EXHIBIT 10.21
SOUND SOURCE INTERACTIVE, INC.
&
T D K RECORDING MEDIA EUROPE
REPUBILISING ~ MARKETIG ~ DISTRIBUTION
AGREEMENT
CHILDREN'S EDUCATION & EDUTAINMENT SOFTWARE
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This Agreement, made and entered into as of this first day of November, 1998, is
by and between:
Sound Source Interactive, Incorporated, a California Corporation, and carrying
on business at:
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇ ▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
United States of America
Hereinafter "SSII"
And
T D K Recording Media Europe SA, a company located in the Grand Duchy of
Luxembourg and carrying on business at:
▇.▇. ▇▇▇▇▇▇▇▇▇▇▇▇▇
▇-▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇-▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇▇
Hereinafter "TDK"
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WHEREAS:
"SSII" is engaged in licensing, creating, developing and marketing and is
the sole and exclusive owner and / or licensee of the computer software products
(hereinafter "Articles") specified in Schedule "A" as attached hereto, and made
a part hereof, including the documentation and operating manuals thereof;
"SSII" proposes extending the market for the "Articles" by granting to
"TDK" the right to republish, market, distribute and sell copies of the same
outside the United States of America, within the countries (hereinafter
"Territory") as set forth in Schedule "B", which is made a part hereof, and in
accordance with conditions as set forth herein and as attached hereto;
"TDK" is engaged in the business of republishing, manufacturing, marketing,
distributing and selling localized language versions of computer software and
wishes to acquire from "SSII" the right to carry on such business with respect
to the "Articles" as set forth in Schedule "A";
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, "TDK" and "SSII" agree as follows:
1. GRANT OF RIGHTS / SERVICES
A. "SSII" hereby grants to "TDK" and "TDK" hereby accepts the exclusive
right to republish the "Articles" (as set forth in Schedule "A") for
the purpose of creating localized language versions of the "Articles"
and to republish, manufacture, market, distribute, display, and sell
the localized language versions throughout the "Territory" (as set
forth in Schedule "B").
B. "SSII" shall not itself nor through agents or third parties knowingly
publish, republish, manufacture, market distribute, display or sell the
localized language versions (non-English or American English language
version) in the "Territory" while this "Agreement" is in force.
C. "SSIl" shall not be liable to "TDK" for any loss or damage incurred as
a result of any unauthorized republishing, manufacturing, marketing,
distribution, displaying or of "Articles" in the "Territory" during the
term of this "Agreement "
D. "SSII" grants to "TDK" the right to make such adaptations (pending
original licensor approval) to the "Articles" as are necessary to
develop localized language versions of them and allow "TDK" to exercise
its rights under paragraph 1-A and without prejudice to the generality
of the foregoing the right to use disks, manuals, CD's and read only
memories and the right to translate the "Articles" into any language
approved by "SSII" as listed in and in accordance with Schedule "A" and
"B" of this "Agreement". Adaptations mean also the right
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for "TDK" to adapt the "Articles" by making such changes as "TDK" deems
appropriate to bring the "Articles" in line with the specific cultural
requirements of each country within the "Territory".
However, in exercising its rights herein, "TDK" is not authorized to
make any change to the function or content (audio and / or visual) of
the "Articles" without the written consent of SSIl" (such consent not
to be unreasonably withheld) except for necessary adaptations required
by each localized language. All approvals shall be deemed given unless
"TDK" is notified to the contrary within twenty-one (21) calendar days
of "SSII" receipt of localized adaptation requirements. Once given,
approval shall be irrevocable.
E. In the event "TDK" does not commence the distribution or the sale of
the localized language versions specified in Schedule "B" within the
"Territory" six (6) months after the delivery of the Localization Kit,
"TDK" grants "SSII" the right to republish, manufacture market,
distribute, and sell the localized language versions that "TDK" failed
to distribute in the "Territory" within the period mentioned above.
F. "SSII" does NOT grant to "TDK" ANY rights under paragraph (1-A) to
publish, republish, manufacture, market, distribute, sale, nor in any
way use the "Articles" through time-sharing services or networks or
rentals except on line demos of products for promotional purposes (as
set forth in Clause 7-A)unless pre-approved by "SSII"'.
G. As and when "SSII" develops new software products and chooses to have
them sold in the languages and in the "Territory" as listed in Schedule
"B", "TDK" is hereby granted right of first refusal and shall have
sixty (60) days from receipt of an "SSII" Beta CD to exercise such
right of first refusal. That period can be extended to ninety (90) days
if requested in writing by "TDK" and if then agreed to in writing, by
"SSII" to accept such offer. Should "TDK" accept any or all such
further software product, it shall be regarded as a constituent part of
this "Agreement" and added by amendment hereto and incorporated into
the schedules herein accordingly."SSII" shall not distribute such
software or grant any third party any rights in such software prior to
expiry of the relevant period referred to in this paragraph 1-
For the Term of this Agreement, "TDK" shall have a right of first
refusal in the manner set forth in this ▇▇▇▇▇▇▇▇▇.▇▇ the event that
"SSH" publishes any "Articles" or new software in PSX, Nintendo 64,
Sega Dream Cast or Gameboy format and wishes to license the rights to
adapt such titles for distribution in the Territory, "SSII" shall
notify "TDK" in writing, of its intention to do so. "SSII" shall then
negotiate exclusively with "TDK" with respect to such rights for a
ninety (90) day negotiation period commencing on the date that "TDK"
receives such notice. Should "TDK" accept any or all such further
formats, it shall be regarded as a constituent parts of this Agreement
and added by amendment hereto and incorporated into the Schedules
herein accordingly. "SSII" shall not distribute such formats or grant
any third party any rights in such formats prior to expiry of the
relevant period referred to in this paragraph 1-
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H. In addition, "SSIP agrees to negotiate exclusively with "TDK" to
distribute the "Articles" mentioned in Schedule "A" in an extended
"Additional Territory" as set forth in Schedule "E".
2. TERM
A. This "Agreement" shall commence on November 1, 1998 and shall endure
for a period of thirty-six (36) months through October 31, 2001 (the
"Term"), subject always to prior termination as herein specified and
subject to continued effectivity of "SSII's" licensed properties.
B. Both parties shall use their best efforts to reach a mutual agreement
on any disputes, controversies or differences which may arise between
the parties, out of or in connection with this Agreement.
3. MASTER DISK & TECHNICAL INFORMATION
A. "SSII" shall forthwith upon execution of this Agreement furnish "TDK"
with two Localization Kits of each "Article" and reproducible copies of
all available file maintenance documentation, drawings, data, upgrade
and "bug," lists that are necessary to enable "TDK" to republish,
manufacture, market, distribute, sell and support the "Articles". Each
Localization Kit delivered to "TDK" shall comply with the checklist
mentioned in Schedule "C" "Localization Kit & Technical Information"
attached hereto.
B. "SSII" shall keep "TDK" fully informed of and provide "TDK" with any
changes, additions or modifications to the master disk and to such
documentation, drawings, data upgrade and "bug" lists that have effect
on marketing, operations, performance, cost or support by furnishing
"TDK" with one reproducible copy of the modified "Master disk, within a
fortnight (14 days) of release of such revisions by "SSII".
C. "SSII" shall offer limited technical support of "Source Code".
4. LICENSE FEE
A. As set forth below, "TDK" shall pay "SSII" a Republishing fee of four
(4) USD ($4.00) per unit for all units of the localized language
versions sold by "TDK" such fee based on total invoiced sales less
returns. For the avoidance of doubt no royalties shall be payable on
review, advertising samples or other promotional copies. Except as
otherwise set forth herein, royalties shall be due and payable within
forty-five (45) days of the close of each calendar quarter. In
addition, as set forth below, "TDK" guarantees to "SSII" a total
minimum royalty advance payment of nine hundred thousand ($900,000.00)
USD. The total minimum non-refundable Republishing fee
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advance payment shall be recoupable against royalty payments due to
"SSII" for the first two hundred and twenty-five thousand (225,000)
units sold anywhere in the Territory. This total minimum royalty
advance payment shall be paid in accordance with the schedule mentioned
below:
"TDK" guarantees to "SSII" a total minimum royalty advance payment of
nine hundred thousand ($900,000.00) USD. The total minimum
nonrefundable Republishing fee advance payment shall be recoupable
against royalty payments due to "SSII" for the first two hundred and
twenty-five thousand (225,000) units sold anywhere in the Territory.
This total minimum royalty advance payment shall be paid in accordance
with the schedule mentioned below:
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Land Before Time 50,000 units $4.00 $200,000.00 (US)
Math Adventure
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Land Before Time 50,000 UNITS $4.00 $200,000.00 (US)
Kindergarten Adv.
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Babe Pre-School 30,000 units $4.00 $120,000.00 (US)
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Babe Early Reader 30,000 units $4.00 $120,000.00 (US)
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Casper Early Reader 40,000 units $4.00 $160,000.00 (US)
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An American Tail 25,000 units $4.00 $100,000.00 (US)
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Total 225,000 units $4.00 $900,000.00 (US)
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The Advances shall be paid by "TDK" with respect to each Localized Version
to "SSII" according to the following, schedule:
1) Forty percent (40%), three hundred and sixty thousand dollars (US)
($360,000.00) of the total advance for the six "SSII" Software
titles upon execution of this Agreement and in exchange for "TDK's"
receipt of Localization Kits for all six titles designated in
Schedule "A".
2) Thirty percent (30%) of the total advance, two hundred and seventy
thousand dollars (US) ($270,000.00) for the localized version of
each "SSII's" software total to be paid upon "TDK's" submission to
"SSII" of the "Gold Master" (first localized version per title).
3) Thirty percent (30%) of the total advance, two hundred and seventy
thousand dollars (US) ($270,000.00) of the total advance for each
localized version of each "SSIP software title to be paid within
sixty (60) days after first customer ship date of such localized
version.
B. In the event that the parties enter into an agreement (as set forth in
Article I H for the "Additional Territory" mentioned in Schedule E
"TDK" shall pay a Re-publishing fee of four US dollars ($4.00) per unit
of the "Articles" sold by "TDK" in the
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"Additional Territory" mentioned in Schedule "E", such fee to be based
on total invoiced sales less returns. For the avoidance of doubt, no
re-publishing fee shall be payable on review, advertising, samples and
on promotional copies.
C. Within thirty (30) days after the March 31, June 30, September 30 and
December 31 of each year during the period this "Agreement" shall be in
force and effect, "TDK" hereby undertakes to submit to "SSII", even in
case of no sales, a statement in writing, setting forth with respect to
the preceding quarterly period:
a) The quantities of "Articles" manufactured by "TDK".
b) The quantities of "Articles" sold Territory by Territory,
specifying the quantities for each type (language) of "Articles"
referred to in Schedule "A".
c) The royalty amount of each type of said "Articles" sold due to
"SSII". "TDK" shall pay to "SSII" in US dollar within forty-five
(45) Days after the end of each quarterly period, the royalty due
hereunder.
D. In case of expiration or termination of this "Agreement'', all
"Articles" manufactured prior but remaining in stock with "TDK" at the
date of expiration or termination can be sold, distributed, used, or
disposed of by "TDK" as set forth in Clause 15.F. 'TDK" shall respect
the reporting obligation as set forth in Clause 4.C.
E. All payments to "SSII" referred to in this Agreement" shall be effected
by wire transfer in US dollars to Sound Source Interactive, Inc. bank
number: ▇▇▇▇▇ FARGO BANK, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇ Name of Account: Sound Source Interactive, Inc., Business
Checking Acct. Acct No.: 0747-563716 ABA Routing # 121-000248
F. All stamp duties, taxes and other similar levies originating from or in
connection with the execution of this "Agreement" under Luxembourg law
shall be borne by "TDK". However, in the event that the government of a
country imposes any income taxes on payments hereunder by "TDK" to
"SSII" and requires "TDK" to withhold such tax from such payments.
"TDK" may deduct such tax from such payments. In such event, "TDK"
shall promptly furnish "SSII" with tax receipts issued by appropriate
tax authorities so as to enable "SSII" to support a claim for credit
against income taxes which may be payable by "SSII" in the United
States of America.
G. In order that the royalties and reports provided for in Article 4 may
be verified, "TDK" agrees to ensure that full, complete and accurate
books and records shall be kept, covering all sales or other disposals
of "Articles" by "TDK", for a period of two (2) years following each
quarterly report.
H. It is agreed that the books and records of "TDK" may be audited from
time to time, but not more that once in each calendar year, by an
independent certified public accountant appointed by "SSII" and
reasonably acceptable to "TDK", to the extent
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necessary to verify the accuracy of the aforementioned statements and
payments. Such inspection shall be completed at "SSII's" own expense.
I. Re-publishing fees are set forth in Article 4 and made a part hereof as
the same may be amended from time to time by mutual agreement between
the "SSII" and "TDK". The republishing fee will be based on a "per unit
sold" and not subject to adjustments for:
i. any sales, excise or value added taxes, which are separately stated,
and which are required to be collected from customers as part of net
sales, and which are payable to taxing authorities; and
ii. actual returns; and
iii. actual quantity discounts; and
iv. the actual cost of any premium purchased for inclusion in a "bundle"
with another "Article" and
v. excluding freight, (if separately invoiced).
J. It is specifically understood and agreed that no deduction may be made
for any bad debts, or any reserves therefor, Vy manufacturing costs,
importing costs, selling costs, advertising, costs, any real estate
taxes, business license taxes, net income taxes, franchise taxes,
withholding taxes or any other taxes not otherwise accounted for in the
"Agreement".
K. "Total Unit Sales" shall not include any sales by "TDK" or its
affiliated companies to itself or its affiliated companies, the primary
purpose of which is the transfer of "Articles" for eventual resale. Re-
publishing Fees as a result of such sales shall be based upon and paid
when the "Article" is ultimately sold to the distributor, retailer,
consumer or other unaffiliated third party.
L. "TDK" will pay all taxes, customs, duties, assessments, excise except
as provided in 4 F (i) and other charges levied upon the importation of
or assessed against the "Article" under this "Agreement," as well as
all "TDK" costs of doing, business and "SSII" shall have no liability
therefor.
M. It is a material term and condition of this "Agreement" that "TDK"
report total unit sales on a country-by-country and title-by-title
basis.
5. INDEMNIFICATIONS:
A. "SSII" hereby indemnifies "TDK" and shall hold it harmless from any
loss, liability, damage, cost or expense arising out of any claims or
suits which may be brought or made against "TDK" by reason of the
breach of the warranties or representations as set forth herein.
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B. "TDK" hereby indemnifies and agrees to hold "SSII" and its agents,
servants, employees, officers and directors harmless from any loss,
liability, damage, cost or expense arising out of any claims or suits
which may be made against "SSII" by reason of or alleging any
unauthorized or infringing use by "TDK" of any patent, process, trade
secret, copyright or other similar property in connection with the
"Articles" or the Trademarks covered by this "Agreement" or by reason
of any alleged defects (design, manufacturing, handling or other) of
the "Articles" manufactured by "TDK" other than as a result of any
breach of this "Agreement" by "SSII "..
6. APPROVALS / QUALITY / SAMPLES:
A. "TDK" agrees that the "Articles" as well as all packaging labels, press
releases, advertising, promotion display or other material prepared in
connection with the "Articles" ("Collateral Materials"), shall be of
the highest standard and quality and shall ensure that all "Articles"
and the distribution thereof, comply with all applicable laws
throughout the "Territory".
B. "TDK" shall submit to "SSII" and "SSII" shall have absolute approval of
all republished "Articles" and all "Collateral Materials" at all
relevant stages of development and application thereof. "TDK" may not
republish, manufacture, market, display, distribute or sell any
"Articles" until and unless "TDK" has received "SSII's" prior written
approval. The terms of this paragraph shall be deemed material to the
"Agreement".
C. In the event "TDK" is not the manufacturer of the "Articles", "TDK"
shall be subject to the prior written approval of "SSII" and it's
Licensor(s), (which approval shall not be unreasonably withheld),
entitled to utilize a third party manufacturer in connection with the
manufacture and production of the "Articles" provided that such
manufacturer shall execute a letter in the form of Exhibit 1 attached
hereto and by this reference made a part hereof. In such event, "TDK"
shall remain primarily obligated to "SSII" and its Licensor(s) under
all of the provisions of this "Agreement". In no event shall any such
authorization include the right to grant an additional authorization or
any sublicense whatsoever.
D. "TDK" will send the "Gold Master Candidate" for the localized language
versions to "SSII" in a timely, fashion to permit "SSII"' to complete
the acceptance described in Article 6.D prior to the initial
publication of the localized language version. Acceptance shall be
deemed given unless "TDK" is notified to the contrary within twenty-one
(21) calendar days of "SSII's" receipt of "Gold Master Candidate". The
"Gold Master Candidate" will be deemed acceptable as the "Gold Master"
when (i) they perform at a level of performance equal to or greater
than that of the "SSII" title; and (ii) the changes in the "Articles"
have been made in accordance with the requirements mentioned in Article
1. In addition to the "Gold Master Candidates", "TDK" will send samples
of printed documentation and packaging to "SSII" for
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approval in a timely fashion to permit "SSII" to review such materials,
such acceptance not to be unreasonably withheld. Acceptance shall be
deemed given unless "TDK" is notified to the contrary within twenty-one
(21) calendar days of "SSII's" receipt of such materials. Once given,
approval shall be irrevocable. All such material submitted by "TDK" to
"SSII" shall be at "TDK's" expense.
E. "TDK" shall supply "SSII" with twenty-five (25) samples of each
"Article" in each localized language produced, at the time of first
distribution. A Republishing fee shall not be payable on such samples.
F. "SSII" may purchase from "TDK" localized language versions of
"Articles" as authorized and produced hereunder at a reasonable price
(such price shall include costs, sales expense and a reasonable margin)
for direct sale outside the Territory and the Additional Territory. The
License Fee shall not be payable on such purchases.
7. ADVERTISING AND PROMOTIONAL ACTIVITIES
A. "TDK" shall be entitled for the term of this Agreement to realize
advertising campaigns of the "Articles" by printed media, radio and TV
advertising throughout the Territory.
"TDK" has the right to use free of charge "SSII's" name, image,
likeness, software characters, software animations and other elements
of the "Articles" for printed media, on-line, radio and TV advertising
throughout the Territory.
"TDK" shall also be entitled to establish an Internet site (or create a
page(s) in connection with "TDK's*' Internet site) subject in all
respects to approval in accordance with 7-D below, containing
information and advertising related to the "Articles".
B. "TDK" shall be entitled for the term of this Agreement to create
marketing communication material and Press release to promote the
Software throughout the Territory.
"TDK" shall be entitled to use, at its own expense, "SSII's" name,
image, likeness, software characters, software animations and other
elements of the "Articles" for production of promotional items such as
posters, stickers, header cards, leaflets, catalogues, demos, and any
other promotional items that "TDK" deems necessary for promotional
activities.
"TDK" shall also be entitled to use software characters, software
animations, demos and other elements of the software on "TDK" products
for the purpose of promoting "Articles"
C. "SSII" will provide "TDK", free of charge, with sufficient existing
photographs, logos, software character pictures and software animations
and other elements of the "Articles"
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for the purpose contemplated in clauses A and B. This material will be
delivered to "TDK" forthwith upon delivery of the Localization Kit.
"SSII" will provide "TDK", free of charge, with necessary guidelines
on material delivered to "TDK" for the purpose of allowing "TDK" an
appropriate usage of the material.
D. All material produced by "TDK" shall be submitted to I'"SSII"' for
prior approval. All approvals shall be deemed given unless "TDK" is
notified to the contrary within fifteen (15) days of "SSII's" receipt
of material. In the event that any request for approval is denied,
"SSII" shall provide specific reasons therefore and suggest how to
alter same to make it acceptable. Once given, approval shall be
irrevocable.
8. COPYRIGHT AND TRADEMARK:
A. All ownership of copyrights and trademarks in "Articles" republished
hereunder, as well as all artwork, packaging copy, literary text,
advertising material of any sort, shall be in such names and all such
items shall bear copyright and trademark notices and any other legal
notices as "SSII" directs.
B. "TDK" shall furnish all applicable notices and markings as appropriate
and as otherwise required by local governments within the "Territory.
9. RESERVATION OF RIGHTS:
A. All rights of "SSII" not expressly granted herein to "TDK" are hereby
expressly reserved by "SSII" or its designates without restriction.
B. "TDK" acknowledges that the right to republish as granted herein, does
not include any right, title, or interest in or to the Proprietary
Subject Matter nor to any copyrights, patents, and / or trademarks
therein or associated therewith.
C. "TDK" acknowledges that this Agreement relates solely to the
Proprietary Subject Matter. "TDK" is not, by virtue of this Agreement,
acquiring any right whatsoever in any motion picture or television
production or other endeavor which is based upon, derivative of, or
otherwise related to the Proprietary Subject Matter, including-,
without limitation, remakes, sequels, sound recordings, publications,
or copyrights and / or trademarks in the Proprietary Subject Matter.
D. With respect to the Proprietary Subject Matter, "SSII" reserves unto
itself and / or its designates the right to manufacture, sell,
advertise, promote, display and otherwise exploit software product
similar and / or identical to the "Articles" outside "Territory."
10. UNDERTAKINGS by "SSII"
A. "SSII" shall respond to requests from "TDK" for end user software
support in accordance with the level of support specified in Schedule
"D" as attached hereto and
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incorporated herein. For such purposes "SSII" shall employ and maintain
employment of suitably qualified personnel (English speaking only) to
operate an efficient call control desk during normal office hours, of
0730 to 1700, Pacific Time, Monday through Friday inclusive, excluding
public holidays as celebrated in the USA, and via e-mail and the
internet.
B. "SSII" shall prepare, compile, maintain and update the master disks and
related documentation at its Own cost to enable "TDK" to satisfactorily
develop localized language versions and to market, distribute, sell and
/ or otherwise support the "Articles" in accordance with the terms of
this Agreement and to provide "TDK" with such documentation or
sufficient access thereto or to the appropriately qualified personnel
for such purposes.
C. "SSII" shall satisfactorily resolve any defect in the "Article" and for
such purpose shall forthwith take all such action and / or make
available all such facilities to rectify the defect. This only extends
to operation on systems as used in the USA. Any factors unique to other
nations is the responsibility of "TDK" to adjust or compensate for.
D. "SSII" shall provide "TDK", at mutually agreed intervals or at such
reasonable times or at the request of "TDK", with information
concerning, "Articles", enhancements, current developments, support and
any changes relating to ultimate users, customers and activities of
competitors and such other matters and information in any way relating
to the constructive performance of this "Agreement".
E. "SSII" warrants that the "Articles" are reliable and robust for the
purposes of marketing, is not infringing on third party intellectual
property rights and complies with all rules and regulations laid down
by any society, institution or other body to which the "Articles" may
relate and that "SSII" shall continually reflect any changes required
by such societies, institutions or bodies .
F. "SSII" warrants to "TDK" that each master disk of the software issued
to "TDK" upon execution hereof or from time to time hereafter shall be
free from such faults, defects, "bugs" or inadequacies as would
restrict "TDK" from marketing and / or supporting the "Articles".
G. "SSII" agrees that within a period of five (5) working days from
notification of the same and in any other case, as soon as possible, to
rectify or replace free of charge a Master Disk of an "Article" found
faulty, defective or inadequate, upon receipt of "TDK", and shall
forthwith replace each such master disk of the "Article" with one
incorporating, appropriate corrections.
11. MUTUAL UNDERTAKINGS of "SSII" and "TDK"
It is mutually understood and agreed that neither "SSII" nor "TDK"
shall incur any liability on behalf of the other or in any way to
pledge to the others credit or accept any
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order or make any contract binding upon the other without obtaining
prior written consent and that nothing in this "Agreement" should be
interpreted as creating a partnership between the parties.
12. UNDERTAKINGS by "TDK":
A. "TDK" agrees to use its best efforts and optimum abilities in its
endeavors to republish, manufacture, market, distribute and sell copies
of the "Articles" and generally to market the "Articles" in a form
which at least meets the same standards of quality as that established
by
"SSII" in the original "SSII" released product.
B. "TDK" agrees to use its reasonable endeavors to support the "Articles"
in good operational order to such standards as are generally accepted
throughout the PC software applications of similar nature and quality
of "Articles".
C. "TDK" agrees not to market or deal with the "Articles" in any way with
any party so as to bring the "Article" or its name nor "SSII's" name
into disrepute or in which would otherwise affect the marketability of
the "Article."
12. LIABILITY:
"SSII" shall not be liable to "TDK" or any other person for loss or
damage arising, directly in connection with the "Article" developed by
"TDK" or any modification, variation, enhancement or upgrade thereof,
and any documentation, manual or training relating thereto.
13. COPYRIGHTS:
"SSII" agrees to protect and save harmless and defend, at its own
expense, "TDK" from and against any and all claims of infringement of
copyrights, patents, trade marks, industrial designs or other property
rights issued under the laws of any country affecting the "Article."
14. CONFIDENTIAL INFORMATION:
The parties have imparted and may from time to time impart to the other certain
confidential information relating to the "Article," successor "Article" or other
software, marketing or support thereof including specifications and copyright
manuals therefor.
Each party hereby agrees that it will use such confidential information solely
for the purposes of this Agreement and that it shall not disclose, whether
directly or indirectly, to any third party such information other than as
required to carry out the purposes of, this Agreement.
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Where disclosure is essential, such party will, prior to any disclosure, obtain
from such third parties duly binding agreements to maintain in confidence the
information to be disclosed to the same extent at least, as the parties are so
bound hereunder.
15. EXPIRATION or TERMINATION of "AGREEMENT":
A. "SSII" may terminate this "Agreement" with immediate effect by
registered mail notice in any of the following circumstances:
1) "TDK" defaults in due and punctual payment of any amount due to
"SSII" pursuant to this "Agreement" for more than thirty (30) days
after written notice of summons to pay from "SSII";
2) "TDK" is in breach of any other provision contained in this
"Agreement" and such breach has not been remedied within thirty
(30) days from "SSII" written notice;
3) "TDK" is declared bankrupt or put under receivership;
4) "TDK" or any of its employees deliberately make false statements in
reports;
5) If employees, officers or directors of "TDK" commit or are under
formal investigation for allegedly having committed criminal acts
or other acts of moral turpitude which could damage "SSII's"
reputation.
B. "TDK" may terminate this "Agreement" with immediate effect by
registered mail notice in any of the following circumstances:
1) "SSII" is in breach of any other provision contained in this
"Agreement" and such breach has not been remedied within thirty
(30) days from "TDK's" written notice, especially for the breach of
"SSII's" obligation to license all the rights to "TDK".
2) "SSII" is declared bankrupt or put under receivership;
3) If any dispute arises between any of the persons directly or
indirectly interested in the management or shareholdership of
"SSII's" business which affects the business relationship between
"TDK" and "SSII";
4) If employees, officers or directors of "SSII" commit or are under
formal investigation for allegedly having committed criminal acts
or other acts of moral turpitude which could damage "TDK's"
reputation.
C. In the event "SSII' commits a material breach of this "Agreement",
"SSII" shall reimburse "TDK" (i) 50% of the Localization costs expended
to the date of
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termination (ii) 100% of the advance payment if termination date is
within the first six (6) months of the effectivity date of this
"Agreement". The remedies set out in this section 15.C are in addition
to and not instead of remedies provided by law.
D. "TDK" agrees to use its reasonable endeavors to republish, manufacture,
distribute and sell the "Articles" throughout the "Territory" provided
always that, in the exercise of "TDK's" reasonable judgment, it makes
good commercial sense to do so, specifically, it shall:
1) Republish, manufacture, distribute and sell "Articles" in such
price and quality brackets as are required to meet competition by
reputable manufacturers of similar articles;
2) Make and maintain adequate arrangements for the distribution of the
"Articles" throughout the "Territory".
3) Not deliver or sell "Articles" outside the "Territory" or knowingly
sell "Articles" to a third party for delivery outside the
"Territory".
E. Upon termination pursuant to Article 15. A, "TDK" shall immediately
cease any further license, sale, distribution, use or disposal of any
"Articles" mentioned in Schedule "A", if applicable, and "TDK" may at
its discretion (i) return all units in "TDK's" possession or control to
"SSII"or destroy such units, in which case no royalty for said returned
units will be due and payable, or (ii) retain said units for sale or
distribution and pay the royalty due as if all such units had been sold
during, the calendar quarter prior to the quarter in which "SSII"
delivered notice of termination.
F. Upon termination pursuant to Article 15. B, "TDK" may at its discretion
sell, distribute, use or otherwise dispose of all units already
manufactured and pay the royalty due pursuant to this Agreement. Under
no circumstances shall either party be liable to the other for
incidental or consequential damages, whether foreseeable or not,
including lost profits, direct or indirect damages, costs of goods,
promotion, advertising or any other cost, charge or damage.
16. WARRANTIES:
A. "SSII" represents, warrants and covenants to "TDK" as follows:
(a) "SSII" has the full right and legal authority to enter into and fully
perform this "Agreement" in accordance with its terms;
(b) "SSII" is fully able to grant "TDK" the rights it grants herein and
represents that these rights are granted free and clear of any and all
claims and encumbrances and that the exercise by "TDK" of such rights will
not infringe the rights of any third party;
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(c) "SSII" declares that is authorized to grant the rights of use concerning
the "Articles" mentioned in Schedule "A" of this "Agreement" and which are
the subject of this "Agreement" and it vouches for the "TDK's" right to the
same;
(d) "SSII" guarantees that referring to the production, utilization and
exploitation of the "Articles", all rights of manufacture and use required
for the exploitation of the "Articles" as contemplated in this "Agreement"
have been duly acquired and do not infringe upon any personal or other
rights of software utilization by a third party. "SSII" must hold "TDK"
harmless in this matter from and against claims made by third parties
related to third parties holding rights on such "Articles".
(e) For the avoidance of doubt all rights wholly controlled by "SSII" shall be
licensed to "TDK" for use in accordance with this "Agreement" without
charge.
(f) "SSII" declares and warrants that the rights hereby granted have neither
been granted in whole nor part to a third party, that a third party neither
has the right to exercise them nor has been entrusted with the care of such
rights and that "SSII" will not seek to exploit such rights itself. "SSII"
indemnifies "TDK" as well as any other party who may obtain the rights
granted in this "Agreement" from claims of a third party, which may be
imposed in connection with the utilization of rights granted in this
"Agreement".
(g) This "Agreement" when executed and delivered by "SSII" and "TDK" will be
le-al, valid and binding, obligations enforceable against "SSII" in
accordance with its terms, except to the extent that enforcement thereof
may be limited by bankruptcy, insolvency or other similar laws affecting
creditors' rights generally;
(h) The execution, delivery and performances of this "Agreement" by "SSII" does
not and will not violate or cause a breach of any other agreements or
obligations to which it is a party or by which it is bound, and no approval
or other action by any governmental authority or agency is required in
connection herewith; Each of the foregoing representations, warranties and
covenants shall be true at all times. "SSII" acknowledges that each of such
representations, warranties and covenants are deemed to be material and
have been relied upon by "TDK" notwithstanding any investigation made by
"TDK". "SSII" has not entered and will not enter into any agreement,
commitment or other arrangement, which affects or diminishes any of the
rights herein granted to "TDK".
(k) The "SSII" Localization Kit'will be free from faults, bugs or other defects
and capable of performing in accordance with the requirements imposed on
developers of games for the PC and/or Apple computers and, to the extent
that "TDK" is granted the relevant rights.
(l) There is no litigation and "SSII" is not aware of any pending or threatened
litigation with respect to the "Articles".
B. "TDK" represents, warrants and covenants to "SSII" as follows:
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(a) "TDK" has the full right and legal authority to enter into and fully
perform this "Agreement" in accordance with its terms;
(b) This "Agreement" when executed and delivered by "TDK" and "SSII" will be
legal, valid and binding obligations enforceable against "TDK" in
accordance with its terms, except to the extent that enforcement thereof
may be limited by bankruptcy, insolvency or other similar laws affecting
creditor's rights generally; The execution, delivery and performances of
this "Agreement" by "TDK" does not and will not violate or cause a breach
of any other agreements or obligations to which it is a party or by which
it is bound, and no approval or other action by any governmental authority
or agency is required in connection herewith;
(c) Each of the foregoing representations, warranties and covenants shall be
true at all times. "TDK" acknowledges that each of such representations,
warranties and covenants are deemed to be material and have been relied
upon by "SSII" notwithstanding any investigations made by "SSII"'.
(d) "TDK" is not entitled to transfer sub-license or assign any rights granted
in this "Agreement" to a third party without "SSII's" prior written consent
(such consent not to be unreasonably withheld).
17. SUCCESSORS AND ASSIGNS:
Neither party shall assign its rights and/or obligations under this
"Agreement" without the prior written approval of the other party (such
approval not to be unreasonably withheld). This "Agreement" and all of the
terms and provisions hereof will be binding upon, and will inure to the
benefit of, the parties hereto, and their respective successors and
approved assigns.
18. MISCELLANEOUS:
(a) Each of the individuals executing, this "Agreement" certifies that he or
she is duly authorized to do so.
(b) The rights and remedies set forth herein are intended to be cumulative, and
the exercise of any one right or remedy by either party shall not preclude
or waive its exercise of any other rights or remedies hereunder or pursuant
to law.
(c) This "Agreement" may be executed in counterparts.
19. RENEWABILITY:
Three months prior to the expiration of this "Agreement", the parties shall
have completed negotiations in good faith with a view to its renewal.
20. FORCE MAJEURE:
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"TDK" shall be under no liability to "SSII" in any way whatsoever for
destruction, damage, delay or any other matters of the nature whatsoever
arising out of war, rebellion, civil commotion, strikes, lock-outs and
industrial disputes, fire, explosion, earthquake, act of God, flood,
drought or bad weather, the unavailability of deliveries or supplies or
requisitioning, or other constituted body that could not have been
reasonably foreseen by a reasonably prudent business officer in the
"Territory". At any time following ninety (90) days after commencement of a
force major event, either party may elect to terminate the term of this
"Agreement" pursuant to clause 15.F
21. NOTICES:
Any notice required or permitted under the terms of this Agreement or
required by statute, law or regulation shall (unless otherwise provided) be
in writing and shall be delivered in person, sent by registered mail or by
DHL or Federal Express, properly posted and fully pre-paid in an envelope
properly addressed or to such other address as may from time to time be
designated by notice hereunder. Any such notice shall be in the English
language and shall be considered to have been given at the time when
actually delivered, or in any event within fourteen (14) days after it was
mailed in the manner as herein provided.
22. AGREEMENT:
This Agreement supersedes any arrangements, understandings, promises or
agreements made or existing between the parties hereto prior to or
simultaneously with this Agreement and constitutes the entire
understanding, between the parties hereto. Except as otherwise provided
herein, no addition, amendment to or modification of this Agreement shall
be effective unless it is in writing, and signed by and on behalf of both
parties.
23. HEADINGS:
The headings of the paragraphs of this Agreement are inserted for
convenience of reference only and are not intended to be part of or to
affect the meaning or interpretation of this Agreement.
24. SEVERABILITY:
In the event that any of these terms, conditions or provisions shall be
determined invalid, unlawful or unenforceable to any extent such term,
condition, or provision shall be severed from the remaining terms,
conditions and provisions which shall continue to be valid to the fullest
extent permitted by law.
25. LAW:
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The Parties hereby agree that this Agreement and the provisions hereof
shall be construed in accordance with U.S. law and it is agreed that the
Courts of California, in and for the County of Los Angeles, have
jurisdiction to settle any disputes which may arise out of or in connection
with this Agreement.
IN WITNESS WHEREOF the parties hereto have caused this Agreement to be executed
the day and year as herein set forth at the effective date.
SIGNED for and on behalf of Sound Source Interactive, Inc. "SSII"
---------------------------------- --------------------------------------------
SIGNED for and on behalf of TDK Recording; Media Europe S.A. "TDK"
---------------------------------- --------------------------------------------
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SCHEDULE "A" "Articles"
------------
Titles of the computer software referred to in the "Agreement" as ie "Articles"
and as set forth herein below made a part of and incorporated into the
"Agreement" as follows:
-------------------------------------------------------------------------------
MOVIEBOOK - TITLE
-----------------
------------------------------------- WIN / MAC
AN AMERICAN TAIL
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
ACTIVITY CENTER - TITLE
-----------------------
------------------------------------- WIN / MAC
BABE Preschool
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
LEARNING ADVENTURE - TITLE
--------------------------
-------------------------------------
BABE: Early Reader Win/▇▇▇
▇▇▇▇▇▇: Early Reader Win/Mac
LAND BEFORE TIME: Math Adventure Win/Mac
ANF BEFORE TIME: Kindergarden Adv. Win/Mac
-------------------------------------------------------------------------------
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SCHEDULE "B" "Language & Territories"
------------
LANGUAGE:
"Articles" licensed and approved by "SSII" to be developed and manufactured by
"TDK" in the Localized Languages as set forth herein below ONLY, is made a part
of and is incorporated into the "Agreement" as follows:
French German
Spanish UK England
Italian Swedish
MARKETING DATE:
"TDK" intends to introduce these six (6) languages in six (6) months after the,
delivery of the Localization Kit. "TDK" has no obligation to commence the
distribution of the localized languages versions in all the nations of the
Territory within six (6) months after the delivery of the Localization Kit.*
In case that "SSII" wishes to introduce other languages in he Territory, "TDK"
is granted the right of first refusal and shall have sixty (60) days from
receipt of "SSII" proposal to exercise such right of first refusal. If "TDK"
wants to introduce other languages in the Territory, "TDK" and "SSII" will
negotiate in good faith the ten-ns and conditions of the Agreement.
[Hand written notation "IF" not scanned/included in italics:]
* If "TDK" fails to introduce all the localized languages in the time mentioned
above, "TDK" grants "SSII" the right to introduce the missing localized
languages by itself or through any other third party in the Territory after this
period.
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"TERRITORY'
"SSII" authorizes the "Localized Language" version of "Articles" to be
distributed for sale by "TDK" in the following countries, which constitute the
"Territory" as referred to herein and is incorporated into and made a part of
the "Agreement":
European nation of:
------------------------------------------------------------------------------
1) All EU nations:
------------------------------------------------------------------------------
Austria Greece
------------------------------------------------------------------------------
Belgium Rep. Of Ireland
------------------------------------------------------------------------------
Denmark Italy
------------------------------------------------------------------------------
Finland The Netherlands
------------------------------------------------------------------------------
France Portugal
------------------------------------------------------------------------------
Germany Spain
------------------------------------------------------------------------------
Grand-Duchy of Luxemborg Sweden
------------------------------------------------------------------------------
United Kingdom
------------------------------------------------------------------------------
------------------------------------------------------------------------------
------------------------------------------------------------------------------
------------------------------------------------------------------------------
2)Non EU nations
------------------------------------------------------------------------------
Andora Norway Switzerland Israel
------------------------------------------------------------------------------
------------------------------------------------------------------------------
3) Spanish speaking Latin
American nations
------------------------------------------------------------------------------
Argentina Ecuador Paraguay
------------------------------------------------------------------------------
Bolivia El Salvador Peru
------------------------------------------------------------------------------
Chile Guatemala Puerto Rico
------------------------------------------------------------------------------
Columbia Honduras Trinidad & Tobago
------------------------------------------------------------------------------
Costa Rica Mexico Uruguay
------------------------------------------------------------------------------
Cuba Nicaragua Venezuela
------------------------------------------------------------------------------
Dominican Republic Panama
------------------------------------------------------------------------------
In Localized non-American English language version only.
------------------------------------------------------------------------------
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S C H E D U L E " C " "GOLD DISK & TECHNICAL INFORMATION"
---------------------
"SSH" will supply to "TDK" information on:
1. Program files on disk;
Where the files are to be found; menu files and control programs.
Data files on disk,
Where the files are to be found; their structure, e.g. records, fields,
characters (enough information to enable "TDK" to access the data)
3. Interaction of program / data files
4. Utility programs / recovery programs to look at data files; for the
reconstruction of data / records and executables.
Bug list on current release and updates
B. Documentation
C. Information on future plans / development
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SCHEDULE "D" "Support Level"
------------
A. Call SSII Control Desk (0730 to 1700 M-F)
B. Way Forward Technologies
C. Other
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SCHEDULE "E" "Additional Territory"
------------
"SSII" agrees to guarantee "TDK" the option to include the "Articles" set forth
in Schedule "A" in the following "Additional Territories" and respective "
Languages":
------------------------------------------------------------------------------
Albania Estonia Morocco
------------------------------------------------------------------------------
Algeria Hungary Poland
------------------------------------------------------------------------------
Bosnia-Herzegovina Iceland Romania
------------------------------------------------------------------------------
Bulgaria Latvia Serbia-Montenegro
------------------------------------------------------------------------------
Croatia Lithuania Slovakia
------------------------------------------------------------------------------
Cyprus Macedonia Slovenia
------------------------------------------------------------------------------
Czech Republic Malta Tunisia
------------------------------------------------------------------------------
12 CIS states (Russia, Ukraine, Belarus, Georgia, Armenia, Azerbaijan,
Kazakhstan, Kyrgyzstan, Tajilustan, T urkmenistan, Moldova, and Uzbekistan).
No option fee for the Additional Territory and the relevant languages shall be
due to "SSII"'. If "SSII11 wishes to cover some countries of the Additional
Territory and wants to introduce other languages, "TDK" is granted right of
first refusal and shall have sixty (60) days from receipt of 11SSII11 proposal
to exercise such right of first refusal. If "TDK" wants to commence distribution
of the "Articles77 in the Additional Territory in the relevant languages, "TDK"
and "SSII" will negotiate in good faith the terms and conditions of the
Agreement.
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