SELECT AGENCY REPRESENTATION AGREEMENT

 

SELECT

AGENCY REPRESENTATION AGREEMENT

This Select Agency Representation Agreement (“Agreement”) is made as of February 27, 2020 (the “Effective Date”) between Neon Media, a Washington company located at 2701 Franklin Ave E, Seattle, WA 98102 (herein referred to as “Company”), and DDM Game Studio Representation LLC, a Delaware limited liability company, located at 17 New South Street, Suite 205, Northampton, MA 01060 (herein referred to as “Agency”) (Company and Agency are sometimes referred to herein each as a “Party” and together as the “Parties”).

 

WHEREAS, Company develops interactive entertainment software and desires the services of a professional business agency; and

 

WHEREAS, Agency provides business services in the interactive entertainment field and desires to represent Company.

 

NOW THEREFORE, in consideration of the covenants set forth below, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:

 

Definitions

 

“Affiliate” means any parent, subsidiary, sister or affiliate of Company or Target, as the case may be.

 

“Product” means an interactive entertainment software program which is designed, developed, managed, published, distributed, owned or otherwise exploited by or on behalf of Company.

 

“Target” means an entity with which Company may engage in a business relationship regarding a Product.

 

“Product Agreement” means any contract, agreement or binding commitment entered into by Company (or any of its Affiliates) and a Target (or any of its Affiliates) in connection with funding, design, development, conversion, distribution, publication, sale, and/or license of one or more Products. The Product Agreement includes expansions, additional content, live teams and all other ancillary work directly related to the Product even if such content is subject to a separate agreement between Company (or any of its Affiliates) and Target (or any of its Affiliates).

 

“Third Party Agreement” means any Product Agreement for a Product which meets at least one of the Product Inclusion Requirements (see Section Four below).

 

“Third Party Opportunity” means a business development opportunity with a Target which may lead to a Third Party Agreement. A Third Party Opportunity may be defined by Product, Target and/or other criteria.

 

Section One Exclusion List

 

This Agreement shall apply to all Third Party Opportunities except for those specifically set forth in Exhibit A (“Exclusion List”); the Third Party Opportunities set forth in Exhibit A are expressly excluded from the scope of this Agreement.

 

Section Two Term of Agreement

 

  1. The “Term” of this Agreement shall be three (3) years from the Effective Date unless earlier terminated or extended as set forth in this Agreement.

 

  1. Either Party may terminate this Agreement for cause at any time in the event of a material breach of this Agreement by the other Party, which breach remains uncured after fifteen (15) days’ written notice of such breach from the terminating Party.

 

  1. Unless otherwise terminated in accordance with the terms of this Agreement, this Agreement shall automatically renew for successive three (3) year periods until a written notification of non-renewal is delivered by one Party to the other Party prior to the end of the then-current three (3) year period.

 

  1. Notwithstanding any termination or expiration of this Agreement, the obligations of Company and Agency in Sections Four and Seven through Fifteen shall survive such termination or expiration.

 

Section Three Territory

 

The “Territory” in which Agency shall represent Company’s interests shall be worldwide unless otherwise mutually agreed upon in writing by the Parties for a given Third Party Opportunity.

 

Section Four

Product Inclusion Requirements

 

A Product Agreement shall be deemed to be included as a Third Party Agreement hereunder (and thus subject to payment of full Agency Fees to Agency for the applicable Third Party Agreement) if at least any one (1) of the following “Product Inclusion Requirements” is met:

 

  1. This Agreement is in effect when Company (or its Affiliate) enters into the Product Agreement resulting from a Third Party Opportunity.

 

  1. Company (or its Affiliate) enters into the Product Agreement resulting from a Third Party Opportunity within ninety (90) days of the termination (for any reason) or expiration of this Agreement.

 

  1. Whether or not this Agreement has been terminated (for any reason) or has expired, the Product Agreement is for a sequel, prequel, extension, companion and/or modification of a Third Party Agreement with the same Target (or its Affiliate) or with an entity that secured the rights to the project directly from the Target (or its Affiliate).

 

  1. An existing Third Party Opportunity leads to the Product Agreement with the Target (or its Affiliate) for a different Product, either while this Agreement is in effect or within ninety (90) days of the termination or expiration of this Agreement.

 

Section Five Agency’s Services

 

Company hereby engages Agency as its exclusive agent and representative, during the Term (as may be extended), in the Territory, to provide the services set forth in this Section Five. In connection therewith:

 

  1. Agency shall use its reasonable commercial efforts on behalf of Company to: (i) identify Third Party Opportunities; (ii) perform business development activities to secure Third Party Agreements; (iii) assist Company in negotiating the business terms of such Third Party Agreements subject to Company’s direction and control; (iv) provide Company with business development advice and guidance; and (v) for Company-Funded Products, Agency shall secure distribution and assist with securing production, development, and publishing services. Agency does not provide legal counsel or broker/dealer services.

 

  1. Agency may, at its sole discretion and at Agency’s own expense, engage third parties to perform some of the services it provides to Company hereunder, provided that: (i) Agency remains responsible for the performance of its obligations hereunder, and (ii) Agency provides Company with written notice of Agency’s intention to engage any such third party, and Company does not expressly object to such engagement in writing within ten (10) business days of its receipt of such written notice.

 

  1. Agency will keep Company regularly informed of all Agency initiatives relating to Company.

 

  1. Agency shall have the exclusive right to pitch any and all of Company’s Products and Product concepts to Targets and pursue Third Party Opportunities and Product Agreements therefor.

 

  1. Company understands, acknowledges, and agrees that: (i) Agency renders similar services as set forth herein for its other clients and has related companies and affiliates which render similar and other services for a wide variety of interactive entertainment software company clients in areas including interactive entertainment software product development, publishing, distribution, exploitation, and writing; and (ii) nothing in this Agreement restricts the unfettered right of Agency and its affiliates to continue all such activities for its other clients at Agency’s sole discretion, even if the interests of such other clients may be directly competitive to Company’s interests.

 

  1. Agency has no authority to sign any agreement on behalf of Company or to bind Company to any agreements.

 

Section Six Company Assistance

 

Company recognizes that effectively working with Agency requires actions by Company which include, without limitation:

 

  1. Providing regular access for Agency to the top decision maker(s) of Company; and

 

  1. Clearly outlining roles and responsibilities between Company’s business development staff and Agency; and

 

  1. Presenting all new Company Product concepts to Agency in a timely and orderly manner; and

 

  1. Working with Agency diligently and in good faith to close Third Party Agreements and not using Agency to generate “stalking horse” or similar deals; and

 

  1. Being forthright and otherwise keeping Agency up-to-date on Company’s financial situation; and

 

  1. Company providing Agency with a copy of each and every Third Party Agreement within ten

(10) days of the execution thereof; and

 

  1. Company expressly acknowledges and agrees that each Third Party Agreement shall include a provision that requires that copies of all notices, documentation, statements, reports, correspondence and the like relating to payments made thereunder (including without limitation Product Development Compensation and Game Revenue) to Company shall be simultaneously sent to Agency, even after termination or expiration of this Agreement, unless Agency otherwise agrees in writing, and Company shall require that such provision be included in each Third Party Agreement.

 

  1. In the event any Target or other third party approaches or otherwise solicits Company with respect to a potential Third Party Opportunity, Company shall promptly: (i) advise Agency of such potential Third Party Opportunity; and (ii) advise said Target or other third party that all such potential Third Party Opportunities are handled by Agency as set forth herein; and (iii) direct such Target or other third party to contact Agency with respect to the further evaluation and negotiation of any such Third Party Opportunities.

 

Section Seven Agency’s Compensation

 

  1. Company shall pay Agency as compensation for services rendered pursuant to this Agreement

 

sums as outlined in this Section 7.1 (collectively, “Agency Fees”). Italicized terms are defined in the attached Schedule 1, which is incorporated by reference. Agency Fees shall accrue and remain due and payable on Third Party Agreements for the life of such Third Party Agreements, whether or not this Agreement has been terminated or expired. Agency Fees are and shall be calculated as follows:

 

  1. Percentage fee of Product Development Compensation: (a) zero percent (0%) on Company-Funded Advances; and (b) five percent (5%) on a given Product’s Product Development Compensation, after first subtracting Development Pass Through Costs (solely to the extent unrecouped) from the Product Development Compensation.

 

  1. Percentage fee of Game Revenue: five percent (5%) for Game Revenue earned using the free- to-play business model and, otherwise, five percent (5%) until Company earns back or is otherwise reimbursed for any Company-Funded Advances, and then ten percent (10%) thereafter, in all cases after first subtracting Game Revenue Pass Through Costs (solely to the extent unrecouped) from the Game Revenue.

 

  1. Unless there is a separate Funding Services Consulting Agreement between the Parties:

 

  1. In the event Company engages in a Sale during the Term, this Agreement shall remain in full force and effect and shall be binding upon the successors and assigns of Company, including without limitation any acquiring entity of Company, and Agency shall be entitled to receive, and shall continue to receive, all Agency Fees as set forth herein. Notwithstanding the foregoing, if, and only if, the entity acquiring Company via the Sale is a Target, then with respect to Third Party Agreements with the Target only, Company may elect to pay an Agreement Buyout Fee to Agency on or before the closing date of the Sale. In the event an Agreement Buyout Fee is paid to Agency, the compensation provisions set forth in Section 7.1(i) through 7.1(iii) shall terminate only with respect to any Third Party Agreements with Target. For the avoidance of doubt, all other Third Party Agreements shall not be subject to the Agreement Buyout Fee, and Agency shall continue to receive all Agency Fees on such Third Party Agreements. The Parties shall use good faith and diligent efforts to determine a fair and equitable Agreement Buyout Fee. Company acknowledges and agrees that mutual agreement on, and payment of, the Agreement Buyout Fee shall be a condition precedent to closing any Sale to a Target, if Company has elected the Agreement Buyout Fee option.

 

  1. Payment Timing.

 

  1. Agency Fees based on Product Development Compensation shall be paid to Agency within five

(5) business days of Company’s receipt of the applicable compensation.

 

  1. Agency Fees based on Game Revenue shall be paid to Agency within ten (10) business days of the close of the month in which the applicable compensation was received by Company.

 

  1. Agency Fees shall be sent via electronic transfer at Company’s expense, unless Company has a US bank account in which case a check from such account is also acceptable. Each payment shall be accompanied by a statement setting forth in reasonable detail the basis for computation of the amount remitted, together with such supporting documents as Agency may reasonably request. Without limiting the foregoing, Company shall provide Agency with documentation of all Company-Funded Advances, Development Pass Through Costs and Game Revenue Pass Through Costs within ten (10) business days of Agency’s request.

 

  1. Late Payment; Collection.

 

  1. In the event of a late payment of any Agency Fees by Company to Agency, in order to partially compensate Agency for its collection costs and its loss of anticipated operating revenues, Agency may impose a late payment charge of 1.5% of the balance outstanding per thirty (30) days overdue, to be calculated on a monthly compounded basis. In addition, if Company is more than fifteen (15) days late on payment of fees to Agency, Agency may at its discretion and without limiting its rights, suspend performance of its services to Company, and on Company’s behalf, until Company has paid all due Agency Fees and late payment charges. Without limiting the generality of the foregoing and without limiting Agency’s rights or remedies, in the event Company is more than ninety (90) days late on payment of Agency Fees to Agency, Company shall be responsible for and shall reimburse Agency for any out-of-pocket costs and expenses, including outside attorneys’ fees and other collection costs, incurred by Agency in connection with its efforts to collect the outstanding Agency Fees from Company.

 

  1. Company expressly agrees that, notwithstanding any confidentiality obligations herein, in the event of Company’s late or non-payment of undisputed Agency Fees to Agency for three (3) months, Agency shall be entitled to show this Section 7.3(ii) together with an affidavit of non-payment to the Target and direct the Target to submit all future Company funds to Agency for the life of that Product. For the avoidance of doubt, in such case, Company agrees that Agency may, in its sole discretion, deduct any outstanding undisputed Agency Fees, plus interest, before promptly remitting the balance, if any, to Company.

 

  1. Audit. Company agrees to keep accurate accounting records covering all Third Party Agreements for the term of such Third Party Agreements and for two years thereafter, and to allow Agency and/or its independent auditors to review such records to verify the accuracy and completeness of Company’s payment of Agency Fees. Such audits shall not occur more than once per twelve (12) month period, unless Company has not timely paid Agency Fees as they become due under this Agreement, or a prior audit has revealed an underpayment of Agency Fees of five percent (5%) or more for the audited period, in which event Agency may audit as frequently as it wishes during the Term with respect to all applicable Third Party Agreements. Agency shall provide written notice of at least twenty (20) business days prior to any such audit, and shall conduct such audit during normal business hours. If Agency engages an auditor, the auditor must agree to be bound by a confidentiality agreement to Company.

 

Underpayment of Agency Fees, including interest thereon, shall be paid to Agency within ten

(10) business days of Agency’s receipt of the auditor’s report. Agency shall be solely responsible for the cost of the audit, except if any underpayment of Agency Fees of five percent (5%) or more is revealed by such audit for the audited period, in which case Company shall reimburse the reasonable cost of the audit to Agency in addition to paying the outstanding Agency Fees and any interest thereon. Agency’s audit right shall survive for five (5) years after the termination or expiration of this Agreement or five (5) years after the commercial release of the last Product under the last active Third Party Agreement, whichever comes later.

 

Section Eight Warranties  and Indemnification

 

  1. Company represents, warrants, and covenants that:

 

  1. It is duly organized and in good standing in the jurisdiction of its formation; and

 

  1. It is the owner of or has licensed all rights in any Products included under this Agreement, and has all necessary rights to exploit these Products in the manner in which it requests Agency to assist; and

 

  1. It is authorized to enter into this Agreement and perform all obligations of Company pursuant hereto, and that so doing will not violate the terms of any other agreement to which it is a party; and

 

  1. Any Company financial information it provides to Agency is correct in all material respects, and that it will promptly inform Agency of any material changes to such information; and

 

  1. This Agreement constitutes the legal, valid and binding obligation of Company, enforceable in accordance with its terms.

 

  1. Company expressly understands and agrees that Agency makes no warranty whatsoever that:
    1. the services and products of Company will be successfully marketed to Targets; or (ii) any minimum number of Third Party Agreements for Company will be secured; or (iii) that any minimum level of revenue for Company will be achieved, whether through Third Party Agreements or otherwise.

 

  1. Company shall indemnify and hold Agency (and its parent and affiliated companies, together with the respective owners, directors, officers, agents and employees of the same) harmless from and against any and all suits, losses, liabilities, damages, awards, claims, settlements, costs and expenses, including reasonable attorneys’ fees, arising out of or otherwise relating to any third party claim based on or arising from: (i) any breach of its warranties and representations hereunder; (ii) any Product or service of Company or any Third Party Agreement, or (iii) any

 

services provided by Agency hereunder (other than any action, loss, damage or expense arising solely out of Agency’s gross negligence or willful misconduct).

 

  1. Agency represents, warrants, and covenants that: (i) it is duly organized and in good standing in the jurisdiction of its formation; (ii) it is authorized to enter into this Agreement and perform all obligations of Agency pursuant hereto, and that so doing will not violate the terms of any other agreement to which it is a party; and (iii) this Agreement constitutes the legal, valid and binding obligation of Agency, enforceable in accordance with its terms.

 

  1. Agency shall indemnify and hold Company (and its officers, directors, employees and agents) harmless from and against any and all suits, losses, liabilities, damages, awards, claims, settlements, costs and expenses, including reasonable attorneys’ fees, arising out of or otherwise relating to any third party claim based on or arising from any breach by Agency of its warranties and representations hereunder.

 

Section Nine Confidentiality

 

“Confidential Information” shall mean all proprietary information, materials or documents, including designs, concepts, trade secrets and other intellectual property, business information, plans, processes, procedures and financial information of the disclosing Party (“Disclosing Party”) which may be disclosed to the other Party (“Receiving Party”) in the course of exercising and performing its rights and obligations under the Agreement.

 

Confidential Information shall not include information that: (1) is now in the public domain or subsequently enters the public domain by publication or otherwise through no action or fault of the Receiving Party; (2) was in the Receiving Party’s possession free of any obligation of confidence at the time it was disclosed to the Receiving Party; (3) was rightfully communicated to the Receiving Party free of any obligation of confidence subsequent to the time it was disclosed by the Disclosing Party, or (4) was independently developed by the Receiving Party without reference to the Disclosing Party’s Confidential Information.

 

Section Ten Notices

 

All notices, requests, demands, and other communications required under this Agreement shall be delivered to the Parties by internationally-recognized overnight courier (e.g., FedEx, DHL) or delivered personally at the addresses listed in the first paragraph of the Agreement, or to such other address as either Party may direct in writing. Notices shall be deemed given when actually received by the intended recipient. Notices may also be given via email (with delivery acknowledged, or a delivery receipt issued by the recipient, or with a confirmation copy sent by one of the other methods of delivery), provided the Agreement Executors are included on the email thread. “Agreement Executors” are the signors of this Agreement and can be changed by either Party via written notification to the other.

 

Section Eleven Limitation of Liability

 

Except for the indemnification obligations under Section Eight above, under no circumstances shall either Party to this Agreement be liable to the other Party for lost profits, loss of use, or for any special, indirect, consequential, or punitive damages, whether or not such damages are caused by the fault or negligence of such Party and whether or not such Party is notified or is aware of the possibility of such damages. In no event shall either Party be liable for an amount greater than the total Agency Fees paid or due Agency during the preceding twelve months plus late fees; for the avoidance of doubt, the foregoing limitation shall not apply to the indemnification obligations under Section Eight above, or any award of attorneys’ fees and expenses.

 

Section Twelve Governing Law and Jurisdiction

 

This Agreement shall be construed, interpreted and governed in accordance with the laws of the United States of America and the Commonwealth of Massachusetts applicable to agreements made within Massachusetts and otherwise without reference to provisions regarding conflict of laws. Subject to Section Thirteen below, any dispute, controversy or claim between the Parties arising out of or relating to this Agreement may only be brought in the State or Federal Courts in Hampshire or Hampden County, Massachusetts. All Parties hereby consent to the exercise of personal jurisdiction by any such court with respect to any such proceeding. The Parties irrevocably stipulate that both such forums are convenient to them, agree to accept service of process by international courier, waive any formal service of process required under the Hague Convention, and waive any jurisdictional or venue defenses available to them. In any action to enforce any right or remedy under this Agreement or to interpret any provision of this Agreement, the prevailing Party shall be entitled to recover its reasonable attorneys’ fees, costs and other expenses.

 

Section Thirteen Alternative Dispute Resolution

 

In the event of any dispute arising under this Agreement, the Parties shall negotiate in good faith to resolve such dispute. If the Parties are unable to settle the dispute within fourteen (14) days, the Parties may mutually agree in writing to resolve such dispute by binding arbitration in lieu of the dispute resolution procedures in Section Twelve above. Such binding arbitration shall be conducted in accordance with the Commercial Arbitration Rules of the American Arbitration Association (“AAA”) before a single arbitrator. If the Parties are unable to mutually agree upon an arbitrator, then the AAA shall select the arbitrator. Any such arbitration shall be conducted in Springfield, Massachusetts. A final award or decision in any dispute arbitrated hereunder shall be binding upon the Parties, and may be entered in any court having jurisdiction over the losing Party, or any of such Party’s assets, for enforcement thereof. The prevailing Party shall be entitled to have its attorneys’ fees and all arbitration costs paid by the other Party. For the avoidance of doubt, in the event the Parties do not mutually agree in writing to resolve such dispute by binding arbitration as set forth in this Section 13, such dispute shall be resolved pursuant to the dispute resolution procedures set forth in Section 12 above.

 

Section Fourteen

No Talent Agency Services

 

As of the Effective Date, Agency is licensed as a “talent agency” in the State of California; however, Company expressly acknowledges and agrees that: Agency is not providing any talent agency services to or for the benefit of Company or its employees under this Agreement, Agency’s services hereunder shall not be construed to be the provision of talent agency services to Company or its employees, and Agency’s services hereunder do no fall within the ambit or jurisdiction of the California Talent Agencies Act or similar laws applicable to talent agency services.

 

Section Fifteen Miscellaneous Provisions

 

  1. Entire Agreement. This Agreement, including all attachments hereto, constitutes the entire agreement between the Parties with regard to the subject matter set forth herein, and supersedes all other agreements and understandings, oral or written, between the Parties on such subject matter.

 

  1. Severability. The provisions of the Agreement are severable, and if any provision is held to be invalid or unenforceable, such provision shall be stricken from the Agreement, and the balance of this Agreement shall have its intended full force and effect according to its stated terms and conditions.

 

  1. Headings. The numbers, headings, titles or designations of the various Sections set forth herein are not part of this Agreement but are for convenience of reference only and do not and shall not be used to define, limit or construe the contents thereof.

 

  1. Assignment. Neither Party may assign this Agreement without the prior written consent of the other Party, which consent shall not be unreasonably withheld or delayed. Notwithstanding the foregoing, a Party shall have the right to assign this Agreement without the consent of the other in connection with a merger, acquisition, or sale of all, or substantially all, of that Party’s assets, or other reorganization or consolidation of that Party’s business, provided such assignment does not otherwise create a breach of this Agreement. Subject to the foregoing, this Agreement shall be binding upon and inure to the benefit of the Parties’ respective successors and assigns.

 

  1. Company Affiliates. Company hereby guarantees and shall ensure that its Affiliates diligently and in good faith observe and comply with all of Company’s obligations hereunder, and that such Affiliates cooperate with Company and Agency to ensure that Agency is timely paid all of its Agency Fees as set forth herein.

 

  1. Amendment. No amendment or modification of this Agreement will be made except by an instrument in writing signed by both Parties.

 

  1. Waiver. No waiver of any obligation by any Party hereto under this Agreement shall be effective unless set forth in a written instrument specifying such waiver and executed by the Party making such waiver. A waiver by a Party of any of its rights or remedies under this Agreement on any occasion shall not be a bar to the exercise of the same right or remedy on any subsequent occasion or of any other right or remedy at any time.

 

  1. Further Assurances. The Parties agree to execute, acknowledge and deliver any and all further documents which may be reasonably required to effectuate the terms and conditions of this Agreement.

 

  1. Relationship. Nothing contained in this Agreement shall be deemed or construed as creating a joint venture or partnership between the Parties. No Party shall have the power to control the activities or operations of the other Party, and their status is, and at all times shall continue to be, that of independent contractors with respect to each other.

 

  1. Neutral Interpretation. All of the Parties below have had the opportunity to consult with counsel regarding this Agreement. In the event of a dispute over the terms of this Agreement, the terms shall be neutrally interpreted without regard to who drafted the documents.

 

  1. Counterparts; Miscellaneous. This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, but all of which together shall constitute but one instrument. A signature transmitted by facsimile or PDF shall be deemed as acceptable as an original.

 

IN WITNESS WHEREOF, the Parties have executed this Agreement commencing on the day and year first written above.

 

For Company: For Agency:

 

  _ _

Mark Long, CEO Joseph Minton, President


2/27/2020 | 4:13 PM PST_

Date Date

2/27/2020 | 2:47 PM EST _

 

Exhibit A –Exclusion List

 

Target HBO Interactive Target Legendary Pictures

 

SCHEDULE 1

Definitions

 

Definitions for italicized terms used in the Agreement if not defined elsewhere in the Agreement:

 

“Product Development Compensation” means all revenue received by or credited to Company (or any of its Affiliates) from Third Party Agreements where the purpose of such payments is for Product development fees, advances, content fees, license fees, distribution fees, territory fees and/or costs of maintaining a live game operations team.

 

“Game Revenue” means all revenue received by or credited to Company (or any of its Affiliates) from Third Party Agreements other than Product Development Compensation, such as minimum guarantees on sales and sales revenue.

 

“Development Pass Through Costs” means any monies actually and verifiably paid by Company to unaffiliated third parties for: (i) console development kits specifically used in connection with the applicable Product; and (ii) licenses of video game development Middleware for use in connection with the applicable Product. “Middleware” means video game development tools and engines used for the purpose of running one or more components of a videogame, such as Unreal Engine, Unity Engine, Speedtree and Bink Video. Middleware does not include operating systems or software used for the purpose of creating assets, such as Maya, Adobe Photoshop, Microsoft Windows and Microsoft Excel.

 

“Game Revenue Pass Through Costs” means the following: (i) if not already deducted prior to Company receiving revenues, actual, verifiable pre-paid card fees, payment provider fees, distribution and hosting fees, customer fraud and customer charge backs, Middleware costs, and (ii) if paid for by Company and not reimbursed under the Third Party Agreement or in another manner, actual and verifiable out-of-pocket Product specific publishing costs, inclusive of ratings, certifications, localization, and quality assurance costs, as well as direct marketing expenses which are paid by Company and dedicated solely for the Product and not, for example, to market Company or the Product’s intellectual property.

 

“Company-Funded Advances” means the out-of-pocket sums that Company itself actually and verifiably expends directly on development of the Product, including investments raised by Company for this purpose, but not including Company’s general overhead, or customary work required to create Product pitch materials, demos and playables used to secure Third Party Agreements.

 

“Company-Funded Product” means a Product that is fully funded and brought to market by Company.

 

“Sale” means the following: (i) a sale, transfer or license of all or substantially all assets of the Company, or (ii) a sale or transfer of equity interests in the Company constituting a majority of the voting power of all its equity interests, or (iii) a merger, consolidation or other transaction pursuant to which the members or shareholders of the Company own or control

 

less than a majority of the voting interests of the surviving entity.

 

“Agreement Buyout Fee” means an amount roughly equal to what the projected Agency Fees would be as derived from current and projected Third Party Agreements between Company and Target, where Target is the acquiring entity in a Sale.

 

AMENDMENT GFM

This Amendment GFM adds the following to the Agreement:

 

The Parties agree that Agency shall supply a non-exclusive merchandise service (“Store”) provided by Game Fans Merchandizing (“GFM”) to Company, under a special agreement Agency secured on behalf of its clients, with no setup cost nor long-term commitment, as follows:

 

  1. License. Company hereby grants to GFM a non-exclusive license to use items of intellectual property (“Licensed IP”) which Company provides to GFM for the purpose of populating the Store with branded merchandise (“Merch”) and for which Company has the merchandizing rights for such Licensed IP: Nothing herein obligates GFM to exercise the rights granted in this Agreement although GFM shall use reasonable efforts to create the Store. Further, Company grants Agency the right to sell Merch from Agency’s own GFM store (“Agency Store”).

 

  1. Consideration. As consideration for revenue generated by the Store, GFM shall pay to Company a Revenue Share. The Revenue Share is equal to a percentage (see below) of the Net Profit. The Net Profit equals the retail price less (i) the cost of goods, (ii) shipping, (iii) payment processing and (iv) returns.

 

For merchandise sold directly from the Store, the Revenue Share percentage is 50%. For merchandise sold directly from the Agency Store, the Revenue Share percentage is 45%. No other fees are due to Agency from the Agreement on the revenue Company receives from the sales of the Merch.

 

Revenue Share will be calculated by GFM on a calendar monthly basis, reported and paid within 15 days of the end of the month. Revenue Share payments less than $500 USD will be paid via check. Additional payment options are available for amounts greater than $500 (including ACH, wire transfer and PayPal). Any payment processing fees are paid by Company.

 

  1. Merch. GFM will use logos and images provided by Company to populate Merch in the Store. Company may then request modifications, subtractions and additions to the Merch directly to GFM before the Store goes live. GFM will set initial retail pricing for all Merch. Company may request that GFM increases the prices from this initially-set level.

 

  1. Store. The Store shall be accessed via a url provided to Company by GFM. The Store will only sell Merch from Company. The color scheme of the Store will be set by GFM and will use branding as provided by Company. Company may then request modifications to this look directly to GFM before the Store goes live, understanding that the Store is created using a template system, so changes need to work within this framework. At its option, Company may fold the store into its own website domain such that the custom url from GFM is not needed. Note that the Agency Store will include merchandise from a variety of Agency clients, including Merch from Company.

 

  1. Ownership of Licensed IP. GFM has agreed in its master agreement with Agency that, subject to the rights and licenses granted herein, Company is, and will remain, the sole and exclusive owner

 

of all right, title, and interest, throughout the world, to all Licensed IP and any copies of the Licensed IP. In no event may GFM remove any copyright or intellectual property notice, proprietary legend, trademark or service mark from any materials. Company may require an appropriate legal notice or legend to be placed on all products, packaging and promotional materials.

 

  1. Legal Action. Company will maintain sole control and discretion over the prosecution and maintenance with respect to all rights, including all intellectual property rights to the Licensed IP. Company will have the primary right, but not the obligation, to bring and control any litigation, enforcement action, proceeding, or other legal action (collectively, the “Action”) against any unauthorized use, infringement, misappropriation, dilution or other violation of the Licensed IP.

 

  1. Termination. Either party may terminate this Amendment GFM immediately upon delivery of written notice to the other party specifying clearly the grounds for termination if the other party commits a material breach of its obligations under this Agreement and fails to cure the breach within thirty (30) days after written notice of the breach is received by the breaching party. Should GFM breach, Agency will attempt to cure the breach with GFM in these thirty (30) days. For the avoidance of doubt, termination will be without prejudice to any liability incurred prior to the effective date of termination. Notwithstanding the foregoing, Company may elect to cease selling Merch in the Store, and thus also Agency Store, at any time; and in such as a case, after three (3) months of no Merch for sale in the Store, this Amendment GFM shall terminate automatically.

 

  1. Survival. This Amendment GFM survives any termination of the Agreement although may be terminated per Section 7 of this Amendment GFM.

 

In witness whereof, the Parties have executed this Amendment GFM commencing on the day and year first written above.

 

For Company: For Agency:

 

  _ _

Mark Long, CEO Joseph Minton, President

2/27/2020 | 4:13 PM PST

_

Date Date

2/27/2020  | 2:47 PM EST _

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