{"id":42296,"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-multimedia-inc-and-franchise.html"},"modified":"2015-09-17T11:25:58","modified_gmt":"2015-09-17T16:25:58","slug":"exclusive-output-agreement-bay-multimedia-inc-and-franchise","status":"publish","type":"corporate_contracts","link":"https:\/\/corporate.findlaw.com\/contracts\/operations\/exclusive-output-agreement-bay-multimedia-inc-and-franchise.html","title":{"rendered":"Exclusive Output Agreement &#8211; Bay Multimedia Inc and Franchise Films Inc."},"content":{"rendered":"<pre>                        (Confidential Portions Omitted)\n\n                           EXCLUSIVE OUTPUT AGREEMENT\n\n     This Agreement (the \"Agreement\") is being entered into as of this 7th day \nof April, 2000 by and between BAY MULTIMEDIA, INC. (\"Bay\") and FRANCHISE FILMS, \nINC. (\"Franchise\") and sets forth the terms and conditions of their agreement \nregarding Bay's acquisition of certain rights to Franchise's motion picture \noutput on an exclusive basis and certain other motion picture product, all as \nmore particularly set forth below. As used herein, the term \"Parties\" shall \nrefer collectively to Bay and Franchise, and the term \"Party\" shall refer to \nBay or Franchise individually. The Parties hereby agree as follows:\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), Franchise shall submit to Bay, on an exclusive, \"first-look\" basis, \nall Franchise Pictures (as defined herein) with respect to which Bay shall have \nthe right to exploit Interactive Entertainment Rights (as defined in Paragraph \n5 hereof) in perpetuity throughout the universe, in accordance with the terms \nand conditions hereof. Each submission shall be made by Franchise in accordance \nwith the requirements and procedures set forth below. The term \"Franchise \nPicture\" shall mean an original first class theatrical motion picture: (i) to \nbe produced or acquired for theatrical release by Franchise; and\/or (ii) to be \notherwise released under the Franchise name and\/or logo and\/or any other name \nand\/or logo owned, operated or controlled by, or otherwise affiliated with, \nFranchise, by itself or through a joint venture with another entity. A motion \npicture project, property or film shall be deemed to be a Franchise Picture the \nfirst date upon which Franchise enters into an agreement to acquire the rights \nto cause such project, property or film to be produced, acquired or otherwise \nreleased in accordance with the definition of a Franchise Picture hereunder \n(the \"Acquisition Date\"). For purposes hereof, \"first look\" means that a \nFranchise Picture shall be submitted solely and exclusively to Bay for purposes \nof exploiting the Interactive Entertainment Rights in and to such Franchise \nPicture before the same is submitted to any other person or entity. It is the \nessence of this Agreement that Franchise will not submit any Franchise Picture \nto a third party for acquisition, licensing, exploitation or any other use of \nthe Interactive Entertainment Rights unless and until the Franchise Picture has \nbeen submitted to Bay hereunder and Bay has declined to exploit the Interactive \nEntertainment Rights to the Franchise Picture (a \"Rejected Picture\"). A \nFranchise Picture for which Bay elects to exploit the Interactive Entertainment \nRights shall be referred to as an \"Included Picture.\"\n\n     b.   Grant of Rights. Franchise hereby irrevocably grants, transfers, \nassigns and licenses to Bay the Granted Rights (as defined in Paragraph 5 \nhereof) in and to each Franchise 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 upon the later of (i) that date which is three\n(3) years from the date hereof or (ii) initial theatrical release in the United \nStates of the tenth Included Picture. It is understood that notwithstanding the \nexpiration of the Output Term, Bay's Granted Rights with respect to each \nFranchise Picture shall continue in perpetuity throughout the universe.\n\n  \n   2\n\n      d.    Wide Release Requirement. Notwithstanding anything to the contrary \ncontained herein, the Parties agree that in the event that an Included Picture \nshall fail to be released theatrically by Franchise on at least 800 screens in \nthe United States simultaneously at any time during the 8 weeks after initial \nrelease of such Included Picture (each Included Picture which fails to achieve \nsuch a theatrical release shall be referred to herein as a \"Limited Release \nPicture\"), such Limited Release Picture shall cease to be an Included Picture \nhereunder for purposes of determining the Output Term.\n\n2.    GRANTED RIGHTS: The term \"Granted Rights\" shall mean the exclusive\nInteractive Entertainment Rights (as defined herein) to each of the Franchise\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 Franchise 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, Nintendo Dolphin, Nintendo 64, etc.), (iii) coin\noperated, token operated or other arcade games, and (iv) handheld consoles and\ndevices (e.g., Nintendo Color Gameboy); and (b) rights to use elements of each\nFranchise Picture including, without limitation, the soundtrack to each\nFranchise Picture and the names, likenesses, biographies, photographs and\nrecorded voices of all persons appearing in each Franchise Picture, to the\nextent Franchise possesses such rights, (i) as part of the name, label,\npackaging, or trade dress (i.e., overall appearance and commercial impression)\nof the Products, (ii) as part of the sound, graphics or other audio-visual\nelements integral to the Products for use in all interactive media whether\nheretofore known or hereafter developed, and (iii) in print media, point of\nsale, radio broadcast and television advertising, and in brochures, sales\nliterature and promotional activities, including on-line promotional activities,\nfor the Products. The Parties agree that the Granted Rights are subject only to\nany non-financial contractual restrictions thereon set forth in any bona fide\nagreement entered into by Franchise with third parties of which Bay has received\nwritten notice at the time of submission.\n\n3.    SUBMISSION PROCEDURES:\n\n      a.    Submission. Not later than five (5) business days following the \nAcquisition Date of a Franchise Picture, Franchise shall submit the screenplay \nfor such Franchise Picture to Bay, along with a written notice (\"Submission \nNotice\") from Franchise to Bay stating the proposed budget amount for such \nFranchise Picture and informing Bay that the screenplay and notice constitute a \nsubmission hereunder. In addition, Franchise shall submit to Bay a statement of \nany and all creative elements attached to such Franchise Picture (e.g., \ndirector, writer, principal cast members) and all other relevant material \nFranchise has in connection with such Franchise Picture (e.g., chain-of-title \ndocuments, proposed schedule, expected date of initial United States theatrical \nrelease) (collectively, all of the foregoing shall be known as the \"Submission \nMaterials\").\n\n   3\n     b.   Bay's Response to Submission. Within ninety (90) days following \nreceipt by Bay of a Submission Notice, together with complete Submission \nMaterials (the \"Response Period\"), Bay will provide written notice to Franchise \nwhether Bay elects to exploit the Interactive Entertainment Rights to such \nFranchise Picture. The Response Period may be extended in writing by Bay as \nreasonably necessary to confirm the validity of the chain of title for such \nFranchise Picture. Bay's failure to respond within the Response Period shall be \ndeemed to constitute Bay's rejection of such Franchise Picture and such \nFranchise Picture shall thereafter be deemed to be a Rejected Picture.\n\n     c.   Rejected Pictures. With respect to each Rejected Picture, Franchise \nwill have the option to arrange for the Interactive Entertainment Rights to \nsuch Rejected Picture to be acquired by third parties; provided, however, that \nprior to the time that Franchise concludes any agreement to set up such rights \nwith a third party, if there is any change in any of the elements set forth in \nthe Submission Materials (e.g., additional writing, a change in the budget \namount, a change in the principal cast), then Franchise shall resubmit the \nRejected Picture to Bay in accordance with the terms of Paragraph 6.a. above \nand the Rejected Picture shall not be submitted to any third party unless and \nuntil Bay has again declined to exploit said rights. All of Bay's right, title, \nand interest in and to each Rejected Picture that is not required to be \nresubmitted to Bay pursuant to the terms of this Paragraph 6.c. shall revert to \nFranchise automatically. Bay shall quitclaim all rights in and to such Rejected \nPicture to Franchise. Upon Franchise's written request, Bay shall execute and \ndeliver or cause to be executed and delivered to Franchise a customary \nquitclaim or such other instruments, documents or agreements as Franchise may \nreasonably deem necessary to effectuate such quitclaim.\n\n     d.   Submission by Bay. In addition to Franchise's submissions hereunder, \nBay shall have the right, but not the obligation, to submit to Franchise, at \nany time, theatrical motion picture projects for which Bay is willing to \nexploit the Interactive Entertainment Rights. None of such projects shall be \ndeemed a Franchise Picture hereunder unless and until Franchise enters into a \nbinding written agreement to acquire the rights to cause such project to be \nproduced, acquired or otherwise released in accordance with the definition of a \nFranchise Picture hereunder.\n\n4.   EQUITY INTEREST:\n\n     a.   Bay Common Stock. Franchise shall be entitled to receive up to an \naggregate total of seven hundred fifty thousand (750,000) shares of Bay common \nstock (the \"Equity Interest\"), which shares shall accrue and be payable to \nFranchise in ten (10) equal installments (each installment representing \none-tenth (1\/10) of the Equity Interest) within 10 business days from initial \nUnited States theatrical release of each of the first ten (10) Included \nPictures.\n\n     b.   Rights of First Refusal.\n\n          i.   Offer of Sale; Notice of Proposed Sale. If at any time Franchise\n               desires to sell, transfer or otherwise dispose of any of its\n               shares of the capital stock of Bay now or hereafter held or any\n               interest in such shares of capital stock of Bay (referred to\n               herein as \"Shares\"), Franchise shall deliver written notice of\n               its desire to do so (the \"Sale Notice\") to Bay, which Sale Notice\n               must be accompanied by a binding agreement (the \"Binding\n               Agreement\"), which\n   4\n\n            Binding Agreement shall be expressly subject to Franchise's \n            complying with the provisions of this Agreement, including this \n            Paragraph 7, with a bona fide purchaser reasonably capable of \n            completing such purchase (the \"Proposed Transferee\"). The Sale \n            Notice and Binding Agreement shall specify (i) the name and address \n            of the Proposed Transferee(s), (ii) the number of Shares Franchise \n            proposes to sell, transfer or otherwise dispose of (referred to \n            herein as \"Offered Shares\"), (iii) the consideration per Offered \n            Share to be delivered to Franchise for the proposed sale, transfer \n            or disposition and (iv) all other material terms and conditions of \n            the proposed transaction.\n\n      ii.   Option to Purchase. Bay shall have the option to purchase all or \n            any portion of the Offered Shares for the consideration per share \n            and on the terms and conditions set forth in the Sale Notice and \n            Binding Agreement. The Company may only exercise such option by \n            delivery of written notice to Franchise prior to the date fifteen \n            (15) business days after the date of delivery of the Sale Notice. \n            If Bay delivers written notice of its intent to purchase all or any \n            portion of the Offered Shares, then the closing of the purchase of \n            the Offered Shares shall take place at the offices of Bay no later \n            than ten (10) business days after the expiration of the fifteen \n            (15) day period specified above.\n\n      iii.  Form of Consideration. To the extent that the consideration \n            proposed to be paid by the Proposed Transferee for the Offered \n            Shares consists of property other than cash or a promissory note \n            (the \"Non-Cash Consideration\"), the consideration required to be \n            paid by Bay exercising its option under this Paragraph 7.b. may \n            consist of cash equal to the value of the Non-Cash Consideration, \n            as determined in good faith by Bay's Board of Directors. \n            Notwithstanding anything to the contrary set forth above, the \n            fifteen (15) day period specified in Paragraph 7.b.ii. shall \n            commence when the value of the Non-Cash Consideration is determined.\n\n      iv.   Sale to Proposed Transferee. To the extent Bay fails (i) to deliver\n            written notice or notices of intent to purchase any of the Offered\n            Shares within the fifteen (15) day period specified in Paragraph\n            7.b.ii. or (ii) to close the purchase of the Offered Shares within\n            the applicable period specified in Paragraph 7.b.ii., then Franchise\n            may sell, transfer or otherwise dispose of the remaining Offered\n            Shares to the Proposed Transferee at any time within one hundred\n            twenty (120) days after the date of the delivery of the Sale Notice\n            on the terms set forth in the Sale Notice and Binding Agreement. Any\n            Offered Shares not sold, transferred or otherwise disposed of within\n            the applicable one hundred twenty (120) day period shall continue to\n            be subject to all of the requirements of this Paragraph 7 as if\n            there had been no prior offer or Sale Notice. Notwithstanding the\n            above, the Offered Shares shall not be sold, transferred or\n            otherwise disposed of unless such purchaser or acquirer is bound or\n            agrees in writing to be bound by the provisions of this Paragraph 7,\n            and any such sale, transfer or disposition where such purchaser or\n            acquirer is not bound or does not so agree to be bound shall be\n            void.\n   5\n\n     c.   Additional Transfer Restrictions. Notwithstanding any provision of \n          this Agreement to the contrary, no Shares or any other equity \n          securities of Bay or rights or warrants exercisable, exchangeable or \n          convertible into any equity securities of Bay may be made to any \n          third party if such third party is engaged, directly or indirectly, \n          whether as an owner or an employee, in a business that is similar to \n          or in competition with the business of Bay.\n\n     d.   Lock-up Agreement. In consideration for Bay agreeing to its \n          obligations under this Agreement, Franchise agrees, in connection \n          with the first qualified public offering of Bay securities, upon \n          request of Bay or the underwriters managing such offering, not to \n          sell, make any short sale of, loan, grant any option for the purchase \n          of, or otherwise dispose of any securities of Bay (other than those \n          included in the registration) without the prior written consent of \n          Bay 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 \n          of such registration as Bay or the underwriters may specify. \n          Franchise agrees that Bay may instruct its transfer agent to place \n          stop transfer notations in its records to enforce the provisions of \n          this Paragraph 7.\n\n     e.   Effect of Not Following Procedures. Any sale, transfer or other \n          disposition of any Shares not in accordance with the foregoing \n          procedures of this Paragraph 7 shall be null and void and of no force \n          and effect. Notwithstanding anything to the contrary contained \n          herein, nothing shall prevent Franchise from pledging or otherwise \n          encumbering its Shares; provided, however, that the pledgee or holder \n          of such encumbrance shall not be entitled to acquire such Shares upon \n          default or otherwise unless the provisions of this Paragraph 7 are \n          first complied with.\n\n5.   ROYALTY PAYMENTS:\n\n     a.   Royalties. Provided Franchise is not in material breach of or default\nunder the terms of this Agreement, and subject to the limitations set forth in\nParagraph 8.b. hereof, Bay agrees to pay Franchise a royalty in the amount of\n[*] of Net Sales (as defined in Schedule NS attached hereto and incorporated\nherein by reference) of each of the Products developed by Bay in connection with\nan Included Picture hereunder. Any royalties due pursuant to this Section 8.a.\nshall be paid to Franchise on a quarterly basis for two (2) years, semiannually\nfor the next three (3) years and annually thereafter, and shall be accompanied\nby a royalty statement.\n\n     b.   Limitations on Royalties. No royalties shall be due for the sale of \nProducts that result in a loss to Bay. No royalties will be payable on returns \nthat are accepted and credited by Bay or an affiliate of Bay, on units of the \nProducts distributed exclusively for demonstration or promotional purposes, or \nfor replacements. Bay 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 Bay or affiliates of Bay in any given quarter \nare greater than the expected returns based on which Bay has adjusted any \nroyalty payments, such difference will be withheld by or payable to Bay, as the\ncase may be. No royalties will be payable on sales or other transactions between\nBay and any affiliates of Bay. If Bay makes a royalty payment to franchise where\nBay is subsequently required to refund or reduce all or any part of the gross\nrevenue collected by it, Bay shall have the right to a refund of overpayments of\nroyalties made to Franchise.\n\n\n\n*  Confidential Portion Omitted and Filed Separately with the Commission.\n\n   6\n      c.    Books and Records Relating to Sales. Bay will maintain sufficient \nand accurate books and records relating to all transactions relevant to sales \nof the Products or in respect of which Bay is required to provide information \nin a royalty statement.\n\n      d.    Inspection. Bay will permit a chartered accountant reasonably\nacceptable to Bay and appointed by Franchise (the \"Franchise Accountant\") to\ninspect the books and records maintained by Bay after thirty (30) days notice at\nany reasonable time during normal business hours at Franchise's expense and in\nsuch manner as not to interfere with the business of Bay for the purpose of\nverifying the correctness of the royalty statements and the payments made by Bay\nto Franchise by way of royalty pursuant to this Paragraph 8. Franchise 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 Franchise Accountant discovers an error of greater than [*]\nin favor of Franchise, Franchise shall be entitled to reimbursement by Bay \nfor the costs of such a review.\n\n      e.    No Disclosure. Franchise shall not and shall cause the Franchise \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\n6.    CONSULTATION RIGHTS: Franchise shall regularly and meaningfully consult \nwith Bay in good faith during the Output Term with respect to (a) Franchise's \ndevelopment\/acquisition slate for Franchise Pictures and (b) all key creative \nelements of the Included Pictures. Franchise shall advise Bay as to the status \nof pre-production, production and post-production of each Included Picture on \nno less than a monthly basis. Without limiting the generality of the foregoing, \nFranchise agrees to provide Bay with regular production status reports during \nthe period of principal photography and post-production of each Included \nPicture. Bay agrees to consult with Franchise with respect to the initial \nmarketing campaign and release of all Products developed in connection with \neach Included Picture.\n\n7.    BOOKS AND RECORDS: Franchise 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 Bay's\nrequest, for a period of up to two (2) years after initial United States\ntheatrical release of the applicable Included Picture, provide Bay with\nreasonable access to review and copy the same during reasonable business hours.\n\n8.    DELIVERY: The term \"Delivery\" shall mean Bay'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 completion of post production of \neach Included Picture (\"Delivery Date\"); provided, however, with respect to \nFranchise's acquisition of Included Pictures in completed form, in lieu of the \nforegoing, the Delivery Date shall be no later than thirty (30) days following \nFranchise's acquisition of such Included Picture. Notwithstanding the \nforegoing, Franchise agrees to use its best efforts to provide any Delivery \nItems to Bay as soon as is practicable during the course of production. \nFranchise agrees further to provide Bay reasonable access to the set during \nproduction of an Included Picture, on a non-interference basis with production, \nto enable Bay to photograph the set and to conduct motion capture sessions as \nBay may arrange with cast members. If the Delivery Items are not fully \ndelivered in accordance with this Paragraph 11 by the Delivery Date, Bay may \nchoose, at Bay's sole discretion, to exclude such Included Picture from the \ntotal of Included Pictures hereunder for the \n\n\n\n*  Confidential Portion Omitted and Filed Separately with the Commission.\n\n\n\n\n   7\npurpose of determining the Output Term. Franchise agrees herein that the\nDelivery Items shall be fully paid for by Franchise and Bay shall not be\nresponsible for any of the costs of Delivery. It is understood and agreed by Bay\nand Franchise that any Delivery Items delivered to Bay hereunder shall become\nthe sole and exclusive property of Bay; provided, however, in no event shall\nBay's ownership of such materials be deemed to give Bay any greater rights in\nthe Included Picture than the Granted Rights.\n\n9.      PUBLICITY MATERIALS: Franchise agrees herein to provide Bay with free\naccess to all publicity and advertising materials which have been prepared (and\ncleared by Franchise) in connection with the theatrical release of each Included\nPicture (provided, that any costs associated with duplication of such materials\nshall be borne by Bay and recoupable by Bay hereunder). The Parties agree that\nBay may use such publicity and advertising materials to promote, advertise and\nmarket all Products developed in connection with the applicable Included\nPicture.\n\n10.     REPRESENTATIONS, WARRANTIES AND COVENANTS OF FRANCHISE: Franchise hereby\nrepresents, warrants and covenants to Bay as follows:\n\n        a.      Power. Franchise is a corporation duly formed and validly\nexisting in good standing under the laws of the State of __________ and has the\nrequisite power and authority to enter into this Agreement and to perform its\nobligations hereunder.\n\n        b.      Duly Authorized. The execution and delivery of this Agreement by\nFranchise and the consummation by Franchise of the transactions contemplated\nhereby have been duly authorized and no other corporate or partnership\nproceeding or consent on the part of Franchise is necessary to authorize this\nAgreement and the transactions contemplated hereby.\n\n        c.      No Liens. With respect to each Franchise Picture, the Granted\nRights licensed hereunder to Bay are, as of the date of this Agreement (and\nshall hereafter continue to be), free and clear of any and all claims, liens,\ncharges or encumbrances which materially impair or materially and adversely\naffect the Granted Rights; further, there are not, and there will not be\noutstanding at any time, any liens, claims, charges, encumbrances, restrictions,\nagreements, commitments, arrangements whatsoever with any person, firm or\ncorporation, or any obligation (past, present or future), or any defaults under,\nor breaches of, any contract, license or agreement which can, or will, in any\nway interfere with, impair, abrogate, or adversely or otherwise affect any of\nthe Granted Rights under this Agreement, and that there are not and will not be\nany payments of any kind required to be made by Bay in respect, or as a result,\nof any use of the Franchise Pictures pursuant to the rights and licenses herein\ngranted to Bay. Notwithstanding anything to the contrary contained herein, Bay\nacknowledges and agrees that Franchise if permitted to accord applicable guilds,\nthe financing bank, and the completion guarantor for a Franchise Picture, with a\nsecurity interest that has priority over Bay's security interest; provided,\nhowever, Franchise shall use good faith efforts to require the applicable guilds\nto subordinate to Bay's security interest and shall require the financing bank's\nlien and the completion guarantor's lien in the Franchise Picture to terminate\nimmediately upon delivery of such Franchise Picture to the distributor(s) of\nsuch Franchise Picture.\n\n        d.      No Infringement. With respect to each Franchise Picture and the\nadvertising and publicity materials in connection therewith provided to Bay\nhereunder: (i) the foregoing does not and will not contain any language or\nmaterial which is libelous, slanderous, or defamatory; and (ii) the foregoing\nwill not, when used by Bay (or its permitted licensees and assigns) as\nauthorized hereunder, violate, infringe upon or give rise to any adverse claim\nwith respect to, any common law\n\n   8\nor other right (including, without limitation, any copyright, trademark, \nservice mark, literary, dramatic or musical right, or right of privacy or \npublicity) of any person, or violate any applicable law in a fashion which \nwould adversely affect Bay's ability to exercise the Granted Rights hereunder.\n\n     e.   Music. With respect to each musical composition in each Franchise \nPicture, Franchise will own and control or will have been granted, without any \nlimitations or restrictions whatsoever, all motion picture performance, \nsynchronization, mechanical license and all other Granted Rights hereunder in \nand to the Franchise Pictures and all subsidiary rights embodied therein and \nhas obtained all necessary licenses required for the exhibition, performance, \nduplication, distribution, marketing and exploitation of the Granted Rights in \nthe Franchise Pictures hereunder (including the music contained therein) in \nperpetuity throughout the universe, for any and all purposes licensed hereunder \nand by every means, method and device now or hereafter known or required for \nthe full, complete and unlimited exercise and enjoyment by Bay of each and all \nof the Granted Rights under this Agreement; and the non-dramatic musical \nperformance rights in connection with such musical composition necessary for \nBay's exercise of the Granted Rights hereunder are: (i) controlled by the \nAmerican Society of Composers, Authors and Publishers, Broadcast Music, Inc. \nor SESAC; or (ii) owned by or licensed to Franchise so that no additional \nclearance of, or payment with respect to, such rights will be required by Bay \nin connection with the exercise of the Granted Rights; or (iii) in the public \ndomain.\n\n     f.   No Payment Obligations. Franchise has acquired or will have acquired \nthe valid and exclusive rights to exhibit, distribute, and\/or exploit each \nFranchise Picture as provided herein; and all of the following has been or will \nbe fully paid or discharged prior to Delivery: (i) except as to customary \nresidual payments and payments due to performing rights societies, all claims \nand rights of owners of copyright in literary, dramatic, musical rights and \nother property or rights in or to all stories, plays, scripts, scenarios, \nthemes, incidents, plots, characters, dialogue, music, words and other material \nof any nature whatsoever appearing, used or recorded in the Program; (ii) \nexcept as to customary residual payments and payments due to performing rights \nsocieties, all claims and rights with respect to the use, distribution, \nperformances, exhibition and exploitation of each Franchise Picture, and any \nmusic contained therein, throughout the universe; (iii) all costs of producing \nand completing each Franchise Picture except for profit participations and \ndeferments not yet due which Franchise represents and warrants are solely the \nresponsibility of Franchise. Further, Bay will not be obligated to make any \npayments to any third party, unless otherwise expressly specified in this \nAgreement, in connection with the exercise by Bay or its licensees of the \nGranted Rights including, but not limited to: (x) any guild re-run, reuse, \npension or residual payments of any kind, nature or description; or (y) any \nother payments (whether characterized as a deferment, participation, or \notherwise) required to be made to any third party participant including without \nlimitation investors in and\/or financiers of any Franchise Picture.\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 Franchise 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 Franchise Picture and Franchise 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   9\n\n\n     h. No Conflicting Grant. With respect to its projects, properties and\nfilms, Franchise has not granted and will not grant to any third person (i) any\nof the Granted Rights granted to Bay hereunder nor (ii) any other rights which\nconflict with the Granted Rights exclusively granted to Bay hereunder, and has\nnot entered and shall not hereafter enter into any agreement, which would\nviolate or conflict with the Granted Rights granted to Bay or the restrictions\nimposed upon Franchise hereunder.\n\n     i. Compliance With Laws. Each Franchise Picture, and all parts thereof, \nwill be, or has been produced in compliance with any and all relevant laws, \nrules, regulations, guidelines, whether state, federal, international or local \n(i.e., those imposed by any union, guild or labor organization), applicable to \nthe production and completion of motion pictures. Each Franchise Picture shall \nnot, either in whole or in part constitute, or contain any material which \nconstitutes, a violation of any law or administrative regulation or rule, or to \nthe best of Franchise's knowledge in the exercise of due diligence, an \ninvasion, violation or infringement of any right or interest of any third \nparty; and shall be produced in accordance with all applicable laws, statutes, \nordinances, rules, regulations and requirements of all governmental agencies \nand regulatory bodies, both domestic and foreign, having jurisdiction with \nrespect to the production of each such Franchise Picture. To the extent \nrequired pursuant to any applicable law by reason of Franchise's or any other \nentity's activities, Franchise and\/or such other entity or entities, as the \ncase may be, shall have become signatory to all applicable collective \nbargaining agreements and Franchise's activities and those of such other entity \nor entities in connection with the Franchise Pictures have not, are not and \nwill not be in violation of such collective bargaining agreements, to the \nextent same are applicable thereto.\n\n     j. Advertising. Bay may use, subject only to contractual restrictions\ncontained in applicable talent agreements, which Franchise has notified Bay of\nin writing prior to submission, the names and likenesses of all talent rendering\nservices in connection with the Franchise Picture in any and all advertising and\npublicity materials and Bay 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     k. Investment Experience. Franchise represents that it is experienced in \nevaluating and investing in companies in a similar stage of development as Bay \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 \nof its investment pursuant to this Agreement. Franchise is capable of \nevaluating the merits and risks of the investment in the Shares and can bear \nthe risk of the loss of the entire Equity Interest. Franchise has not been \norganized for the purpose of acquiring the Shares. Franchise is an \"Accredited \nInvestor\" as defined in the Securities Act of 1933, as amended.\n\n     l. Investment for Own Account. The Shares will be acquired for Franchise's\nown account, not as a nominee or agent, and not with a view to or in connection\nwith the sale or distribution of any part thereof. There is no contract or\narrangement with any person to sell, transfer or grant participations to any\nthird person with respect to the Shares.\n\n11.  REPRESENTATIONS, WARRANTIES AND COVENANTS OF BAY: Bay hereby represents, \nwarrants and covenants to Franchise as follows:\n\n     a. Power. Bay is a corporation duly formed and validly existing in good \nstanding under the laws of the State of [California] and has the requisite \npower and authority to enter into this Agreement and to perform its obligations \nhereunder.\n\n\n   10\n     b.  Duly Authorized. The execution and delivery of this Agreement by Bay \nand the consummation by Bay of the transactions contemplated hereby have been \nduly authorized and no other corporate or partnership proceeding or consent on \nthe part of Bay is necessary to authorize this Agreement and the transactions \ncontemplated hereby.\n\n     c.  Capitalization. As of the date hereof, the authorized capital stock of\nBay consists solely of fifteen million (15 mil) shares of common stock, of which\nfive mil seven thirty three thousand (5,733,333) shares have been issued. Each\nshare issued has been issued in conformity with applicable law.\n\n12.  INDEMNITY:\n\n     a.  Franchise. Franchise hereby agrees to indemnify, defend and hold \nharmless Bay, 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 \nFranchise hereunder or any error or omission in any of the material or \ninformation furnished to Bay in accordance with this Agreement.\n\n     b.  Bay. Bay hereby agrees to indemnify, defend and hold harmless\nFranchise, 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) relating to or arising out of any breach of any of the warranties,\nrepresentations or agreements of Bay hereunder or otherwise in connection with\nthe Products (except to the extent such claims, actions or proceedings give rise\nto Franchise's indemnification obligations under this Agreement).\n\n13.  REMEDIES:\n\n     a.  Franchise's Remedies. No action or omission by Bay shall constitute a \nbreach of this Agreement unless Franchise first notifies Bay in writing setting \nforth the alleged breach or default and Bay does not cure the same. If Bay \nbreaches its obligations hereunder, the damage, if any, caused Franchise shall \nnot be irreparable or sufficient to entitle Franchise to injunctive or other \nequitable relief. Consequently, Franchise's rights and remedies shall be \nlimited to the right, if any, to obtain damages at law and Franchise shall not \nhave any right in such event to terminate or rescind this Agreement or any of \nthe rights granted to Bay hereunder or to enjoin or restrain the advertising, \npromotion, distribution, exhibition or exploitation of the Franchise Pictures \nand\/or any of Bay's rights hereunder. Bay's payment of any compensation or \nperformance of any obligation hereunder shall not constitute a waiver by Bay of \nany breach by Franchise of any rights or remedies which Bay may have as a \nresult of such breach, provided, however, that if such a breach by Franchise \n(i) is inadvertent and non-recurring (i.e., not intentional or repeated) and is \nby its nature reasonably curable and (ii) allowing Franchise to cure such a \nbreach will not result in additional expense to Bay, then Franchise shall have \na period of five (5) business days from the date of notice from Bay of such \nbreach within which to cure such breach.\n\n     c.  Remedies Cumulative. Except as set forth in Paragraph 16.a. above, all \nremedies accorded herein or otherwise available to either Party hereto shall be \ncumulative, and no one such remedy shall be exclusive of, nor shall it be \nconsidered a waiver of, any other.\n   11\n\n\n     d.   Rights Unique.  Franchise 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\nFranchise will cause Bay irreparable injury and damage. Bay shall be entitled to\ninjunctive and other equitable relief to prevent any breach by Franchise.\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 \ninto the United States mail, postage prepaid.\n\n(a)  If to Bay:                    (b)  If to Franchise:\n\nBay Multimedia, Inc.               Franchise Films, Inc.\n333 W. Santa Clara Street          8228 Sunset Blvd.\nSuite 930                          Suite 311\nSan Jose, CA 95113                 Los Angeles, CA 90046\nAttn: Ray Musci                    Attn: Elie Samaha\nFax No. (408) 298-9600             Fax No. (323) 848-9612\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, Bay 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 Bay's right to exploit the Granted Rights in a \nSubsequent Production to an Included Picture on a rolling basis shall be \nconditioned on Bay 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 [Elie\nSamaha] and ___________ (or their Bay approved replacement; if applicable) are\nno longer rendering substantial in person services to Franchise as employees\nthereof, then Bay 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 Franchise finds replacements for [Elie Samaha]\nwhich are of comparable stature and which are acceptable to Bay (which\nacceptance shall not be unreasonably withheld), then Bay shall not have the\nright to terminate this Agreement pursuant to this Paragraph 19.\n\n   12\n\n17.  SECURITY DOCUMENTATION: Concurrent with the execution of this Agreement, \nFranchise hereby agrees to execute the security documentation set forth in \nSchedule SD attached hereto and incorporated herein by this reference, which \ndocumentation shall grant Bay a priority lien and security interest in each \nFranchise Picture, which security interest shall be terminable in accordance \nwith the terms thereof. Franchise further agrees to promptly execute and \ndeliver all further instruments and documents (including, without limitation, \ncopyright registration of the underlying material upon which the Franchise \nPicture is based, any financing statements, continuation statements, mortgages \nof copyright and any amendments thereto), and take all further action that may \nbe necessary or desirable, or that Bay may request, in order to perfect and \nprotect any security interest granted or purported to be granted by the \nsecurity documentation or to enable Bay to exercise and enforce its rights and \nremedies under the security documentation or with respect to any collateral \nthereunder. Franchise hereby irrevocably appoints and authorizes Bay, as \nFranchise's attorney-in-fact (Franchise acknowledges that said appointment is \ncoupled with an interest) to take all steps in Franchise's name as may be \nreasonably required to execute such documentation in the event that Franchise \nfails to execute such documentation.\n\n18.  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 \nso notify the other party as promptly as practicable (if possible, prior to \nmaking such disclosure) and shall seek confidential treatment of such \ninformation; (b) as part of its normal reporting or review procedure to its \nparent company, banks, auditors, investment bankers, underwriters and\/or \nattorneys (collectively, \"Reporting Parties\"), provided that such Reporting \nParties agree to be bound by the provisions of this Paragraph 21; (c) in order \nto enforce its rights pursuant to this Agreement; and (d) when such information \nis otherwise publicly available.\n\n19.  INITIAL PRESS ANNOUNCEMENT: The Parties agree that the timing and content \nof the initial announcement (if any) relating to the completion of this \nAgreement will be mutually coordinated and agreed upon before being issued by \nBay, Franchise, or any third party.\n\n20.  ASSIGNMENT: Franchise 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 Bay, except that Franchise may freely assign this Agreement to its\nsuccessor or successors, 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 Franchise's obligations hereunder\nin writing; and, provided, further, Franchise shall be entitled to assign one\ntime only its right to receive payments hereunder, without Bay's consent, if\nsuch assignment is made pursuant to a signed, written payment direction.\n\n21.  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\n \n   13\n22.     GOVERNING LAW\/DISPUTE RESOLUTION:\n\n        a.      Governing Law. The substantive laws (as distinguished from the\nchoice of 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 our 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,\nreasonably attorneys' fees and costs.\n\nIN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be signed\nthe day and year first written above.\n\nBAY MULTIMEDIA, INC.                    FRANCHISE FILMS, INC.\n\nBy: \/s\/ RAYMOND C. MUSCI                By: \/s\/ ELIE SAMAHA\n   -------------------------------         --------------------------------\n\nIts: President                          Its: Chairman\n    ------------------------------          -------------------------------\n\n\n   14\n                                  SCHEDULE NS\n                                  -----------\n\n\n                              NET SALES DEFINITION\n\n\n\n     \"Net Sales\" means the gross revenue earned and actually received by Bay or \nany affiliated or related entity or any affiliate or related entity from the \nsale, lease, license, distribution or other exploitation of the Product less \nthe following (all of which shall collectively be known as the \"Cost of \nGoods\"): (a) actual, direct, third party out-of-pocket charges or expenses \nincurred by Bay or any affiliate or related entity thereof in connection with \ntransportation, handling, carriage, delivery, insurance, taxes (including \nwithholding taxes and Value Added Tax), duties, tariffs, assessments, levies \nand other governmental and \"pass-through\" charges on or after sale of units of \nthe Product; (b) actual, direct, third party costs of raw materials and all \nfinished goods sold (e.g., cost of production, duplication, manufacturing and \nassembly, including related labor and overhead charge; cost of documentation, \nlabels and packaging; etc.) incurred by Bay or any affiliate or related entity \nthereof; (c) actual, direct, third party sales commissions, discounts, \nadvertising, promotional and marketing costs and other costs of sales; (d) any \nand all third party royalties and fees paid by Bay in connection with revenue \nearned from the sale and distribution of the Product (including, without \nlimitation, royalties and fees paid by Bay to third party holders of rights in \ndedicated computer entertainment or gaming platforms or operating systems \n(e.g., Nintendo, Sega, Sony PlayStation, etc.); and (e) any rebates or \nallowances (including allowances credited to resellers or distributors in \nrespect of marketing and promotional costs) paid by Bay in connection with the \nsale or distribution of the Product. If Bay earns revenue from distribution of \na Product in combination or bundle with one or more other Bay products, such \nrevenue will be allocated between that Product and such other products on a \nfair and reasonable basis taking into consideration the current or most recent \nwholesale prices of components of such compilation or bundle.\n\n\n   15\n                                  SCHEDULE DS\n\n                               DELIVERY SCHEDULE\n\n                 [Further specification to be provided by Bay.]\n\n1.    Soundtrack.\n\n2.    Access to computer graphics imaging (CGI) and models.\n\n3.    Still frame photographs of major sets and\/or set pieces.\n\n4.    Access to physical models used in principal photography.\n\n   16\n\n\n\n\n\n                                  SCHEDULE SD\n\n\n                             SECURITY DOCUMENTATION\n\n\n                               [To be provided.]\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-42296","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\/42296","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=42296"}],"wp:term":[{"taxonomy":"corporate_contracts_companies","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_companies?post=42296"},{"taxonomy":"corporate_contracts_industries","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_industries?post=42296"},{"taxonomy":"corporate_contracts_types","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_types?post=42296"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}