Laws.

(h)        The Subcontractor agrees to comply with all applicable Laws, including those pertaining to the manufacture, pricing, sale and distribution of the Products.

 

	
            (i)  
 	
            The Subcontractor agrees to comply with all applicable environmental Laws.
 

(j)         The Subcontractor agrees that Disney and its designated agents (including third parties) may engage in monitoring activities to confirm compliance with this Agreement, including unannounced on-site inspections of manufacturing, packaging and distribution facilities, and employer-provided housing, such inspections to include reviews of books and records relating to employment matters and private interviews with employees. The Subcontractor agrees to maintain on site all documentation necessary to demonstrate compliance with the Agreement.

(k)        The Subcontractor agrees to take appropriate steps to ensure that the provisions of this Paragraph 5 are communicated to employees, including the prominent posting of a copy of Disney’s Code of Conduct for Manufacturers in the local language and in a place readily accessible to employees at all times.

	
            6.
 	
            The term “Laws” as used in this Subcontractor Agreement means any and all applicable laws, rules, regulations, ordinances, voluntary industry standards, association laws, codes or other obligations pertaining to any of Subcontractor’s activities in connection with the Agreement including but not limited to, those applicable to the Authorized Product and the Disney Properties and the performance of the Services.
 
	
            7.
 	
            The Subcontractor shall not, and shall not permit or assist any other party to, manufacture, modify or adapt all or any part of the Authorized Product or otherwise make copies of all or part of the Authorized Product onto any media (whether for error correction or other purposes), except as may be expressly and clearly required in connection with the Services. The Subcontractor also agrees that it shall not, and shall not permit or assist any other party to, disassemble, decompile or reverse engineer all or any part of the Authorized Product.
 
	
            8.
 	
            During the performance of the Services in connection with the Authorized Product Subcontractor shall not introduce any computer virus or any other similar harmful, malicious, or hidden program or data to the Authorized Product.
 
	
            9.
 	
            The Subcontractor will not, without Disney’s prior written consent, provide the Services, or contract for the provision of services comparable to the Services, in connection with video games or other computer software utilizing any Disney Property, any artwork based thereon and/or any trademark, trade name or logo owned or used by Disney, other than the Authorized Product.
 
	
            10.
 	
            The Subcontractor will neither cause nor allow any use not authorized by Disney or Fluent under the direction of Disney of any material containing or capable of displaying any Disney Property.
 
	
            11.
 	
            The Subcontractor understands that it does not have or acquire, and shall not purport to have or acquire, any right to, interest in or title to the Authorized Product nor any Disney Property nor 
 

 

26

 

 

any other copyright, trademark, trade name or logo or the names applied thereto embodied in the Authorized Product.

	
            12.
 	
            
The Subcontractor acknowledges that the provisions of this agreement are necessary to protect Disney’s intellectual property rights and, specifically, to conserve the
goodwill and good name of its products and the name “Disney”, and
therefore Subcontractor agrees that it will not, and it will not allow or assist
any other third party to, perform any act or omit from performing any act, that
would result in the Authorized Product, any Disney Property or the name
“Disney” to become involved in matters that will or could detract
from, or impugn, its public acceptance and popularity, or impair its legal
status.
 

	
            13.
 	
            From time to time, the Subcontractor will permit Disney’s authorized representative to inspect its activities and premises, accounting books and invoices relevant to its manufacture and supply of Authorized Product.
 
	
            14.
 	
            Except and only to the extent specifically required in connection with its performance of the Services in connection with the Authorized Product, Subcontractor shall not acquire any right under this Agreement to use, and Subcontractor shall not use, and shall not, directly or indirectly, allow or assist any other party to use,
 

 

 

	
            (a)
 	
            the name “Disney” (either alone, in conjunction with or as a part of any other word, name or phrase) or,
 
	
            (b)
 	
            any Disney Property or any other fanciful character or design, any music or any intellectual property right of Disney Enterprises, Inc. (formerly known as The Walt Disney Company) or any of its related, affiliated or subsidiary companies (i) in any advertising, publicity or promotion or other disclosure, (ii) in any in-house publication, (iii) to express or imply any endorsement of any product or service, or (iv) in any other manner or for any purpose whatsoever (whether or not similar to any of the foregoing).
 

 

	
            15.
 	
            Subcontractor understands that it may, during the performance of the Services in connection with the Authorized Product, have access to and acquire knowledge from, material, data, systems and other information concerning the operation, business, financial affairs, products, customers and intellectual property rights or other aspects of Disney or any of Disney’s affiliated or related companies that may not be accessible or known to the general public (referred to herein as “Confidential Information”). Any Confidential Information acquired by Subcontractor shall not be used, published or divulged by Subcontractor to any other party in any manner whatsoever without the prior clear and express written approval of Disney, which approval Disney may withhold in its sole
discretion. Subcontractor shall, and shall cause its employees, agents and every other party it employs in connection with the Services to, protect and safeguard the Confidential Information by using the same degree of care, but no less than a reasonable degree of care, to prevent the unauthorized use, dissemination or publication of the Confidential Information as Subcontractor uses to protect its own confidential or proprietary information of a like nature. In the event that Subcontractor is directed to disclose any portion of any Confidential Information of Disney or any other materials proprietary to Disney, Subcontractor shall immediately notify Disney both orally and in writing. Subcontractor agrees to provide Disney with reasonable cooperation and assistance in obtaining a suitable protective order and in taking any other steps to preserve the confidentiality of the Confidential Information.
 

 

 

27

 

 

 

	
            16.
 	
            Upon expiration or termination of the Agreement, or upon notification by Disney or Red Mile, the Subcontractor will (a) immediately cease manufacturing the Authorized Product and deliver to Disney or its authorized representative that portion of any and all molds, plates, engravings or other devices used to reproduce the Disney Properties, or (b) provide Disney with satisfactory evidence that the Disney Properties have been erased or eradicated and are no longer reproducible.
 
	
            17.
 	
            Nothing herein shall be construed as to require Subcontractor to initiate any legal action against any unauthorized use of any materials containing or capable of displaying any Disney Property.
 
	
            18.
 	
            This agreement shall be deemed to be entered into in California and shall be governed and interpreted according to the laws of the State of California. Any legal actions pertaining to this Agreement shall be commenced within the State of California. Any legal actions pertaining to this Agreement shall be commenced within the State of California and within either Los Angeles or Orange Counties.
 

IN WITNESS WHEREOF, the duly authorized representatives of each of the parties hereto have executed this Consent Agreement as of the _____ day of _____________________,  ____________.

	
            RED MILE ENTERTAINMENT
 	
            SUBCONTRACTOR
 	
             

	
             
	
            By:  
 	
            ___________________________
 	
            By:  
 	
            _______
 
							

 

	
            Date:  
 	
            ___________________________
 	
            Date:  
 	
            ______
 

 

	
            Title:  ____________________________
 	
            Title:  _______________________________
 

 

 

 

28Exhibit 10.11

 

DATE December 21st, 2005 

 

 

 

(1)              RED MILE ENTERTAINMENT, INC

 

(2)              IR GURUS INTERACTIVE PTY LTD

 

 

 

SOFTWARE DEVELOPMENT AND LICENSING

AGREEMENT

 

For

 

HEROES OF THE PACIFIC on the PSP

 

 

 

 

 

 

 

 

 

	
            Page 1 of 25
 

 

 

 

THIS AGREEMENT is made on December 21, 2005

 

BETWEEN:

 

	
            (1)
 	
            Red Mile Entertainment, Inc., a Florida Corporation (“the Publisher”) whose principal address is 4000 Bridgeway, Suite 101, Sausalito., CA 94965; and
 
	
            (2)
 	
            IG Gurus Interactive Pty Ltd, an Australian corporation whose principal address is Level 1, 96 Pelham Street, Carlton, Victoria 3053, Australia (the “Developer” or “Licensor”) 
 

 

	
            (A)
 	
            The Developer has a software development engine capable of creating the Product.
 
	
            (B)
 	
            Publisher seeks to engage the Developer’s services to develop the Product.
 	
             

	
            (C)
 	
            The Developer has agreed to exclusively license certain rights to the Product on the terms and conditions of this Agreement.
 

 

AGREEMENT

	
            1.
 	
            DEFINITIONS
 	
             

	
            1.1
 	
            In this Agreement:
 

“Acceptance Date” in relation to any Gold Master means the date on which it is accepted unconditionally under paragraph 4.5;

“Affiliate” means any corporate entity that controls, is controlled by or is under the common control of a party to this Agreement;

“Alpha Version” means the Version of the Product that is written by or for the Developer that is a playable version of the Product containing substantially all features of the Product, as specified in the Specification with all software modules integrated and working together in a usable and testable fashion. The Alpha Version is expected to undergo further test and revision for levels, design tuning and elimination of possible Product Errors. Some assets may be placeholders for purposes of this Version and this Version may not include software theft protection, and title and legal screens. It also includes a draft of the User Manual and any Supporting Documentation reasonably requested by the Publisher to allow complete feature and functionality testing.

“Beta Version” means the Version of the Product that is written by or for the Developer that is a complete running software Product containing ALL FEATURES of the Product and final-quality game assets, as specified in the Specification plus the incorporation of improvements, corrections and any other errors identified through testing of the Alpha Version of the Product. The Beta Version is a Version which is ready for Publisher to do its quality assurance testing and Developer is ready to fix Errors which may be found by Publisher during its “QA” testing and will include all Original Language assets and be Multi Byte Language compatible. It also includes 

 

	
            Page 2 of 25
 

 

 

such information and user instructions that the Publisher reasonably and requires to finish producing a User Manual in the Original Language;

“Conversion” means the preparation of a Product which involves the adaptation or conversion of a Version into a new Version for use on a Machine other than the Initial Machine;

“Co-Publisher” means a licensee with whom Publisher shares to a substantial degree the costs of publishing the Product in a part of the Territory, as opposed to a licensee who bears all of those costs alone and “co-publishing” shall be interpreted accordingly;

“Delivery Date” means the relevant Milestone Date specified for delivery of the Gold Master of each Version;

“Developer Trademark(s)” means Developer’s trademark or trade name or art work used in conjunction therewith to identify Developer’s software development business and/or the trademarks and/or trade names and/or artwork used in conjunction therewith;

“End User” means anyone who is the ultimate user of any Product;

“Error” means any known material defect relevant to an End User in a Product including:

	
            (a)
 	
            any failure to run the test procedure set out in the Specification;
 

	
            (b)
 	
            any inability to perform repeatedly without interruption, loss of data or erroneously or improperly formatted output;
 

	
            (c)
 	
            any misspelled incorrect text;
 	
             

	
            (d)
 	
            any non-compliance of any Product with any part of the Specification;
 

“Gold Master” means:

	
            (a)
 	
            a non-copy protected and non-encrypted final gold master of a Product for use on an Initial Machine in such physical medium which (i) is sufficiently complete and correct to be released into the final manufacturing process in preparation for commercial release and shipment, in its Original Language and Translations in executable form; and (ii) is accepted for manufacturing and distribution by any applicable third-party licensor whose approval is contractually required prior to manufacturing and distribution of the Version for that Initial Machine. The Gold Master shall be the Beta Version with incorporation of any final improvements and correction of any Product Errors found in the testing of any and all elements of the Beta Version;
 
	
            (b)
 	
            a copy protected final Gold Master of the Version referred to in (a) in its Original Language and related Translations recorded in executable form; and
 

 

 

	
            Page 3 of 25
 

 

 

 

	
            (c)
 	
            in the case of (a) and (b), any necessary supporting software and data including all graphics and sound files
 

“Hardware Manufacturers” means Sony Computer Entertainment.

“Initial Machine” means the Sony PlayStation Portable (Sony PSP) for which the Product will be developed by the Developer under this Agreement;

“Intellectual Property Rights” means, without limitation, all present and future rights of copyright, patent, registered designs, design rights, trademarks and trade names, neighboring rights or rights analogous to any of the above under any jurisdiction, in each case registered or unregistered and existing now or in the future, including reversions and renewals of such rights and rights to make applications for registration of any such rights and Intellectual Property Rights shall include in particular all rights in any jurisdiction to copy, adapt, translate, broadcast, transmit, publish, perform, reproduce in any medium and otherwise exploit the work or materials concerned;

“Machine” means an object or system of any description, now known or coming into existence in the future, with which a Product may be viewed, played or otherwise used;

“Milestone” means each stage of development of the Product set out alongside a Milestone Date in Schedule 1;

“Milestone Date” means each of the dates for achieving a Milestone in Schedule 1;

“Milestone Payment Schedule” means the schedule detailing the relevant fee charged by the Developer for the completion of each Milestone as detailed in Schedule 1.

“Multi Byte Character” means a character or single text letter whose character code consists of two or more bytes under a certain character-encoding scheme.

“Multi Byte Languages” means software code that supports Multi Byte Character represented text and characters for one dialect of an Asian language to be determined by the parties in connection with the preparation of Translations (as defined below).

“Original Language” means American English. 

“Product” means a Sony PlayStation Portable (“PSP”) version of the PlayStation 2 game “Heroes of the Pacific” as more particularly defined in the attached Design Document (Exhibit A) to be produced by the Developer under this Agreement in respect of the Initial Machines and comprising each stage as existing from time to time:

	
            (a)
 	
            the Product plots, themes, story lines, characters and sequences;
 

	
            (b)
 	
            all revised, amended and rejected prototypes and materials prepared in connection with the development of the Product;
 

 

 

	
            Page 4 of 25
 

 

 

 

	
            (c)
 	
            all Object Code, graphics, sound effects and music and implementing copy protection routines in each of the Versions;
 

“Product Names” means all names of characters, scenes, themes, products, sets, processes or other aspects of the Product and all designs of characters, backgrounds and other visual features appearing in the Product;

“Project Manager(s)” means the person at Developer responsible for the project management of Product and identified in Schedule 2; 

“Publisher’s Producer” means the person at Publisher responsible for the project management of Product and identified in Schedule 2;

“Quarter End” means 31 March, 30 June, 30 September and 31 December each year during the Term;

“Source Code” means all software code and listings (excluding the Developer’s Tools and Technology) generated by the Developer in human readable form in order to create any Version of the Product, together with accompanying sound code, Product notes, flow charts, diagrams, written script of text, audio track and other documentation relating to such code;

“Specification” means the specification for each Version of the Product current from time to time comprising a detailed specification of all game features, mechanics, game structure and technical specifications of the Product;  

“Supporting Documentation” means documentation in English containing full and clear information enabling the Publisher and its licensees to support and maintain all aspects of the Product;

“Term” will mean beginning on the date shown on page one of this Agreement and ending ten years hence unless extended under the terms of “Renewal”. At the end of the Term, Publisher shall cease manufacturing any additional units of the Product. Publisher may continue to sell units in inventory for an additional three months (“Sell-off Period”) beyond the term. Profits for sales of Products during the Sell-off Period shall be paid and remitted in accordance with paragraph 10

“Territory” means the universe;

“Translation” means a copy of a Version in which text and/or text related graphics and/or dialogue have been translated into French, German, Italian, Spanish, Dutch and one dialect of an Asian language in accordance with paragraph 9 hereof;

“Unit” means a copy of a Version embodied in a medium or format (whether tangible, electronic or otherwise) which is customarily made commercially available to the public;

“User Manual” means a manual containing instructions for End Users clearly expressed and enabling them to operate the Product fully, in a style suitable for the intended age range of End Users;

 

 

	
            Page 5 of 25
 

 

 

 

“Version” means a form of the Product produced by the Developer under this Agreement designed to be compatible with a particular Initial Machine and (where relevant) a particular screen format PAL/NTSC including all prototypes and all Master Copies of that Version, and when used in connection with the name of a Machine shall mean a form of the Product readable and executable on that Machine;

“Virus Free” means that at the time of delivery, the Product shall not contain any known computer Product (detectable by the McAfee anti-virus software current at that time) which copies itself to other storage machines including magnetic tape cassette, memory chip, electronic cartridge, optical disk and magnetic disk and which destroys data, causes damage or creates a nuisance or annoyance to the End User.

“Working Day” means Monday to Friday except for all public holidays observed in the United States or Australia;

	
            1.2
 	
            As the context permits, references to people include any legal entity, and partnerships or unincorporated associations, references to the singular include the plural and vice versa, and references to any gender include each other gender.
 

	
            1.3
 	
            “Include” or “including” are used without limitation.
 

	
            1.4
 	
            Headings and titles are used for reference only and do not affect the interpretation of the Agreement.
 
	
            1.5
 	
            Any reference to any paragraph or schedule is a reference to a paragraph or schedule in this Agreement.
 

	
            2.
 	
            INTELLECTUAL PROPERTY RIGHTS
 

	
            2.1
 	
            License. Publisher acknowledges that Developer owns the intellectual property rights to the name “Heroes of the Pacific” and to an existing game by that name (“Existing Heroes of the Pacific”). Publisher agrees to use such name for the Product in North America, Europe and Asia. In versions where Publisher uses the name “Heroes of the Pacific” as the title of the Product, the Product and the Gold Master shall be the sole and exclusive property of Developer. Publisher’s sole rights shall be those granted elsewhere in this Agreement.
 
	
             
	
            2.1.1
 	
            Other versions of the Product. Developer, as controller of the underlying software code for “Heroes of the Pacific”, shall decide whether or not to create other video game versions of the Product. Publisher shall have the right of first refusal on reasonable commercial terms to publish any other version of the Product. Under this Agreement other versions include all video game formats know known, including PS2, Xbox, PSP and DS, and their successors (i.e., PS3 is a successor to PS2) and the P.C. The parties agree to negotiate in good faith the terms under which Publisher would publish such products. If the parties are unable to negotiate an agreement within 30 days of Developer noticing Publisher of its desire to create other 
 

 

	
            Page 6 of 25
 

 

 

versions, Developer shall be free to negotiate with other publishers. Prior to completing an agreement with another Publisher, Developer shall offer the Product to Publisher on the same terms and conditions as agreed to with the other publisher. Publisher shall have ten (10) days to elect to match the offer or lose its rights to the other version(s).

	
            2.1.2
 	
            Sequels of the Product. Publisher shall have the first right of negotiation for the next sequel to the Product If the parties are unable to negotiate an agreement within 30 days of Developer noticing Publisher of its desire to create a sequel, Developer shall be free to negotiate with other publishers. Prior to completing an agreement with another Publisher, Developer shall offer the Product to Publisher on the same terms and conditions as agreed to with the other publisher. Publisher shall have ten (10) days to elect to match the offer or lose its rights to the sequel and all future sequels. (For sake of clarity, Publisher has this right for the first sequel. If Publisher and Developer agree to terms for the first sequel, Publisher will have such rights for the second sequel, and so on. Once
Publisher has lost the right to a particular sequel, it has lost the right to all future sequels.)
 
	
            2.1.3
 	
            Agreement not to Compete. So long as the Product is being actively sold by Publisher, Developer shall not create, for its own benefit or for another Publisher any product based on Existing Heroes of the Pacific.
 

	
            2.2
 	
            Developer’s Intellectual Property Rights.
 

	
            (a)
 	
            Notwithstanding anything else contained herein, Developer will retain exclusive ownership and control of all of the Intellectual Property Rights in or relating to the Product. Developer hereby grants to Publisher a royalty-bearing, worldwide, exclusive license to: (i) sell copies of the Product in the format delivered to Publisher by Developer only (excluding without limitation the right to modify the Product or exploit it in source code format or in connection with any other product); and (ii) sublicense such rights to sublicensees.
 
	
            (b)
 	
            For the avoidance of doubt Publisher shall not (and shall not authorize any third party to) (i) decompile, disassemble or otherwise reverse engineer the source code or underlying algorithms of the Product, regardless of name. This paragraph 2.2(b) shall not apply to software code delivered by Developer to Publisher in accordance with paragraph 9 provided that Publisher shall not use any such code for any purpose other than in order to create Translations.
 

	
            3.
 	
            DEVELOPMENT
 

	
            3.1
 	
            The Developer shall develop the Product for the Initial Machines and in the Original Language(s) in accordance with the Specification. Developer will provide or obtain at its sole cost and expense all necessary programming (including, without limitation, the application of technical knowledge, expertise and the services of personnel) and 
 

 

	
            Page 7 of 25
 

 

 

other production materials required to develop the Product, including licenses such as GameSpy. In addition, Publisher will loan Developer five PSP Development Stations and five PC workstations. Such equipment will be returned upon completion of the Product.

	
            3.2
 	
            The Developer shall achieve each of the Milestones by the relevant Milestone Date (Publisher to provide reasonable assistance to Developer in respect of meeting the relevant Milestone). On achieving each Milestone, the Developer shall, if requested to do so by the Publisher, deliver to the Publisher all materials relevant to the particular Milestone including in particular copies of the User Manual and Support Documentation with each Alpha and Beta Version. In addition, Publisher may request Developer deposit Source Code with a mutually agreed upon Escrow Agent in Australia. Publisher shall pay all fees of Escrow Agent. Under the terms of such escrow arrangement, Publisher may request release of the source code from escrow, only if Developer fails to perform such translations or refuses to create them and fails to cure such
default as required by paragraph 9.2, below.
 
	
            3.3
 	
            The Developer shall keep the Publisher promptly and regularly informed of all developments, problems, new concepts and ideas in relation to the Product.
 
	
            3.4
 	
            The Developer shall appoint a Project Manager who shall liaise with the Publisher during development of the Product. In addition, Developer must identify the key team members on Schedule 2. The original key team members and any subsequent changes to the key team members are subject to approval by Publisher.
 
	
            3.5
 	
            The Developer shall be responsible for initial testing on each Version prior to delivery in accordance with customary testing procedures. The Developer shall prior to delivery correct Errors discovered as a result of that testing, and also (in accordance with the procedure set out in this paragraph) any Errors notified to the Developer by the Publisher following the Publisher’s testing of any Alpha or Beta Versions, or other Product materials supplied before delivery of the Alpha Version, Beta Version and the Gold Master.
 
	
            3.6
 	
            Publisher shall be responsible for submitting the Gold Master candidate to the Hardware Manufacturers for approval within five (5) days of receiving the Gold Master approval from the Developer. Developer and Publisher shall work together in good faith to obtain approval of the Gold Master candidate from the Hardware Manufacturers. Should the Gold Master candidate be rejected by either Hardware Manufacturer and such rejection is not due to the acts or omissions of Publisher, and the Developer and Publisher together are unable to correct such deficiencies and obtain approval of the Gold Master by Hardware Manufacturer, Publisher or Developer may terminate this Agreement in accordance with paragraph 16.2.
 
	
            3.7
 	
            Developer shall deliver, at its own cost, the Marketing Deliverables included on Schedule 5. Such Marketing Deliverables are material deliverables for meeting the Milestone commitments.
 

 

 

	
            Page 8 of 25
 

 

 

 

	
            4.
 	
            DELIVERY AND ACCEPTANCE
 

	
            4.1
 	
            Developer shall submit to Publisher a Version of the Product at each Milestone for approval. Publisher shall (acting reasonably) review the submission for compliance with the relevant parts of the Specification at that Milestone and for Publisher’s continued awareness as to the Product status.
 
	
            4.2
 	
            As soon as reasonably practicable, but in any event within 10 (ten) business days following receipt of a Version of the Product at each Milestone, Publisher’s Producer shall notify the Developer in writing that:
 

	
            4.2.1
 	
            it accepts and approves that Version unconditionally; or
 

	
            4.2.2
 	
            it accepts and approves that Version conditionally on correction of the Errors specified; or
 

	
            4.2.3
 	
            it does not accept or approve that Version
 

and shall at the same time notify the Developer of the Errors that it is aware of which are contained in that Version which it has not accepted and approved unconditionally. Publisher shall accept and approve unconditionally each Version unless there is an Error in that Version. 

	
            4.3
 	
            If the Publisher has not have given the Developer such notice under paragraph 4.2 within the said 10 (ten) business days, that Version shall be deemed accepted. 
 
	
            4.4
 	
            As soon as reasonably practicable, but in any event no later than 10 Calendar Days (or such other period as the parties may agree) after receiving notice of non-acceptance pursuant to paragraph 4.2, the Developer shall correct the specified Errors at its sole expense and deliver to the Publisher the corrected Version of the Product. Paragraphs 4.2, 4.3 and this paragraph 4.4 shall then apply again in respect of that corrected Version.
 
	
            4.5
 	
            The Developer shall deliver to the Publisher the Gold Master of each Version by the relevant Delivery Date. For the avoidance of doubt, Developer shall deliver a Gold Master for the Original Language Version of the Product and a multi-language Version for all agreed Translations as required by the Hardware Manufacturers and Publisher, i.e., a US Gold Master for SCEA and one (1) multi-language Gold Master each for SCEE and for SCEI, respectively. The parties acknowledge that in the case of PSP, the Hardware Manufacturer shall have the final right to accept or reject such Master. In the case of rejection, Developer shall respond as if such rejection was made by Publisher and shall respond to such rejection in accordance with this paragraph 4.
 

 

 

	
            Page 9 of 25
 

 

 

 

	
            5.
 	
            CHANGE CONTROL
 

	
            5.1
 	
            A party may at any time by notice in writing to the other party suggest or request a change to the attached Design Document, where the proposed changes will have the effect of varying the Product. Such notice must clearly detail the nature of the proposed change (‘Change Request’).
 
	
            5.2
 	
            Within 5 business days (or any longer period as the parties may reasonably agree) of receiving a Change Request from, Developer must prepare and submit to Publisher a proposal (‘Change Request Quote’) containing at least:
 

	
            5.2.1
 	
            the time within which the Change Request can be implemented.
 

	
            5.2.2
 	
            an analysis of the impact or likely impact of the Change Request and its implementation on:
 

	
            (a)
 	
            the Design Document (including the project plan); and
 	
             

	
            (b)
 	
            the performance or other technical aspect of this Agreement.
 

	
            5.2.3
 	
            the skill type and the days effort the Developer proposes to use to implement the Change Request.
 

	
            5.2.4
 	
            the cost of implementing the Change Request.
 

	
            5.3
 	
            If the proposed Change Request can be reasonably accommodated within the specified existing level of resources, not including overtime work, then being used by the Developer in performing its obligations under this Agreement and without degradation of Developer’s compliance with all applicable performance requirements, the cost of implementing the Change Request is covered by the charges already payable under this Agreement  If implementation of the proposed Change Request will reduce Developer’s cost to fully perform its obligations under this Agreement, the Developer must review the charges payable so as to reflect any projected cost savings.
 
	
            5.4
 	
            The cost quoted by the Developer to implement the Change Request must reflect no more than the same level of profit as the charges payable for this Agreement.
 
	
            5.5
 	
            If Publisher cannot agree with the Developer about any Change Request and that dispute cannot be resolved within 14 business days, either party may refer the dispute for resolution by an independent expert who is required to determine an equitable adjustment to the price to reflect the proposed change in the scope of work. In making a determination under this clause, the independent expert is acting as an expert, and is not acting as an arbitrator. The parties must share equally the costs of the independent expert.
 
	
            5.6
 	
            A Change Request Quote is not accepted unless Publisher accepts it in writing and signed by its representative.
 

 

 

	
            Page 10 of 25
 

 

 

 

	
            5.7
 	
            If Publisher accepts a Change Request Quote:
 

	
            5.7.1
 	
            this Agreement is amended to the extent necessary to incorporate the terms (including costs), specifications and timing in the Change Request Quote.
 
	
            5.7.2
 	
            the Developer must carry out, implement and complete the Change Request on the terms of the Change Request Quote.
 

	
            6.
 	
            MEDIA FORMAT, COPY PROTECTION
 

The final media format of the Product must by determined by the Publisher prior to completion of “pre production” (as detailed in the attached design Document). Publisher will notify Developer on or before the completion of the Product’s beta milestone of the copy protection scheme to be used on the Product.

	
            7.
 	
            QUALITY ASSURANCE (“QA”)
 

Publisher acknowledges that it will be responsible of the Product’s QA. In particular, Publisher will be primarily responsible for general QA activities, pre-submission, submission, compatibility and localization QA activities. Developer will be responsible for basic Product QA only (for example, the main function of Developer’s QA will be to act as an interface between the Publisher’s QA activities and the Product development team).

	
            8.
 	
            LICENSE
 

Developer hereby grants to Publisher, and Publisher hereby accepts, the exclusive right to manufacture, distribute, sell and market the Product in the Territory through any and all channels of distribution known now or created in the future during the Term of this Agreement. Subject as provided in this Agreement, the publishing of the Product including manufacturing, pricing, distribution, marketing, packaging and artwork shall be the responsibility and the obligation of the Publisher. Publisher shall have the right, subject to approval of Developer, such approval not to be unreasonably withheld, to sublicense the rights licensed hereunder to third parties.

	
            9.
 	
            TRANSLATION
 

	
            9.1
 	
            At its own cost, Publisher shall be responsible for translating and integrating localized text and voice over material and generating a multi-language Gold Master(s) embodying the Translations. Unless otherwise agreed in writing between the parties and subject to the payment of Developer’s reasonable costs as detailed in Schedule 1, the Developer will provide the services to translate and integrate localized text and 
 

 

	
            Page 11 of 25
 

 

 

voice over materials and generate a multi-language Gold Master(s) embodying the Translation.

	
            9.2
 	
            If the Developer fails to perform such translations or refuses to create them and fails to cure such default within thirty (30) days of receipt of notice from Publisher, Publisher may use a third party for the Translation, the Developer shall supply the Publisher with all Original Language text and/or text related graphics and/or dialogue featured in the relevant Version, to the extent not previously delivered. Publisher shall recover the reasonable cost of any such translations out of Profits earned.
 
	
            9.3
 	
            If pursuant to this Section 9 the Publisher uses a third party to carry out the Translation, the Publisher will sign, and will ensure that its chosen third party signs, a confidentiality undertaking reasonably specified by the Developer which will include, without limitation, undertakings that the Source Code, and any other material, information, data or other things of the Developer will not be used by the persons signing for any purpose other than the development of the Translation and that all such things will be held securely at all times and returned to the Developer when work on the Translation is complete. Developer shall deliver to Publisher any additional work (including part of the Developer’s Tools and Technology) which is necessary to the Publisher in order to complete a Translation.
 

	
            10.
 	
            PROFIT SHARING
 	
             

	
            10.1
 	
            The Publisher shall pay the Developer the following share of profits as follows:
 

	
             
	
            10.1.1
 	
            The Publisher shall retain one hundred percent (100%) of all cash received from any sources until the Publisher has recovered all of Publisher’s reasonable out of pocket costs, including payments made to Developer related to the Product, plus xxxxxx. Publisher will provide Developer with a detailed accounting of all out of pocket expenses charged to the project.
 
	
             
	
            10.1.2
 	
            Once the Publisher has recovered the costs in 10.1.1, the Publisher shall retain xxxxxx percent (xxxxxx) of any remaining monies and pay to Developer xxxxxx percent (xxxxxx).
 
	
            10.2
 	
            Within forty-five (45) days of the Quarter End following the date on which the Publisher first commercially releases a Version of the Product and of every subsequent Quarter End the Publisher shall provide the Developer with a written Profit Statement specifying in sufficient detail (i) amounts spent in satisfaction of the Marketing Guarantee (as defined below) in respect of that quarter; and (ii) the calculations of Cash Receipts and Expenses, and the Profit (if any) due to the Developer in respect of that quarter. Each Profit Statement shall be accompanied by a wire transfer for any monies due, save that if the Publisher is prevented by the law of any country from making payments outside that country it shall be entities to pay the relevant sums to the Developer in that country. All sums payable to Developer
pursuant to this Agreement (including the Development Advances and Profits) shall be made in U.S. Dollars. At each Quarter End the Publisher may retain from Profits 
 
			

 

	
            Page 12 of 25
 

 

 

payable a reserve against returns or other credits in respect of Units sold by the Publisher hereunder in the manner set out in paragraph 10.2.1. 

	
             
	
            10.2.1
 	
            The Publisher will withhold a general reserve against rebates, deductions, price protection, discounts, allowances or refunds for returned, defective or discounted units, exchanges, credits and the like (the “General Reserve”) either:
 
	
             
	
            10.2.1.1
 	
            where Publisher is responsible for the above described items, a reserve not to exceed Twenty percent (20%) of Gross Wholesale Sales (“Gross Wholesale Sales” is defined as gross amounts received by Publisher from the sale, distribution or ancillary exploitation attributable to the Product), or
 
	
             
	
            10.2.1.2
 	
            where publisher is not responsible for the above described items, in a pro rata amount of any such reserve withheld by Publisher’s Co-Publishers or sub-licensees of the product. Such pro-rata amount shall be based on the applicable Royalty Rate in paragraph 10.1. (For example, should a Co-Publisher withhold from Publisher $1,000 in payments which would fall under paragraph 10.1.1 above, Publisher would withhold $350 from Developer in a reserve. When Co-Publisher releases Publisher’s reserve, Publisher will promptly release Developer’s reserve.)
 
	
             
	
            10.2.2
 	
            In either case under paragraph 10.2.1, such reserve shall be liquidated on a twelve month rolling basis. 
 
	
            10.3
 	
            Publisher will maintain accurate accounts, books and records that report the marketing, distribution and sales and other commercial exploitation of each Version of the Product which has been commercially released by the Publisher and any sub-licensing by the Publisher. Developer shall have the right to designate a certified public accountant (“the Auditor”) on Developer’s behalf to examine those accounts, books and records solely for the purpose of verifying the expenditures of the Marketing Guarantee and verifying the accuracy of the Royalty Statements under paragraph 10.2 and the Royalty payable under this Agreement. Developer’s Auditor may only make such examination during regular business hours and upon reasonable notice and in manner that is at the Publisher’s reasonable convenience and
not disruptive to the Publisher’s business. Each examination will take place at the place the Publisher normally keeps the accounts, books and records to be examined, which is presently in Sausalito, California. Developer shall be limited to one such examination each 12 months while the Product is being commercially exploited and for 3 years thereafter. Publisher’s accounts, books and records relating to the Marketing Guarantee and to a particular Profitability Statement may be examined only within 36 months after the date the Statement was rendered. Developer shall not have the right to examine Publisher’s accounts, books or records relating to a particular Profitability Statement more than once. Prior to the commencement of any examination of the Publisher’s accounts, books and records under this Agreement, 
 
				

 

	
            Page 13 of 25
 

 

 

Developer shall cause the Auditor to sign a letter and/or agreement which acknowledges the confidentiality of the Publisher’s accounts, books and records in the form set out in Schedule 3. The fees of the Auditor shall be at the sole expense of Developer unless such audit discovers previously undiscovered errors in favor of Publisher exceeding both 5% and $2,500 for the entire time period covered by that audit, in which case the Publisher shall reimburse actual and reasonable Auditor’s fees for that audit to Developer in addition to make good the amounts of such errors and pay interest on such unpaid sums at the statutory rate of interest under California law.

	
            10.4
 	
            Each Profitability Statement shall be final and binding on Developer unless Developer has given Publisher written notice of objection stating the matters to which it disagrees within 3 years of the issue of the Profitability Statements, and (if the Publisher does not accept any of those objections), unless the Developer has issued and served legal proceedings within 2 years of the date of the Developer’s relevant notice of objection.
 

	
            11.
 	
            DEVELOPMENT COST
 

	
            11.1
 	
            Development Cost of the Product in accordance with this Agreement shall be the relevant amount set out in Schedule 1 payable to the Developer by the Publisher in accordance with the Milestone Payment Schedule detailed in Schedule 1. 
 
	
            11.2
 	
            Without prejudice to the provisions of paragraph 4 above, Publisher shall use reasonable endeavors to expedite its acceptance of deliverables in relation to a Milestone.
 
	
            11.3
 	
            Developer may raise an invoice on the Publisher upon notice by the Publisher of its acceptance of each Milestone pursuant to Paragraph 4 and such invoice is due within ten (10) calendar days of this acceptance.
 
	
            11.4
 	
            The Publisher shall have no obligation to make any payments to the Developer under this Agreement for anything save for the payment of the Development Cost referred to in this paragraph 11, Profits under paragraph 10 and payments (if relevant) under paragraph 9. Nevertheless, any other additional payments that the Publisher, in its discretion, makes to the Developer in relation to the Developer’s work under this Agreement for any reason shall be treated as a further Development Cost payment and fully recoupable from Profits payable under this Agreement, unless otherwise agreed in writing.
 
	
            11.5
 	
            All Development Costs paid by Publisher to the Developer together with payments (if relevant) under paragraph 9 (except payment of Profits) shall be recoupable at the rate of 100% out of the cash received by Publisher for sale and license of the Product.
 

	
            11.6
 	
            The parties agree that no finder’s fees are payable to any party under this transaction.
 

 

 

	
            Page 14 of 25
 

 

 

 

	
            12.
 	
            INDEMNIFICATION.
 

	
            12.1
 	
            Developer Indemnification. Subject to the provisions of paragraph 12.3 (Indemnification Procedures), Developer will indemnify, defend and hold harmless Publisher and its affiliates, officers, directors, employees and agents from and against any and all losses, liabilities, claims, obligations, costs and expenses (including, without limitation, reasonable attorneys’ fees) which arise in connection with any breach or alleged breach by Developer of any of its representations and warranties set forth in paragraph 14 (Warranties of Developer). Notwithstanding anything in this paragraph 12 to the contrary, in the event that, by reason of a claim by a third party of infringement based on the Product, Publisher is temporarily or permanently enjoined from distributing the Product developed
under this Agreement, then, if Developer is unable, within sixty (60) days from the signing of the order of injunction, to provide Publisher with a non-infringing Product, Publisher shall have the right to obtain a license from the third party to continue with the marketing, distribution and sale of the Product(s) and Developer shall reimburse Publisher for any reasonable license/settlement fee and related reasonable legal expenses paid by Publisher to the third party, unless Developer ultimately prevails in the litigation; if Publisher elects this remedy and obtains such a license, such remedy shall be Publisher’s sole and exclusive remedy in connection with such claim.
 
	
            12.2
 	
            Publisher Indemnification. Subject to the provisions of paragraph 12.3 (Indemnification Procedures), Publisher agrees to defend, indemnify and hold harmless Developer and its affiliates, officers, directors, employees and agents from and against any and all losses, liabilities, claims, obligations, costs and expenses (including, without limitation, reasonable attorneys’ fees) which arise in connection with the breach or an alleged breach by Publisher of any of its warranties set forth in paragraph 15 (Warranties of Publisher).
 
	
            12.3
 	
            Indemnification Procedures. If a third party asserts any claim or allegation which, if proven, would trigger the indemnification obligations set forth in paragraphs 12.1 and 12.2, the indemnifying party shall be notified promptly of such claim by the indemnified party and given control of the defense and/or settlement thereof. After notice from the indemnifying party to the indemnified party of its election to assume the defense of such claim or action, the indemnifying party shall not be liable to the indemnified party under this paragraph 12 for any legal or other expenses subsequently incurred by the indemnified party in connection with the defense thereof. No indemnifying party shall, without the prior written consent of the indemnified party, effect any settlement of any pending or
threatened proceeding in respect of which any indemnified party is a party and indemnity could have been sought hereunder by such indemnified party, unless such settlement includes an unconditional release of such indemnified party from all such liability on claims that are the subject matter of such proceeding. Moreover Developer shall not, in the absence of the consent of Publisher (which shall not be unreasonably withheld or delayed), effect any settlement of any pending, threatened or actual proceeding or claim which has the effect of compromising in any way the rights, interests and 
 

 

	
            Page 15 of 25
 

 

 

licenses in the Product or the license granted to Publisher hereunder. The foregoing provisions of this paragraph 12 state the entirety of the parties’ obligations with respect to any claim by any third party.

	
            12.4
 	
            Developer shall procure and maintain for itself and its employees and contractors all insurance coverage required by Australian law. Developer also agrees to maintain general liability and errors and omissions insurance, in the amount of at least AU$1,000,000. Upon request, Developer shall furnish Publisher with an up-to-date certificate of insurance evidencing such coverage.
 

	
            13.
 	
            MARKETING
 

	
            13.1
 	
            The parties will work together to determine the optimal time and manner of announcing the Product and having the website “go live”. Developer will own, operate and maintain the “official” website for the “Heroes of the Pacific” Product and Publisher and Developer shall cooperate with each other on providing content for such website.
 
	
            13.2
 	
            Publisher shall, subject to the terms of this Agreement and consistent with its own policies, practices and procedures, use commercially reasonable efforts to promote and exploit the Product throughout the Territory within a reasonable period following the hardware manufacture’s approval.
 
	
            13.3
 	
            Publisher shall furnish Developer without charge thirty (30) samples of each English language Version of the Product distributed hereunder, such samples not to be resold by Developer. Developer shall have the right to purchase additional units of the Product at Publisher’s cost therefore, such copies not to be resold or used for any advertising or promotional activities (except with Publisher’s prior written consent).
 
	
            13.4
 	
            Publisher shall present all marketing materials to Developer for review and approval, not to be unreasonably withheld. Developer shall have ten (10) days to approve or reject such materials. In the case where Developer does not respond within ten (10) days, the marketing materials are deemed approved.
 
	
            13.5
 	
            Publisher shall be responsible for setting the initial suggested retail price (SRP) and any subsequent changes to said SRP. Such pricing shall represent Publishers best efforts to properly price the Product taking into account, the perceived quality or the Product, the market and pricing of any competitive products. In the event that Publisher deems it necessary to change the SRP, Publisher shall inform Developer of such change and the reasons for such change.
 

	
            14.
 	
            WARRANTIES OF DEVELOPER
 	
             

	
            14.1
 	
            The Developer represents and warrants that:
 

 

 

	
            Page 16 of 25
 

 

 

 

	
            (a)
 	
            it will at all material times own or control all Intellectual Property Rights to the Product, free from any third party right or interest which would impair the rights of the Publisher under this Agreement;
 
	
            (b)
 	
            it has and will at all material times have full power and authority to enter into and perform this Agreement and to grant the rights expressed to be granted by it;
 
	
            (c)
 	
            nothing contained in the Product will infringe a third party’s Intellectual Property Rights, of a right of privacy or name or image or likeness, or become liable under unfair competition law;
 
	
            (d)
 	
            nothing contained in the Product will be obscene or libelous or otherwise in breach of any relevant laws or regulations of any territory which relates to health and safety;
 
	
            (e)
 	
            each Gold Master will be Virus Free on its Acceptance Date and each Gold Master shall not contain any software routine designed to disable a computer Product automatically with the passage of time or by the intervention of a third party other than a licensee of the Gold Master or Publisher;
 

	
            (f)
 	
            the Product will be an original work created by the Developer;
 

	
            (g)
 	
            the execution of this Agreement will not put the Developer in breach of any other agreement including an exclusive term agreement;
 
	
            (h)
 	
            the Developer has received no notice of any claim pending or threatened against Developer based on infringement of the rights set forth in this Agreement;
 
	
            (i)
 	
            the Developer has not sold, assigned, leased, licensed or in any other way disposed of or encumbered the rights granted to Publisher hereunder in such a way as to materially affect the rights granted to Publisher hereunder, and Developer will not sell, assign, lease, license or in any other way dispose of or encumber any of such rights in such a manner as to encumber the rights granted to Publisher hereunder;
 
	
            (j)
 	
            Developer will not use Publisher’s name or logos or the names of any of Publisher’s products for any purpose, including, but not limited to, advertising or promotional purposes, except as provided in this Agreement or with the prior written consent of Publisher.
 

	
            15.
 	
            WARRANTIES OF PUBLISHER
 	
             

	
            15.1
 	
            The Publisher warrants and represents:
 

	
            (a)
 	
            it has and will at all material times have full power and authority to enter into and perform this Agreement and to grant the rights granted;
 

 

 

	
            Page 17 of 25
 

 

 

 

	
             
	
            (b)
 	
            nothing contained in this Agreement or in the performance of this Agreement will place Publisher in breach of any other contract or obligation.
 
	
             
	
            (c)
 	
            Publisher does not know or have reason to know that anything Publisher provides that is or will be contained in the Product does or will violate or infringe any Intellectual Property Rights, whether statutory or common law of any third party in any jurisdiction, or contain any libelous or otherwise unlawful material;
 
	
             
	
            (d)
 	
            Publisher has received no notice of any claim pending or threatened against Publisher based on infringement of the rights set forth in this Agreement; and
 
	
             
	
            (e)
 	
            Publisher warrants that it has the financial ability to enter into and perform all its obligations under this Agreement.
 
	
            15.2
 	
            Disclaimer. EXCEPT FOR THE WARRANTIES EXPRESSLY SET FORTH IN THIS AGREEMENT, THE PARTIES HEREBY DISCLAIM ALL OTHER WARRANTIES, WHETHER EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION, ANY AND ALL WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, AND NON-INFRINGEMENT OF THIRD PARTY RIGHTS.
 
			

	
            16.
 	
            TERMINATION
 

	
            16.1
 	
            Either party shall be entitled, without prejudice to its other rights, to terminate the Agreement with immediate effect by giving written notice to the other party if the other party is in breach of any of its material obligations under this Agreement and, if the breach is capable of remedy, it has continued unremedied for a period of thirty (30) calendar days after the other party has been given written notice specifying the breach and the steps required to remedy it. Failure to pay any monies due under this Agreement is a material breach and subject to cure under this paragraph 16.1.
 
	
            16.2
 	
            If Sony Computer Entertainment of America rejects the concept submittal or the Gold Master candidates for any reason, except due to Publisher’s act or omission, Publisher may cancel this agreement for the non-approved product.
 
	
            16.3
 	
            Either party shall be entitled, without prejudice to its other rights, to terminate the Agreement with immediate effect by giving written notice to the other party if the other party shall have a receiver or an administrative receiver or an administrator or liquidator appointed over it (except a liquidator appointed for the purpose of amalgamation or reconstruction) or shall pass a resolution for winding up or shall enter into any voluntary agreement with its creditors or shall become bankrupt or file for voluntary bankruptcy or anything analogous to any of the above under the law of any jurisdiction occurs in relation to such party.
 
	
            16.4
 	
            If at any time, Developer is more than thirty days late delivering a Milestone, and such event is not due to the acts or omissions of Publisher, Publisher may Terminate 
 

 

	
            Page 18 of 25
 

 

 

this Agreement. In such case, as Publisher’s sole remedy, unless Developer is willfully not delivering a Milestone, shall be termination.

	
            16.5
 	
            Subject to clauses 16.1 and 16.3 and notwithstanding any other provision contained in this Agreement, Developer cannot terminate this Agreement prior to US third party hardware manufacturer final approval (ready for release to manufacturing).
 

	
            17.
 	
            CONSEQUENCES OF TERMINATION
 

	
            17.1
 	
            Any termination of the Agreement shall not affect any accrued rights or liabilities of either party, nor any other rights of the terminating party in relation to the matter giving rise to the termination, nor shall it affect the coming into force or the continuance in force of any provisions of this Agreement which are expressly intended to come into or to continue in force on or after such termination. Termination of this Agreement by the Publisher under paragraph 16 shall not affect any Version whose Acceptance Date has already occurred, and this Agreement shall continue to apply in all respects to any such Version.
 
	
            17.2
 	
            In the event that this Agreement is terminated in accordance with Paragraph 16.2 or 16.4, Publisher will pay Developer any expenses incurred (but not damages for loss of profit) which are substantiated and are properly incurred by the Developer up to the date of termination to the extent that those liabilities or expenses cannot be mitigated, provided that such expenses do not exceed the total fees payable to the Developer under this Agreement.
 

	
            18.
 	
            CREDITS AND ARTWORK
 

	
            18.1
 	
            Publisher acknowledges that Developer’s Name and logo shall appear on a splash screen during the “boot-up” sequence of the Product, subject to approval of the Hardware Manufacturers. Subject to such approvals, whenever Publisher’s name and/or logo appears, Developer’s name and/or logo shall appear on the Product packaging, User Manuals, demo discs and self-playing demos, screenshots, and full-page print advertising, in approximately the same size of Publishers logo on the Product and in the credits of all Versions of the Product. In addition Developer may designate a reasonable number of persons to receive individual text credits in the Product whose names and capacities Developer shall submit to Publisher prior to final delivery of the Product. On Publisher’s request, Developer shall
promptly supply Publisher with any transparencies that might be required by it for the purposes of this paragraph. Publisher’s obligations under this paragraph are subject to the final approval of the applicable Hardware Manufacturer. An inadvertent failure by Publisher to include Developer’s name or logo shall not be a material breach of this Agreement, provided that Publisher shall cure any such failure on a prospective basis once Publisher has been notified of same.
 
	
            18.2
 	
            Developer shall supply Publisher on reasonable request (so as not to interfere with Developer’s efforts to complete and deliver the Product as contemplated hereunder) 
 

 

	
            Page 19 of 25
 

 

 

with any relevant materials it may have that may be useful to Publisher for artwork, packaging, merchandising, marketing and advertising including play through videos, demo discs, screenshots and graphics of characters.

	
            18.3
 	
            Publisher shall cause copyright, patent and trademark notices to appear on each unit of the Product (other than on screen notices, the production and placement of which shall be Developer’s responsibility) and on the back of the Product packaging and User Manual and advertising materials as may be designated and approved by Developer.
 

	
            19.
 	
            SUPPORT
 

	
            19.1
 	
            The Developer shall at its sole expense correct any Errors in any Gold Master which become apparent after that Gold Master has been accepted by the Publisher and which the Publisher notifies to the Developer, and shall carry out any other alterations to the Gold Master which the Publisher notifies the Developer are needed for any of the following reasons: to obtain the rating from the applicable rating board (such as ESRB in the U.S.) as specified in the Specification; to obtain the approval of Hardware Manufacturers; or to ensure that the Product conforms with the Specification. The Developer shall start correction of Errors and making of alterations within 5 days of receiving the Publisher’s notice and shall rectify all Errors and make all alterations set out in
the notice as soon as reasonably practicable thereafter. Developer’s obligations under this paragraph 19.1 in respect of each Version shall terminate twelve (12) months after the initial commercial release of the Product pursuant to this Agreement.
 
	
             
	
            19.1.1
 	
            The parties shall work together so that the Product does not violate the guidelines for ratings issued by ESRB in the United States and ELSPA in the UK or censorship ratings in other countries in the Territory. In any case where the Product does not meet the guidelines, Developer shall be responsible at its own cost to promptly correct the Product. 
 
	
            19.2
 	
            From the date that the Publisher accepts any Gold Master, the Developer will provide technical support to the Publisher only (not to End Users under any circumstances) in respect of that Gold Master without further charge. This support will continue for a period of 7 calendar months from the date of first commercial release by Publisher and will be by means of e-mail and telephone on Working Days and during regular business hours, Melbourne Time. Developer will use reasonable endeavors to provide a service out of hours and on non-Working Days in the event of exigent circumstances. The support will be provided by a person with reasonable technical knowledge of the Product. Any questions that cannot be dealt with immediately will be responded to with reasonable promptness. Failure by Developer to provide such support
shall not be a material breach of this Agreement.
 

 

 

	
            Page 20 of 25
 

 

 

 

	
            20.
 	
            NOTICES
 

Any notice required or permitted by this Agreement shall be in writing and shall be given by fax (if confirmed by delivery of the hard copy as provided herein), courier or other personal delivery or by registered or certified mail at the appropriate address below or at a substitute address designated by notice by the party concerned:

	
            IR Gurus Interactive

Level 1, 96-106 Pelham Street, Carlton, Victoria 3053, Australia Attn:      Mike Fegan
 	
            Red Mile Entertainment.

4000 Bridgeway

Suite 101

Sausalito, CA 94965

Attention: CFO
 
	
            Phone: 011 613 9347 5044

Fax: 011 613 9347 5233
 	
            Phone: 1 (415) 339-4245

Fax: 1 (415) 339-4249
 

Notices shall be deemed given when faxed (if confirmed by delivery of the hard copy as provided herein), delivered by a courier or, in the case of mail, upon receipt, with written notification of said receipt. 

	
            21.
 	
            CONFIDENTIALITY
 

	
            21.1
 	
            Each party to this Agreement acknowledges that it will have access to proprietary or confidential information of the other party including, but not limited to, the terms of this Agreement, the documentation and materials produced in accordance with this Agreement, marketing information, manufacturing information, customer or client information and development techniques and know-how (“the Confidential Information”). During the Term of this Agreement, each party will regard and preserve as strictly confidential the Confidential Information and will not use the Confidential Information or disclose the Confidential Information to a third party other than is strictly necessary in order to fulfill an obligation under this Agreement.
 
	
            21.2
 	
            The obligations of confidentiality and non-use specified in paragraph 21.1 will not apply to any Confidential Information of one party which:
 
	
             
	
            21.2.1
 	
            was known by the other party prior to the date of this Agreement and not obtained or derived, directly or indirectly, from such party or its Affiliates or if so obtained or derived, was lawfully obtained or derived and is not held subject to any confidentiality or non-use obligations;
 
	
             
	
            21.2.2
 	
            is or becomes public or available to the general public otherwise than through any act or default of the other party or any breach of a confidentiality obligation to the disclosing party by a third party;
 
	
             
	
            21.2.3
 	
            is obtained or derived prior or subsequent to the date of this Agreement from a third party which, to the best knowledge of the party acquiring such information, is lawfully in possession of such information and does not 
 

 

	
            Page 21 of 25
 

 

 

hold such information subject to any confidentiality or non-use obligations;

	
             
	
            21.2.4
 	
            is independently developed by such party without use of the other party’s confidential information; or
 
	
             
	
            21.2.5
 	
            is required to be disclosed by one of the parties pursuant to an applicable law or under a government or court order provided that:
 
	
             
	
            (a)
 	
            the obligations of confidentiality and non-use will continue to the fullest extend not in conflict with such law or order; and
 
	
             
	
            (b)
 	
            if and when a party is required to disclose such Confidential Information pursuant to any such law or order, such party will give notice to the other party to allow such party to make efforts to obtain a protective order or take such other actions as will prevent or limit, to the fullest extent possible, public access to, or disclosure of, such Confidential Information.
 
	
            21.3
 	
            It is further understood and agreed that money damages would not be a sufficient remedy for any breach of either party’s obligations under this paragraph 21 by the other party, or any employees, consultants or other persons under the other party’s supervision and that the disclosing party shall be entitled to specific performance, including, without limitation, injunctive relief, as a remedy for any such breach. The parties agree that the damaging party shall reimburse the costs and expenses (including, without limitation, reasonable attorneys’ fees) incurred by the damaged party in connection with the enforcement of this Agreement.
 
	
            21.4
 	
            In the event of any termination or expiration of this Agreement, each party shall promptly return to the other party all Confidential Information of such other party in tangible form, the receiving party shall certify in a writing signed by an authorized officer or representative that the foregoing have been shredded and disposed of in a secure manner.
 

	
            22.
 	
            GENERAL
 

	
            22.1
 	
            No addition to or modification of any provision of this Agreement shall be binding upon the parties unless made by written instrument signed by a duly authorized representative of each of the parties. Each party confirms it is not relying on any representation or commitment by the other in entering into this Agreement except as set out in this Agreement. This paragraph 22.1 shall not apply to any deliberate misrepresentations made before this Agreement was made.
 
	
            22.2
 	
            Developer may not assign this Agreement, nor delegate or subcontract any of its obligations hereunder, to any third party without the prior written consent of Publisher, which consent will not be unreasonably withheld; provided, however that Developer may assign its right to receive payments of the Development Advance 
 

 

	
            Page 22 of 25
 

 

 

and/or Profits hereunder without the consent of Publisher. Publisher may assign this Agreement to a purchaser of the business of Publisher or substantially all the assets of the business without the consent of Developer, but save as aforesaid Publisher may not assign this Agreement, nor delegate or subcontract any of its obligations hereunder, to any third party without the prior written consent of Developer, which consent will not be unreasonably withheld. Subject to the foregoing, this Agreement shall bind and inure to the benefit of the parties, and their respective successors and permitted assigns.

	
            22.3
 	
            Neither party is the legal representative, agent, joint venturer, partner, or employee of the other party for any purpose whatsoever. Neither party has any right or authority to assume or create any obligations of any kind or to make any representation or warranty on behalf of the other party, whether express or implied, or to bind the other party in any respect whatsoever.
 
	
            22.4
 	
            No failure or delay by either party in exercising any right, power, or remedy under this Agreement shall operate as a waiver of any such right, power or remedy. No waiver or modification of any provision of this Agreement shall be effective unless in writing and signed by both parties. Any waiver by either party of any provision of this Agreement shall not be construed as a waiver of any other provision of this Agreement, nor shall such waiver operate as or be construed as a waiver of such provision respecting any future event or circumstance.
 
	
            22.5
 	
            If any provision or wording of this Agreement is held by a judicial authority having jurisdiction over the matter to be unlawful or unenforceable for any purpose, it shall be deemed excluded for that purpose and the rest of this Agreement shall remain in full force and effect. The parties will negotiate in good faith a valid and enforceable provision to replace the excluded provision as closely as reasonably possible.
 
	
            22.6
 	
            FORCE MAJUERE. In the event that either party is prevented from fulfilling its material obligations hereunder or said obligations are materially interfered with by reason of events of war, fire, flood, earthquake, explosion or other natural disaster, industrial action or any other reason beyond the reasonable control of that party, such obligation shall be delayed until it can be performed. The party claiming excusable delay must promptly notify the other party of such delay. If the delay continues for more than 45 days the other party may terminate this Agreement by giving 45 days prior written notice to the delaying party provided that the Agreement will not terminate if the party claiming excusable delay substantially performs the material obligation which has been delayed within such 45 day notice period from the other
party.
 
	
            22.7
 	
            EXCEPT FOR THE OBLIGATIONS IN PARAGRAPH 12, NEITHER PARTY SHALL BE LIABLE FOR ANY INCIDENTAL, INDIRECT, CONSEQUENTIAL, OR SPECIAL DAMAGES ARISING OUT OF THIS AGREEMENT OR ANY OBLIGATION ARISING THEREFROM OR OTHERWISE, WHETHER LIABILITY IS ASSERTED IN CONTRACT OR TORT (INCLUDING NEGLIGENCE AND STRICT PRODUCT LIABILITY), AND IRRESPECTIVE OF 
 

 

	
            Page 23 of 25
 

 

 

WHETHER IT HAS ADVISED OR HAS BEEN ADVISED OF THE POSSIBILITY OF ANY SUCH LOSS OR DAMAGE.

	
            22.8
 	
            Each party’s services and rights herein granted are special, unique, extraordinary and intellectual in character and value such that the loss thereof could not be reasonably compensable in damages in an action at law. Accordingly, the other party shall be entitled to seek equitable relief by way of injunction or otherwise to prevent the breach or continued breach thereof. Should Publisher’s Co-Publisher in a particular country or region breach the Agreement, Developer may only seek injunction in the country or region where such breach occurred.
 
	
            22.9
 	
            If any dispute arises in connection with this Agreement, either party may convene an extraordinary meeting on their respective Developer’s Project Manager and Publisher’s Producer by serving not less than 3 Working Days notice on the other. At such meeting the representatives shall negotiate in good faith, and in a timely manner, in an effort to resolve the dispute. If the Developer’s Project Manager and Publisher’s Producer cannot resolve the dispute, then either party may refer the dispute to the respective chief executive officers of the parties by serving notice on the other party. The chief executive officers shall negotiate in good faith, and in a timely manner, in an effort to resolve the dispute. Nothing in this paragraph shall limit the ability of either party to seek legal redress in respect of the
dispute in a court of law.
 
	
            22.10
 	
            Developer may change their Project Manager and Publisher may change the Publisher’s Producer at any time by giving the other party 5 Working Days’ notice of the change and such notice shall stipulate the new Developer’s Project Manager or Publisher’s Producer’s name, address, telephone number and any other relevant contact details. Publisher shall have right to approve the Developer’s project manager, shall approval not to be unreasonably withheld.
 
	
            22.11
 	
            Until one year has passed from the initial release of the United States version of the Product, this Agreement and all questions arising hereunder shall be governed by and construed in accordance with the laws and decisions of the State of California without giving effect to the principles thereof relating to conflicts of law. After such period, the Agreement will be governed by and interpreted in accordance with the substantive laws of Australia. Subject to the above, ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST EITHER PARTY ARISING OUT OF OR RELATING TO THIS AGREEMENT MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION IN THE STATE OF CALIFORNIA UNTIL THE TURNOVER DATE AND THEREAFTER IN ANY COURT OF COMPETENT JURISDICTION IN AUSTRALIA, AND BY EXECUTION AND DELIVERY OF AGREEMENT EACH PARTY ACCEPTS FOR ITSELF AND
IN CONNECTION WITH ITS LICENSED PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE NONEXCLUSIVE JURISDICTION OF THE AFORESAID COURTS AND WAIVES ANY DEFENSE OF FORUM NON CONVENIENS AND IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH THIS AGREEMENT. Nothing herein shall affect the right to serve process in any other 
 

 

	
            Page 24 of 25
 

 

 

manner permitted by law or shall limit the right of either party to bring proceedings against the other party in the courts of any other jurisdiction. The parties stipulate and agree that any judgment relating to this Agreement, which is entered in a court located within California, shall be binding throughout the world and may be sued upon, docketed, entered and/or enforced, without challenge or opposition on their part and without re-trial of any of the issues which give rise to such judgment in any state, county, province, commonwealth, or territory having jurisdiction over their respective persons or properties. The parties recognize that the above agreement to submit all controversies to forever-binding adjudication by a court located within San Francisco, California does not constitute a confession of judgment on anybody’s part,
but is simply an agreement, similar to an arbitration agreement, to have particular controversies resolved, once and for all, by a specified tribunal. Notwithstanding the foregoing, all parties agree that equitable relief, including injunctive and specific performance, may be necessary and proper to enforce their obligations and commitments under this paragraph, including without limitation under paragraphs 2, 12, 14, 15, 16, 17, 18 and 21 of this Agreement and this choice of jurisdiction or venue does not prevent either party from seeking such relief in any court of competent jurisdiction throughout the world.

	
            22.12
 	
            In the event any provision of this Agreement shall be held invalid or unenforceable, it shall be deemed modified only to the extent necessary to make it lawful. To effect such modification, the said provision shall be deemed deleted, added to and/or rewritten, whichever shall most fully preserve the intention of the parties as originally expressed herein.
 
	
            22.13
 	
            The prevailing party in any litigation between the parties shall recover from the other party its reasonable legal fees and expenses.
 

This Agreement may be executed in two (2) or more counterparts, each of which shall be deemed an original, and all of which together shall constitute one and the same instrument.

ACCORDINGLY this Agreement has been entered into by the parties on the date set out on page 1.

 

	
            Red Mile Entertainment, Inc.
 	
            IR Gurus Interactive Pty. Ltd.
 

 

 

 

	
             
	
            /s/Ed Roffman
 	
            /s/ Mike Fegan
 
	
            Ed Roffman, CFO
 	
            Mike Fegan
 	
             

				

 

 

 

	
            Page 25 of 25

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00103-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00103-of-00352.parquet"}]]