License Agreement - Takara Co. Ltd. and Bay Area Multimedia Inc.
BAY AREA MULTIMEDIA, INC. - TAKARA CO., LTD.
LICENSE AGREEMENT
THIS AGREEMENT is made and entered into this 31 day of March 2000 (the
"EXECUTION DATE"), by and between TAKARA CO., LTD., a corporation formed in
accordance with the laws of Japan at 4-19-16 Aoto, Katsushika-Ku, Tokyo 125-8503
Japan ("LICENSOR") and BAY AREA MULTIMEDIA, INC, a California corporation at
20760 Monte Sunset Drive, San Jose, CA 95120 ("LICENSEE").
RECITALS
A. LICENSOR is in the business of developing and licensing products for
interactive media.
B. LICENSEE is in the business of acquiring, marketing, and distributing
products for interactive media.
C. LICENSOR (1) has developed and is developing and (2) owns certain
proprietary rights or has obtained all necessary rights to a product known as
"Transformers, Beast Wars Transmetals" described in greater detail in EXHIBIT A
attached hereto. (All rights, title, and interest in the copyrights, trademarks,
likenesses, and all other proprietary rights relating to or connected with such
product, collectively shall be referred to as the "PRODUCT").
D. LICENSOR desires to grant to LICENSEE and LICENSEE desires to obtain
a license to market, distribute and sell products incorporating the PRODUCT,
subject to the terms and conditions set forth in this AGREEMENT.
NOW, THEREFORE, the parties agree as follows:
1. Ownership. Subject to the license granted LICENSEE in Section 2
below, LICENSOR shall retain all ownership rights in the PRODUCT.
2 . Grant of Exclusive License in the USA, its Possessions, Canada, and
the Sales Territories of the Sony Computer Entertainment of America and Nintendo
of America.
2.1 The Grant. LICENSOR hereby grants to LICENSEE, and LICENSEE
accepts from LICENSOR a license (the "LICENSE") to display, advertise, promote,
manufacture or have manufactured, license, sell, or otherwise distribute
products (collectively the "DISTRIBUTION RIGHTS") incorporating the PRODUCT,
subject to the terms and conditions contained herein.
2.2 Scope. The LICENSE granted herein shall be exclusive with
respect to the platforms and within the territory as defined herein. The
platforms are Nintendo 64 ("N64") and the Sony Playstation ("PLAYSTATION"). The
territory is North America. (The products LICENSEE distributes which incorporate
the PRODUCT and which are subject to this AGREEMENT hereafter are referred to as
the "LICENSED PRODUCTS").
3. Term. The term of this AGREEMENT shall expire on December 31, 2002,
unless terminated sooner in accordance with the provisions of this AGREEMENT
(the "TERM"). After the original term, the AGREEMENT automatically extends for
additional one-year terms unless either party indicates its intent to terminate
the AGREEMENT by delivery of notice thereof not less than ninety (90) days prior
to the end of such term.
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4. Completion.
4.1 Finalization. LICENSOR exclusively shall be responsible for the
completion and localization of the LICENSED PRODUCTS for the various territories
within North America; and shall bear all costs associated with such activities,
In addition, LICENSOR shall be responsible for and bear all costs associated
with obtaining the approval of the distribution of the LICENSED PRODUCT in North
America by Nintendo of America ("NINTENDO") and Sony Computer Entertainment of
America ("SONY"), respectively.
4.2 Maintenance. During the term of this AGREEMENT, LICENSOR shall
exercise its best efforts to correct defects in the PRODUCT as promptly as
reasonably possible. LICENSEE shall be solely responsible for providing support
and maintenance to its customers.
5. Compensation.
5.1 GUARANTEED COMPENSATION Amount. LICENSEE shall pay to LICENSOR the
following guaranteed compensation (the "GUARANTEED COMPENSATION):
<TABLE>
<CAPTION>
VERSION GUARANTEED COMPENSATION
------- -----------------------
<S> <C>
N64 $[*]
PLAYSTATION $[*]
</TABLE>
5.2 GUARANTEED COMPENSATION Payment Terms. GUARANTEED COMPENSATION shall
be due and payable [*] upon execution of this AGREEMENT; [*] upon completion of
each version of the LICENSED PRODUCT; and [*] on the approval of each version of
the LICENSED PRODUCT by NINTENDO or SONY, as appropriate. In the event both
LICENSED PRODUCTS are not completed and approved as contemplated above
("FINALIZED") by April 30, 2000, LICENSEE shall have the right to notify
LICENSOR of its intent to terminate this AGREEMENT ("FINALIZATION TERMINATION
NOTICE"). GUARANTEED COMPENSATION and ROYALTY PAYMENTS, defined in Section 5.3
below, shall be transmitted by telegraph to The Fuji Bank Ltd.,
Katsushika-Branch at 1-3-12 Tateishi, Katsushika-Ku Tokyo, Japan, account number
12185, account name Takara Co., Ltd., within seven (7) days of LICENSEE's
FINALIZATION TERMINATION NOTICE. If within thirty (30) days of delivery of the
FINALIZATION TERMINATION NOTICE both LICENSED PRODUCTS are not FINALIZED,
notwithstanding any other term of this AGREEMENT, LICENSEE shall have the
immediate right to terminate this AGREEMENT and receive from LICENSOR all funds
previously delivered by LICENSEE to LICENSOR under this AGREEMENT.
5.3 ROYALTY COMPENSATION. LICENSEE shall pay LICENSOR additional
compensation equal to $[*] per PLAYSTATION unit; $[*] per N64 unit ("ROYALTY
COMPENSATION"), less returns and units sold to existing customers as replacement
products. ROYALTY COMPENSATION shall not be payable on units sold at or below
cost. In each contract year LICENSEE shall be permitted an allowance of up to
[*] units of each LICENSED PRODUCT per platform, royalty-free ("ROYALTY FREE
PROMOTIONAL UNITS"), provided that such ROYALTY FREE PROMOTIONAL UNITS must be
distributed at no charge as samples and/or as review copies, or as otherwise
permitted by this AGREEMENT, and LICENSEE shall provide an accounting thereof.
*Confidential Portions Omitted and Filed Separately with the Commission.
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LICENSOR shall have the right to check the ROYALTY COMPENSATION records of
LICENSEE during normal business hours upon two (2) weeks written notice.
LICENSEE shall keep such records for five (5) years from the EXECUTION DATE of
this AGREEMENT.
5.4 ROYAL COMPENSATION Payment Terms. ROYALTY COMPENSATION shall be
payable quarterly in arrears within forty-five (45) days after the conclusion of
the respective calendar quarter. LICENSEE shall provide LICENSOR a full and
accurate written accounting of sales during the preceding quarter ("QUARTERLY
SALES REPORT").
5.5 Recoupment. The payments otherwise required under Sections 6.3
and 6.4 shall not apply until the aggregate amounts due thereunder for both
versions of the LICENSED PRODUCTS exceeds $[*].
5.6 USD. All payments under this AGREEMENT shall be made in USD.
5.7 Deduction of Taxes. LICENSEE shall be authorized to withhold from
payments to LICENSOR under this AGREEMENT the amount of any taxes assessed, if
any, by any governmental entity in any jurisdiction on amounts payable to
LICENSOR hereunder and shall effect payment to the appropriate tax authority.
LICENSEE shall promptly forward to LICENSOR copies of all receipts and other
relevant documents evidencing payment of applicable withholding taxes.
6. LICENSOR Copyright and Trademark.
6.1 Notice. "NOTICE" as used in this Section, shall mean the
copyright notice defined in EXHIBIT B.
6.2 PUBLISHED MATERIALS. LICENSEE must receive approval from LICENSOR
for the design and copyright of all "PUBLISHED MATERIALS". "PUBLISHED
MATERIALS" shall include manuals, flyers, labels, and sales catalogues. All such
copyrights shall be owned by LICENSOR.
7. Infringement Litigation.
7.1 Assistance. LICENSEE agrees to assist LICENSOR, at LICENSOR's
sole expense, to the extent necessary in the procurement of any protection or to
protect any of LICENSOR's rights to the PRODUCT.
7.2 Notification. Each party hereto shall promptly notify the other
party of an infringement or possible infringement (collectively, "INFRINGEMENT")
of any rights granted to LICENSEE hereunder.
7.3 Defense. Upon notification of an INFRINGEMENT, the parties shall
promptly confer with respect thereto and, if no mutually satisfactory agreement
is reached concerning remedial action, or, if the INFRINGEMENT is not terminated
within thirty (30) days after the date of receipt by a party hereto of a notice
contemplated by Section 8.2, LICENSOR shall have the exclusive right for a
period of sixty (60) days, commencing the day after the last day of said thirty
(30) day period, to institute legal action (at its own expense), against the
INFRINGER or to otherwise terminate such INFRINGEMENT; provided, however, that
LICENSEE shall have the right to join such action as a party to protect its
interests in any rights granted to LICENSEE hereunder (at its own expense). If,
within said sixty (60) day period, LICENSOR should fail to institute legal
action against the INFRINGER or to otherwise terminate the INFRINGEMENT,
LICENSEE shall have the right to institute such action at LICENSOR'S expense or
to otherwise
*Confidential Portions Omitted and Filed Separately with the Commission.
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terminate such INFRINGEMENT; provided, however, that LICENSOR shall have the
right to join such action as a party to protect its interest in the PRODUCT at
its own expense.
7.4 Settlement. Neither party hereto shall enter into any settlement
with an INFRINGER of any rights granted by LICENSOR to LICENSEE hereunder
without the prior written consent of the other party; provided, however, that
such consent shall not be unreasonably delayed or withheld. The parties agree to
cooperate with each other with respect to any suits or other action taken under
this Section and to keep the other party promptly and fully advised. with
respect thereto.
7.5 Communication. In the event a party elects to prosecute a legal
action pursuant to this Section, such party agrees, to the extent procedurally
practicable, to furnish to the other party copies of all pleadings, motions,
briefs, and other papers proposed to be served or filed in connection with such
action reasonably prior to the contemplated date of service or filing.
8. LICENSOR Representations and Warranties.
8.1 LICENSOR's Representations. LICENSOR represents and warrants to
LICENSEE that:
a. LICENSOR has not previously granted and will not grant any
rights in the PRODUCT to any third party which are inconsistent with the rights
granted to LICENSEE herein; LICENSOR has full power to enter into this
AGREEMENT, to carry out its obligations hereunder and to grant the rights herein
granted to LICENSEE; and the PRODUCT is the creation, work, and property of
LICENSOR and does not infringe or misappropriate the rights or intellectual
property of any third party.
b. The PRODUCT will perform in accordance with reasonable
industry standards. If any failure to so perform is reported to LICENSOR by
LICENSEE, LICENSOR will exercise its best efforts to correct such nonconformity.
8.2 Infringement. If LICENSEE has been given notice that the PRODUCT
infringes or misappropriates an intellectual property right of a third party
("INFRINGEMENT CLAIM"), LICENSEE shall so notify LICENSOR ("INFRINGEMENT
NOTIFICATION"). Then, in addition to the obligation to defend and indemnify
against damages as described below, LICENSOR shall:
a. Procure for LICENSEE the right to continue to utilize and
market the PRODUCT; or
b. Replace or modify the PRODUCT in such a way that it will not
continue to constitute an infringement; or
c. If a. or b. is not provided within one hundred twenty (120)
days of the INFRINGEMENT NOTIFICATION, if the following calculation provides a
positive number, LICENSOR immediately shall pay to LICENSEE the difference
between (i)(a) the GUARANTEED COMPENSATION plus (b) all costs incurred by
LICENSEE in conjunction with the sale of the LICENSED PRODUCTS minus (ii) the
ROYALTY COMPENSATION paid by LICENSEE to LICENSOR hereunder.
9. Indemnification.
9.1 By LICENSOR. LICENSOR agrees to indemnify LICENSEE (including its
officers, employees, and agents) from and against all claims, suits, damages and
expenses
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(including attorneys' fees) directly or indirectly arising out of or relating to
any breach of LICENSOR's representations, agreements or obligations under this
AGREEMENT or to LICENSOR's performance of activities related to this AGREEMENT.
9.2 By LICENSEE. Except with respect to matters for which LICENSEE
is entitled to indemnification under Section 9.1, LICENSEE agrees to indemnify,
defend and hold harmless LICENSOR and its officers, employees, and agents from
and against any and all claims, losses, damages, costs and expenses (including
attorneys' fees), directly or indirectly arising out of or relating to any
breach of LICENSEE's representations, agreements or obligations under this
AGREEMENT or to LICENSEE's activities related to this AGREEMENT including the
production and distribution of the PRODUCTS.
10. Materials Supplied to LICENSEE. LICENSOR shall provide LICENSEE with
the following:
a. a copy of the object code for the PRODUCTS;
b. currently available transparencies of character images and
documentation in English that LICENSEE may use to develop marketing
advertisements and packaging;
c. manuals/documentation of the game;
d. video tapes of the game (entire game played and video ROM
samples).
11. Termination.
11.1 Procedure.
a. Except for FINALIZATION TERMINATION as provided in Section
6.2, in the event that either party is in default or commits a breach of this
AGREEMENT, and if such default or breach is not cured within 30 days after
written notice of such default or breach is given by the non-defaulting party to
the defaulting party, then at any time after the expiration of such 30 days, the
non-defaulting party may terminate this AGREEMENT by giving written notice to
the defaulting party of its election to terminate; provided, however, that the
parties recognize that it may not be practical to complete within 30 days a cure
of certain types of breaches or defaults. Therefore in situations in which the
cure of a default or breach cannot reasonably be completed within 30 days, this
AGREEMENT shall not be subject to termination if the defaulting party in breach
reasonably commences a cure of a breach or default within 30 days of receiving
notice from the other party and diligently pursues the cure to completion;
provided, further, that with respect to LICENSEE obligation to submit reports
and make payments as provided herein, such defaulting party shall have only 15
days to cure a default or breach of such obligations.
b Such right of termination will not be exclusive of any other
remedies or means of redress to which the non-defaulting party may be lawfully
entitled.
11.2 Survival. The following rights and obligations survive any
expiration or termination of this AGREEMENT to the degree necessary to permit
their complete fulfillment or discharge:
a LICENSEE' obligation to pay and LICENSOR's right to receive
payments in accordance with this AGREEMENT, including payments on account of
any sales of PRODUCTS after the date of expiration or termination;
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b. The obligation of confidentiality of each party as provided
in Section 18;
c. Any cause of action or claim of either party, accrued or to
accrue, because of any breach or default by the other party; and
d. The warranties and indemnities of the parties set forth in
this AGREEMENT.
12. Disposal of Inventory. Upon the expiration or termination of this
AGREEMENT, LICENSEE shall have the right to sell the LICENSED PRODUCTS in
accordance with this AGREEMENT.
13. Additional Acts. Each party, at the expense of the other, will
deliver such documents and take such actions as such other party may reasonably
request to evidence or otherwise perfect such other party's rights as specified
in this AGREEMENT.
14. Applicable Law; Venue. Both parties hereby agree that the applicable
law shall be the law of the State of California, except to the extent
specifically superseded by the laws of the United States, in which case the laws
of the United States shall apply. Both parties agree that the Federal Courts
located in the State of California and the State Courts of the State of
California shall have EXCLUSIVE jurisdiction over ALL issues which arise out of
or relate to this AGREEMENT.
15. Obligations. Neither party is authorized to and shall not at any
time attempt to act on behalf of the other to bind it in any manner whatsoever
to any obligations whatsoever. Each party shall not act as an agent, or
representative of the other, its parent, subsidiaries, or affiliate, without the
prior written consent of the other.
16. Independent Contractor. Neither party is a partner or joint venturer
with the other, or any parent, subsidiary, or affiliate of the other. The
relationship between LICENSEE and LICENSOR is that of independent contractors.
17. PROPRIETARY INFORMATION. Each party agrees that any data,
information and/or drawings, whether or not protected by patent, copyright or
otherwise, including, but not limited to: (a) technical specifications which
relate to the PRODUCT, (b) sales information and (c) account activity; which is
disclosed to the other (the "PROPRIETARY INFORMATION"), shall be treated by the
other as PROPRIETARY INFORMATION of such party and shall not be disclosed to any
third party without the prior written consent of a duly authorized officer of
such party for a period of 7 years after disclosure of such PROPRIETARY
INFORMATION. Each party shall not reproduce, provide or otherwise make available
any such confidential data or information to any person other than those
employees of such party who have a need to know for the purpose of the
performance of this AGREEMENT. Each party agrees that any such employees to whom
such information is disclosed shall first execute an agreement with such party
not to disclose such information to any third parties without the prior written
permission of the other.
18. Amendments; Entire Agreement. No amendment to this AGREEMENT shall
be valid, unless in writing and signed by all of the parties hereto. Further,
the terms and conditions set forth in this AGREEMENT constitute the entire
agreement between the parties respecting the subject matter hereof.
19. Notices, Payments, Etc. All reports, consents, payments, and notices
required or permitted to be given under this AGREEMENT will be deemed to have
been validly given if in writing and delivered or mailed via professional
courier to the receiving party or transmitted by
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facsimile, e-mail or other method of simultaneous transmission and will be
deemed to have been received by the receiving party upon delivery.
20. Assignment. This AGREEMENT shall be binding upon and inure to the
benefit of each party and its successors and/or permitted assigns. LICENSOR may
not assign any of the rights or delegate any of the obligations of this
AGREEMENT without the prior written consent of LICENSEE, which consent shall not
be unreasonably withheld or delayed; provided, however, that LICENSOR may assign
this AGREEMENT to a purchaser of the PRODUCT. Assignments by LICENSOR permitted
by this Section shall be subject to the condition precedent that the assignee
shall assume in writing all obligations and conditions of assignor under this
AGREEMENT.
21. Attorneys' Fees. Should any party hereto institute legal action
against the other to interpret or enforce any of the terms or provisions of this
AGREEMENT, the prevailing party in such action shall be entitled to recover
reasonable fees of attorneys, accountants and expert witnesses, as costs, in
addition to any other damages that may otherwise be awarded by the court.
22. Waiver. A waiver by either party of any of the terms and conditions
of this AGREEMENT in any instance will not be deemed or construed to be a waiver
of such terms or conditions for the future, or of any subsequent breach thereof.
23. Severability. In the event that any term, clause or provision of
this AGREEMENT is construed to be or adjudged invalid, void or unenforceable,
such term, clause or provision will be construed as severed from this AGREEMENT,
and the remaining terms, clauses and provisions will remain in full force and
effect.
24. Interpretation. This AGREEMENT shall be construed without regard to
the party responsible for the preparation of the same, and shall be deemed to
have been prepared jointly by the parties. Any ambiguity or uncertainty existing
herein shall not be interpreted against either party, but according to the
application of other rules of contract interpretation.
IN WITNESS WHEREOF, the parties hereto have executed this AGREEMENT as
of the date first set forth above.
LICENSOR:
TAKARA CO., LTD.
a Japan corporation
/s/ KEITA SATOH, PRESIDENT
----------------------------------------
Keita Satoh, President
LICENSEE:
BAY AREA MULTIMEDIA, INC.,
a California corporation
By: /s/ RAYMOND C. MUSCI
------------------------------------
Title: PRESIDENT
----------------------------------
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EXHIBIT A
DECRIPTION OF THE PRODUCT
Video Game Software titled "TRANSFORMERS, BEAST WARS TRANSMETALS" for
Nintendo 64 and Sony PlayStation. (C) Takara Co., Ltd. 2000.
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EXHIBIT B
NOTICE
"TRANSFORMERS(TM), BEAST WARS(R) TRANSMETALS(R)" (C) Takara Co., Ltd.
2000 TRANSFORMERST(TM), BEAST WARS(R) and TRANSMETALS(R) are trademarks of
Hasbro, Inc. (C) 2000 Hasbro, Inc. All Rights Reserved. Manufactured under
license from Takara Co., Ltd.
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