Annual Report — Small Business — Form 10-KSB
Filing Table of Contents
Document/Exhibit Description Pages Size
1: 10KSB Annual Report -- Small Business 69 351K
2: EX-2.1 Plan of Reorganization 8 56K
3: EX-3.1 Articles of Incorporation 4 32K
4: EX-3.2 Articles of Incorporation 1 17K
5: EX-3.3 Articles of Incorporation 16 75K
6: EX-3.4 By-Laws 18 86K
7: EX-10.1 Material Contracts 58 245K
16: EX-10.10 Material Contracts 18 76K
17: EX-10.11 Material Contracts 4 30K
18: EX-10.12 Material Contracts 4 30K
19: EX-10.13 Material Contracts 4 30K
20: EX-10.14 Material Contracts 4 30K
21: EX-10.15 Material Contracts 4 30K
22: EX-10.16 Material Contracts 4 31K
23: EX-10.17 Material Contracts 4 30K
24: EX-10.18 Material Contracts 17 66K
25: EX-10.19 Material Contracts 4 30K
8: EX-10.2 Material Contracts 13 53K
26: EX-10.20 Material Contracts 4 30K
27: EX-10.21 Material Contracts 4 30K
28: EX-10.22 Material Contracts 4 30K
29: EX-10.23 Material Contracts 4 30K
30: EX-10.24 Material Contracts 4 30K
31: EX-10.25 Material Contracts 4 30K
32: EX-10.26 Material Contracts 3 26K
33: EX-10.27 Material Contracts 3 27K
34: EX-10.28 Material Contracts 4 30K
35: EX-10.29 Material Contracts 4 30K
9: EX-10.3 Material Contracts 30 127K
36: EX-10.30 Material Contracts 4 30K
37: EX-10.31 Material Contracts 4 30K
38: EX-10.32 Material Contracts 4 30K
39: EX-10.33 Material Contracts 4 30K
40: EX-10.34 Material Contracts 4 30K
41: EX-10.35 Material Contracts 4 31K
42: EX-10.36 Material Contracts 4 31K
43: EX-10.37 Material Contracts 4 30K
44: EX-10.38 Material Contracts 2 22K
45: EX-10.39 Material Contracts 3 26K
10: EX-10.4 Material Contracts 30 126K
46: EX-10.40 Material Contracts 3 26K
47: EX-10.41 Material Contracts 3 27K
48: EX-10.42 Material Contracts 1 19K
49: EX-10.43 Material Contracts 18 82K
50: EX-10.44 Material Contracts 16 77K
51: EX-10.45 Material Contracts 13 55K
52: EX-10.46 Material Contracts 8 38K
53: EX-10.47 Material Contracts 30 110K
54: EX-10.48 Material Contracts 17 75K
55: EX-10.49 Material Contracts 17 81K
11: EX-10.5 Material Contracts 10 40K
56: EX-10.50 Material Contracts 3 23K
57: EX-10.51 Material Contracts 6 33K
58: EX-10.52 Material Contracts 3 29K
59: EX-10.53 Material Contracts 80± 299K
60: EX-10.54 Material Contracts 9 51K
12: EX-10.6 Material Contracts 10 40K
13: EX-10.7 Material Contracts 8 45K
14: EX-10.8 Material Contracts 7 36K
15: EX-10.9 Material Contracts 12 59K
61: EX-21.1 Subsidiaries 1 14K
62: EX-27 Financial Data Schedule 1 16K
EX-10.2 — Material Contracts
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EXHIBIT 10.2
AGREEMENT
BETWEEN STAN LEE MEDIA AND MACROMEDIA
DATED AS OF __________________
1. PARTIES AND PURPOSE: Macromedia ("Macromedia") and Stan Lee Media, Inc.
("SLM") enter into this agreement for Macromedia to distribute episodic
super-hero series produced by SLM (the "SLM Series") comprised of
flash-animated episodes of approximate five minutes duration created for
initial exploitation over the Internet (Webisodes") for possible
exhibition on Macromedia's "Shockwave" Internet site or any other site
established by Macromedia as its premiere site for delivering content on
the Internet ("Shockwave"). The parties will discuss in good faith the
possibility of altering the format of the Webisodes (duration, etc.) to
the extent that it is believed that another format may be more successful;
provided, neither party can change the format of an Accepted Project
(defined below) without the consent of the other.
2. TERM OF AGREEMENT: The Term shall commence on execution hereof and
continue for five years. If all Webisodes deliverable hereunder have not,
in fact, been delivered by the end of the Term, then the Term shall be
extended until the delivery of the last such contractually required
Webisode. During the term, Macromedia agrees that it intends that
Shockwave shall be its main website for the delivery of original animated
entertainment content on the Internet. If, during the term, Macromedia
shall have a site other than Shockwave as such main site, then SLM shall
have the option to require Macromedia to place the content produced
hereunder on such other site, as well as on Shockwave, and, if such option
is exercised, then all references herein to Shockwave shall thereafter
refer to both such other site and to Shockwave.
3. SHOCKWAVE AND THE SLM CHANNEL:
a) The parties agree to use reasonable best efforts to find ways in
which SLM content shall be featured and promoted by Macromedia and
Shockwave, and SLM and Stan Lee shall promote Macromedia and
Shockwave. Without limiting the foregoing, for no less than the
initial six months from webcast of the first Webisode hereunder,
Shockwave shall establish and maintain a separate "first tier" SLM
Channel (i.e. a channel primarily accessible directly from the home
page, as distinct from a so-called "sub-channel", which are
primarily accessed from first tier channels or other sub-channels)
within Shockwave (the "SLM Channel"). After the initial six months,
Macromedia shall have the right to enable access to the SLM Channel
via a generic link (eg, "superhero" or "comics") on the Shockwave
home page. Further without limitation, SLM shall use reasonable
efforts to include references to the SLM Channel URL in all of its
marketing and advertising activity.
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b) During at least the four (4) weeks following its launch, the SLM
Channel and the first SLM/Shockwave Series (defined in paragraph 4
below) shall be displayed and promoted ("Featured") more prominently
than any other content and channels of content on Shockwave.
Thereafter, the SLM Channel and each SLM/Shockwave Series (defined
in paragraph 4 below) shall be Featured no less prominently than any
other content and channels of content on Shockwave; provided,
however, that during the first four weeks following the launch of
another series on Shockwave, such series may be Featured in a manner
more prominent than the SLM/Shockwave Series are then Featured In
any event the SLM Channel and each SLM/Shockwave Series shall
continue to be Featured in a very prominent manner at all times, and
each additional SLM/Shockwave Series (after the first) shall
prominently be Featured during its launch. The SLM Channel and any
SLM/Shockwave Series will receive prominent credit in ads and
publicity issued by Macromedia or under Macromedia' control for
Shockwave ("Shockwave Ads"), the SLM Channel and any SLM/Shockwave
Series. To the extent that Shockwave Ads Feature other content and
not the SLM/Shockwave Series, then Macromedia shall within a period
of 6 weeks cause to be produced and distributed a substantially
equal number of ads of substantially equal quality Featuring
SLM/Shockwave Series without reference to other non-SLM content. In
the event of an alleged breach by Macromedia of the foregoing, SLM
shall accord Macromedia written notice and Macromedia shall have 30
days within which to cure such alleged breach.
c) Macromedia shall give good faith consideration to offering SLM the
first right to produce, for reasonable fees to be mutually agreed,
additional content to be featured on Shockwave as well as on any
other age- and theme-appropriate sites and communications owned or
controlled by Macromedia. The additional content may include, for
example, interstitial material and material used to entertain a user
during a download of Macromedia files.
d) The SLM Channel shall feature additional content as determined by
SLM and Macromedia in order to "enhance" the SLM Channel, including
chat, games, e-commerce, and other community building activities
("Enhancements").
e) SLM shall have the right to maintain other SLM-branded websites
which may include Enhancements of SLM/Shockwave Series, archived
Webisodes of SLM/Shockwave Series and any other programming and
products, subject to the exclusivity described in 5(b) below.
f) Macromedia has reviewed SLM's agreement with AcmeCity and will
comply with any applicable requirements contained therein. In this
regard, SLM has represented to Macromedia that the requirement
applicable to linkage from the SLM/Shockwave Channel is a
requirement to link to the SLM home page,
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which, in turn, will provide linkage to AcmeCity. Macromedia will
rely on such representation in providing such linkage and SLM will
indemnify Macromedia in connection therewith as described in 13,
below.
4. FIRST LOOK:
a) The parties agree that the first SLM Series for Shockwave shall be
"7th Portal" (which shall substantially follow the presentations
previously given by SLM to Macromedia).
b) During the Term, prior to any submission thereof to a third party,
SLM will submit to Macromedia on a 15 day "first look" basis, any
project owned or controlled by SLM (or any affiliated entity) which
SLM desires to develop or produce as a series of Webisodes for the
Internet. During the first year of the Term, SLM shall make 10 such
submissions at an average rate of at least one submission every 2
months; provided that no further submissions shall be required as a
result of this sentence if SLM no longer has a first look obligation
hereunder (e.g. 5 have been accepted as described in (c) below). Any
submission shall include a brief description and tentative character
designs of the "Key Characters" (as defined below), the universe of
the series and ideas for possible future episodes, as well as the
contemplated per-Webisode budget (the "Budget") for the applicable
Series. Each submission shall be deemed to meet the submission
requirements unless Macromedia shall, within 3 business days of
receipt thereof, inform SLM, in writing, of the specific manner in
which such submission is deficient. To the extent that SLM has
expenses which benefit more than one project, SLM shall make a good
faith allocation of such expenses between projects. The budget (and
the actual costs if a series is, in fact, produced) shall identify
and include the allocations of such expenses as determined by SLM in
good faith. If Macromedia is interested in webcasting a submitted
project on Shockwave and so advises SLM in writing during the
aforesaid 15 day period, then the project will be deemed an
"Accepted Project" and Macromedia will pay for each Webisode, within
5 business days of the SLM's delivery thereof, the amount described
in the Budget as submitted. Any Accepted Project shall be defined as
an "SLM/Shockwave Series". The terms hereof applicable to 7th Portal
shall apply to any such SLM/Shockwave Series. Each Webisode of an
Accepted Project shall, absent information to the contrary provided
to Macromedia as part of its submission of such project, be of a
quality substantially consistent with that of the previously
delivered Webisodes.
c) SLM's duty to submit projects on a first look basis to Macromedia
shall not apply at any time during which Macromedia shall have
accepted five (5) projects (subject to the exclusions described in
the penultimate sentence of this paragraph (c)). Notwithstanding the
foregoing, if SLM elects at its
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discretion to cease producing Webisodes of a particular
SLM/Shockwave Series, it shall have the right to do so, by written
notice to Macromedia, provided, Macromedia shall again have a first
look at subsequent projects owned or controlled by SLM (or any
affiliated entity) which SLM desires to develop or produce as a
series of Webisodes for the Internet until it has replaced said
SLM/Shockwave Series. To the extent that any new SLM project is
either (i) a revival of a prior SLM/Shockwave Series (i.e. new
Webisodes of such series) which SLM (as distinct from Macromedia)
has elected to cease producing, or (ii) which has as Key Characters
one or more Key Characters from existing SLM/Shockwave Series, then
Macromedia shall have a first look, as described above, regardless
of the number of SLM/Shockwave Series previously accepted. As used
herein "Key Character" means any character that has appeared in at
least 5/13 of the Webisodes of a specific SLM/Shockwave Series for
any production year, and that was not publicly exploited (on more
than merely an incidental basis) prior to its inclusion in the
applicable SLM/Shockwave Series (SLM agrees that no such previously
exploited character shall be included in more than 5/13 of the
Webisodes without Macromedia's approval).
d) As to any submitted projects that Macromedia rejects or is deemed to
have rejected (including all SLM/Shockwave Series for which
Macromedia has failed to exercise its option for additional
Webisodes as described in 6(a) below ), SLM will be free to set it
up with a third party, with no further obligation to Macromedia
(subject, however, if the project has any changed material elements
(including the Key Characters and the budget) since last passed on
by Macromedia, to SLM again submitting to Macromedia for a first
look as described above, the project containing such changed
elements). SLM's services on such outside projects will not
interfere with the timely delivery of SLM/Shockwave Series.
e) The Budget (as initially submitted by SLM) for each Webisode of a
SLM/Shockwave Series shall be based on SLM's good faith estimate of
the costs (prorated over 22 Webisodes or such other number as the
parties may agree shall be produced with respect to an Accepted
Project) of producing such Series and shall include an allowance of
15% for SLM overhead and 10% for SLM profit (with no overhead on
profit and no profit on overhead). After delivery of the last of
each block of 22 Webisodes of a particular SLM/Shockwave Series, SLM
shall deliver a statement of the actual costs incurred in the
production of such episodes plus overhead and profit as aforesaid.
If the actual costs (plus overhead and profit thereon) were less
than the aggregate fees actually paid by Macromedia for said 22
Webisodes, then Macromedia shall be entitled to a credit equal to
the difference against future Webisode license fees. Macromedia
shall have the right to audit SLM's actual costs once per year and
once per 22 Webisode block within 12 months
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after submission of the statement referred to above; provided,
Macromedia shall not have the right to contest SLM's good faith
allocation of actual costs.
5. EXCLUSIVITY:
a) SLM's services shall be exclusive to Macromedia and Shockwave only
as specifically set forth herein. For example, it is understood that
SLM shall have the right to produce programming such as Webisodes
featuring elements it does not own or control for and with third
parties outside of this agreement and to maintain other SLM-branded
websites, without any obligation to Macromedia.
b) Each Webisode of a SLM/Shockwave Series shall be available
exclusively to Macromedia for a period of six months (the "Exclusive
Webcast Period") from the Initial Webcast Date (as defined in the
next two (2) sentences). The Initial Webcast Date with respect to
the first Webisode of a SLM/Shockwave Series shall be mutually
agreed between the parties but shall be no later than ten (10)
business days after delivery by SLM of the first three Webisodes of
such SLM/Shockwave Series unless SLM otherwise agrees. The Initial
Webcast Date of each subsequent Webisode of a SLM/Shockwave Series
shall be two weeks after the Initial Webcast Date of the prior
Webisode of such SLM/Shockwave Series so long as SLM shall have
timely delivered such Webisode to Macromedia.. SLM shall endeavor,
in good faith, to deliver the first Webisode of SLM/Shockwave Series
(in a form reasonably required by Macromedia for exploitation of
same on the Internet) within 60 days of Macromedia's acceptance
thereof (or, in the case of a series in years after the first year,
after Macromedia's exercise of its option for such subsequent year)
and to deliver the remaining episodes for each production year at
the rate of approximately one episode each two weeks. SLM shall keep
Macromedia fully apprised of any material schedule delays as soon as
SLM is aware of same.
c) After each respective 6-month Exclusive Webcast Period, SLM shall
consult with Macromedia with respect to the subsequent exploitation
of such Webisodes, with SLM having the final decision with regard
thereto. All such Webisodes also shall be archived non-exclusively
on the SLM Channel of Shockwave without additional charges to
Macromedia, except for the Contingent Compensation described in 10,
below; provided, however, that if Macromedia shall fail to exercise
its option for further Webisodes, as described in 6(a) below, and if
SLM shall thereafter cause new Webisodes of such Series to be
available on the Internet from a non-Macromedia source, then, after
the end of the exclusivity period for the Webisodes of such series
previously delivered hereunder, Macromedia shall no longer have a
right to authorize any third party to exhibit any past Webisodes of
such series, all
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such rights thereafter, as between the parties hereto, being vested
solely in SLM.
d) Macromedia's Webisode exclusivity extends to made-for-the-Internet
use of Key Characters (but not where such Internet use is primarily
for the purpose of advertising and marketing non-Internet
exploitation of such Key Characters) in each SLM/Shockwave Series,
so long as any Webisodes of such Series are exclusive to Macromedia
hereunder. Notwithstanding the foregoing such exclusivity shall not
apply to either (i) Key Characters where Macromedia has elected to
cancel the applicable SLM/Shockwave Series, (ii) the appearance of
any Key Characters as "guest stars" on any non-Shockwave series
owned or controlled by SLM, but in no event may any such third party
"guest star" appearance of a Key Character exceed 4 Webisodes in
each calendar year; provided that SLM has obtained a comparable
right for itself for analogous "guest star" appearances by Key
Characters from such non-Shockwave series on SLM/Shockwave Series or
(iii) Webisodes not originally produced in the English language.
Macromedia agrees that it will not authorize, on sites controlled by
it, any parody of any character owned by SLM, whether part of an
SLM/Macromedia Series or otherwise, including, without limitation,
any character which is intended to trade off the good will of any
such SLM character (e.g. similar overall look or powers).
e) In the event that at the time that SLM initially submits an SLM
Series for Macromedia's consideration and Macromedia accepts same,
Macromedia advises SLM in writing that (a) Macromedia is desirous of
acquiring specific denominated foreign language versions of
Webisodes of such Series and (b) Macromedia has or will at all
relevant times have --- established versions of the Shockwave
website in each such denominated foreign language (i.e., such
language is the main language of such site), then Macromedia rights
hereunder shall include the applicable foreign language rights along
with the English language rights to such Webisodes during the
applicable Exclusive Webcast Period. In such event, Macromedia shall
be required to produce (or to have SLM produce) versions of each
such Webisode translated, dubbed and otherwise re-purposed in and
for each such foreign language, at Macromedia's expense (and with
SLM's creative approval under paragraph 7 below), and webcast such
foreign language version at such site commencing on about the same
date that such Webisode is webcast in the English language and
otherwise on the same terms applicable to the equivalent English
language Webisode subject to any additional laws and regulations
applicable to the foreign-language version of such Webisode outside
the United States. With respect to successive production years for
each SLM/Shockwave Series, at the time Macromedia elects to exercise
its option to extend under 6(a) below, Macromedia shall again have
the right to acquire
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specific denominated foreign language rights on the same terms as
outlined above.
6. SLM/SHOCKWAVE SERIES: The terms and conditions of the license fee
agreement between SLM and Shockwave shall include the following:
a) With respect to subsequent production years for each SLM/Shockwave Series,
SLM shall submit to Macromedia, at least 105 days prior to the end of the
one (1) year period commencing on delivery of the first Webisode for the
each production year, for the next subsequent production year: (i) any
required change in the budget, and, (ii) to the extent known as of the
date of submission, (aa) new character designs (if any) and (bb)
contemplated story arcs. Macromedia shall have four (4) consecutive annual
options to have SLM deliver new Webisodes, exercisable in writing no later
than 90 days prior to the end of the one (1) year period commencing on
delivery of the first Webisode for the preceding production year, but in
no event earlier than the date 20 days following the delivery of the
elements referred to in (i) and (ii) above. Shockwave shall webcast all
Webisodes of a SLM/Shockwave Series produced, including a minimum of 22
Webisodes per production year. If Macromedia does not make each such
Webisode available for viewing at Shockwave on the Initial Webcast Date
and throughout the entire Exclusive Webcast Period, after notice from SLM,
then such exclusive period shall end and SLM shall have the right to make
each such Webisode available at any other websites, at its sole
discretion; provided, Macromedia shall not be relieved of its obligations
with respect to all Webisodes for which Macromedia shall have exercised
its option.
b) License Fee:
i) SLM/Shockwave Series: For each Webisode of a SLM/Shockwave
Series, Macromedia shall pay SLM a license fee equal to the
average Webisode budget, as more fully described in 4(e)
above.
ii) Subject to 8(a) below, Macromedia shall have a credit of
$535,500 against the first sums payable to SLM as license fees
for Webisodes of the 7th Portal; provided such credited sums
shall not be repayable to Macromedia.
7. CREATIVE CONTROLS: SLM shall have absolute creative control and "final
cut" with respect to the SLM Series as well as any non-series exploitation
of any Key Character. "Creative controls" will be deemed to extend to the
selection of scripts, writers, writing staff, directors, other producers
(including executive, co-executive, supervising, associate and
co-producers), consultants, cast and key post-production personnel. To the
extent that Macromedia shall, with SLM's consent, create or cause
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the creation of any materials not delivered by SLM hereunder containing
any Key Character or other SLM element, Macromedia shall submit same to
SLM, and if SLM has not disapproved same within 10 business days
(reducible for exigent circumstances, but to no fewer than 3 business
days) of its receipt, then such submitted material shall be deemed
approved. SLM agrees that all Webisodes, and all other content delivered
hereunder shall endeavor to conform to Macromedia's written Standards and
Practice rules and Quality Assurance Processes applicable to all
Macromedia Internet Activities and required technical protocols for, so
long as a copy of such rules and protocol requirements have been delivered
to SLM prior to the commencement of production of the applicable Webisode.
If a Webisode that has been approved for exhibition thereafter fails to
meet Macromedia's Quality Assurance Process standards, the parties
mutually shall agree on a method to effect any needed corrections. Neither
party's rights of approval hereunder shall be exercised in a manner so as
to frustrate the purposes of this agreement.
8. ADVERTISING AND CREDIT:
a) SLM shall pay $178,500 of the advertising costs for the launch of
the SLM Channel and 7th Portal during or prior to the 4 week period
referred to in 3(b) above, which costs shall be reviewed and
reasonably approved by Macromedia.
b) The parties shall co-host major media events to announce this
agreement and the launch of 7th Portal and the SLM Channel.
c) All ads and publicity for the SLM Channel and any SLM/Shockwave
Series, and any press release relating to this agreement, shall
require SLM's and Macromedia's reasonable approval. No ad under the
direct or indirect control of or authorized by Macromedia appears in
conjunction with any SLM/Shockwave Series Webisode or any other use
of any Key Character (including, without limitation, any ad created
by a third party which is authorized by Macromedia to appear on a
Macromedia or Shockwave website containing any SLM/Shockwave Series
Webisode or any other use of any Key Character) shall advertise a
product which is inappropriate (using general national US community
standards) for use by children between the ages of 10 and 18,
including, without limitation, ads for tobacco, alcohol, drugs
(whether or not prescription or "over-the counter" drugs), sexually
related services, gambling and any illegal activity. In the event of
a breach by Macromedia of the foregoing, SLM shall notify Macromedia
and Macromedia shall have 24 hours within which to cure such breach
by removing the applicable ad.
d) SLM shall use reasonable efforts to cause Macromedia or its
individual designee to receive co-production credit or a
co-executive producing credit in
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connection with the ancillary exploitation of SLM/Shockwave Series
elements.
9. OWNERSHIP: SLM shall own in perpetuity all rights in and to the SLM Series
and the SLM Channel, including the Webisodes themselves as well as the
underlying characters and other elements, including all copyright,
trademark and other rights of every kind and nature, subject only to the
express rights granted herein, including, without limitation, the right to
continue exploiting Webisodes after the exclusive period as described and
subject to 5(b) above.
10. CONTINGENT COMPENSATION: Macromedia shall receive the following contingent
compensation in respect of the exploitation of all SLM/Shockwave Series
and all Key Characters therefrom:
a) Internet Licenses: Macromedia shall be entitled to receive 50% of
all adjusted gross income ("AGI") derived from the following:
i) Licenses of English-language Webisodes of a SLM/Shockwave
Series to other Internet sites. Macromedia shall be
responsible for such licenses during the Exclusive Webcast
Period of the applicable Webisode (for no additional fee);
provided any such licenses shall require SLM's reasonable
approval. After the initial six months, SLM shall be
responsible for such licenses.
ii) Licenses to Internet sites of non-English language versions of
the Webisodes. Subject to 5(e) above (i.e, if Macromedia does
not acquire such rights for its own foreign language website),
SLM shall be responsible for all such licenses; provided,
Macromedia shall have the right reasonably to approve the
licensee of any such webcast rights during the Exclusive
Webcast Period of the English-language version of the
applicable Webisode. In addition to the foregoing, and again
subject to Macromedia's rights under 5(e) above, to the extent
that SLM desires to license to a third party for webcast
during Macromedia's Exclusive Webcast Periods more than a
single season's block of non-English language versions of
Webisodes (i.e., 22 Webisodes) of an SLM/Shockwave Series,
then Macromedia shall have the right reasonably to approve the
terms of such a license. Further, and again subject to
Macromedia's rights under 5(e) above, to the extent that SLM
desires to license to a third party for webcast during
Macromedia's Exclusive Webcast Period non-English language
Webisodes (i.e., 22 Webisodes) of an SLM/Shockwave Series for
which no license fee is denominated but instead SLM is
receiving consideration in another form (eg, a purchase of
stock in
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SLM), then Macromedia also shall have the right reasonably to
approve the terms of such a license.
iii) Sales of the right to view or download Webisodes from the SLM
Channel via the Shockmachine or otherwise. Macromedia shall be
responsible for any such sales from Shockwave (for no
additional fee); provided that Macromedia shall consult in
good faith with SLM as to specific pricing and selection of
Webisodes for such sale purposes. After such consultation,
Macromedia's decision with regard to pricing for any public or
other unrelated third party arms-length sale shall be final.
Any sale to a Macromedia related party and any "bundling" in a
single sale with non-SLM product shall be subject to SLM's
prior written approval.
iv) Advertising and Sponsorships on pages on Shockwave exhibited
SLM/Shockwave Series, and other uses Key Characters in
connection with other Macromedia products. Macromedia shall be
responsible for all such advertising and sponsorship sales and
shall have the right to designate third parties as its agents
for such purposes; provided, the fee charged by Macromedia for
such purposes (inclusive of any third party fee) shall not
exceed 30%.
v) The parties agree that each new Webisode of a SLM/Shockwave
Series shall be available for free viewing at Shockwave for a
period of no less than three months during the Macromedia six
month exclusive period for such Webisode.
b) Other Exploitation: Macromedia shall be entitled to receive 10% of
all AGI received by SLM from all other exploitation of the
SLM/Shockwave Series and any elements thereof (including, without
limitation, any Key Characters) including, without limitation,
advertising on SLM sites, merchandising, ancillary media
productions, etc. SLM shall be responsible for all such exploitation
or shall have the right to designate third parties as its agents for
such purposes; provided, the fee charged by SLM for such purposes
(inclusive of any third party fee) shall not exceed 30%. SLM shall
consult in good faith with Macromedia with respect to such
exploitation. In the event that income is derived from the
exploitation of SLM/Shockwave Series together with other SLM owned
properties, SLM shall make a good faith allocation.
c) AGI shall be defined as gross sums received by SLM or Macromedia (or
their respective affiliates) after deducting the following in the
following order:
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i) Any sums included in such gross monies which are contractually
required by the payor (e.g., the financier of a television
series being produced by SLM) to be expended to create the
materials or elements for which the gross monies are paid (eg,
a license fee for an episode of a television program which fee
includes, in part, the cost of producing the program);
ii) Distribution/service/sales fees (described above);
iii) Third party participations (which shall be included in the
submitted budget or otherwise approved, in writing, by
Macromedia); and
iv) Costs borne/advanced by SLM, including, by way of example,
unreimbursed costs of materials or programming created by SLM
to the extent such materials or programming are approved or
accepted by Macromedia, and distribution expenses.
d) All income shall be collected directly by the party responsible for
the applicable exploitation, and shall be accounted to the other
party on a quarterly basis. Each party shall have the right to audit
the books and records of the other party with respect to sums
payable hereunder on reasonable notice, no more than one per year or
once with respect to any accounting period.
e) Notwithstanding anything to the contrary contained hereinabove, in
the event that Macromedia fails to order and exhibit in accordance
with this agreement 22 episodes of an SLM/Shockwave Series (other
than due to SLM's actions or omissions), then Macromedia shall not
be entitled to any share in Contingent Compensation.
11. ECOMMERCE: Macromedia may from time-to-time establish eCommerce
businesses. SLM shall endeavor to offer Macromedia's eCommerce businesses
the first opportunity to provide services to SLM, the SLM Channel and the
SLM/Shockwave Series. In the event SLM desires to utilize the services of
any such eCommerce business, the parties shall negotiate in good faith the
appropriate consideration therefor.
12. REMEDIES: Excepting only in the case of exploitation of the SLM/Shockwave
Series Webisodes or the Key Characters which is prohibited hereunder, the
parties hereto agree that, in the event of a purported breach hereof, the
party claiming said breach shall be limited to recovering actual damages
caused by such breach, and in no event shall such party have any right to
collateral, consequential or punitive damages, or any right to seek
injunctive or equitable relief.
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13. INDEMNITY: Each party agrees to indemnify the other from and against any
and all costs, damages liabilities and expenses (including, without
limitation reasonable attorneys' fees and expenses) in connection with any
breach by such party of any obligation or representation hereunder,
including, without limitation, any claim that the representation contained
in 3(f) above is incorrect. Upon receiving any third party claim, the
party receiving same will promptly inform the other party thereof, and the
indemnifying party shall be solely responsible for all responses to any
such claim, including, without limitation, any legal responses and
defenses with regard thereto and the direction of all lawyers in
connection therewith. If the indemnifying party shall fail to defend
against such claim, and shall continue to do so for a period of thirty
(30) days after notice of such failure from the indemnified party, then
the indemnified party shall have the right to set up a reasonable reserve
for such claim and to cease making payments or deliveries hereunder until
such reserve has been filled or the indemnifying party has commenced such
defense, and such failure to make payment or delivery shall not be a
breach hereof or extend any dates hereunder.
15. CLEAR RIGHTS: SLM represents and warrants that (except to the extent where
there was notification in the original submission or where otherwise
approved in writing by Macromedia) the Webisodes and other material
delivered by SLM shall be solely owned by SLM and free and clear of any
third party claims or encumbrances, or violate the rights of any third
party (including, without limitation, copyrights, trademarks and the right
to be free from defamation) when used by Macromedia in the manner
authorized hereunder.
16. OTHER TERMS: This agreement is deemed to include other customary terms as
are set forth in agreements of this nature (e.g., warranties and
indemnities, E&O, etc.), as same may be negotiated in good faith. Unless
and until a more formal agreement is signed, this shall constitute a
binding agreement between the parties.
17. ENTIRE AGREEMENT; AMENDMENTS: This Agreement supersedes all other prior
oral or written agreements between the parties, their affiliates and
persons acting on their behalf with respect to the matters discussed
herein, and this Agreement and the instruments referenced herein contain
the entire understanding of the parties with respect to the matters
covered herein and therein and, except as specifically set forth herein or
therein, neither party makes any representation, warranty, covenant or
undertaking with respect to such matters. For purposes of interpretation,
this agreement will be deemed to have been drafted by both parties. No
provision of this Agreement may be amended other than by an instrument in
writing signed by the Company and the Investor, and no provision hereof
may be waived other than by an instrument in writing signed by the party
against whom enforcement is sought.
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AGREED AND ACCEPTED:
-------------------
STAN LEE MEDIA, INC. MACROMEDIA, INC.
By: /s/ Gill Champion By: /s/ Loren E. Hillberg
----------------------------- ---------------------------------
Its: VP-Chief Operating Officer Its: Vice President/General Counsel
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