1
3.34 Form: Publisher Oriented CD-ROM Title Development Agreement
THIS AGREEMENT, made and entered into as of this __ day of
, 19__, by and between Publisher, Inc. ("Publisher"), a company with a
place of business at 1400 Washington Avenue, New York, N.Y., and
Developer For Hire & Associates ("Developer"), a corporation with a
place of business at 8 Humphrey Terrace, Boston, MA.
1. Definitions
The following terms when used herein shall have the meanings set
forth below:
1.1. Acceptance Tests
"Acceptance Tests" shall mean tests designed to determine whether the
Deliverables meet the criteria specified in the Design Documents.
1.2. Alpha Version
"Alpha Version" means the first complete version of the product for
internal testing. The Alpha version shall (i)\x11conform to the
approved final Design Specifications with any approved revisions
thereto; (ii)\x11include all components of the final product, including
all of the software, with place holder data for audio, text and graphics
that have not yet been completed; and (iii)\x11run on the targeted
platforms.
1.3. Beta Version
"Beta Version" means the first version of the product that is suitable
for external testing. The Beta Version shall (i)\x11conform to the
approved Final Design Specifications with any approved revisions
thereto, including those resulting from tests of the Alpha Version;
(ii)\x11include all components of the final product, including software
modules and 100% of the audio, text graphics, etc.; and (iii)\x11run on
all target platforms.
2
1.4. Deliverables
"Deliverables" shall mean the work product of the development work
to be performed by Developer and delivered to Publisher under the
terms of this Agreement and set forth more fully in the Design and
Development Plan, including, without limitation, object code and
source code and related Technical Specifications.
1.5. Delivery Date
"Delivery Date" shall mean the respective dates set forth in the Design
and Development Plan by which the Design Documents or
Deliverables, as the case may be, are to be delivered to Publisher by
Developer.
1.6. Design and Development Plan
"Design and Development Plan" shall mean the design and
development plan set forth as Exhibit A, as amended from time to time
by the parties in accordance with this Agreement.
1.7. Design Error
"Design Error" shall mean (i)\x11any failure of a Deliverable to meet
any applicable specification in the Final Design Specification and/or to
meet any written representations made by Developer, (ii)\x11any
failure of a Deliverable to interface properly with any related operating
system software or related hardware design referenced in the Design
and Development Plan and Final Design Specification and/or as
mutually agreed upon by the parties; and (iii)\x11any malfunction or
defect, or any inability of a Deliverable to perform repeatedly, without
interruption, and in compliance with the performance characteristics
described in the Final Design Specification.
1.8. Final Design Specifications
"Final Design Specifications" shall mean the design specifications
prepared by Developer and accepted by Publisher which shall contain
all product elements, including overview, structure, user interface,
3
level descriptions, layout and inventory of all art and audio assets, as
well as detail the technical aspects of implementation.
1.9. Gold Master
"Gold Master" shall mean the Beta Version of the Title that has
successfully passed the Acceptance Test and is ready for duplication
for commercial distribution.
1.10. Manual
"Manual" shall mean the document describing the operation and
functions of the Title and continuing instructions for using the Title.
1.11. Milestone Payment
"Milestone Payment" shall mean the amount set forth in the Design
and Development Plan to be paid to Developer upon the approval of a
Design Document or acceptance of a Deliverable, as the case may be,
in accordance with the terms of this Agreement.
1.12. Prototype
"Prototype" means a version of the Title which is based upon the Final
Design Specification and shall demonstrate the key elements of the
final product. The Prototype must include sufficient data to show
variety and repeatability and must clearly demonstrate the look and
feel of the final product.
1.13. Technical Specifications
"Technical Specifications" shall mean all documents associated with
the creation, design, and development of the title, including but not
limited to materials identifying any and all licensors of any authoring
system, applications or tools used by Developer in developing the
Title, licensing information related to any developer kit licensed by
Developer in connection with the development of the Title, files
describing the control structure and all functions of the Title which can
be maintained and modified at any object code level, and any and all
4
source files (including, without limitation, uncompiled code, graphics,
and audio source files), custom programs, utilities, tools, make files,
file layouts, instructions, control logic, flow charts, internal
documentation, designs, drawings, prints, technical data, and such
other documentation as is necessary to install, use, support, recreate,
revise, modify or enhance the Title or any portion thereof.
1.14. Title
"Title" shall mean the CD-ROM product tentatively entitled
_____________________ to be delivered as a Deliverable in
accordance with the Design Documents and the terms of this
Agreement, and described more fully in Exhibit B hereto, including all
Modifications of the Title.
2. Development Services.
2.1. Developer's Services.
Developer agrees to perform such services as are necessary to develop
the Title in accordance with the Design Documents and for the
platforms and/or operating systems indicated on Schedule A.
Developer acknowledges that Publisher may, from time to time,
amend the Design Documents in the light of commercial or creative
considerations or as reasonably necessary to ensure adequate
performance of, and end-user satisfaction with, the Deliverables and
the Title, as determined in Publisher discretion. Publisher shall be
entitled, but not obligated, to conduct periodic on-site reviews
(including reviews of Developer's facilities), with reasonable notice
and during normal business hours, of the development work being
performed under the terms of this Agreement. Publisher may request,
in its sole discretion, and Developer shall provide the prompt delivery
to Publisher of copies of all work in progress.
2.2. Materials and Assistance to Developer
Publisher shall provide Developer with such materials and assistance
in furtherance of Developer's service obligations as Publisher deems
necessary for the development of the Title pursuant to this Agreement.
5
2.3. Licensed Product
The parties acknowledge that the Developer may incorporate in the
Deliverables for use in the Title various materials from third parties
("Licensed Product"). Developer shall not incorporate such material
into the Deliverables for use in the Title unless it shall have obtained
prior written permission from the owner of such material and
appropriate releases from persons or entities portrayed in such
materials in content and form substantially as indicated at Exhibit C, or
in such other form as has been deemed reasonably acceptable to
Publisher, for Publisher to use such material in and in connection with
the Title to the full extent contemplated herein. Along with the
submission of each Deliverable containing such Licensed Product,
Publisher shall have the right to review such written statement of
permission to ensure their acceptability. Publisher shall pay costs and
permissions fees associated with licenses to and delivery of Licensed
product in the aggregate amount not to exceed $______. Developer
shall pay all costs and permissions fees associated with licenses to and
delivery of Licensed product and other materials that Developer and/or
its employee or agent has purposed for use in the Title, as set forth
herein, in excess of the amount paid by Publisher.
2.4. Other Material in Title
In addition to Licensed Product, Developer may incorporate in the
Deliverables for use in the Title materials that have been prepared by
persons or entities other than Developer and/or its regular employees.
Developer shall be entitled to engage the services of such consultants
or independent contractors in the development of the Deliverables;
provided, however, that all such consultants or independent contractors
are required to execute and do execute a consulting or independent
contractor's agreement, in content and form reasonably acceptable to
Publisher, providing that all such services are "work made for hire" for
Developer or its designee, as such term is defined in the U.S.
Copyright Act, and that the consultant irrevocably assigns all right,
title and interest therein to Developer or its assignee. Such consultants
shall not be engaged by Developer without the prior approval of
Publisher, and all costs associated with the engagement of such
6
consultants and the delivery of any materials prepared by them, as set
forth herein, shall be borne by Developer.
3. Acceptance of Deliverables
3.1 Design Documents
Developer will submit a preliminary design specification for the Title
to Publisher for Publisher's approval which shall include a general
description of the Title, the Title elements, mechanics, storyboards to
illustrate use, art and audio/video requirements. Developer shall
promptly make such modifications to the preliminary design
specification as are requested (if any) and resubmit the revised
preliminary design specification to Publisher for approval. This
process shall continue until written approval by Publisher of the
preliminary design specification. Once approved, the preliminary
design specification shall become the Final Design Specification.
3.2. Delivery
Developer will develop and deliver to Publisher the Deliverables,
including the Prototype, Alpha Version Beta Version and Gold Master
of the Title, in accordance with the Milestone Schedule and will
demonstrate as a material part of each delivery that the relevant
deliverable is complete, and satisfies the applicable portion of the
Design Documents. Delivery shall occur when Publisher receives a
Deliverable from Developer accompanied by a written statement
listing the items delivered and stating that such Deliverable is ready
for Publisher's Acceptance Testing.
3.3. Failure to Deliver the Title
If the Developer shall fail to deliver any Deliverable within ten (10)
days of the applicable date set forth in the Design and Development
Plan (and such delivery failure is not due to a breach by Publisher of
its obligations hereunder), then Publisher may at any time thereafter be
entitled to terminate this Agreement in accordance with the provisions
of Section 7.1.
7
3.4. Acceptance of the Deliverables
Following receipt of each Deliverable, Publisher shall, as appropriate,
perform Acceptance Tests on such Deliverable. Publisher shall use its
reasonable efforts to complete such Acceptance Tests within ten (10)
working days of the delivery of each Deliverable and in the case of the
Beta Version of the Title, thirty (30) working days (the "Test period").
Upon completion of such Acceptance Tests, Publisher shall deliver to
Developer a written statement of acceptance, conditional acceptance or
rejection. For each day after the Test Period that Publisher has not
delivered to Developer such a written statement, the re-Delivery Date
for the such Deliverable shall be extended by one day.
(1) If a Deliverable successfully completes the Acceptance Test,
Publisher shall deliver to Developer a written statement of acceptance.
(2) If all or any portion of a Deliverable does not successfully
complete the Acceptance Tests, Publisher shall deliver to Developer a
written notice of conditional acceptance or rejection, specifying the
nature of each and every deficiency. Developer shall promptly take
such action as may be required to correct such deficiency, at no
additional charge, and shall redeliver such Deliverable to Publisher for
further testing. The resubmitted Deliverable under this section shall be
deemed to have been approved as resubmitted unless a written request
for modifications thereto shall have been received by the Developer
within ten (10) working days after the resubmitted Deliverable has
been received by Publisher. This procedure shall continue until such
time as Publisher has delivered to Developer a written statement of
acceptance by Publisher. If Developer fails to correct the same error
after three successive test passes, the Developer shall be in breach of
this Agreement and Publisher may terminate this Agreement under
Section 7.1.
3.5. Good Faith
The parties shall act in good faith in connection with the delivery and
acceptance procedures outlined in this Article 3.
8
3.6. Developer's Continuing Obligations
(1) Warranty Period. During the one year period following initial
release of the Title (the "Warranty period"), Developer shall, at no
charge to Publisher, within thirty (30) days of its receipt of notice of a
Design Error, defect or bug, furnish such materials and services and
make whatever revisions as are necessary to correct any such Design
Error, defect or bug and upon completion, promptly redeliver the
corrected master disk to Publisher. If Developer fails to make the
required corrections within said thirty (30) day period, Publisher, at its
option, may take such corrective steps as it deems necessary and the
reasonable costs associated therewith may be offset against any of
Publisher's payment obligations to Developer hereunder.
(2) Ongoing Support. Following expiration of the applicable Warranty
Period and during the Term of this Agreement, Developer agrees to
continue to provide Design Error and ongoing support services to
Publisher, provided that Publisher shall reimburse Developer, on a
time and materials basis, for actual costs and expenses incurred by
Developer in rendering such services.
3.7. Source Code
Within three (3) business days of the successful completion of
Acceptance Testing with respect to each Deliverable and the Gold
Master, Developer shall deliver to Publisher one copy of the source
code, object code and Technical Specifications for the Title, as it exists
as of that date. During the term of this Agreement, Developer shall
provide to Publisher any updated source code, object code and
Technical Specifications within ten (10) days after completion of any
Modifications or revisions to the Title or any New Versions.
4. Development Fee
4.1. Advance
In consideration of all rights granted or relinquished by Developer and
for the services provided by Developer hereunder, Publisher agrees to
pay Developer a design and development fee set forth on Exhibit D
9
hereto (the "Development Fee"). The Development Fee shall be
payable upon delivery and acceptance (in accordance with Article 4
above) of each Deliverable, in an amount equal to the Milestone
payment for such Deliverable as set forth in the Design and
Development Plan.
4.2. Royalties
Publisher shall pay Developer a royalty equal to ______ of Net
Receipts, less a reasonable reserve for returns for sales (which shall
include licenses) of the title by Publisher (including, without
limitation, sales by or through Publisher's distributors and value added
resellers. No Royalty shall be payable on samples of the title that are
given away free for promotional, publicity or demonstration purposes
or are given or sold to Developer and no royalty shall be payable
hereunder until such time as Publisher has recouped all amounts
recoupable by Publisher hereunder.
(1) As used herein, "Net Receipts" shall mean the actual amount
received by Publisher when converted into U.S. dollars from the sale,
lease or license of the title, or from the sublicense of rights with
respect to the Title, (exclusive of sales, use excise and other taxes,
packing insurance, shipping and similar charges reimbursed by
customers), less: (i)\x11the amount of any credits or refunds for
returns, taking into account any reserves previously established by
Publisher; (ii)\x11any credits, discounts, rebates, and promotional
allowances to customers; and (iii)\x11the amount of any sales or use
taxes required to be paid or withheld by Publisher with respect to the
payments due Developer. For the purposes of calculating royalties
from sales or original equipment manufacturer ("OEM's") for bundling
purposes, "Net Receipts" shall mean Publisher's Gross Receipts from
OEM sales, less (i)\x11direct costs associated with OEM sales
including, without limitation, manufacturing and replication costs (i.e.
discs, component parts and manuals) and the allocated cost of
incremental technical support, (ii)\x11related marketing costs expenses
(i.e. co-promotions with OEM's, coop advertising, market
development funds and promotional allowances), (iii) sales
commissions and/or distribution fees to third parties, (iv) direct costs
associated with foreign sales (including, without limitation,
10
localization expenses and shipping), (v) returns, credits, discounts,
taxes and (vi) a reasonable reserve against future returns.
(2) On copies sold in combination with one or more other products
("bundling"), the royalty shall be computed as set forth hereunder,
provided, however, that the "Net Receipts" for such sales of the title
shall be determined by multiplying the amount actually received by
Publisher for the bundle by the ratio represented by the suggested
retail price of the Title divided by he sum of the suggested retail price
of all products included in the bundle.
4.3. Accrual and Payment of Royalties
Publisher shall render accounting statements to Developer (i)\x11in
February for the preceding period April 1 to September 30, and
(ii)\x11in August for the preceding period October 1 to March 31. If
for only any royalty period the current period total activity in the
Developer's account for the title is less than $100, then Publisher may
defer the rendering of a statement and payment until such royalty
period as the cumulative activity since the last statement exceed such
amount. Publisher shall keep accurate books of account and records
covering all transactions relating to this Agreement at its principal
place of business for a period of three (3) years after making any
royalty payment reflected in such records.
Publisher shall have no obligation whatsoever to manufacture, sell
and/or distribute the Title and Publisher makes no guarantee or
representation as to the amount, if any, of its Net Receipts for the title
or the selling price at which the Title will be licensed or sold.
5. Modified and New Versions
5.1. Modifications
Publisher may, from time to time in its sole discretion, elect to prepare
enhanced versions of the Title that execute on the same operating
platform/s as such Title that may include, without limitation,
improvements, enhancements, modifications or alterations thereto to
11
ensure adequate performance ("Modifications"). For a period of
eighteen (18) months from the acceptance of the Final Master of the
Title by Publisher, Developer agrees to provide such services as
Publisher may in its sole discretion request in connection with
Modifications to the Title. In full consideration for the performance of
such services and the delivery of any materials necessary therefor,
Publisher shall reimburse Developer for the cost of the personnel time
and materials required therefor, and any such compensation shall
constitute additional recoupable payments. Prior to Publisher engaging
Developer for such services, Developer shall submit a detailed written
estimate of the personnel time (broken down by category of
personnel), hourly rate of each person who Developer proposes to
perform such Modifications, materials cost required to implement such
Modifications, and a proposed production schedule for its
implementation (it being understood that any such estimate shall
reflect an average rate for personnel time of no greater than
$____(U.S.) per hour). Publisher may also elect to itself perform or
engage a third party to perform such Modification and may deduct the
percentage of royalty that must be paid or the expense of such service
from the royalties accruing to Developer. In the event Developer does
render services hereunder, its services and submissions shall be subject
to a delivery schedule and approval standards to be agreed upon by the
parties in advance of Developer's rendering such services.
5.2. New Versions
In addition to the foregoing, Publisher may, from time to time in its
sole discretion, elect to convert the Title to a language other than
American English ("New Versions"). Developer agrees to provide
such services as Publisher may, in its sole discretion, request in
connection with such New Versions. In full consideration for the
performance of such services and the delivery of any materials
necessary therefor, Publisher shall compensate Developer for the cost
of the personnel time and materials required therefor, and any such
compensation shall be a recoupable payment against royalties for such
New Version. Prior to Publisher's engaging Developer for such
services, Developer shall submit a detailed written estimate of the
personnel time (broken down by category of personnel), hourly rate of
each person who Developer proposes to perform such services,
12
materials costs required to implement such services, and a proposed
production schedule for the implementation of such services (it being
understood that any such estimate shall reflect an average rate for
personnel time of no greater than $_____ (U.S.) per hour). In the event
Developer renders services for New Versions hereunder, its services
and submissions shall be subject to a delivery schedule and approval
standards to be agreed upon by the parties in advance of Developer's
rendering such services.
5.3 Developer Royalties
Developer shall be entitled to the royalties set forth herein only for the
Title and for those New Versions for which it renders services under
Section 5.2 to Publisher's reasonable satisfaction. On New Versions
for which Developer has not rendered services under Section 5.2 or
has not rendered services to Publisher's reasonable satisfaction,
Developer shall be entitled to a royalty of ____% of Net Receipts.
Except as otherwise set forth herein, all payments to Developer shall
be based on the provisions of this Article 8. Any development fees or
similar payments made to Developer on a New Version pursuant to
Section 5.2 may be recouped against royalties payable to Developer
hereunder. Notwithstanding the foregoing, in no event shall Developer
be entitled to royalties for any New Version for which it has no
rendered services wherein the editorial content is not the same or
substantially the same as the editorial content of the title as originally
developed hereunder or the source code of such New Version is not
the same or substantially the same as the source of the Title as
originally developed hereunder.
6. Proprietary Rights
6.1. Publisher Ownership
(1) Publisher shall own all right, title and interest in and to the Title
and the Deliverables, and all additions to, deletions from alterations of
or revisions in, and each part thereof, including all Modifications and
New Versions and all tools and work in progress with respect thereto,
all hardware, software or other materials provided to Developer by or
at the expense of Publisher, and all other materials developed or
13
furnished by Developer in connection with the services provided
hereunder (collectively, for purposes of this Agreement, the
"Properties").
(2) As between Developer and Publisher, Publisher has the exclusive
rights to the Properties, including, but not limited to, publishing,
reproduction or use of the Properties in all formats and media,
including computerized versions, now known or later developed and in
all languages, broadcasting by radio, making audio and video
recordings and other mechanical or electronic renditions, making
derivative works, customized versions, translations and other
variations, showing by motion picture or by television, and otherwise
utilizing the Properties and material based on the Properties.
6.2. Work and Services
(1) Without limiting the foregoing, Developer hereby acknowledges
that Developer's work and services hereunder and all results thereof,
including the Properties, are works done which have been specially
ordered or commissioned by Publisher and that the Properties shall be
"work made for hire" for Publisher and Publisher shall own all right,
title, and interest therein. Publisher shall be considered the author of
the Properties for purposes of copyright and shall own all the rights in
and to the copyright of the Properties, and, as between Developer and
Publisher, only Publisher shall have the right to obtain a copyright
registration on the same which Publisher may do in its name, its trade
name or the name of its nominees. Accordingly, among other things,
Publisher is the author and owner of the Deliverables and shall have
the sole and exclusive rights to do and authorize any and all of the acts
set forth in Section 106 of the Copyright Act with respect to the
Deliverables and any derivatives thereof, and to secure any and all
renewals and extensions of such copyrights. Developer retains no right
to use the Deliverable and agrees not to challenge the validity of
Publisher's ownership in the Deliverables.
(2) If the Properties or any portion thereof is determined not to be a
work made for hire, Developer hereby irrevocably assigns, transfers,
releases and conveys to Publisher in perpetuity throughout the
universe, from the moment of its creation, all right, title and interest of
14
Developer in and to the Properties, as well as all intellectual property
rights embodied in or pertaining to any of the foregoing and the
complete right to exploit or otherwise use the Properties and all so-
called auxiliary and subsidiary rights in any form of medium,
expression or technology now known or hereafter known, created,
devised or developed (including but not limited to free, pay, toll,
advertising, subscription, radio, television devices, theatrical, audio
visual cassettes, cartridges and disks), free and clear of any and all
rights and claims by Developer or any other third party. Accordingly,
among other things, Publisher shall have the sole and exclusive right to
do and authorize any and all of the acts set forth in Section 106 of the
Copyright Act, including, without limitation, to copyright in its name,
as the owner thereof, the Properties and any derivatives thereof and to
secure any and all renewals and extensions of such copyrights. In
addition, Developer shall, upon Publisher's request, enter into any
further assignments, waivers or licenses of the Properties or
Intellectual Property Rights related to the Deliverables as Publisher
deems necessary or appropriate, and hereby designates Publisher as its
attorney-in-fact for the purpose of executing such assignments,
waivers or licenses in the name of Developer. Developer hereby
waives any and all claims that Developer may now or hereafter have in
any jurisdiction to so-called "moral rights" with respect to the results
of Developer's work and services hereunder.
7. Termination
7.1. Circumstances Warranting Termination
This Agreement may be terminated in accordance with any of the
following provisions:
(1) Publisher may terminate this Agreement at any time upon _____
days prior written notice to Developer in the event that Publisher
determines to cancel development of the title for any reason in its sole
discretion;
15
(2) Either party may terminate this Agreement at any time when the
other party is in material breach of its obligations under this
Agreement, and such party fails to cure such breach within thirty (30)
days after written notice thereof is given by he non-breaching party; or
(3) Either party may, at its option, immediately terminate this
Agreement if a receiver is appointed for the other party or its property;
the other party becomes insolvent or unable to pay its debts as they
mature, or makes an assignment for the benefit of its creditors; the
other party seeks relief or if proceedings are commenced against the
other party or on its behalf under any bankruptcy, insolvency or
debtor's relief law, and such proceedings have not been vacated or set
aside within sixty (60) days from the date of commencement thereof;
or if the other party is liquidated or dissolved.
7.2. No Waiver
The election of either party to terminate this Agreement pursuant to
Section 7.1 hereof shall not serve to waive, limit, bar or otherwise
extinguish any rights that party may have to pursue and recover any
damages that party may have suffered or incurred due to the breach of
any term or condition of this Agreement.
7.3 Events Upon Termination
In the event of the termination of this Agreement in accordance with
any of the provisions of Section 7.1 hereof, the parties agree to the
following:
(1) Upon termination of this Agreement by Publisher in accordance
with Section 7.1 or by Developer in accordance with any provision of
Article 7: (i)\x11Developer shall immediately deliver to Publisher all
work product of any nature whatsoever generated by Developer in
connection with the performance of this Agreement; (ii)\x11Developer
shall be entitled to receive and Publisher shall be obligated to make
payment of any Milestone Payment on any Deliverable for which
Publisher has delivered a written notice of acceptance; and
(iii)\x11Publisher shall be obligated to compensate Developer for the
16
value of the services performed by Developer in contemplation of
receiving the next Milestone Payment and for which Developer has
not, as of the date of such termination, received a Milestone Payment
pursuant to the terms of Article 3. Developer shall submit to Publisher
a detailed invoice (which shall not be binding upon Publisher) of the
value of such services provided, however, that approval of such
invoice shall not be unreasonably withheld. In no event shall the value
of such services be more than the next scheduled Milestone Payment
for the services being performed.
(2) Upon termination of this Agreement by Publisher in accordance
with Section 7.1(2) or (3): (i)\x11Developer shall immediately deliver
to Publisher all work product of any nature whatsoever generated by
Developer in connection with the performance of this Agreement; and
(ii)\x11in addition to any and all rights and remedies of Publisher in
law or at equity, Publisher shall be entitled to offset its damages in
completing development of the Titles against any Milestone Payment
not paid to Developer prior to termination on any Deliverable for
which Publisher has delivered a written notice of acceptance.
(3) Upon termination of this Agreement by either party in accordance
with Section 7.1 above, Developer shall immediately return to
Publisher all equipment, instruments, diskettes, handbooks,
documents, photographs, images, video and materials of any kind, and
all copies thereof, that were provided to Developer by Publisher in
connection with this Agreement.
8. Warranties and Representation.
8.1. Developer's Representations and Warranties.
Developer warrants and represents that:
(1) Developer possesses full power and authority to enter into this
Agreement and to fulfill its obligations hereunder and that it is
financially and technically competent to perform its obligations
hereunder, and agrees that any change in such status shall be
immediately communicated in writing to Publisher;
17
(2) Except to the extent developed by Publisher or its employees, the
Deliverables and all portions thereof shall be developed solely by
Developer through the use of Developer employees, or through the
services of consultants pursuant to the provision of Section 2.4 hereof,
who have provided such services as "work made for hire" and have
otherwise irrevocably assigned all rights in the product of their
services to Developer or its assignee;
(3) The work provided to Publisher by Developer will be its original
work (except for material in the public domain or as to which
permission has been obtained from the copyright owner as provided in
Section 2.3 for use in connection with the Title developed hereunder in
form as set forth in Exhibit C;
(4) The Design Documents and Deliverables will not contain any
libelous or otherwise unlawful material or infringe any statutory or
common law copyright, trademark or registered U.S. patent or
otherwise infringe any personal or proprietary right of any person or
entity; that performance of the terms of this Agreement and of
Developer's obligations hereunder shall not breach Developer's charter
or bylaw or any separate agreement by which Developer is bound;
(5) The performance of the Title shall conform to the specifications set
forth in Exhibit A, shall operate in accordance with the Design
Documents and with commonly accepted standards for the operation
of computer software, and shall be free of errors; and
(6) the Title does not contain any virus, Trojan horse, worm, or other
unauthorized access to disable, erase, or otherwise harm software,
hardware, data, or to perform any other such actions.
8.2. Publisher's Representations and Warranties
Publisher warrants and represents that it has all necessary rights and
authority to execute and deliver this Agreement and perform its
obligations hereunder, and nothing contained in this Agreement or in
the performance of this Agreement will place Publisher in breach of
any other contract or obligation.
18
9. Indemnification
9.1. Indemnification by Developer
Developer shall indemnify, and hold Publisher and its successors,
assigns, agents, officers, directors and employees, harmless from and
against any and all liabilities, obligations, losses, claims, damage, cost,
charges or other expenses of every kind and character (including but
not limited to reasonable attorneys' fees and court costs) which arise
out of or result from any breach or alleged breach of any
representation or warranty by Developer or arising out of Developer's
failure to obtain releases or permissions from third parties required in
connection with the Design Documents and/or Deliverables. Publisher
shall have the right to withhold its reasonable estimate of the total
damages and expenses from sums otherwise payable to Developer
hereunder, and to apply such sums to payment of such damages and
expenses. Publisher shall have the sole right to control the defense of
any such claim and shall consult with Developer prior to settlement
thereof. Developer agrees to provide reasonable assistance to Publisher
at Publisher's expense, in the defense of same.
9.2. Premises
If Developer, its agents or employees, shall be required by the terms of
this Agreement to perform, or does perform, work on the premises of
Publisher, Developer agrees to indemnify and hold harmless Publisher,
its officers, employees, agents and invitees from and against all claims,
liabilities, losses, injuries and damages of every nature arising out of
or in connection with the performance of such work.
9.3. No Remedy Exclusive
The rights of indemnification of Publisher and its successors, assigns,
officers, directors and employees shall not be limited to the provisions
of this Article, and the provisions of this Article shall be in addition to,
and shall not be exclusive of any other rights or remedies which may
accrue to Publisher and its successors, assigns, officers, directors and
employees.
19
10. Confidentiality
10.1 Disclosure of Information
Each party (the "Disclosing Party") may provide to the other party
("Recipient") certain non-public information, whether in oral, written
or other tangible form that Disclosing Party designates as being
confidential or which, under the circumstances surrounding disclosure,
should be treated as confidential ("Confidential Information").
Notwithstanding the foregoing, information will not be deemed
confidential Information if and to the extent such Confidential
Information: (i)\x11is or becomes generally available to the public
other than: (a) as a result of a disclosure by Recipient or its employees
or any other person who directly or indirectly receives such
information from Recipient or its employees or (b) in violation of a
confidentiality obligation to Disclosing Party known to Recipient; or
(ii) is or becomes available to Recipient on a non-confidential basis
from a source which is entitled to disclose it to Recipient.
10.2. Obligation of Confidentially
Recipient understands and agrees that it will be deemed in a fiduciary
relationship of confidence and trust with respect to the Confidential
Information. Recipient agrees to hold the Confidential Information in
strict confidence, provided that the Confidential Information may be
disclosed to such of Recipient's employees as need to know for the
purpose of fulfilling Recipient's obligations under this Agreement.
Recipient will advise any such employees that the Confidential
Information is confidential and that by receiving such information
such employees are agreeing to be bound by the terms of this Article
10 and not to use such information for any purpose other than
described herein. Without Disclosing Party's prior written consent,
Recipient will not, and will direct its employees not to, disclose the
Confidential Information in whole or in part, except to the extent
compelled by law. Recipient agrees that it will employ all reasonable
steps to protect the Confidential Information from unauthorized or
inadvertent disclosure or use, including, without limitation, all steps
that it takes to protect its own information that it considers proprietary
20
and trade secret. Recipient agrees to be responsible for any breach by
its employees of the obligations provided for under this Article 10. In
the event that any Confidential Information is wrongfully used or
disclosed by a Recipient employee, Recipient shall fully assist, in
litigation or otherwise, Disclosing Party in preventing any further
disclosure or use of the wrongfully disclosed or used Confidential
Information and shall, if requested by Disclosing Party, permanently
remove such employee from any further involvement in any project
contemplated by this Agreement.
10.3 Injunctive Relief
It is further understood and agreed that money damages would not be a
sufficient remedy for any breach of Recipient's obligations under this
Article 10 by Recipient, or any employees, consultants or other
persons under Recipient's supervision and that Disclosing Party shall
be entitled to specific performance, including, without limitation,
injunctive relief, as a remedy for any such breach. Such remedy shall
not be deemed to be the exclusive remedy for breach of either party's
obligations under this Article 10 but shall be in addition to all other
remedies. Recipient agrees to reimburse Disclosing Party for costs and
expenses (including, without limitation, reasonable attorneys' fees)
incurred by Disclosing party in the enforcement of this Article 10.
10.4. Return of Confidential Information
In the event of any termination of this Agreement, Recipient shall
promptly return to Disclosing Party all Confidential Information of
Disclosing Party in tangible form, including without limitation all
copies thereof and photographs, videotapes, printouts, notes and
working papers created by or for the Recipient in connection
therewith, including all such items, materials and information in its
possession or control or in the possession or control of any person
permitted access to the Confidential Information. Alternatively,
Recipient 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.
21
11. Miscellaneous
11.1 Relationship of Parties
(1) Developer is appointed by Publisher only for the purposes and to
the extent set forth in this Agreement, and Developer's relation to
Publisher shall, during the period covered by this Agreement, be that
of an independent contractor, and Developer does not have and shall
not have any power, and Developer shall not represent that Developer
has any power, to bind Publisher, to assume or to create any obligation
or responsibility, express or implied, on behalf of Publisher or in its
name. Developer shall perform all duties hereunder in good faith, and
shall avoid any conflicts of interest in the performance of its
obligations hereunder.
(2) Developer shall not be considered, under the provisions of this
Agreement or otherwise, as having an employee status or the status of
an agent or partner of Publisher, and shall not be entitled to participate
in any plans, arrangements, or distributions by Publisher pertaining to
or in connection with any pension, stock, bonus, profit sharing, health
plans, or similar benefits for Publisher employees. Developer shall
meet all of its obligations and responsibilities as an employer to its
own employees under any federal, state or local laws, regulations or
order now or hereafter in force, including, without limitation, those
relating to taxes, unemployment compensation or insurance, arising to
of its engagement of persons for the performance of or contribution to
the services performed hereunder.
(3) Developer shall be solely responsible to report as income its
compensation received from Publisher and to make the requisite tax
filings and payments to the appropriate federal, state or local tax
authority.
(4) No part of Developer's compensation shall be subject to
withholding by Publisher for the payment of social security,
unemployment, or disability insurance or any other similar state or
federal tax obligation. However, in the event Publisher is found to be
liable for social security, unemployment, disability insurance, or other
tax or withholding, Publisher shall have the right to recover an
22
equivalent amount, including any interest or penalties paid in
connection therewith from Developer.
11.2. Notice and Service
All notices or requests, including communications and statements
which are required or permitted under the terms of this Agreement,
shall be in writing and shall be sent by telex or facsimile, or sent by
recognized commercial overnight courier, or mailed by United States
registered or certified mail to the addresses set forth above. Notices
shall be effective upon receipt.
11.3 Captions
All indices, titles, subject headings, section titles and similar items
contained in this Agreement are provided for the purpose of reference
and convenience only and are not intended to be inclusive, definitive
or to affect the meaning, content or scope of this Agreement.
11.4. Binding Agreement: Assignments
This Agreement, upon execution by both parties, will be binding upon
the parties hereto, their heirs, successors, permitted assigns and
personal representatives. Neither party shall be entitled to assign,
pledge or transfer any of its rights and obligations under this
Agreement, except that Developer shall be entitled to assign or pledge
its right to receive royalty payments hereunder and Publisher shall be
entitled to assign any and all rights herein granted to any corporation
or entity controlling, controlled by or under common control with
Publisher.
11.5. Survival
Upon any termination of this Agreement, Articles 6, 7, 8, 9, 10 and 11
shall remain in full force and effect.
23
11.6. Governing Law
The validity of this Agreement, the construction of its terms and the
interpretation of the rights and duties of the parties hereto shall be
governed by and construed in accordance with the substantive laws of
the state of New York, without reference to laws relating to conflicts
of law. The parties agree to submit to the exclusive jurisdiction over
all disputes hereunder in the federal and state courts in the State of
New York located in New York County.
11.7. Entire Agreement
This Agreement constitutes the entire agreement and understanding
between the parties hereto with respect to the subject matter thereof
and supersedes any and all other agreements, written or oral, that the
parties heretofore may have had with respect to the subject matters
herein.
11.8. Incorporation
The Exhibits hereto are made a part hereof and hereby incorporated
into this Agreement by reference.
11.9. Effective Date
This Agreement shall be effective when signed by both parties and as
of the date of the last signature hereto.
11.10. Amendments
No amendment, modification or waiver of the terms of this Agreement
shall be binding unless reduced to writing and signed by both parties.
11.11. Force Majeure
Neither party shall be deemed in default of this Agreement to the
extent that performance of its obligations or attempts to cure any
breach are delayed or prevented by reason of any act of God, fire,
natural disaster, accident, riots, acts of government, shortage of
24
materials or supplies, or any other cause beyond the reasonable control
of such party; provided, that the party interfered gives the other party
written notice thereof within ten (10) working days of any such event
or occurrence.
11.12. Limitation on Liabilities, Remedies
NEITHER PARTY SHALL BE LIABLE TO THE OTHER PARTY
FOR ANY INCIDENTAL, CONSEQUENTIAL, SPECIAL, OR
PUNITIVE DAMAGES OR LOST OR IMPUTED PROFITS OR
ROYALTIES ARISING OUT OF THIS AGREEMENT OR ITS
TERMINATION, WHETHER FOR BREACH OF WARRANTY 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 THE PARTY
HAS ADVISED OR HAS BEEN ADVISED OF THE POSSIBILITY
OF ANY SUCH LOSS OR DAMAGE. EACH PARTY HEREBY
WAIVES ANY CLAIMS THAT THESE EXCLUSIONS DEPRIVE
SUCH PARTY OF AN ADEQUATE REMEDY.
11.13. Severability
In the event any proof is determined by a court of competent
jurisdiction to be invalid, illegal or otherwise unenforceable, such
provision shall be deemed to have been deleted from this Agreement,
while the remainder of this agreement shall remain in full force and
effect according to its terms.
IN WITNESS WHEREOF, the parties hereto have cause this
Agreement to be duly executed.
PUBLISHER DEVELOPER
By _______________ By _________________
Title ______________ By _________________
25
EXHIBIT A
DESIGN AND DEVELOPMENT PLAN
MILESTONE SCHEDULE
Milestone #1 Preliminary Design Specification
The Preliminary Design Specification shall include a general
description of the product, product elements, mechanics, storyboards
to illustrate product play, art and audio/video requirements.
Delivery Date:
Payment:
Milestone #2 Final Design Specifications
The Final Design Specification shall include the final description of all
product elements including: product overview, product structure (user
interface, level descriptions/layouts, character descriptions, character
interactions, difficulty banking and inventory of all art and audio
assets) and product play. Inventories of all art and audio necessary to
complete the product shall be included along with storyboards for all
key product graphic elements. The final Design Specification details
the technical aspects of the implementation with risks and alternatives.
Delivery Date:
Payment:
Milestone #3 Roughly Operation
The roughly operational product shall be based on the Final Design
Specifications and shall demonstrate the navigation and interfaces to
be used and the unique play features of the product as they will appear
on the development platforms. The roughly operational product will
include sample demonstrations of all key product elements, including
full screen background with multiple animating objects, both moving
and stationary, music and sound effects, response to user controller
buttons, and three connected scenes with scripted actions and a fully
functioned user interface. The roughly operational product must
26
demonstrate the key elements of the final product. The roughly
operational product must include sufficient data to show variety and
repeatability and must clearly demonstrate the look and feel of the
final product.
Delivery Date:
Payment:
Milestone #4 Alpha Version Completed
This is the first complete version of the product for internal publisher
testing.
ï The Alpha product must conform to the approved final Design
Specification with any approved revisions.
ï The Alpha product must include all components of the final product.
This means all of the software with place holder data for audio, text
and graphics that have not yet been completed.
ï The Alpha product must run on the target systems.
Delivery Date:
Payment:
Milestone #5 Beta Version Completed
This is the first version of the product that is suitable for external
testing.
ï The Beta product must conform to the approved final Design
Specification with any approved revisions, including those resulting
from tests of the Alpha product.
ï The Beta product must include all components of the final product.
This means all the software modules and 100% of the audio, text,
graphics, etc.
27
ï The Beta product must run on the target systems.
Delivery Date:
Payment:
Milestone #6 Manual
The final version of the user documentation and other materials to be
provided with the Software to end-users.
Delivery Date:
Payment:
Milestone #7 Rights Clearances
All rights clearances completed and evidenced by fully executed
license agreements.
Delivery Date:
Payment:
Milestone #8 Final Master and Documentation
The final version of the Title means the ROM in the form of a
duplicate program (a "Golden Master"), on EPROMs or other suitable
medium as specified by Publisher, suitable for manufacture without
any modifications. All development work and corrections to the Beta
version will be incorporated into the Golden Master. The
Documentation shall also be provided.
Delivery Date:
Payment:
EXHIBIT B
DESCRIPTION OF THE TITLE
DESCRIPTION OF TITLE SPECIFICATIONS
28
Operating System Specifications
The Title should be compatible with the following minimum
configuration for the applicable operating system. The Title should
take advantage wherever possible of any capabilities exceeding those
described below.
IBM 386 33Mhz or 100% compatible
4MB of RAM
2x CD-ROM drive
VGA with 256 colors
SVGA with 256 colors
Support for VESA complaint video boards
Local Bus video architecture specifically PCI
Microsoft mouse and 100% compatibles
DOS 3.3 or higher
Windows 95 support
Sound Hardware Support (both 8 and 16 bit soundcards):
100% Soundblaster Compatible Sound Card
Mediavision Compatible Sound
Covox Sound Master II
Microsoft Windows Sound System
ESS Audiodrive Sound System
Title Requirements
Title should include DOS level application which within reason
detects hardware capabilities of the machine and installs all required
software and drivers on CD.
Title should require no more than 15MB of hard drive space when
installed in minimum configuration. User should be allowed to specify
installation directory.
Installer should also be able to perform de-install, removing all files
installed on hard drive by original install process.
Description of Title Design Specifications
29
The Title Design Specifications will include:
High concept
Feature overview
Description of installation process
Description of filing operations; save, load options
Feature map including description of relationship to other features
For each major feature:
Goal of feature
User interface description
Musical content
Sound effect content
The Design Specification will also include descriptions of the
following:
Programming language and proprietary and commercial development
tools utilized including version numbers
Video driver technology
Sound driver technology
Mouse driver technology
CD driver technology
CD file map description and configuration
Memory map description and configuration
