Exhibit (10)(f)(i)
VHS CASSETTE LICENSE AGREEMENT
FOR DUPLICATORS (U.S.A.)
BETWEEN
XXXXXX COMPANY OF JAPAN, LIMITED
AND
ALLIED DIGITAL TECHNOLOGIES CORPORATION
VHS CASSETTE LICENSE AGREEMENT
FOR DUPLICATORS (U.S.A.)
This Agreement made and entered into as of the 1st day of July 1991 by and
between, XXXXXX COMPANY OF JAPAN, LIMITED, a corporation duly organized and
existing under the laws of Japan having its principal office at 12, 3-Chome,
Xxxxxx-xxx, Xxxxxxxx-xx, Xxxxxxxx 000, Xxxxx (hereinafter referred to as
"Licensor") and ALLIED DIGITAL TECHNOLOGIES CORPORATION a corporation duly
organized and existing under the laws of Delaware having its registered office
at 0000 Xxxxxxxx Xxxxxx, Xxxxxxx, XX 00000 X.X.X. (hereinafter referred to as
"Licensee").
WITNESSETH:
WHEREAS, Licensor has developed a VHS video cassette having 12.65 mm (1/2 inch)
width magnetic tape for VHS video cassette recorders and/or reproducers for the
recording and/or reproducing of television signals primarily for home use, and
is promoting the manufacture and sale of such video cassette throughout the
world.
WHEREAS, Licensor intends to ensure that such video cassettes will be
readily available to any customer at any place in the world.
WHEREAS, Licensor is prepared to make available the technical information
relating to such video cassettes to
any qualified party in the world desiring to manufacture and sell such video
cassettes in conformity with the VHS Standards and other quality requirements
established by Licensor, and to grant a license and right therefor.
WHEREAS, Licensee is desirous of obtaining a license from Licensor to load video
tape into VHS cassette housings for its duplicating purpose and to sell, use or
otherwise dispose of such finished VHS video cassettes, and
WHEREAS, Licensee acknowledges the need to maintain sufficiently high quality of
its loaded sample VHS video cassettes through the technical evaluation conducted
by Licensor or Licensor's designated laboratory.
NOW, THEREFORE, Licensor and Licensee hereby agree as follows:
ARTICLE 1. Definitions
For the purpose of this Agreement, the following terms shall have the respective
meanings set forth below:
(1) "Technical Information" shall mean the VHS Standards and other information
set forth in Exhibit A hereof.
(2) "Licensed Product" or "Licensed Products" shall mean a VHS video cassette
or VHS video cassettes having packed
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therein magnetic tape of 12.65mm (1/2 inch) width conforming to the VHS
Standards.
(3) "Trademark" shall mean the VHS Logo Trademark owned and used by Licensor
as shown in Exhibit B hereof.
(4) "Manufacturing Premises" shall mean Licensee's factory or factories for
manufacture of Licensed Products at
000 X.X. Xxxxxxx Xxxxxxxxxx Xxxxxxx 00 Xxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxx 00000 Xxxxxxxxx, XX 00000
or such other premises as Licensee may identify to Licensor and obtain
from Licensor a written consent from time to time.
ARTICLE 2. Grant of License
(1) Subject to the terms and condition hereinafter set forth and the due
performance by Licensee of each of its obligations and covenants contained
herein. Licensor hereby grants to Licensee a non-exclusive,
non-transferable and indivisible license and right, without the right to
sublicense to (i) manufacture Licensed Products in its Manufacturing
Premises (and to make use of the Technical Information in such
manufacturing) by loading video tape into VHS cassette housings for
duplicating purposes, and (ii) use or sell Licensed Products throughout
the world.
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(2) No license shall be granted under the preceding Paragraph to sell (i)
component parts or constituent elements of Licensed Products including
blank video tape or cassette housing or (ii) unfinished products.
(3) No license shall be granted under the paragraph (1) above regarding the
manufacturing processes for magnetic tapes and magnetic materials.
(4) None of the provisions hereof shall be construed to restrict in any way
the manufacture and/or sale by Licensee of video cassettes of any kind and
type other than Licensed Products.
ARTICLE 3. Compatibility
Licensee fully recognizes the imperative need for maintaining
compatibility between Licensed Products and VHS video recorders and/or
reproducers conforming to VHS Standards to widely promote this VHS video
system, and undertakes to only sell, use of otherwise dispose of Licensed
Products which maintain such compatibility.
ARTICLE 4. Supply of Technical Information
(1) Licensor shall provide Licensee with Technical Information within forty
(40) days from the date on which Licensor acknowledges the receipt of
payment of
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Evaluation Fee by Licensee according to Article 5 (1) ii. hereof.
(2) Licensor shall be under no obligation to supply Licensee with any
technical information other than as set forth in the preceding paragraph,
except that Licensor shall provide Licensee with any change or amendment
to the VHS Video Cassette System Standards for Licensed Product from time
to time and with any other information which may be necessary to enable
Licensee to comply with the provisions of Article 3 hereof.
ARTICLE 5. Consideration
(1) In consideration of the grant of license and rights under this Agreement,
Licensee shall pay to Licensor:
i. An Initial Fee of Twenty Five Hundred Dollars ($2,500) on signing of
this Agreement. Such amount shall not be refunded for any reason
whatsoever. Payment is to be paid by electronic bank transfer at the
same time the signed Agreements are sent to Japan by air courier.
ii. An Evaluation Fee of One Million (1,000,000) Japanese Yen with in
thirty days (30) after this
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Agreement becomes effective. Such amount shall not be refundable for
any reason whatsoever.
iii. A royalty based upon either of the following royalty structures, to
be selected by Licensee for each quarter during the term of this
Agreement, with such selection to e reported to Licensor along with
the royalty statements for such quarter as provided by Article 5(3)
hereof:
(a)-1) until March 31, 1993, Five Japanese Yen (5 YEN) for each
Licensed Product sold or otherwise transferred by
Licensee, and
(a)-2) on or after April 1, 1993, Four Japanese Yen (4 YEN) for
each Licensed Product sold or otherwise transferred by
Licensee, provided however, that if Licensee can
demonstrate to Licensor's reasonable satisfaction that
certain of the Licensed Products sold or otherwise
transferred by Licensee have a recording time of thirty
(30) minutes or shorter ("Short Cassettes"), a royalty
rate of Three Japanese Yen (3 YEN) shall apply for each
such Short Cassette, or
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(b) Eighty Seven Thousand Five Hundred Dollars (US $ 87,500)
plus Two Point Thirty Three Cents (2.33) for each
Licensed Product in excess of 3.75 million pieces sold
or otherwise transferred by Licensee during such
quarter.
The royalty rate for Licensed Products xxxx or otherwise transferred by Licensee
in the form of blank video cassettes for duplication by other duplications shall
be determined in the same manner as described in Article 5(1) iii. (a)-1) or
(a)-2) above, but the quantity of such blank video cassettes shall not be
included in determining the quarterly volume of Licensed Products for purposes
of Article 5(1) iii. (b).
Licensee shall not be obligated to pay in any quarter a royalty rate per
duplicated cassette which is higher than that paid by any other duplicator which
has duplicated, sold or otherwise transferred in such quarter a volume of video
cassettes comparable to that of Licensee.
ELECTRONIC BANK TRANSFER TO:
Bank Name: The Sakura Bank, Honcho Branch
Bank Address: 4-10, Xxxxxxxxxx-Xxxxxx 0-xxxxx,
Xxxx-xx, Xxxxx 000, Xxxxx
Account No.: 0000000 (for deposit of Xxxxxx
Company of Japan, Limited).
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AGREEMENTS & CORRESPONDENCE TO:
Mr. Y. Honda, Manager, Licensing
INTELLECTUAL PROPERTY DEPARTMENT
XXXXXX COMPANY OF JAPAN, LIMITED
12, 3-Chome, Xxxxxx-xxx, Xxxxxxxx-xx
Xxxxxxxx 000, Xxxxx
(2) In the event that any income tax on payments by Licensee to Licensor
hereunder shall be required to be withheld from such payments, Licensee
may deduct the amount of such tax from such payments. In such case,
Licensee shall apply to the competent authority of Licensee's country on
behalf of Licensor an appropriate form of claim under the double taxation
conventions, if any, for the avoidance of double taxation between the two
nations and Licensee shall furnish Licensor with a certified tax receipt
immediately upon payment of such tax by Licensee.
(3) Licensee shall prepare and deliver to Licensor royalty statements duly
certified by the responsible officer or auditor of Licensee for each
calendar quarter ending in March, Jun, September, and December of each
year within sixty (60) days of each such period setting forth the quantity
of Licensed Products made, sold or otherwise disposed of by Licensee in
each such calendar quarter and the royalties due and payable with respect
to such
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calendar quarter, as well as any other particulars to be requested by
Licensor.
(4) In the case of failure by Licensee to make any of the payments mentioned
in the preceding paragraph within the specified period, the royalties
remaining unpaid shall bear the interest of a rate of ten (10%) percent
per annum for any period until the payment is made in full.
(5) Licensee shall remit and pay to Licensor the total amount of royalties
given in paragraph (1) and/or the royalty statement of paragraph (4)
simultaneously with the delivery to Licensor of the royalty statement, and
such royalties paid to Licensor shall not be refundable for any reason
whatsoever.
(6) Licensee shall keep full, clear and accurate records and books showing the
manufacture, sale and other dispositions of Licensed products by Licensee
and shall keep such records and books during the effective period of this
Agreement and for two (2) years after the termination thereof.
(7) Independent public accountant(s) appointed by Licensor may examine, during
Licensee's normal business hours, Licensee's records and books set forth
in the preceding
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paragraph to the extent necessary to verify the accuracy of royalty
statements delivered by Licensee to Licensor. Should this examination
result in a correction of more than five (5) percent of the royalty due,
Licensee shall bear the cost of the examination.
Article 6. Maintenance of Standards and Quality
(1) In order to insure the compatibility described in Article 3, Licensee
undertakes that Licensed Products manufactured hereunder by Licensee shall
comply with VHS Standards and all the other quality requirements imposed
by Licensor. For this purpose, Licensee shall provide any and all
necessary measuring equipment and facilities including those specified in
Exhibit C hereof or the equivalent as approved by Licensor. Within
forty-five (45) days after Licensee has received Technical Information,
and thereafter at any time during the effective period of this Agreement
upon Licensor's request, Licensee shall submit and deliver to Licensor the
samples of Licensed Products together with its own measured data for
Licensor's technical inspection. Licensee's procurement of magnetic tapes
or component partes from any other licensee shall not be deemed to exempt
Licensee from implementing the above Licensee's obligation as to sample
submission.
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(2) Each time any significant change is made by Licensee in the process of
manufacture of Licensed Products or magnetic tapes packaged therein or the
component parts thereof, Licensee shall inform Licensor of such change
three (3) months or more prior to the commencement of sale thereof. Upon
Licensor's request, Licensee shall submit and deliver the samples of
Licensed Product incorporating such change for Licensor's technical
inspection and approval.
(3) If and when Licensee shall have received from Licensor a notice advising
Licensee that any sample of Licensed Products stipulated in Article 6(1)
or Licensed Products placed on the market by Licensee do not conform to
VHS Standards and/or any other quality requirements, then Licensee shall
take any and all steps necessary to remove the specified defects within
sixty (60) days from receipt of such notice so as to secure the conformity
to VHS Standards and/or other quality requirements imposed by Licensor.
(4) Even if Licensee does not manufacture magnetic tapes or component parts
for Licensed Products but procures them for Licensee's manufacture of
Licensed Products from any other licensee, Licensee shall confirm, as its
own responsibility, that such magnetic tapes or component
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parties are in conformity with VHS Standards and all other quality
requirements imposed by Licensor.
(5) During the term of this Agreement, Licensor's personnel may enter into any
premises which Licensee may from time to time use for the manufacture of
Licensed Products at reasonable time only for the purpose of inspecting
Licensed Products, production facilities and measuring equipment thereof.
(6) Upon Licensee's request and subject to Licensor's reasonable convenience,
Licensor agrees to have a technical meeting with Licensee's engineer(s) to
provide Licensee with technical counsel for the interpretation of
Technical Information and the performance measurement of Licensed Products
at Licensee's cost and expenses.
Article 7. Confidentiality
(1) Licensor shall use all reasonable efforts to keep in confidence all
Technical Information supplied by Licensor to Licensee under this
Agreement as well as the contents of this Agreement, and shall not reveal
or disclose the same to any third party, for five (5) years from the date
of mailing of Technical Information by Licensor (notwithstanding the
earlier termination or
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expiration hereof), except to the extent that such information:
(i) is unavoidably disclosed by the sale of
Licensed Products manufactured by Licensee.
(ii) is or becomes legitimately a matter of public
knowledge.
(iii) is established to be in public domain other than a result of
Licensee's default of its obligations under this Agreement. Licensee shall
not use any Technical Information for any purpose other than for the
manufacture of Licensed Products under this Agreement.
(2) Licensee may cause any third party to manufacture any component or parts
of Licensed Products (including dies therefor) for Licensee using
Technical Information supplied by Licensor hereunder but only on the
condition that Licensee causes such party to assume the obligations
provided for in the preceding paragraph.
Article 8. Trademark and Identification
(1) Subject to (i) the due performance by Licensee of all of its obligations
and covenants contained herein, and
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(ii) Licensor's approval on quality of sample cassettes to be submitted by
Licensee to Licensor in accordance with Licensor's instruction, Licensor
hereby grants to Licensee, without any additional payment, a non-exclusive
license to use the Trademark on Licensee's Licensed Products during the
period of this Agreement.
(2) Licensee shall use the Trademark prominently on the body of all Licensed
Products manufactured and sold by Licensee and shall use its best efforts
to ensure that its customers use the Trademark on any associated printed
materials such as packaging and advertising literature. All use of the
Trademark shall be in accordance with the instruction entitled "VHS Video
Cassette System Standard; VHS Xxxx Usage" to be provided by Licensor to
Licensee, except in those countries where Trademark may not be used.
(3) Licensee acknowledges that Licensor has acquired or will acquire all
right, title and interest in and to the Trademark and agrees not to use
such Trademark in any manner which may endanger Licensor's title to the
Trademark or the validity of the Trademark. Should Licensor have found or
in any way foreseen any trend on the market which may dilute or otherwise
jeopardize the Trademark, then Licensee shall make any reasonable
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change in the manner of its use of the Trademark as Licensor may request
from time to time.
(4) License shall submit to Licensor samples of all of its proposed cassette
case artwork bearing the Trademark for the purpose of Licensor's
inspecting Licensee's usage of the Trademark to conform to the "VHS Video
Cassette System Standard; VHS Xxxx Usage" and shall use its best efforts
to ensure that such submission of samples occurs before releasing Licensed
Products bearing such artwork to the public.
(5) To indicate the origin of such Licensed Products Licensee shall use
Licensee's own trademark or the trademark of its customers in addition to
the Trademark on all the Licensed Products manufactured and sold by
Licensee to prevent possible confusion with Licensed Products manufactured
and sold by Licensor.
Article 9. Earlier Termination of this Agreement
(1) If Licensee shall have defaulted in the performance of
any of the obligations assumed hereunder, Licensor shall give a written
notice to Licensee specifying the default, and if Licensee shall not have
rectified such default within sixty (60) days after the receipt of
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such notice, Licensor may terminate this Agreement immediately by giving a
written notice to such effect.
(2) Should Licensee have discontinued the manufacture and sale of Licensed
Products at any time after five (5) years from the date first above
written, Licensee may terminate this Agreement by giving a written notice
to such effect to Licensor, with such termination to take effect as of the
date of a Licensor's acknowledgement of said notice.
(3) If this Agreement is terminated under either of the preceding paragraphs
of this Article 9, all the rights and licenses granted under this
Agreement shall cease to exist forthwith and Licensee shall return to
Licensor all the Technical Information including all copies thereof within
thirty (30) days from the date of termination.
Article 10. Term of Agreement
Subject to the approval by the competent Japanese Governmental
authorities, if necessary, this Agreement shall become effective on the
date first above written and, unless terminated earlier in accordance with
the preceding Article 9, shall continue to be effective for five (5) years
thereafter. Within thirty (30) days
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from the date of expiration, Licensee shall return to Licensor all of the
Technical Information including all copies thereof.
Article 11. Report and Payment upon Termination
(1) Upon the expiration of the term of this Agreement or the termination under
the provisions of Article 9, Licensee shall prepare and submit to Licensor
a royalty statement in accordance with Article 5 covering the quarterly
period in which this Agreement has terminated.
(2) Any stock of Licensed Products in Licensee's possession or control as of
the date of termination and any unfinished products which exist at the
time of termination and may be completed in to finished products after the
date of termination, shall be considered sold by Licensee on the
termination date, and shall be subject to the provisions of the preceding
paragraph of this Article 11.
Article 12. Disclaimer of Representation and Warranty
(1) No warranty or representation is made by Licensor either as to the
sufficiency of the Technical Information supplied hereunder for the
manufacture,
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use, sale or other dispositions of Licensed Products by Licensee or as to
the sufficiency of the quality of Licensed Products to be manufactured,
used, sole or otherwise disposed of by Licensee under this Agreement.
(2) No warranty is made by Licensor to Licensee to the effect that Licensed
Products manufactured or sold under this Agreement (i) will be free from
claims of infringement of any patent, utility model, design right,
trademark right or any other right of any third party, (ii) will cause and
direct or indirect benefits to licensee or (iii) will not cause any loss
to Licensee.
(3) Licensee shall at all time keep Licensor fully and effectively indemnified
against all actions, proceedings, claims, demands, costs, charges,
damages, expenses and liabilities whatsoever by reason of or on account of
any inaccurate or defamatory or blasphemous statement or matter contained
on or implied in or any infringement of any copyright or any other
intellectual property right caused by any material duplicated onto or
otherwise recorded on any of the Licensed Products.
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Article 13. Assignment
Neither this Agreement nor any licenses or rights hereunder granted, in
whole or in part, shall be assignable or otherwise transferable without
the prior written consent of Licensor. Any attempted assignment or
transfer of this Agreement or any of the rights or licenses granted
thereunder without such prior written consent of Licensor shall be null
and void.
Article 14. Notices
All notices, requests, statements or payments which may be or are required
to be given under this Agreement, shall be deemed to be sufficiently given
ten (10) days after posting airmail by prepaid registered mail addressed
to the addressee at its office first above specified or at such changed
address as the addressee shall have specified by written notice. Any mail
addressed to Licensor shall be directed to "Intellectual Property
Department".
Article 15. Force Majeure
Neither party may be liable for failure to perform its obligations under
this Agreement during the period when such failure is due to Acts of God,
fire, flood, war,
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strikes and other similar causes beyond the control of the parties.
Article 16. Applicable Law and Jurisdiction
This Agreement shall be governed by and interpreted under the laws of
State of New York.
Article 17. Related Patents
(1) Subject to the terms and conditions of this Agreement and full and due
performance by Licensee of all of its obligations and covenants herein
contained, Licensor agrees that, for so long as Licensee makes payments to
Licensor pursuant to Article 5 hereof, Licensor shall not assert against
Licensee any patent, utility model and design patent right relating to
Licensed Products which are owned or will be acquired by Licensor during
the period of this Agreement.
(2) Should there be any patent, utility model or design patent right owned by
Licensee relating to Licensed Products, Licensee agrees to grant licenses
to Licensor under such reasonable terms as will be agreed upon separately.
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Article 18. Past Royalty Settlement
Licensee acknowledges its obligations to provide to Licensor a statement
certified by a responsible officer of Licensee setting out the quantity of
VHS video cassettes made, sold or otherwise disposed of by Licensee prior
to the commencement of this Agreement using the Trademark or other
intellectual property rights belonging to Licensor. So long as Licensee is
not in default of its obligations under this Agreement, the $2,500 Initial
Fee set forth in Article 5 shall operate as satisfaction for Licensee's
past royalty obligations.
IN WITNESS WHEREOF, the parties hereto have cause this Agreement to be signed in
duplicate copies, with each party to keep one copy.
On: November 9, 1995 Licensor
At: Yokohama, Japan XXXXXX COMPANY OF JAPAN, LIMITED
By /s/ Takeo Shattui
------------------------------
Takeo Shutui, President
On: October 11, 1995 Licensee
At: Detroit, Michigan ALLIED DIGITAL TECHNOLOGIES
CORPORATION
By /s/ Xxxxx X. Xxxxxx
------------------------------
Xxxxx X. Xxxxxx
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