Electronic Publishing Development Agreement - American Greetings Corp., AGC Inc., and Mindscape Inc.
ELECTRONIC PUBLISHING DEVELOPMENT AGREEMENT
This Electronic Publishing Development Agreement (this "Agreement"), is
made as of February 26, 1998 (the "Effective Date"), by and among American
Greetings Corporation, an Ohio corporation ("AG"), AGC, Inc., an Ohio
corporation ("AGC" and, together with AG, the "AG Parties"), and Mindscape, Inc.
a Delaware corporation ("Mindscape"). Except where the context otherwise
requires, the term "AG Parties" is to be read as if it was a single party to
this Agreement.
Background
A. Mindscape is in the business of developing, marketing, publishing and
distributing computer software applications; and
B. The AG Parties are in the business of development, marketing, publishing
and distributing social expression products; and
C. The parties' objective is to use their respective strengths and work
together to produce several American Greetings/Mindscape co-branded
software products.
Agreements
NOW, THEREFORE, the parties, intending to be legally bound, agree as
follows (capitalized terms herein not otherwise defined being used as defined in
Section 9):
1. PRODUCT DEVELOPMENT AND MARKETING.
1.1. OVERVIEW. Subject to the terms and conditions hereof, the parties
agree to cooperate with the goal of developing, marketing, publishing
and selling co-branded personal computer software and content pack
products in the Full Feature Print Creativity Category and in various
user and feature focused subcategories thereof, and in the Greeting
Card Category. In addition to marketing through traditional channels,
the parties agree to work together to develop an online distribution
strategy for the products sold hereunder. The categories of products
to be developed and published and the intended time table for product
introductions is set forth on Exhibit A hereto.
1.2. MINDSCAPE ROLE.
1.2.1. Mindscape shall publish the Approved Products and shall carry
out the manufacturing, distribution, software development,
product design, marketing, and sales for all Approved Products
(except for marketing and sales through AG Channels).
1.2.2. Mindscape agrees to pursue an aggressive marketing strategy
with respect to Unlockable Content Packs. Mindscape shall
include Unlockable Content Packs on all Approved Products sold
by Mindscape, and as
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mutually agreed on approved versions of PrintMaster and other
Mindscape product CD's.
1.3. AG ROLE.
1.3.1. AG shall provide content and marketing expertise, digitized
artwork and content (including the licensing to Mindscape as
provided hereafter of certain proprietary copyrighted material
and Trademarks) as may be agreed among the parties for all
Approved Products developed hereunder.
1.3.2. The AG Parties shall be permitted (but not required) to
purchase Approved Products for marketing and sale through AG
Channels.
1.4. PRODUCT DEVELOPMENT OVERVIEWS.
1.4.1. For each Listed Product to be developed hereunder, Mindscape shall
prepare a development plan overview (the "Product Development
Overview") in consultation with the AG Parties identifying, in
reasonable detail: a specification of all product features, systems
requirements, content specifications, resource allocations, the
development schedule (detailing milestones from project launch at least
to product launch), content deliverable schedules and the tasks and
resources generally required of each party. Except as otherwise agreed
by the parties, each Product Development Overview shall be consistent
with the overall timeline set forth on Exhibit A.
1.4.2. The Product Development Overview shall also identify one or more
individuals from each party to serve as Product Development Manager for
each party to serve as the primary point of contact and coordination
between the parties with respect to any Listed Product. Each party may
change its designation upon notice to the other.
1.4.3. Each Product Development Overview shall be at a level of detail that
provides overall project guidance and a timeline for major milestones.
It shall not be required to detail project tasks comprehensively and
shall not limit operational or implementation flexibility. The Product
Development Overview shall be a summary of, but shall not necessarily
contain all the detail of, the operational product development plan.
1.4.4. Each Product Development Overview shall be in writing and signed by the
parties hereto. When a Product Development Overview is signed by the
parties it shall become a part of this Agreement and the parties shall
timely carry out their respective obligations under the Product
Development Overview in accordance with its terms and the terms of this
Agreement. No Product Development Overview shall be deemed to amend or
modify any contrary term herein unless specific reference to this
Section 1.4.4 is made therein and specifically agreed to (by initialing
or other reasonable means) by duly authorized officers of the parties
hereto.
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1.4.5. Prior to marketing any Listed Product resulting from
the activities under a Product Development Overview,
each party shall each have the right to review and
approve relevant materials in connection with each
Listed Product. The AG Parties shall be entitled to
review and approve the following: (i) at the alpha
stage:[
], (ii) at
the beta stage:[
] and
(iii) at or before product launch, the final
implementation of the foregoing items. Subject to the
provisions of paragraph 10.14, the parties shall each
use commercially reasonable efforts to provide the
other with approval within ten (10) business days of
the date it receives a request for approval, but no
public announcement, marketing or sales shall be made
until such final approval is given and the form and
content of any announcement is mutually agreed upon
by the parties. Upon approval by both parties hereto
of all materials for a Listed Product, the Listed
Product shall be considered an Approved Product. Any
subsequent non-trivial changes or additions to
materials approved for an Approved Product shall
require the further approval of both parties.
1.5. TERMS OF END-USER SALES.
1.5.1. The parties shall cooperate in good faith to
establish an End User License Agreement ("EULA")
incorporating reasonable terms, conditions and
procedures on which Approved Products may be sold so
as to protect the Intellectual Property rights and
commercial interests of the parties hereto, which
terms, conditions and procedures may limit the means
by which Approved Products are "sold" so that such
products are intended to be licensed rather than
sold. Neither party shall sell or otherwise
distribute Approved Products other than by means
reasonably calculated to make the EULA effective and
references herein to "sales" of Approved Products
shall refer to such transactions.
2. EXCLUSIVITY.
2.1. GENERAL NON-EXCLUSIVITY. Except as specifically set forth in
this Section 2, this Agreement and the rights granted herein
shall be non-exclusive and neither party shall be restricted
in any way from developing, marketing or selling any product
or service.[
]
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2.2. SPECIFIC EXCLUSIVE RIGHTS.
[
]
2.3. END OF EXCLUSIVITY. Notwithstanding Section 2.2, the
AG Parties may market, sell, license Creative Content
for and otherwise distribute a product in the
categories listed on Exhibit A if
2.3.1. in the case of Listed Products in any category, (i) a Product
Development Overview has been agreed to for a Listed Product
in a category and
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(ii) sales of an Approved Product in such category
have not commenced within [ ] after the launch
date specified on Exhibit A; or
2.3.2. in the case of Listed Products in the [
], an Approved Product has been in existence
for at least [ ] and such Listed Product is not
within the top [ ] products in the United States
marketplace in its category as reported by [
]; or
2.3.3. in the case of Listed Products in categories other
than the [ ], (i) either (x) sales
of an Approved Product in such category have not
commenced or (y) sales of an Approved Product in such
category have commenced, but an updated version of
such Approved Product has not begun selling for the
current Fiscal Year and (ii) Mindscape commences
sales of a Listed Product in such category that is
not an Approved Product; or
2.3.4. in the case of a Listed Product in any category that
is principally designed for use in one of the
languages listed on Exhibit B, sales of an Approved
Product have not commenced within [ ] of the
commencement of sales of an Approved Product in that
category that is principally designed for use in the
English language.
[
]
3. PAYMENTS, REVENUE SHARE, GUARANTEES.
3.1. OVERALL GUARANTY. The overall minimum royalties payable by
Mindscape hereunder shall be [
]
3.2. INITIAL LICENSE FEE. On the date hereof, Mindscape shall pay
AGC a single nonrefundable trademark licensing fee of [
]. This fee shall not be creditable
against any other minimum payments due hereunder.
3.3. ROYALTIES.
3.3.1. ROYALTY RATES. Mindscape shall pay the following
royalties to AGC with respect to all sales of
Approved Products (including, without limitation,
products sold to AG):
i. [ ]% of the wholesale price received less
returns, credits, allowances, discounts and
rebates, before any reduction of direct
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Coat of Goods Sold, on all Approved Products sold direct to
retail at a suggested retail price of $[ ] and above;
ii. [ ]% of the wholesale price received less returns, credits,
allowances, discounts and rebates, after reduction for the
direct Cost of Goods Sold on all Approved Products sold direct
to retail at a suggested retail price under $[ ];
iii. [ ]% of the direct to consumer price received less returns,
credits, allowances, discounts and rebates, after Direct Cost
of Goods Sold on all Approved Products sold direct to
consumers by mail and/or electronic fulfillment;
iv. [ ]% of the direct to consumer price received less returns,
credits, allowances, discounts and rebates, after Direct Cost
of Goods Sold on Unlockable Content Packs;
v. [ ]% of net revenues received from distribution of products
that are OEM Versions of Approved Products, except as follows:
vi. in the case of any OEM Version of the [ ] that
contains any content provided by the AG Parties, [ ]% of net
revenues; and
vii. in the case of an OEM Version produced for [
] a
percentage of net revenues as mutually agreed in good faith
but in no event less than [ ]%; and
viii. [ ] for each unit of [ ] that is sold containing AG
Content;
3.3.2. ADVANCES AND MINIMUMS. For each product category listed on Exhibit C,
Mindscape shall pay AGC the amounts set forth with respect to such
product category set forth on such Exhibit. Such minimum payments for
products in the [ ] shall be required in the
specified Fiscal Year, whether or not a Product Development Overview or
Approved Product is produced for such category in such Fiscal Year.
Minimums shall be reviewed as provided in Section 3.3.5. Minimum
payments shall be made for each product category in [
] due as follows:
i. Upon agreement to the Product Development Overview for such
product;
ii. Upon final approval of the Approved Product;
iii. Upon first shipment of the Approved Product; and
iv. [ ] after first shipment of the Approved
Product;
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provided, however, that, subject to Section 3.3.5, the full amount of
the minimum payments due for any Fiscal Year shall, if not previously
paid, be due and payable on the first business day of the last full
calendar week of that Fiscal Year.
3.3.3. MINIMUM INCREASES. Effective upon the approval, pursuant to Section
1.4.5 of an Approved Product principally designed for a language listed
on Exhibit B, the minimum royalty hereunder for that Approved Product's
category may be increased or decreased based on the parties' respective
expenses incurred in producing such version, as is mutually agreed.
3.3.4. REPORTING AND PAYMENT. Unless otherwise agreed in writing, Mindscape
shall provide to AGC, within [ ] days after the close of each
calendar [ ], commencing after the first full calendar [ ]
after the Effective Date, a written report of royalties accrued during
the prior [ ] for each product category hereunder, any amounts
advanced pursuant to Section 3.3.2 against such royalties and the net
amount of royalties owed. Payment of such net amount shall be made
within [ ] days of the end of the quarter. Mindscape shall have
the right to withhold [ ] of royalties payable for each
calendar quarter as a reserve against refunds, returns and other
credits as provided above. This reserve shall be reconciled and the
following quarterly report In addition, Mindscape shall also provide
AGC with a monthly report within 5 days of the end of each month of
estimated product shipped within such month.
3.3.5. CROSS-APPLICATION OF ADVANCES AND MINIMUMS.
i. Royalties in excess of the minimums payable for any Approved
Product within any category [
] may be applied against the advances and minimums
paid in any other category [
] (such other category referred to as the "Shortfall
Category") so long as either (i) an Approved Product in the
Shortfall Category has commenced shipping and, if applicable,
has been updated to the current Fiscal Year or (ii) any delay
in the development of an Approved Product in the Shortfall
Category was due to action or inaction by AG or (iii) AG
consents.
ii. Each Fiscal Year, no later than March 31, the parties shall
meet and confer regarding the requirements of Section 3.3.2
and the categories in which it is advisable to develop and
launch Approved Products. In the event that market conditions
in certain categories and/or product development delays have
adversely affected royalties hereunder for that Fiscal Year,
then the minimums for that Fiscal Year may be deferred into
the next Fiscal Year to the extent mutually agreed, provided
that in no event shall any deferral of minimums extend beyond
the Term.
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3.3.6. BUNDLE ALLOCATION. Mindscape shall not sell or otherwise
distribute Approved Products together with other products as a
single-priced bundle (a "Bundle") without the prior written
approval of the AG. [
]
3.4. RECORDS AND INSPECTION RIGHTS. Mindscape shall keep and maintain proper
records and books of account relating to Mindscape's marketing and
sales of all products containing AG Content and the accounting of
royalties hereunder. AG may inspect such records to verify rendered
statements but not more than once in any 12 month period. Any such
inspection will be conducted after reasonable notice of at least 10
business days and during regular business hours at Mindscape's offices
in a manner that does not unreasonably interfere with Mindscape's
business activities. Such inspection shall be at AG's cost and expense;
provided, however, if the audit reveals overdue payments in excess of
[ ] of the payments owed to date, Mindscape shall pay the
reasonable cost of such audit.
3.5. SALES TO AG.
3.5.1. Mindscape shall sell up to [ ] copies of each Approved
Product to AG at a price not exceeding that product's Direct
Cost of Goods Sold for promotional purposes only and not for
resale. Such purchases shall not be eligible for a royalty. In
addition, Mindscape shall supply AG with at least [ ] free
copies of each Approved Product upon first shipment of each.
3.5.2. Mindscape shall sell to AG or to its foreign licensees such
quantity as AG requests of Approved Product for resale by AG
through AG Channels at a price [
]
3.6. CERTAIN CREDITS. Mindscape shall be entitled to a credit against
royalties otherwise becoming due hereunder in excess of the Threshold
Amount for a Fiscal Year up to a maximum of $[ ] per Fiscal Year
commencing in the [ ] year of the term hereof, up to an aggregate
maximum of $[ ]. The "Threshold Amount" for a Fiscal Year is the
aggregate minimum payments required by Section 3.3.2 and Exhibit C for
that Fiscal Year for each Listed Product other than the Listed Product
in the [ ] and [
] categories (as such categories are
described on Exhibit A); provided that if there is an Approved Product
in either or both of such categories then the Threshold Amount shall
also include the minimum payments
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required by Section 3.3.2 and Exhibit C for that Fiscal Year
for either or both such categories.
4. TERM AND TERMINATION.
4.1. TERM. The Term of this agreement ("Term") shall be from
February 1, 1998 to [ ], subject to extension as
provided below.
4.2. RENEWAL BY MINDSCAPE.
4.2.1. Mindscape may, by written notice to AG prior to the
expiration of the Term, extend the Term to [
] if the total royalty payments to AG pursuant
to Section 3.3 for periods prior to [ ]
exceed $[ ], and for the twelve month period
ending [ ], exceed $[ ].
4.2.2. Mindscape may, by written notice to AG prior to the
expiration of the Term, extend the Term of this
agreement to [ ] if the total royalty
payments to AG pursuant to Section 3.3 for periods
prior to [ ] exceed $[ ], and
for the twelve month period ending [ ],
exceed $[ ].
4.3. JOINT RENEWAL. The Term may also be extended by the mutual
written agreement of the parties.
4.4. TERMINATION.
4.4.1. Either party may terminate this Agreement if the
other fails to perform any material term or condition
of this Agreement and such failure continues for a
period of [ ] following receipt of
written notice ("Breach Notice") thereof by the
breaching party; provided, however, that if the
breach is not susceptible of cure within such [
] period termination shall be effective upon notice
or such later date as is provided in the notice,
except as provided in the next sentence. If the
breach is a "Channel Breach" then cure will be deemed
effective if the party in breach (i) has diligently
commenced to cure in good faith and continues
thereafter to pursue such cure diligently (ii)
effects a cure within [ ] of receipt of the
Breach Notice. A "Channel Breach" is a breach
consisting solely of a matter which may be cured only
by replacement of Approved Product already delivered
to distributors.
4.4.2. Either party may terminate this Agreement immediately
if (1) the other commences a voluntary case or other
proceeding under any bankruptcy or insolvency law, or
seeks the appointment of a trustee, receiver,
liquidation, custodian or similar official of all or
any substantial part of its property, or (2) an
involuntary case or other proceeding under any
bankruptcy or insolvency law seeking the appointment
of a trustee, receiver, liquidator, custodian, or
similar official for all or any substantial part of
the other party's property, is commenced against the
other party, and the other party consents to any
relief requested, or such proceeding is not stayed or
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discharged within [ ] days, or (3) the other
party makes a general assignment for the benefit of
creditors or fails generally to pay its debts as they
become due.
4.4.3. Either party may terminate this Agreement upon [
] written notice in the event of a change in
control of the other party [
]. In the event of any
such termination by the AG parties, Mindscape will be
entitled to be reimbursed in the full amount of any
unrecouped advances paid to the AG Parties pursuant
to Section 3.3.2(i) and (ii) with respect to Approved
Products that have not yet been shipped.
4.5. POST TERMINATION SALES. Upon termination or expiration of this
Agreement by either party, either party shall have, for a
period of [ ] months, the right to sell, subject to the
royalties provided for herein, all of the unsold Approved
Products in such party's inventory as of the date of
termination up to the Permitted Quantity of each Approved
Product; provided, however, that prior to disposing of such
unsold Approved Products, each party shall give the other an
itemized statement of all such unsold Approved Products. The
"Permitted Quantity" of an Approved Product shall be [
] of the quantity of that Approved Product sold by that
party during the [ ] calendar months immediately preceding
the date of termination.
4.6. SURVIVAL. Sections 4, 6.1.1(v), 6.1.2(iii), 6.1.3, 6.1.4, 6.3,
7 and 8 shall survive the termination or expiration of this
Agreement.
5. PRODUCT TRANSITION.
1. LIMITATIONS PRIOR TO SEPTEMBER 1, 1999. Notwithstanding
anything to the contrary herein, the parties agree that in no
event will they incorporate any AG Intellectual Property into
any computer software product designed and marketed primarily
for the in-home printing of Social Expression Products in the
English or Japanese languages prior to September 1, 1999.
2. SALES OF THIRD PARTY INVENTORY. The AG Parties further agree
that, should any third party royalties paid to the AG Parties
with respect to the sale of unsold inventories of now existing
American Greetings branded software products in the Greeting
Card Category exceed $[ ] for the [ ] month period
commencing [ ], then the minimum royalty payment
for such category for such period, as set forth on Exhibit C
shall be deemed reduced for the Fiscal Year ending [
] by the amount of such excess, but not exceeding a
total reduction of $[ ].
5.3. REGISTRATION DATABASE. To the extent that the AG Parties are
legally able to do so, it shall give Mindscape reasonable
access to its database of customer names which
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has been accumulated from software registration of the
CreataCard series of products.
6. PROPRIETARY RIGHTS.
6.1. LICENSING AND OWNERSHIP.
6.1.1. AG GRANT OF RIGHTS.
i. AGC grants Mindscape a license under the AG
Copyrights to copy and distribute the AG Delivered
Content during the Term solely in Approved Products
in the form and in accordance with the marketing
plans approved by AG pursuant to the applicable
Product Development Overview and Section 1.4.5.
ii. AGC grants Mindscape a license under the AG
Trademarks to use the AG Trademarks during the Term
on the packaging, documentation and promotional
materials used in conjunction with and to identify
Approved Products, such Trademarks to be used in the
form and in accordance with the marketing plans
approved by AG pursuant to the applicable Product
Development Overview and Section 1.4.5.
iii. The foregoing licenses shall be exclusive to the
extent (but only to the extent) so provided in
Article 2 hereof.
iv. Pursuant to the license granted in clause (i) above,
but subject to the approval, royalty and other
requirements of this Agreement, during the Term,
Mindscape may: (a) incorporate the AG Delivered
Content into the Approved Products; (b) edit or
otherwise modify the AG Delivered Content and create
derivative works of the AG Delivered Content for
solely for inclusion in Approved Products; (c)
prepare translations and conversions of the Approved
Products, solely to the extent such translations and
conversions constitute Approved Products; (d)
reproduce the Approved Products; (e) sell, marker,
distribute for rental, and otherwise distribute the
Approved Products; and (f) publicly display and
perform the Approved Products incidental to the
promotion and sale of the Approved Products.
v. Mindscape acknowledges that nothing herein shall give
to Mindscape any right, title or interest in any AG
Intellectual Property (including any modifications,
translations, transformations or other derivative
works thereof) except the rights specifically granted
in this Article 6; and that any and all goodwill
generated by use of the AG Trademarks shall inure to
the benefit of AG.
vi. The rights granted Mindscape under this Article 6
shall include the right to sublicense these rights to
third parties in connection with the localization and
distribution of foreign language versions of any
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Approved Product and for the distribution of any Approved
Product through the OEM channel, subject to the approval
rights of the AG Parties contained in this Agreement and
provided that such third parties agree to adhere to the rights
and obligations imposed on Mindscape hereunder with respect to
the protection of AGC's Intellectual Property rights.
6.1.2. MINDSCAPE GRANT OF RIGHTS.
i. Mindscape grants the AG Parties a license to use and
distribute the Approved Products.
ii. Pursuant to the license granted in clause (i) above, the AG
Parties may; (a) sell, market, distribute for rental, and
otherwise distribute the Approved Products; and (b) publicly
display and perform the Approved Products incidental to the
promotion and sale of the Approved Products.
iii. AG acknowledges that nothing herein shall give to the AG
Parties any right, title or interest in any Mindscape
Intellectual Property (including any modifications,
translations, transformations or other derivative works
thereof) except the rights specifically granted in this
Article 6 and except to the extent that any AG Intellectual
Property is incorporated therein.
6.1.3. DEVELOPMENTS. To the extent there is developed, conceived, invented or
otherwise created any new Intellectual Property as a result of
activities hereunder involving material participation by both parties
hereto:
i. to the extent it (i) consists of a [
] or (ii)
otherwise constitutes [ ], then, to such extent,
such Intellectual Property shall be the property of and is
hereby assigned to [ ]; and
ii. to the extent it consists of [
]
then to such extent, such Intellectual Property shall be the
property of and is hereby assigned to [ ], and
iii. to the extent it consists of any other Intellectual Property,
other than [ ] rights
therein, to such extent, such Intellectual Property shall be
the property of and is hereby assigned to [ ], subject
to a fully paid, perpetual, assignable (but only to any
current or future Affiliate of [ ]) license, with the right to
sublicense (other than to a [ ]),
which is hereby granted to the [ ] to use, copy,
modify, display and perform such Intellectual Property and to
make, have made, use, sell and import any invention,
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product or process embodied in such Intellectual Property,
provided that such license may be exercised only in connection
with the [
]; and
iv. to the extent it consists of product names and the
Intellectual Property rights therein ("Names"), to such
extent, such Intellectual Property shall be the [
] and is hereby assigned to [
], but subject to the following:
a. [
]
b. [
]
c. [
]
6.1.4. RESTRICTIONS ON TRADEMARK USE. Neither party shall take any
action that would undermine, conflict with or be contrary to
the other's rights and interest in its Trademarks. Each parry
acknowledges the other's exclusive ownership of such other's
Trademarks, and this Agreement does not grant either party any
right, title or interest in or to the other's Trademarks other
than the license granted herein. Each party shall have the
right to control the nature and quality of the Approved
Products, as well as all packaging, display, promotional and
advertising materials that bear such party's Trademarks
pursuant to the terms of the applicable Product Development
Overview. Pursuant to such tight, any materials developed by
either party that use the other's Trademarks shall be subject
to the prior written approval of the panty owning the
Trademarks. The Approved Products and all packaging,
advertising and promotional materials, including on-line and
other screen displays, shall include such copyright, trademark
and other intellectual property notices as are specified by
the parties to each other. Mindscape shall manufacture, have
manufactured, package, label, sell, distribute, advertise and
promote the Approved Products in conformity with AG's
reasonable marketing guidelines and practices as set forth in
Exhibit D, as modified by AG from time to time with written
notice
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to and approval of Mindscape (such approval not to be
unreasonably withheld) and in accordance with all applicable
laws and regulations.
6.2. REGISTRATION INFORMATION. All product registration information (names,
addresses, e-mail address) from all Approved Products (excluding
PrintMaster and other Mindscape products containing Unlockable Content
Packs, but not excluding products containing an Unlockable Content Pack
that has been unlocked) shall be [
]. Each month during the Term, Mindscape shall deliver a copy
of all such information received the prior month in an electronic
format reasonably requested by the AG Parties.
6.3. CONFIDENTIAL INFORMATION.
6.3.1. Each party agrees that, with respect to Confidential
Information of the other party that it obtains hereunder it
shall:
i. not disclose such Confidential Information
ii. use the same care and discretion to prevent
disclosure of such Confidential Information as it
uses with similar Confidential Information of its own
that it does not desire to disclose, but in no event
with less than a reasonable degree of care;
iii. receive such Confidential Information and use such
Confidential Information only for the purposes and
within the scope of this Agreement; and
iv. restrict disclosure of Confidential Information
solely to its officers, directors, employees and
advisors (collectively, "Representatives") who have a
need to know and agree or are bound not disclose such
Confidential Information to any third parties.
6.3.2. The foregoing restrictions shall not apply to information
that:
i. is or hereafter becomes part of the public domain
through no wrongful act, fault or negligence on the
part of the recipient;
ii. the recipient can reasonably demonstrate, was already
in its possession and not subject to an existing
agreement of confidentiality;
iii. is received from a third party without restriction
and without breach of this Agreement;
iv. was independently developed by the recipient as
evidenced by its records; or
v. recipient is required to disclose pursuant to a valid
order of a court or other governmental body;
provided, however, that the recipient shall first
have given notice to the disclosing party and shall
give the disclosing party a reasonable opportunity to
interpose an objection or obtain a protective order
requiring that the Confidential
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Information so disclosed be used only for the
purposes for which the order was issued.
6.3.3. All notes, data, reference manuals, sketches, drawings,
memoranda, electronic media and records in any way
incorporating or reflecting any Confidential Information of
the disclosing party and all proprietary rights therein shall
belong exclusively to such disclosing party and the recipient
agrees to return all copies of such materials to the
disclosing party as soon as reasonably practicable upon
request or upon termination or expiration of this Agreement.
6.3.4. Unless required by law or otherwise mutually agreed by the
parties, neither of the parties shall disclose the terms of
this Agreement. Each party may, however, disclose such terms
to its officers, directors, employees, shareholders, outside
counsel and auditors who have a need to know and are advised
of the nondisclosure requirements contained herein, whether or
not they remain employed or affiliated with that party.
7. REPRESENTATIONS AND WARRANTIES.
7.1. RECIPROCAL. Each party represents and warrants that (i) it has
corporate power and authority to enter into and perform this
Agreement; (ii) it is the sole author or authorized licensee
of its intellectual property delivered to the other party
pursuant to this Agreement; (iii) the intellectual property
delivered by it to the other party hereunder does not and will
not infringe or misappropriate any third party proprietary
right.
7.2. MINDSCAPE. Mindscape represents and warrants that the Approved
Products will documentation function in accordance with and
other specifications thereof and will not contain any viruses
or other similar codes that may be reasonably expected to
damage data, software, systems or operations of the users of
such products.
7.3. DISCLAIMERS. EXCEPT AS EXPRESSLY PROVIDED HEREIN, EACH PARTY
DISCLAIMS ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING
WITHOUT LIMITATION THE IMPLIED WARRANTIES OF MERCHANTABILITY
AND FITNESS FOR A PARTICULAR PURPOSE.
8. LIABILITY AND INDEMNITY.
8.1 INDEMNIFICATION. Each party ("Indemnifying Party") agrees
that, at its own expense, it shall defend or settle any
action, claim, suit or proceeding ("Claim") brought against
the other or the other's directors, officers, affiliates,
employees or agents (collectively "Indemnified Parties") based
upon the Indemnifying Party's breach or alleged breach of any
representation or warranty contained herein. In addition, the
Indemnifying Party shall indemnify and hold harmless the
Indemnified Parties from and against any and all damages,
liabilities, losses, settlement amounts and any other costs
and expenses (including but not limited to reasonable
attorneys' fees), incurred as a result of any such Claim. The
Indemnified Parties shall provide the Indemnifying Party with
prompt written notification of any Claim,
15
<PAGE> 16
with sole control over the defense, and with reasonable
cooperation in the defense of any such Claim at the
Indemnifying Party's expense.
8.2. LIMITATION ON LIABILITY. NEITHER PARTY SHALL BE LIABLE
HEREUNDER FOR ANY LOSS OF PROFITS, INCIDENTAL OR CONSEQUENTIAL
DAMAGES, EVEN IF THE OTHER PARTY HAS BEEN ADVISED OF THE
POSSIBILITY OF SUCH DAMAGES. THE LIABILITY OF EITHER PARTY FOR
ANY CLAIM CONCERNING PERFORMANCE OR NONPERFORMANCE BY THE
OTHER (EXCLUDING CLAIMS FOR PERSONAL INJURY OR BREACH OF
INTELLECTUAL PROPERTY RIGHTS) PURSUANT TO, OR IN ANY WAY
RELATED TO, THE SUBJECT MATTER OF THIS AGREEMENT, REGARDLESS
OF THE FORM OF ACTION, WHETHER IN CONTRACT OR IN TORT,
INCLUDING NEGLIGENCE OR STRICT LIABILITY, SHALL BE LIMITED TO
THE GREATER OF (i) 4.25 MILLION DOLLARS OR (ii) THE AGGREGATE
ROYALTIES PAID HEREUNDER OVER THE 12 MONTH PERIOD PRECEDING
THE EVENTS GIVING RISE THE CLAIM.
9. DEFINITIONS.
9.1. "Affiliate" of an entity shall mean any other entity
controlled by, in control of, or under common control with
such first entity.
9.2. "AG Channels" shall mean websites and online stores of the AG
Parties, any AG direct mail programs as may be agreed among
the parties, and in any AG traditional retail in-store
greeting card departments.
9.3. "AG Delivered Content" shall mean the images, text and
characters delivered by AG to Mindscape pursuant to Product
Development Overviews hereunder.
9.4. "AG Trademarks" shall mean the trademarks specifically
identified on Exhibit E hereto.
9.5. "AG Copyrights" shall mean the copyright in AG Delivered
Content.
9.6. "Approved Products" shall mean software products developed
pursuant to a Product Development Overview hereunder and
approved pursuant to Section 1.4.5.
9.7. "Confidential Information" shall mean oral or written
information, of whatever kind and in whatever form, relating
to past, present or future products, software, research,
development, inventions, processes, techniques, designs or
other technical information and data, and marketing plans,
provided that such information has been reasonably identified
as or could be reasonably considered to be proprietary or
confidential, that either party (a) may have received prior to
the date of this Agreement, whether directly from the other or
indirectly from third parties, or (b) may receive hereunder
from the other.
9.8. "Creative Content" shall mean images, text and characters of a
nature similar to any contemplated by the parties to become AG
Delivered Content.
16
<PAGE> 17
9.9. "Direct Cost of Goods Sold" shall mean the direct cost to
source, manufacture (including reasonable manufacturing
overhead and obsolescence), (including royalties paid to third
parties in connection with the licensing of third party
intellectual property). Direct Cost of Goods Sold shall not
include technical support cost, development costs,
advertising, promotion, selling costs, distribution,
warehousing costs, administrative overhead costs or interest.
9.10. "Fiscal Year" shall mean the period commencing March 1 each
calendar year and ending the last day of February the
following calendar year.
9.11. "Full Feature Print Creativity Category" shall mean the
category of personal computer software products that support a
broad range of printable projects for both home and business
use such as the currently existing versions of [
]. Products in this
category may include functionality to produce greeting cards,
but they are not designed and marketed primarily for the
purpose of creating greeting cards.
9.12. "Greeting Card Category" shall mean the category of personal
computer software products that, from both a marketing and
product focus standpoint, feature primarily greeting cards and
related social expression products, such as Micrografx'
CreataCard series, [
].
9.13. "Greeting Card Company" shall mean [
] and any other entity or
business unit of an entity the primary business of which is
the greeting card business.
9.14. "Intellectual Property" shall mean intellectual property of
any kind, including, without limitation, copyrights, patents,
trade secrets and trademarks and any applications or
registrations (as applicable) for the foregoing and any
licenses from third parties for any of the foregoing.
9.15. "Listed Product" shall mean a [ ] in one
of the categories listed on Exhibit A.
9.16. "OEM Versions" shall mean a modified version of a product
developed and sold pursuant to an agreement between AG or
Mindscape and a third party that sells its own product, and
bundled with such product for sale to consumers.
9.17. "Restricted Entity" shall mean any entity listed on Exhibit F
and any Affiliate of such entities.
9.18. "Social Expression Product" shall mean a combination of art
and verse designed to convey sentiment regarding an array of
human interaction and emotion, specifically, (i) a Social
Expression Product that is printed on paper (or similar
substance) and readable by the ultimate recipient without the
use of a computer or (ii) a Social Expression Product which is
to be electronically delivered, i.e., in an electronically
transmitted format, (iii) post cards, (iv) invitations, (y)
announcements, (vi) awards and (vii) certificates.
17
<PAGE> 18
9.19. "Trademark" shall mean any trademark, service mark, trade
name, trade dress, design logo or similar proprietary right.
9.20. "Unlockable Content Pack" shall mean a collection of
theme-specific or occasion- specific Creative Content that is
either (i) sold as a separate product or (ii) embedded within
another product such that the consumer can be charged a
separate fee to obtain access to such content.
10. MISCELLANEOUS.
10.1. AMENDMENT. This Agreement may only be amended by a writing
signed by the authorized representatives of the parties
hereto.
10.2. ASSIGNMENT. This Agreement shall inure to the benefit of and
be binding upon the parties hereto and their respective
transferees, successors and assigns. Either party hereto may
make an assignment of this Agreement or any of its rights or
interests herein. No such assignment shall relieve the
assignor of any obligation hereunder. Notwithstanding the
foregoing, without the prior written consent of AG, which may
be withheld in its sole discretion, Mindscape may not assign
or delegate its rights or obligations hereunder to a
Restricted Entity of if the assignment or delegation can
reasonably be expected to impair Mindscape's performance
hereunder.
10.3. COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original and
all of which together shall be deemed the same agreement.
10.4. DISPUTE RESOLUTION. Any disputes arising out of or relating to
this Agreement ("Disputes") shall be governed by the following
procedures in the following order until finally resolved:
10.4.1. If a dispute arises out of or relates to this
Agreement, or the breach hereof, within [ ] days of
receipt of written notice of a dispute, the parties
shall attempt in good faith to resolve such dispute
by negotiation among senior executives who have
authority to settle the controversy;
10.4.2. If the dispute cannot be settled through such
negotiations within the [ ] day period set forth
above, the parties agree to try in good faith to
settle the dispute by mediation within [ ] days
immediately following the [ ] day period set forth
above, in the forum of the party against whom a
dispute resolution is sought or claim is made under
the Commercial Mediation Rules of the American
Arbitration Association. For clarification, the forum
shall be Cleveland, Ohio for claims made or
resolutions sought by Mindscape and San Francisco,
California for claims made or resolutions sought by
the AG Parties.
10.4.3. If the dispute cannot be settled by such mediation,
the parties agree to submit the dispute to binding
arbitration in the forum of the party against whom a
dispute resolution is sought or claim is made as
provided above, under the forum state and applicable
Federal law upon receipt of a written
18
<PAGE> 19
demand for arbitration by either of the parties setting forth
the names of the other party or parties. Within [ ] days
after such commencement, each party shall select one person to
act as arbitrator, and the two selected shall select a third
arbitrator within [ ] days of appointment. If the arbitrators
fail to select a third arbitrator, then the American
Arbitration Association shall select the third arbitrator.
Except as otherwise provided herein, the arbitrator shall have
the authority to award any remedy or relief a state or federal
court of the state of the forum could order or grant,
including, without limitation, specific performance, the
awarding of compensatory damages, the issuance of an
injunction and other equitable relief, but excluding any
punitive or consequential damages. If the remedy sought is a
monetary award, each party shall simultaneously, on the
[ ] business day following the commencement of the
arbitration, propose to the arbitrators the amount that party
believes should be awarded, and with respect to compensatory
damages, the arbitrators shall make an award in whichever of
the two amounts they deem most reasonable. The Arbitrators'
decision shall be issued with findings of fact and conclusions
of law and shall be non-appealable. Notwithstanding anything
in this Section 10.4 to the contrary, the losing party in a
dispute hereunder shall pay all reasonable legal fees and
expenses incurred by the prevailing party in connection with
the arbitration.
10.5. ENTIRE AGREEMENT. This Agreement sets forth the entire
understanding of the parties with respect to the subject
matter hereof and supersedes all prior contracts, memoranda,
agreements, arrangements, communications and discussions,
whether oral or written.
10.6 FORCE MAJEURE. Neither party shall be liable for any failure
or delay in performing its obligations under this Agreement,
or for any loss or damage resulting therefrom, due to causes
beyond its control (each, a "Force Majeure"), including but
not limited to, acts of God, the public enemy, riots, fires,
natural catastrophes or epidemics. In the event of such
failure or delay, the date of delivery or performance shall be
extended for a period not to exceed the time lost by reason of
the failure or delay; provided that the party affected by such
delay is using reasonable commercial efforts to mitigate or
eliminate the cause of such delay or its effects. Each party
shall notify the other in writing promptly of any failure or
delay in, and the effect on, its performance.
10.7. FURTHER ASSURANCES. The parties each agree to execute and
deliver any appropriate instruments or documents to confirm
the assignments and licenses provided for herein and to enable
the other to perfect the same by filing, registration or
otherwise in any state, territory, or country, as may be
reasonably requested and prepared by such other from time to
time.
10.8. GOVERNING LAW. This Agreement shall be governed by and
construed and enforced in accordance with the substantive laws
of the State of Ohio.
10.9. NOTICES.
19
<PAGE> 20
10.9.1. All notices, requests, demands, claims, and other communications
hereunder shall be in writing and shall be sent by registered or
certified mail, return receipt requested, postage prepaid, addressed to
the intended recipient as set forth below:
If to Mindscape:
Mindscape, Inc.
88 Rowland Way
Novato, CA 94945
Attention: Executive Vice President Home Products
with a copy to:
Mindscape, Inc.
88 Rowland Way
Novato, CA 94945
Attention: General Counsel
If to the AG Parties (or either of them):
American Greetings Corporation
10500 American Road
Cleveland, Ohio 44144
Attention: Senior Vice President - Electronic Marketing
with a copy to:
American Greetings Corporation
10500 American Road
Cleveland, Ohio 44144
Attention: General Counsel
All notices shall be effective only upon receipt. Any party may send
any notice, request, demand, claim, or other communication hereunder to
the intended recipient at the address set forth above using any other
means (including personal delivery, expedited courier, messenger
service. telecopy, telex, ordinary mail, or electronic mail), but no
such notice, request, demand, claim, or other communication shall be
deemed to have been duly given unless and until it actually is received
by the intended recipient. Any party may change the address to which
notices, requests, demands, claims, and other communications hereunder
are to be delivered by giving the other parties notice in the manner
herein set forth.
10.10. PUBLICITY. Neither party shall make any public announcement regarding
the terms or existence of this Agreement without the prior written
consent of the other.
10.11. RELATIONSHIP. This Agreement is not intended by the parties to, and
shall not be deemed to, constitute or create a joint venture, pooling
arrangement, partnership,
20
<PAGE> 21
or other business organization or entity of any kind and the rights and
obligations of the parties shall be only those expressly set forth
herein. Each party shall operate as an independent contractor in the
performance of this Agreement and not as agents or employees of the
other. Each party shall ensure that neither it nor its agents or
employees shall act or hold themselves Out as agents or employees of
the other.
10.12. WAIVERS. No purported waiver by any party of any default by any other
party of any term or provision contained herein shall be deemed to be a
waiver of such term or provision unless the waiver is in writing and
signed by the waiving party. No such waiver shall in any event be
deemed a waiver of any subsequent default under the same or any other
term or provision contained herein.
10.13. APPROVALS: This Agreement requires the parties to secure approval from
each other for various activities. Unless there is a specific provision
to the contrary, it is understood that all responses to requests for
approval shall be made within [ ] business days of receipt of the
request for approval (and all necessary materials for making a
reasonably informed decision) by the party from whom approval is sought
and that approvals shall not be unreasonably withheld. Each party shall
be entitled to learn the reason for a refusal to approve and shall have
a reasonable period of time to meet the objection. Mindscape
understands that if any refusal to approve by the AG parties is because
it believes the material, presentation or use in questions impairs the
Trademarks and goodwill of the AG Parties, the refusal to approve shall
be deemed reasonable. In any such case, the AG Parties agree to specify
the problem and help suggest a solution. When an item is submitted by
one party (the "Sending Party") to the other for approval and no
approval or rejection is received within [ ] business days, the
Sending Party shall notify the other party (the "Receiving Party") by
sending a further written notice that an approval or rejection has not
been received, such notice to be conspicuously labeled "Urgent Legal
Notice," and sent as provided in Section 10.9 by overnight courier,
requiring signature verification of receipt. If the Receiving Party,
after said notification, still does not give approval or rejection
within a further [ ] business days, the item shall be deemed
[ ].
21
<PAGE> 22
IN WITNESS WHEREOF, the parties hereto have caused their duly authorized
officers to execute this agreement as of the date set forth above.
AMERICAN GREETINGS CORPORATION AGC, INC.
By: /s/ John M. Klipfell By: /s/ Dale A. Cable
---------------------------- -------------------------
Name: John M. Klipfell Name: Dale A. Cable
---------------------------- -------------------------
Title: SR VP ELECTRONIC MARKETING Title: TREASURER
---------------------------- -------------------------
MINDSCAPE, INC.
By: /s/ John Moore
----------------------------
Name: John Moore
----------------------------
Title: CEO
----------------------------
22
<PAGE> 23
[
]
<PAGE> 24
Exhibit B
[ ] Languages other than English
[
]
<PAGE> 25
[
]
Page 1
<PAGE> 26
Exhibit 1
[
]
<PAGE> 27
[
]
<PAGE> 28
[
]
<PAGE> 29
[
]
<PAGE> 30
[
]
<PAGE> 31
[
]
<PAGE> 32
[
]
<PAGE> 33
[
]
<PAGE> 34
[
]
<PAGE> 35
[
]
<PAGE> 36
[
]
<PAGE> 37
[
]
<PAGE> 38
[
]
<PAGE> 39
Exhibit E
LICENSED TRADEMARKS
1. American Greetings
2. Carlton Cards
3. CreataCard
4. John Sands
<PAGE> 40
EXHIBIT F
[
]
<PAGE> 41
LICENSED PROPERTIES EXHIBIT G
1. King Features
- Betty Boop
- Popeye
- Berenstain Bears
- Sunday Funnies
- School House Rock
2. Team NFL
- All team logos
- The Quarterback Club
3. National Enquirer
- Banner Front Page
4. Rock Art (Grateful Dead Art)
5. Three Stooges
6. Elvis
7 Major League Baseball (MLB)
- All team logos
8. Duckman
9. Gary Patterson
10. Marvel Comics
- All Marvel Characters
11. Simpsons
12. NBA
13. NHL
14. WWF
15. Nickelodeon
- Rugrats
- Ren & Stimpy
- AAHHA! Real Monsters
16. Scooby Doo
17. The Mask
18. Power Rangers
19. Flintstones
20. Drew Carey
21. Ace Ventura
22. Opus n' Bill
23. Married w/ Children
24. Nintendo
- Super Mario Brothers
- Donkey-Kong
25. The Beatles
26. I Love Lucy
27. Muppets
28. Pink Panther
29. MTV
- Beavis & Butthead
30. United Media
- Dilbert
- Comic Zone
31. South Park
32. Looney Tunes
33. Cartoon Network
34. DC Comics
- Batman
- Superman
35. Star Trek
36. X-Files
<PAGE> 42
Exhibit H
[
]
<PAGE> 43
Draft of June 29, 1998
AMENDMENT NUMBER 1 TO
ELECTRONIC PUBLISHING DEVELOPMENT AGREEMENT
This Amendment Number 1 to Electronic Publishing Development Agreement
(this "Amendment"), is made as of June __, 1998 (the "Effective Date"), by and
among American Greetings Corporation, an Ohio corporation ("AG"), AGC, Inc., an
Ohio corporation ("AGC" and, together with AG, the "AG Parties"), and Mindscape,
Inc. a Delaware corporation ("Mindscape"). Except where the context otherwise
requires, the term "AG Parties" is to be read as if it was a single party to
this Agreement.
Background
A. Mindscape and the AG Parties entered into an Electronic Publishing
Development Agreement on February 25, 1998 (the "Existing Agreement"); and
B. Mindscape and the AG parties now wish to append the same.
Agreements
NOW, THEREFORE, the parties, intending to be legally bound, agree as
follows (capitalized terms herein not otherwise defined being used as defined in
the Existing Agreement):
1. AMENDMENTS
The Existing Agreement is amended in the following respects:
1.1 ROYALTY CALCULATION. Section 3.3 is hereby amended by inserting at the
end thereof a Section 3.3.7, as follows:
In determining the amount of royalties due hereunder, rebates to
consumers shall be deemed marketing expenses and, as such, shall not
be applied as a deduction in the calculation of royalties. REBATES TO
RETAILERS OR WHOLESALERS, HOWEVER, SHALL NOT BE AFFECTED BY THE
FOREGOING.
1.2 APPLICATION OF MINIMUM ROYALTY. Section 3.3.5 is hereby amended by
renumbering subparagraphs (i) and (ii) to be (ii) and (iii),
respectively, and inserting a new subparagraph (i) as follows:
Any royalties paid pursuant to Section 3.3.1 in a Fiscal Year with
respect to any product in any product category listed on Exhibit C
shall be applied to reduce the amount of the minimum payments
otherwise applicable pursuant to Section 3.3.2 for that product
category in that Fiscal Year.
1.3 FISCAL YEAR. Section 9.10 is hereby amended in its entirety to read as
follows:
"Fiscal Year" shall mean the period ending the last day of February of
each calendar year and commencing March 1 of the prior calendar year.
Fiscal year 1999, for example, commenced on March 1, 1998 and ends on
February 28, 1999.
<PAGE> 44
1.4. CONFIDENTIALITY. This Amendment shall be deemed part of the
Agreement for purposes of Section 6.3.4 and 10.10 of the Existing
Agreement.
2. MISCELLANEOUS.
2.1. EFFECT OF AMENDMENT. As amended hereby, the Existing Agreement
shall continue in full force and effect in accordance with its
terms.
2.2. COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original and all of
which together shall be deemed the same agreement.
2.3. DISPUTE RESOLUTION. The dispute resolution provisions of the
Existing Agreement shall apply to this Amendment.
2.4. GOVERNING LAW. This Amendment shall be governed by and construed
and enforced in accordance with the substantive laws of the State
of Ohio.
2.5. NOTICES. All notices, requests, demands, claims, and other
communications hereunder shall be given in the manner and with the
effect provided in the Existing Agreement.
IN WITNESS WHEREOF, the parties hereto have caused their duly
authorized officers to execute this agreement as of the date set forth above.
AMERICAN GREETINGS CORPORATION AGC, INCL
By: /s/ John M. Klipfell By: /s/ John M. Klipfell
------------------------------- -------------------------------
Name: John M. Klipfell Name: John M. Klipfell
Title: SR VP - ELECTRONIC MARKETING TITLE: VICE PRESIDENT
MINDSCAPE, INC.
By: /s/ Cynthia Hudson
-------------------------------
Name: -----------------------------
Title: ----------------------------
<PAGE> 45
AMENDMENT NUMBER 2 TO
ELECTRONIC PUBLISHING DEVELOPMENT AGREEMENT
This Amendment Number 2 to Electronic Publishing Development Agreement
(this "Amendment"), is made as of September 3, 1998 (the "Effective Date"), by
and among American Greetings Corporation, an Ohio corporation ("AG"), AGC, Inc.,
an Ohio corporation ("AGC" and, together with AG, the "AG Parties"), and
Mindscape, Inc. a Delaware corporation ("Mindscape"). Except where the context
otherwise requires, the term "AG Parties" is to be read as if it was a single
party to this Amendment.
Background
A. Mindscape and the AG Parties entered into an Electronic Publishing
Development Agreement on February 25. 1998 (as subsequently amended by
Amendment No. 1 thereto, the "Existing Agreement"); and
B. In connection with certain transactions between Mindscape and Micrografx,
Inc. ("Micrografx"). Mindscape and the AG Parties now wish to further amend
the same.
Agreements
NOW, THEREFORE, the parties, intending to be legally bound, agree as
follows (capitalized terms herein not otherwise defined being used as
defined in Section 3 hereof):
1. CONDITIONAL AMENDMENTS.
Subject to the terms and conditions of this Agreement, the Existing
Agreement is amended in the following respects:
1.1. ROYALTY CREDIT.
1.1.1 Section 3.3 of the Existing Agreement is hereby
amended by inserting at the end thereof a Section
3.3.8 as follows:
Notwithstanding the foregoing, in the event
that the Transfer Payment is greater than
$[ ], then, solely with respect to the
[ ], the royalty rate
identified in clauses [
] of Section 3.3.1 shall be reduced by[ ]%
([ ]%, rather than [ ]% for clauses[
], and [ ] % rather than [ ]% for
clause [ ]) until such time as the aggregate
amount of such royalty reduction equals the
lesser of: (i)[ ] of the
Transfer Payment or (ii) $[ ]
1.1.2. The following additional definitions are inserted in
Section 9 of the Existing Agreement:
"CreataCard Products" shall mean the
Approved Products that are identified on
part I of Exhibit A to Amendment No. 2 to
this Agreement and any later approved
versions of the same.
<PAGE> 46
"Transfer Payment" shall mean the total cash
payments by Mindscape to Micrografx pursuant
to the agreement referred to in Section 2.1.
of Amendment No. 2 to this Agreement.
1.2. EXCLUSIVITY EXCEPTION. Sections 5.1 of the Existing Agreement
(Limitations prior to September 1, 1999) and 9.18 of the
Existing Agreement (Social Expression Products) are hereby
deleted in their entirety.
1.3. GUARANTY SCHEDULE. Exhibit C of the Existing Agreement
(Guaranty Schedule) is hereby amended by (i) setting all
amounts under the column headed "1999" to zero and (ii)
adjusting the column designated "Total" so as to reflect the
foregoing and be mathematically accurate.
1.4. AGREEMENT SCOPE. For all purposes of the Existing Agreement,
including, without limitation, Section 3.3 thereof, each of
the products listed on Exhibit A hereto (part 1 and part 2)
shall be deemed to be Approved Products under the Existing
Agreement and any Creative Content of the AG Parties embodied
therein shall be deemed to be AG Delivered Content under the
Existing Agreement. Mindscape and AG shall cooperate in good
faith with respect to appropriate approvals of any necessary
collateral materials in accordance with Section 1.4.5 and
10.13 of the Existing Agreement
1.5. TRANSFERRED AGREEMENTS. Immediately upon their assignment to
Mindscape, the Transferred Agreements shall be deemed
terminated and shall be of no further force or effect.
Mindscape and the AG Parties each hereby irrevocably release
and forever waive any claims, actions, causes of action,
remedies, obligations, damages and liabilities of every name
and nature, whether in law or in equity, whether known or
unknown, absolute or contingent arising out of the Transferred
Agreements, including but any limited to any Claim in any way
relating to any breach or alleged breach thereof occurring
prior to the date hereof Mindscape and the AG Parties shall
have no claim or obligation whatsoever to the other under or
with respect to the Transferred Agreements
1.6. CONFIDENTIALITY. This Amendment shall be deemed part of the
Agreement for purposes of Section 6.3.4 and 10.10 of the
Existing Agreement.
1.7. CORRECTION OF TYPOGRAPHICAL ERROR. The reference in Section
1.4.5 of the Existing Agreement to "Section 10.14" is hereby
corrected to refer to Section 10.13.
1.8. UNLOCKABLE CONTENT. Mindscape shall provide reporting of
revenue deriving from unlockable content packs in sufficient
detail for the AG Parties to pay any royalties that must be
paid to their licensors.
1.9. MINDSCAPE AFFILIATE. Learning Company Properties, Inc. an
affiliate of Mindscape, by its execution hereof, agrees to be
subject to all applicable restrictions in the Existing
Agreement, as amended hereby, on the use or other exercise of
rights with respect to AG Copyrights, AG Delivered Content, AG
Trademarks and any other intellectual property of the AG
Parties. Mindscape agrees that any funds received by Learning
Company Properties, Inc. in respect of
<PAGE> 47
Approved Products shall be subject to the royalties provided
in the Existing Agreement.
2. CONDITIONS.
The rights and obligations of the parties hereto shall not be effective
until, and shall be subject to the satisfaction or waiver in writing
of, the following conditions:
2.1. MINDSCAPE/MICROGRAFX AGREEMENT. AG shall have been provided
with and given an opportunity to review the agreement between
Micrografx and Mindscape providing for the assignment of the
Transferred Agreements and shall have been satisfied, in its
sole discretion, with the terms and conditions thereof.
2.2. MICROGRAFX/AG AGREEMENT. AG shall have entered into an
agreement with Micrografx providing the AG Parties' consent to
the assignment to Mindscape of the Transferred Agreements and
AG shall have been satisfied. in its sole discretion, with the
terms and conditions thereof.
provided however, that AG and Mindscape shall use commercially
reasonable efforts to cause such conditions to be satisfied as promptly
as possible.
3. DEFINITIONS.
3.1. "Transferred Agreements" shall mean (i) that certain Master
Agreement between the AG Parties and Micrografx dated February
9, 1996 as amended April 1, 1997: (ii) Subagreement A between
the AG Parties and Micrografx dated February 9, 1996 as
amended April 1, 1997; (iii) Subagreement B between the AG
Parties and Micrografx dated February 9, 1996 as amended April
1, 1997; (iv) Subagreement D between the AG Parties and
Micrografx dated April 1, 1997; (y) Subagreement E between the
AG Panties and Micrografx dated April 1, 1997.
3.2. Capitalized terms used herein without definition are used as
defined in the Existing Agreement.
4. MISCELLANEOUS.
4.1. EFFECT OF AMENDMENT. As amended hereby, the Existing Agreement
shall continue in full force and effect in accordance with its
terms.
4.2. COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original and
all of which together shall be deemed the same agreement.
4.3. DISPUTE RESOLUTION. The dispute resolution provisions of the
Existing Agreement shall apply to this Amendment.
4.4. GOVERNING LAW. This Amendment shall be governed by and
construed and enforced in accordance with the substantive laws
of the State of Ohio.
4.5. NOTICES. All notices, requests, demands, claims, and other
communications hereunder shall be given in the manner and with
the effect provided in the Existing Agreement.
<PAGE> 48
4.6. TERMINATION. This Agreement shall terminate and be of no
further force or effect in the event the assignment of the
Transferred Agreements shall not have occurred by September 4,
1998 at 5 p.m. Eastern Time.
IN WITNESS WHEREOF, the parties hereto have caused their duly
authorized officers to execute this agreement as of the date set forth above.
AMERICAN GREETINGS CORPORATION AGC, INC.
By: /s/ John M. Klipfell By: /s/ John M. Klipfell
--------------------------------------- -------------------------------
Name: JOHN M. KLIPFELL Name: JOHN M. KLIPFELL
------------------------------------- -----------------------------
Title: Sr VP Electronic Marketing Title: Sr VP Electronic Marketing
------------------------------------ -----------------------------
MINDSCAPE, INC.
By: /s/ R. Scott Murray
--------------------------------------------------------
Name: R. SCOTT MURRAY
------------------------------------------------------
Title: Executive Vice President and Chief Financial Officer
-----------------------------------------------------
as to Section 1.9:
LEARNING COMPANY PROPERTIES, INC.
By: /s/ R. Scott Murray
--------------------------------------------------------
Name: R. SCOTT MURRAY
------------------------------------------------------
Title: Executive Vice President and Chief Financial Officer
-----------------------------------------------------
<PAGE> 49
AMENDMENT NUMBER 4 TO
ELECTRONIC PUBLISHING DEVELOPMENT AGREEMENT
This Amendment Number 4 to Electronic Publishing Development Agreement
(this "Amendment"), is made as of April 12, 1999 (the "Effective Date"), by and
among American Greetings Corporation, an Ohio corporation ("AG"), AGC, Inc., an
Ohio corporation ("AGC" and, together with AG, the "AG Parties"), and Mindscape,
Inc. a Delaware corporation ("Mindscape"). Except where the context otherwise
requires, the term "AG Parties" is to be read as if it was a single party to
this Amendment.
Background
A. Mindscape and the AG Parties entered into an Electronic Publishing
Development Agreement on February 26, 1998 (as subsequently amended by
Amendment No. 1, Amendment No. 2 and Amendment No: 3 thereto, the "Existing
Agreement"); and
B. Mindscape and the AG Parties now wish to further amend the same:
Agreements
NOW, THEREFORE, the parties, intending to be legally bound, agree as
follows (capitalized terms herein not otherwise defined being used as defined in
Section 3 hereof):
1. CLARIFICATION OF PAYMENT TIMING. The Existing Agreement is amended in the
following respects:
1.1. In each of clauses i, ii, iii, iv and v of Section 3.3. 1 of the
Existing Agreement, the term "received" is replaced with the term
"invoiced."
1.2 At the end of Section 3.3.1 of the Existing Agreement, the following
is inserted: Mindscape agrees that invoices are issued upon product
shipment and that all amounts required to be paid are reflected in
such invoices.
1.3 In Section 3.3.4 of the Existing Agreement, the figure [
] is replaced with [ ] and the following is
added at the end of the section:
With respect to each [ ], Mindscape shall report and pay
based on product sales that occur in that [ ], without regard
to whether payment for such sales shall have been actually
received by Mindscape, subject to subsequent reconciliation of
refunds, returns and credits as provided in the preceding
sentence.
2. TRANSITION. The parties acknowledge that as of the date hereof, there is an
amount (the "Transition Amount") that would be past due if the timing of
Mindscape's payment obligations were determined in compliance with the
terms of Section 3.3.1 as amended hereby. The AG Parties hereby agree, that
notwithstanding the requirements of the Existing Agreement, as amended
hereby, Mindscape may pay the Transition Amount in [ ] installments
payable on [ ] and July 15, 1999 provided that
Mindscape provides a report of the amount thereof no later than April 30,
1999 such report to be subject to Section 3.4 and the other requirements of
the Existing Agreement.
<PAGE> 50
3. MISCELLANEOUS.
3.1. EFFECT OF AMENDMENT. As amended hereby, the Existing Agreement shall
continue in full force and effect in accordance with its terms.
3.2. COUNTERPARTS. This Agreement may be executed in multiple counterparts,
each of which shall be deemed an original and all of which together
shall be deemed the same agreement.
3.3. DISPUTE RESOLUTION. The dispute resolution provisions of the Existing
Agreement shall apply to this Amendment.
3.4. GOVERNING LAW. This Amendment shall be governed by and construed and
enforced in accordance with the substantive laws of the State of Ohio.
3.5. NOTICES. All notices, requests, demands, claims, and other
communications hereunder shall be given in the manner and with the
effect provided in the Existing Agreement; provided, however, that an
additional copy of any notices to Mindscape shall be sent as follows:
The Learning Company
One Athenaeum Street
Cambridge, MA 02142
Attn: Scott Murray, Executive Vice President and Chief Financial
Officer
Attn: General Counsel
IN WITNESS WHEREOF, the parties hereto have caused their duly
authorized officers to execute this agreement as of the date set forth above.
AMERICAN GREETINGS CORPORATION AGC, INC.
By: /s/ John M. Klipfell By: /s/ John M. Klipfell
------------------------------ -------------------------------
Name: JOHN M. KLIPFELL Name: JOHN M. KLIPFELL
---------------------------- -----------------------------
Title: SR VP Title: VP
--------------------------- ----------------------------
MINDSCAPE, INC.
By: /s/ John Moore
------------------------------
Name: JOHN MOORE
----------------------------
Title: Pres
---------------------------