Confidential License Agreement for Game Boy, Game Boy Color and Game Boy Pocket Handheld Video Game Systems - Nintendo of America Inc. and The 3DO Co.
CONFIDENTIAL
Confidential information omitted where indicated by "[*]" and filed separately
with the Securities Exchange Commission pursuant to a request for confidential
treatment under Rule 406 of the Securities Act of 1933.
CONFIDENTIAL LICENSE AGREEMENT
FOR GAME BOY, GAME BOY COLOR AND GAME BOY POCKET
HANDHELD VIDEO GAME SYSTEMS
(Western Hemisphere)
THIS AGREEMENT is entered into by and between NINTENDO OF AMERICA INC.
a Washington corporation with an address for notice purposes of 4820 - 150th
Avenue NE, Redmond, WA 98052 (Fax: 425-882-3585) ("NINTENDO") and THE 3DO
COMPANY, a California corporation with an address for notice purposes of 600
Galveston Drive, Redwood City, CA 94063-4746 (Fax: 650-261-3151), Attention:
President ("LICENSEE").
NINTENDO and LICENSEE acknowledge and agree as follows:
1. RECITALS
1.1 NINTENDO markets and sells high-quality video game systems, including
without limitation hardware and software, marketed by NINTENDO under its
trademarks "Game Boy", Game Boy pocket" and "Game Boy Color" for playing video
games.
1.2 LICENSEE desires to gain access to and a license to use highly
proprietary programming specifications, development tools, trademarks and other
valuable intellectual property rights owned by NINTENDO, in order to develop
video game software and to purchase such video game software from NINTENDO for
play on the Game Boy Systems (as defined below), which systems were developed by
NCL.
1.3 NINTENDO is willing to grant to LICENSEE a license to use such
proprietary information and intellectual property rights and to sell video game
software to LICENSEE upon the terms and conditions set forth in this Agreement.
2. DEFINITIONS
2.1 "Artwork" shall mean the final art and mechanical formats for the
Licensed Product (as defined below) including the Game box, user instruction
manual with consumer precautions and warranty, game cartridge label and inserts.
2.2 "Effective Date" shall mean the last date on which all parties shall
have signed this Agreement.
-1-
<PAGE>
CONFIDENTIAL
2.3 "Game Boy Systems" shall mean individually, collectively or in any
combination the 8-bit monochrome Game Boy and Game Boy pocket handheld video
game systems and the 8-bit Game Boy Color handheld game system.
2.4 "Game Cartridge(s)" shall mean interchangeable plastic cartridges
adapted for use with the Game Boy Systems, housing the Games embodied in
electronic memory devices or comparable medium authorized by NINTENDO for
storing the Games.
2.5 "Game(s)" shall mean video game software compatible with Game Boy
Systems developed under this Agreement.
2.6 "Guidelines" shall mean the "Game Boy Systems Packaging Guidelines" and
the "Game Boy Systems Development Manual" setting forth trademark, copyright and
related artwork standards, as provided by NINTENDO.
2.7 "Independent Contractor" shall mean any third-party agent, consultant,
contractor or independent programmer, other than LICENSEE.
2.8 "Licensed Copyright(s)" shall mean various copyrights in printed
materials, art or logo designs, computer software, electronic circuitry and
rights in integrated circuit layout designs employed in the Game Boy Systems.
2.9 "Licensed Intellectual Properties" shall mean individually,
collectively or in any combination, the Licensed Inventions, Licensed
Proprietary Information, Licensed Copyrights and Licensed Trademarks.
2.10 "Licensed Invention(s)" shall mean improvements and inventions
concerning the Game Boy Systems, including inventions which are or may become
the subject matter of various patents or patent applications.
2.11 "Licensed Product(s)" shall mean Game Cartridges (or comparable medium
authorized by NINTENDO) for employing the Licensed Intellectual Properties and
having electronic memory devices storing the Games.
2.12 "Licensed Proprietary Information" shall mean any of the following
information relating to the Game Boy Systems: (a) all current or future
information, know-how, techniques, methods, information, tools, emulator
hardware or software, software development specifications, and/or trade secrets,
(b) any non-public information or patent applications, (c) any business,
marketing or sales data or other such information, and (d) any other information
or data relating to development, design, operation, manufacturing, marketing or
sales. "Licensed Proprietary Information" shall include information disclosed to
LICENSEE by NINTENDO, NINTENDO's affiliated companies, and/or other third
parties working with NINTENDO. Such Licensed Proprietary Information shall
include all confidential information disclosed, whether in writing, orally,
visually, or in the form of drawings, technical specifications, software,
samples, pictures, models, recordings, or other tangible items which contain or
manifest, in any form, the above listed information. Licensed Proprietary
Information shall not include: (a) data and
2
<PAGE>
CONFIDENTIAL
information which was in the public domain prior to LICENSEE's receipt of the
same hereunder, or which subsequently becomes part of the public domain by
publication or otherwise, except by LICENSEE's wrongful act or omission, (b)
data and information which LICENSEE can demonstrate, through written records
kept in the ordinary course of business, was in its possession without
restriction on use or disclosure, prior to its receipt of the same hereunder and
was not acquired directly or indirectly from NINTENDO under an obligation of
confidentiality which is still in force, (c) data and information which LICENSEE
can show was received by it from a third party who did not acquire the same
directly or indirectly from NINTENDO and to whom LICENSEE has no obligation of
confidentiality, and (d) data and information which is required to be disclosed
by an authorized governmental or judicial entity, provided that LICENSEE shall
notify NINTENDO at least thirty (30) days prior to such disclosure.
2.13 "Licensed Trademarks" shall mean registered and unregistered
trademarks and trademark applications used in connection with the Game Boy
Systems including, but not limited to, "Nintendo", "Game Boy", "Game Boy Color",
Game Boy pocket, "Official Nintendo Seal of Quality" and trade dress in the Game
Boy Systems.
2.14 "Marketing Materials" shall mean marketing, advertising or promotional
materials which incorporate the Licensed Intellectual Properties and which are
developed by or for LICENSEE to promote the sale of the Licensed Products.
2.15 "NCL" shall mean NINTENDO's parent company, Nintendo Co., Ltd. of
Kyoto, Japan.
2.16 "Product Sample" shall mean a sample of the Games for Game Boy Color
as defined in Section 5.2.
2.17 "Schedule 1" shall mean the "Nintendo of America Inc. Price Schedule
for the Game Boy Licensed Game Paks" attached to this Agreement and incorporated
by reference into this Agreement.
2.18 "Schedule 2" shall mean the "Nintendo of America Inc. Price Schedule
for the Game Boy Color Licensed Game Paks" attached to this Agreement and
incorporated by reference into this Agreement.
2.19 "Term" shall mean three (3) years from the Effective Date.
2.20 "Territory" shall mean all countries within the Western Hemisphere,
including without limitation, the United States, Canada, South America, Central
America, Mexico, and all applicable territories and possessions of such
countries.
3. GRANT OF LICENSE; RESERVATION OF RIGHTS BY NINTENDO
3.1 Grant. For the Term and in the Territory, NINTENDO hereby grants to
LICENSEE, and LICENSEE hereby accepts under the terms and conditions set forth
in this Agreement, a nonexclusive license to develop the Licensed Products.
Except as may be
3
<PAGE>
CONFIDENTIAL
permitted under a separate written authorization from NINTENDO or NCL, LICENSEE
shall not use the Licensed Intellectual Properties for any other purpose.
3.2 Reservation of Rights in the Licensed Intellectual Properties. LICENSEE
acknowledges NINTENDO's and NCL's right, title, and interest in and to the
Licensed Intellectual Properties and the goodwill associated with the Licensed
Trademarks. LICENSEE will not at any time do or cause to be done any act or
thing which in any way impairs or is intended to impair any part of such right,
title, interest or goodwill. LICENSEE shall not represent that it has any
ownership in the Licensed Intellectual Properties. This Agreement does not grant
LICENSEE any ownership interest in the Licensed Intellectual Properties, and
LICENSEE's use of the Licensed Intellectual Properties shall not create any
right, title or interest therein in LICENSEE's favor beyond the license granted
herein.
3.3 Reservation of Rights of Distribution Outside the Territory. LICENSEE
shall market and sell the Licensed Products only in the Territory. LICENSEE
shall not directly or indirectly export any Licensed Products from the Territory
nor shall LICENSEE knowingly permit or assist any third party in doing so.
3.4 Reservation of Rights to Reverse Engineer. LICENSEE may utilize and
study the design, performance and operation of the Game Boy Systems and the
Licensed Proprietary Information solely for the purpose of developing software
which is compatible with the Game Boy Systems for license under this Agreement.
LICENSEE shall not, directly or indirectly, reverse engineer or aid or assist in
the reverse engineering of all or any part of the Game Boy Systems, including
the hardware, software and/or tools. For purposes of this Agreement, "reverse
engineering" shall mean: (a) the x-ray electronic scanning and/or physical or
chemical stripping of semiconductor components; and/or (b) the disassembly,
decompilation, decryption, or simulation of object code or executable code,
specifically including, but not limited to, any NINTENDO supplied or developed
libraries. The limitations set forth in this Section 3.4 shall not preclude
LICENSEE from engaging in reverse engineering of any Game code which was
developed solely by LICENSEE and relates only to the Game(s) and was not
supplied by nor derived from any code supplied by NINTENDO.
3.5 Reservation of Rights of Electronic Transmission. LICENSEE shall not
directly or indirectly duplicate, distribute or transmit Games via electronic
means or any other means now known or hereafter devised, including without
limitation, wireless, cable, fiber optic means, telephone lines, satellite
transmission, microwave or radio waves or over a network of interconnected
computers or other devices. Notwithstanding this limitation, LICENSEE shall not
be prohibited from the electronic transmission of Games during the development
process for the sole purpose of facilitation development; provided, however,
that no right of retransmission shall attach to any such transmission, and,
provided further, that LICENSEE shall use reasonable security measures,
customary within the industry, to reduce the risk of unauthorized interception
or retransmission of such transmissions.
3.6 Notification Obligations. LICENSEE shall promptly notify NINTENDO of
the loss or unauthorized use or disclosure of any Licensed Proprietary
Information and shall promptly act to recover any such information and/or
prevent further breach of the confidentiality obligations herein.
4
<PAGE>
CONFIDENTIAL
4. CONFIDENTIALITY
4.1 Disclosure of Proprietary Information. During the Term, NINTENDO may
provide LICENSEE with highly proprietary development information, development
tools, emulation systems, programming specifications and related resources and
information constituting and incorporating the Licensed Proprietary Information
to enable LICENSEE to develop video games for use with the Game Boy Systems.
4.2 Confidentiality of Licensed Proprietary Information. LICENSEE shall
maintain all Licensed Proprietary Information as strictly confidential and will
use such Licensed Proprietary Information only in accordance with this
Agreement. LICENSEE shall limit access to the Licensed Proprietary Information
to LICENSEE's employees having a strict need to know and shall advise such
employees of their obligation of confidentiality as provided herein. LICENSEE
shall require each such employee to retain in confidence the Licensed
Proprietary Information pursuant to a written non-disclosure agreement between
LICENSEE and such employee. LICENSEE shall use its best efforts to ensure that
its employees working with or otherwise having access to Licensed Proprietary
Information shall not disclose or make unauthorized use of the Licensed
Proprietary Information.
4.3 Agent/Consultant Confidentiality. LICENSEE shall not disclose the
Licensed Proprietary Information to any Independent Contractor without
NINTENDO's prior written approval. Each approved Independent Contractor shall be
required to enter into a written non-disclosure agreement with NINTENDO prior to
receiving any access to or disclosure of the Licensed Proprietary Information.
5. DEVELOPMENT; QUALITY STANDARDS; ARTWORK; MANUFACTURING
5.1 Development and Sale of the Game Boy Systems Programs. During the Term
and for the Territory, LICENSEE may develop Games and/or sell Licensed Products
for the Game Boy Systems in accordance with this Agreement.
5.2 Submission of Product Sample (Game Boy Color Only). Prior to a Game Boy
Color Game reaching fifty percent (50%) completion, LICENSEE shall submit to
NINTENDO for approval a Product Sample. Such Product Sample must include a
demonstration of the manner in which such Game Boy Color dedicated or compatible
Game will utilize and exploit the following color criteria: (a) differentiation
from monochrome Game Boy software (each Game Boy Color Game must appear
significantly more colorful than monochrome Game Boy software when "colorized"
by the Game Boy Color hardware); (b) simultaneous colors; (c) appropriate use
of color; (d) variety of colors, and (e) contrast and saturation. For the
purpose of demonstrating these criteria, the Product Sample shall be either a
programmed demo or various ROM images. In addition to these criteria, for Games
which have been previously released for the Game Boy monochrome system, LICENSEE
must provide a demonstration of the game-play enhancements which have been added
to the Game which may include any of the following: (i) additional stages,
levels or areas; (ii) new characters; and/or (iii) game-play based on color.
Subsequent to acceptance and approval of a Product Sample, LICENSEE shall notify
NINTENDO in writing of any material proposed changes in the Product Sample
and/or the proposed Licensed Products. No submission samples are required for
Games exclusively for play on Game Boy and Game Boy pocket systems.
5.3 Delivery of Completed Game. Upon completion of a Game, LICENSEE shall
deliver to NINTENDO one (1) prototype of such Game in a format specified by
NINTENDO,
5
<PAGE>
CONFIDENTIAL
together with written user instructions and a complete screen text script.
NINTENDO shall promptly evaluate each submitted Game with regard to: (a) its
technical compatibility with and error-free operation on the Game Boy Systems;
(b) the suitability of the Game content, taking into account reasonable
standards set forth in the Guidelines; and, if applicable, (c) whether the Game
achieves the criteria as set forth in Section 5.2 at 50% completion and upon
final completion. LICENSEE shall have satisfied the Game content suitability
criteria by providing NINTENDO with proof that each submitted Game has been
provided with a certificate of a rating other than ADULTS ONLY (or its
equivalent) from the Entertainment Software Ratings Board or comparable
independent ratings body which reviews and certifies product for violent or
sexual content, and that the Game meets the content criteria set forth in
NINTENDO's content guidelines.
5.4 Approval of Completed Game. NINTENDO shall, within a reasonable period
of time after receipt, approve or disapprove each submitted Game. If any such
Game is disapproved, NINTENDO shall specify in writing the reasons for such
disapproval and state what corrections and/or improvements are necessary in
order to be approved. After making the necessary corrections and/or
improvements, LICENSEE shall submit a revised version of such Game for approval
by NINTENDO. The approval of any Game by NINTENDO shall not relieve LICENSEE of
its sole responsibility for the development, quality and operation of the Game
or in any way create any warranty for a Licensed Product by NINTENDO. NINTENDO
shall not unreasonably withhold or delay any approval provided for herein.
5.5 Development and Quality of Artwork. In connection with the submission
of a proposed Licensed Product to NINTENDO, LICENSEE shall submit all Artwork to
NINTENDO. All Artwork shall conform to the requirements set forth in the
Guidelines. Within fifteen (15) business days of receipt of the Artwork,
NINTENDO shall approve or disapprove the Artwork based upon the Guidelines. If
any of the Artwork is disapproved, NINTENDO shall specify in writing the reasons
for such disapproval and state what corrections and/or improvements are
necessary in order to be approved. After making the necessary corrections and/or
improvements to the disapproved Artwork, LICENSEE shall resubmit new Artwork for
approval by NINTENDO. NINTENDO shall not unreasonably withhold or delay its
approval of any Artwork.
5.6 Appointment of NCL as Manufacturer. LICENSEE hereby appoints NCL, and
NINTENDO confirms that NCL accepts such appointment, as manufacturer of the
Licensed Products. LICENSEE shall purchase from NCL through NINTENDO all of its
requirements for the Licensed Products. NCL shall have the sole responsibility
for establishing and fulfilling all aspects of the manufacturing process,
including selecting the location of and specifications for any manufacturing
facilities, appointing suppliers and subcontractors, and managing all
work-in-progress and finished goods inventory. NCL shall acquire and retain
responsibility for all equipment, tooling, molds or masks used in connection
with the manufacture of the Licensed Products.
5.7 Manufacture of Licensed Products. Upon approval of each Game and the
Artwork related thereto and upon receipt from LICENSEE of an order in accordance
with
6
<PAGE>
CONFIDENTIAL
Section 6 herein, NCL will manufacture for LICENSEE the Licensed Products,
including the Artwork corresponding to such Game.
5.8 Retention of Sample Licensed Products. NCL may, at its own expense,
manufacture samples of the Licensed Products, only to the extent necessary, to
be used by NINTENDO for archival purposes, legal proceedings against infringers
of the Licensed Intellectual Properties, and for other lawful purposes but not
for resale.
6. PURCHASE PRICE; PAYMENT; DELIVERY OF COMPLETED LICENSED PRODUCT
6.1 Minimum Initial Orders. Upon placement of an initial order for each
Game, LICENSEE shall order a minimum quantity of [*] units of Licensed Products.
6.2 Subsequent Minimum Orders. LICENSEE may subsequently order additional
Licensed Products corresponding to any Game in a minimum quantity of [*] units
of a Licensed Product.
6.3 Purchase Price. The purchase price to be paid by LICENSEE to NINTENDO
for the Licensed Products shall be in accordance with NINTENDO's pricing
schedules currently set forth in the attached Schedules 1 and 2. The purchase
price includes the cost of manufacturing, printing and packaging the Licensed
Products and a royalty for the use of the Licensed Intellectual Properties.
Schedule 1 and/or Schedule 2 are subject to change by NINTENDO at any time
without notice; provided, however, any price increase shall only be applicable
to purchase orders received by NINTENDO after the effective date of such
increase.
6.4 Payment. At the time an order is placed, LICENSEE shall provide to
NINTENDO an irrevocable letter of credit in favor of NINTENDO and payable at
sight, issued by a bank acceptable to NINTENDO and confirmed, at LICENSEE's
expense, if requested by NINTENDO. The letter of credit shall be in United
States dollars in an amount equal to the purchase price of the Licensed Products
ordered. All associated banking charges are for LICENSEE's account.
6.5 Shipment and Delivery. The Licensed Products shall be delivered F.O.B.
Japan, with shipment at LICENSEE's direction and expense. Orders may be
delivered by NINTENDO in partial shipments, each directed to no more than two
(2) destinations designated by LICENSEE in the Territory. Title to the Licensed
Products shall vest in accordance with the terms of the applicable letter of
credit.
7. MARKETING, SALE AND RENTAL OF THE LICENSED PRODUCTS
7.1 Marketing Materials. LICENSEE agrees that any Marketing Materials shall
be of high quality and shall comply with the Guidelines.
7.2 Submission of Proposed Marketing Materials. Prior to actual use or
distribution, LICENSEE shall submit to NINTENDO for review and evaluation
initial samples of all Marketing Materials. NINTENDO shall, within fifteen (15)
business days of receipt of such samples, approve or disapprove of the quality
of such samples. If any of the samples are
-------------------
* Confidential portion omitted and filed separately with the Commission.
7
<PAGE>
CONFIDENTIAL
disapproved as to quality, NINTENDO shall specify the reasons for such
disapproval and state what corrections and/or improvements are necessary in
order to be approved. After making the necessary corrections and/or improvements
to the disapproved samples, LICENSEE may resubmit new samples for approval by
NINTENDO as to quality. No Marketing Materials shall be distributed or utilized
by LICENSEE without obtaining prior written approval as to quality by NINTENDO.
NINTENDO shall not unreasonably withhold or delay its approval of the proposed
Marketing Materials. NINTENDO reserves the right to disapprove Marketing
Materials that include non-licensed accessories.
7.3 Warranty and Repair. With respect to the Licensed Product, LICENSEE
shall provide to the original consumer a minimum ninety (90) day limited
warranty, comparable to that offered by NINTENDO. LICENSEE shall also provide to
the original consumer, either directly or indirectly through authorized service
centers, reasonably accessible product service, including out-of-warranty
service for a period of three (3) years following sale of the Licensed Product.
In the event LICENSEE is unable to obtain sufficient quantities of repair parts
for service obligations from defective and/or product returns, NINTENDO shall
cooperate in providing reasonable quantities of repair parts to LICENSEE at its
standard cost.
7.4 Business Facilities; Sales of Licensed Products. LICENSEE agrees to
develop, maintain and utilize during the Term: (a) suitable office facilities
within the Territory, adequately staffed to enable LICENSEE to fulfill all of
its responsibilities under this Agreement; (b) necessary warehouse,
distribution, marketing, sales, collection and credit operations to facilitate
proper handling of the Licensed Product; and, (c) customer service and game
counseling support, including telephone service, to adequately support the
Licensed Products.
7.5 Defects; Recall. In the event of a material programming defect in any
of the Licensed Product, which defect in the reasonable judgment of NINTENDO
would significantly impair the ability of a consumer to play such Licensed
Product, NINTENDO may require the LICENSEE to recall the Licensed Product and
undertake suitable repairs or replacements prior to further sale.
7.6 Rental. In the event LICENSEE elects to engage in the commercial rental
of the Licensed Products within the Territory on such terms and conditions as
LICENSEE shall determine, LICENSEE shall secure appropriate authorizations
and/or assignments from the holder(s) of the copyrightable elements employed in
the computer programs for the Licensed Products. LICENSEE shall clearly provide
notice on the Artwork for each Licensed Product of any rental right or
reservation thereof.
7.7 Nintendo Promotional Materials, Publications and Events. At its option,
NINTENDO may: (a) insert in the packaging for the Licensed Product promotional
materials concerning Nintendo Power magazine; (b) utilize screen shots, package
art and related art and information regarding the Licensed Products in Nintendo
Power, Nintendo Power Source. (NINTENDO's on-line version of Nintendo Power) or
other media or marketing programs which promote NINTENDO products; and (c)
exercise public performance rights of the Licensed Products and use the related
trademarks and art in NINTENDO sponsored contests, tours and
8
<PAGE>
CONFIDENTIAL
events which generally promote NINTENDO products, provided that no other third
party approvals are required.
8. LICENSEE'S COPYRIGHTS AND TRADEMARKS
8.1 Copyright and Trademark Warranties. LICENSEE represents and warrants
that, throughout the Territory, LICENSEE is either: (a) the sole owner of all
right, title and interest in and to the trademarks, copyrights, Artwork and
other intellectual property rights used on or in association with the Licensed
Products; or (b) the holder of sufficient rights to the trademarks, copyrights,
Artwork and other intellectual property rights which have been licensed from a
third party for use in the Licensed Product.
8.2 Licensee's Indemnification. LICENSEE shall indemnify and hold NINTENDO
and NCL harmless from any claims, losses, liabilities, damages, expenses and
costs, including, without limitation, reasonable attorneys' fees and costs,
which result from: (a) a breach of any of the representations or warranties
provided by LICENSEE herein; (b) any claim of infringement of any third party's
intellectual property rights with respect to the Licensed Products, (including,
but not limited to, any claim relating to marketing, advertising and/or sale of
the Licensed Products), excluding claims based solely upon NINTENDO's Licensed
Intellectual Properties; or (c) any claim of bodily injury (including death) or
property damage arising out of or in connection with, the development, sale
and/or use of any of the Licensed Products. NINTENDO shall give LICENSEE prompt
written notice of the assertion of any such claim and provided, further, that
LICENSEE shall have the right to select counsel and control the defense and/or
settlement of any such claim, subject to the right of NINTENDO to participate in
any such action or proceeding at its own expense with counsel of its own choice.
8.3 Insurance. LICENSEE shall, at its own expense, obtain a policy of
general liability insurance which includes product liability coverage by a
recognized insurance company. Such policy of insurance shall be in an amount of
not less than Five Million Dollars ($5,000,000 USD) on a per occurrence basis
and shall provide for adequate protection against any suits, claims, loss or
damage or any alleged intellectual property infringements by the Licensed
Products. Such policy shall name NINTENDO as an additional insured and may not
be canceled without thirty (30) days prior written notice to NINTENDO. A
Certificate of Insurance shall be provided to NINTENDO's Licensing Department
within thirty (30) days of the Effective Date. If LICENSEE fails to maintain
such insurance during the Term, NINTENDO may secure and maintain such insurance
at LICENSEE's expense.
9. LIMITATION OF LIABILITY
9.1 Disclaimer Regarding Licensed Intellectual Properties. NINTENDO makes
no representations, guarantees or warranties concerning the scope or validity of
the Licensed Intellectual Properties, and does not warrant that the sale of the
Licensed Products by LICENSEE will not infringe upon the patent, trade secret,
copyright, mask work or trademark rights of another in the Territory. THE RISK
OF INFRINGEMENT IS HEREBY ASSUMED BY LICENSEE.
9
<PAGE>
CONFIDENTIAL
9.2 Warranty Disclaimer. NINTENDO DISCLAIMS ANY AND ALL WARRANTIES OF THE
LICENSED PRODUCTS AS BETWEEN NINTENDO AND LICENSEE AND AS BETWEEN NINTENDO AND
ANY THIRD PARTY PURCHASERS FROM LICENSEE. LICENSEE PURCHASES AND ACCEPTS ALL
LICENSED PRODUCTS FROM NINTENDO ON AN "AS IS" AND "WHERE IS" BASIS AND WITHOUT
ANY WARRANTIES, EXPRESS OR IMPLIED. WITH RESPECT TO THE LICENSED PRODUCTS,
NINTENDO DISCLAIMS ALL WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A GENERAL
OR PARTICULAR PURPOSE AND SHALL IN NO EVENT BE LIABLE FOR ANY INCIDENTAL AND/OR
CONSEQUENTIAL DAMAGES OF LICENSEE, ITS RETAILERS OR CUSTOMERS. LICENSEE SHALL BE
SOLELY RESPONSIBLE FOR PROVIDING THIRD-PARTY PURCHASERS FROM LICENSEE WITH
WARRANTY AND REPAIR/REPLACEMENT SERVICES FOR ANY DEFECTIVE LICENSED PRODUCTS.
NOTWITHSTANDING THE CONDITIONS SET FORTH IN THIS PARAGRAPH, NINTENDO WILL USE
ITS BEST EFFORTS TO RESOLVE ANY CATASTROPHIC DEFECT IN THE LICENSED PRODUCTS
PURCHASED BY LICENSEE FROM NINTENDO. A "CATASTROPHIC DEFECT" IS DEFINED AS A
MANUFACTURING DEFECT RATE OF FIVE PERCENT (5%) OR GREATER IN ANY SHIPMENT OF
LICENSED PRODUCTS TO LICENSEE.
10. INFRINGEMENT OF LICENSED INTELLECTUAL PROPERTIES AND LICENSEE'S TRADEMARKS
AND COPYRIGHTS
10.1 Reporting. In the event any claim is asserted against LICENSEE
alleging that any of the Licensed Intellectual Properties constitute an
infringement of another's rights or if a claim is asserted against NINTENDO
alleging that the Licensed Products infringe the rights of a third party, then
the party with such knowledge shall promptly notify the other party.
10.2 Licensed Intellectual Properties. NINTENDO shall have the sole right,
at its expense, to commence and/or defend a legal action or negotiate a
settlement relating to any alleged infringement by the Licensed Intellectual
Properties. LICENSEE agrees to give reasonable assistance in any such legal
action, but at no expense to it. NINTENDO shall be entitled to all of the
recovery or damages collected as a result of such legal action or negotiated
settlement. In the event of a legal action against LICENSEE alleging an
infringement by the Licensed Intellectual Properties as incorporated into
LICENSEE's Licensed Products which NINTENDO affirmatively selects in writing not
to defend, LICENSEE may defend or settle such legal action, at its option and
expense. NINTENDO agrees to provide reasonable assistance in defending any such
legal action. LICENSEE agrees to keep NINTENDO fully informed with respect to
developments in any such legal action and to provide NINTENDO reasonable notice
of the terms of any proposed settlement and to consider any comments by NINTENDO
before settlement is made.
10.3 Infringement of Licensed Products. LICENSEE shall take reasonable
steps to abate any infringement of LICENSEE's copyrights and trademarks employed
in the Licensed Products. LICENSEE shall also take all reasonable and necessary
steps, including legal action, to defend against any alleged infringement caused
by any of LICENSEE's content in any Licensed Product or any Artwork, title or
designation used in conjunction with any of the Licensed Products. NINTENDO
shall give to LICENSEE reasonable assistance and cooperation in any such legal
action, but at no expense to NINTENDO.
10
<PAGE>
CONFIDENTIAL
11. TERM AND TERMINATION
11.1 Default or Breach. In the event that either party is in default or
commits a breach of this Agreement which is not cured within thirty (30) days
after written notice thereof, then this Agreement shall automatically terminate
on the date specified in such notice.
11.2 Bankruptcy/Insolvency. At NINTENDO's option, and for its own
convenience, this Agreement can be terminated immediately and without notice in
the event that LICENSEE: (a) makes an assignment for the benefit of creditors;
(b) becomes insolvent; (c) files a voluntary petition for bankruptcy; (d)
acquiesces to any involuntary bankruptcy petition; (e) is adjudicated as a
bankrupt; or (f) ceases to do business.
11.3 Termination Other Than by Breach. Upon the expiration of this
Agreement or its termination other than by LICENSEE's breach, LICENSEE shall
have a period of one hundred eighty (180) days to sell any unsold Licensed
Products. All Licensed Products in LICENSEE's control following expiration of
such sell-off period, shall be destroyed by LICENSEE within ten (10) days and
proof of such destruction shall be delivered to NINTENDO certified by an officer
of LICENSEE.
11.4 Termination by LICENSEE's Breach. If this Agreement is terminated by
NINTENDO as a result of a breach of its terms and conditions by LICENSEE,
LICENSEE shall immediately cease all distribution, promotion or sale of any
Licensed Products. All Licensed Products in LICENSEE's control as of such
termination shall be destroyed by LICENSEE within ten (10) days and proof of
such destruction shall be delivered to NINTENDO certified by an officer of
LICENSEE.
11.5 Licensed Intellectual Property Rights. Upon expiration and/or
termination of this Agreement, LICENSEE will cease all use of the Licensed
Proprietary Information for any purpose, and Sections 4.2 and 4.3 of this
Agreement, pertaining to LICENSEE's obligation to not disclose to third parties
any Licensed Proprietary Information shall survive the termination of this
Agreement. LICENSEE shall also return to NINTENDO all writings, drawings,
models, data and other materials and things in LICENSEE's possession or in the
possession of any past or present employee, agent or contractor receiving the
information through LICENSEE, which were received from NINTENDO constitute or
relate to or disclose any Licensed Proprietary Information without making copies
or otherwise retaining any such information.
11.6 Termination by Nintendo's Breach. If this Agreement is terminated by
LICENSEE as a result of a breach of its terms or conditions by NINTENDO,
LICENSEE may continue to sell the Licensed Products in the Territory until the
expiration of the Term, at which time the provisions herein relating to
termination other than by default of LICENSEE shall apply to any unsold Licensed
Products.
12. GENERAL PROVISIONS
12.1 Nonassignability/Sublicensing. This Agreement is personal to LICENSEE
and may not be sold, assigned, delegated, sublicensed or otherwise transferred
or encumbered,
11
<PAGE>
CONFIDENTIAL
including by operation of law or by the sale or transfer of more than [*] of the
stock, assets or ownership interest or control of LICENSEE, without the prior
written consent of NINTENDO.
12.2 Force Majeure. Neither party shall be liable for any breach of this
Agreement occasioned by any cause beyond the reasonable control of such party,
including governmental action, war, riot or civil commotion, fire, natural
disaster, labor disputes, restraints affecting shipping or credit, delay of
carriers, inadequate supply of suitable materials, or any other causes which
could not with reasonable diligence be controlled or prevented by the parties.
In the event of material shortages, including shortages of microcomputer chips
necessary for production of the Licensed Products, NINTENDO reserves the right
to allocate essential materials among itself and its licensees.
12.3 Waiver; Severability; Integration. The failure of either party to
enforce any provision of this Agreement shall not be construed to be a waiver of
such provision or of the right of such party to thereafter enforce such
provision. In the event that any term, clause or provision of this Agreement
shall be construed to be or adjudged invalid, void or unenforceable, such term,
clause or provision shall be construed as severed from this Agreement, and the
remaining terms, clauses and provisions shall remain in effect. This Agreement
constitutes the entire agreement between the parties relating to the subject
matter hereof. All prior negotiations, representations, agreements and
understandings are merged into, extinguished by and completely expressed by this
Agreement. Any amendment to this Agreement shall be in writing, signed by both
parties.
12.4 Governing Law; Venue. This Agreement shall be governed by, subject to
and construed under the laws of the State of Washington. Any legal actions
prosecuted or instituted by NINTENDO or by LICENSEE under this Agreement, with
respect to any matters arising under or growing out of this Agreement, shall
only be brought in a court of competent jurisdiction in King County, Washington
and each party hereby consents to the jurisdiction and venue of such courts for
such purposes.
12.5 Equitable Relief. LICENSEE acknowledges that in the event of its
breach of this Agreement, no adequate remedy at law may be available to NINTENDO
and that NINTENDO shall be entitled to seek injunctive or other equitable relief
in addition to any relief available at law.
12.6 Attorneys' Fees. In the event it is necessary for either party of this
Agreement to undertake legal action to enforce any of the terms, conditions or
rights contained herein, or to defend any such action, then the prevailing party
in any such action shall be entitled to recover from the other party all
reasonable attorneys' fees, costs and expenses relating to such legal action or
any appeal therefrom.
12.7 Notices. All notices required or permitted under this Agreement shall
be sufficiently given when: (a) personally served or delivered; (b) deposited,
postage prepaid, with a guaranteed air courier service, addressed as stated
herein, or to such other person or address either party may designate in a
notice; or, (c) by facsimile, with an original sent concurrently by
12
<PAGE>
CONFIDENTIAL
first class U.S. mail. Notice shall be deemed effective upon the earlier of
actual receipt or two (2) business days after transmittal.
12.8 Counterparts; Signature by Facsimile. This Agreement may be signed in
counterparts, which shall together constitute a complete Agreement. A signature
transmitted by facsimile shall be considered an original for purposes of this
Agreement.
12.9 Time is of the Essence. Time is of the essence with regard to this
Agreement and the performance of the parties' obligations hereunder.
IN WITNESS WHEREOF, NINTENDO and LICENSEE have entered into this Agreement
on the dates set forth below.
NINTENDO: LICENSEE:
NINTENDO OF AMERICA INC. THE 3DO COMPANY
By: /s/ John H. Bauer By: /s/ James Alan Cook
----------------------------------------- -------------------------
Its: Executive Vice President, Administration Its: Exec. Vice President
---------------------------------------- ------------------------
Date: October 1, 1999 Date: September 23, 1999
-------------------------------------- ---------------------
JEN:hjd
13
<PAGE>
<TABLE>
CONFIDENTIAL
SCHEDULE 1
NINTENDO OF AMERICA INC.
PRICE SCHEDULE
GAME BOY LICENSED GAME PAKS
<CAPTION>
----------------------------------------------------------------------------------------------------------------------
Memory Capacity MBC Battery Previous NOA Price Previous "Classic" New Price
Price (shipped
before 12/31/94)
======================================================================================================================
<S> <C> <C> <C> <C> <C>
256K [*] [*] [*]
----------------------------------------------------------------------------------------------------------------------
512K MBC-1 [*] [*] [*]
----------------------------------------------------------------------------------------------------------------------
1 Megabit MBC-1 [*] [*] [*]
----------------------------------------------------------------------------------------------------------------------
2 Megabit MBC-1 [*] [*] [*]
----------------------------------------------------------------------------------------------------------------------
4 Megabit MBC-1 [*] [*] [*]
----------------------------------------------------------------------------------------------------------------------
8 Megabit MBC-1 [*] [*] [*]
----------------------------------------------------------------------------------------------------------------------
512K X 64K SRAM MBC-1 Battery [*] [*] [*]
----------------------------------------------------------------------------------------------------------------------
1 Megabit X 64K SRAM MBC-1 Battery [*] [*] [*]
----------------------------------------------------------------------------------------------------------------------
1 Megabit X 256K SRAM MBC-1 Battery [*] [*] [*]
----------------------------------------------------------------------------------------------------------------------
2 Megabit X 16K SRAM MBC-1 [*] [*] [*]
----------------------------------------------------------------------------------------------------------------------
2 Megabit X 64K SRAM MBC-1 Battery [*] [*] [*]
----------------------------------------------------------------------------------------------------------------------
4 Megabit X 64K SRAM MBC-1 [*] [*] [*]
----------------------------------------------------------------------------------------------------------------------
4 Megabit X 64K SRAM MBC-1 Battery [*] [*] [*]
----------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------
512K MBC-2 Battery [*] [*] [*]
----------------------------------------------------------------------------------------------------------------------
1 Megabit MBC-2 Battery [*] [*] [*]
----------------------------------------------------------------------------------------------------------------------
2 Megabit MBC-2 Battery [*] [*] [*]
----------------------------------------------------------------------------------------------------------------------
</TABLE>
EXTRA PACKAGING (must be ordered with product on a separate PO)
Game Pak Box [*]
Instruction Manual [*]
Game Pak Label [*]
Game Pak Poster [*]
Warranty Card [*]
ALL PRICES ARE SUBJECT TO CHANGE WITHOUT NOTICE. REV. 4/1/97
-------------------
* Confidential portions omitted and filed separately with the Commission.
14
<PAGE>
<TABLE>
CONFIDENTIAL
SCHEDULE 2
NINTENDO OF AMERICA INC.
PRICE SCHEDULE
GAME BOY COLOR LICENSED GAME PAKS
<CAPTION>
----------------------------------------------------------------------------------------------------------------------
MEMORY CAPACITY MBC BATTERY RUMBLE PAK PRICE
======================================================================================================================
<S> <C> <C> <C> <C>
8 Megabit MBC-5 [*]
----------------------------------------------------------------------------------------------------------------------
8 Megabit MBC-5 Yes [*]
----------------------------------------------------------------------------------------------------------------------
8 Megabit X 64K SRAM MBC-5 Battery [*]
----------------------------------------------------------------------------------------------------------------------
8 Megabit X 64K SRAM MBC-5 Battery Yes [*]
----------------------------------------------------------------------------------------------------------------------
8 Megabit X 256K SRAM MBC-5 Battery [*]
----------------------------------------------------------------------------------------------------------------------
8 Megabit X 256K SRAM MBC-5 Battery Yes [*]
----------------------------------------------------------------------------------------------------------------------
16 Megabit MBC-5 [*]
----------------------------------------------------------------------------------------------------------------------
16 Megabit MBC-5 Yes [*]
----------------------------------------------------------------------------------------------------------------------
16 Megabit X 64K SRAM MBC-5 Battery [*]
----------------------------------------------------------------------------------------------------------------------
16 Megabit X 64K SRAM MBC-5 Battery Yes [*]
----------------------------------------------------------------------------------------------------------------------
16 Megabit X 256K SRAM MBC-5 Battery [*]
----------------------------------------------------------------------------------------------------------------------
16 Megabit X 256K SRAM MBC-5 Battery Yes [*]
----------------------------------------------------------------------------------------------------------------------
32 Megabit MBC-5 [*]
----------------------------------------------------------------------------------------------------------------------
32 Megabit MBC-5 Yes [*]
----------------------------------------------------------------------------------------------------------------------
32 Megabit X 64K SRAM MBC-5 Battery [*]
----------------------------------------------------------------------------------------------------------------------
32 Megabit X 64K SRAM MBC-5 Battery Yes [*]
----------------------------------------------------------------------------------------------------------------------
32 Megabit X 256K SRAM MBC-5 Battery [*]
----------------------------------------------------------------------------------------------------------------------
32 Megabit X 256K SRAM MBC-5 Battery Yes [*]
----------------------------------------------------------------------------------------------------------------------
8 Megabit X 64K SRAM MBC-3 Battery [*]
----------------------------------------------------------------------------------------------------------------------
</TABLE>
EXTRA PACKAGING (must be ordered with product on a separate PO)
Game Pak Box [*]
Instruction Manual [*]
Game Pak Label [*]
Game Pak Poster [*]
Warranty Card
ALL PRICES ARE SUBJECT TO CHANGE WITHOUT NOTICE. REV. 2/1/99
-------------------
* Confidential portions omitted and filed separately with the Commission.