{"id":42295,"date":"2015-09-17T11:25:58","date_gmt":"2015-09-17T16:25:58","guid":{"rendered":"https:\/\/content.findlaw-admin.com\/ability-legal\/contracts\/uncategorized\/exclusive-output-agreement-bay-area-multimedia-inc-and.html"},"modified":"2015-09-17T11:25:58","modified_gmt":"2015-09-17T16:25:58","slug":"exclusive-output-agreement-bay-area-multimedia-inc-and","status":"publish","type":"corporate_contracts","link":"https:\/\/corporate.findlaw.com\/contracts\/operations\/exclusive-output-agreement-bay-area-multimedia-inc-and.html","title":{"rendered":"Exclusive Output Agreement &#8211; Bay Area Multimedia Inc. and Spyglass Entertainment Group L.P."},"content":{"rendered":"<pre>                        (Confidential Portions Omitted)\n\n                           EXCLUSIVE OUTPUT AGREEMENT\n\n        This Agreement (the \"Agreement\") is being entered into as of this 25th\nday of October, 2000 by and between BAY AREA MULTIMEDIA, INC. (\"BAM\") and\nSPYGLASS ENTERTAINMENT GROUP, L.P. (\"SPYGLASS\") and sets forth the terms and\nconditions of their agreement regarding BAM's acquisition of certain rights to\nSPYGLASS' motion picture output on an exclusive basis and certain other motion\npicture product, all as more particularly set forth below. As used herein, the\nterm \"Parties\" shall refer collectively to BAM and SPYGLASS, and the term\n\"Party\" shall refer to BAM or SPYGLASS individually. The Parties hereby agree as\nfollows:\n\n1.      SCOPE OF THE AGREEMENT: For good and valuable consideration, receipt of\nwhich is hereby acknowledged:\n\n        a. Exclusive First Look Obligation. During the Output Term (as defined\nherein), SPYGLASS shall submit to BAM, on an exclusive, \"first-look\" basis, all\nSPYGLASS Pictures (as defined herein) with respect to which BAM shall have the\nright to exploit Interactive Entertainment Rights (as defined in Paragraph 5\nhereof) in perpetuity throughout the universe, in accordance with the terms and\nconditions hereof. Each submission shall be made by SPYGLASS in accordance with\nthe requirements and procedures set forth below. The term \"SPYGLASS Picture\"\nshall mean an original first class theatrical motion picture: (i) to be produced\nor acquired for theatrical release by SPYGLASS; and\/or (ii) to be otherwise\nreleased under the SPYGLASS name and\/or logo and\/or any other name and\/or logo\nowned, operated or controlled by, or otherwise affiliated with, SPYGLASS, by\nitself or through a joint venture with another entity, in each instance for\nwhich SPYGLASS controls the Granted Rights. A motion picture project, property\nor film shall be deemed to be a SPYGLASS Picture the first date upon which\nSPYGLASS enters into an agreement to acquire the rights to cause such project,\nproperty or film to be produced, acquired or otherwise released in accordance\nwith the definition of a SPYGLASS Picture hereunder (the \"Acquisition Date\").\nFor purposes hereof, \"first look\" means that a SPYGLASS Picture shall be\nsubmitted solely and exclusively to BAM for purposes of exploiting the\nInteractive Entertainment Rights in and to such SPYGLASS Picture before the same\nis submitted to any other person or entity. It is the essence of this Agreement\nthat SPYGLASS will not submit any SPYGLASS Picture to a third party for\nacquisition, licensing, exploitation or any other use of the Interactive\nEntertainment Rights unless and until the SPYGLASS Picture has been submitted to\nBAM hereunder and BAM has declined to exploit the Interactive Entertainment\nRights to the SPYGLASS Picture (a \"Rejected Picture\"). A SPYGLASS Picture for\nwhich BAM elects to exploit the Interactive Entertainment Rights shall be\nreferred to as an \"Included Picture.\"\n\n        b. Grant of Rights. SPYGLASS hereby irrevocably grants, transfers,\nassigns and licenses to BAM the Granted Rights (as defined in Paragraph 2\nhereof) in and to each SPYGLASS Picture during the Output Term (as defined\nherein) in perpetuity throughout the universe subject to, and in accordance\nwith, the terms hereof.\n\n        c. Output Term. The term \"Output Term\" shall mean the period commencing\non the date hereof and expiring five (5) years from the date hereof. It is\nunderstood that notwithstanding\n\n\n\n                                       1\n   2\n\nthe expiration of the Output Term, BAM's Granted Rights with respect to each\nSPYGLASS Picture shall continue in perpetuity throughout the universe.\n\n2.      GRANTED RIGHTS:\n\n        a. Granted Rights. The term \"Granted Rights\" shall mean the exclusive\nInteractive Entertainment Rights (as defined herein) to each of the SPYGLASS\nPictures, all rights necessary to distribute, exploit, advertise, promote and\npublicize such Interactive Entertainment Rights, and the identical rights to all\nremakes, sequels and prequels of each SPYGLASS Picture, for exploitation in\nperpetuity throughout the Universe. \"Interactive Entertainment Rights\" shall\nmean all of the following: (a) rights to develop and manufacture interactive\nsoftware products (the \"Products\") on all interactive entertainment software\nplatforms including, without limitation: (i) IBM PC, Apple Macintosh and Power\nPC compatible computers and any similar or successor personal computers, whether\noperating under DOS, Windows, OS\/2, Macintosh OS, UNIX or any similar or\nsuccessor operating system, and whether operating in stand-alone or networked\nconfiguration including, without limitation, on the interactive networks and the\nInternet, and regardless of storage media (e.g., whether on CD-ROM, magnetic,\noptical solid-state or other media), (ii) dedicated console gaming systems and\nany similar or successor gaming systems (e.g., Sony PlayStation, Sony\nPlayStation 2, Sega Dreamcast, Microsoft Xbox, Nintendo Dolphin, Nintendo 64,\netc.), (iii) coin operated, token operated or other arcade games, and (iv)\nhandheld consoles and devices (e.g., Nintendo Color Gameboy); and (b) rights to\nuse elements of each SPYGLASS Picture including, without limitation, the\nsoundtrack to each SPYGLASS Picture and the names, likenesses, biographies,\nphotographs and recorded voices of all persons appearing in each SPYGLASS\nPicture, but only to the extent SPYGLASS possesses the right to grant any such\nrights, (i) as part of the name, label, packaging, or trade dress (i.e., overall\nappearance and commercial impression) of the Products, (ii) as part of the\nsound, graphics or other audio-visual elements integral to the Products for use\nin all interactive media whether heretofore known or hereafter developed, and\n(iii) in print media, point of sale, radio broadcast and television advertising,\nand in brochures, sales literature and promotional activities, including on-line\npromotional activities, for the Products. The Parties agree that the Granted\nRights are subject only to any non-financial contractual restrictions thereon\nset forth in any bona fide agreement entered into by SPYGLASS with third parties\nof which BAM has received timely written notice. SPYGLASS will apprise BAM of\nany such restrictions it is aware of at the time of the submission.\n\n        b. Exclusions. Notwithstanding the foregoing, BAM hereby acknowledges\nthat pursuant to a prior existing agreement SPYGLASS is subject to certain\nrights of first negotiation\/first refusal held by a third party regarding the\ndistribution of Granted Rights in the territories of Germany, Austria,\nLiechtenstein, Switzerland, Luxembourg and Alto Adige and accordingly, BAM's\nexercise of the Granted Rights shall also subject to and limited by such\npre-existing obligations. In addition, SPYGLASS hereby reserves the right,\nexercisable in its sole discretion, to exclude the Picture entitled \"Reign of\nFire\" as a SPYGLASS Picture hereunder.\n\n3.      SUBMISSION PROCEDURES:\n\n\n\n                                       2\n   3\n\n        a. Submission. Not later than thirty (30) business days following the\nAcquisition Date of a SPYGLASS Picture, SPYGLASS shall submit the screenplay for\nsuch SPYGLASS Picture to BAM, along with a written notice (\"Submission Notice\")\nfrom SPYGLASS to BAM stating the proposed budget amount for such SPYGLASS\nPicture and informing BAM that the screenplay and notice constitute a submission\nhereunder. In addition, SPYGLASS shall submit to BAM a statement of any and all\ncreative elements attached to such SPYGLASS Picture, if any (e.g., director,\nwriter, principal cast members) and all other relevant material SPYGLASS has in\nconnection with such SPYGLASS Picture (e.g., proposed schedule, expected date of\ninitial United States theatrical release) (collectively, all of the foregoing\nshall be known as the \"Submission Materials\").\n\n        b. BAM's Response to Submission. Within ninety (90) days following\nreceipt by BAM of a Submission Notice, together with complete Submission\nMaterials (the \"Response Period\"), BAM will provide written notice to SPYGLASS\nwhether BAM elects to exploit the Interactive Entertainment Rights to such\nSPYGLASS Picture. BAM's failure to respond within the Response Period shall be\ndeemed to constitute BAM's rejection of such SPYGLASS Picture and such SPYGLASS\nPicture shall thereafter be deemed to be a Rejected Picture.\n\n        c. Rejected Pictures. With respect to each Rejected Picture, SPYGLASS\nwill have the option to arrange for the Interactive Entertainment Rights to such\nRejected Picture to be acquired by third parties; provided, however, that prior\nto the time that SPYGLASS concludes any agreement to set up such rights with a\nthird party, if there is a change in any of the following elements set forth in\nthe Submission Materials (e.g., a change in the budget in excess of twenty-five\npercent (25%) of the total budget amount, a change in the principal cast), then\nSPYGLASS shall resubmit the Rejected Picture to BAM in accordance with the terms\nof Paragraph 3.a. above (provided BAM shall have 30 days from the date of such\nresubmission to make its determination) and the Rejected Picture shall not be\nsubmitted to any third party unless and until BAM has again declined to exploit\nsaid rights. All of BAM's right, title, and interest in and to each Rejected\nPicture that is not required to be resubmitted to BAM pursuant to the terms of\nthis Paragraph 3.c. shall revert to SPYGLASS automatically. BAM shall quitclaim\nall rights in and to such Rejected Picture to SPYGLASS. Upon SPYGLASS' written\nrequest, BAM shall execute and deliver or cause to be executed and delivered to\nSPYGLASS a customary quitclaim or such other instruments, documents or\nagreements as SPYGLASS may reasonably deem necessary to effectuate such\nquitclaim.\n\n        d. Submission by BAM. In addition to SPYGLASS' submissions hereunder,\nBAM shall have the right, but not the obligation, to submit to SPYGLASS, at any\ntime, theatrical motion picture projects for which BAM is willing to exploit the\nInteractive Entertainment Rights. None of such projects shall be deemed a\nSPYGLASS Picture hereunder unless and until SPYGLASS enters into a binding\nwritten agreement to acquire the rights to cause such project to be produced,\nacquired or otherwise released in accordance with the definition of a SPYGLASS\nPicture hereunder.\n\n4.      EQUITY INTEREST:\n\n\n\n                                       3\n   4\n\n        a. BAM Common Stock. SPYGLASS shall be entitled to receive from BAM a\nwarrant in the form attached hereto as Exhibit A to purchase up to 100,000\nshares of BAM common stock (the \"Equity Interest\"). (The shares issued upon\nexercise of the Warrant shall be referred to as the \"Shares\").\n\n        b. Rights of First Refusal. From the date hereof until the earliest to\noccur of (i) the sale or transfer of greater than 50% of the aggregate equity\ninterests in BAM held by Raymond Musci and Anthony Williams as of the date of\nthis Agreement, (ii) such time as Raymond Musci and Anthony Williams no longer\nserve as officers of BAM, or (iii) an initial public offering of the equity of\nBAM. SPYGLASS and BAM agree:\n\n               (i) Offer of Sale; Notice of Proposed Sale. If at any time\nSPYGLASS desires to sell, transfer or otherwise dispose of the Shares, SPYGLASS\nshall deliver written notice of its desire to do so (the \"Sale Notice\") to BAM,\nwhich Sale Notice must be accompanied a summary of the terms of a bona fide\noffer to purchase SPYGLASS shares (the \"Sale Offer\"), which Sale Offer shall be\nexpressly subject to SPYGLASS' complying with the provisions of this Agreement,\nincluding this Paragraph 4, with a bona fide purchaser reasonably capable of\ncompleting such purchase (the \"Proposed Transferee\"). The Sale Notice and Sale\nOffer shall specify (i) the name and address of the Proposed Transferee(s), (ii)\nthe number of Shares SPYGLASS proposes to sell, transfer or otherwise dispose of\n(referred to herein as \"Offered Shares\"), (iii) the consideration per Offered\nShare to be delivered to SPYGLASS for the proposed sale, transfer or disposition\nand (iv) all other material terms and conditions of the proposed transaction.\n\n               (ii) Option to Purchase. BAM shall have the option to purchase\nall or any portion of the Offered Shares for the consideration per share and on\nthe terms and conditions set forth in the Sale Notice and Binding Agreement. The\nCompany may only exercise such option by delivery of written notice to SPYGLASS\nprior to the date fifteen (15) business days after the date of delivery of the\nSale Notice. If BAM delivers written notice of its intent to purchase all or any\nportion of the Offered Shares, then the closing of the purchase of the Offered\nShares shall take place at the offices of BAM no later than ten (10) business\ndays after the expiration of the fifteen (15) day period specified above.\n\n               (iii) Sale to Proposed Transferee. To the extent BAM fails (i) to\ndeliver written notice or notices of intent to purchase any of the Offered\nShares within the fifteen (15) day period specified in Paragraph 4.b.(ii) or\n(ii) to close the purchase of the Offered Shares within the applicable period\nspecified in Paragraph 4.b.(ii), then SPYGLASS may sell, transfer or otherwise\ndispose of the remaining Offered Shares to the Proposed Transferee at any time\nwithin one hundred twenty (120) days after the date of the delivery of the Sale\nNotice on terms not less favorable than terms set forth in the Sale Notice and\nSale Offer. Any Offered Shares not sold, transferred or otherwise disposed of\nwithin the applicable one hundred twenty (120) day period shall continue to be\nsubject to all of the requirements of this Paragraph 4 as if there had been no\nprior offer or Sale Notice. Notwithstanding the above, the Offered Shares shall\nnot be sold, transferred or otherwise disposed of unless such purchaser or\nacquirer is bound or agrees in writing to be bound by the provisions of this\nParagraph 4, and any such sale, transfer or disposition where such purchaser or\nacquirer is not bound or does not so agree to be bound shall be void.\n\n\n\n                                       4\n   5\n\n        c. Lock-up Agreement. In consideration for BAM agreeing to its\nobligations under this Agreement, SPYGLASS agrees, in connection with the first\nqualified public offering of BAM securities, upon request of BAM or the\nunderwriters managing such offering, not to sell, make any short sale of, loan,\ngrant any option for the purchase of, or otherwise dispose of any securities of\nBAM (other than those included in the registration) without the prior written\nconsent of BAM or such underwriters, as the case may be, for such period of time\n(not to exceed one hundred eighty (180) days) from the effective date of such\nregistration as BAM or the underwriters may specify. SPYGLASS agrees that BAM\nmay instruct its transfer agent to place stop transfer notations in its records\nto enforce the provisions of this Paragraph 4.\n\n        d. Effect of Not Following Procedures. Any sale, transfer or other\ndisposition of any Shares not in accordance with the foregoing procedures of\nthis Paragraph 4 shall be null and void and of no force and effect.\nNotwithstanding anything to the contrary contained herein, nothing shall prevent\nSPYGLASS from pledging or otherwise encumbering its Shares; provided, however,\nthat the pledgee or holder of such encumbrance shall not be entitled to acquire\nsuch Shares upon default or otherwise unless the provisions of this Paragraph 4\nare first complied with.\n\n        e. Tag Along Provisions.\n\n               (i) General. Prior to a Qualified IPO, if Raymond Musci\n(\"Principal Stockholder\") proposes to offer shares of BAM (\"Offered Securities\")\nto any Person (individually, a \"Third Party\" and collectively, \"Third Parties\")\nin any one transaction or any series of related transactions, directly or\nindirectly, such sale or other disposition shall not be permitted unless\nPrincipal Stockholder shall offer (or cause the Third Party to offer) to\nSPYGLASS in writing (the \"Tag-Along Notice\") the right to elect to include, at\nthe sole option SPYGLASS, in the sale or other disposition to the Third Party\nsuch number of shares of Offered Securities owned by SPYGLASS as shall be\ndetermined in accordance with paragraph (iii) below (the \"Tag-Along Shares\").\nThe Tag-Along Notice shall state: (1) the Principal Stockholder's bona fide\nintention to sell such Offered Securities; (2) the number of shares of such\nOffered Securities to be offered for sale; and (3) the price and terms upon\nwhich the Principal Stockholder proposes to offer such Offered Securities.\n\n               (ii) At any time within fifteen (15) days after the giving of the\nTag-Along Notice, SPYGLASS may make an election to include the Tag-Along Shares\nin such a sale and deliver to the Company a stock certificate or certificates\nrepresenting the Tag-Along Shares, together with a limited power-of-attorney\nauthorizing the Principal Stockholder to sell or otherwise dispose of such\nTag-Along Shares pursuant to the terms of such Third Party's offer.\n\n               (iii) SPYGLASS shall have the right to sell or include in the\nThird Party's offer, that percentage (the \"Tag-Along Percentage\") of the number\nof Offered Securities to be sold to the Third Party equal to the ratio\n(expressed as a percentage) of (1) the Shares purchased by SPYGLASS, as compared\nwith (2) the aggregate number of shares owned by all stockholders.\n\n               (iv) The purchase from SPYGLASS pursuant to this Section shall be\non the same terms and conditions, including the price per share, the form of\nconsideration and the date of sale or\n\n\n\n                                       5\n   6\n\nother disposition, as are received by the Principal Stockholder and shall be no\nless favorable to the sellers than as stated in the Tag-Along Notice.\n\n               (v) Promptly (but in no event later than fifteen (15) days after\ntreating all securities, or rights which are convertible into securities as\nhaving been exercised and converted into shares of common stock, consummation of\nthe sale or other disposition of shares of Offered Securities of the Principal\nStockholder and SPYGLASS to the Third Party pursuant to the Third Party's offer,\nthe Principal Stockholder shall (1) notify such other SPYGLASS of the completion\nthereof, (2) cause to be remitted to SPYGLASS the total sales price attributable\nto the Offered Securities which SPYGLASS sold or otherwise disposed of pursuant\nthereto, and (3) furnish SPYGLASS evidence of the completion and time of\ncompletion of such sale or other disposition and the terms thereof as may be\nreasonably requested by SPYGLASS.\n\n               (vi) If within fifteen (15) days after the Tag-Along Notice is\ngiven, SPYGLASS has not accepted the offer to make an inclusion election, such\nSPYGLASS will be deemed to have waived any and all of its rights with respect to\nthe sale or other disposition of the Offered Securities described in the\nTag-Along Notice. The Principal Stockholder shall have one hundred twenty (120)\ndays after such 30-day period in which to sell or otherwise dispose of the\nOffered Securities of the Offering Stockholder to the Third Party or any other\nPerson at a price and on terms not more favorable in the aggregate to the\nPrincipal Stockholder than were set forth in the Tag-Along Notice.\n\n               (vii) If, at the end of such 120-day period, the Principal\nStockholder has not completed the sale of shares of Offered Securities in\naccordance with the terms of the Third Party's offer, all the restrictions on\nsale contained in this Agreement with respect to Offered Securities owned by the\nOffering Stockholders shall again be in effect (unless such 120-day period is\nextended with the consent of each of the other Stockholders).\n\n               (viii) Notwithstanding the terms and provisions of paragraph\n43(i) hereof, the Tag-Along Right provided for in this Section 4 shall not be\napplicable to (i) any repurchase by the Company of equity securities from an\nemployee upon termination, (ii) any redemption or conversion of any Preferred\nStock in accordance with its terms, (iii) any transfer solely by one or more\nstockholders, in a single transaction or series of related transactions, of\nShares constituting less than five percent (5%) of the fully diluted Stock; (iv)\nany transfer for estate purposes, (v) any transfer to a family member, Robert\nHolmes or Anthony Williams.\n\n5.      ROYALTY PAYMENTS:\n\n        a. Royalties. Royalties shall be payable in accordance with the schedule\nset forth on Schedule NS. Any royalties payable pursuant to this Agreement shall\nbe paid on a quarterly basis for the first two years subsequent to the date\nhereof, on a semi-annual basis for the following three years, and, thereafter on\nan annual basis, provided that in each such case, each payment hereunder shall\nbe accompanied by a royalty statement.\n\n\n\n                                       6\n   7\n\n        b. Limitations on Royalties. No royalties will be payable on returns\nthat are accepted and credited by BAM or an affiliate of BAM, or on units of the\nProducts distributed exclusively for demonstration or promotional purposes, or\nfor replacements. BAM shall have the right to retain a reasonable reserve from\nroyalties for returned Products (provided that such reserve will be reviewed\nand, if appropriate, liquidated in good faith on a quarterly basis). To the\nextent that the actual returns to BAM or affiliates of BAM in any given quarter\nare greater than the expected returns based on which BAM has adjusted any\nroyalty payments, such difference will be withheld by or payable to BAM, as the\ncase may be. No royalties will be payable on sales or other transactions between\nBAM and any affiliates of BAM. If BAM makes a royalty payment to SPYGLASS where\nBAM is subsequently required to refund or reduce all or any part of the Net\nSales collected by it, BAM shall have the right to a refund of overpayments of\nroyalties made to SPYGLASS.\n\n        c. Books and Records Relating to Sales. BAM will maintain sufficient and\naccurate books and records relating to all transactions relevant to sales of the\nProducts or in respect of which BAM is required to provide information in a\nroyalty statement.\n\n        d. Inspection. BAM will permit a chartered accountant reasonably\nacceptable to BAM and appointed by SPYGLASS (the \"SPYGLASS Accountant\") to\ninspect the books and records maintained by BAM after thirty (30) days notice at\nany reasonable time during normal business hours at SPYGLASS' expense and in\nsuch manner as not to interfere with the business of BAM for the purpose of\nverifying the correctness of the royalty statements and the payments made by BAM\nto SPYGLASS by way of royalty pursuant to this Paragraph 8. SPYGLASS shall not\nbe entitled to make such inspections more frequently than on one occasion in\neach period of twelve (12) calendar months unless it can demonstrate that there\nare exceptional circumstances requiring such additional inspections. In the\nevent that the SPYGLASS Accountant discovers an error of greater than [*]\nin favor of SPYGLASS, SPYGLASS shall be entitled to reimbursement\nby BAM for the costs of such a review plus interest at 10 percent (10%) per\nannum.\n\n        e. No Disclosure. SPYGLASS shall not and shall cause the SPYGLASS\nAccountant not to disclose any information acquired as a result of any such\nexamination or inspection to any person, firm or corporation other than its\nemployees, authorized representatives and as otherwise strictly necessary to\nenforce its rights hereunder.\n\n*  Confidential Portion Omitted and Filed Separately with the Commission.\n\n\n\n                                       7\n   8\n\n6.      CONSULTATION AND APPROVAL RIGHTS:\n\n        a. SPYGLASS. SPYGLASS shall meaningfully consult with BAM in good faith\nduring the Output Term with respect to (a) SPYGLASS' development\/acquisition\nslate for SPYGLASS Pictures and (b) all key creative elements of the Included\nPictures. SPYGLASS shall advise BAM as to the status of pre-production,\nproduction and post-production of each Included Picture on no less than a\nquarterly basis. Without limiting the generality of the foregoing, SPYGLASS\nagrees to provide BAM with regular production status reports during the period\nof principal photography and post-production of each Included Picture.\n\n        b. BAM. The parties shall mutually agree upon a milestone schedule of\ntasks to be completed for the development, production, marketing and\ndistribution of each Product and the relevant requirements therefor (the\n\"Milestone(s)\"). SPYGLASS shall evaluate each relevant Milestone to determine\nwhether the Milestone complies with the requirements established for each such\nMilestone. Once approved by SPYGLASS, such approval of the Milestone is not\nrevocable.\n\n7.      BOOKS AND RECORDS: SPYGLASS shall at all times maintain customary\nproduction books and records (including copies of third party agreements and\nchain-of-title documentation) for each Included Picture and shall, upon BAM's\nrequest, for a period of up to two (2) years after initial United States\ntheatrical release of the applicable Included Picture, provide BAM with\nreasonable access to review and copy the same during reasonable business hours.\n\n8.      DELIVERY: The term \"Delivery\" shall mean BAM's receipt and approval of\nall of the items listed in Schedule DS attached hereto (the \"Delivery Items\")\nand incorporated herein by reference relating to each Included Picture, by a\ndate no later than two (2) weeks following delivery of each Included Picture to\nits domestic distributor (\"Delivery Date\"); provided, however, with respect to\nSPYGLASS' acquisition of Included Pictures in completed form, in lieu of the\nforegoing, the Delivery Date shall be no later than thirty (30) days following\ndelivery to SPYGLASS of such Included Picture. Notwithstanding the foregoing,\nSPYGLASS agrees to use its best efforts to provide any Delivery Items to BAM as\nsoon as is practicable during the course of production. SPYGLASS agrees further\nto provide BAM reasonable access to the set during production of an Included\nPicture, on a non-interference basis with production, to enable BAM to\nphotograph the set and to conduct motion capture sessions as BAM may arrange\nwith cast members. SPYGLASS agrees herein that the Delivery Items shall be fully\npaid for by SPYGLASS provided that BAM shall be responsible for any duplication\ncosts and delivery costs. It is understood and agreed by BAM and SPYGLASS that\nany Delivery Items delivered to BAM hereunder shall become the sole and\nexclusive property of BAM; provided, however, in no event shall BAM's ownership\nof such materials be deemed to give BAM any greater rights in the Included\nPicture than the Granted Rights.\n\n9.      PUBLICITY MATERIALS: SPYGLASS agrees herein to provide BAM with free\naccess to all publicity and advertising materials which have been prepared (and\ncleared by SPYGLASS) in connection with the theatrical release of each Included\nPicture (provided, that any costs associated with duplication of such materials\nshall be borne by BAM and recoupable by BAM hereunder). The Parties agree that\nBAM may use such publicity and advertising materials to promote, advertise and\n\n\n\n                                       8\n   9\n\nmarket all Products developed in connection with the applicable Included\nPicture, subject to the contractual restrictions imposed by third parties.\nSubject to the prior approval of SPYGLASS, BAM agrees to use SPYGLASS logos in\nconnection with all Products developed in connection with the applicable\nIncluded Picture.\n\n10.     REPRESENTATIONS, WARRANTIES AND COVENANTS OF SPYGLASS: SPYGLASS hereby\nrepresents, warrants and covenants to BAM as follows:\n\n        a. Power. SPYGLASS is a partnership duly formed and validly existing in\ngood standing under the laws of the State of Delaware and has the requisite\npower and authority to enter into this Agreement and to perform its obligations\nhereunder.\n\n        b. Duly Authorized. The execution and delivery of this Agreement by\nSPYGLASS and the consummation by SPYGLASS of the transactions contemplated\nhereby have been duly authorized and no other corporate or partnership\nproceeding or consent on the part of SPYGLASS is necessary to authorize this\nAgreement and the transactions contemplated hereby.\n\n        c. Liens. Schedule 10c sets forth a listing of all claims, liens,\ncharges or encumbrances which materially impair or materially and adversely\naffect the Granted Rights. SPYGLASS hereby agrees to provide BAM with written\nnotice upon the creation of any additional claim, lien, charge or encumbrance,\nor any amendments or other modifications to any of the charges, liens, claims or\nencumbrances set forth on Schedule 10c which in either case, would materially\nimpair or have a material and adverse effect on the Granted Rights. Such written\nnotice will be sent in a timely manner and shall include a brief description of\nsuch claim, lien, charge or encumbrance. Except as set forth on Schedule 10c,\nthe Granted Rights licensed to BAM hereunder, as of the date of this agreement\nand hereafter shall continue to be, free and clear of any and all claims, liens,\ncharges, encumbrances, restrictions, agreements, commitments, and arrangements\nwhatsoever which materially impair or materially and adversely affect BAM's\nrights hereunder to exploit the Granted Rights, provided, however that for any\nbreach of the representation and warranty set forth in this subparagraph\nregarding the liens set forth on Schedule 10c hereto, BAM's sole remedy is\ntermination of this Agreement.\n\n        d. No Infringement. With respect to each SPYGLASS Picture and the\nadvertising and publicity materials in connection therewith provided to BAM\nhereunder and so long as such advertising and publicity materials are used in\ncompliance with any restrictions on such materials specified by SPYGLASS to BAM:\n(i) to the best of SPYGLASS' knowledge, the foregoing does not and will not\ncontain any language or material which is libelous, slanderous, or defamatory;\nand (ii) to the best of SPYGLASS' knowledge, the foregoing will not, when used\nby BAM (or its permitted licensees and assigns) as authorized hereunder,\nviolate, infringe upon or give rise to any adverse claim with respect to, any\ncommon-law or other right (including, without limitation, any copyright,\ntrademark, service mark, literary, dramatic or musical right, or right of\nprivacy or publicity) of any person, or violate any applicable law in a fashion\nwhich would adversely affect BAM's ability to exercise the Granted Rights\nhereunder.\n\n\n\n                                       9\n   10\n\n        e. Music. With respect to each musical composition included in a\nSPYGLASS Picture, SPYGLASS shall assign such rights to BAM to use under the\nterms of this Agreement to the extent SPYGLASS has the right to assign such\nrights to BAM.\n\n        f. No Payment Obligations. BAM will not be obligated to make any\npayments to any third party, unless otherwise expressly specified in this\nAgreement or consented to in writing by BAM, in connection with the exercise by\nBAM or its licensees of the Granted Rights including, but not limited to: (i)\nany guild re-run, reuse, pension or residual payments of any kind, nature or\ndescription; or (ii) any other payments (whether characterized as a deferment,\nparticipation, or otherwise) required to be made to any third party participant\nincluding without limitation investors in and\/or financiers of any SPYGLASS\nPicture.\n\n        g. Copyrighted Material. Except with respect to incidental public domain\nelements, and subject to the applicable provisions of applicable copyright law\nas of the date hereof and as it may change in the future, the copyright(s) in\neach SPYGLASS Picture and in the literary, dramatic and musical material upon\nwhich it is based or which is contained therein will be valid and subsisting\nduring the Output Term for each SPYGLASS Picture and SPYGLASS has not done or\npermitted and will not do or permit any act or omission which would impair or\ndiminish the validity or duration of such copyright.\n\n        h. No Conflicting Grant. With respect to its projects, properties and\nfilms, SPYGLASS has not granted and will not grant to any third person (i) any\nof the Granted Rights granted to BAM hereunder nor (ii) any other rights which\nconflict with the Granted Rights exclusively granted to BAM hereunder, and has\nnot entered and shall not hereafter enter into any agreement, which would\nviolate or conflict with the Granted Rights granted to BAM or the restrictions\nimposed upon SPYGLASS hereunder.\n\n        i. Advertising. BAM may use, subject only to contractual restrictions\ncontained in applicable talent agreements, which SPYGLASS has notified BAM of in\nwriting prior to submission, the names and likenesses of all talent rendering\nservices in connection with the SPYGLASS Picture in any and all advertising and\npublicity materials and BAM will not be restricted in any way from using any of\nthe talent's names and likenesses in connection with such advertising and\npublicity materials.\n\n        j. Investment Experience. SPYGLASS represents that it is experienced in\nevaluating and investing in companies in a similar stage of development as BAM\nand acknowledges that it is able to fend for itself in the transactions\ncontemplated by this Agreement and has the ability to bear the economic risks of\nits investment pursuant to this Agreement. SPYGLASS is capable of evaluating the\nmerits and risks of the investment in the Shares and can bear the risk of the\nloss of the entire Equity Interest. SPYGLASS has not been organized for the\npurpose of acquiring the Shares. SPYGLASS is an \"Accredited Investor\" as defined\nin the Securities Act of 1933, as amended.\n\n        k. Investment for Own Account. The Shares will be acquired for SPYGLASS'\nown account, not as a nominee or agent, and not with a view to or in connection\nwith the sale or\n\n\n\n                                       10\n   11\n\ndistribution of any part thereof. There is no contract or arrangement with any\nperson to sell, transfer or grant participations to any third person with\nrespect to the Shares.\n\n11.     REPRESENTATIONS, WARRANTIES AND COVENANTS OF BAM: BAM hereby represents,\nwarrants and covenants to SPYGLASS as follows:\n\n        a. Power. BAM is a corporation duly formed and validly existing in good\nstanding under the laws of the State of Delaware and has the requisite power and\nauthority to enter into this Agreement and to perform its obligations hereunder.\n\n        b. Duly Authorized. The execution and delivery of this Agreement by BAM\nand the consummation by BAM of the transactions contemplated hereby have been\nduly authorized and no other corporate or partnership proceeding or consent on\nthe part of BAM is necessary to authorize this Agreement and the transactions\ncontemplated hereby.\n\n        c. Capitalization. As of the date hereof, there are 312,760 shares of\ncommon stock and 976,220 shares of Series A Preferred Stock issued and\noutstanding. Each share issued has been issued in conformity with applicable\nlaw.\n\n        d. No Infringement. With respect to each BAM Product (but specifically\nexcluding each SPYGLASS Picture and the advertising and publicity materials\nprovided by SPYGLASS to BAM in connection therewith pursuant to this Agreement,\nso long as BAM complies with any restrictions of which BAM is notified regarding\nsuch materials): (i) to the best of BAM's knowledge, the foregoing does not and\nwill not contain any language or material which is libelous, slanderous, or\ndefamatory; and (ii) to the best of BAM's knowledge, the foregoing will not\nviolate, infringe upon or give rise to any adverse claim with respect to, any\ncommon-law or other right (including, without limitation, any copyright,\ntrademark, service mark, literary, dramatic or musical right, or right of\nprivacy or publicity) of any person, or violate any applicable law.\n\n12.     INDEMNITY\/INSURANCE:\n\n        a. SPYGLASS. SPYGLASS hereby agrees to indemnify, defend and hold\nharmless BAM, its parent, subsidiaries and related companies, its licensees,\nsubdistributors and affiliates, and their respective officers, directors,\nagents, and employees from any and all third party claims, actions or\nproceedings of any kind and from any and all damages, liabilities, costs and\nexpenses (including reasonable legal fees and costs) relating to or arising out\nof any breach of any of the warranties, representations or agreements of\nSPYGLASS hereunder or any error or omission in any of the material or\ninformation furnished to BAM in accordance with this Agreement (except to the\nextent such claims, actions or proceedings give rise to BAM's indemnification\nobligations under this Agreement).\n\n        b. BAM. BAM hereby agrees to indemnify, defend and hold harmless\nSPYGLASS, its parent, subsidiaries and related companies and affiliates, and\ntheir respective officers, directors, agents, and employees from any and all\nthird party claims, actions or proceedings of any kind and from any and all\ndamages, liabilities, costs and expenses (including reasonable legal fees and\ncosts)\n\n\n\n                                       11\n   12\n\nrelating to or arising out of any breach of any of the warranties,\nrepresentations or agreements of BAM hereunder or otherwise in connection with\nthe Products (except to the extent such claims, actions or proceedings give rise\nto SPYGLASS' indemnification obligations under this Agreement).\n\n        c. INSURANCE. BAM shall name SPYGLASS as an additional named insured\nunder its E&amp;O and product liability insurance as appropriate.\n\n13.     REMEDIES:\n\n        a. SPYGLASS' Remedies. No action or omission by BAM shall constitute a\nbreach of this Agreement unless SPYGLASS first notifies BAM in writing setting\nforth the alleged breach or default and BAM does not cure the same within thirty\n(30) days of being notified of such breach, with the exception of a breach of a\npayment obligation which cure period shall be limited to five (5) days of being\nnotified of such breach. If BAM breaches its obligations hereunder, the damage,\nif any, caused SPYGLASS shall not be irreparable or sufficient to entitle\nSPYGLASS to injunctive or other equitable relief. Consequently, SPYGLASS' rights\nand remedies shall be limited to the right, if any, to obtain damages at law\nand SPYGLASS shall not have any right in such event to terminate or rescind this\nAgreement or any of the rights granted to BAM hereunder or to enjoin or restrain\nthe advertising, promotion, distribution, exhibition or exploitation of the\nSPYGLASS Pictures and\/or any of BAM's rights hereunder. BAM's payment of any\ncompensation or performance of any obligation hereunder shall not constitute a\nwaiver by BAM of any breach by SPYGLASS of any rights or remedies which BAM may\nhave as a result of such breach, provided, however, that if such a breach by\nSPYGLASS (i) is inadvertent and non-recurring (i.e., not intentional or\nrepeated) and is by its nature reasonably curable and (ii) allowing SPYGLASS to\ncure such a breach will not result in additional expense to BAM, then SPYGLASS\nshall have a period of five (5) business days from the date of notice from BAM\nof such breach within which to cure such breach.\n\n        b. Remedies Cumulative. Except as set forth in Paragraph 13.a. above,\nall remedies accorded herein or otherwise available to either Party hereto shall\nbe cumulative, and no one such remedy shall be exclusive of, nor shall it be\nconsidered a waiver of, any other.\n\n        c. Rights Unique. SPYGLASS acknowledges that the rights herein granted\nare of a special, unique, unusual, extraordinary and intellectual character\ngiving them a peculiar value, the loss of which cannot be reasonably or\nadequately compensated in damages in an action at law, and that a breach by\nSPYGLASS will cause BAM irreparable injury and damage. BAM shall be entitled to\ninjunctive and other equitable relief to prevent any breach by SPYGLASS.\n\n14.     NOTICES: All notices shall be in writing and shall be delivered to the\naddress(es) for notice set forth below or hereafter supplied by a Party to the\nother. Notices shall be effective on the date received, if delivered by hand or\nby facsimile, on the next business day following delivery thereof to an air\ncourier for overnight delivery, and on the third business day after deposit into\nthe United States mail, postage prepaid.\n\n\n\n                                       12\n   13\n\n(a) If to BAM:                       (b) If to SPYGLASS:\n\nBay Area Multimedia, Inc.                   Spyglass Entertainment Group, L.P.\n333 W. Santa Clara Street                   500 S. Buena Vista St.\nSuite 930                                   Burbank, CA 91521-1855\nSan Jose, CA 95113                          Attn: Gary Barber\nAttn: Ray Musci                             Fax No. (818) 566-8599\nFax No. (408) 298-9600\n\nWith a copy to:\n\nDoty Sundheim &amp; Gilmore\n260 Sheridan Avenue\nSuite 200\nPalo Alto, CA 94306\nAttn: George Sundheim\nFax No. (650) 327-0101\n\n15.     SUBSEQUENT PRODUCTIONS: Without regard to the expiration of the Output\nTerm, BAM shall have a continuing rolling right of first negotiation\/first\nrefusal to exploit the Granted Rights with respect to sequels, prequels and\/or\nremakes (as such terms are customarily defined in the United States\nentertainment industry, each a \"Subsequent Production\") of an Included Picture\nhereunder provided that BAM's right to exploit the Granted Rights in a\nSubsequent Production to an Included Picture on a rolling basis shall be\nconditioned on BAM having exploited the rights in the immediately prior\nSubsequent Production to such Included Picture.\n\n16.     KEY EXECUTIVES: If at any time during the Output Term, both of Roger\nBirnbaum and Gary Barber (or their BAM approved replacement; if applicable) are\nno longer rendering substantial in person services to SPYGLASS as employees\nthereof, then BAM shall have the option, to be exercised in its sole discretion,\nto terminate the Output Term at any time thereafter upon 5 business days' notice\n(such termination shall not affect any Included Picture prior to the date of\nsuch termination), except that if SPYGLASS finds replacements for Roger Birnbaum\nand Gary Barber which are of comparable stature and which are acceptable to BAM\n(which acceptance shall not be unreasonably withheld), then BAM shall not have\nthe right to terminate this Agreement pursuant to this Paragraph 16.\n\n17.     CONFIDENTIALITY: The Parties shall hold in confidence the terms of this\nAgreement and any negotiations relating thereto. Neither Party shall disclose,\nwithout the other Party's prior consent to any third party (other than its\nrespective employees, directors, officers, attorneys and agents engaged in this\ntransaction, in their capacity as such, on a need-to-know basis), any\ninformation with respect to the terms and provisions of this Agreement except:\n(a) to the extent necessary to comply with law or the valid order of a court of\ncompetent jurisdiction, in which event the party making such disclosure shall so\nnotify the other party as promptly as practicable (if possible, prior to making\nsuch disclosure) and shall seek confidential treatment of such information; (b)\nas part of its normal reporting or review procedure to its parent company,\nbanks, auditors,\n\n\n\n                                       13\n   14\n\ninvestment bankers, underwriters, third party participants, and\/or attorneys\n(collectively, \"Reporting Parties\"), provided that such Reporting Parties agree\nto be bound by the provisions of this Paragraph 21; (c) in order to enforce its\nrights pursuant to this Agreement; and (d) when such information is otherwise\npublicly available.\n\n18.     INITIAL PRESS ANNOUNCEMENT: The Parties agree that the timing and\ncontent of the initial announcement (if any) relating to the completion of this\nAgreement will be mutually coordinated and agreed upon before being issued by\nBAM, SPYGLASS, or any third party.\n\n19.     ASSIGNMENT: SPYGLASS may not assign, transfer, sell, mortgage, pledge or\nhypothecate this Agreement or any interest herein or rights hereunder, in whole\nor in part, either voluntary or by operation of law (including without\nlimitation by merger or consolidation or otherwise), without the prior written\nconsent of BAM, except that SPYGLASS may freely assign this Agreement to its\nsuccessor or assigns, to any of its associated, affiliated and subsidiary\ncompanies or to an entity which acquires all or substantially all of its assets\non the condition that assignee assumes all of SPYGLASS' obligations hereunder in\nwriting; and, provided, further, SPYGLASS shall be entitled to assign from time\nto time its right to receive payments hereunder, without BAM's consent, if such\nassignment is made pursuant to a signed, written payment direction.\n\n20.     FURTHER INSTRUMENTS: Each Party hereto shall duly execute and deliver to\nthe other Party, any and all agreements, documents and instruments reasonably\nrequired by the other Party to carry out and effectuate the purposes and intent\nof this Agreement.\n\n21.     GOVERNING LAW\/DISPUTE RESOLUTION:\n\n        a. Governing Law. The substantive laws (as distinguished from the choice\nof law rules) of the State of California and The United States of America\napplicable to contracts made and performed entirely in California shall govern\n(i) the validity and interpretation of this Agreement, (ii) the performance by\nthe Parties of their respective obligations hereunder, and (iii) all other\ncauses of action (whether sounding in contract or in tort) arising out of or\nrelating to this Agreement or the termination of this Agreement.\n\n        b. Dispute Resolution. The Parties hereto agree that any dispute or\ncontroversy relating to this Agreement shall be decided by a Rent-A-Judge,\nmutually selected by the Parties (or, if they cannot agree, by the Presiding\nJudge of the Los Angeles Superior Court) appointed in accordance with California\nCode of Civil Procedure Section 638, sitting without a jury, in Los Angeles\nCounty California, and the Parties hereby submit to the jurisdiction of such\ncourt. The prevailing Party shall be entitled to collect from the other Party\nall of its legal expenses incurred in said matter including, without limitation,\nreasonable attorneys' fees and costs.\n\n\n\n                                       14\n   15\n\nIN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be signed\nthe day and year first written above.\n\nBAY AREA MULTIMEDIA, INC.                    SPYGLASS ENTERTAINMENT GROUP, L.P.\n\nBy: \/s\/ RAYMOND C. MUSCI                     By: \/s\/ GARY BARBER\n   --------------------------------             --------------------------------\n\nIts: President                               Its: Co-Chairman\/CEO\n    -------------------------------              -------------------------------\n\n\n\n                                       15\n   16\n\n                                  SCHEDULE NS\n\n                              NET SALES DEFINITION\n\n\nRoyalty Rate(s):\n\n\"Open\" Systems as defined in Section 2(a)(i).\n  [*]% of Net Sales of each product (SKU) for units [*]\n  [*]% of Net Sales of each product (SKU) for units [*]\n  [*]% of Net Sales of each product (SKU) for units [*]\n\n\"Closed\" systems as defined in Section 2(a)(ii)\n  [*]% of Net Sales of each product (SKU) for units [*]\n  [*]% of Net Sales of each product (SKU) for units [*]\n  [*]% of Net Sales of each product (SKU) for units [*]\n\n        \"Net Sales\" means the gross revenue (including advances) earned and\nactually received by or credited to BAM or any affiliated or related entity or\nany affiliate or related entity from the sale, lease, license, distribution or\nother exploitation of the Product less the following (all of which shall\ncollectively be known as the \"Cost of Goods\"): (a) actual, direct, third party\nout-of pocket charges or expenses incurred by BAM or any affiliate or related\nentity thereof in connection with transportation, handling, carriage, delivery,\ninsurance, taxes (including withholding taxes and Value Added Tax), duties,\ntariffs, assessments, levies and other governmental and \"pass-through\" charges\non or after sale of units of the Product; and (b) any rebates or allowances\n(including allowances credited to resellers or distributors in respect of\nmarketing and promotional costs) paid by BAM in connection with the sale or\ndistribution of the Product. If BAM earns revenue from distribution of a Product\nin combination or bundle with one or more other BAM products, such revenue will\nbe allocated between that Product and such other products on a fair and\nreasonable basis taking into consideration the current or most recent wholesale\nprices of components of such compilation or bundle.\n\n\n*  Confidential Portion Omitted and Filed Separately with the Commission.\n\n\n\n\n                                       i\n\n\n\n   17\n\n                                   SCHEDULE DS\n\n                                DELIVERY SCHEDULE\n                 [Further specification to be provided by BAM.]\n\n1.      Soundtrack (if created).\n\n2.      Access to computer graphics imaging (CGI) and models (if created).\n\n3.      Still frame photographs of major sets and\/or set pieces (if created).\n\n4.      Access to physical models used in principal photography (if created).\n\n\n\n                                       1\n   18\n\n                                 SCHEDULE 10.C.\n\n\n\n\n                                       2\n<\/pre>\n","protected":false},"template":"","meta":{"_acf_changed":false,"_stopmodifiedupdate":true,"_modified_date":"","_cloudinary_featured_overwrite":false},"corporate_contracts_companies":[6843],"corporate_contracts_industries":[9513],"corporate_contracts_types":[9613,9619],"class_list":["post-42295","corporate_contracts","type-corporate_contracts","status-publish","hentry","corporate_contracts_companies-bam-entertainment-inc","corporate_contracts_industries-technology__software","corporate_contracts_types-operations","corporate_contracts_types-operations__sales"],"acf":[],"_links":{"self":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts\/42295","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts"}],"about":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/types\/corporate_contracts"}],"wp:attachment":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/media?parent=42295"}],"wp:term":[{"taxonomy":"corporate_contracts_companies","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_companies?post=42295"},{"taxonomy":"corporate_contracts_industries","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_industries?post=42295"},{"taxonomy":"corporate_contracts_types","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_types?post=42295"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}