Document:

Exhibit 10.2

SOFTWARE LICENSE AGREEMENT 

 

GENERAL TERMS 

 

This agreement is made and entered into as of July 19, 2005 (the “Effective Date”) by and between UBISOFT Entertainment S.A., a French corporation with offices at 28 rue Armand Carrel, 93108 Montreuil sous Bois, France (“UBISOFT”), and Red Mile Entertainment Inc. with its registered office at 4000 Bridgeway, Suite 101, Sausalito, CA 94965, USA a company incorporated under the Laws of Florida (“LICENSOR”).

 

Should any provision included in the Specific Terms of the Software License Agreement (“Specific Terms”) be contrary to the General Terms of the Software License Agreement (“General Terms”), the Specific Terms shall prevail. The Specific Terms and General Terms shall be jointly referred to as the “Agreement”.

 

UBISOFT and LICENSOR being hereinafter jointly referred to as the “Parties”.

 

Recitals

 

LICENSOR is engaged in the business of development and production of video games for various platforms. 

 

UBISOFT is engaged in the business of publishing, distributing game software in the “Territory” (as hereinafter defined).

 

UBISOFT desires to obtain and LICENSOR is willing to grant to UBISOFT the exclusive license to manufacture, market, publish, sell and distribute the Game throughout the Territory on the terms and conditions set forth herein.

 

Therefore, in consideration of the mutual covenants hereinafter set forth and other good and valuable consideration, the Parties hereto agree as follows:

 

1. Definitions

 

“Add-on” shall mean an interactive entertainment software product or program for any platform (including without limitation Sony Playstation 2, Sony Playstation 3, Sony PSP, Microsoft X-Box, Microsoft X-Box 2, Nintendo Game Cube, Nintendo Game Boy Color, Nintendo Gameboy Advance, Nintendo DS, Internet (including without limitation streaming, massively multiplayer online, and downloading), PC and any successor console platforms or new platforms and hardware developed during the Term), which includes new elements to the Game, including without limitation new maps, levels, missions, scenario, screenplays, and which runs with or without the pre-existing Game.

 

 “B-to-B” or “Business to Business” shall mean the sale of the Game through special operations or partnership with other industries.

 

 “Bundle or OEM” shall mean the distribution of the Game by way of pre-installing the Game on a PC or marketing a copy of the Game with any other product whatever its nature, subjected to a common offer and/or offered in a common packaging.

 

“Candidate Master” shall mean the final English version of the Game for the Standard and Format, functional in all material respects, fully set up and entirely tested, debugged and delivered by LICENSOR to UBISOFT together with all materials necessary for its submission to Console Manufacturer Approval (if applicable).

 

“Compilation”means the sale of the Game with one or several other video games subject to a common offer.

 

“Console Manufacturer Approval” shall mean that the Game has to be approved by the applicable Console Manufacturer set forth in the Specific Terms throughout the Territory at the two following stages: Concept Approval and Lot Check Approval. Console Manufacturer Approval is considered to be achieved when approvals from the Console Manufacturer have been obtained for these two stages.

 

“Covermount” or “Kiosk”means the sale of the Game together with magazines which may be dedicated to the Game or through newspaper kiosk or stands.

 

“Format” shall mean the video game platform set forth in the Specific Terms. 

 

“Game” shall mean the video game developed by LICENSOR for the Format and Standard and entitled as set forth in the Specific Terms.

 

 

	
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 “Gold Master”shall mean the Candidate Master of the Game for the Standard and Format free of copy protection approved by UBISOFT (not to be unreasonably withheld) and if applicable by the Console Manufacturer for manufacture and release.

 

 “Net Sales” shall mean the gross receipts received by Ubisoft on the sales of the Game less (i) VAT, sales taxes, customs duties, freight, (ii) price protections, mark-downs, customary and usual trade discounts, end year rebates, returns, (iii) marketing development funds/Coop (capped at the greater of $250,000 or 5% of the Net Sales), (iv) the applicable Console Manufacturer royalties and manufacturing costs.

 

“Non-Retail” shall mean sales of the Game set forth in the Specific Terms with the exception of retail sales.

 

“Packaging Artwork” shall mean the final reproducible artwork layered files for the packaging, instruction manuals, and other collateral printed materials (if any) regarding the Game, in English language (and any other language of the Territory when available), on a current industry standard format (QuarkXPress Mac, Photoshop Mac, Illustrator Mac), suitable for duplication by or for UBISOFT in furtherance of this Agreement. 

 

“Portage” shall mean the reproduction and/or adaptation of the Game with a view to its use on any other platform than the Format.

 

“Programming errors” or “Bug” shall mean any incident which may occur, whether on isolated or repeated occasions, during the use of the Game in normal conditions and which prevents the Game from functioning properly. 

 

“Promotional Materials” shall mean any documents and materials including advertising, promotional, display and/or other such marketing materials, of or concerning the Game in English language (and any other language of the Territory when available) which UBISOFT may use in conjunction with the distribution of the Game and for promotional purposes only.

 

“Sell-Off Period” shall mean the period set forth in the Specific Terms commencing on the expiry of the Term or Termination of the Agreement, during which UBISOFT shall be entitled to sell such stock of Game and Promotional Materials as may have been manufactured but which remain unsold on the expiry of the Term or Termination hereof. UBISOFT shall not duplicate or manufacture the Game during the Sell-Off Period.

 

“Sequel” or “Prequel” shall mean the interactive entertainment software product, for any platform (including without limitation Sony Playstation 2, Sony Playstation 3, Sony PSP, Microsoft X-Box, Microsoft X-Box 2, Nintendo Game Cube, Nintendo Game Boy Color, Nintendo Gameboy Advance, Internet (including without limitation streaming, massively multiplayer online, and downloading), PC and any successor console platforms or new platforms and hardware developed during the Term), which (i) reproduces all or a substantial part of the source code and/or the source materials (extensions on- or off-network) and (ii) which employs the same characters and elements of design as those appearing in the Game but in a different plot, sequence, or situation.

 

“Standard” shall mean the PAL and/or NTSC standards as set forth in the Specific Terms.

 

“Trademarks” shall mean the trademarks of LICENSOR, of its licensor’s and the ones regarding the Game which are set forth in the Specific Terms.

 

All references to Clauses, Sub-clauses and Schedules are to Clauses, Sub-clauses of this Agreement. Words importing the singular only shall include the plural and vice versa; words importing the masculine gender shall include the feminine; and words importing persons shall include corporations.

 

2. Grant of Rights

 

	
            2.1
 	
            LICENSOR hereby grants to UBISOFT, in accordance with the terms and subject to the conditions set forth in this Agreement, and UBISOFT hereby accepts from LICENSOR, the following rights within the Territory during the Term  with respect to the Game and the Trademarks:
 

 

(a)          the exclusive license to duplicate, manufacture, market, publish, distribute and sell and otherwise exploit directly and indirectly units of the Game through the distribution channels and by the means set forth in the Specific Terms; and

 

(b)          the exclusive license to manufacture, market, distribute, license and sell directly or indirectly hint books or strategy guides regarding the Game throughout the Territory during the Term; and

 

(c)          the exclusive license to reproduce and distribute the Packaging Artwork and Promotional Materials of the Game throughout the Territory during the Term; and

 

 

 

	
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(d)          the exclusive license to use the logos and Trademarks pertaining to the title of the Game (or any other logo and trademark corresponding to any other title given to the Game) and the exclusive license to register and use any domain name of the title of the Game (or any other domain name corresponding to any other title given to the Game) with respect to the promotion and sale of the Game; and

 

(e)          the exclusive right to make available on websites including but not limited to UBISOFT’s websites, patches, plug-ins, on line version of the Game as a shareware and Add-ons (including, but not limited to, new maps, worlds, and levels) for downloading by the end users of the Game. UBISOFT shall have the exclusive right to exploit the multi-player online features of the Game which shall be playable over gaming intranets and the Internet, including but not limited to UBISOFT’s on-line gaming service and;

 

(f)           the exclusive license to distribute the Game through internet streaming, pay per play and/or downloading during the Term, and to sublicense such distribution. LICENSOR acknowledges and agrees that in order to enable the Game for such digital distribution, UBISOFT or its sublicensee shall have the right to use, copy and process the Game and software files of third parties contained therein, including, without limitation, (i) install the Game on computer servers and reduce any files (including any and all software files of third parties) contained therein, and (ii) encode and encrypt the Game and combine the Game with any software for the sole purpose of allowing digital distribution.

 

2.2 LICENSOR shall not manufacture, market, distribute and sell or otherwise commercially exploit the Game in any languages within the Territory during the Term except through UBISOFT pursuant to this Agreement.

 

3. Term

 

3.1 This Agreement shall take effect on the Effective Date and last for the period of time set forth in the Specific Terms.

 

3.2 This Agreement may be renewed only upon mutual written agreement of the Parties.

 

3.3 UBISOFT shall, upon expiry of the Term and Sell Off Period, furnish to LICENSOR a complete stock inventory of the Game. 

 

4. Territory 

 

The Territory covered by this Agreement is defined in the Specific Terms. 

 

5. Copyright and Trademark Notices

 

5.1 The copyright and trademark notices set forth in the Specific Terms must appear on the Game, any Packaging Artwork and Promotional Materials.

 

5.2 LICENSOR authorizes UBISOFT to insert the name and logo “UBISOFT Entertainment” on the Game, on its front packaging, disc label and any Packaging Artwork and Promotional Materials. 

 

6. Advance against Royalties and Royalties  

 

6.1 Advance against Royalties

 

In consideration of the rights granted, UBISOFT shall pay LICENSOR a fully-recoupable advance against royalties in the amount set forth in the Specific Terms (the “Advance Against Royalties”). 

 

The Advance Against Royalties shall be fully recoupable and fully cross-collateralized across all Royalties accrued from any and all sales and revenues (i) accrued to LICENSOR pursuant to any prior agreement between the Parties and (ii) derived from the Game pursuant to this Agreement. 

 

6.2 Royalties

 

6.2.1 UBISOFT shall pay LICENSOR a royalty on all sales of the Game as set forth in the Specific Terms (“Royalty”).

 

The Royalties are based on the cartridge size of the Game. The Parties acknowledge that should LICENSOR deliver the Game on a bigger cartridge than the one set forth in Section A of the Specific Terms, UBISOFT shall deduct from the Royalty the manufacturing costs incurred by this size difference at the time of manufacture of the Game. 

 

6.2.2 Notwithstanding any contrary provision in this Agreement, UBISOFT may distribute Royalty-free units of the Game in the Territory of not-for-resale copies of the Game at UBISOFT’s sole expense but with no Royalty payment obligation resulting from the distribution of such units. The amount of these Royalty-free units is set forth in the Specific Terms.

 

 

	
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7. Delivery of the Game

 

7.1. Current Version of the Game

 

Upon mutual execution of this Agreement, LICENSOR shall deliver to UBISOFT the latest version of the Game or of the concept of the Game.

UBISOFT may reasonably request LICENSOR to integrate at LICENSOR’s costs some elements into the Game to customize it for the needs of special partnerships such as B-to-B (if applicable), provided that such requests do not jeopardize in the sole opinion of LICENSOR the Gold Master Date. 

UBISOFT may also request LICENSOR to insert at LICENSOR’s costs into the Game elements to enable the online gaming of the Game (if applicable) such as without limitation plug-ins and Ubi.com e-registration software, provided that such requests do not jeopardize in the sole opinion of LICENSOR the Gold Master Date. 

 

7.2. AVI running Demo, Playable Demo, Candidate Master, Gold Master

 

The AVI running demo, playable demo, Candidate Master and the Gold Master of the Game shall be delivered to UBISOFT by LICENSOR no later than the date set forth in the Specific Terms. 

 

7.3. Console Manufacturer Approval (if applicable)

 

UBISOFT shall submit the concept of the Game and the Candidate Master to Console Manufacturer Approval. LICENSOR shall at its own costs deliver to UBISOFT all elements necessary to said submission including without limitation Packaging Artwork. In the event the Parties do not obtain the Console Manufacturer Approval, LICENSOR shall use its best efforts to modify the concept or Candidate Master in accordance with the Console Manufacturer’s requirements and submit a second and - if needed - third concept or Candidate Master to the Console Manufacturer within 30 (thirty) days from the first refusal. Notwithstanding the provisions of Section J of the Specific Terms, if the Console Manufacturer do not approve the third concept or Candidate Master, UBISOFT may decide to immediately terminate this Agreement pursuant to the provisions of Section 14.1 (a) upon written notice to LICENSOR with immediate effect
and LICENSOR shall within thirty (30) days from such notice reimburse UBISOFT of any and all part of the Advance against Royalties paid by UBISOFT to LICENSOR at the date of such termination.

 

7.4. Intentionally Deleted 

 

7.5 Maintenance, Correction and Updates

 

For a period of six (6) months commencing on the date of first release of the Game and upon UBISOFT’s request, LICENSOR shall correct at its own cost any Bug in order to allow the Game to run properly. Any Bug shall be corrected by LICENSOR within ten (10) days of receiving notice from UBISOFT. If LICENSOR fails to correct any Bug, UBISOFT may correct them or have them corrected at LICENSOR’s expense. 

 

In the event after release of the Game in the Territory, a new Gold Master is delivered by LICENSOR to UBISOFT (as collector pack, to add a new language or any other reason), all Bugs noticed shall be corrected and all available patches shall be integrated into this new Gold Master provided by LICENSOR. 

 

8. Quality Assurance, Copy Protection, Packaging Artwork and Promotional Materials

 

8.1 Quality Assurance

 

LICENSOR shall provide UBISOFT with a Game which has been tested and free of Bugs. UBISOFT shall perform at its sole cost and expense one TRC final check of the Candidate Master before its submission to the Console Manufacturer. In the event UBISOFT identifies any Bugs, errors or other problems in the Game, UBISOFT shall promptly communicate in writing to LICENSOR such Bugs or errors in sufficient details to enable LICENSOR to promptly correct such Bugs, errors or other problems. The Parties shall in good faith work cooperatively to complete the QA process in a prompt and efficient manner, but correction of identified bugs/errors shall be the sole responsibility of LICENSOR at LICENSOR’s own expenses. 

 

8.2 Copy Protection

 

LICENSOR shall cooperate with and where necessary assist at its own costs UBISOFT in the implementation of a copy protection software on the Gold Master.

 

8.3 Packaging Artwork and Promotional Materials

 

 

 

	
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Upon mutual execution hereof, LICENSOR shall provide UBISOFT with all available graphic materials regarding the Game including without limitation layered high-resolution files and screenshots.

LICENSOR shall provide UBISOFT with the Packaging Artwork, instruction manual, images and design, marketing materials and other collateral printed materials (if any) relative to the Game in English language. LICENSOR shall provide UBISOFT with the instructional manual, in Word format. The Packaging Artwork and Promotional Materials shall be provided by LICENSOR to UBISOFT no later than August 8th, 2005. In the event LICENSOR fails to deliver such elements by that date, the Advance Against Royalties shall be reduced by 1% (one percent) per period of 7 (seven) days of late delivery. 

 

UBISOFT may use textual and/or pictorial matter pertaining to the Game and/or to the Trademarks on such advertising, promotional and marketing materials as may, in UBISOFT’s judgment, promote the sale of the Game within the Territory.

 

UBISOFT may change the Packaging Artwork of the Game in order to better adapt the Packaging Artwork to the market of the Territory, subject to LICENSOR’s prior approval – such approval not to be unreasonably withheld. LICENSOR shall notify in writing its decision to UBISOFT within 5 (five) days of LICENSOR’s receipt of UBISOFT’s request. In the event LICENSOR does not render its decision within this 5-day period, LICENSOR shall be deemed to have given their approval. 

 

9. Marketing

 

UBISOFT will take care of all customer support in the Territory. LICENSOR shall promptly provide support to UBISOFT upon UBISOFT’s request to allow UBISOFT to handle customer and dealer support for the Game in the Territory. Should any additional costs be borne by UBISOFT with respect to the customer support of the Game as a consequence of a serious Bug in the Game, UBISOFT shall invoice such additional costs to LICENSOR.

 

10. Statements and payments

 

10.1 Within 45 (forty five) days after the end of every calendar quarter following commercial release of the Game, UBISOFT shall furnish to LICENSOR a complete and accurate statement in the currency set forth in the Specific Terms recording any sale of the Game occurred within the quarter.

 

Royalties are payable on the number of copies of the Game sold less the number of returns. UBISOFT may maintain and withhold from payment Royalties shown to have accrued on any statement reasonable reserves (not exceeding 20%) of the Royalties payable in respect of each quarter in respect of units which may be returned and will subsequently make adjustments based on the number of units actually returned provided that any unused reserve shall be released within the subsequent 180 (one hundred and eighty) days. In the event net reserves are insufficient to cover units returned in any period UBISOFT may deduct from any Royalties that accrue in such or any subsequent period an amount equal to such deficit. In the event in any quarter the Royalties paid to LICENSOR exceed the subsequent amount of actual returns, thus leading to a Royalty overpayment, LICENSOR shall promptly upon UBISOFT’s request refund
such overpayment to UBISOFT. Any objection to a statement shall be deemed waived unless made within one (1) year of the date of reception of the statement.

 

10.2 LICENSOR may appoint an independent Chartered Accountant registered on the list of “Certified Public Accountant” to examine UBISOFT’s sales records for the preceding four (4) full quarters for the sole purpose of checking the exactness of the statements mentioned herein. The independent Chartered Accountant (a) shall be reasonably acceptable to UBISOFT and (b) may not be compensated on a contingency basis or otherwise have financial interest in the outcome of such audit. The audit shall take place at UBISOFT’s place of business in the United States for North American sales and at UBISOFT’s principal place of business in France for other sales. Such audit shall be carried out at the expense of LICENSOR and not more than once every year. The Chartered Accountant shall not make any copies of the documents provided by UBISOFT. The dates and terms of intervention of the Chartered
Accountant must be fixed by mutual agreement between the Parties. The Parties agree that the audit shall take place no less than forty-five (45) days from prior to or after the half-yearly closing dates of UBISOFT’s accounts. LICENSOR shall provide UBISOFT with the report of the Chartered Accountant promptly following the end of the audit. If UBISOFT disagrees with such report, UBISOFT shall have the right to produce a counter-report on audited transactions. In the event the audit reveals that UBISOFT underpaid the royalties payable with respect to the period for which the audit was performed by an amount in excess of five percent (5%) of the amount owed, the reasonable cost of such inspection (not exceeding $10,000) shall be borne by UBISOFT. 

 

10.3 Payments to be made by UBISOFT pursuant to this Agreement will be made through wire transfer within 10 (ten) business days of UBISOFT’s receipt of a corresponding invoice. 

 

11. Warranties

 

11.1 LICENSOR warrants that it has full power and authority to enter into this Agreement and to grant the rights described herein. LICENSOR specifically represents and warrants that Evolved Games has no rights in the Game. IR 

 

 

	
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Gurus and/or any third party has no publishing rights in the Game in the Territory. LICENSOR further warrants that (a) UBISOFT’s use and enjoyment of the rights granted herein shall not violate any third party right, including but not limited to copyright, patent rights, trade dresses, trademark rights or any other intellectual property right of any third party; (b) the execution of this Agreement by LICENSOR does not violate any agreements, rights or obligation existing between LICENSOR and any third party; (c) during the Term of this Agreement, LICENSOR shall not make any agreement that is in conflict with this Agreement; and (d) LICENSOR is the sole owner or exclusive controller (with the right to sublicense) of the Game, the trademarks associated with the Game, the Packaging Artworks, Promotional Materials and any other materials regarding the Game delivered by LICENSOR in furtherance of this
Agreement; (e) the Game and any element incorporated in the Game shall not violate any rights of any third party; (f) LICENSOR shall comply with the laws and regulations of all countries in the Territory in respect to the content of the Game. LICENSOR, in collaboration with UBISOFT, shall make sure that the Game does not contain excessive violence, racist opinions, hidden content or any inappropriate content for its ESRB rating target nor any element which could prevent the commercial release of the Game in any country of the Territory and notably, upon UBISOFT’s request, LICENSOR shall replace red blood (if any) with green blood in the German version of the Game; and (g) LICENSOR has created all music contained within the Game internally within the company, or if it has not created music internally LICENSOR owns the exclusive title to such music. LICENSOR shall provide the warranty letter for the SACEM, S.I.A.E. or equivalent collective authors’ entities (substantially in
the form set forth at Exhibit A) and UBISOFT shall deduct from payments due to LICENSOR any fees or penalties that may be required to be paid by UBISOFT to such entities or at UBISOFT’s sole discretion, reimburse the said amounts to UBISOFT, if applicable and upon presentation to LICENSOR of proper documentation.

 

11.2 UBISOFT warrants that UBISOFT has full power and authority to enter into this Agreement. UBISOFT further warrants that the execution of this Agreement by UBISOFT does not violate any agreements, rights or obligation existing between UBISOFT and any third party. 

 

12. Intellectual Property Rights  

 

12.1 UBISOFT acknowledges that all of the copyrights, trademarks and other intellectual property rights used or embodied in or in connection with the Game including all documentation and manuals relating thereto are and shall remain the sole and exclusive property of LICENSOR or a third party under license to LICENSOR. UBISOFT shall not during or at any time after the expiry or termination of this Agreement in any way question or dispute the ownership or any LICENSOR’s intellectual rights pertaining to the Game. 

 

12.2 LICENSOR acknowledges that all of the copyrights, trademarks and other intellectual property rights used or embodied in or in connection with the translation or creative works carried out by UBISOFT in connection with the Game are and shall remain the sole and exclusive property of UBISOFT or a third party under license to UBISOFT. LICENSOR shall not during or at any time after the expiry or termination of this Agreement in any way question or dispute the ownership or any UBISOFT’s intellectual rights pertaining to these works. 

 

12.3 In the event that either Party discovers that any other person or organization is making use of the other Party’s copyrighted materials, that Party shall immediately notify the other Party of such use and shall cooperate fully with the other Party’s efforts to enforce its rights.

 

13. Press Announcement

 

Neither Party shall make any press announcement without the prior written approval of the other Party, such approval or disapproval to be given within 5 (five) business days of the receipt of the submitted press announcement. 

 

14. Termination

 

14.1 This Agreement may be terminated immediately by either Party by written notice to the other Party and all rights granted to UBISOFT shall cease and revert back to LICENSOR if: 

 

	
             
 	
            a)
 	
            (if applicable pursuant to the provisions of Section 7.3 hereof) the Console Manufacturer rejects three times the concept of the Game or the Candidate Master. UBISOFT may decide at its sole discretion to terminate this Agreement - in whole or in part for the corresponding part of the Territory - by written notice to LICENSOR with immediate effect and LICENSOR shall within 30 (thirty) days thereof then reimburse UBISOFT the Advance Against Royalties paid to LICENSOR by UBISOFT pursuant to this Agreement without prejudice to any remedy for damages either at equity or at law that UBISOFT may claim;
 

 

	
             
 	
            b)
 	
            pursuant to the provisions of Section J of the Specific Terms, LICENSOR fails to deliver any Format of the Candidate Master by the date set forth in the Specific Terms. UBISOFT shall be free to terminate this Agreement without any cure period. In this event, LICENSOR shall within 30 (thirty) days reimburse the Advance Against Royalties paid to LICENSOR by UBISOFT as well as all direct non-cancelable costs incurred by UBISOFT in connection with the advertisement, marketing and promotion of the Game without prejudice to any remedy for damages either at equity or at law that UBISOFT may claim.
 

 

 

	
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            c)
 	
            either Party commits a material breach of any obligations or undertakings hereunder and fails within 30 (thirty) business days of having received written notice to that effect to remedy the same, in which event the other Party may forthwith, by notice in writing terminate this Agreement without prejudice to any other rights which may have accrued to it hereunder;
 

 

	
             
 	
            d)
 	
            either Party shall convene a meeting of its creditors or if a proposal shall be made for a voluntary arrangement within applicable laws or a proposal for any other composition scheme or arrangement with (or assignment for the benefit of) its creditors or if the other shall be unable to pay its debts, or if a trustee, receiver, administrative receiver, or similar officer is appointed in respect of all or any part of the business or assets of the other or if a petition is presented or a meeting is convened for the purpose of considering a resolution or other steps are taken for the winding up of the other or for the making of an administration order (otherwise than for the purpose of an amalgamation or reconstruction ).
 

 

14.2 The termination of this Agreement shall be without prejudice to the rights of the Parties accrued up to the date of such termination. LICENSOR hereby acknowledges that in the event UBISOFT terminates the Agreement pursuant to the provisions of Article 14.1 (c), LICENSOR shall reimburse UBISOFT of any and all unrecouped costs and out of pocket expenses engaged by UBISOFT in connection with the manufacturing, distribution and marketing of the Game.

 

15. First Option

 

UBISOFT shall have the right, before LICENSOR enters into good faith negotiations with any third party, to (i) review and evaluate any and all Sequels, Prequels and Add-ons of the Game (collectively “Future Games”); and (ii) enter into exclusive negotiations with LICENSOR for a period of thirty (30) days with respect to the development and/or publishing, distribution and sale of any Future Game. LICENSOR must trigger this exclusive “first look” period for each Future Game by giving UBISOFT written notice as provided for pursuant to the terms of this Agreement, or otherwise this “first look” period of thirty (30) days shall not be deemed to have been used by UBISOFT. If the Parties agree on the terms of the offer, the Parties will conclude in good faith an agreement within fifteen (15) working days in addition to the thirty (30) day negotiation period, otherwise the negotiation
period shall have concluded.

 

If the Parties are unable to reach an agreement during the applicable “first look” period, then LICENSOR shall be free to seek an agreement with third parties. If LICENSOR receives a bona fide offer from a third party for a Future Game which is less than or equal to 110% of the Minimum Guarantee (one hundred and ten percent) in UBISOFT’s last offer during the “first look” period, LICENSOR shall submit the terms of that offer in full in writing to UBISOFT, which shall have the right within ten (10) business days from the date of receipt of such offer to match the offer and conclude the same agreement with LICENSOR.. 

 

16. General Provisions

 

16.1 Notices

 

All notices which either Party is required or may desire to serve upon the other Party shall be in writing and in English, addressed to the Party to be served at the address set forth in the Specific Terms and sent by reputable overnight international courier or registered mail. 

 

16.2 Assignment

 

16.2.1 UBISOFT may assign this Agreement or any part hereof without the prior written consent of LICENSOR.

 

16.2.2 LICENSOR may not assign this Agreement or any part hereof without the prior written consent of UBISOFT which UBISOFT may, at its absolute discretion, withhold.

 

16.3 Confidentiality and Nondisclosure

 

Each Party agrees that the copyright, know-how, trade secrets and technology embodied in and related to the Game, any other information concerning the other Party’s marketing plans, the other Party’s existing or future products or the terms of this Agreement, and any other confidential business or technical information disclosed by the other Party to the first Party in furtherance of this Agreement shall be held in strict confidence and shall not be disseminated or disclosed to any other Party without the express written consent of the other Party, except as needed to perform obligations hereunder. The obligations of this Section 16.3 shall survive the expiration or termination of this Agreement for a period of three (3) years thereafter. The foregoing obligations will not apply to any information that: (a) becomes known to the general public without fault or breach on the part of the receiving
Party; (b) the receiving Party receives from a third party without breach of a nondisclosure obligation and without restriction on disclosure; (c) was in the possession of the receiving Party prior to disclosure by the other Party; or (d) is independently developed by the receiving Party’s personnel having no access to similar confidential information obtained from the other.

 

 

	
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16.4 Mutual Indemnification

 

Each Party agrees to indemnify and hold the other harmless from and against any and all claims, damages and liabilities whatsoever, asserted by any person or entity, resulting directly or indirectly from any breach by the first Party or any of its respective employees or agents, of this Agreement or of any warranty, representation, covenant or obligation contained in this Agreement. Such indemnification shall include the payment of all reasonable attorney’s fees and other costs incurred by the indemnified Party in defending any such claim. The indemnified Party shall inform the indemnifying Party in writing of any claim, demand or suit and shall fully cooperate in the defense thereof. The indemnified Party will not agree to the settlement of any such claim, demand or suit prior to the final judgment thereon without the consent of the indemnifying Party, whose consent will not be unreasonably withheld.

 

LICENSOR shall indemnify UBISOFT against all claims, liabilities and costs, including reasonable attorney’s fees, arising from any infringement or alleged infringement on the part of UBISOFT, its subsidiaries and their respective directors, officers, employees, and agents (collectively, “UBISOFT Claimants”) in connection with this Agreement, even if UBISOFT Claimants would have the opportunity to be aware of any outstanding claim, provided, that UBISOFT promptly notifies LICENSOR in writing of the claim or suit or any claim of infringement and that LICENSOR is permitted to control fully the defence or the claim or suit, and may appear, at its own expense, through counsel of its choice. 

 

16.5 Force Majeure

 

No Party shall be deemed in default of this Agreement to the extent that performance of its respective obligations or attempts to cure any breach are delayed or prevented by reason of any Act of God, fire, natural disaster, accident, act of government, or any other cause beyond the reasonable control of such Party; provided, that the Party interfered with gives the other Party written notice thereof within ten (10) working days of any such event or occurrence.

 

16.6 Independent Contractors

 

Nothing contained in this Agreement shall be construed as creating any partnership or joint venture between the Parties. Neither Party shall be authorized to act as an agent for the other, nor shall either Party enter into any agreement or contract on behalf of the other as representative or agent.

 

16.7 Entire Agreement

 

This Agreement states the entire agreement between the Parties with respect to the subject matter hereof and supersedes all prior negotiations, understandings and agreements between the Parties hereto concerning the subject matter hereof. No amendment or modification of this Agreement shall be made except by an instrument in writing signed by both Parties.

 

16.8 Severability

 

Should any provision of this Agreement be held to be void, invalid or inoperative, the remaining provisions of this Agreement shall not be affected and shall continue in effect as though such provision was deleted.

 

16.9 Waiver

 

The failure by either Party to enforce at any time or for any period any one or more of the terms or conditions of this Agreement shall not be a waiver of them or of the right at any time subsequently to enforce all terms and conditions of this Agreement.

 

16.10 Governing Law 

 

This Agreement shall be governed by the laws of the State of California, USA. The Parties agree that any dispute, or any matter or question arising from this Agreement which cannot be resolved by the Parties negotiating in good faith shall be submitted to the exclusive jurisdiction of the courts located in San Francisco County, USA.

 

This Agreement constitutes the entire agreement between the Parties, and supersedes all prior oral or written agreements, understandings, representations and warranties, and courses of conduct and dealing between the Parties on the subject matter hereof. This Agreement may be amended or modified only by a written document executed by all Parties.

	
            By : /s/ Ed Roffman........................................
 	
            By :
 	
            ....../s/...... Yves Guillemot
 

	
            Ed Roffman

CFO

Red Mile Entertainment Inc.
 	
            Yves Guillemot 

President

UBISOFT ENTERTAINMENT
 

 

 

 

	
            Confidential
 	
            Page 8
 

 

 

 

 

EXHIBIT A

 

Warranty Letter 

 

Red Mile Entertainment Inc.stationery

 

 

Declaration

 

Game Title(s)/Format: Heroes of the Pacific (Sony Playstation 2, Microsoft Xbox and PC)

 

As regards the above-referenced game(s), Red Mile Entertainment Inc. hereby warrants that it has created all music contained within the game(s) internally within the company, or where it has not created music internally or owns the exclusive title to such music, LICENSOR warrants that all the necessary royalties have been paid and are being paid either to the copyright owner of the music or the controlling music organization.

 

 

	
             
 	
            Red Mile Entertainment Inc.
 

 

 

	
             
 	
            By: _________________________
 
	
             
 	
            Name: ______________________
 	
             

	
             
 	
            Title: _______________________
 	
             

				

 

 

Date: _______________________ 

 

 

	
            Confidential
 	
            Page 9
 

 

 

 

SOFTWARE LICENSE AGREEMENT

 

SPECIFIC TERMS 

 

	
             
  	
            A.
 	
            Game – Title, Format & Delivery Dates
 

 

Title of the Game: Heroes of the Pacific

Format:  PC compatible with Windows 95 to XP [and any subsequent versions of Windows available at the release date of the Game, Playstation 2 and Xbox 

Console Manufacturers:  Sony (PS2) and Microsoft (Xbox)

Standard: NTSC

Rating: T

 

	
            Candidate Master (all Formats) Delivery Date:
 	
            July 28, 2005
 	
             

	
            Gold Master Date (all Formats) Delivery Date:
 	
            September 6, 2005
 

 

LICENSOR shall provide marketing support material (including without limitation: manual documentation, high resolution images, screenshots, and other artwork) to be used by UBISOFT in Packaging Artwork and Promotional Materials upon mutual signature of the Agreement.     

 

LICENSOR shall provide text and art assets necessary for manual creation no later than August 8th 2005.

 

LICENSOR will provide videos of gameplay and an interactive demo version by August 8th 2005 to support sales activities.

 

	
             
 	
            B.
 	
            Types of Distribution and Authorized Distribution Channels: 
 

 

- Retail 

- Non-Retail: B-to-B, Bundle/OEM, Covermount/Kiosk, Compilation, sublicense, including internet streaming, pay per play and downloading. 

- Distribution channel: any channel (directly or indirectly through sublicense including without limitation wholesalers, distributors, retailers, online retail channels, internet streaming, pay per play, downloading or by electronic software distribution), as a premium (on-pack offer, in-pack offer) or giveaway or in connection with the sale and promotion of any other products or services within the Territory during the Term.

 

	
             
 	
            C.
 	
            Term and Sell-Off Period
 

 

Term:  five (5) years from the first release of each Format of the Game in the Territory. 

 

Sell-Off Period: twelve (12) months.

 

	
             
 	
            D.
 	
            Territory
 

 

United States of America, Canada and Mexico 

 

	
             
 	
            E.
 	
            Copyright and Trademark Notices
 

 

 (c) 2005 Red Mile Entertainment. All Rights Reserved. 

Published and distributed by Ubisoft Entertainment under license from Red Mile Entertainment. 

Heroes of the Pacific is a trademark of Red Mile Entertainment and is used under license. 

 

	
             
 	
            F.
 	
            Advance Against Royalties and Royalties
 

 

Advance Against Royalties:

 

- US$xxxxxx (xxxxxx US dollars) to be paid as follows:

 

	
             
 	
            •
 	
            $xxxxx (xxxxxxxxxx US dollars) to be paid upon (i) mutual execution of the Agreement and (ii) written evidence of concept approval by both Sony and Microsoft;
 

	
             
 	
            •
 	
            $xxxxxxxxx US dollars) to be paid upon (i) written approval of all Formats of the Gold Master and (ii) delivery of all three Formats (Playstation 2, Xbox, PC) by Gold Master Date;
 

 

 

	
            Confidential
 	
            Page 10
 

 

 

 

	
             
 	
            •
 	
            $xxxxxxxxxxxxxxxxxxxxxxxxx US dollars) to be paid 30 days after the commercial release of the first Format in the Territory or 2 months after delivery of the Gold Master, whichever comes first.
 

 

Percentage Royalty:

 

	
            •
 	
            UBISOFT shall pay LICENSOR a Royalty of xxxxxx percent of the Net Sales received on all Retail and Non-Retail sales of the Game.
 

 

Ancillary Products Royalty: xxxxxxx) percent of the Net Sales accrued on the sales of strategy guides and hint books regarding the Game.

 

Royalty Free Units (promotional units):  250 units per country in the Territory (i.e., 250 for US, 250 for Canada and 250 for Mexico). UBISOFT shall also provide LICENSOR with 100 free copies of the Game.

 

	
             
 	
            G.
 	
            Localization of the Game
 

 

English only. 

 

	
             
 	
            H.
 	
            Marketing commitment
 

 

UBISOFT shall spend not less than an amount equal to 8% (eight percent) of the Net Sales accrued on the sales of the Game including MDF/Co-op for marketing and promotion purposes of the Game for its launch and hereafter during the Term, through advertising, PR, and MDF/Co-op. Additional marketing expenditures may be made, should sell-through allow it. 

 

	
             
 	
            I.
 	
            UBISOFT Obligations
 

 

UBISOFT guarantees that all necessary communication between LICENSOR and Console Manufacturers (SCEA and Microsoft) shall take place by the end of the next business day. 

 

	
             
 	
            J.
 	
            Late Delivery
 

In the event LICENSOR fails to deliver to UBISOFT the PS2 and/or Xbox Candidate Masters and/or Gold Masters by September 6th, 2005, then UBISOFT shall be entitled to automatically reduce the Advance Against Royalties by $50,000 for each of the said two Formats (PS2,  Xbox) corresponding to a total aggregate penalties of $100,000. 

In the event LICENSOR fails to deliver to UBISOFT all Formats of the Candidate Master and/or Gold Master by October 3rd, 2005 then UBISOFT shall be entitled to automatically reduce the Advance Against Royalties by $400,000 in total aggregate penalties. 

In the event LICENSOR fails to deliver to UBISOFT any Formats of the Candidate Master and/or Gold Master by October 30, 2005, UBISOFT shall be free to terminate this Agreement without any cure period pursuant to the provisions of Section 14.1 (b) of the Agreement. 

 

	
             
 	
            K.
 	
             

 
 

 

 

	
            Confidential
 	
            Page 11
 

 

 

 

Notices

 

Red Mile Entertainment Inc.

4000 Bridgeway, Suite 101, 

Sausalito, CA 94965, USA 

 

UBISOFT 

28 rue Armand Carrel

93108 Montreuil sous Bois cedex, France.

Tel (33) 1.48.18.50.00

Fax (33) 1.48.18.52.81

Attention: Yves GUILLEMOT

 

	
            Signed
 	
            Signed
 

 

	
            By: .../s/...... Yves GUILLEMOT
 	
            By: /s/......Ed Roffman.........................
 

 

	
            For: UBISOFT Entertainment
 	
            For: Red Mile Entertainment Inc.
 	
             

	
            Name: Yves GUILLEMOT
 	
            Name: ...Ed Roffman..................
 
	
            Title: President & CEO
 	
            Title: ......CFO...........................
 	
             

				

 

 

 

 

 

 

 

	
            Confidential
 	
            Page 12Exhibit 10.3

 

DATE:  September 24, 2004               

 

 

 

(1)   FLUENT  ENTERTAINMENT, INC

 

(2)   PRODIGY DESIGN LIMITED, doing business as SIDHE INTERACTIVE

 

 

 

SOFTWARE DEVELOPMENT AND LICENSING

AGREEMENT

 

 

 

 

 

 

 

 

 

{00017347.DOC/ / 08/20/2004  01:20 PM}

 

 

 

	
             
 	
            THIS AGREEMENT is made on  
 	
            September 24, 2004
 

 

BETWEEN:

 

	
            (1)
 	
            Fluent Entertainment, Inc., a Nevada Corporation (“the Publisher”) whose principal address is 1701 Novato Blvd., Suite 300, Novato CA 94947; and
 

 

	
            (2)
 	
            Prodigy Design Limited, doing business as Sidhe Interactive, a New Zealand corporation whose principal address is Level 7, Willbank House, 57 Willis Street, PO Box 6203, Wellington New Zealand (the “Developer” or “Licensor”) 
 

 

	
            (A)
 	
            The Developer has proposed to the Publisher to develop and license a Product to Publisher provisionally entitled “Super Stunt Buggy” (Product).
 

 

	
            (B)
 	
            The Developer is developing the Product provisionally entitled “Super Stunt Buggy” and 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 

 

2

 

 

 

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 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 
 

 

3

 

 

 

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
 

 

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

 

“Hardware Manufacturer” means Sony Computer Entertainment. 

 

“Initial Machine” means the 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” means each of the Development Advance payments set out in respect of a Milestone in Schedule 1;

 

“Minimum Guarantee” means any payments made by Publisher to Developer whether at the commencement of this Agreement or by installments during the course of the development of the Product under this Agreement;

 

“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 the Japanese language to be determined by the parties in connection with the preparation of Translations (as defined below).

 

4

 

 

 

 

“Net Royalty Receipts” means any funds received by or credited to Publisher for a sub-license where the Publisher is paid a net amount per unit sold and Publisher has no direct marketing responsibility.

 

“Net Sales Receipts” means the actual wholesale selling price of the Product invoiced by Publisher and/or Publisher’s authorized Co-Publisher less (to the extent actually paid, or actually issued, by Publisher or its Co-Publisher, as applicable, in respect of the Product): any credits for returns of Units, price protection or markdowns, credits in lieu of returns, any value added tax and any other sales taxes included in such invoice price and actual cost of goods sold (manufacturing costs). 

 

“Original Language” means American English. 

 

“Product” means the software Product currently known as “Super Stunt Buggy” to be developed by the Developer under this Agreement in respect of the Initial Machine 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;

 

(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;

 

“Product Title” means “Super Stunt Buggy” or such other title for the Product as may be mutually determined by Publisher and Developer;

 

“Project Manager(s)” means the person at Developer responsible for the project management of Product; 

 

“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;

 

“Royalties” means the amounts in US Dollars payable by the Publisher to the Developer in accordance with paragraph 7 of this Agreement;

 

 

5

 

 

 

 

“Royalty Statement” means the statement of Royalties provided by the Publisher to the Developer under this Agreement;

 

“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 three years hence. 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. Royalties for sales of Products during the Sell-off Period shall be paid and remitted in accordance with Section 7.

 

“Territory” means the universe, excluding Australia and New Zealand;

 

“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 and one dialect of Japanese, in accordance with paragraph 6 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;

 

“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;

 

 

6

 

 

 

 

“Vertical Slice Demo” means a stand alone version of the Product in the Original Language and such Translations as may be agreed by the parties that demonstrates the functionality of Product for the purposes of marketing which will contain the following features: Challenge Mode, Race Mode, Practice Mode, and Time Attack Mode; 10 or more Challenge Mode levels across at least two themed worlds; 1 or more Race Mode levels; and 1 or more Bonus Games;

 

“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 New Zealand;

 

	
            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.
 	
            PROPRIETARY RIGHTS.
 

 

	
            2.1
 	
            Publisher’s Rights. Publisher acknowledges and agrees that, the intellectual property rights in the Product and 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 owner of the intellectual property known as Super Stunt Buggy, shall decide whether or not to create other video game versions of the Product. Fluent shall have the right of first refusal to publish any other version of the Product. Under this Agreement other versions include all video game formats know known 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 cannot agree on terms for Publisher to publish such products within forty-five (45) days of Developer noticing Publisher of its desire to create other versions, Publisher shall lose all rights to such other versions and Developer shall be free to license such rights to a third party. 
 

 

 

7

 

 

 

 

	
            2.1.2
 	
            Sequels of the Product. Publisher shall have the first right of negotiation for the next sequel to the Product. (For sake of clarity, Fluent has this right for the first sequel. If Fluent and Publisher agree to terms for the first sequel, Fluent will have such rights for the second sequel, and so on. Once Fluent has lost to right to a particular sequel, it has lost the right to all future sequels.)  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, or on the terms of the last offer made by Publisher to Developer during
the negotiating period, whichever terms are more beneficial to Developer. Publisher shall have ten (10) days to elect to match the offer or lose its rights to the sequel and all future sequels. 
 

 

8

 

 

 

 

 

 

	
            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 (excluding New Zealand and Australia), 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. This paragraph 2.2(b) shall not apply to software code delivered by Developer to Publisher in accordance with paragraph 6 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 Machine and in the Original Language 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 other production materials required to develop the Product.
 

	
            3.2
 	
            The Developer shall achieve each of the Milestones by the relevant Milestone Date. 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 New Zealand. 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 6.2, 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
 	
            In order to assist Publisher in selling the Product, Developer shall deliver a Vertical Slice Demo of the Product no later than November 8, 2004. 
 

 

	
            3.5
 	
            The Developer shall appoint a Project Manager who shall liaise with the Publisher during development of the Product.
 

 

9

 

 

 

 

	
            3.6
 	
            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 paragraph 5 below) any Errors notified to the Developer by the Publisher following the Publisher’s testing of any Alpha or Beta Versions, Vertical Slice Demos, or other Product materials supplied before delivery of the Alpha Version, Beta Version and the Gold Master.
 

 

	
            3.7
 	
            Publisher shall be responsible for submitting the game concept to the Hardware Manufacturer for approval within ten (10) days of receiving the game concept documents from the Developer. Developer and Publisher shall work together to obtain such approval from the Hardware Manufacturer. Should the game concept be rejected by the 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 Hardware Manufacturer approval of the game concept, Publisher may terminate this Agreement in accordance with Paragraph 13.2.
 

 

	
            3.8
 	
            Publisher shall be responsible for submitting the Gold Master candidate to the Hardware Manufacturer for approval within ten (10) days of receiving the Gold Master candidate from the Developer. Developer and Publisher shall work together to obtain approval of the Gold Master candidate from the Hardware Manufacturer. Should the Gold Master candidate be rejected by Sony Computer Entertainment America, Inc. (“SCEA”), 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 SCEA, Publisher may reduce the Minimum Guarantee made under this Agreement to US$250,000.
 

 

	
            4.
 	
            DELIVERY AND ACCEPTANCE
 

 

	
            4.1
 	
            Developer shall submit to Publisher a Version of the Product at each Milestone, except Milestone 1, for approval. Publisher shall 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
 

 

 

10

 

 

 

 

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 shall 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 in a form free of Errors. 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 Manufacturer, 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.
 

 

	
            5.
 	
            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 normal channels of distribution 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 of the Publisher.

 

	
            6.
 	
            TRANSLATION
 

 

	
            6.1
 	
            At its own cost, Developer shall be responsible for integrating localized text and voice over material and generating a multi-language Gold Master embodying the Translations at no additional charge, including multi-byte languages, as defined in Translations. Publisher shall be responsible for preparing and delivering, at its expense, the first 5,000 words of localized text in each language including the User Manuals necessary to enable Developer to integrate such files to create the Translations. The parties will share equally the cost of any localized text above 5,000 words in each language.   
 

 

11

 

 

 

 

	
            6.2
 	
            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. Developer shall recover the cost of any such translations out of royalties earned.
 

 

	
            6.3 
 	
            If pursuant to this Paragraph 6, 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. However, except as expressly provided in this Paragraph
6.3 neither Publisher nor any third party shall be entitled to use the Retained Materials in connection with a Translation.
 

 

	
            7.
 	
            ROYALTIES
 

 

	
            7.1
 	
            The Publisher shall pay the Developer the following Royalties all of which are subject to recoupment of the Minimum Guarantee paid under Paragraph 8 (that is, the Minimum Guarantee regardless of which Version of the Product are cross-collateralized against all royalties earned under this paragraph 7): 
 

 

	
             
 	
            7.1.1
 	
            in respect of the use of the Products developed under this Agreement and published or co-published by Publisher (which shall include any Translation of the Product):  xxxxxxxxxxx%) of the Net Sales Receipts;
 

 

	
             
 	
            7.1.2
 	
            in respect to any sublicense or OEM agreement where Fluent does not have any “risk” (i.e., doesn’t pay for manufacturing, distribution, inventory or control and pay for the consumer marketing) the royalty rate shall be xxxxxxxxxxx) of the Net Royalty Receipts.
 

 

	
            7.2
 	
            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 Royalty 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 Net Sales Receipts and Net Royalty Receipts, and the Royalty (if any) due to the Developer in respect of that quarter. Each Royalty Statement shall be accompanied by a wire transfer for any Royalty due, save that if the Publisher is prevented by the law of any 
 

 

12

 

 

 

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 Minimum Guarantee and Royalties) shall be made in U.S. Dollars. At each Quarter End the Publisher may retain from Royalties payable a reserve against returns or other credits in respect of Units sold by the Publisher hereunder in the manner set out in paragraph 7.2.1. 

 

	
            7.2.1
 	
            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”) 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 Section 7.1. (For example, should a co-publisher withhold from Publisher $1,000 in payments which would fall under Section 7.1.1 above, Publisher would withhold $150 from Developer in a reserve. When co-publisher releases Publisher’s reserve, Publisher will release Developer’s reserve.) 
 

 

	
            7.3
 	
            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 7.2 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 Novato, 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 Royalty 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 Royalty Statement more than once. Prior to the commencement of any examination of the Publisher’s accounts, books and records under this Agreement, 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 2. 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.
 

 

 

13

 

 

 

 

	
            7.4
 	
            Each Royalty 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 Royalty 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.
 

 

	
            8.
 	
            MINIMUM GUARANTEE
 

 

	
            8.1
 	
            The Minimum Guarantee for the development of the Product for the Initial Machine in accordance with this Agreement shall be the relevant amount set out in Schedule 1 payable to the Developer in the separate Milestone Payments as set out in Schedule 1, each Milestone Payment being payable in accordance with the procedures set out in this Agreement, following acceptance under paragraph 5 above of the materials produced in respect of the corresponding Milestone. 
 

 

	
            8.2
 	
            Without prejudice to the provisions of paragraph 4 above, Publisher shall not unreasonably delay or withhold its acceptance of deliverables in relation to a Milestone.
 

 

	
            8.3
 	
            Developer may raise an invoice on the Publisher for the relevant Milestone Payment on delivery of the relevant Milestone. Payment of the invoice is due within ten (10) calendar days of the acceptance of the milestone.
 

 

	
            8.4
 	
            The Publisher shall have no obligation to make any payments to the Developer under this Agreement for anything save for the payment of the Minimum Guarantee referred to in this paragraph 8, Royalties under paragraph 7 and payments (if relevant) under paragraph 6. 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 Minimum Guarantee payment and fully recoupable against Royalties payable under this Agreement, unless otherwise agreed in writing.
 

 

	
            8.5
 	
            All Minimum Guarantees paid by Publisher to the Developer together with payments (if relevant) under paragraph 6 (except payment of Royalties) shall be recoupable out of the Royalties payable under this Agreement. 
 

 

	
            8.6
 	
            All Minimum Guarantees as well as all Royalties actually paid by Publisher to the Developer shall count towards the Repurchase Right Paragraph 8.3 of the Securities Purchase Agreement dated February 28, 2003.
 

 

	
            8.7
 	
            The parties agree that no finder’s fees are to any party under this transaction.
 

 

	
            9.
 	
            INDEMNIFICATION.
 

 

	
            9.1
 	
            Developer Indemnification. Subject to the provisions of paragraph 9.3 (Indemnification Procedures), Developer will indemnify, defend and hold harmless Publisher and its 
 

 

14

 

 

 

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 11 (Warranties of Developer). Notwithstanding anything in this paragraph 9 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.. 

 

	
            9.2
 	
            Publisher Indemnification. Subject to the provisions of paragraph 9.3 (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 12(Warranties of Publisher). 
 

 

	
            9.3
 	
            Indemnification Procedures. If a third party asserts any claim or allegation which, if proven, would trigger the indemnification obligations set forth in paragraphs 9.1 and 9.2, 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 9 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 licenses in the Product or the license granted to Publisher hereunder. The foregoing provisions of this paragraph 9 state the entirety of the parties’ obligations with respect to any claim by any third party.
 

 

 

15

 

 

 

 

	
            9.4
 	
            Developer shall procure and maintain for itself and its employees and contractors all insurance coverage required by New Zealand law. Developer also agrees to maintain general liability insurance, in the amount of at least NZ$1,000,000. Upon request, Developer shall furnish Publisher with an up-to-date certificate of insurance evidencing such coverage.
 

 

	
            10.
 	
            MARKETING
 

 

	
            10.1
 	
            Publisher can replicate up to 1,000 Royalty-free Units for each Initial Machine for use including, but not limited to, promoting the game by sales and public relations and marketing teams on which no Royalty is payable to Developer. 
 

 

	
            10.2
 	
            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 Product (www.SuperStuntBuggy.com) and Publisher and Developer shall cooperate with each other on providing content for such website. 
 

 

	
            10.3
 	
            Publisher shall, subject to the terms of this Agreement and consistent with its own policies, practices and procedures, use its reasonable efforts to promote and exploit the Product throughout the Territory. Publisher agrees that it will release the Product in the United States and in Europe within six (6) months from the date that the Publisher accepts any Gold Master or within three (3) months from the date that Hardware Manufacturer releases the hardware within each region within the Territory, whichever is later. Publisher shall present a marketing plan to Developer no later than sixty days before the Product is to be released in each country or region of the world within the Territory for review and comment. Such plan shall include a sales forecast for the country or region. Publisher, or its co-publisher, shall spend a minimum of ten percent (10%) of the expected revenue, based on the sales forecast, in each country or region (the “Marketing Guarantee”). 
 

 

	
            10.4
 	
            Publisher shall furnish to Licensor without charge fifteen (15) samples of each 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).
 

 

	
            11.
 	
            WARRANTIES OF DEVELOPER
 

 

	
            11.1
 	
            The Developer represents and warrants that: 
 

 

	
             
 	
            (a)
 	
            it is and will at all material times own or control all Intellectual Property Rights in the Product, free from any third party right or interest which would impair the  rights of the Publisher under this Agreement; 
 

 

 

16

 

 

 

 

(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.

 

	
            12.
 	
            WARRANTIES OF PUBLISHER
 

 

	
            12.1
 	
            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;

 

 (b)     nothing contained in this Agreement or in the performance of this Agreement will place Publisher in breach of any other contract or obligation.

 

 

17

 

 

 

 

(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;

 

	
            12.2
 	
            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.
 

 

	
            13.
 	
            TERMINATION
 

 

	
            13.1
 	
            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 calendar 30 days after the other party has been given written notice specifying the breach and the steps required to remedy it. 
 

 

	
            13.2
 	
            If Sony Computer Entertainment of America disapproves the concept submittal, for any reason except due to Publisher’s act or omission, Publisher may cancel this agreement and any Minimum Guarantee payments made under this Agreement to such date are fully and immediately refundable to the Publisher. 
 

 

	
            13.4
 	
            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. 
 

 

	
            13.6
 	
            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 this Agreement. In such case, as Publisher’s sole remedy, Developer shall return all Minimum Guarantee payments paid to such date.
 

 

	
            14.
 	
            CONSEQUENCES OF TERMINATION
 

 

 

18

 

 

 

 

	
            14.1
 	
            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 14 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.
 

 

	
            15.
 	
            CREDITS AND ARTWORK
 

 

	
            15.1
 	
            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 manufacturer. Whenever Publisher’s name and/or logo appears, Developer’s name and/or logo shall appear on the front and back of 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.
 

 

	
            15.2
 	
            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) 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.
 

 

	
            15.3
 	
            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.
 

 

	
            16.
 	
            SUPPORT 
 

 

	
            16.1
 	
            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 in the US from the ESRB as specified in the 
 

 

19

 

 

 

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 6.1 in respect of each Version shall terminate twelve (12) months after the initial commercial release of the Product pursuant to this Agreement.

 

	
            16.1.1
 	
            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. 
 

 

	
            16.2
 	
            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, New Zealand 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.
 

 

 

20

 

 

 

 

17.    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:

 

	
            Sidhe Interactive, Inc.

Level 7, Willbank House

57 Willis Street

PO Box 6203 

Wellington New Zealand

Attn:     Mario Wynands, Managing Director                                                  
 	
            Fluent Entertainment.

1701 Novato Blvd.

Suite 300

Novato, CA 94947

Attention:  CFO

 

 
 
	
            Phone: 011 64 4 4712638

Fax: 011  64 4 4712639
 	
            Phone: 1 (415) 493-2300

Fax: 1 (415) 493-2303
 

                

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. Copies of all notices to Developer should be sent to David S. Rosenbaum, Esq., 6303 Owensmouth Avenue, 10th Floor, Woodland Hills, California USA 91367 (Phone: 818-936-3455; Fax: 818-936-3055).

 

	
            18
 	
            CONFIDENTIALITY
 

 

	
            18.1
 	
            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 fulfil an obligation under this Agreement.
 

 

	
            18.2
 	
            The obligations of confidentiality and non-use specified in paragraph 18.1 will not apply to any Confidential Information of one party which:
 

 

	
             
 	
            18.2.1
 	
            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

 

 

 

 

	
             
 	
            18.2.2
 	
            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;
 

 

	
             
 	
            18.2.3
 	
            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 hold such information subject to any confidentiality or non-use obligations;
 

 

	
             
 	
            18.2.4
 	
            is independently developed by such party without use of the other party’s confidential information; or
 

 

	
             
 	
            18.2.5
 	
            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.
 

 

	
            18.3
 	
            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 18 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.
 

 

	
            18.4
 	
            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.
 

 

	
            19
 	
            GENERAL
 

 

	
            19.1
 	
            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 
 

 

22

 

 

 

commitment by the other in entering into this Agreement except as set out in this Agreement. This paragraph 19.1 shall not apply to any deliberate misrepresentations made before this Agreement was made.

 

	
            19.2
 	
            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 Minimum Guarantee and/or Royalties 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.
 

 

	
            19.3
 	
            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.
 

 

	
            19.4
 	
            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.
 

 

	
            19.5
 	
            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.
 

 

	
            19.6
 	
            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 
 

 

23

 

 

 

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.

 

	
            19.7
 	
            EXCEPT FOR THE OBLIGATIONS IN PARAGRAPH 9, 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 WHETHER IT HAS ADVISED OR HAS BEEN ADVISED OF THE POSSIBILITY OF ANY SUCH LOSS OR DAMAGE.
 

 

	
            19.8
 	
            Developer’s services and rights herein granted are special, unique, extraordinary and intellectual in character and value such that the loss thereof could not be reasonable compensable in damages in an action at law. Accordingly, Publisher 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. 
 

 

	
            19.9
 	
            
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 Producer’s Publisher 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.
 

 

	
            19.10
 	
            
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 Producer’s Publisher name, address,
telephone number and any other relevant contact details.
 

 

	
            19.11   
 	
            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. Any controversy arising out of this Agreement or because of any duty created thereby, shall be resolved in a federal or state court located in San Francisco, California. The parties consent to jurisdiction in such courts and waive objection to such venue and agree that service of the summons to such proceeding (and of any papers which accompany it), shall be deemed sufficient if made by certified or registered mail, postage prepaid, addressed to the parties’ addresses as designated in or hereafter changed under paragraph 17. The parties 
 

 

24

 

 

 

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, 10, 11, 12, 13, 14, 15 and 18 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.

 

	
            19.12
 	
            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.
 

 

	
            19.13
 	
            The prevailing party in any litigation between the parties shall recover from the other party its reasonable legal fees and expenses.
 

 

	
            19.14
 	
            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.

 

	
             
 	
            Fluent Entertainment, Inc.
 	
            Prodigy Design Limited
 

 

 

	
             
 	
            /s/ Ed Roffman                                  
 	
            /s/ Mario Wynands                                  
 

	
             
 	
            Ed Roffman, CFO
 	
            
Mario Wynands, 
 

	
             
 	
             
 	
            
Managing Director
 

 

25

 

 

 

 

 

 

AMENDMENT #1 TO THE

SOFTWARE DEVELOPMENT AND LICENSING AGREEMENT 

DATED SEPTEMBER 24, 2004 BETWEEN

RED MILE ENTERTAINMENT (AS SUCCESSOR-IN-INTEREST TO FLUENT ENTERTAINMENT, INC.) AND PRODIGY DESIGN LIMITED

 

This Agreement, when completely executed below, shall constitute an amendment (“Amendment #1”) to the Software Development and Licensing Agreement, dated September 24, 2004, 

(the “Agreement”) by and between Prodigy Design Limited (“Developer”) and Red Mile Entertainment, Inc. (“Publisher”). 

 

The Agreement shall be amended in the following respects only:

 

1.             All terms used in this Amendment #1 to the Agreement shall, except as expressly provided herein, be used as defined in the Agreement.

 

	
            2.
 	
            The following Paragraph 3.1.1 is added to the Agreement:
 

 

	
            3.1.1 
 	
            The parties acknowledge that it is in the best interests of the Product to include a feature known as “Ghosting”. The use of such feature requires a license from Midway Games, Inc. (“Midway”), as successor-in-interest to Atari Games Corporation, under U.S. Patent No. 5,577,913. The cost of such license is a royalty advance to Midway of $xxxxx (the “Midway Advance”) plus a royalty of $xxxx per unit sold after recoupment of the Midway Advance (the “Midway Royalty”). The parties agree that Red Mile shall cause Midway to enter into a license agreement with Developer for the use of the ghosting feature in the Product. The terms of such license shall be subject
to Developer’s approval, such approval not to be unreasonably withheld. The Midway Advance shall be treated as an additional Minimum Guarantee payment, which shall be subject to recoupment by Publisher as provided in paragraph 8.5 of the Agreement. In addition, the Midway Royalty shall be deducted from either Net Royalty Receipts or Net Sales Receipts, as appropriate, before calculating any Royalties due Developer.
 

 

In all other respects, the Agreement, as amended by this Amendment #1, remains in full force and effect and is hereby ratified and affirmed.

 

\\

 

\\

 

Accordingly, this Amendment #1 to the Agreement has been entered into by the parties on the date last set out below.

 

	
            Red Mile Entertainment, Inc
 	
            Prodigy Design Limited
 

 

 

 

	
            /s/ Chester P. Aldridge                                    
 	
            /s/ Mario Wynands                                     

 
	
            Chester P. Aldridge, CEO
 	
            Mario Wynands, Managing Director
 	
             

				

 

	
            Date:March 9, 2005_____________
 	
            Date: March 9, 2005______________
 

 

 

26

 

 

 

 

AMENDMENT #2 TO THE

SOFTWARE DEVELOPMENT AND LICENSING AGREEMENT 

DATED SEPTEMBER 24, 2004 BETWEEN

RED MILE ENTERTAINMENT, INC. (AS SUCCESSOR-IN-INTEREST TO FLUENT ENTERTAINMENT, INC.) AND PRODIGY DESIGN LIMITED

 

This Agreement, when completely executed below, shall constitute an amendment (“Amendment #2”) to the Software Development and Licensing Agreement, dated September 24, 2004, as amended by Amendment #1, dated March 9, 2005 (the “Agreement”) by and between Prodigy Design Limited (“Developer”) and Red Mile Entertainment, Inc. (“Publisher”). 

 

The Agreement shall be amended in the following respects only:

 

1.             All terms used in this Amendment #2 to the Agreement shall, except as expressly provided herein, be used as defined in the Agreement.

 

2.             Publisher desires to enter into a Co-Publishing Agreement with Sony Online Entertainment, Inc. (“SOE”) with respect to the Product (the “SOE Agreement”) and has requested Developer to enter into this Amendment #2 in order for Publisher to enter into the SOE Agreement. Developer is willing to enter into this Amendment #2 on the terms provided hereinbelow; provided, however, if Publisher does not enter into and execute such SOE Agreement, this Amendment #2 shall be deemed void ab initio and shall be of no force and effect.

 

3.             In Section 1 of the Agreement (Definitions), the definitions for “Net Royalty Receipts,” “Term” and Territory” are deleted and replaced with the following:

 

“Net Royalty Receipts” means any funds received by or credited to Publisher for a sub-license including without limitation, where Publisher is paid a development fee which is not recoupable from royalties or a net amount per unit sold and Publisher has no direct marketing responsibility. 

 

For purposes of this Amendment #2, Publisher agrees that the SOE Agreement is a sublicense and will be accounted to Developer as a sublicense.

 

“Term” will mean beginning on the date shown on page one of this Agreement and ending on March 31, 2008. 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 six months (Sell-off Period”) beyond the Term. Royalties for sales of Products during the Sell-off Period shall be paid and remitted in accordance with Section 7.

 

“Territory” means the world.

 

	
            4.
 	
            All references in the Agreement to “Super Stunt Buggy” shall be replaced with “GripShift”.
 

 

	
            5.
 	
            All references to “Schedule 1” shall be changed to “Schedule 1-A”.
 

 

	
            6.
 	
            Schedule 1 is deleted in its entirety and replaced with Schedule 1-A.
 

 

7.             In Section 2.2 (a) of the Agreement, the following is added to the beginning of the first sentence “Except as granted in 2.3 , below,”

 

	
            8.
 	
            In Section 2.2 (a) of the Agreement, the phrase “excluding New Zealand and Australia” is deleted.
 

 

 

27

 

 

 

 

	
            9.
 	
            Sections 2.3 and 2.4 are added as follows:
 

 

2.3 Publisher is granted a perpetual, irrevocable, royalty free, non-exclusive worldwide right and license to use and exploit all executable files within the Product (the “Licensed Executable Files”) for any and all purposes. Publisher shall not, directly or indirectly, modify, disassemble, decompile or otherwise reverse engineer or attempt to reverse engineer or derive source code from, all or any portion of the Licensed Executable Files.

 

2.4 Non-compete. Developer shall not directly or indirectly, commercially release (a) a competing PSP automobile/kart racing game within thirteen (13) months after Hardware Manufacturer approval of the Product and (b) a competing PSP automobile/kart puzzle game during the Term; provided, however, in the event that Publisher does not license the sequel of the Product as provided in Section 2.1.2 of this Agreement, Developer shall be free to directly or indirectly commercially release a sequel to the Product, provided that such sequel is not commercially released within thirteen (13) months of Hardware Manufacturer approval of the Product.

 

	
            10.
 	
            The following is added to the end of the final sentence of Section 3.8 “and any payments in excess of $250,000 shall be immediately refunded by Developer.”
 

 

	
            10.
 	
            Section 6.1 is deleted in its entirety and replaced with the following:
 

 

6.1 Publisher shall provide localized text and voices. Developer shall be responsible for integrating localized text and voice over material and generating a multi-language Gold Master embodying the Translations at no additional charge, including multi-byte languages, as defined in Translations. 

 

	
            11.
 	
            Section 7.1.3 is added to the Agreement as follows:
 

 

7.1.3 in respect to any sales of the Product pursuant to the SOE Agreement into New Zealand and Australia Publisher shall remit one hundred (100) percent of the Net Royalty Receipts from SOE to Developer without deduction whatsoever and such Net Royalty Receipts shall not be cross-collateralized by Publisher with any other Net Royalty Receipts or other sums received by or credited to Publisher in respect of the Product.

 

	
            12.
 	
            The following is added at the end of Section 7.2 of the Agreement:
 

 

Notwithstanding the foregoing to the contrary, (i) Publisher shall cause SOE to provided separate royalty statements in respect to any sales of the Product into New Zealand and Australia, and (ii)Publisher shall provide Royalty Statements with respect to the exploitation of the Product by SOE and Developer’s Royalties within five (5) days of receipt by Publisher of royalty statements from SOE.

 

	
            13.
 	
            The following is added as Section 7.5:
 

 

Publisher shall permit Developer to participate in any audit or examination that Publisher may undertake of the books and records of SOE pursuant to the SOE Agreement, and if Publisher declines to conduct such audit, then Developer shall have the right to conduct such audit in Publisher’s stead.

 

14.           In all other respects, the Agreement, as amended by this Amendment #2, remains in full force and effect and is hereby ratified and affirmed.

 

 

28

 

 

 

 

Accordingly, this Amendment #2 to the Agreement has been entered into by the parties on the date last set out below.

 

	
            Red Mile Entertainment, Inc
 	
            Prodigy Design Limited
 

 

 

	
            /s/   Chester P. Aldridge     
 	
            /s/   Mario Wynands     
 
	
            Chester P. Aldridge, CEO
 	
            Mario Wynands, Managing Director
 

 

	
            Date: March 31, 2005                        _____
 	
            Date: March 31, 2005                                      _____
 

 

 

29

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